The CX factor driving financial services transformation

February 2018  |  COVER STORY  |  BANKING & FINANCE

Financier Worldwide Magazine

February 2018 Issue

In a complex, competitive and rapidly changing financial environment – engendered by the likes of regulatory obligations, disruptive technologies and increasing media fragmentation – the pressure is firmly on financial services (FS) institutions to drive strategic growth and secure future success.

Among the options for achieving this is to boost customer experience (CX) – an essential aim if the FS industry is to transform and attract new customers, as well as retain existing ones. However, giving fresh impetus to CX is no easy task. The reality is that modern-day customers are sophisticated animals, demonstrably au fait with the latest social and technological trends. Meeting their expectations is therefore a major challenge.

Customers today have many more channels and options for how they bank,” says Tom Kimner, head of global marketing and operations at SAS Institute. “Some, in fact, are questioning whether they need traditional banking at all. Historically, banks were trusted financial institutions for lending, making deposits, cashing cheques, savings, and other financial needs. With the advent of mobile technologies and the near collapse of the financial markets in the late 2000s, the nature of interactions with banks changed, along with the view about just who banks were looking out for.”

Laying bare customer attitudes to financial services is EY’s 2017 ‘Global Consumer Banking Survey’, which outlines how banks can remain relevant and achieve higher satisfaction and loyalty with their customers. According to the survey: (i) 40 percent of customers expressed decreased dependence on their bank as their primary financial services provider; (ii) 33 percent of consumers see little differentiation among banking providers; and (iii) 26 percent of customers trust their banks to provide truly unbiased advice, a total which lags well behind that of digital banks and FinTechs.

“An overwhelming majority of customers consider their banking relationship merely transactional and are seeking better experiences from banks,” suggests Fabrice Albizzati, a partner in EY’s FS advisory practice. “Customers are looking for service providers that know them, that  they can trust and, in turn, stay loyal to. FS institutions, therefore, need to optimise CX and implement a more personalised approach to recapture customer loyalty.”

Indeed, according to a 2017 report by Russell Reynolds Associates – ‘What Does Organizing around the Customer Experience Mean for Financial Services?’  – this loyalty is being hijacked by FinTech players able to offer products and services and a speed of service the FS industry finds difficult to match. Previously, notes the report, the finance industry prioritised product development and distribution over CX – a product-centric model which meant that FS institutions could grow and retain customers, mainly by differentiating themselves. Those days, however, are over.

“The result is not only a more crowded marketplace, but consumers who are far more demanding”, states the report. “These consumers are increasingly shopping around for the best experience, rather than the best product. When quality and value are comparable across products, why would customers settle for anything less than a seamless, interactive experience?”

Expectations heightened, patience lowered

With consumer attitudes having shifted markedly over the past 10 years, the FS industry is now faced with a new dynamic that is having a major impact on the services it provides and how they provide them. For many FS institutions, this involves transforming mindsets that have been fixed for decades.

In the view of Andy Berry, vice president EMEA at Pitney Bowes Software, it is the ability of a consumer to become a ‘citizen journalist’ that has transformed the dynamic between FS institutions and their customers, shifting it from physical to digital, from transactional to experiential. “Sharing experiences online on websites, forums, consumer ratings’ sites and message boards has empowered customers and created a landscape in which consumers are no longer willing to accept below-par service,” he says.

Customers today have many more channels and options for how they bank. Some, in fact, are questioning whether they need traditional banking at all.

Yet for all the pressure to change this new dynamic brings, the reality is that many FS institutions are still very much at the embryonic stage of transformation as far as CX is concerned.

“Expectations have been heightened and patience lowered,” states Robert Voth, leader of the global consumer financial services practice at Russell Reynolds Associates. “FS institutions have received the CX message loud and clear. However, decades of traditional processes and service philosophies have to be rewritten to successfully deliver what the customer of today expects.”

To meet contemporary financial needs and habits requires FS institutions to develop the experience that surrounds their products and services first, then see them through regulations and the profit cycle. Generally, institutions have a tendency to develop a product and run it through regulatory and revenue checks first, then roll it out to specific segments. “Reversing this is an exhausting and challenging exercise for FS veterans unused to digital competition and speed,” adds Mr Voth.

Social and technological trends

One of the major factors driving FS institutions to up their CX game is social media – platforms which disseminate information virtually instantaneously and where the penalty for perceived poor CX is often a no quarter given critique that has the potential to be seen by millions.

“The increased use of social media and the pace at which information moves in the digital age has a dramatic impact on financial and non-financial institutions alike,” says Mr Kimner. “The risks for missteps by banks can be great, most notably the downside risks around how customers are treated – either individually or collectively.”

A good example of the power of social media was the experience of Bank of America when it notified customers it was instituting a fee to use debit cards. A social media storm immediately ensued, and such was the frenzy, the multinational banking and financial services corporation was forced to back down. Wells Fargo also fell foul of social media when it created unauthorised accounts for its customers. When this action was digested by the online community, customers voted with their feet and swiftly took their business elsewhere. Clearly, such activities erode trust very quickly and can have a major impact on an FS company’s bottom line.

Given the influence that social media platforms possess, the need for FS institutions to boost their CX strategies is clear and unambiguous. That said, with technological trends developing apace, numerous risks and challenges are involved in doing so.

“There are two key risks for FS institutions that do not adapt their CX strategies,” believes Mr Berry. “First, neglecting to optimise integrated digital and physical channels, and then getting left behind as other organisations deliver on-demand services. And second, not maintaining respect for data. Never before has there been a more important time for companies to prioritise data management and understand its impact on their business.”

Jonathan Valenti, a senior strategy and operations manager at Deliotte, notes that the source of competitive advantage has shifted from the physical proximity of branches and offices to more experiential-based attributes delivered through marketing and digital services. “The lines between the traditional product areas of banking, wealth and insurance have been blurred as customers are creating their own customised experiences through apps and multiple providers,” he explains. “Experiences are becoming more episodic and continuous, with real time advice and feedback on banking and payments.”

The trade-off between modernisation of infrastructures vs. building new models from scratch poses a significant challenge for larger banks in particular – burdened as they are by legacy systems, siloed organisational structures and poor data quality. As for smaller banks, many lack the scale and investment power to have any chance of keeping up with bigger players. “All could benefit from more deliberate CX strategies and execution programmes,” adds Mr Valenti.


A necessity rather than a novelty, personalisation across all channels and touchpoints is a key requirement if FS institutions are to engage and retain customers in a highly competitive market. However, embedding a more personalised approach in order to deliver a deeper connection is easier said than done.

“FS institutions must build on the data they have to hand and transform it into meaningful, actionable information to drive both compliance and engagement,” says Mr Berry. “Entity resolution systems uncover relationships and connections between customers, creating a 360-degree ‘single customer view’. Institutions can then generate a deeper connection with their customers and deliver a relevant, engaging, personalised experience across a realm of integrated channels such as video. As well as driving engagement, video educates consumers on alternative products and services.”

One of the main challenges facing FS institutions when implementing personalisation strategies is that such an approach does not necessarily return immediate profitability. “One of the world’s foremost CX experts, the United Services Automobile Association (USAA), has taken decades to build a culture based on putting its members first and balance sheet second,” notes Mr Voth. “This is foreign to many in FS institutions and is a painful but sometimes necessary trade off.”

In the view of Kyle Priest, chief strategy and marketing officer at TeleTech, the CX market has reached an inflection point. “Brands are working behind the scenes to make experiences appear simple to their customers,” he explains. “However, orchestrating dozens of insight-driven micro interactions that criss-cross multiple channels is a lot harder than it looks. The work is complex, the stakes are high and the pace is unrelenting.”

The GDPR factor

Once piece of legislation set to have a major impact on the relationship between customers and FS institutions is the forthcoming General Data Protection Regulation (GDPR) – the largest change made to European data protection legislation in 20 years. Scheduled to come into force on 25 May 2018, the regulation gives customers substantially more power to control how organisations use their data.

“Many customers are rightly concerned with how their data and, more importantly, their identities will be protected in the future,” says Mr Kimner. “Current legislative pressures are starting to swing the balance toward individual citizens and away from FS institutions and the GDPR is a good example of data privacy protections being implemented.”

Furthermore, one of the most significant elements of the GDPR legislation is the requirement for FS institutions to be accountable for the protection of personal information, including current or historic physical records, digital files, contact details, recordings or images. “Institutions will need to invest in better technology to protect the information they store related to their customers,” continues Mr Kimner. “The penalties for not providing strong security will be severe, not just monetarily, but in departing customers and related revenue as trust is lost due to inadequate privacy protection.”

For Mr Berry, the GDPR will drive accountability and generate transparency, with the upshot being revitalised CX. “Customers that desire a relationship with an FS institution – not because they are tied in or because it is a hassle to leave, but because they are loyal and happy with the service they receive – are critical to the long-term health of the FS industry. Transparency has a crucial part to play here. Successful FS institutions will future-proof their businesses by generating an open dialogue with consumers, identifying ways to engage with and educate them.”

Keeping pace

The rapidly evolving relationship between the FS industry and consumers has meant that FS institutions not only need to keep pace with the demands and expectations of their existing customers, but also develop new products and services attractive enough to acquire new ones.

In order to do this, the EY report advises FS institutions to: (i) radically transform the front line’s ability to provide unbiased, high-quality advice; (ii) enforce operational excellence to eliminate errors and shorten service timelines; (iii) foster a customer-centric culture by empowering both front line and back office employees to directly engage with customers; (iv) ensure complete transparency on product pricing and features; and (v) proactively protect the customer from data privacy and cyber security threats. “With traditional FS institutions continuing to face competition from nontraditional disruptors, institutions need to be more agile and responsive with their support, have a better understanding of customer needs and provide a unique experience across channels,” says Mr Albizzati.

As a further means of boosting CX, many FS institutions are electing to appoint a dedicated chief customer experience officer (CCO) to oversee the agenda – a move designed to immediately position CX as a strategic priority. Indeed, the Russell Reynolds Associates report states that “appointment of a CCO makes a strong statement of commitment to customer experience and a rallying cry for the organisation to follow”.


Today, customers expect FS institutions to deliver a seamless experience, regardless of the channel through which they choose to interact. Unfortunately, many customers do not consider the experience they receive across branch, online and mobile channels to be a seamless one.

“New regulatory initiatives, technological advancements in payment and credit management, and changes in consumer behaviour are disrupting the market and changing the way that FS institutions compete,” observes Mr Priest. “Banks must act fast to put in place the right technology stack, analytics capabilities and processes employing a mix of self-service, automation and digitally-enabled human interactions to support the seamless, integrated experience that customers are seeking.”

Likewise, Mr Kimner believes banks and other traditional FS institutions need to move quickly to adapt to the demands of a changing customer base. “FS institutions’ relationships with their customers will continue to evolve,” he notes. “Institutions that do not embrace the evolution will likely suffer an eroding customer base.”

Fundamentally, the FS industry is at a crossroads: it either prioritises the CX experience to cultivate customer loyalty or watches those customers take their business to more progressive alternatives.

© Financier Worldwide


Fraser Tennant

©2001-2019 Financier Worldwide Ltd. All rights reserved.