Just the other day I was talking to one of my friends who happens to be a fintech executive. “What makes you better than the retail banks and how are you growing faster?” I asked him. I will share with you his words of wisdom towards the end but it was also clear from his response that banks themselves were responsible for the negative sentiment they face today.
With a better alternative, which most fintechs provide, customers would change their bank at the drop of a hat. More importantly customers mentally leave their banks years before they actually cut the cord. I still have my checking account with the same bank from a decade ago but have had to look outside of my bank to serve my changing financial needs. These extend from the simple credit cards to personal financial management tools, payments, retirement as well as investment planning. Ironically, banking commercials always seem to revolve around celebrating milestones and personal events in one’s life although you never get a relevant and timely offer from them in real life!
Have we already reached a tipping point as far as retail banking is concerned? PWC thinks so. In fact they point out the year 2015 as the tipping point for this transition.
There are numerous surveys that highlight the challenges traditional banking has in addressing the changing needs of customers. We decided to take a look beyond the rhetoric to what the actual data was telling us. After all 88% of the US top 25 retail focused banks have corporate twitter handles and over 76% have dedicated customer support handles. We decided to analyze these conversations over the last 6 months which incidentally covers the crucial peak holiday season of the year as well.
Figure 1 : Analysis of Customer tweets with top 25 US Retail banks (SEP 2014 - MAR 2015)
Overall negative sentiment was at least 6 times more than positive sentiment. Service quality turned out to be the number one indicator of positive and negative sentiment. But service quality can relate to a lot of things so we decided to investigate the words and experiences leading up to the sentiment.
Digital access/payments, security and fees/charges and customer service emerged as the top 3 factors that led to either positive or negative sentiment for the brand. This is significant because they even feature among the top reasons customers exited or stayed with the bank.
Additionally 36% of the customers voicing their negative sentiment online considered or had exited the bank itself. The top reasons for leaving, other than poor customer service was Fees & Charges, Access/ Mobility and Security. 92% of those who said they are leaving the bank attributed it to one of these 4 reasons.
These frustrations reflect the changing expectations of a generation of customers used to a world of instant gratification. More importantly the insight reveals a perfect storm whereby the age old problems of siloe’d banking are feeling the pressure of pervasive banking expectations from customers. Millennials form the bulk of this generation as do most of us who have grown up alongside the online world.
My conversation with the fintech executive confirmed this as well. “Banks essentially operate in big silos” he said. The different business or product units within the bank essentially function as different companies with their own structure and product offering whether it is mortgage, credit cards, CASA accounts or retirement/investment planning. The different silos have no incentive to share data and are at times oblivious to the fact that they are serving the same customer!
So what can banks do to address this challenge? Let’s start by defining these expectations as quite simply a need for banks to know, empower and wow their customers.
Know me – Know your customers, their like and preferences from their social digital activities. Form a dynamic and complete view of the customer, synthesized from information within and outside the business, which can inform every aspect of customer engagement.
Empower me – Empower your customers so that they can transact anytime, anywhere, across any channel. Delivering continuity through the engagement process and empowering them with relevant information and tools is very critical to win them and keep them.
Wow me – Strive to provide the right service, the right product, the right price every time and at the right time. You need to anticipate their needs, and provides them simple, easy, and relevant products and services.
Most of the significant factors that emerged from the analysis could be classified and addressed under the objective of know me, empower me and wow me.
Figure 2: Situations or experiences that led to either Positive or Negative Sentiment
To achieve these objectives banks need to implement a “Customer In” instead of “product out” approach to their banking and underlying technology investments.Though a lot of banks have already started addressing this, there are 3 ways they can go about this progressive transformation.
I will address these ways in my next post but please do write in with what your experience has been on this front.
Mark Atherton is the Group Vice President of the Financial Services
Business Unit at Oracle. The views expressed on this blog are his own
and do not necessarily reflect the views of Oracle. He can be reached atmark.atherton AT oracle.com.