Top Class Customer Management in Retail Banking

Is it possible that digital banks with no branches and no call centres can outperform banks with both? Yes. And it's already happening. Many new players focus entirely on their customers instead of focusing on products or channels.

In fact, there's a global trend now for retail banks to move from product or channel-centred business models towards a customer-centred banking culture. The problem? It's far from straightforward. In fact, it's downright difficult – but far from impossible. Once you start building a customer-centred culture, all kinds of other good results follow.

Here we outline some of the major challenges that banks need to address in order to move to a long-term customer-centred culture. See if you can identify which issues and challenges prevail at your bank: some are technical, some are cultural, some are simply due to historical legacies. But once you've identified the issues, you can start to see new potential, and start to make a change.

Orienting Around Customers

For a start, four out of 10 banks still prioritise products and internal sales goals above the needs of customers, and that's how the bank is organised. That leads to low customer trust and loyalty, as customers discover that the bank is not aligned with their expectations – and often it's not even aligned with the brand promise.

And that gap between expectation and experience can work on many levels. There's often a gap between what executives believe they deliver and what customers experience, which leads to customer dissatisfaction and loss of clients. (It also contributes to customer cynicism!)

As we outlined in a recent news story (about NatWest Bank), many banks have customer data scattered across legacy systems and don't have a 360 degree view of their customers, having to manually collate data in response to customer queries. That results in a limited understanding of customer behaviour and customer needs, and limits the potential to personalise offerings and experiences.

Being Customer-Driven

But on top of such technical challenges, it's culture that is most difficult to change. Organisational inertia and siloed departments will naturally resist cultural shifts – we've all heard that line about culture eating strategy for breakfast! Without understanding and buying in to a customer-centred culture, employees will not have the power to change and processes will remain inwardly-driven rather than customer driven.

An example of this is when CRM systems are used primarily as sales tools rather than for engaging with and delivering for customers. We've often seen employees resisting adoption of CRMs if they see them as yet another task or box to be ticked.

As a result, banks miss out on insights that arise from understanding and segmenting customers properly, which in turn results in generic marketing and missed opportunities for cross-selling. It also means that customers will experience inconsistencies across different channels, which means they have to repeat information as they are passed through customer service. We've all had this experience: you're being told that the bank is here to help you, but it doesn't really seem to know who you are.

Customers feel anonymous and caught in a bureaucratic process. That's frustrating enough, but it is doubly frustrating when the bank's brand promise is putting customer first, or being always there to help. It's little wonder then that such banks will not score well on Net Promoter Scores. Valuable customers will feel like they're not valuable, and are more likely to leave.

It's well established that losing valuable customers is costly, especially when so much effort is put into gaining customers in the first place. In the US, for instance, the major banks spend upwards of $500 to gain a single customer.

Learning from the Best

Great banks learn not just from other banks but from other high-end retail and services businesses. The Ritz famously authorised staff to spend a lot of money to solve customer problems without sending the problem up the chain of command. Fintech group Wise authorised service agents to spend up to an hour on the phone to resolve customer complaints. When frontline people feel the power to assist customers, it can lead not only to making customers happy but turning them into advocates for the bank. That not only makes customers happy but contributes to employee well-being too.

So while turning your bank into a modern customer-centred digital retail bank may seem like a huge effort, it's incredibly worthwhile. Then, even customer complaints turn into opportunities!