Banking on the user-centric experience? Begin with robust data and analytics
The UK retail banking sector is characterised by a continuing lack of competition and resultant limited customer churn between financial services providers. This has made it difficult even for new market entrants to gain market share from long-standing, less popular competitors, due to the inconvenience and complexity involved in switching banks. Meanwhile, many customers of established banks, while reluctant to convert to another provider, are dissatisfied, inactive or indifferent about their relationship with that bank, writes Igor Sarenac, vice president of financial services and international business at Convergys (right).
Faced with this challenge, financial institutions are becoming ever more reliant on technologies such as data analytics to deepen their understanding of customers’ experiences, and to identify the factors that really impact satisfaction levels and overall brand loyalty. In short, technology has become a necessity rather than a ‘nice to have’.
Recent plans outlined by the UK Chancellor, George Osborne, to allow customers to switch their account to a rival firm within a week, are set to further shake up the industry – a move designed to “give customers the most powerful weapon of all: choice.” Technology will, of course, play a vital role in this evolution, presenting both challenges and opportunities. While automatic switching services will incentivise much needed competition by making it easier for customers to transfer their accounts, this will hugely increase the focus on customer retention.
The time to act is now. Cutting-edge technologies can help to identify potential switchers early and prevent their defection, while simultaneously targeting the most valuable and susceptible switchers. Moreover, these long overdue changes will act as a catalyst for banks to improve their understanding of satisfaction levels and delivery of customer service offerings, which ultimately lead to greater loyalty, customer retention rates and share of wallet.
Many banks are already seeking to improve customer service by creating differentiation through streamlined processes and initiatives, as well as increased convenience through reduced complexity. This is essential in the current environment as many banks struggle to restore profitability and reputation among a customer base that’s inherently more risk-averse and less trusting.
Customers create value for banks by buying more products and services more often. In the new competitive environment, banks will have to do much more to generate revenue through cross-, and up-selling. To turn a difficult or indifferent customer into a loyal and active one, for example, providers will need to get to grips with their customers’ preferences: What are their banking habits and channel preferences? How does a bank define its customers’ purchasing behaviour? How can a highly personal experience for that customer be optimally achieved?
Firstly, banks need to collate and process more and better data. Today’s banks need to be able to create, capture and analyse data to broaden their knowledge of customers, which will bring multiple benefits. The aftermath of the global financial crisis – and loss of trust among consumers – has resulted in tougher regulation, more oversight and greater potential for censure and financial penalties. Effective use of data to ensure that services are reflective of customers’ needs and status is not just good business sense, its good compliance too. Using data analytics to ensure customers are offered the right products matched to their individual circumstances not only generates higher satisfaction and loyalty but protects against allegations of exploitation and even profiteering. Providers in all industries make smarter, higher ROI decisions when they know more about their customers. By employing the best tools and analysis available, banks can personalise service, and create effective and intelligent interactions across multiple channels, allowing them to anticipate consumers’ needs, spot opportunities and guide them to a positive result.
A robust data and analytics approach is critical in achieving highly personal customer experiences through good quality segmentation. Behavioural analysis uses technology to create a precise ‘snapshot’ of each customer, accessing and consolidating information from multiple databases in real-time to paint a full picture. Analytics are then deployed to identify propensity patterns based on recent interactions, channels most often selected, the rate and types of product adoption, account balance, credit history, past experience with customer service, and use of social media.
This allows marketing, customer service and sales teams to assess whether or not the relationship is favourable, or has been in the past, and best equips them to cross-, and up-sell. It’s the intense personalisation of the experience that opens the door to increased loyalty and improved margins.
Secondly, banks need to invest in technology that helps them to personalise service, and create effective and intelligent interactions as part of a multichannel approach. Consumers today expect to have a variety of channels available to them: voice, web, chat, e-mail, mobile, and social media. But beyond that banks must also do a better job of making their customer knowledge more transparent and relevant across these channels.
In the current climate, and with significant industry changes on the horizon, overcoming the challenge of adding and retaining customers and increasing their life-time value starts with understanding the quality of customers’ experiences, their satisfaction and individual brand loyalty. The key is creating extremely targeted and personalised experiences, which are replicable across whole segments through an approach rooted in robust data and analytics and enabled by multi-channel interactions.
