Unlocking the Potential of Customer Experience in Retail Banking

Customer Experience (CX) has bubbled to the top of strategic priorities as retail banks (and firms across every industry) strive to make the connection between customer interactions and desired business outcomes like retention, profitability, and relationship growth. The problem isn’t a lack of desire to drive towards customer-centricity or a lack of information on what good customer experiences look like or how to design them. A recent search on FinancialBrand.com revealed over 75 pages of articles discussing CX in financial services, the majority of which talk about ways to make customer interactions easier, more relevant, and more brand positive. Our own market research shows that 88 percent of business leaders cite better CX as “extremely important” over the next five years. However, only 35 percent of them feel prepared to get customer-centricity right.

Unfortunately, since the publication of Pine and Gilmore’s seminal article “Welcome to the Experience Economy” in the July-August 1998 issue of the Harvard Business Review, business leaders have been confusing Customer Service and Customer Experience. As a corollary, metrics such as Customer Satisfaction (C-SAT) and Net Promoter Score (NPS) have emerged and become accepted as true measures of CX excellence as opposed to measures product/service quality and loyalty. Carrying that forward, today’s retail banking leaders often focus on the relationships between C-SAT and NPS scores to key financial outcomes to justify their belief that those CX metrics are key drivers of success.

While that may be true to an extent, here’s the rub. The C-SAT and NPS scores touted by retail banking leaders are typically only measured at a relational level once or twice a year, and there is a tremendous amount of bias behind them. What’s missing is true insight into whether customer needs are truly being met and where the real opportunities lie for driving tangible, measurable outcomes as customers move through their lifecycle with the bank. There is no one-size-fits-all measure of CX, and banking leaders can no longer simply fill their websites with stock photos of smiling customers and promote slogans like “Customers First” while claiming success with relational C-SAT and NPS scores.

Over the last two decades, companies like Ritz Carlton, USAA, and Amazon have championed the idea that profitability, loyalty, and longevity hinge upon business strategies built on the foundation of purposefully designed and executed customer experiences. However, retail banks have been slow to jump on the CX train. While most retail banks have invested heavily in their digital channels over the last 10-15 years, many still struggle to create well-orchestrated experiences that are both easy and relevant and to connect those experiences across digital and non-digital channels. There is not an omni-experience strategy or enterprise-wide CX plan in most banks, which begs the question: are these banks really “customer first”?

A big part of the issue is that so many leaders continue to be enamored with those relational C-SAT and NPS scores that tell them the experience is great and driving bottom-line value for the bank. In recent talks with a senior CX executive at a large U.S.-based retail bank, she commented that, “some leaders get it, while others still struggle to understand the power of CX.” She acknowledged that some of the disconnect results from an inability to consistently and effectively measure the impact experience changes have on key business outcomes. She added that the use of more qualitative CX-related terms (such as “moments that matter”) hinders buy-in in the more quantitative world of retail banking leaders.

So how do we start to overcome some of these barriers in the short-term?

Start small and place some small bets. Give your people the opportunity to prove their CX case. Identify an experience that you know is ripe with opportunity (e.g. onboarding) and develop a deep understanding of your customer’s needs with respect to that experience. Identify and prioritize quick-wins that can be easily measured and define the right metrics. As you test solutions for the “moments that matter,” tie your metrics back to desired business outcomes to demonstrate the impact on a smaller scale. Establishing a pattern of quick wins that drive meaningful business outcomes is the strongest argument for large-scale CX transformation and for breaking down the walls of relational C-SAT and NPS scores as the only enterprise-wide CX measures.

What about the long game?

A one-size-fits-all approach to arriving at the CX promised land is a myth. Your journey hinges on your individual context. CX leaders today must start by taking an introspective look at themselves to understand who they are as a leader. Then they need to take an honest look at their current situation and culture. What is the CX climate within the bank? What are the CX assets at your disposal? And finally, CX leaders must build a battle plan that accounts for individual leadership style and the context in which they work. To learn more about driving CX transformation within your own organization, check out our latest perspective, “Lead Where You Stand”.