How to win the race for customer loyalty in Financial Services
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How to win the race for customer loyalty in Financial Services

Is your culture able to deliver an amazing customer experience?

read time 5 mins

Customer loyalty in Financial Services – a disappearing phenomenon?

Times have been tough for Financial Services providers when it comes to customer retention and loyalty. 55% of adults now hold financial products with between 2 – 5 companies.

Conventional banks now account for only 72% of the stockmarket value of the global banking and payments industry, down from 96% in 2010. The Economist

Why? After relying on traditional banks and the tools they provided for decades the mandate of open banking in 2018 has been showing customers that it can be done differently. Demand for real-time products and services from banking partners coupled with a strong desire for single bank portals capable of accessing multiple services and even multi bank portals are just some of the reasons cited why customers look elsewhere. It’s easy to see why: people are looking for convenience and efficiencies.

So, what does that mean for Financial Services providers, whether you’re a traditional bank or a fast rising Fintech provider?

Focus on customer needs and convenience rather than product features or rewards

The reality is that the drivers for customer satisfaction and loyalty are fairly easy to identify: a frictionless service-driven experience with a high standard of customer care. And yet, despite much investment, effort and many improvements in recent years traditional Financial Service providers continue to struggle to provide just that: a great end-to-end brand experience that focusses on customer needs, service and tools that are easily accessible and even easier to use.

Why? In a highly regulated and traditional industry plagued by legacy systems and old hierarchical structures it can be difficult to break through and create fast in new ways. Customers are taking advantage by providing simpler and smarter solutions that allow customers to sign up in 1-3 hours rather (think Tide or Starling Bank) than 10-14 days as can sometimes be the case with some traditional banks. The promise of a free business account for 12 months is usually not enough for an Entrepreneur who’d prefer to get paid today rather than save £120.

But incumbents are catching up fast. Established trust in traditional banks coupled with cash rewards is also still working as ‘the Current Account Switching Service (Cass) data shows in the second and third quarter of last year. Nationwide Building Society, HSBC and NatWest had the highest net switching-gains.1

55% of adults hold financial products with between 2-5 companies

Customer expectations are on the rise

Having tasted what simplified and convenient services can do has changed customer expectations. Customers don’t necessarily want to change providers. But, they expect traditional providers to keep up with what they experience from Fintechs such as Monzo, Revolut or Transferwise. Customers couldn’t care less about the complexity of your infrastructure or regulatory hurdles.

Once customers have experienced what can be done, the question of “why hasn’t my bank done it yet?” won’t disappear.

Instant money transfers (including real-time international rates), being able to analyse spending, setting up saving goals or automated savings and submitting cheques through their mobile app are just a few of the many things customers are increasingly expecting as a standard. And when they need to speak to a real person they want access quickly. They want someone who is able to resolve their issue or enquiry there and then. They don’t want a 5 minute automated conversation with a bot that leads to an unhelpful FAQ page.

The opportunity of a focussed approach

Using data to your advantage and focussing in on customer needs means to engage, listen and test obsessively in fast targeted sprints. It also means dissecting and making the most of the data you have. It requires alignment within your organisation around priorities and brand experience. This is where Fintech’s often shine. Fintechs don’t have to deal with legacy systems, internal hierarchies and segmentations of customers in different business units that are often separated for legal reasons. This means Fintechs are often able to act faster and be more targeted in their approach. The downside? Concerns are sometimes raised about less mature Fintechs who move too fast and end up encountering serious and costly security and regulatory issues. This could be due to under-investment in infrastructure and security, regulatory issues they weren’t aware of, or risks they’ve underestimated.

 A change in customer experience ratings for a multichannel bank leaves $124 million on the table for every 1-point decline in its CX Index score, Forrester’s Customer Experience Index said. Forbes

The race of customer loyalty and trust will belong to those that are determined to obsess about customer experiences and are able to tear down outdated internal barriers where possible. It will belong to the disciplined and focussed. It’s not about nice to have glitter projects with little to no benefit that ultimately die in an in-house app store. Customers want genuinely useful and accessible tools that once tried, they don’t want to live without.

Better experiences by fast moving Fintechs create higher customer expectations

Never forget the human

We love AI and the power of machine learning, chatbots and the opportunities this is creating on a daily basis. But in the interest of improvement and efficiency it’s important to remember that whoever or whatever we let interact with customers needs to be helpful and respectful of the customer’s time. We’ve mentioned the frustration people experience when interacting with automated processes that can’t help or if the same questions are repeated over and over.

According to Hubspot 40% of customers don’t care if they speak to a bot or not, as long as their query or request gets resolved. This creates a challenge as well as an opportunity.

Use chatbots and AI wisely and obsess about the human element and creating a better experience for humans. The devil is in the detail when it comes to automation of processes and service driven solutions.

Brand and customer experience go hand in hand

Ultimately, it’s about the customer brand experience you create end-to-end. Whether you’re an established Financial Services provider or a new Fintech: your customer experience involves so much more than just your brand, tone of voice and marketing material. It includes your digital culture and how your organisation treats and communicates with employees and customers at any given moment or touchpoint.

Rule of thumb: Trust takes time to build, seconds to break, and forever to repair. Mary Keane Dawson

We’re all about tackling problems head-on. So, to get you problem solving quickly we’ve put together a guide on how to improve your brand experience in Financial Services.

Download our brand experience guide for Financial Services

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