Under siege: Improving customer experience in banking

In a world where 95 percent of the global Fortune 500 companies feel customer experience (CX) is the key competitive differentiator, banks are under siege. A Bain and Company survey found that 54 percent of respondents trusted at least one tech company more than most banks and that tech companies ranked higher than the respondent’s primary bank in all of the categories that contribute to the popular customer satisfaction metric Net Promoter Score (NPS). Considering the encroachment of Fintechs into the banking landscape, this is not good news.

The bad news is borne out in the latest Satmetrix benchmark survey on NPS, where banking ranked 13th out of 23 industries with an average NPS of 34. Compare that average to the one shining star in the industry, USAA, who scored 68 and 73 respectively for their banking and auto insurance divisions, and you can see that most banks could be doing a whole lot better.

There is some good news though; improvement is possible. In the Digital Banking Report, Artificial Intelligence for an Improved Customer Experience (download free research findings here), owner and publisher Jim Marous says this: “By deploying proactive recommendations based on real-time needs and behaviors, financial institutions will be able to personalize experiences at scale, generating loyalty, trust and sales.”  

In this interview recap, Marous and Lisa Loftis, Customer Intelligence Thought Leader at SAS, discuss the report findings and provide their thoughts on the challenges that are keeping banking’s NPS scores low and CX less than optimal.

What factors are hindering so many banks from reaching the high NPS scores that USAA consistently achieves?

Marous: Although most financial institutions understand that consumers expect a personalized approach, they’re unable to meet consumer expectations due to various challenges. Most banks and credit unions don’t have a full view of their customers or members across the organization. This results in lost opportunities to engage or provide proactive advice, as well as increasing the cost to serve for the institution.

While it’s universally agreed that insight and customer data is an important differentiator against competition, this is only true if the right insights are collected and used to benefit consumers. In other words, unless the data can be used to “know the customer,” “look out for the customer,” and “reward the customer,” the insight is of limited value. Banking organizations are making some progress towards harnessing consumer insight to enhance the customer experience and to boost overall profitability, but there’s still a long way to go.

Loftis: Although both data and culture vie for prominence in most CX challenge lists, data issues took precedence in the Digital Banking Report with respondents highlighting quality and reliability of data; data availability and collaboration across the organization; actionable data; and scope of data points and sources as some of the main challenges.

I view this as a positive because the cultural issues are a lot harder to solve. While overcoming data challenges is not easy it can be done. Building a strategy map that first ties data to corporate objectives and next identifies data related gaps is a great starting point. It provides a phased approach to overcoming the data challenges that has been approved by the business, and is in line with corporate strategy.

You both mention data issues, what are some of the benefits that bankers are realizing from using data to drive customer journeys?

Marous: For the past several years, the Digital Banking Report has found that ‘improving the customer experience’ is both a major trend in the banking industry and a major strategic objective for the majority of banks and credit unions. Unfortunately, research also indicates that most financial institutions talk more about improving customer experiences than investing in ways to remove friction, increase engagement and motivate employees towards this goal.

There’s a strong motivation to do the right things for consumers. We’ve found that financial institutions that lead in CX have a higher recommendation rate, a higher share of deposits, and a greater likelihood that customers will increase their portfolio of new products and services from their bank.

Loftis: Focusing in on what bankers think about analytics makes Jim’s answer even more interesting. Respondents to the report said that the top three benefits of using data and analytics were improved customer experience, increased sales and loyalty, and better real-time targeting and communication. This clearly indicates that if you want to achieve the CX benefits Jim discussed, you must be looking at ways to incorporate data and analytics into the mix.

What is contextual banking and how do we connect data and context?

Loftis: Context is the ability to understand what the customer is doing ‘in the moment’ and use that understanding to tailor offers and communications on the go. There are several different types of context that you can glean from data. Relationship context comes from historical behavior and product purchase and usage information. This gives us a good picture of the customers overall relationship and allows us to predict intent based on past actions. Personal context is gleaned from social media, market research and psychographics and tells us a great deal about the customers emotional state, preferences and attitudes.

Real-time situational context refers to a customer’s immediate actions on a web page, in a mobile app, or based on geo-location sensors or IoT information. This tells us what the customer is doing now and allows us to tailor our actions with them accordingly. This is very powerful – the ultimate form of personalization.

Marous: Contextual banking refers to the interrelated factors of customer insights and environmental conditions that make digital banking experiences more relevant. To succeed, banks and credit unions need to leverage data from all sources and channels. This includes everything from online banking apps and mobile devices to ATMs and branch engagement. The goal is to create a contextual data repository that can drive highly personalized engagement in real time.

Done well, banks and credit unions not only have the ability to know a consumer’s financial profile, including services held and channels used, but what they may be browsing on your website, shopping for online or discussing with others. Moreover, you’ll be able to better understand financial needs … instantly.

Any last thoughts on using data and AI to elevate the customer experience for bankers?

Marous: The roadmap to customer experience growth is based on clarity of brand promise, empowerment of employees and customers, the ability to create lasting memories, and exceptional delivery. To be a truly customer-centric organization, a bank or credit union must consider how experiences align (or don’t) with the promises made to consumers.

Loftis: Analytically powered and automated operational decisions driving CX will yield the NPS scores marketers have been envisioning for years. The mantra that SAS lives by is this:

“Data doesn’t change the organization. Decisions do. Every decision drives value -from big strategic choices to thousands of operational micro-moments. Success will come to those who can make the right decisions in the moment, for every moment, automating and scaling those decisions with powerful and trusted analytics.”