Financial institutions can improve the customer experience by making themselves easier to do business with, being guided by the Voice of the Customer and by systematizing data collection and usage.
This article was originally published in BAI Banking Strategies on April 4, 2016. Mark Hendrix is an Advisor at Peak Performance Consulting Group.
BY MARK HENDRIX
In today’s digital economy, banking, like other industries, faces “disruptive” expectations from customers. Both individuals and businesses expect access to and delivery of services virtually on demand. Winning companies are responding by creating innovative approaches to the customer experience. They have learned that re-calibrating their processes, bringing them into alignment with customer expectations, has resulted in new sources of revenue and productivity.
How can bankers accomplish this? By offering value in three areas:
To be successful, Bank-at-Work programs must deliver effectively on three elements: partnership, value proposition and sales execution.
This article was originally published in BAI Banking Strategies on March 11, 2016
It goes without saying that retail banking has many moving parts and Bank-at-Work programs are no exception. From target strategy to sales protocols and from results tracking to offer fulfillment, successful program implementation requires that banks maintain a comprehensive structure around their Bank-at-Work initiatives.
But within that program structure, three things stand out because without them you’ll just be spinning your wheels. They are: partnerships, value proposition and sales execution. The formula goes like this: partnerships get you in front of company decision makers; value proposition gets you in front of employees; and sales execution gets you incremental revenue. Sounds pretty simple, but the reality is very few programs actually focus on these key essentials, which is the root cause of why many retail Bank-at-Work initiatives run aground and get shelved.
Banks need to eliminate complexity by simplifying processes and customer interactions, with the payoff being lower expense, higher customer loyalty and reduced risk. This article was originally published in BAI Banking Strategies on January 5, 2016
Consumers are increasingly self-reliant and see time as a resource that is just as valuable as money. Moving forward, delivering a timely customer experience will be an important factor in winning in the market.
Banks, however, have a hard time delivering on this customer demand for timeliness due to their innate complexity, with business models that reflect the uneven integration of multiple lines of business such as retail, business banking and investment banking. Over time, these organizational processes have often been “spaghetti wired” from legacy systems that are not fully integrated. Recent regulation further complicated matters, adding additional infrastructure that increased operational layers and cost.
Bankers are increasingly aware that this unplanned complexity has gotten out of hand and harms the ability to deliver for customers. In our recent survey of financial services executives, 68% of respondents indicated they have initiatives in place to simplify their business models. How should an organization tackle this task?
Start with a change campaign. With so much at stake, you can start anywhere – beginning, middle or the end – but take the first step. Start by mapping process steps and identifying activities that are duplicative, or do not contribute to efficiency.
Once a root cause has been identified, develop the management routines to determine the legacy drivers in Information Technology (IT), operations, service, channel and organizational structure. Several remedies that can yield immediate productivity are:
- Eliminate hand offs;
- Remove paper processes;
- Standardize data capture and governance;
- Implement voice of customer research on how customers shop, buy and use your products and services.
Embedding these changes is not a function of technology but rather of change management and organizational leadership. Enterprise Resource Planning can provide reports and metrics to identify opportunities. But improvements are a function of leadership attention to the experience drivers that create real value.
Jim Marous, who’s work I respect, asked for our insight and input to his annual Top 10 Retail Banking Predictions. Here are 4 predictions for 2016. What do you think?.
Universal Bankers will become “universal”, and will be the standard staffing model in most bank branches. And this will not just be cross-trained tellers but a true merging of the teller and personal banker role.
The shift to digital will accelerate. Up to now it has primarily impacted routine monetary and service transactions. But we are at an inflection point where account openings and advisory services will be delivered remotely. This will represent a fundamental shift, where the physical branch will support the digital channels, rather than the reverse.
With more touchpoints, mapping the customer journey becomes critical. Understanding where they start, how they use channels in tandem, and where they stop along the way will be essential to managing relationships in the future. This will require adoption of new data management tools and skills.
- The call center is back! It will no longer be a support function to the branch network, but rather the hub of the customer experience. With customers using more channels than ever before, they expect consistency across all touchpoints. These new “customer experience hubs” are well positioned to bridge both physical and digital channels.
This article by Guenther Hartfeil, a Senior Consultant at Peak Performance Consulting Group, was originally published in BAI Banking Strategies on December 3. 2015.
Cross-selling can be effective if bankers put the right metrics in place, change behavior of sales staff, align incentives, re-focus on customer needs and eliminate policies that get in the way.
It’s common knowledge that it’s easier and cheaper to sell to existing customers than to attract new ones. However, according to studies at two major banking institutions, many cross-sell efforts result in little or no improvement in customer profitability.
There are two primary reasons for this. First, most banks do not have an effective way to accurately track “new-to-the-bank” funds. Typically, sales staff receives credit for new accounts opened and the bank projects value based on typical account balances.
But this does not account for the significant money churn between existing accounts. Analysis I conducted at one large financial institution showed that, depending on the deposit product type, between 25% and 79% of funds into newly opened accounts came from deposits already in the bank. For example, it’s pretty easy to switch account types, say, from one type of savings into another type of savings or one certificate of deposit (CD) term into another CD term, or open accounts for new family members by using existing account balances. Churn is less but still significant at 25% to 30% for brokerage accounts, non-auto direct loans or home equity credit.
Another reason that cross-selling may be ineffective is that projected balances or anticipated account activity may not materialize. New checking accounts usually start with a small balance and grow over time as the relationship builds, or as new customers wind down accounts at their previous financial institution. However, sales staff may inadvertently receive incentives to generate account volume, “widgets” rather than value because of product configuration, deficiencies in tracking capability, or both. For example, free checking – a product that many institutions have now discontinued – was so easy to sell that the overwhelming majority of new accounts opened at most banks was “free.” The number of accounts grew dramatically, but balances often did not follow.
Here are five strategies for making cross-selling more profitable:
A modified version of this article was originally published in BAI Banking Strategies on November 13, 2015.
As the Millennial generation increases its economic clout, banks need to adapt strategies that enable them to profitably attract, serve and grow with these new customers.
It’s a simple fact: Millennials are your future customers. Already the largest group in the workforce, the leading edge is now in their 30’s and reaching an age when they have stable jobs, are forming families and buying homes. By 2020 they will have greater savings and investments than Baby Boomers. They are not just a customer category, but a massive segment that is driving change rapidly.
And Millennials are critical to your bank’s growth strategy. Approximately 10% of households switch banks annually – a rate that has been relatively stable for the past decade. But this propensity to switch varies widely by age group. Older customers are more likely to have long-established banking relationships and their average switching rate is only between 3% and 4%, usually as the result of a service or moving issue. On the other hand, younger customers switch at a rate of between 15% and 20% annually. They are most likely to be attracted to financial institutions that offer the technology and online services they prefer.
Banks need to take action or risk losing this segment to new entrants in the payment, consumer banking and business banking space. And there is cause for concern: we counted 38 different non-traditional competitors in the payments space alone, of which 10 were new in the last year.
Up to now, these competitors have been mostly nibbling around the edges, but the introduction of Apple Pay significantly heightened awareness of the threat. In our recent industry survey, one bank CEO told us: “The fear is that Apple Pay and Google Pay reduce, if not eliminate, the need for banks to provide the payment stream. How do we compete with that? …. Not sure what the solution is at this point. Once the consumer leaves or never comes in to the system, will they ever join again? Jury is out but I am not optimistic.”