To be successful, organizations cannot be mired in yesterday’s traditions or practices. They must meet the current demands of their customer bases and the current expectations of their industry. Organizational success requires flexibility and adaptability.
In other words, transformation is critical to your future success, but you shouldn’t attempt it blindly. Approximately, two-thirds of businesses have completed an underperforming transition over the last five years, and with banks, in particular, there is one key reason for underperformance — failure to focus on customers.
The irony, however, is that most bankers think their transformations are customer-centric. Have you fallen into this trap in the past? Are you trying to avoid it this time around? How do you ensure that you’re not embracing this delusion and that you engineer a truly successful customer-focused transformation? Let these tips guide the way.
1. Start with customer preferences.
Most transformational projects start with financial projections. Disrupt this legacy approach and start with your customer preferences. Leave no stone unturned when defining their needs and demands. Look at internal transaction data, survey customers, and review external reports about customer preferences in the banking industry.
Note, however, that you may need a data transformation to access and integrate the data you need to truly understand your customers. For example, you should understand how customers engage with your digital tools and where they abandon sign-up processes for new products. Then, you can use this data to determine the offerings and features your customers need and want.
2. Prioritize spending on customer-centric initiatives.
Generally, when financial institutions make their transformation budgets, they earmark funds for identifying the plan, proving regulatory compliance, and sales and marketing. Then, they devote leftover funds to customer-centric initiatives. That doesn’t work. If you want customers at the heart of your bank, you need to put them at the front of your transformation budget.
When EY studied customer-centric transformation budgets, they saw that the most successful initiatives devoted 15% of their budgets to customer-centric processes. This includes doing customer research, tracking user experiences, designing customer journeys, and testing new products with customers.
3. Look beyond customer loyalty metrics.
A loyal customer base is critical for financial institutions, but hyper-focusing on loyalty metrics can hinder your ability to truly satisfy your customers. Look at your net promoter score (NPS) to see which of your customers recommend your bank to other people, but keep in mind that you can have above-average NPS while bleeding customers and losing touch with the overall market.
As you plan your transformation, find other metrics to track and integrate them with your NPS scores. For example, you may want to measure the rates that customers apply for loans with your bank before other financial institutions. You may also want to measure internal efforts, such as the amount of time spent on user testing of digital applications or the percentage of your budget devoted to customer-centric projects.
The more you track data about customer preferences, the easier it becomes to create a culture that meets those preferences. Additionally, as you track your internal efforts, you can see how increasing customer-centric initiatives improves customer satisfaction, lifetime value, and NPS.
4. Create a customer-centric team.
Meeting your customers’ needs means providing the right products, services, and digital tools, but you also need to ensure that your employees understand how to create customer-centric experiences. During transformations or when developing new products, this includes your product designers, data specialists, and sales/marketing teams.
Additionally, at all times, your customer service and management teams should display a strong commitment to excellent customer service. Drive this point home by rewarding employees who exhibit customer service excellence.
5. Assign a chief customer officer
Your chief customer officer ensures that your bank integrates the above tips. They keep your institution and your team accountable to your goal of customer centricity. However, to do that successfully, they must be part of your executive team, and the rest of your executives must be willing to listen to them.
Questions to Consider Before Starting Your Bank Transformation
Before starting your bank transformation, you should work through these critical questions.
What do our specific customers want? What do banking customers in general want? Which sector of the market are we missing? How can we deepen our appeal to existing customers and broaden our appeal to new customers?
To learn more about your customers, also consider the following: How do we measure customer expectations, desires, and satisfaction levels? Besides net promotor scores (NPS), which key performance indicators (KPI) are important to our transformation? How will we collect, measure, and use this data?
As you create the budget, ask these questions: How can we prioritize customer-centric initiatives when creating our budget? How much of our transformation budget is allocated toward customer-centric actions? If less than 15% of the proposed budget is earmarked for customer-centric actions, how can we increase the budget share for these initiatives?
Finally, to ensure that your transformation creates a customer-centric culture, ask the following: What can we do to create a top-down culture of customer-centrism? Have we hired a customer care officer? Is their role well-defined? Can they influence the rest of the executive team?
Invest in Fraud Prevention Solutions to Protect Your Customers
Perhaps the number one reason that customers become dissatisfied with their banks is when they become the victim of fraud. To maintain and build customer loyalty, you need strategies to protect your customers against fraud. As you add new products and services, you need to redouble your fraud efforts in those areas.
At SQN Banking Systems, we help our clients detect and prevent bank fraud so that they can provide top-notch experiences for their customers. By reducing the risk of fraud, you improve the customer experience, but while doing so, you need to ensure that you don’t put unnecessary roadblocks into the customer journey through false positives. We help you strike that balance.
To get started, contact us today. We’ll help you do a fraud process review, and then, we’ll tailor an anti-fraud strategy to the unique concerns and preferences of you and your customers.