Consumer Expectations: Changing Consumer Expectations: An Invitation to Banks? | So Good News
My daughter recently got her own bank account. He doesn’t care about visiting a branch, or talking to someone. For all intents and purposes, his “bank” is software. They build trust based on what the banking software offers. The difference in expectations is huge and I’m not sure the banks will step in and make the necessary changes.
It is the wake of the banks. Those who listen will be able to leverage customer experience as a way to differentiate them. Those who don’t soon realize that in a world of empowered customers who are spoiled for choice, small experience providers fade into obscurity.
In the past decade, consumer expectations have begun to change more rapidly than the banking industry has. NTT Global Banking and Investment Guide to the 2020 Global Customer Experience Benchmarking Report has revealed a significant difference in how banks view and act on customer experience. Among the banks and finance companies surveyed, 83.9% agreed that CX offered a competitive edge, while 60.9% felt it was significantly different. However only 17.4% of organizations surveyed agreed that CX is the most important part of the organization’s strategy.
There are four global trends in consumer behavior that will increase over the next decade:
1. Users build trust differently than before. Historically, consumers have built trust in a bank through the presence of a brick-and-mortar location they can visit and the relationships they build with the bank. While this may be especially true for many customer segments, we are seeing a new generation of consumers who build trust based on the quality, responsiveness, and consistency of their experience.
2. Customers are more sophisticated than ever, and their indicators are changing. They have high-end apps (such as Amazon, Google, and Instagram) installed on their mobile devices and expect the same from their financial services providers.
3. Consumers have many choices and rightfully so. Consumers have many choices when choosing financial products. In days gone by, the limited choice of financial service providers was a factor that made consumers more flexible. Now consumers want flexibility and the ability to change financial products to meet their needs instead of the other way around.
4. The changing demands of consumers require a new urgency. The changing needs of consumers require a rapid evolution of features and activities. Today, being in the classroom is more difficult than being the best. The level of innovation has long been critical to success. Financial services startups have contributed to the large gap between the changing needs of consumers and the response of banking companies to create opportunities for themselves.
There are some common themes in how they approach customers:
1. Work backwards from the Client: They often choose a specific product to use and step back from the consumer’s needs to create the right offering instead of moving forward from the product.
2. Create on behalf of the Client: They use innovative technology to create on behalf of their customers, often focusing on entertainment and activities that allow customers to create habits.
3. Try to put technology in the hands of customers quickly: They understand that cycle time is important and most Fintechs practice design-build-test-deploy cycles to continuously deploy new capabilities and functionality.
4. Develop functional skills in design: They understand the functionality and scalability of their systems often before the first line of code is written.
5. Look at the constant change of inputs: They monitor and measure the metrics that drive superior customer service and continuously improve. This has helped these companies capture wallets and, more importantly, consumer sentiment.
As consumers develop new habits, the risk for banking companies is that they become disconnected from their customers, turning them into financial channels.
It is imperative that banking companies around the world recognize and start prioritizing Consumer experience as a way to drive growth:
1. Selection: Invest in understanding your customers’ needs and step back to find solutions on their behalf. Put choice, choice, and control in the hands of the Consumer. This is very different from the past.
2. Price: Financial instruments should be valued based on the value offered and not the value received. Cost-based pricing forces service providers to raise their service levels and quality. It requires a critical review of value propositions and delivery methods.
3. Good: Focus on the inputs that drive customers easily rather than on the results. The traditional methods have been out and the financial results are focused. When done right, it will help customers eat what they want, where they want, and how they want.
When banks plan, organize, and execute against these three pillars, Consumer information can unlock non-linear growth and drive operational efficiency. Technology companies have realized this and built a Trillion dollar market. It’s time the banking industry recognized and prioritized customer experience as a driver for growth.
(The author is President & Chief of Customer Experience, Kotak Mahindra Bank. Opinions expressed are personal)