Blog Article

In banking, no-one can hear the customer scream

Posted by Graeme Yell

Graeme Yell

According to our recent Appearances can Deceive report financial institutions have a strong opportunity to build a competitive edge with better customer service. This post outlines three ways in which financial services leaders can set about this.

It’s fair to say that the finance sector has been a victim of its own success. Before the financial crisis, when the money was flowing in regardless and from a variety of sources – among them complex proprietary products  – there was less need to invest in customer service.

Banks are no longer a ‘venue’
Now, though, in a highly competitive market, customer service really matters. Stung by the financial crisis, and increasingly empowered, customers are screaming even louder. And disruptive new market entrants are happy to step up from left field to provide the service they demand. From PayPal to Simple and the rapid rise of mobile banking, there is a fundamental change under way around who owns the interface between customers and their money. As Author Brett King says: “Banking is no longer somewhere that you go, it’s something that you do.” Competitive advantage today is more about trust, transparency and service than product features and apparent strength.

Distanced from customers
Many firms are complex and bureaucratic in structure, and have grown in a way that has put distance between decision-makers and customers. A senior bank executive to whom I spoke recently suggested that many financial organizations had become so complex and smothered in management layers that “no-one could hear the customer scream”.

Three ways to get closer to customers
So what’s a bank to do? Many are still in crisis mode, struggling with increased regulation and the aftermath of the crash as well as restive customers and new competition. As a consequence they are focused on cutting costs – but this sits uneasily with the need to simultaneously become more customer-oriented. Or does it? Our experience suggests there are three ways in which financial organizations could improve customer service without the need for lengthy and expensive internal programs.

1. Reorganize – but in a targeted way
If no one can hear the customer’s voice, then there’s clearly a structural problem. Many organizations are designed with unclear accountabilities and too much complexity. A targeted organization review focusing on where and how the institution makes money and the critical capabilities to support it vs. a ‘salami-slicing’ approach to cost cutting, will shorten the distance to the customer sustainably and cost effectively.

2. Rebuild trust
Rebuild trust with customers, taking advantage of the brand familiarity that can help defend against new competitors. This is the approach taken by Barclays with its  ‘Transform’ programme, which places a strong emphasis on values like respect and service, linking them with performance and remuneration. The bank has also moved to articulate its purpose: “Helping people achieve their ambitions – in the right way.” in order to position itself as making a positive contribution to the world, much as multinationals like Unilever have done.

3. Develop customer-oriented leaders
And an exceptionally cost-effective way to improve customer service is to start with leadership, because leaders have a proven, direct impact on customer service levels. Leaders influence climate – “what it feels like to work here” – by up to 70 percent. And climate affects team performance, which in turn impacts customer service, by up to 30%. Train leaders to create better climates, and customers will benefit directly.

I have worked with one major bank on a development program aimed at makng branch managers better at motivating and engaging their staff. Diagnostic surveys run one year after the program showed that 73% of leaders had improved their climates, reducing staff turnover and sickness levels, and improving over half of the bank’s regional customer satisfaction levels. The value generated per leader, in terms of cost saving and increased revenue, was $43,000.  Overall, the program cost significantly less than refurbishing a single branch.

At this bank, at least, customers no longer have to scream to make themselves heard.

This is the second in a series of six blogs focusing on the financial services sector – sign up here to receive the full series and learn about the practices that will boost performance, build customer focus and trust.

More blogs in the series:
1. Why are things not what they seem in financial services? By Jean-Marc Laouchez
2. In banking, no-one can hear the customer scream. By Graeme Yell
3. Innovate differently. By Jean-Marc Laouchez
4. Beyond dealmakers. By Madeline Dessing

* For more detail about our findings on customer service in financial services, download the Appearances can deceive white paper or visit our website to find out more about the research.

 

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