âPutting money in to fix a problem is rarely the best way to overcome it. And this is never more true than developing a differentiating experience for clients or members of financial institutions.
This observation comes from a new report from the software company Total expert which explores the maturity of the customer experience, comparing industry leaders with CX laggards. Ultimately, the message the company is trying to get across is that banks and credit unions need to be creative in solving their problems, especially small community institutions.
Total Expert surveyed over 200 banking industry executives to find out how they are working to improve their customer experience model. Respondents came from a mix of banks (56%) and credit unions (41%). Another 3% came from other types of institutions. 22% of respondents were from institutions with less than $ 500 million in assets, while 60% had assets over $ 1 billion – and almost a fifth (18%) fell in between.
Read more about The financial brand on Innovation strategies:
The five stages of CX maturity
With the rapid infusion of rapidly changing marketing technologies, not all financial institutions are moving at the same speed. Some banks and credit unions are lagging behind in the use of customer experience tools, while others are rolling out new technology and functionality.
While there are no universal metrics to determine where financial institutions are on this journey, Total Expert has attempted to categorize them, breaking down banks and credit unions into the following segments:
Banks by asset size in each category
Credit unions by asset size in each category
While very few marketing teams reside at this stage – which is the start of the technology journey – there are a few banks and credit unions that are still new to the dialogue. These institutions work with limited data and do not have a dedicated customer experience team. Their messages are often very generalized and not disseminated by customer segment.
Institutions in the Manager category – second only to Achievers – are more apt than Starters to get customer feedback. They started to segment their customers demographically. Managing institutions are starting to develop enhanced multi-channel engagement that can target individual customers.
It is on this common ground, Achiever, that the vast majority of banks and credit unions are found. Automation is starting to take hold as the institution integrates CRM data into its digital banking plan. The customer experience is greatly improved over the previous two steps as the financial institution spends time conducting regular feedback surveys and integrating the results.
If a financial institution is in one of the last three stages, it is likely building on concepts and technologies that innovative banking providers have already implemented and tested with customers. Institutions in the Accelerator space are starting to get more creative with their automation technology as they build customer personas based on the data they collect.
( To listen: Unlock robotic automation for growth)
Although there are a few more institutions that are in this Leaders stage than in the Starters stage, very few banks and credit unions reside here. Banking providers in the Leaders category already have a complete CRM system with personalized 1-to-1 omnichannel experiences and technology.
Don’t underestimate the small players:
Big banks and credit unions inevitably have more resources, which can help in the tech race. However, small financial institutions are showing that they can fend for themselves, despite the constraints of lower budgets and fewer team members.
Go from beginner to leader
Whatever category they find themselves in, banking providers can easily adapt their operations to meet the expectations of an âAcceleratorâ or, better yet, a âLeaderâ. And it should start with three main steps.
1. Rapidly deploy new CX technology
The importance of technology to the banking industry was predicted in the 1960s when Intel co-founder Gordon Moore presented his theory – eventually called âMoore’s Lawâ – that the evolution of technology would double everyone. the two years (more technically, his theory was based on the number of transistors in the integrated circuit of a computer). In many ways, his prediction came true.
Executives in the banking industry recognize this and many are trying to adapt. The Total Expert report found that four in five respondents are working on implementing new technologies, 73% are connecting new processes to their infrastructure and more than half (51%) are partnering with fintechs to develop their technological stacks. Almost one in two (48%) establish new team roles specifically to support a digital customer experience.
Some institutions may argue that the cost is not justifiable – how do you budget around a new technology if it evolves so quickly that it costs more to upgrade than just seeing what comes next?
While this is a valid question, the report finds that investing in the right technology now pays off if the budget is focused on retaining existing customers. For example, the report found that acquiring new customers can cost up to five times more than retaining existing customers. And investing in ways to retain even 2% of customers equates to cost savings of up to 10%.
It is important to look to the future and to the next customer segment. However, onboarding new customers is up to five times more expensive than satisfying existing customers.
While Starters are slowly scaling back the implementation of new technology, adding new processes and procedures as well as partnerships (and not adding new roles focused on customer experience), 100% of Leaders have found that the technology and new processes were a key method for success, and 83% say it is essential to add new members to the team.
( Dig deeper: Top five trends in banking customer experience for 2022)
2. Spend time on data to understand personalization
Messaging is a key method of providing customers with the banking information they need, but there are still many institutions that are mass-distributing the same text messages to consumers without any personalized touches.
The individualized element is crucial. People are easily frustrated with marketing communications that are not relevant to their financial situation. They benefit from messages that help them better understand their finances.
Yet all of this is difficult if banks and credit unions haven’t used consumer data to create customer profiles. Total Expert even goes on to say that it is, by far, “the biggest challenge financial institutions face in improving the member-customer experience”.
3. Upgrade the customer engagement infrastructure
Finally, one of the best ways for financial institutions to improve consumer journeys is to find unique ways to engage people. However, starters in the banking industry are not taking these steps. Total Expert found that 0% of Starters “have customer engagement strategies in place”, and even at the next level, over half (56%) of Managers are not maximizing their customer engagement strategies.
Examples of customer engagement strategies the report cites notify customers of low usage of online and mobile banking, low volume of debit / credit card transactions, abandonment of online applications as well as account fraud notifications. Accelerators and leaders in the financial world have already integrated all of these push notifications into their banking applications.