Over my career, I’ve been honored to serve as Chief CX Officer for Bank of America, Merrill Lynch, and Allstate. Over the decades, we’ve all seen massive change – specifically, the demand of Digital Natives for contextual relevance when dealing with brands. In banking, non-traditional competitors, unhindered by a bank’s legacy silos, are delivering against these expectations and beating traditional banks on many customer metrics. Given this, it’s no surprise that 55 percent of bank executives view non-traditional competitors as a threat to their business.
Traditional banks are finally waking up, now realizing that delivering the experience consumers want is the key to surviving in an increasingly competitive marketplace. This includes focusing on hyper-personalizing customer interactions, as well as on understanding the three pillars of an exceptional customer experience: trust, transparency, and technology. Each pillar is important for a different reason, which is why we often advise financial institutions to frame their customer experience strategy using these three pillars as the foundation.
In order for banks to develop trust, customers need to trust that their bank is telling the truth about their products and services. If the bank says they offer 3.5 percent APR on a CD, as one example, then the consumer needs to trust that this is the actual rate they’ll receive on their deposit. More than trusting the bank’s communication about their own rates, customers also need to trust that banks are giving them the best possible rates. If you convince customers that you’re being open and honest about your products in the full scope of the marketplace, then you’ll win.
Progressive Insurance is a great brand at building trust. They’ve built significant trust in the marketplace by providing competitor rates right on their homepage. Even if the customer ultimately doesn’t buy from Progressive – and many don’t – they still trust that Progressive is honest about their products, increasing the probability that the consumer will use Progressive some time in the future.
Trust is especially vital because banks aren’t only facing other financial institutions; tech companies have made dramatic inroads, which is clear from the 73 percent of consumers age 18 to 34 who are willing to buy financial products from them. Apple may not open a retail bank, but if they partner with a financial institution to provide banking products? Imagine the number of young consumers who would flock to that service. Focusing on building consumer trust may not give you a brand reputation like Apple, but it can help retain more customers and grow relationships more efficiently and effectively.
Consumers are increasingly interested in co-creating financial products. Let’s use mortgages as an example. No one goes shopping for a $350,000 mortgage; what they do is determine how much of a monthly payment they can afford, then use that number to reverse-engineer the loan amount they want to take out. Banks need to be transparent when it comes to creating financial products. This is critical as consumers are becoming more focused on self-service in their financial lives. If a retail bank makes it easy to build an IRA or research a home equity line of credit, then customers become more engaged in the experience and loyalty to the brand increases
The right technology is also critical to creating the experience that Digital Natives are demanding. Without the right technology, you can’t build the kind of experience that consumers want with their banks. Customer-facing technologies such as mobile apps and websites need to make it easy for the consumer to perform self-service tasks, co-create product bundles, or contact a bank employee for assistance. Banks need look no farther than those non-traditional competitors and fintech firms for the kinds of technologies consumers want.
Traditional retail banks are under assault on multiple fronts. Digital-first financial firms, non-traditional competitors and fintech brands alike are all seeking to topple traditional banks from their pedestal. Banks can improve their competitive position with a customer experience focus, but that focus must include (1) putting the right technology in place, (2) being transparent with their pricing and product data, and (3) building trust with consumers. Using these three pillars as the foundation of your customer experience strategy will drive the customer metrics that improve your competitive position in the marketplace.