Customer centricity and its role in financial services

Organisations competing in the world of finance are working within a tsunami of regulatory boundaries, which are in place to ensure the right outcomes are generated for individuals, but also present a challenge to the status quo.  These regulations are no longer just for boardroom discussion.  They are top of mind for people and the media alike.

Many of the executives we speak with in banking, financial services and other sectors are still struggling to devise a complete view and understanding of their customers – a view that is vital for lenders to identify and respond rapidly to changes in a person’s circumstances and to ensure the right outcomes are indeed generated.

Moreover, the entire financial services ecosystem is extending; new entrants are disrupting the market, new partnerships are forming and new propositions are materialising. And a new type of customer is emerging – one that is confident, better informed and connected.

People want bank loans to be pre-approved or approved in minutes. They expect all service providers to have automated access to all the data they provided earlier and not to ask them the same questions over and over again. They wonder why a lender needs their salary slips as proof of income when their money is being deposited directly into the bank every month by their employer.

These digitally empowered customers expect lenders to deliver services on par with the best experiences from other industries.  And it’s extremely unlikely that we’ve reached any kind of endpoint. The world of finance is transforming.

Focus on the whole relationship

Financial services enterprises cannot simply tinker with existing processes for incremental boosts in revenue or small cost reductions.  They’ll need to manage customers more holistically. Customer retention is going to be key, and it won’t be well-served by a product-centric, siloed approach.  Customer-level scoring models are important components, but what’s really critical is that the decisions you make be the right decisions for the whole relationship, not just for a given product.

Staggering amounts of data and information are accessible as never before – from public sources of data to closed user group data.  Access to new insight in wealth, income and expenditure, understanding of non-traditional credit use and instant access to a real time credit position could turn lengthy customer fact finds into a thing of the past. Furthermore, it provides the accurate instant information and validation required to provide a premier remote customer experience.

Customer service is crucial

Consider what types of end to end services can engage a customer and improve their experience. For example a credit card customer is having trouble being accepted for the card they want. A truly customer centric approach would let the customer see if they pre-qualify for credit before they apply, to ensure it doesn’t leave any damage on their credit score and making the customer experience much improved. Experian’s recent research (July 2014) revealed a third of consumers (34%) have had a frustrating experience when applying for a new product or service with a financial services company.  46% said poor customer service or user interface would cause them to leave or stop completing an application that they started. Moreover, two in five (41%) said they would be less likely to interact with a provider again if their online interaction with them was disrupted.

How can you do more?

Continuously think about how you can develop services, products and experiences based on the insight gleaned about your customers' preferences. What if you could have a holistic view of customer’s financial behaviours in addition to their credit risk? Such a view could give you an accurate assessment of the financial products they may require and the best time to offer them. It would also enable you to develop segmentation strategies based on behaviour. Propensity models will allow you to understand what your customers want and when they want it. This means you can offer products at the most appropriate time for the customer.

The holistic view

A holistic debt management process can be resource-intensive, which is why as an industry, we need to come together and use partners to help us on this journey. To build the fairest, most effective collections strategies, credit providers need access to data from multiple industry partners, including credit reference agencies, DCAs and third party debt advisors. Only by bringing all this together and adopting a ‘data-sharing’ approach can you achieve a holistic view of your customers’ financial situations.

While meeting FCA expectations for customer outcomes is an important reason, it is also the right thing to do, not only for the fair treatment of individuals, but also to maintain relationships well into the future.  Successful debt management in a safe and fair environment will benefit both credit providers and customers. 

“Think customer” for a better relationship

Financial Service providers that gain a holistic 360 degree view of their customers are ahead of the industry with increased market share, and are bending the curve through nonlinear growth.

These kinds of priorities demand an enterprise view of customer relationships and a disciplined, analytically driven approach to customer management.

The new financial environment gives banks even more impetus to proactively leverage customer relationship data to deepen their relationships with customers. Deeper relationships will win and share of wallet will become the name of the game, which will facilitate better insights that will benefit institutions at all points in the customers’ lifecycle.

Successful organisations will be those that can truly put the customer at the centre of what they do, with every single individual immersing themselves in “thinking customer”.  Embodying this approach will enable more personal conversations and more mutually rewarding interactions – ultimately, helping organisations and people value each other.