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Future of Banking & Role of Customer Experience

Future of Banking & Role of Customer Experience

Prime Minister Narendra Mode announced the opening of 170 mn account opening during last less than 12 months under Jan Dhan Yojana. Additionally, he also asked bankers to finance start-ups. Indian banks, especially public sector banks are struggling with customer service. Imagine the additional customer load and service expectations.

About a year back I had blogged Everyone Else but Customers, wherein I had stated banks are for customers, but bank boards have nominees from all other stakeholders like RBI, Govt, Employees, Officers  & Shareholders but no customer nominees. In the absence of customer nominees who will advocate customers cause?

Few days back, I saw a recruitment advertise in a leading daily. A leading public sector bank is inviting an application for Chief Customer Officer. When public sector banks are suffering from problems of plenty, this bank has thought it apt to deal with customer onslaught is to offer them a better customer experience.

Competitive pressures coupled with social media sharing, banks are awakening to the dire need for better customer experience. Every consulting company is it Mckinsey and Boston Consulting or big four – E & Y, KPMG, Deloitte or PWC and Technology Consulting Companies Infosys, IBM, Accenture, Cognizant, Capgemini and Oracle all are talking about the importance and therefore the necessity of customer experience in the banking sector.

Capgemini’s World Retail Banking report 2015 has some very interesting finding about the state of customer experience in the global banking industry. The report reports;

Banks are facing stagnating customer experience. Their data of the world’s banks suggest customer experience at banks are deteriorating. In most countries customer experience index is down from 2013 index.

Percentage of customers likely to stay, refer and buy have decreased and percentage of customers unlikely to stay, refer and buy has increased as compared to 2014 data.

This data suggests customers are not happy with their banking experience. This is coupled with the trend of the emergence of financial technology firms offering some of the banking products. The report says that the banks agree;

Customers are more comfortable with internet/technology firms, significantly higher than the comfort level they have with banks.

The potential of the Fintech firms to disrupt the market comes from their agility and ability to leverage technology, derive insight from data and develop simple and intuitive offerings.   

Yesterday only RBI has given in-principle approval to eleven payment banks which will mostly operate through mobile and internet.

Imagine the situation; Unhappy customer experience on the rise and new players to capture the market. Banks are stuffed with huge manpower which is a cost, enormous NPA problem & low focus on customer experience. Fintech firms are agile, branchless, lower on people and high on technology.

The banking industry world over is facing an unprecedented challenge.

The report also says;

Customer experience figured prominently as a driver of investments in the front office, but not in middle or back office investment.  

The trend is also going to continue and this is a major cause of concern as majority of customer dissatisfaction emanates from back offices leading to increase in negative customer experience levels which have already risen from past years.

As far as India is concerned, CE Index dropped from 75.4 to 70.9 and customers with positive experience down from 46.2 to 38.1 during 2015 as compared to 2013.

All the reports on banking by leading consultancy firms are unanimous about the importance of customer experience and steps to become customer-centric. While there is no doubt about this KPMG report – Customer Experience Barometer – Banking drill down to attributes of customer experience:

  • Accessibility
  • Ease of doing business
  • Executional excellence
  • Personalised offering
  • Staff Engagement
  • Value for money
  • Brand value and reputation

While many still believe customer experience is all out the ambiance, branding, attire this report further drill down in detail by stating importance of 30 attributes from the seven broad stated above and performance vis a vis importance.

Parameters Importance Performance
1 Value for money (i.e. fair and appropriate fees and charges) 74% 49%
2 Staff who are honest and tell the truth 74% 56%
3 Staff who consistently follow through on their promises 70% 51%
4 Getting things right the first time 69% 53%
5 A company that puts the consumer first 69% 46%

All these reports and data suggest how seriously banks need to focus on customer centricity and create a better customer experience.

Following image from a report Banking on Customer Centricity by Mckinsey says it all very aptly:

Mckinsey

Banks are at the cross road. Technology, social media, population, Govt focus on growth, average age of staff, NPA – issues are plenty but the option is only one – Fanatical Focus on Customer Experience.  In a case study on customer satisfaction at co-operative bank in UK states:

The Co-operative  Bank’s Corporate Banking Division puts much of its success in recent years down to its fanatical focus on customer service.

Yes, this is the level of focus on customer experience banks need to fine-tune in order to meet the challenges stated above. Bottomline is:

Know your customer more than KYC regulation demands, make it easy, give them multichannel options and access & sensitise the organisation – front, middle and back about the importance of customer experience. Technology company reports are more obsessed with digitalisation of banking customer experience but human touch and emotional experience are irreplaceable. Developing holistic customer experience is the way forward.

As Mr. Vermon Hill, Chairman and CEO of Commerce Bancorp said,

“We have shown that you can decommoditize a commodity business. Nobody wants another me-too bank. We have created an unusual, unduplicatable experience for our customers. We are creating emotional attachment with our customers. I have had more people tell me that their kids used to go to Starbucks with them on Saturday morning. Now they want to come to the bank! We have created a cult brand out of a dead business. ”

(Source book:  Mavericks @ Work by William C Taylor & Polly G. Labarre)

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Sunil Gandhi
Sunil Gandhi

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