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Investments in Customer Centricity Are Seeing Dividends for Financial Services Firms


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A look at how Retail Banks and Insurance Companies are evolving their product-focused missions into customer-centric strategies for financial gains.

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Investments in Customer Centricity Are Seeing Dividends for Financial Services Firms

  1. 1. Investments in Customer Centricity Are Seeing Dividends for Financial Services Firms A look at how Retail Banks and Insurance Companies are evolving their product-focused missions into customer-centric strategies for financial gains Exerpted Articles From: 1to1 ® mediaa division of Peppers & Rogers Group
  2. 2. ©2014 2 Retail banking is undergoing a massive disruption. While banks have traditionally been the provid- ers of retail services, they’re now facing real competitive threats as new mobile technologies and emerging financial and non-financial intermediaries combine to provide trusted alternatives and less-expensive solutions for both the unbanked and for profitable customers. Consumer banks are rapidly losing market share as a result. In fact, according to the 2013 Accenture study, Banking 2020, banks could lose about 35 percent of their market share by 2020, and up to 25 percent of U.S. banks could disappear completely. The same study estimated that 15 percent of traditional banks’ revenues could shift to online- only players—including branchless banks and new technology entrants—in the next seven years as more consumers flock to technology driven services. Another 20 percent could go to “retail- driven players with a mass-market focus.” Some of these non-traditional providers include Wal-Mart, which has partnered with American Express to offer Bluebird, an alternative to debit and checking accounts designed to enable con- sumers to deposit checks and pay bills via mobile devices, maintain a zero minimum balance, and avoid any overdraft fees; and 7-Eleven, which offers prepaid banking cards that enable customers with the ease of doing business by allowing ATM transactions, the purchase of money orders, fund transfers, check cashing, and bill pay. In addition, online-only providers have made a splash on the scene. Top players include: Moven, an online debit account provider that promises to support its customers’ financial wellness through transparency, the ability to connect customers with their money 24/7, and the knowledge to make sound financial decisions; GoBank, which offers custom Visa and debit cards and mobile deposits; and Simple, which promises “no surprise fees,” offers budgeting tools, and boasts a branchless banking experience. [Note: Multinational bank BBVA acquired Simple in February 2014 for approximately $117 million, validating the importance of these new competitors.] Traditional and non-traditional financial services institutions alike are seeing some of the big- gest advances happening in mobile banking. Accenture reported a 50 percent increase in mobile banking activity since 2012, with consumers saying online banking is the single most important investment banks can make. By leveraging the wide range of mobile functionality available, including mobile POS such as Square and Paypal; near-field communication payments like Google Wallet; mobile banking, and in-app billing, traditional and non-traditional financial providers are offering a low-cost channel to acquire new customers and scale-up efficiently. In doing so, they’re hedging their bets for a share of the massive market currently dominated by the large consumer banking providers. These mobile developments, as well as the introduction of mass market players, are posing a threat to financial institutions as profitable customers become less satisfied with their banks. According to the World Retail Banking Report 2013, from Capgemini and Efma, customers are mostly unsatisfied with their banks in five core areas: knowledge of customer’s needs and prefer- ences (37 percent satisfied); product-channel fit (43 percent satisfied); trust and confidence (51 percent satisfied); intimacy and relationship-building (43 percent satisfied); and providing a con- sistent multichannel experience (44 percent satisfied). This research shows that today’s banks must understand their customers, repair their relation- ships, and focus on providing personalized cross-channel engagements to defend against new competitors, avoid commoditization, and ultimately lead to higher revenue growth. These repairs will only work if they’re established upon a foundation of trust, which requires banks to deliver on the moments of truth for their customers, forming a trusted bond that trans- forms the customer experience. —Weston McDonald, Senior Vice President, Financial Services, TeleTech Restoring Trust in Banking Executive Overview: Table of Contents Executive Overview..............2 Banking.................................3 Insurance............................33
  3. 3. ©2014 3 Every business—and every bank—has a corporate culture. And cultures are made up of attitudes, behav- iors, and company values. The question of culture is a key one for banks that are looking to become more customer-centric.  Customer centricity is a hot topic of discussion among banks in the Middle East in particular. It is a strategy that both global and local banks are taking very seriously in their quest to stay ahead of growing competition in the region. Atatimewhenmostbanksarestrugglingtogrow,manybanksintheregionarewell-capitalizedandhavethe fundsattheirdisposaltoexploitnewgrowth.Theyareengagedinpursuingnewrevenueopportunitiesanddiver- sifyingtheirincomestreams.Inthisenvironment,customercentricityfitsasanaturalstrategyformanyreasons. Many banks are seeing impressive growth in the number of new, young customers. These customers are increasingly sophisticated and value customer centricity. They see how customer focus is being applied in other industries and with new technologies. They expect the financial services industry to keep up. There is rising intolerance for bank service that simply goes through the motions. Customers are demanding more. Relationships are very important culturally when doing business in the region, and customers are looking to build a trusting relationship with their bank. Most want respect in the relationship to be reciprocal. They want to be treated as people rather than as just account numbers. Competition is fierce as banks look to capitalize on the region’s wealth, its growing young population, and pace of economic development.  Most importantly, however, becoming a customer-centric bank can have tangible ben- efits for the bottom line. Turkey’s Isbank, for example, implemented an enterprisewide customer-centric transformation within the past few years, with its stated mission to be the “bank closest to customers.” Working with Peppers Rogers Group, it implemented measures such as installing customer relationship managers in every branch, overseeing specific “cus- tomer portfolios” (i.e., groups of customers with similar needs) and centralizing reporting functions previously performed by branch personnel in order to allow more time to interact with customers. This approach achieved some impressive results: • Total assets rose by 130 percent • Loans rose by 160 percent • Deposits rose by 137 percent • Net interest income rose by 140 percent Creating a Customer-Centric Culture for Middle East Banks The banking environment is primed for leaders to step up and transform their business around the customer to create long-term strength and stability in an ever-changing region. Adapted from Customer Strategist Journal Banks: Articles Creating a Customer-Centric Culture for Middle East Banks.......................................................3 SunTrust Learn Why Customers Behave the Way They Do....6 Customer Focus Sits at the Forefront in Financial Services..........................................................8 NedBank Embarks on a Client-Centric Journey.............10 What’s Keeping Banks From Reaching Their Innovation Potential in Social Media?....................12 Social Media Energizes Traditional Banking Strategy.......15 Study Shows Potential for Social Media in Emerging Markets.......................................................18 Five Steps to Big Data Dominance in Banking................19 Associated Banc-Corp’s Customer Listening Makeover..22 Financial Firms Cash in on VoC.......................................23 Akbank’s Analytics Initiative Improves the Customer Experience................................................25 AMP Financial Services Invests in Knowledgebase Optimization..........................................27 la Caxia Banks on Innovation..........................................29 Standard Bank’s 4 Steps Toward Becoming a Customer-Focused Organization.....................................31 Retail Banks
  4. 4. ©2014 4 Retail Banks The end goal is for the new culture to be internalized rather than imposed from the outside. New ways of thinking and behavior should become automatic and the organization will use the new cultural principles to drive development and progress. In addition, Isbank branches operating within the new business model increased their assets under management by 25 percent compared to branches in which transformation initiatives were not carried out. Egypt’s CIB is also very focused on customer service and customer-friendly banking channels. In a 2008 interview, CEO Hisham Ezz Al-Arab said that he believes the bank’s reputation for well-established customer relationships is a distinct competitive advantage. He believes that each customer deserves to enjoy a unique banking experience. The bank has invested heavily in training, for example, empowering a knowledgeable workforce to provide an outstanding service. The best examples of customer-centric transformation from anywhere in the world all share a common thread—leadership that drives change in favor of customer focus. What is the role of leadership in changing culture? Strong leadership is integral for any bank that wants to develop a customer-centric corporate culture. Leaders must be the driving force for cultural transformation and they must relentlessly promote values such as openness, innovativeness, friendliness, and personalization that are key to a customer-centric banking experience. A strong, consistent message from the top is a signal that customer service is no mere window dressing and that employees need to take it seriously as a key priority. The leader must articulate a vision for the future of the bank as an organization that focuses on custom- ers’ needs through every process and on every level of doing business. For the truly customer-centric bank, the customer IS king. The leader must help ever one in the bank understand this and lead them in working together to make that vision a reality. The bank will first have to identify its strengths and weak- nesses regarding customer centricity. Honest feedback from everyone in the company is desirable here to get a true picture of the company culture as it really is, rather than what employees think management would like it to be. There are several tools banks can use for such assessments, ranging from in-house surveys to internal working groups, that will best be determined according to the needs of the organization. In some cases, bringing in outside consultants who specialize in change management can allow a bank to benefit from others’ experiences and create a change plan based on proven methods. The bank will also need to identify what customer centricity means for its organization and the expected benefits of the change. These should be clearly outlined so that employees can see the reason for the changes. Employees will be much more enthusiastic and much less resistant to positive change when they can see that the desired changes will be good for the organization, as well as for them personally. The end goal is for the new culture to be internalized rather than imposed from the outside. New ways of thinking and behavior should become automatic and the organization will use the new cultural principles to drive development and progress. Going from the old culture to the new will not be accomplished instantly. Culture is deeply ingrained and encompasses not only processes, but attitudes, assumptions, communication styles, goals and roles, among other elements. True change will require carefully planned, step-by-step progress that is closely monitored and guided by management. A dedicated change management team, composed of representatives from all areas of the organization, can oversee the change effort and help it stay on track. Leaders must clearly emphasize the importance of the change management effort and give the team the status and authority needed to implement effective initiatives. Before the plan is rolled out, those spearheading the change initiatives must dig deep into the details of how the organization can go from point A to point B. Part of this process must be anticipating how the changes will affect people on a day-to-day basis, as well as thinking ahead to the questions and objections that could be raised as every level of the organization.
  5. 5. ©2014 5 Retail Banks Reaping the rewards Transforming a bank’s corporate culture to be truly customer-centric is not an easy task, but it is a must in the atmosphere of growing competition and high customer expectations that banks in the Middle East are experiencing today. Once leaders decide on a customer-centric cultural change, communication and consistency are criti- cal, starting with the highest levels of the organization and working down to every single employee.  Ideally, each person in the organization will become an agent for change who can influence those around him or her. Think of it as a cascade of change that starts at the top and gathers strength as it pours down through the organization. Middle East banks that succeed in creating a customer-centric corporate culture will reap the competi- tive advantages of an improved reputation for customer service, stronger relationships with customers, a mindset that contributes to more successful products designed with the customer in mind and more selling opportunities, among others. Focusing on the customer is another way to focus on success for the future. Once leaders decide on a customer-centric cultural change, communication and consistency are critical, starting with the highest levels of the organization and working down to every single employee. 
  6. 6. ©2014 6 Retail Banks “Grow consumer market and wallet share.” This is one of SunTrust Bank’s strategic priorities, formalized in its 2011 annual report by Chairman and CEO William H. Rogers, Jr. Such a statement is easy to say, but can be difficult to implement. There are many avenues a company can take to achieve such a goal. SunTrust chose to shift its business from a product-focused orientation into one that is more customer-focused and service-oriented. It’s a way to build relationships and stand out from competitors in the crowded and volatile banking industry. “We believe that delivering industry-leading service quality will lead to improved client loyalty and increased consumer wallet and market share,” Rogers wrote in a letter to shareholders earlier this year. Instead of giving in to the temptation of just customer acquisition, SunTrust is working to improve client loyalty and share of wallet. In 2011, the company improved product penetration per relationship in eight of its 10 largest markets, Rogers noted. What’s behind the company’s approach to customer relationships? New actionable insight about customer behavior and the reasons behind their banking decisions. “Customer centricity is the act of understanding, from the customer perspective, their needs and their perception of the value proposition, then delivering it in the best possible way,” says Greg Holzwarth, man- aging director of client information at SunTrust. To that end, his team is tasked with creating actionable insight from both internal and external customer data. In the past, SunTrust studied customer behavior and made strategic decisions based on how customers acted. But, that wasn’t enough. “We do just fine in understanding client behavior,” he says. “We didn’t know the ‘why’ behind the behavior. We needed to better understand customers’ attitudes and emotions around their behavior. Knowing why someone does something is very useful.” Deeper customer insight yields new opportunities SunTrust, along with Peppers Rogers Group’s iKnowtion analytics group and other partners, conducted a survey of U.S. consumers to learn about how and why they make their banking decisions. With this insight, the team created new multi-dimensional market segments that mixed behavioral and demographic infor- mation with common attitudes and needs shared by members of each segment. SunTrust then mapped the new segments to existing customers and prospects within its database to gain a clearer picture of its customers. The new segments combine customer needs, value, behavior, and attitudes in a holistic way. “We couldn’t influence positive behavior until we understood their attitudes, goals, and emotions,” Holzwarth says. SunTrust observed changing attitudes around borrowing money, for example. Since the financial crisis, people still borrow money, but often it’s for something pragmatic like education, a new car, or healthcare. They are less likely to borrow for extravagant or impractical reasons. And, they are looking for the bank to help them manage not only the actual loan, but also the best way to pay it back. “We’re now starting to marry our practices—how do we use that understanding to derive effective interactions,” Holzwarth says. Internally, the new segments inform further market research, product devel- opment, and value proposition development. Externally, the insight guides advertising, direct marketing, and channel management decisions. This allows the company to optimize channels and interact appropri- ately with the right types of customers. In the loan example, bank employees are also encouraged to have SunTrust Learns Why Customers Behave the Way They Do The bank uses customer data and predictive analytics to be more relevant to customers and prospects, leading to improved satisfaction, revenue, and loyalty. Adapted from Customer Strategist Journal “We believe that delivering industry-leading service quality will lead to im- proved client loyalty and increased consumer wallet and market share.” —William H. Rogers, Jr., Chairman and CEO, SunTrust Bank
  7. 7. ©2014 7 Retail Banks ‘‘ ’’a- ‘‘ ’’ha conversations about customer cash flow and offer advice on the best ways to pay back the loan. An understanding of customer needs and attitudes also helped ease dissatisfaction when the company recently transitioned away from its free checking program. The company looked at which customers would be impacted and determined unique ways to communicate with different customer groups. SunTrust was required to notify all customers, but those above the minimum deposit threshold received a different message than those who would be charged the fee. The team overlaid attitudinal and other information about those segments to create a strategy around how to help them make that journey. “We helped them understand what’s happening, explained how it will affect them, and offered potential ways to avoid the fee or cope with the issue,” Holzwarth says. In addition, employees were trained to acknowledge customer anger and be patient with customers as they processed this information. Holzwarth notes that the initiative exceeded its goals. Overall satisfaction and loyalty initially dipped when the news was announced, as expected, but it’s now higher than it was before the free checking program ended. This new information also helps to enable CEO Rogers’ vision of a service-based culture. “We’re moving away from a traditional bank/client relationship,” Holzwarth says. “In the past we’ve put it on clients to figure out what they need, then come to us. Now we build awareness and help them figure out what they need in a way that’s best for them.” The sales function is evolving into more of an advisory role, for example. The goal now is to better under- stand client needs, then package a solution to meet those needs. “We’re striving to change the experience so it doesn’t feel as much like a traditional sales process,” he says. Instead, “we’re solution processing.” Salespeople create a dialogue with customers about their needs and circumstances before the sale is introduced. “It becomes a completely different conversation when it’s not led by the product,” Holzwarth says. The company hasn’t removed the notion of “sales,” but it’s now at the tail end of the process. SunTrust’s analytics activities also revealed opportunity for improved customer communications. By observing customer behavior together with their attitudes and needs, Holzwarth’s team quickly discovered that customers did not think in product terms. “The big a-ha moment was that none [of what customers talked about] was in the vocabulary of traditional banking products,” he says. No one ever mentioned the word “account,” for example. SunTrust changed how it spoke to customers to consider the client point of view. The word “client” is now a noun that is spoken in internal business discussions, something Holzwarth says was missing before. “Conversations need to change so they are in the customers’ language,” he says. For example, SunTrust is in the midst of creating a detailed customer experience process based on sav- ings from a customer point of view. It is enhancing its automatic bill pay tools so clients can create savings buckets with customizable nicknames. It will provide tools to help customers determine how much they should save per pay period, and set up automatic transfers into this new bucketed account. Customers can use the technology to pay themselves first and save for an upcoming event or purchase. It requires no new deployments on the bank’s part. All that’s needed is the customer perspective. “It’s not earth-shattering stuff, but it’s important and relevant to customers,” Holzwarth says. “We’re chang- ing the way we talk about and represent our products,” which involves simply changing the conversation. It’s not the initiative that’s important, he adds. It’s the strategy and philosophy behind it. “Think about attitudes, not just behavior, and think about your strategy to influence positive attitudes and behavior for clients and the business,” Holzwarth says. A culture evolves Like many executives, Holzwarth doesn’t like to use the word ‘culture’ when discussing SunTrust’s inter- nal approach to doing business. For him, the term represents something that may not be perceived as actionable. Instead, he’s proud of the fact that customer centricity is woven into the fabric of the company. “It’s ingrained into what we do, rather than having to go through a checklist,” he says, adding that it’s not just marketing’s job to think about the customer experience. “Everyone’s a part of it, rather than being reminded that they have to think about the customer. We’re all redesigning the client journey “The big a-ha moment was that none [of what customers talked about] was in the vocabulary of traditional banking products.” —William H. Rogers, Jr., Chairman and CEO, SunTrust Bank
  8. 8. ©2014 8 Retail Banks Success in the financial industry pivots around building strong and lasting relationships. When a client charges an organization with taking care of his financial security, he is putting a high level of trust in assum- ing that the business will act in his best interests and do its best to safeguard his finances. The financial crisis has shone a spotlight on the need for organizations to be trustworthy and act in the best interest of their customers. This event brought to the fore the vulnerability of the financial industry, the need for regulations, and emphasized the importance of transparency. This focus on relationships, trust, and doing what’s right for clients makes it imperative that financial organizations adopt a customer-centric strategy. Yet, the industry has a transaction-based legacy. In many cases, customers are thought of in terms of their account balances only. Financial institutions often struggle to execute the philosophy of customer centricity and embed it in their day-to-day operations. It’s too easy to fall back on the traditional ways of handling customers and accounts where products trump individual customer value. Three pillars of customer centricity Transforming an organization into a truly customer-centric entity isn’t an easy task that happens over- night. However, organizations that invest in the right people and processes are able to become more client-focused, using this strategy as a differentiator in a cutthroat environment. Customer data is of fundamental importance in this transformative endeavor. Often financial organiza- tions believe they don’t have sufficient customer information. Although this may be true, often we observe that many companies don’t use existing available customer information to the full extent and instead seek to collect more. Similarly, we observe that customer data is rarely stored and shared, and what is shared remains in product silos. Such processes fail to bring together the different data points that allow the organization to have a 360-degree view of its clients on which to base future decisions. Forward-thinking businesses are bridging their different data silos to get a holistic picture of customers. They use this information as the basis of their decisions, leading to a companywide strategy that drives business results while doing what’s right for the customer. When it comes to an organization’s nature, customer focus needs to be ingrained in the makeup of an organization. After organizing their data, financial institutions need to determine who owns customer rela- tions, and then work toward setting up departments to manage this holistic view of customers. Although organizations need to move from being product-focused to being customer-centric, it’s possible for an organization to have a customer-centric strategy while retaining product expertise and working to make them the best for its clients. Finally, customer focus needs to be visible throughout the organization, from the C-suite right down to frontline employees. Customer-centric organizations make decisions for the benefit of customers rather than just for financial gains. The attitudes of all employees must reflect that. At Peppers Rogers Group, we help businesses implement this philosophy and ensure it’s practiced and not merely praised. “After organizing their data, financial institu- tions need to determine who owns customer relations, and then work toward setting up departments to manage this holistic view of customers.” Customer Focus Sits at the Forefront in Financial Services Financial organizations are challenged more than ever with becoming truly customer centric and gaining the trust of their clients. Adapted from Customer Strategist Journal
  9. 9. ©2014 9 Retail Banks Transforming into a client-focused company In order to become customer centric, organizations need to steer away from the one-size-fits-all approach and instead treat different customers differently. While there are a variety of ways to achieve this with differing levels of complexity, we at Peppers Rogers Group believe the strategy ultimately comes down to four main steps:  1. Identify who customers are, use the information to get to know them and understand them, and start treating them as unique individuals. 2. Differentiate customers by segmenting them according to current and future value, allowing the organization to design and execute strategies that address the diverse needs of different customer groups. 3. Interact with customers to ensure comprehension of their goals and expectations, leading to more effective future interactions. 4. Customize both communications and offers according to customers’ expectations, needs, and value to the organization. Savvy financial services organizations have already begun ingraining customer centricity into their DNA. Germany’s Fidor Bank uses Facebook to connect customers’ online, offline, and virtual worlds. And Barclaycard recently launched its Ring MasterCard in the U.S., where interest rates, payment schedules, and other features are crowdsourced by the community. These organizations, and others like them, are guided by forward-thinking business leaders who are cognizant that a great customer experience is a necessary differentiator without which the company’s success is jeopardized. Progressive organizations are working on their data strategy and governance to enhance their capabili- ties to identify and create a 360-degree view of their client-base. More advanced businesses are creating segmentation models that don’t only focus on customer value, but also incorporate behavior and needs. They are working on customized client value propositions and contact strategies to better interact with their customers and get to know them. Customer focus isn’t the future. The necessity for organizations to become customer centric is here now.  Those firms that haven’t embarked on a process to become truly customer centric should not waste any more time. Otherwise, customers will pivot towards competitors that exude customer centricity and trustability. “Progressive organizations are working on their data strategy and governance to enhance their capabili- ties to identify and create a 360-degree view of their client-base.”
  10. 10. ©2014 10 Retail Banks The banking industry has traditionally not been known to be client-centric. However, cutthroat competition and more discerning customers have impelled a number of banks to start focusing on becoming just that. Nedbank, one of South Africa’s largest banks, is one financial organization that’s aspiring to be totally client-centric. In the words of Doug Hardie, executive general manager at Nedbank, “we want to get to the stage where client centricity becomes part of our DNA.” Cognizant that this is not an overnight endeavor, Nedbank embarked on a journey towards client cen- tricity five years ago. Hardie says the team spearheading the change recognized that the only way to succeed was if the transformation was embraced whole-heartedly by the company’s leadership. While this took some time, Mike Brown, the bank’s chief executive, is passionate about being client sensitive and has surrounded himself with like-minded people. “That passion is shining through very clearly in everything the leadership team does,” Hardie says. “This has to be the single, most-important success factor.” The commitment towards client centricity is deeply embedded in the bank’s strategy and three-year-plan’s aspiration to “build many deep and enduring client relationships.” The very first step was identifying areas within the organization that were not working as well as they should. “We had to start working consistently on a strategic journey to get the basics right,” says Hardie. After addressing the fundamentals, the bank started working upwards, methodically and consistently bringing change to all tiers of the organization. In order to deliver world-class service, Nedbank’s leadership was committed to creating brand ambas- sadors, starting with its own employees. The organization embarked on a seven-pillar strategy to make sure it had the right people in place: • Getting its employees to be more client-focused • Making the recruitment and selection process more client-centric • Enhancing the induction process to expose new hires to the organization’s service-driven culture • Developing the right skills through a robust learning and development curriculum • Empowering staff members to deliver a magical client experience • Measuring the day-to-day processes • Rewarding and recognizing the right behavior, making it the focus of the organization Underpinning all the pillars is a robust change management and communication strategy. To instill an effective client engagement culture, Nedbank reviewed its client communications and created its Believe to Achieve charter for customers: • Know me and understand my aspirations • Listen and care about my financial fitness • Treat me with respect, value, and appreciate me and my business • Give me great advice to make smart financial decisions • Deliver with diligence—I only Ask Once • Give me great value banking An essential ingredient in this journey was to undertake an outside-in view from the clients’ eyes. Hardie says this practice went from being an aspiration to increasingly manifesting itself in forums, decision- making, and informed strategies. “We had to start working consistently on a strategic journey to get the basics right.” —Doug Hardie Executive General manager, Nedbank Nedbank Embarks on a Client-Centric Journey One of South Africa’s largest banks aspires to become more client-focused. Adapted from Customer Strategist Journal
  11. 11. ©2014 11 Retail Banks Measurement drives momentum “Any strategic change journey requires constantly measuring and tracking improvements. In order to succeed Nedbank established a robust voice of the customer strategy,” Hardie explains. Although the organization had been tracking its client focus and Net Promoter Score (NPS) through an annual industry study, to maintain momentum the bank wanted to establish an in-house client management capability. “We developed a 35-agent outbound contact center to reach out to clients within 48 hours of an interac- tion with the bank while the experience was still top of mind. After analyzing the 150,000 surveys that are completed annually, a team of statistical experts score the results and mine client insights allowing the team/bank to make incremental improvements in service-delivery,” Hardie says. Through this process, Nedbank found that up to 8 percent of clients still had an unresolved issue at the time of contact, and established new processes to make sure the issue was resolved within that same tele- phone call, either by the person conducting the survey or by special resolution experts, ensuring clients’ satisfaction when they get off the phone. “You need to have a very robust measurement engine in place as a foundational step to start building more aspirational initiatives,” Hardie says. The process allows for an extreme level of granularity to the point where Nedbank is able to produce an NPS for its individual bankers, creating clear targets in staff members’ scorecards that are directly linked to the client experience being delivered. However, measuring on its own is not enough. Hardie underlines the need to bring an organization- wide cultural revolution that encourages employees to change their behavior as they interact with clients, while also promoting a more client-centric experience with internal clients. One of the ways Nedbank began manifesting its commitment to clients was through its “Ask Once” promise, through which the bank pledges to resolve client requests the first time around. In case the bank fails to keep this promise, it will make a donation in the client’s name to the client’s choice from a list of charities. “This was a very clear commitment to clients and non-clients alike that we were determined to start fix- ing the basics and embark on a client-centered journey,” Hardie adds. Results This strategy demonstrates that Nedbank not only knows about its clients, but also knows them individu- ally. Hardie says the company’s strategy has driven impressive results. In the first half of the year, NPS has increased “drastically” across the board, reaching in excess of 80 percent in some channels. This lift after a five-year journey is believed to be due to the different initiatives meshing together and starting to drive real change. “We got to the critical stage where the cohesiveness of the initiatives started to drive real results.” Customer acquisition rates also improved, which were below the bank’s expectations three years ago. These have since increased and compare with those of international retail banks. With the help of Peppers Rogers Group, Nedbank now better understands the causes of attrition and has identified 16 initiatives to address this problem. Despite its achievements, Nedbank’s leadership recognizes that the bank still has more to do to achieve its goals. “It has been a long journey with a lot of hard work and dedication—we are delighted that we are half way there,” Hardie says. Through these various but complementary initiatives, Nedbank continues in its efforts toward building deeper relationships with clients. The bank’s most current initiative includes a coordinated review of its client loyalty strategy with the goal of deepening relationships with clients in real time. “You need to have a very robust measurement engine in place as a foundational step to start building more aspirational initiatives.” —Doug Hardie Executive General Manager, Nedbank
  12. 12. Retail Banks On paper, financial institutions seem primed to excel with social customer interactions. They have large amounts of customer data at their disposal to engage and advise them via social channels. At the same time, money and finance are extremely important issues to most consumers. They use social media to share insights and learn about new products, services, and make financial decisions. Every day, consumers sign up for tools such as electronic transfers, mobile check deposits, online branch and ATM locators, and other digital applications they find convenient and valuable. Younger, digital-native consumers are approaching banking age, searching for banks that will meet their interaction preferences. In addition, the banking industry has been working to break away from its less-than-stellar reputation with consumers. Social media offers ways to make genuine connections with consumers in an effective and cost-efficient way, all while strengthening individual relationships. Advanced social media strategy therefore seems like a natural extension of a bank’s customer experi- ence strategy. But the fact is that banks aren’t doing much beyond just being present on social media sites. Sure, many banks have Facebook or Twitter pages to broadcast PR or marketing messages and monitor customer complaints. But you’d be hard pressed to find much more than that. What’s holding banks back from advanced social media activities? The simple answer is that it’s chal- lenging, and without a proven go-to strategy for social media in banking, the ROI is not always obvious. Many banks choose to maintain the status quo rather than try to innovate with an unproven strategy. We think that’s a lost opportunity to build revenue, trust, and long-term relationship strength with banking consumers. It’s time for banks to dip more than a toe in the water if they want to reap the potential rewards of social media strategy. Social media obstacles Many in the financial world offer excuses for why they don’t innovate through the social media channel. All can be overcome. A few common challenges: 1. Compliance and regulations The banking industry is a regulatory minefield. Banks must deal with laws pertaining to the use of customer data, privacy requirements, records retention, and even inter- actions that may be construed as investment advice. As such, they are very cautious about doing much more than the basics regarding social media. We think that challenge can be overcome with a strategic approach to social media participation. It starts by establishing policies designed to manage internal and external social media “rules of engagement.” Set expectations right from the start about the types of conversations you will have in your different social media accounts. Move to more appropriate channels if escalation is needed. Create employee guidelines for participation and train the staff on social media compli- ance, so they will feel comfortable knowing their boundaries. And recognize and share great social media interactions to encourage others to participate. ©2014 12 What’s Keeping Banks From Reaching Their Innovation Potential in Social Media? Three recommendations for attainable opportunities using social media strategy. Adapted from Customer Strategist Journal Social Media Reaches Across the Business Social media is not just for one department. Many areas of the business can see enhancements, such as: “Many banks choose to maintain the status quo rather than try to innovate with an unproven strategy.”
  13. 13. ©2014 13 Retail Banks 2. Lack of proven ROI As with all new and disruptive technologies, banks struggle to determine the value of their social media activities and ultimately, their ROI. They are unsure how much likes, fans, and followers actually contribute to the business fundamentals. ROI is possible in social media, if measurable goals and objectives are defined. We recommend the fol- lowing framework: • Define SMART (specific, measurable, attainable, relevant, timely) social media objectives and KPIs that are aligned to corporate goals and target segments. For example, one bank’s corporate goal may be to generate leads in its youth segment. The specific social media objective would be to generate 10 percent of overall leads in the youth segment from social media over a six-month period by driving traffic to bank- owned channels such as its website, call center, or branch. When new customers sign up, the bank can ask customers if they used social media in their search and consideration process. Then it can measure leads generated through social media as a core KPI.  • Collect accurate data using social analytics tools, such as Google Analytics, to get a complete picture of social media activity. It is important to collect data before and after the social media initiative to measure the incremental impact. For those interested in brand awareness, measurements may include number of visits, time on the site, number of followers or likes, and conversion rates for users taking specific action. If engage- ment is more important, banks can focus on metrics such as number of community registrations, comments, reviews, etc., or how influential customers are in terms of their own number of followers and interactions.  • Calculate the benefits associated with the social media initiative using collected data. The value of a Facebook like can be determined by tracking the revenue generated via leads and traffic originating from Facebook to a dedicated landing page on the company’s website (accessible only via Facebook). So the benefit of a ‘Facebook engagement’ campaign is the total revenue generated from Facebook fans who were encouraged to visit the website and enticed to purchase the promoted product or service. By sub- sequently quantifying the cost of the social media initiative in terms of people, process, and technology expenditures, the ROI calculation now becomes a trivial task. Social media doesn’t have to be expensive. Tools and technology are readily available. The real invest- ment comes from thinking and acting strategically about the best ways to engage with your customers via social media. Product-focused legacy Banks are traditionally product-centric. They focus most of their energy on pushing products and services to masses or specific segments. In the social media space, banks need to take on a different dimension that encourages customers to create an emotional bond with the brand. With so much happening in the social space, banks are unlikely to capture customers’ attention by just pushing out messages about their products or services at random times across randomly selected chan- nels. Instead, explore where the bank’s customers and prospects gather and offer something that the audience wants, whether it be relevant content or quick responses to complaints. The discussions naturally lead to sales opportunities, which banks can seize by creating compelling offers and delivering on the value as promised. Social media isn’t about products and services. It should reflect the experience and emotions of custom- ers as they use products and services. Social media opportunities Banks that look at social media as a strategic channel will see many ways to engage with customers across the lifecycle. In past issues of Customer Strategist we have wrriten that banks can mix offline and online customer data to get, keep, and grow customers. We also see innovation potential through activities where banks build customer trust, generate revenue, and achieve operational excellence. “In the social media space, banks need to take on a differ- ent dimension that encourages customers to create an emotional bond with the brand.”
  14. 14. ©2014 14 Retail Banks 1. Build customer trust Banks are a necessity, but many consumers feel like they have an adversarial relationship with them. The industry’s reputation leaves a lot to be desired. Yet there is great opportunity to advance social media to build relationships with individuals to counteract that reputation. In their book, Extreme Trust: Honesty as a Competitive Advantage, Don Peppers and Martha Rogers, Ph.D. write that trustable companies do the right things and do things right, proactively. They act in cus- tomers’ best interests with proactive competence and intent. What better channel to demonstrate proactive competence and intention than social media? Banks can preemptively contact someone before a fee is incurred, or connect with target segments about financial issues that are important to them. More than just Facebook and Twitter accounts, we see great potential in bank-sponsored social com- munities, provided consumers are willing to participate. Banks that position themselves as helpful advisors with useful content can overcome poor reputations to be considered trustable. Community success requires honest, genuine discussion about issues, led by consumers and merely facilitated by the bank. And research shows that consumers who see a firm as a trustable source are more likely to spend more and make recommendations to friends. 2. Generate revenue Social media is about building and nurturing genuine relationships. The way to extract financial value from those relationships is, first and foremost, to listen to what customers and prospects are saying and then offer something compelling based on identified needs. Banks can respond with tailored messages and rel- evant communications on how to benefit from using a specific product or service to meet customers’ needs. Active listening can also uncover opportunities to identify customer life events, such as buying a home, getting married, etc., which banks can turn into sales. Monitoring customer complaints presents an addi- tional means to retain revenues—by addressing the concerns of existing customers and preventing them from ceasing their relationship with the bank.   3. Achieve operational excellence Leading banks use social media to develop more innovative products, services, and processes that reflect customer demand. As a channel, social media is positioned as a cost-effective and easy way to seek and incorporate multiple levels of customer feedback. Some examples: • Product innovation: Crowdsourcing through relevant social channels yields new banking products. • Service innovation: The ability to address inquiries and complaints on customers’ choice of media helps nurture communities of advocates. • Process innovation: Internal collaboration improves productivity. The benefits of the social media channel come from its constant evolution. It’s not enough for banks to have a social presence. They need to innovate and evolve along with their customers and the channel itself. Will you do what it takes to reach your customer innovation potential? Note: Claus Friis, Peppers Rogers Group financial services subject matter expert, contributed to this article. “Banks that position themselves as help- ful advisors with useful content can overcome poor reputations to be considered trustable.”
  15. 15. ©2014 15 Retail Banks Created in 2005, Boubyan Bank is one of the fastest growing banks in Kuwait, with a wide range of products and services in consumer banking, corporate banking, and investments, including Islamic banking offerings. As a Deputy CEO in charge of consumer banking and banking operations groups, Abdullah Al Najran for- mulates business strategies and policies and is closely involved in the planning and execution of operational activities. He is also a key advocate of learning and innovation culture, which continues to be the major focus of the bank’s strategy. Here he shares his thoughts on the intersection of traditional and innovative forms of customer strategy, specifically social media. Customer Strategist: Why are customer strategy and innovation important to the company? Abdullah Al Najran: The customer is at the center of everything we do and our customer strategy focuses on providing differentiating products and the best quality service to our main target segment of affluent Kuwaitis. We have also identified the potential of other strategic segments, such as youth and ladies, for which we devel- oped compelling value propositions that would appeal to new customers, as well as retain the existing ones. Innovation takes the bank’s signature customer experience to the next level as we strive to continu- ously exceed our customers’ expectations. We have embarked on a transformation journey and are in the process of implementing various customer-centric initiatives, such as upgrading the call center with biometric features such as automatic customer voice recognition, revamping our website for superior digi- tal experience with “chat” and enhanced Internet banking features, focusing on social media as a market differentiator to engage with our customers on a more personalized level, amongst others. Essentially, the customer strategy defines the “wow” experiences for our target customers, whereas innovation ensures that we keep delivering on the Boubyan promise in line with our customers’ ever- changing needs and preferences. CS: What potential is there for banks to advance their customer strategy through social media activity? AAN: Social media has become the primary channel of communication for young, digital, socially savvy customers. Banks need to adapt to this trend in order to build credibility and trust with this segment. Social networking sites are where youths of today gather to socialize, be entertained, share stories, seek advice, and prefer to have their complaints and questions answered. Consumers view social media as the platform for meaningful engagement through on-demand content customization, sharing and collaboration, all of which banks can leverage to build trust and create opportunities to grow their customer portfolio. If positioned correctly, social media can be a very effective customer acquisition and retention tool. First and foremost, social media marketing is a far less expensive option relative to traditional media, such as TV, radio, billboards, etc. Social media is also a well-positioned platform to build superior relationships with customers, as banks have a direct path to interacting with the audience to gather immediate feedback on the products and services. People can immediately “like” the product /service, comment on it, share it with their friends. This “know-like-trust” cycle with customers and prospects will ultimately lead to revenue growth through new acquisitions and repeat business. CS: What type of social media activity do you think holds the most promise from a business perspective? AAN: The key to social media success starts with “listening” across all social media platforms to what is Social Media Energizes Traditional Banking Strategy Kuwait’s Boubyan Bank undergoes a customer-focused transformation, using social media as the strategic lynchpin. Adapted from Customer Strategist Journal “Essentially, the customer strategy defines the “wow” experiences for our target customers, whereas innovation ensures that we keep delivering on the Boubyan promise in line with our customers’ ever-changing needs and preferences.” —Abdullah Al Najram, Deputy CEO, Boubyan Bank
  16. 16. Banks being said about the brand and products, competitors, and following industry trends. This gives insight on customers’ and prospects’ needs and preferences, which guides communication and engagement efforts in order to create high brand awareness and keep the brand top of mind for consumers. With a social media monitoring tool in place searching for brand and product mentions, banks can identify customer service issues as they come up, even on fast moving social networking sites like Twitter. Furthermore, a good listening program can proactively manage the brand’s reputation and in the case of a crisis, mitigate the potentially negative effects on the brand by responding quickly and properly according to the corporate crisis response plan. CS: What social lessons from other industries can help banks with their social initiatives? AAN: Focus on business outcomes—most banks are using social media channels merely to push mes- sages out. Social platforms offer a golden opportunity to engage with customers in a two-way dialogue and to create an emotional bond with the brand. Customers can also become the most significant source of innovation—banks need to embed social capabilities in the business processes to continuously collect customer feedback. Change starts from within—social media adoption requires transformational change, so dedicate a social business team (comprising representatives from relevant business groups) to act as change agents to build awareness and drive the adoption across the organization. [Boubyan is in the process of defining an employee transformation program to start down this journey]. Furthermore, banks should empower their employees to become brand ambassadors and leverage them to grow the network of followers and external brand evangelists. CS: What do you think are some of the biggest roadblocks to banks’ use of social media as a relation- ship channel? AAN: I believe the biggest challenge lies in maintaining customer data privacy in terms of the extent and scope of customers’ information being shared over social media platforms. These platforms are typically provided by external third parties, which means that data is stored on the provider’s servers. Naturally, banks are very uncomfortable with such a set-up, since regulations dictate that customer information of a sensitive or confidential nature cannot be stored outside of the bank’s systems. So when a customer makes a complaint about a bank on Twitter, for example, the bank needs to shift that conversation offline and typically asks the customer to contact the call center or a direct number to the bank staff member. The challenge becomes when a customer does not necessarily want to call the bank on the phone. Banks need to look for alternative online solutions to address this issue. One way is to direct a customer to a click-to-chat tool with a live agent that resides on the bank’s servers and provides a secure environment over which to share personal banking details. Live chat is something that Boubyan will implement in the near future, not only to resolve customer complaints but also to engage in informative discussions. CS: How should a bank balance social media activity with the rules and guidelines of Islamic banking? AAN: Social media and Islamic banking are not conflicting; indeed social media is a channel like any other and the same rules and guidelines of Islamic banking apply across all customer touchpoints. Since custom- ers and users interested in Islamic banking are generally more conservative, there are additional guidelines that apply in the social media space with respect to moderation and stricter filtering of the language used (tone / content) and photos shared. The flexibility in interaction should be there, but with clear redlines not to cross. CS: What is the biggest challenge you see to social media expansion? AAN: Customer perception and experience of the bank’s brand can be relatively easily swayed by the ©2014 16 “Banks should empower their employees to become brand ambas- sadors and leverage them to grow the network of followers and external brand evangelists.” —Abdullah Al Najram, Deputy CEO, Boubyan Bank
  17. 17. Banks conversations taking place across social media channels, which we have very little control over. That’s why we felt it was important to invest in establishing clear governance and social media policies to enable us to respond quickly and communicate in a manner that is aligned with our brand values and consistent across the channels. Another area that we needed to address was how to manage employee communication through their personal accounts. Since we encourage our employees to get involved in social media adoption and innovation, we also invested in developing clear social media guidelines for staff to avoid any public embar- rassment and liability with any potential miscommunication. CS: What would you say to other banking executives looking to expand their customer initiatives into social channels? AAN: Start with the solid governance to guide your decision making and oversee social media activities in an efficient and effective way. Build internal policies for your employees to follow to ensure consistency in branding, communication, and customer experience across all social media platforms. Furthermore, build- ing engagement on your social media channels requires active listening so invest in a good social media monitoring tool. Understand where your target customers are gathering, listen to what they are saying, and finally provide them with content and propositions based on their needs. ©2014 17 “Start with the solid governance to guide your decision making and oversee social media activities in an efficient and effective way.” —Abdullah Al Najram, Deputy CEO, Boubyan Bank
  18. 18. Retail Banks With so many types of social media platforms out there, it can be hard to determine which one to focus on. Peppers Rogers Group conducted a study of nearly 3,000 social media users in Kuwait to determine how they use social media and their potential for stronger banking relationships. According to the study, Facebook, Twitter, and YouTube are the most popular social media channels, attracting more than 60 percent of users. While Facebook has the highest usage, Twitter is accessed the most per day. And users are diverse – a small but growing population also uses emerging platforms such as Whatsapp, Pinterest, Skype, and Orkut. Consumers use social media for a variety of reasons—to stay in touch with friends and family, share common interests with others, find information about products and ser- vices, and share photos, videos, and music. The common thread among them is that they all connect people to others. And consum- ers are receptive to the idea of connecting to businesses as well, if the interaction is valuable and relevant. Sixty-eight percent of users are somewhat or most likely to click on an ad within social media that is relevant to them, and 66 percent are somewhat or most likely to purchase a product or ser- vice recommended on a social network. When it comes to banking, there is opportunity to increase awareness and engagement. Only 40 percent of Facebook and Twitter users follow their banks on social media, and it’s even less on other channels—17 percent for YouTube and less than 6 percent for all others. However, con- sumers have a positive view of banks that do use social media: 78 percent agree that bank social media presence “makes me feel that the bank is keeping its customers informed,” and 64 per- cent agree that social media use by banks “makes me feel that it is open to people’s opinions.” Social media has become a vital channel to the future of banking interactions. It must be considered a strategic channel, not just a second thought or PR endeavor. ©2014 18 Study Shows Potential for Social Media in Emerging Markets Peppers Rogers Group conducted a study of nearly 3,000 social media users in Kuwait to determine how they use social media and their potential for stronger banking relationships. Adapted from Customer Strategist Journal Consumer Perceptions Related to bank Social Media Presence Consumers have a positive perception of banks that participate in social media. Source: Peppers Rogers Group
  19. 19. ©2014 19 Retail Banks The use of digital channels is skyrocketing in financial services. New technologies serve customers in unprecedented ways while driving internal efficiencies. And according to market research company Ovum, U.S. banks will spend $41.5 billion on technology through 2013, with much of it on digital tools. Customers now have access to accounts and can transact across mobile, social, and other self-serve channels. The branch’s role is changing to focus on more complex issues while consumers use Facebook, mobile apps, and virtual wallets to conduct financial business in a new ecosystem. Today’s consumers share more information about their needs, risk tolerance, and personal profile than ever before. Their expectations are higher, shaped by experiences outside banking. They are bet- ter informed as they use internal and external channels to research products and services. They look beyond banks to fulfill financial needs, engaging players such as Google Wallet, PayPal,, and even Costco and Wal-Mart. And consumers connect to brands and one another through social and mobile channels, communicating their experiences broadly. They’re willing to take advantage of low cost channels if they find them valuable and relevant to their daily lives. Many actually prefer them. There is much potential to balance internal efficiencies with a superior customer experience in this new reality. But achieving the balance requires banks to optimize the unprecedented amounts of customer data now generated to make information actionable and relevant. New sources of customer Big Data consist of: • Transactional data • Product usage data • Web registration data • Customer value data • Channel usage data • Web clickstream data • Third-party data • Social media data Banks are beginning to explore the opportunity to differentiate with insight. For example, the business press reports that one of Capital One’s top priorities is to be a data-driven organization and use insight to differentiate in customer service and product development, though specifics are hard to come by. And it is not alone. Investment firm State Street Corp. is using semantic data models on the client side to opti- mize investment strategies, while also improving regulatory reporting and risk calculation internally. Even a smaller player like Midwest regional bank Great Western Bank is leveraging predictive analytics for its marketing activities. The industry is still in its nascent stage, however. According to a recent study by Celent, only 24 percent of banks surveyed had implemented a Big Data solution, most commonly around risk and fraud monitoring or product and service marketing. But of those who have had a Big Data initiative in place for more than a year, 70 percent had met or exceeded business expectations. And to highlight data’s potential, 90 percent of those surveyed said they think that successful Big Data initiatives will define the financial services win- ners in the future. So how can banks make the most of Big Data? By optimizing the collection and use of customer data, banks and other financial institutions can simultaneously improve the customer experience while driving efficiencies. Some examples include: Provide consistent multichannel experiences. Consumers can now interact with a bank through multi- ple channels for information and transactions. Banks must provide a seamless experience across whatever Five Steps to Big Data Dominance in Banking Superior customer experiences and improved internal efficiencies require smart use of newly available Big Data. Adapted from Customer Strategist Journal “Achieving the balance requires banks to optimize the unprecedented amounts of customer data now generated to make information actionable and relevant.”
  20. 20. ©2014 20 Retail Banks channels are used. Employees in the branch must know if a customer has called the contact center or visited the website; transactions started in one channel can be completed in another. This will create satis- fied, engaged customers. Acquire new, mobile-savvy customers. Young, digital native consumers are beginning to open accounts and create lifelong relationships with financial services firms. They’re mobile and they expect the compa- nies they do business with to be mobile, too. Banks will succeed reaching this new customer group if they deliver insight-driven experiences through mobile devices. Sense and respond with effective targeting. Reaching the right customer with the right offer at the right time is the holy grail of sales and experience. And banks can generate new revenues through proactive engagement and outreach to certain customers groups at the proper time. Rightsize the customer experience. Use Big Data to find the most appropriate channels based on cus- tomer needs, value, and behavior, and then go deeper to understand the best way to migrate customers to serve them in the most efficient and effective channels. Identify new sources of revenue and acquisition. Mine unstructured social data to activate advocates and identify new customers. Optimize pricing based on customer segments, products, channels and geog- raphies, and remove any revenue leaks such as ineffective lead generation, poor follow-up, low conversion ratio, or high attrition to achieve sustainable revenue sources that are less sensitive to risk, sticky, and recurring. Build loyal relationships. Surprise and delight by knowing customers more intimately than ever before and meeting their needs, whether they are verbalized or not. Show that your bank has its customers’ best interests at heart, and they will reward you with their loyalty. Improve service to sales. By mining customer service data and defining trends, banks can respond to customer needs and make systemic changes to processes that can even result in up-sell success. For example, rather than responding to and resolving complaints around monthly service fees, offer direct deposit or other products and services as part of the care response that would eliminate these charges. Invest smartly in the retail branch. Understand branch-level data and optimize investments in the net- work. Learn what types of customers visit the branch and why. Focus branch initiatives on what matters most to those customers. With so many opportunities for revenue enhancement and relationship strength, why don’t more banks take advantage of the Big Data potential? Because acting on these opportunities is a non-trivial matter. Making sense of so much data is a challenge, as is where to prioritize efforts. Companies also want to make sure to invest in the most effective initiatives while staying agile enough to meet changing customer expectations. It can be a daunting undertaking. Five Ways to Attack Big Data We at Peppers Rogers Group have outlined five steps to guide financial leaders as they craft smart data strategies: 1. Elevate the importance of business-savvy data scientists. While there’s always a high demand for quan- titative professionals to be part of the team, progressive banks are looking to complement that talent with creative business professionals who see business opportunities in trends that produce bottom-line results.   2. Organize for one version of the truth. Too many banks are still organized in product- or channel-centric silos. The bank can’t knit together a comprehensive picture of the customer. Silos need to be redefined along with analytics practices. Online and offline data must be integrated into platforms across channels that facilitate a comprehensive understanding to enable predictive analytics and inform real-time interac- tion strategies. Silos need to be redefined along with analytics prac- tices. Online and offline data must be integrated into platforms across channels that facilitate a comprehensive under- standing to enable predictive analytics and inform real-time interaction strategies.
  21. 21. ©2014 21 Retail Banks 3. Don’t underestimate the integration challenge. Today banks need to extract insights from structured and unstructured data, statistical data, social media streams, click stream data, smartphone data, videos, etc. Small-scale experiments using Big Data are recommended to start, with slow rollout from there. 4. Integrate intelligence into customer-facing business practices. The biggest opportunity for Big Data is the potential to identify and integrate insights into customer-facing applications in real time. Analytics have come a long way, but many banks neglect to push the intelligence to front-line applications.  5. Use Big Data to accelerate the customer-centric transition. Customer centricity is no longer a nice to have strategy for banks, it’s the only differentiator. And data is the backbone. It’s critical to think beyond technology and analytics to what organization, process, and people-related changes are necessary to really put the data and insights to work. A successful Big Data strategy must be coordinated across the enterprise. It’s not the domain of one department or business unit. The chart above illustrates a hypothetical use of Big Data to har- ness and harvest customer data for an improved customer experience and greater efficiency. Conclusion Big Data shows so much promise for banks willing to consider it strategically. Those that do will be able to understand customers more intimately and act in real time to meet their stated and perceived needs. On the efficiency side, they will harmonize channels by defining multichannel journeys that make sense to the user and eliminate redundancies. And overall, banks that create Big Data dominance will influence customer behavior across channels to make interactions more effective and efficient, gaining loyalty and financial strength in the process. Harness and Harvest Big Data Big Data can be harnessed and harvested at different points in the customer lifecycle to drive customer experience and internal improvements Source: KBM Group
  22. 22. ©2014 22 Round-the-clock customer service is becoming essential for most organizations. This is especially true in the financial services industry since customers want to get help whenever they need it, even after normal office hours. Having recognized the importance of being there for customers whenever they need, irrespective of the time of the day, Associated Banc-Corp decided to start operating its contact center around the clock. “We wanted to improve the customer experience and felt there was adequate need for [24/7 service,]” explains Wendy Kumm, vice president of customer service. To make the extended hours work, the bank started hiring college students to fill the openings created by the additional shifts. This new reality highlighted the need for a better scheduling system for the bank, which manages about $23 billion in assets, employs close to 5,000 people, and serves more than one mil- lion customers. Kumm explains that previously the company was preparing schedules manually. While the spreadsheet-based scheduling system had worked in the past, the bank needed a better way to assign shifts. “We had been doing a good job, but we needed to simplify the process,” Kumm notes. In order to address this issue, Associated Banc-Corp implemented a workforce management tool to help with sched- uling the additional shifts. The company’s leadership quickly realized that technology could also help with the company’s quality control and training efforts, Kumm says. In the past Associated Banc-Corp had relied extensively on live monitoring for quality control and compliance, but it wanted to go a step further and analyze speech. In 2009 the company decided to implement Verint’s workforce optimization suite. “The secret sauce was speech analytics,” Kumm says. “It’s every call center manager’s dream come true.” Results The deep insight into what customers are saying is giving Associated Banc-Corp actionable insights that it’s able to use to improve the customer experience. For example, the company identified that its online banking system wasn’t always as user-friendly as customers desired. After analyzing customers’ com- ments, the bank made changes that improved the experience for customers using online banking. Further, it allows the organization to resolve individual problems that customers are facing. “We want to identify customers who have had issues and reach out to them and offer a resolution,” Kumm says. She explains that the bank has a specific team which listens to calls and then reaches out to customers. This system also allows the organization to identify repeat callers and address their needs. An additional benefit has been using customer insights for training purposes. Kumm explains that the bank developed an e-learning module and uses recordings from actual calls to highlight best practices. Kumm says the organization surveys customers after a contact center interaction and has seen an increase in positive comments since it adopted the new system. She says comments that are made dur- ing interactions with agents have also been very positive, many times praising agents for their help. “Our company is focused on improving customer experience and making it easier for customers to do business with us. This fits right into that aim,” Kumm says. By listening to calls to its contact center, the bank is able to identify problems and address them, improving the customer experience. Associated Banc-Corp’s Customer Listening Makeover Adapted from 1to1 Media Retail Banks “Our company is focused on improving customer experience and making it easier for customers to do business with us. This fits right into that aim.” —Wendy Kumm, Vice President, Customer Service, Banc-Corp
  23. 23. ©2014 23 Trust is easy to lose and difficult to gain back. Cutthroat competition in several industries is making it essential for organizations to retain customer trust or, if they’ve lost it, work hard to earn it back. The financial services industry has been going through a PR crisis in the past years, as bailouts, subprime lending, and stock market declines have led to negative perceptions of the whole industry. As Jonathan Levitt, CMO at OpinionLab, points out, when customers hear the name of a bank or a Wall Street company, many times it’s related to major bailouts or massive bonuses being paid to executives. “The events of the past five years have changed the mentality of customers with regards to financial services companies,” Levitt notes. This cloud of negativity has fueled the need to become more customer centric, bringing about a silver lining to a dark period in the recent history of financial entities. “The financial industry was shaken from its apathy and forced to listen to customers,” Levitt says. Stacey Haefele, CEO of HNW, agrees. “Trust is deeply shaken,” she notes. “More than any other industry, financial services organizations have a big job to earn back their customers’ loyalty,” notes Simon Angrove, senior vice president and general manager for Verint’s retail financial services. Further, the financial services landscape is changing, and traditional entities are having to compete not only against their direct competitors but also non-traditional financial services companies, for example peer-to-peer lending organizations. “Customers have several different options for borrowing money and are no longer locked in to financial institutions like they used to be,” notes Levitt. This is pushing traditional institutions to become more nimble and customer centric. In order to recover the trust they have lost, change some customers’ negative perception of them, and beat their competition, many financial services organizations are making an effort to listen to their custom- ers and then take action on what they’re hearing. Integrating cross-channel feedback Because today’s customers are communicating with the brands they do business with across multiple channels, different departments in an organization are gathering their own customer feedback. According to experts, a major setback for companies is their inability to bridge departmental silos and bring this frag- mented information together, allowing them to glean a more rounded view of their customers. “We’re living in a multichannel retail world where customers complete their buying journeys across many different chan- nels, making it imperative for organizations to get a cross-channel view of their customers across these touchpoints,” Angrove notes. He adds that while there are a number of financial services entities moving towards feedback integration, this is still an early trend. Levitt agrees that cross-channel integration of feedback is the biggest challenge that financial orga- nizations are facing. “We’ve seen companies that are making huge strides in collecting information, but stitching it all together is still a problem,” he notes. Levitt says each interaction between a customer and an organization is part of the overall brand experience, so business leaders need to make sure they’re gather- ing data from every part of the company. Geico, Levitt notes, is one company that is managing to effectively gather information from different channels and meshing it together to tell a comprehensive story. Blue Shield of California addresses the potential problem of silos through a monthly meeting among Financial Firms Cash in on VoC Listening to customers and acting on these insights are essential for organizations. Recovering from negative perceptions and lack of trust, financial services entities are leveraging VOC to become more customer centric. Adapted from 1to1 Media Retail Banks “The financial industry was shaken from its apathy and forced to listen to customers.” —Jonathan Levitt, CMO, OpinionLab
  24. 24. ©2014 24 managers of different channels. During the meeting, they share details on customer insights that they’ve gleaned, notes Mallika Madakasira, insights consultant at the insurance provider. Further, a daily newsletter that includes customer insights is sent to key decision-makers. Sharing insights across different depart- ments helps reiterate the company’s determination to do what’s right for the customer. According to Madakasira, Blue Shield of California’s efforts to listen to what its customers are say- ing have also translated into a cultural shift within the company, turning it into a more customer-focused organization. Madakasira notes that Blue Shield of California is currently working to drive a more cus- tomer-centric culture where the conversation begins with the customer in mind, with employees looking at everything from the customer’s viewpoint, allowing them to prioritize what’s important for their customers. Employing novel VOC techniques Listening to customers is not enough. Organizations not only need to hear what their customers are saying and understand their pain points, but they also need to act on this insight in order to rectify any problems. As Adele Sage, customer experience analyst at Forrester Research, told 1to1 Media last year, companies that excel in their VOC initiatives are distinguished by their ability to connect the dots between listening, analyzing the information, taking action, and looking at results. Levitt notes that organizations, including financial entities, are still making the mistake of not acting on their voice of the customer insights. “We’re great at gathering information, but not so much at acting on it,” he notes. This is due in part to VOC techniques historically being very manual, for example reading comment cards and employing mystery shoppers. Angrove notes today organizations can gather feedback from an increasing number of sources. These include looking at what customers and prospects are saying in social media, both about that particular organization and its competitors. Secondly, voice analytics technology is making it much easier for businesses to understand what their customers expect from them. In order to get the best insights, some financial entities are experimenting with novel ways to analyze and aggregate VOC from across the enterprise. According to Haefele, some companies are recruiting large format focus groups and allowing customers to interact with each other and discuss the companies they do business with. Haefele notes that while representatives of the company that commissioned the research are present, they try to remain unobtrusive, making space for customers to be more vocal and truthful in their discussions. Financial entities are also engaging in ethnographic research by interviewing customers in their own homes. Haefele says brands are sending participants a video camera and sets of exercises and corre- sponding questions and asking them to film themselves answering the questions, allowing businesses to get insights and also observe customers in their own homes. Experts highlight the importance of not forgetting frontline employees, who are always a great source of information since they are in constant contact with customers. Further, including frontline employees in VOC exercises allows organizations to be more agile in addressing problems and fixing potentially prob- lematic relationships. Finally, financial organizations need to close the loop and let customers know what they’re doing to address their concerns. Angrove notes that savvy companies are identifying causes of dissatisfaction and immediately reaching out to that particular customer to ask for more information and also explain what steps the organization is planning to take to resolve the problem. Customers who are not satisfied with the way a brand is treating them are likely to lose trust in that orga- nization. As Don Peppers and Martha Rogers, Ph.D., write in their latest book Extreme Trust: Honesty as a Competitive Advantage, “the penalties for untrustworthy behavior in a highly interactive and transparent world will be severe and immediate.” Since lack of trust is not only a phenomenon present in the financial services industry, with Forbes highlighting research indicating that almost a third of online consumers are more likely to trust the opinion of a stranger above that of a brand just last month, all entities  would do well to listen to their customers’ voice to better understand what they can do to improve the relationship with them. Retail Banks Finally, financial organizations need to close the loop and let customers know what they’re doing to address their concerns.
  25. 25. ©2014 25 Business Boost: A €1.5 million investment resulted in approximately €3.6 million in profits in 2012, an ROI of around 140 percent in the first year. Data has become a very precious commodity for organizations, and business leaders are putting a lot of focus into developing sound analytic strategies that will help their firms get an edge over the competition. The ability to turn data into actionable insights is often a major differentiator among companies. Akbank is committed to leveraging data to create a customer-centric organization. The Turkish bank was collecting huge amounts of data from its customer database, which holds more than 19 million records of customers and sees up to six billion transactions every year over eight channels, including the branches, call center, ATM transactions, and Internet and mobile banking. However, making sense of this huge amount of data was challenging. In order to compete in the tough financial market, Akbank wanted to make the most out of its colossal amounts of data, allowing it to accu- rately predict customer banking and transactional behavior and provide customized solutions for multiple customer segments. The bank wanted to use the information to create more targeted and customized actions for its customers through real-time rules, customer-based and portfolio-based targets, and lifetime events, among others. Further, the bank wanted to leverage data to increase cross-sales, NPS, and profit- ability, while decreasing attrition, notes Attila Bayrak, Akbank’s senior vice president for CRM. The bank’s goals required extensive work in analytics that would allow Akbank’s decision-makers to better understand their customers using data insights, including product and channel propensities, churn and retention behaviors, and cross-sell and up-sell opportunities. These had to be calculated in an environ- ment with multiple channels, segments, and products and the aim was to provide more optimized solutions through the different channels. In order to make the most out of its data strategy, Akbank set up a cross-functional team made up of members from the CRM, strategy, marketing business, operations, and IT departments, which, under the watchful eye of Bayrak, embarked on an initiative to make the most out of data. The company wanted to use these insights to better know its customers. The CEM initiative required the CRM department to undergo structural changes, almost doubling its staff and extending its single analytics team to three, which worked in collaboration with two campaign manage- ment teams. With more than one team, the analytics experts were able to carry out unbiased checkpoints. The analytic initiative provided Akbank with additional information on which to make decisions. Both sales and marketing as well as strategy and operations teams benefitted from continuous insights. The analytics team ran various customer segmentation models every quarter, changing the services per any changes in customer behavior. “The initiative is helping us segment and treat customers in a clearly defined way,” Bayrak notes. He explains that the bank uses customer responses to learn about its clients’ needs and can then send them relevant campaigns and offers in their preferred channels. Offers, campaigns, and com- munications with individual customers are designed according to analytics insights. Akbank put a lot of emphasis on customer feedback, gathering insights regularly both before and after the initiative was launched. This showed that NPS went up by 43 percent between January and December 2012. Further, the number of customer complaints went down by 6 percent during that year. Akbank’s Analytics Initiative Improves the Customer Experience The Turkish bank is leveraging customer data to help it become a more customer- centric organization while also improving its bottom line. Adapted from 1to1 Media, June 5, 2013 Retail Banks “The initiative is helping us segment and treat customers in a clearly defined way.” —Attila Bayrak, Senior Vice President, CRM, Akbank
  26. 26. ©2014 26 The bank decided to implement geocoding technologies within its analytics initiative, including geo- graphical coordinates for 42 million customer addresses, 300,000 merchants, 950 bank branches, and approximately 3,750 ATMs. Further, Akbank’s analytics teams added 800,000 points of interests, including hotels, restaurants, and other retailers, in its data mart. The insights allowed Akbank to optimize its net- work, develop new mobile applications for customers, and helped in segmentation and analysis. Akbank launched a pilot customer acquisition campaign in the last quarter of 2012, leading to 52,000 calls with a response rate of 27 percent. Akbank invested around €1.5 million in the initiative, which resulted in approximately €3.6 million in profits in 2012, an ROI of around 140 percent in the first year based on a three-year period. Between January 2012 and January 2013 the initiative helped Akbank increase the cross-sell ratio of active customers by 3.4 percent, equivalent to 1.6 million new products for active customers. Cumulative customer profitability went up by almost 18 percent, generating an extra €287 million in gross profits last year. Customer retention ratio has also gone up from 17 to 18 percent. The initiative has helped Akbank gain 19.5 percent of the credit card market in Turkey, becoming the leader in the field. A total of 19 credit card sub-segments were created and used in the call center for 336 different retention offers. Increased insights are allowing Akbank to provide customers with appropriate real-time offers, with 2.5 million created systematically every month for inbound channels. As a result of the analytics initiative Akbank increased the products and services sold by 2.4 million through 2012. Retail Banks Cumulative customer profitability went up by almost 18 percent, gener- ating an extra €287 million in gross profits last year. Customer retention ratio has also gone up from 17 to 18 percent.
  27. 27. ©2014 27 Business Boost: Page views increased by 97%, while homepage abandonment decreased 20%. For many companies, aggregating and managing data has become quite the struggle. But, for AMP Financial Services, the challenge posed by its eight separate knowledgebases made balancing consis- tency and efficiency nearly impossible. While the company aimed to provide accurate information across the organization, the siloed systems were difficult to update, creating compliance issues in the process. The available files were frequently out of date, thus providing clients and customer service officers (CSOs) with conflicting information depending upon the knowledge source. With such obstacles in mind, AMP set forth to improve customer self-service, boost CSO efficiency, and eliminate compliance risk from business.  Industries across the board recognize that differentiation has become the key to success. In AMP’s case, providing reliable information was the key. By ensuring that information can be easily accessible and consistent across numerous platforms, AMP customers would be able to connect with the brand when and where they want, thus driving customer loyalty and retention to an otherwise dormant customer base. Stuart Magrath, director of AMP Direct and ipac marketing, notes that AMP’s primary goals not only aimed to consolidate each individual knowledgebase into a single source, but also to reengage customers and retain current business while up-selling and cross-selling to maximize potential. This initiative also aimed to reduce contact center full time equivalents (FTE) as more customers adopt online self-service. The organization-wide effort involved marketing, digital business, digital technology, customer service, direct sales, and adviser distribution, fronted by a steering committee with senior executives and working groups representing each of the key stakeholders. Representatives from digital business and customer service run the program’s day-to-day management, working to ensure content is current, relevant, and compliant, thus making existing content more accessible for all while incorporating feedback on an ongo- ing basis. From the number of articles viewed by CSOs and time spent in the online knowledgebase, to first-call resolution and average call handling time, AMP observes all pertinent success measures in order to maintain and improve upon its existing knowledgebase at all times. With its ‘customer thinking’ design in mind, AMP purposely gathered customer insights by recruiting a group of customers and entrusting them with the task of finding content on the brand’s site, tracking each throughout their entire interaction. The insights were then used to design a paper prototyping process while a second group of customers were brought in to assist in solution design. According to Magrath, this approach put customers at the center of the improvement process, while ongoing reviews, customers and staff feedback, and an annual customer survey allow AMP to improve and enhance continuously. Staff members now own the ability to automatically publish information to the Web and comment on articles to improve accuracy, creating greater staff engagement with the information used each day. This single source also delivers consistent information to frontline staff, financial advisers, and clients so internal users are equipped with the tools necessary for providing an exceptional customer experience, and cus- tomers can quickly and easily discover relevant product and service information on their own. When AMP Financial Services replaced its eight knowledgebases with one source, the company also moved users from the navigational model to the search model on their website. While users were previously AMP Financial Services Invests in Knowledgebase Optimization By consolidating disparate data across the organization, AMP implemented an easily accessible knowledge source that offers clients and staff consistent product and service information. Adapted from 1to1 Media, June 5, 2013 Retail Banks AMP Financial Services marked great cost sav- ings, as the greater usage of self-service options allowed the company to reduce the number of call center representatives. While AMP predicted a 40 percent boost in self-service, the com- pany experienced a 100 percent increase in usage prior to launch. —Stuart Magrath, Director of AMP Direct and ipac MarketingCRM, Akbank
  28. 28. ©2014 28 able to bookmark their favorite pages for speedy access to relevant content, such tools often left them to rely on outdated or non-compliant content that had yet to be removed from the system. Internally, AMP ran competitions within the contact center, enforcing a clean desk policy whereby hard copies of content were discarded, and bookmarks and shortcuts were deleted. Those that failed to comply would have to pay fines for charities in the form of a gold coin donation. Even call scripts and conversation guides were loaded into the knowledge base to encourage use of the tool to guarantee the entire organization would be sharing the same information across the board. The new knowledgebase also provides the ability to email links to various content so customers can read the information at their leisure instead of depending upon the call center representative to convey the data to them. Upon implementation, AMP Financial Services marked great cost savings, as the greater usage of self- service options allowed the company to reduce the number of call center representatives. While AMP predicted a 40 percent boost in self-service, the company experienced a 100 percent increase in usage prior to launch. Page views increased by 97 percent, while homepage abandonment decreased from 66 percent to 46 percent. Average time spent on site also increased by 22 percent, while the usability of AMP’s site increased from 57.6 percent to 65.7 percent, with particular improvements in the areas of effective- ness, efficiency, and satisfaction Retail Banks
  29. 29. ©2014 29 Innovation is essential for organizations to remain successful amidst strong competition. The fast pace of change in consumers’ use of communications and technology in recent years is putting more pressure on companies to embrace customers’ expectations and weave innovation through the fibers of their organiza- tions. Success stories have been written about business leaders who’ve led change to become pioneers in their fields. Brands like Apple have succeeded and achieved business growth because they took calculated risks. The savviest companies don’t see innovation as just a means to an end, and instead consider it as a phi- losophy that has to be ingrained within the core of a company. That is the philosophy that Spanish bank la Caixa lives by. For the bank, innovation is an attitude to work. At la Caixa, innovation lies at the heart of the operating remit and is present within the whole organization. In fact, in 2011 la Caixa was named the “Most Innovative Bank” during the global banking innovation awards, solidifying the bank’s philosophy that innova- tion is the best tool for growing efficiently and responding both to a changing environment and to customers. But becoming an innovative company cannot happen without a major effort that includes everyone within the organization. Employees and even customers have an important role in driving the changes that matter. la Caixa is a firm believer that innovation can only develop successfully if it’s based on feedback and learnings from three important groups—customers, employees, and industry experts. Leveraging customer insights Listening to customers is a key to success for organizations. When customers have the opportunities to pinpoint areas of improvement that the organization should address, companies can apply these shared insights to strategies that help improve their experience. la Caixa is a firm believer in such collaborative efforts. But the bank’s leadership understands that while many customers are eager to share opinions that could improve their experience with the brands they do business with, it’s up to these organizations to provide streamlined and straightforward ways for customers to share feedback and help improve the company’s products and service. This knowledge has prompted la Caixa to invest heavily in processes and mechanisms for gathering cus- tomer feedback and to make it easy for clients to share their comments through the various touchpoints. According to Benjamí Puigdevall, head of the bank’s electronic channels: “We focus our endeavors on creating the framework and tools for customers to collaborate with their ideas, opinions, and suggestions on what they need from our entity.” For example, after making a purchase, the bank gives customers the option to answer a survey over multiple channels about the product and the process. This permanent valu- ation tool allows users to share their feedback on 25 products and services. These surveys are leading to an average of 5,000 customer opinions every month allowing the bank’s leadership to keep its finger on the pulse of its clients. The bank also is agile by quickly making the sug- gested changes or introducing new products that cater to customer needs. The company also proactively reaches out to customers and involves them in brainstorming sessions. Feedback was essential when the company decided to overhaul its Internet banking home page to make it customer-focused. The organization called on its customers to help, involving hundreds in onsite focus groups and interviews to discuss design ideas, browsing habits, and ways to customize the homepage and make it user-friendly. The company’s latest endeavor is a new tool called Inspíranos (inspire us) within its online home banking channel. The tool was specifically built to provide customers with a destination to make suggestions about la Caixa Banks on Innovation By combining customer and employee feedback with learnings from industry experts, Spanish bank la Caixa is better able to map its new products. Adapted from 1to1 Media Retail Banks “We focus our endeavors on creating the framework and tools for custom- ers to collaborate with their ideas, opinions, and suggestions on what they need from our entity.” —Benjamin Puigdewall Head of Electronic Channels, la Caixa