In a matter of only a few weeks, the world of banking has experienced a level of disruption that will change everything that had been the norm in financial services. There has not only been a major change in the way financial institutions conduct business, but in the way employees do their work and the way consumers manage their finances.
Banks are first knee jerk reactions have been to try to save costs because of the financial stress that results from the massive shutdowns caused by COVID-19. Banks must use this time of disruption to consider reinventing themselves from the inside out. Right now, there is an opportunity to reevaluate how technology, insight and analytics can accelerate the future growth and competitiveness of financial institutions globally. Banks that go beyond looking for efficiencies to create completely new business models that will impact all components of performance will be the ones that are most successful during and after this crisis.
The impact of COVID-19 can be felt in every facet of banking. A recent article by Deloitte highlights the various implications, relevant questions and actions that banks should consider in every domain from branch / ATM operations to liquidity and capital management and even LIBOR transactions. Though there are several considerations across the banking value chain, none of these will drive impact and value if they do not keep the customer at the center. In normal times, customer experience in banking is about making customers happy—with the result that they are more loyal, use products more, and cost less to serve. In the context of COVID-19, superior customer experience means clarity and transparency, support for digital tools with which many customers are still unfamiliar, and new products and services for customers in distress.
A key priority for banks is to support the use of digital channels so customers can bank form home. Seems fairly obvious right? However, contrary to popular belief customers in general struggle with the transition to digital. In the US, while the most satisfied customers use digital multiple times per week, the second most satisfied customers do not use digital at all. The least satisfied banking customers are those who use digital tools infrequently, less than once per month. This is because customers go through a learning curve as they adopt digital tools, and most banks under-support their customers in the adoption journey.
In China, a country that was the first to be effected by COVID-19, several banks have set-up online portals which explain available services and the actions they were taking in the context of the COVID-19. These portals provided video servicing and sales capabilities, as well as educational videos for investors who were worried about the impact on their portfolios. One bank launched an integrated digital COVID-19 program: banking services, wealth-management services, tutorials, and timely advisory content, as well as non-banking-related services ranging from help with online shopping to doctor appointments to the delivery of disinfectant. Another launched a digital site that combined information on how to use online tools to bank remotely with information on public-health awareness and a way to support the local Red Cross Society.
Banks must acknowledge that improving customer experience is not just limited to the front end – it can have an impact on efficiency as well as employee experience. To improve experience and efficiency at the same time, many banks will need to reset their customer-experience priorities in general, and their approach to customer-experience measurement in particular. Some banks do not know which parts of their digital experience work well or not, have little sense of which actions help customers learn how to use digital tools, or do not know where the opportunities for operational trade-offs are. In other words, they lack an interpretation of what matters to their customers and what drives behavior. To navigate this banks should (1) structure customer experience measurement around journeys, not interactions at a single point (2) link measurement results directly to the potential impact of efficiency (3) set goals on how experience and efficiency move together and (4) extensively use predictive analytics to determine how to be successful with a vast majority of customers.
In tandem with customer experience is also employee experience. In fact, research suggests that companies that excel in customer experience have 1.5 times more engaged employees than companies with a record of poor customer experience. Greater emphasis on teaching customers how to use existing digital services will also require current staff to engage with customers in new ways and learn new skills. Banks can use this moment to significantly improve the quality and availability of re-skilling programs, including introducing externally meaningful credentialing so that the new skills are portable. This will equip employees with the skills they need to support new digital experiences. And in many markets, it will not be appropriate for banks to reduce staff at a time of crisis, making re-skilling the only sustainable way to fill existing gaps.
Enabling digital channels coupled with having a solid customer and employee experience will allow banks to introduce new experiences for their customers, many of whom will be in a highly uncertain and sensitive state of mind. Preexisting financial vulnerability plus new stresses from COVID-19 will make it harder for banking customers to navigate complexity or make the best financial decisions. For example, research suggests that financial scarcity takes a significant psychological toll and leads to short-sighted decision making. The key design principles for serving distressed customers include awareness, simplicity, transparency, clear expectations, and frequent status updates. Many services will be affected, including, but not limited to, pausing loan payments, refinancing home-equity loans to provide near-term liquidity, and enabling customers to restructure existing loans to name a few examples.
A well recognized Singaporean bank rapidly introduced a comprehensive solution for small and medium-size enterprises (SMEs), including six-month property-loan principal deferments, temporary bridging loans, fee rebates, new digital account-opening services, and next-day and collateral-free business loans. The bank complemented these initiatives with an online “SME Academy” to help business owners navigate the new context.
In conclusion, for banks, investing in customer experience was an imperative before the current crisis, both from a “good business” perspective and a “good bank” perspective. Now, these factors are even more relevant. Delivering on customer experience will be an integral part of how banks reassert their positive role in society during the COVID-19 crisis. By addressing new customer needs and concerns while improving their own efficiency and effectiveness, banks will not only create long-term shareholder value but also be a stabilizing force in a very uncertain environment
Via: www.smallbiztrends.com
