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Improving Customer Experience in Banking is Useless if These 7 Blind Spots Exist

One financial company spent half a million and two years developing a new application, but after launch, customers abandoned it. The reason is that there are seven internal factors that often sabotage all huge investments and efforts to create a successful digital product that provides positive customer experience. So let's find out why even great teams can fail when creating new products and what can be done.

There’s no doubt that great digital customer experience (CX) is mandatory to retain a competitive edge in the digital world. Despite that, the efforts to improve customer experience do not always lead to success due to certain critical blindspots. It happens that failure is pre-installed into the project, regardless of the budget size, the efforts, and the skills of the team.

In fact, if implemented inaccurately, design can lead to losses caused by the so-called “experience gap”.

This was the case for a certain bank that invested nearly half a million dollars to improve its mobile banking app but it resulted in a decrease in digital customer satisfaction. The root cause of it was several internal experience gaps at different levels of the financial company that the team failed to spot and prevent. How to identify and avoid these blindspots in time to protect the success of expensive, large-scale digitization projects?

CX efforts can fail even with huge budgets

In the last decade, a huge amount of research has been carried out confirming the priority influence of customer experience on a company’s market efficiency. If bad CX leads to multiple business problems, then positive CX increases referrals, retention rates, and revenue, because 86% of customers are ready to pay more for a better experience, according to an Oracle report.

It would seem that everything is simple — to see a significant increase in profits it’s enough to provide the best experience. But in real practice, this is not that easy. 80% of CEOs believe they deliver a superior experience, while only 8% of customers agree with that, according to Bain & Company research.

The main reason for that can be explained through the “experience gap”. It is the negative difference between customers’ expectations and the experience they get from a digital financial service. If the experience is significantly worse than expected, it can have many unpleasant consequences, like decreased customer loyalty, tons of negative reviews, and even customers who decide to leave the financial brand.

In most cases, the real experience gap is not recognised. The leaders and employees of the company often do not understand what and why to improve, even if they feel that something is wrong. If something is not consciously recognized, it is not possible to manage it.

Real-life example: Experience gap in action

To explain the way that the “experience gap” might cause trouble, I’d like to share a real-life example. Several years ago a quite known and respectable Central European bank embarked on a voluminous digital transformation journey. The bank’s application had a rating of 3.5 and was outdated. In order to digitalize, improve the bank’s image and the competitive chances in the growing digital market, the management intended to urgently create and launch a modern-looking banking application. Therefore, the initial design and development period was 6 months.

Nevertheless, the bank spent three times as much time building the new application by themselves: 1 year and 8 months. This was a serious project not only in terms of time but also the budget invested. Judging by the scope of the project, the improvements made and the timeline, the overall costs could be estimated at around half a million USD.

However, the result did not live up to expectations at all. After the new mobile application was released it decreased to 2.4 from the previous 3.5 and has kept dropping even a year after its first release as it did not improve, but significantly worsened the digital customer experience.

How could this happen if the bank did everything to improve the banking customer experience and the whole team worked hard for almost two years?

In this case, there was an “experience gap”. Despite that dozens of the bank’s top professionals have spent 20 months and half a million creating an improved product, it has failed to meet user expectations.

Often the companies tend to explain it by blaming external circumstances, though the real reason for customer dissatisfaction is the unconscious experience gap. Companies blame changes in the market, the activity of competitors, the emergence of innovations, changes in consumer patterns. Of course, there’s some objective truth in that, but a company capable of effectively adapting to market challenges uses these factors for its growth, not as a scapegoat.

The main way to measure the effectiveness of adaptation is how well the company’s service meets or even exceeds the expectations of consumers. Companies that are unaware of the gap between their service and customer expectations are unable to adapt. In some cases, the company’s actions even lead to broadening the experience gap to critical levels. This often leads to an alarming drop in demand for the company’s products and services.

If we go back to the example, it seemed that management was confident about the success of the significant improvements made, and devoted large funds and efforts to advertising. The ads promoting the brand new modern, innovative, and user-friendly mobile app caused overestimated expectations among consumers that significantly exceeded the actual quality of the service.

As a result, when the product was finally released, the customers were surprised to find out that their expectations are disappointed and that the new app is even worse than the old one. This led to a massive wave of negative reviews not only on the App Store and Google Play but also on social media. People were tweeting their struggles ironizing about the failed digitalization project of the bank.

Unawareness of the Gap is the main threat

Let’s explore how the gap was formed between the digital service and user expectations, and why no one was able to prevent it. In fact, the biggest challenge is that these types of gaps are often not noticed in the organization. Their reasons are not obvious and are found at several levels of the organization at once. Moreover, their influence is so imperceptible that it leads to destructive consequences unexpectedly. In the end, no one understands what the reason is until the team faces the product failure in the market.

The main difficulty in bridging the gap is that the higher the hierarchy level, the higher the unawareness of the experience gap. In fact, at the top of the hierarchy, the root cause of the gap is usually found. The lower in the hierarchy, the closer to the user and the more employees feel problems and gaps, but they often do not have the authority and ability to eliminate them, they are constrained by culture.

In this particular case, the support department received thousands of calls every day about the struggles caused by the product but due to fragmented business processes, they weren’t able to do anything about it.

Customer frustration grew even stronger. They faced issues that made it difficult to execute even the simplest everyday scenarios but the “support” they got from the bank employees was that they are not the only ones struggling and that currently, the bank is busy delivering new features, instead of fixing the current ones.

What makes things complicated is the fact that the internal processes behind the experience gap are caused by the same mechanisms that have facilitated company survival and growth in the past. The company becomes a prisoner of its past success. Just like the terrible fall of Nokia, the world’s biggest hardware-centered phone factory that was outcompeted in the software revolution led by Apple’s smartphones.

Since any organisation has inertia, these mechanisms are supported by inner beliefs and values and create resistance to adapt to the changing market and bridge the experience gap.

First of all, the gap should be addressed at the management level. Thus, the lower in the hierarchy, the farther from the leadership and the closer to clients, the more the gap is felt and recognized. Naturally, front-line workers will have the most data. They got it from the clients whose expectations are not being met.

The 7 blind spots of experience gap

The main experience gap may be caused by blind spots in one or several of the seven levels (culture, feedback, execution, design, value, brand promise, emotional connection) in the organization.

1. The culture gap

The lack of customer-centricity at the level of culture prevents employees from bringing service closer to customer expectations and causes a “culture gap”. The processes and activities that contribute to customer-centricity in a company with a “culture gap” will not have priority and resources will not be allocated to them.

2. The feedback gap

Lack of data about customer expectations and their experience with a product or service creates a “gap of feedback”. Here, companies often even collect the data but it’s not analyzed and no action is taken to improve the situation.

3. The design gap

Even if a customer-centered approach is a priority and a large amount of data about customer expectations is collected, there could still be a gap concerning the design competence and methodology. Having the right expertise in place allows building a high-quality ecosystem of digital products that will provide the best possible service according to customer needs.

4. The execution gap

This gap is associated with poor design execution. If user-centered product design is not a priority, decisions and efforts to create the final product and service are of low quality and efficiency. This determines the company’s ability to create competitive services and products in the digital age.

5. The value gap

The value gap can form if the design ecosystem is not in compliance with user expectations at the five levels of the Value pyramid: functionality, usability, aesthetics, status, mission.

6. Gap of overpromising

As my example with the bank demonstrates, if a company aggressively promotes its service, promising something that the product is not able to provide, it will lead to even higher disappointment in user expectations. As a result, the negative assessment of the service could double since the advertising promises don’t meet reality.

7. Emotional gap

If brand communication is purely informational, focused on functional features, then an emotional connection with users can’t be formed. Since humans make decisions based on emotions, building service value on an emotional basis has a positive effect on customer expectations and the end user experience.

Bridging the experience gap

Each client unconsciously evaluates the service they receive according to their expectations. The emotions caused by the quality of user experience form the brand’s reputation.

In the modern world, digital channels have become the main “marketing” and PR of the brand.

A negative experience with a mobile application can sabotage all the efforts of brand promotion even if it has a hundred-year history of serving clients and an excellent service on other channels.

It’s simply because in the digital age, the mobile channel dominates and for some, it’s becoming the only way to interact with the brand. That’s why it’s so important to be aware of the ways to bridge these seven experience gaps that might arise when creating digital products.

1. Bridging the culture gap

When it comes to culture, the transformation begins with a change in the mindset of the top management, spreading this influence over the entire culture of the company and inner values. In particular, the customer-centered experience mindset could be implemented.

2. Bridging the feedback gap

In our particular example with the bank, the first step to start bridging the gap would be to dive deep into the most common complaints shared on social media and calls to the support department. These are the clients who are closest to the gap. In fact, they have more insight into fixing it, than the management, and are often eager to actively share their emotions and be heard. If a company is open enough and ready for critics, it can use this data to bridge the gap and improve agility.

3. Bridging the design gap

To create a strategy for overcoming the execution gap through the integration of the design approach and design thinking Design Pyramid can be used. This framework determines five levels at which design integration will significantly increase the overall efficiency of the company: the process, the team, actions, results, and value.

4. Bridging the execution gap

The organisation have to integrate a proven design execution approach such as Design Thinking, HCD, or UX design methodology with a step-by-step system for designing digital products that live up to customer expectations and are able to bridge the execution gap.

5. Bridging the value gap

Creation of true value and benefit for the customers begins at the functionality level of the product and expands through delivering exceptional usability; aesthetics — visual identity that WOWs; status — personalization for a specific audience of the product and, finally, a mission statement that builds a community around it.

6. Bridging the gap of overpromising

The customers of the digital age demand transparency, care, honesty, and open communication. Due to the network effect, it has become nearly impossible to sell a bad quality product because everyone can post negative feedback on social media. This damages customer trust deeply. So, it’s crucial to make promises that can be not only fulfilled but even over-delivered.

7. Bridging the emotional gap

Empathy and care toward customers are more important than ever. Building an emotional connection between the brand and its clients is essential to ensure long-term loyalty and demand. This connection is built through all of the previously covered stages — the right mindset that puts the customers first; collecting feedback and making improvements based on it; using the right tools and methodology to create product design and the ecosystem; creating true value and benefit, and, finally, by being honest and over-delivering on promises.

The pathway toward becoming a beloved financial brand

This covers the seven main gaps that can sabotage the creation of successful financial products, as well as the seven bridges that can help to avoid and solve them. If a brand is aware of these blind spots, it can instantly gain a significant market advantage over its competitors who are still in the blind spot.

Awareness alone makes a huge difference, but awareness combined with action leads to long-term success in becoming a greatly demanded and loved brand.

 

 

UXDA Banking Customer Experience Gap Model
2031

Comments: (2)

Rick Harris
Rick Harris - Customer Faithful - Peterborough 21 May, 2021, 11:25Be the first to give this comment the thumbs up 0 likes

I've no doubt that an experience gap still remains in many industries - the degree of customer churn speaks to that.

However, I challenge the relevance of still quoting the Bain study that "80% of CEOs believe they deliver a superior experience, while only 8% of customers agree with that." That Bain study (of 360 firms) was conducted in 2004 - that data is now 17 years old! So much has changed in that time, especially in the C-suite, where whole new positions have been created to ensure that Directors can bring the data much closer to the Board - it's long since time to recognise that.

Alex Kreger
Alex Kreger - The UXDA - Riga 21 May, 2021, 11:37Be the first to give this comment the thumbs up 0 likes

I agree with you, a much is changed in the world especially because global digitalization and pandemic challenge. And I believe the percentage is changed also. But in financial services, especially traditional ones, this is still close to the truth. We research and communicate with dozens of financial institutions every month, and most of them believe they have good CX / UX, but negative feedback from their customers suggests otherwise.