Customer trust and loyalty towards financial service providers is extremely low and is dropping further. Massive investment in systems, products and processes hasn’t transformed the relationship with customers into something more solid and long term. Customers who experience a better - often digital – relationship, in other sectors are forcing financial service providers to improve relations, or risk losing them to others.
Banks and insurance companies invest billions in customers
Financial institutions acknowledge the importance of customers by hiring senior managers to improve the customer relationship and building (digital) infrastructure to manage relationships. Closer examination shows that the bulk of the ‘customer investments’ goes into continued development of complex financial products, sophisticated back-office and CRM systems and web-enablement of existing services and processes.
Customer trust and loyalty is still dropping
Financial institutions lose loyalty as they push more transactions towards customers and at the same time raise transaction fees. Customers see no value for money – why pay huge fees if I’m doing it myself? Negative press about continued losses and support, in combination with big bonuses continue to erode trust in the sector. This leaves room for different banks and new types of financial service providers to enter the market – using digital platforms to launch new services at lower cost.
Investments don’t translate into solid relationships
Internet and mobile devices have changed the usage of online banking services and have completely changed customers’ daily lives granting mobility and instant, easy access to banking services. They’ve also changed customer relationships which have become more interactive, digital and less personal. While close contact, long term relationship and more personalized advice is critical. Customers become less loyal. Customer engagement, loyalty and satisfaction are under serious pressure.
Digital interactions can change the relationship
Do the basics right to bring the customer closer
New tools make it easy to analyse large amounts of unstructured customer data but cannot be more important than understanding the customer relationship. Banks know their customers and their behaviour but don’t know their needs. Business Intelligence may encourage product innovation but understanding customer data doesn’t equal knowing customers. Banks should communicate more direct and proactive to understand customers’ current situation and anticipate potential needs.
Capitalise on relevant services
Become customer friendly through digital services
Digital enables service providers to scale their service and make it feel personalised and relevant, while keeping it economically viable. Technology enables the service provider to engage customers at the right time, with the right offer in the right language based on an individual’s situation and the behaviour of other customers. The success of digital is based on keeping it simple enough to fit onto a mobile screen and knowing enough about your customers be relevant and timely.