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If you can't beat them, imitate them... until you can do it better - Consumer Banking Part II

It’s time to put the consumer at the heart of ‘consumer banking’.  For banks, that could be a cue to go shopping or take a holiday…

In this second blog in our series (read Part I) on putting the consumer back at the heart of consumer banking, we look at the first of the three key lines of defence against fundamental changes in the banking landscape: imitation. Imitation is a strategy well proven in nature. When a more successful predator appears, you can either continue to do what you do and hope that the rival will fail and go away. Or you can learn from their techniques, emulate the best of them, and change your own game.

Learning from the best

Have you ever wondered what a bank could learn from, say, Singapore Airlines or a John Lewis store? The answer is - a lot. First base is the need to look outwards from banking itself and consider new reference points. The leisure and retail sectors, to name just two examples, already do this. They regularly scrutinise other industries, to see the best practices being used at key touch-points in the consumer relationship: welcoming back existing customers, rewarding loyalty, or resolving customer issues and complaints. By stark contrast, very few banks have so far spliced the DNA of the best retail or leisure practice into their own service approaches. This is a serious gap, not least because other service industries take the service element of their proposition very seriously indeed.

In one example from aviation, initial training for Singapore Airlines cabin crew lasts for three months. It is designed to support staff in learning to meet the needs of all passengers. Learning is not restricted to the immediate work environment. During their course, trainees visit old people’s homes and work with children. The emphasis is on developing the skills to deliver top quality customer service, making attention to detail into an automatic reflex and acquiring language proficiency. Scholarships are available within the company to send cabin crew to University. The airline even has its own management development centre, which employs top quality trainers including Harvard professors.

Meanwhile, some banks maintain the practice of training branch staff on-the-job from day one. Training is derived largely through learning from their colleagues. It is not so surprising perhaps to learn that the banks in question score very poorly on customer satisfaction surveys. (How would airline passengers feel about a flight attendant team that was clearly picking up the job as they went along?!)

In contrast, other banks have taken note and started to blur previously solid lines between industries. From the success of their Virgin Atlantic airport lounges, Virgin Money have launched their very well received Virgin Lounges. Here, customers can log in to their online banking, enjoy a coffee and a snack, or simply use the lounge to relax and take some time out from the hustle of the high street.

Can these, today still limited, examples of cross-industry best practices become a mutually beneficial arrangement? Could they be poised to revolutionise the service culture in banking? Could a Wells Fargo customer on vacation in London go into any Starbucks and access financial help or exchange foreign currency? Could HSBC adopt a loyalty scheme that allows its customers to earn air miles that are redeemable with the One World airlines alliance?

The answer is plausibly a - qualified - ‘yes’. Yes, these changes could happen and their impact would be positive. But they would demand a long-term commitment to a profound shift in attitudes towards customer service. This is about changing a whole culture. It is not a single, isolated initiative with a finite timescale. And yet the banking industry has in the past tended to make incremental improvements, then immediately expect significant gains in sales and customer satisfaction on the back of their one-off investment.

How has this worked in practice? To give one familiar and recurring example, large sums of money are frequently invested in new IT platforms designed to reduce operating costs and put a stop to the most frequent types of customer complaint. But there is a missing dimension: the consumer experience. Without factoring in the impact on the consumer experience that a new platform will bring, no organisation can guarantee the significant gains in customer satisfaction they are predicting and expecting.

In reality, giant and isolated technology initiatives are not always (in fact they are hardly ever) the key to a better experience anyway. Smaller scale and cheaper improvements – that are still very meaningful to customers – can be identified through benchmarking against other industries. Again, other sectors provide valuable insights. Back to Singapore Airlines: they have a panel of experts drawn from several industries who regularly discuss a range of best practices. (Learning is not restricted to a ‘from the outside only’ model. The airline also has a scheme for employees to submit ideas to improve the company. The scheme lets them track those ideas and access feedback from senior management on which initiatives will be taken forward.)

This model of cross-fertilisation from other industries’ successful approaches to customer experience enhancement is something the banking industry should certainly follow. Our own practice confirms this.

It is possible to increase a retail bank’s Net Promoter Score[1] through simple measures such as implementing best practice from the hotel industry. For example, customers could be welcomed personally at the door where their coats would be taken. They could then be offered a hot drink and introduced to the branch manager who would take them to their appointment. Such examples the personal touch in action are rare, but not unique. Customers at North Shore Credit Union branches in Canada are greeted by a concierge, presented with a hot towel and, with spa music playing in the background, they are invited to sit and have a coffee while doing their banking.

Another example of best practice, this time from the retail sector, is a department store that sends their regular customers a Christmas hamper every year. Banks could - at the very least - send their customers a birthday card!

Is the imitation factor a wholly one-way process? Has an industry as old as banking nothing to teach and everything to learn? To suggest that would be a distortion. Banks can offer the example of processes that they lead the way with. They have some of the most stringent and best-established processes for handling cash, anti-money laundering and online security. The hotel sector for example has suffered online security breaches in the past. It could usefully look to the banking industry to improve its practice in this critical area.

To put the consumer firmly at the heart of their consumer banking offer, financial institutions have to be prepared to look outwards now. They need to observe and learn from the very best of service industry best practice. They need to imitate. Then, over time, they need more than imitation. They must emulate – ensuring that change is deep-seated, lasting and in their DNA. To keep their customers, this cannot be a stick-on exercise. Banks must learn and change for life …

 

 

[1]  A measure that indicates how likely a customer is to recommend a bank to their friends and family on a scale of -100 to +100.

 

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Comments: (1)

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 15 September, 2015, 11:54Be the first to give this comment the thumbs up 0 likes

Banking is the only industry I can think of where the guy who gives money to it (account holder) and the guy who takes money from it (borrower) both expect to be treated as customers! This poses banks a unique set of customer engagement management challenges that are absent in other industries. For example, no department store I know is obliged to send a Christmas hamper to every supplier.