Customer Experience is Critical to Banking Differentiation

Industry: Banking & Credit Unions
Capability: Customer Experience
A positive and effortless customer experience can result in increased customer satisfaction, loytalty, advocacy and greater customer lifetime value.

A new mobile generation of consumers, the rise of direct pay and online financial services, and an increase in banking service fees all contribute to an on-going shift in how banking organizations service their customers. With an almost endless pool of financial institutions vying to provide a wide range of products to customers, banking organizations must strive to provide the most superior, consistent and effortless customer experience in order to acquire new customers, retain existing customers or win back lost customers. This requires a shift from a transactional mind-set to one that is more focused on the relationship with the customer.

West Monroe Partners defines customer experience in the banking industry (commercial and individual consumers
who own loans and deposits at an institution) as the sum of the customer’s interactions with an institution across all touch-points, and the customer’s resulting perceptions of the brand. A positive and effortless customer experience can result in increased customer satisfaction, loyalty, advocacy and greater customer lifetime value.

Following are four key driving forces converging to heighten the importance of an optimized customer experience in banking.

Decline in fee income due to regulatory changes.
To help offset declines in fee income, banks need to improve customer onboarding programs to revive retail account profitability. Legislative and regulatory changes have reduced a substantial portion of fee income from retail banking activities affecting what drives the profitability of a consumer relationship. In response, many banks have eliminated rewards programs,instituted requirements for customers to avoid monthly maintenance fees, and increased fees for other services. A more effective approach to offsetting fee income can be achieved through better onboarding of new customers, which helps cultivate primary banking relationships by encouraging new customers to adopt additional services, such as direct deposit and online bill payment.

Mobile generation of customers.
Generation X and the Millennials are aging, causing a shift in the core demographic of bank customers and how they choose to interact with their financial institutions. These customers prefer to bank via online or mobile device (smart phones, tablets, etc.), instead of at the traditional branch.

Rise of the direct pay and online services.
As a result of this shift to mobile and online activity, many other companies are allowing customers to pay directly
with their phone and other pre-paid tools (e.g., Starbucks and other pre-paid cards), avoiding banks all together. In addition, gone are the days where a customer would do “one-stop” shopping for all money products through his or her bank (loans, term investments, deposits). Today, that customer can get many of these products through online companies—oftentimes more conveniently than through his or her traditional bank.

The great fee debate.
With all of the options readily available, customers are looking for the best value for their money, and are looking for the cheapest way to bank. This means they are more likely to choose banks with the lowest or no fees associated with their services. A bank must differentiate itself from its competitors to avoid commoditization and margin erosion.

West Monroe Partners’ Customer Experience Maturity Model for Banking
In order to optimize its customer experience, a banking organization must understand the needs and behaviors of its customers and be equipped to use this insight to take action that will add value to the experience. West Monroe Partners has identified four major dimensional capabilities needed to deliver an effortless customer experience:

  • Customer Experience (CX) Strategy & Design
  • CX Information Management
  • CX Insights
  • CXDelivery

Conclusion
Developing a unified vision and strategic blueprint that is consistent with the brand promise is the first step toward providing an effortless, data-enabled, insight-driven customer experience in banking. Integrating customer data and platforms in order to develop a single customer view is the information-based foundation of a customer-centric banking organization. Leveraging this information and analytic-based insights that, along with new technologies, deliver multi-channel, digital, and optimized customer experiences can offer the competitive differentiation your bank needs to compete and win in today’s marketplace.

For more information on West Monroe Partners’ Customer Experience for Banking capabilities, please contact:

Dave Nash, Director - Customer Experience, at dnash@westmonroepartners.com
Robin Hinds, Senior Architect and Co-Lead - Midwest Banking, at rhinds@westmonroepartners.com
Neil Hartman, Director and Co-Lead - Midwest Banking, at nhartman@westmonroepartners.com
Ken Siegman, Director - West Coast Banking, at ksiegman@westmonroepartners.com
John Vance, Senior Manager - East Coast Banking, at jvance@westmonroepartners.com

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