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John Berry

CX Expert and Senior Advisor, Efma

Building a customer-centric banking culture
Thoughts by John Berry, Efma

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John Berry, Efma Senior Advisor and internationally recognized transformation leader, shares his thoughts on the tsunami of change occurring in customer experience across the retail banking industry and beyond.

Shifting perspectives

When prompted to address the vast topic of ‘reimagining customer journeys’, Efma Senior Advisor John Berry cuts straight to the point – banks need to shift their culture from a banker’s perspective to a customer’s perspective.

“The customer experience issue is essentially about the need for significant cultural change within organizations. Instead of looking at the numbers, we need to recognize that from a customer’s point of view, banks are seen as fairly homogeneous: they offer commodity products; distribution channels and prices are very similar; branches broadly undertake the same services; and processes are generally painful across the board.”

Instilling a customer-centric culture requires senior management to lead the change and follow the transformation all the way through to the recruitment of new talent. For example, measurement systems need to be fundamentally reengineered so that staff are rewarded for delivering what the brand actually stands for – and delivering quality experience rather than meeting sales objectives.

“If you go into a company like Apple, staff are not targeted to sell products and services – their job is to enthuse, help and educate you, and to respond to what it is you want. Of course, many organizations measure customer service, but more and more are moving away from rewarding through product targets.”

Data is the new oil

A major component of this cultural change must come from data analytics. Historically, banks are not as good as retailers or big techs at obtaining insightful data on customer behavior. Amazon, in contrast, is the perfect example of how customer-centric big techs have the potential to upset the balance of power across the retail banking industry.

“Research into customer behavior is why big techs are such a threat. They’re very good at using unstructured data. For example, Alexa is listening to everything you’re saying, which gives Amazon the ability to learn more about you and respond positively to those elements. Banks, on the other hand, are still using transactional data to sell products.”

Data is also the opportunity to do things in a more personalized way. While banks tend to launch products to tens of thousands of customers, Amazon markets products based on individuals’ specific profiles. In fact, 30% of Amazon’s sales come from their referral algorithm.

“Amazon uses data in a way that adds value to the customer. Now that they are reportedly looking at moving into financial services in the US, if and when they launch a current account, they could quite easily grab in excess of 75 million customers, straight from existing banks.”

Research into customer behavior is why big techs are such a threat. They’re very good at using unstructured data.

‘Going digital’ is only part of the solution Looking at big techs for inspiration, many banks mistakenly believe that going digital is all it takes to deliver outstanding customer experience. Yet the solution goes beyond simply providing products through mobile apps or online, says Berry.

“Banks need to understand that digital gives them an opportunity to reengineer customer journeys from end-to-end. Digitalization is about putting customers first, empowering people to make faster decisions and adopting an agile approach to transformation.”

Largely due to their customer-oriented approach, the likes of Starling, Monzo and Revolut have indeed been very successful in attracting customers. In general, these FinTechs stand out for offering solutions to a pain point, rather than the other way round, as is often the case with banks. But being digital-only does not guarantee success.

“During the recent Efma Learning Expedition in London, it was interesting that one of the questions the participants had was ‘does digital mean you are going to be more successful’? Digital tends to improve the experience for the customer, but it doesn’t necessarily mean you’re going to make more money. Some digital banks, such as Fidor Bank which recently shut down operations in the UK, are actually finding it hard to survive.”

The branch is not dead

Indeed, digital-only banks do not benefit from a full relationship with the customer. Traditional banks must leverage their physical presence to offer something different, says Berry, beyond simple transactions. The growing trend worldwide is for banks to become ‘destinations’ – creating an environment focused on education across different segments, as well as business development.

“For example, Idea Bank in Poland has ‘Google-like’ campuses allowing SMEs to use the location as an office. Apple has actually been doing this for a long time. They tend to dedicate roughly 20% of their expenses in major locations to education, entertainment and helping small businesses, because they understand the value of it for customers. Similarly, in the UK, Bank B has been creating a branch environment which SMEs can use as a free working space – with free coffee.”

We need banking. We don’t need banks.

“In five to ten years’ time, I think there will be significantly fewer banks as customers become comfortable buying banking products from ‘non-banking’ organizations, and vice versa. Banks will also have understood the need to be there for customers whenever and however you need them,” he concludes.

According to Berry, successful banks will be those that create not just a quality customer experience, but a human experience. Engaging customers on an emotional level will make them feel comfortable about sharing data with banks, and convert them into a fan of the business, rather than a customer.