by Kyle Hutchins, Director, Customer Experience Practice
In highly regulated, commoditized industries, the best way to differentiate is to provide a consistent, effortless customer experience. This is evident in the financial services industry, where Forrester Research declared customer experience as “one of the key skills for survival”.
At West Monroe Partners, we see financial services companies – specifically consumer oriented banks – marketing their differentiated customer experience, but rarely exhibiting the fortitude and resource allocation to execute. We challenge and advise our clients to “bridge the gap” between marketing (setting customer expectations) and operational execution (fulfilling the brand promise). A recurring topic of conversation with direct financial implications is the New Account Opening experience. This article will explore the opportunity, surface recommendations and provide examples for your consideration.
New Account Opening
As banks vie for new customers and pursue a greater share of wallet, the new account opening process and associated customer experience, becomes a key success factor. Our experience with banks has given us a unique perspective of the new account opening experience, leading us to conclude it is ripe with opportunity to increase completion rates by new and existing bank customers..
In response to this, we have evaluated three key dimensions of the new account opening experience – products, channels, and interactions. Summarized below are the key findings and recommended next steps for each dimension:
Products – We find consumer products offered by banks to be emotionally drab and intellectually confusing. Often the difference between three different products was a marginal, escalating fee for the ability to conduct a few more monthly transactions. At a minimum, this is a weak value proposition. More accurately, it is evidence that banks tend to think inside-out instead of understanding and tailoring their solutions and messaging to the needs of a customer who’s shopping for a new banking relationship. To be clear, it is important to structure products based on internal profitability models, but counterproductive to directly impose those models onto your customers – especially during new account opening. More effective is balancing internal needs with those of prospective customers – requiring analysis of both perspectives to arrive at the proper decision. In addition, we recommend presenting and packaging the products (and services for that matter) in a consumable manner that aligns closely with customer needs and purchase behavior. An excellent example is USAA’s automobile insurance product. What once was marketed as three separate products (auto insurance, auto finance, auto advise), has evolved into a needs based event (buying a car) in which products and services are organized around key steps in the process – finding, insuring, financing, selling, and maintaining.
Channels – We find that depending on corporate strategy, geography and target market, a bank’s preferred channel varies for new account openings. What does not vary is the need to provide choices to customers and integrate the channel experience. New account opening is not a contiguous process for customers, often with starts and stops and different channel needs at each step – research, evaluation, decision, onboard and service. The best companies balance letting internal cost drivers determine the preferred channel with allowing customers to open new accounts their way. We have seen many banks require customers to speak with someone to get a product quote, requiring creation of an online account to compare products, or requiring a visit to a branch to complete the new account opening process. These constraints and the entire new account opening paradigm should be challenged. Imagine if banks borrowed from a world class brand like Apple, and allowed for new account opening to be originated completely online, yet provide the option to schedule an in-person visit if desired to finalize documents or build a relationship with the banker.
Interactions – We believe that complete end-to-end processes like the new account opening experience should strive to be effortless – in perception (customer perspective) and in reality (corporate perspective). While there are several measurements of customer satisfaction and loyalty, the predictive power of minimizing customer effort trumps others according to research by the Harvard Business Review. In practice, customers evaluate each interaction while opening a new account. The more these interactions are seen as effortless, the stronger your brand perception and potentially customer profitability. We qualify this statement by saying “potentially” because your bank’s ability to execute effortlessly internally will determine cost and ultimately profit margin. The reality of the new account opening experience at most banks, even those who get above average marks from customers, is that the process is manual and paper intensive. It often requires re-keying of information into multiple screens and expensive training, ultimately resulting in something that is costly, fraught with error, and detracts from employees’ ability to provide a differentiated customer experience. Technology vendors like Adobe and Microsoft are challenging the incumbent service bureaus (Fiserv, Jack Henry, et al), attempting to provide a more seamless and automated experience for processes such as new account opening. Smart banks will include this class of vendors in technology evaluations, and build a business case for rethinking the new account opening experience.
The opportunity exists for banks to differentiate themselves on customer experience, particularly by rethinking key end-to-end processes such as new account opening. During this redesign, the leading banks will consider both customer and operational perspectives, borrow from best in class brands and implement a unique experience given their product, channel, and interaction mix.
Forrester Research 2010, Customer Experience in Banking
HBR 2010, Stop trying to delight your customers