The end of the FSA earlier this week and the emergence of the FCA profoundly affect the financial services industry. As the FCA is planning to tighten rules on customer protection and to put the customer at the centre of the business, financial organisations must put even greater emphasis on proving to the regulators that they are improving customer experience and delivering service excellence.

The arrival of more aggressive regulatory regimes comes as the industry considers the latest feedback from customers about their experience of services provided by all commercial organisations in the most recent Institute of Customer Service report. Their findings are based on the feedback of 26,000 consumers on their views of the customer service provided by leading organisations across different business sectors. What’s difficult reading for banks is how they sit relative to other major service organisations. So, while the report suggests the general landscape of customer service is improving, when it comes to customer experience, financial services organisations are far behind telco providers despite everyone making big investments in IT.

Nowadays the business landscape changes constantly and quickly, and with that so do customer needs. This means that companies must be able to adapt quickly to not only meet customer needs but to also personalise each interaction with the customer. However, financial organisations are struggling to gain a complete overview of customers’ accounts which makes it impossible to effectively address their existing and emerging needs. Furthermore, banks and insurers dealing with a customer interaction mostly have no idea about who the customer is, how important or valuable they are or what the optimum outcome would be in that specific set of circumstances for the customer and the company. For instance, would you have a different response to a highly valuable client who was about to leave, compared to one who has cost the organisation money and is asking for more discounts?

Therefore, the success of a customer service strategy depends on a sound understanding of the customer and on tailoring the customer service approach depending on the value of the customer for the organisation. Responding to customer enquiries is no longer sufficient to ensure competitiveness in the financial services market. In an industry where value-added services are increasingly important for attracting and retaining customers, proactive customer care is vital to guaranteeing the success of the business.

Banks, insurance firms and financial institutions need to take a leaf out of their telco brothers’ books and adopt more customer-centric strategies that allow them to optimise each customer interaction in a way that benefits both – the organisation and the customer. The telco industry is already reaping the rewards from leveraging data insight and technology with decisioning capabilities to deliver customer recommendations based on the next-best-action required to deliver optimal results in a given situation.

To achieve this, organisations need effective IT systems in place that leverage rule-driven processes and data analytics to proactively engage with customers in conversations that are matched to their needs. Insurance providers and financial organisations can even go a step further by applying predictive analytics to data insight to be able to anticipate customer needs and address emerging needs or issues before their competitors.  Service personalisation through leveraging of data analytics will allow organisations to improve the customer experience, strengthen relationships and predict the actions that will work best for the customer as an individual. By integrating these steps across all communication channels, organisations will be able to deliver consistent customer experience and increase the points of contact with the individual.

Nowadays knowing your customer is not just a ‘nice to have’ addition to the business, it’s a mandatory requirement. However, to be able to stay on the forefront of innovation, organisations need to be one step ahead. The leaders in tomorrow’s competitive business environment will be the organisations which can predict what the customer wants and effectively address these needs.  Predict Your Customer (PYC) should be the aspiration of modern businesses and the ones who can get it right today will be the business success stories of tomorrow.