Bank Customer Service Still Stinks

Banks and credit unions realize that there is a strong correlation between customer satisfaction, portfolio growth and financial results, yet recent studies of customer satisfaction indicate there is still a major gap in performance between the financial services industry and other verticals. 

Where are financial institutions falling short in their quest to become customer-centric and how can banks and credit unions begin to exceed customer service expectations? 

According to findings from a new Carlisle & Gallagher Consulting Group study, 65 percent of consumers say their primary financial institution is not as good as (47%), or much worse than (18%) leading customer service companies. This is despite increased investment in customer experience initiatives by the financial services industry. (A SlideShare presentation entitled, Are Two Calls Too Many in the Eyes of the Customer? is available for download)

The key findings of the report include:

• Customer culture drives great customer service
• Customer experience is defined by first problem resolution
• Most complaints involve core banking products (checking, debit card, credit card, mortgage)
• Banks are not listening to their customers
• There is a correlation between complaint handling, satisfaction, loyalty and new business potential

These findings correlate with the just released ForeSee Experience Index that found that the financial services industry had the lowest aggregate score of any industry, including the lowest scores in retention, upsell and referral potential. In addition, financial services as a category had the largest gap between the highest and lowest scoring brands (American Express is 82 and Santander is 65), suggesting that there is much work to be done in offering the experience that customers expect from companies in this category.

Quick Problem Resolution Provides Challenge and Opportunity

One of the impediments to customer satisfaction is that more than a third of consumers surveyed by Carlisle & Gallagher did not believe their problem* was completely resolved. Of the complaints resolved, a whopping 72 percent of the problems required two or more interactions, with close to 30 percent requiring 3 or more interactions. This is certainly not a path to success.

Source: Carlisle & Gallagher (2013)

From an opportunity perspective, more than half of the customers surveyed said they felt like a valued customer when their issue was resolved with a single interaction and that their confidence in the financial institution increased by 38 percent. Conversely, confidence dropped to 17 percent and trust dropped to 10 percent when a problem required two or more interactions to be resolved.

While some complaints may be complex and require further research, this insight shows the power of resolving a problem quickly and completely. In fact, several studies done in the past have illustrated that a customer who has had a problem resolved satisfactorily can be more loyal than one that has never had a problem.

Source: Carlisle & Gallagher (2013)

There is also a direct correlation between a customer's experience and future banking relationship potential according to the Carlisle & Gallagher study. As shown below, while first call resolution can often lead to more business, slower resolution requiring additional interactions leads to higher dissatisfaction and lower potential for relationship growth.

"Banks have one shot to resolve their customer’s problems before they hurt confidence, trust and future banking relationships. Two calls is just too many in the eyes of the consumer when it comes to solving problems," according to Patricia Sahm, Ph.D., Customer Experience and Channels Practice Lead at Carlisle & Gallagher

Source: Carlisle & Gallagher (2013)

Key Problem Areas

According to Carlisle & Gallagher, the key problem area for banks and credit unions are the core banking products, including checking accounts, credit cards, mortgages and debit cards, with fees and payments being the primary focus of service issues. As a result, focusing on resolving issues with these core products will have the greatest short and long-term impact on customer satisfaction.

"We were surprise that is was the rudimentary products that banks offer that are costing consumers the most headaches with personal checking leading the pack at 38%," said Sahm.

Source: Carlisle & Gallagher (2013)

Interestingly, the CG research also found that customers who did not have their problems resolved felt they shared ideas for problem resolution with their financial institution but were not listen to. This was especially true with debit cards (75%), credit cards (68%), mortgage issues (63%) and problems with checking accounts (60%). 

For institutions hoping to improve satisfaction levels, being able to collect and leverage these insights may provide the foundation for improved customer communication and problem resolution.

Opportunities for Improvement

From recent research from Carlisle & Gallagher as well as ForeSee, it is clear that customer expectations are increasing daily with industries other than financial services setting the bar for success.

According to Patricia Sahm from Carlisle & Gallagher, “Financial institutions have a long way to go to become great customer service organizations. In today’s world of instant gratification, consumer expectations are being shaped by experiences outside of the financial services industry where content, interactions and features are richer, delivering a more engaging and rewarding experience for the consumer.” 

With new compliance requirements, expanded transaction and communication channels and increased competition, the potential cost of poor complaint resolution is high. The good news is that, in an industry struggling with trust and service issues, there is a great opportunity for those financial institutions that meet or exceed expectations.

In fact, according to the study from ForeSee, customer experience is highly predictive of future business success. When comparing the financial behaviors of highly satisfied customers (scores of 80 or higher) to less satisfied customers (scores of 69 or less), highly satisfied customers are:

Source: ForeSee (2013)

"Satisfaction studies are not beauty contests," noted Larry Freed, CEO of ForeSee. “We see more and more CEOs monitoring and improving the customer experience because research shows that, when measured correctly, satisfaction predicts future financial results, revenue and even stock prices."

Some of the recommendations provided by recent research includes:

• Manage customer expectations by sharing problems and solutions with transparency and communicating the type of service level that customers can expect. (if it’s going to take 24 hours for the problem to be resolved share this with the customer)
• Invest in solving the issues with core products first (this is where the most opportunity resides)
• Evaluate your complaint database to determine the primary issues needing to be resolved (spend time resolving those issues driving the most pain)
• Create a 'first touch' resolution process (find a way to avoid multiple interactions)
• Improve social channel problem resolution (consumers using social media to complain can impact the most consumers and expect the quickest resolution)
• Develop a robust listing program (customers are willing to share ideas on problem resolution . . . let them help)
• Share the results (employees will respond to tangible measurements)

As we look to the future, the impact of social media can't be ignored. "The social media channel will serve as the benchmark in customer care, enabling customer communication across the banking enterprise and help break down silos within financial services organizations," according to Pat Sahm.

"Beyond social media, banks and credit unions will need to create the feel of first touch resolution for the customer by enabling employees to take quick action to solve the customer’s problem. It’s all about creating a ‘prevent’ defense and a culture of customer advocacy," continued Salm.

"In the next five years, consumer demands will continue to increase and regulatory requirements will only become more intrusive. Customer experience will need to be built into every aspect of the institution, no longer its own department."

 

* 'Problem' as defined by the Carlisle & Gallagher research included inaccuracies, issues with fees, concern with speed of loan, mishandled funds or other concerns and did not include a basic inquiry about a transaction or to ask product questions.


To request a copy of CG’s research report on customer complaint management available in early 2014, email insight@cgcginc.com.

Additional Resources

Are Two Calls Too Many in the Eyes of the Customer? - Carlisle & Gallagher Consulting Group SlideShare Presentation (December 2013)

ForeSee Experience Index - ForeSee (December 2013)

ForeSee Mobile Satisfaction Index: Financial Services Edition - ForeSee (November, 2012)

Six Years of Financial Services Innovation

Anticipation is building as FinovateFall 2013 is returning to Manhattan on September 10 and 11 for the seventh consecutive year. With more than 70 cutting edge firms doing 7 minute demos in front of a sellout crowd of more than 1,000 bankers, investors, analysts and the press, it is the premier showcase and networking event for what is new in the world of fintech.

While the overarching innovation theme remains the same, it is interesting to see the ebbs and flows of presenting categories and companies through the years. It is more interesting to realize how fast things have changed in the financial services industry.

Finovate 2007: When Mobile Was Young

The brainchild of the Online Banking Report and NetBanker blog publisher, Jim Bruene, the very first Finovate conference was held in New York City on October 2 of 2007, when 20 of the most innovative companies in the financial, banking and lending space gathered in front of a handful more than 200 banking executives, analysts, investors and the press to offer a glimpse of the future using the now familiar 7 minute demo format (no PowerPoint slides allowed!). The one-day event was quickly sold out, with overflow space provided for late registrants to view presentations via a video feed (see all 20 videos from the first Finovate conference here).

While only six years ago, a lot has changed in the financial marketplace. In 2007, mobile banking was in its infancy, with just a few hundred thousand users across three different platforms ('mobile website' was the most popular). Interestingly, the discussion at the time was whether mobile banking would be a standalone profit center or just another cost center for banks (still up for debate by many). And despite a lot of hype at the time, only one bank (Citibank) and one vendor (mFoundry) had launched a fully downloadable, custom mobile banking app.

The themes for the 2007 show and number of companies presenting were PFM (5), mobile banking (5), payments/billing(4), P2P Lending (2), online tools (2), mortgage lending (1) and security (1).

The presenter list included (in alphabetical order); Andera, Billeo, CheckFree (acquired by Fiserv), Clairmail, Firethorn (now Qualcomm Retail Solutions), Geezeo, Digital Insight (an Intuit company), Identity Theft 911, iPay Technologies, Jwaala, Lending Club, Metavante (acquired by FIS), mFoundry, Mint, Monitise, MortgageBot (now part of Davis + Henderson), MShift, Online Resources (acquired by ACI Worldwide), Prosper Marketplace and Yodlee.

The Best of Show winners of the first Finovate were a two-week old online personal finance start-up named Mint, a mortgage marketplace from MortgageBot named Marvel and the peer-to-peer lender Prosper. The biggest winner, however, may have been the financial community, since the success of Finovate 2007 was the foundation for a growing series of global Finovate events that now include an expanded 2-day FinovateFall event in Manhattan, a second two-day U.S. event, FinovateSpring in California, a one-day FinovateAsia (30+ firms) and the two-day FinovateEurope (60+ firms).

With technology always at the forefront, Finovate 2007 was the first financial services conference to proactively court the blogging community, with bloggers from four countries covering the 2007 event (live blogging and a ton of tweeting continues during all events). In addition, all of the presentations are streamed for later viewing for attendees and non-attendees on the Finovate web site.

FinovateStartup 2008 - The First West Coast Show

Only three months after the the success of the first Finovate show in NYC, Jim Bruene announced a slightly modified version of Finovate2007 called FinovateStartup to be held in San Francisco in late April of 2008. With a focus on showcasing the hottest financial technology start-ups, the format of 7-minute fast-paced demos remained the same as did the opportunity for the attendees and innovators to network.

With an original goal of securing 20 cutting edge fintech firms for the second Finovate conference, Jim and his team quickly surpassed their goal with a final lineup of 40 startups despite a tightening credit market and bigger financial industry storm clouds on the horizon. Included in this lineup were several firms using this event to introduce new products. (recap of presentations available thanks to Scott Loftesness of Glenbrook Partners with video archives of the presentations provided by Finovate)

Compared to the first event held 6 months prior, the second event's diversity and expansion of themes was apparent, with new savings/checking products, financial comparison tools and investing/asset management being new themes. In addition, while PFM tools still were prominent at the event, security services and investment/asset management firms had greater representation. As can be seen from the word cloud below, the industry still lacked significant mobile/payments discussions.

Riding The Storm Out: Finovate 2009 - 2011

There is not a banker alive who doesn't remember the financial crisis that started in 2007, 'peaked' in 2008, and is with us to a degree still today. Some of the many impacts of this period were that budgets were highly scrutinized and cut, investment in the future was scaled back and innovation at many financial organizations took a back seat . . . except at Finovate. 

While it would have been easy for Jim Bruene and his team to fold up the tent in late 2008 and restart the Finovate concept a few years down the road when times were better, Finovate continued to provide the premier forum for innovation. Despite the economic conditions (or because of it), companies wanting to showcase their new products increased, registrations multiplied and the trade and business press took notice. Maybe it was the ripple effect of the introduction of the first iPhone in 2007 and the rapid increase in acceptance of mobile apps, but interest in financial innovation increased during this difficult period.

During the shows from 2009-2011, innovation trends continued to be in flux (at least if measured by the products being showcased). Some interesting trends included:

• Twelve companies at the 2009 FinovateStartup did demos on PFM solutions (representing close to 25 percent of presenters).
• Small business solutions began to appear in early 2009 and have continued to be a steady category today.
• Search and comparison tools were strong during the period.
• Mobile solutions became the break-out category in late 2009 and early 2010. That trend continued in 2011, with the emergence of mobile photo bill pay and other tools.
• Safety and security tools remained in the spotlight, reflecting the fiscal conservatism that prevailed and the need for safe havens for funds.
• Alt-payments and alt-lending became a more popular category during this period.
• The emergence of real-time information distribution.
• Rewards platforms and savings tools emerged (and won Best of Show honors) beginning in 2011

As the presenting themes continued to grow and change, the interest in financial innovation continued as well. Finovate grew exponentially to meet this need. 

• FinovateFall 2010 was the first two-day event, reflecting the extraordinary desire to both demo and participate in this unique forum. Despite (or possibly because of) this expanded forum, sold out events became the norm.
• The number of demos at the FinovateSpring and FinovateFall events reached more than 60 per show.
• Audiences multiplied from the first Finovate shows, surpassing 800 at FinovateSpring 2011 and reaching 1,000 in NYC for the FinovateFall 2011 show.
• FinovateEurope was introduced, reflecting the worldwide scope of fintech innovation. While being held in London, presenters came from Europe, North America and Asia. The first show had 3 dozen presenters over 400 participants.
• Coverage in both the financial and mainstream business press exploded during this period. In addition, Twitter became an excellent micro blog of highlights as they occurred.
• All demos continued to be catalogued for future viewing on the Finovate site.
• FinovateSpring 2009 (58 presenters)
• FinovateFall 2009 (32 presenters)
• FinovateSpring 2010 (36 presenters)
• FinovateFall 2010 (56 presenters)
• FinovateEurope 2011 (35 presenters)
• FinovateSpring 2011 (64 presenters)
• FinovateFall 2011 (63 presenters)

FinovateSpring and FinovateFall 2012

The Finovate events for 2012 were filled with familiar categories, new subcategories of previous themes, and categories that didn't even exist when Finovate began in 2007. FinovateSpring 2012 highlighted firms presenting payments and rewards platforms, new mobile solutions and the beginning of social media integration. In addition, solutions emerged in response to new government compliance needs as well as in response to the reduction of fee income.

It is amazing how much change can occur with innovation themes in six short months. Possibly because of rapid changes in the acceptance of mobile devices and related apps, the increased concern around authentication and security, the beginning of marketing's emergence from the financial crisis of 4-5 years prior, and the slow acceptance of certain innovations by the public and financial institutions, the word cloud of FinovateFall 2012 themes looks nothing like the themes of the Spring.

Not only have the themes continued to change, the subcategorization also illustrates the micro segmentation of new solutions.

My First Finovate: FinovateSpring 2013

FinovateSpring 2013 was the first Finovate that I attended in person (previously, I live vicariously through others by following the live blogging and twitter mentions). As has become the norm, the event was again sold out, and you could feel the energy upon entering the venue (see my recap 'Musings of a Finovate Virgin). It also had the feeling of a class reunion since, while presenters may come and go, those who attend the event try to make it every year.

As was true with the themes in 2012, the changes in key categories seemed to evolve based on consumer demand (security services, small business), new tools and visualizations (wealth management, investing and mobile applications), new segments (underbanked) and even some advanced applications (P2P lending and B2B payments). 

Most interestingly was the emergence of so many crowdfunding solutions compared to previous shows and the disappearance of PFM in the traditional sense. As could be expected, the categories of mobile, payments and security/authentication solutions remained strong.

FinovateFall 2013: Fintech Innovation is Alive and Well

With FinovateFall 2013 a week away, there is no doubt that innovation in financial services continues unabated. Finovate will have another sell out crowd in Manhattan on September 10-11, and there will be another exciting roster of 60+ companies ready to demo their solutions.

While some may have a strong business case and a pent up demand for their solution, others may be trying to 'make a market' for their innovation. Some are hoping that their demo will spur new funding for their innovation, while others are extending a product category by an established vendor.

As in the past, there will be more than 1,000 registrants who will cast their ballots for their favorite presentation, naming them 'Best of Show'. Some of the votes will be cast based on presentation style. Others will be cast based on the 'cool factor' (which doesn't always reflect a desire or need to buy). Still others will cast their ballot based on which solutions they believe have a valid chance in the marketplace.

The networking will be one of the primary side benefits with end of day cocktails and even the introduction of the Bank Innovators Council on the Monday evening before the FinovateFall 2013 kickoff.

No matter the outcome of the voting, the diversity of innovation is broad and the excitement in the industry is strong. Innovation is a differentiator in an industry that often feels 'me too'. It is a way to potentially grow market share, retain current customers, cut costs and/or increase revenue. 

Innovation is risky but necessary. It is exciting yet frustrating. It is not for the faint of heart, yet it builds corporate character. Fintech innovation is, by definition, the future. And based on the themes for FinovateFall 2013, innovation is as different from six months ago as it will be six months from now . . . and yet many of the themes sound familiar.

While mobile, security, small business, lending and payments remain strong themes, the underbanked category all but disappears. In addition, we see the somewhat surprising reemergence of PFM and loyalty/rewards (maybe there really is something new in these spaces) at the same time that mobile wallets and customer experience get zero love.

As Bradley Leimer stated upon returning from his first Finovate . . . It is the 'The Disneyland of Fintech'™. For those attending or joining the event through social media, Finovate is definitely an 'E-Ticket' ride to the future.

Additional Resources

Finovate 'Best of Show' Winners 2007 - 2011

FinovateSpring 2012 'Best of Show' Winners

FinovateSpring 2012 Twitter Transcript

FinovateFall 2012 'Best of Show' Winners

FinovateFall 2012 Twitter Transcript

FinovateEurope 2012 Presentations (35 presenters)

FinovateAsia 2012 Presentations (35 presenters)

FinovateEurope 2013 Presentations (64 presenters)

FinovateSpring 2013 'Best of Show' Winners

FinovateSpring 2013 as Seen Through Twitter

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All Bank Customer Experience Initiatives Are Not Created Equal

Despite an increased focus on customer experience initiatives by banks of all sizes, new research has found that not all of these efforts may be resulting in revenue growth. 

In fact, while some banks and credit unions are significantly outperforming peers, others aren't focusing on efforts that customers care about most.

In a just released study from PeopleMetrics entitled, "A Shifting Landscape: Customer Experience Trends and Practices in Retail Banking", it was found that banks are engaged in a surprisingly large number of customer experience initiatives. In fact, it was found that 7 out of 10 executives were working on customer-centric practices. 

While a good start, the research found that most banks have shied away from activities that require investment of human or financial resources. Part of the problem is a lack of association by banks between customer experience initiatives and a tangible ROI.

The important question is which activities lead to revenue growth. By evaluating activities being implemented at growth and non-growth banks, the research found that there were four fundamental customer experience practices that could be directly tied to revenue growth at financial institutions. These insights were drawn from a more encompassing PeopleMetrics study 2013 Most Engaging Customer Experiences (MECx) completed earlier this year. 

The practices that were found to be most correlated with financial performance were:

1. Taking action on individual customer feedback
2. Utilizing a decision-making process that emphasizes the customer
3. Sharing a common definition of what a positive customer experience is
4. Establishing a goal for customer experience improvement

The two most important differentiators are that growth banks have invested in technology that helps to close the loop between customers who report a problem, indicate a need or recognize an employee who performs well. Growth banks and credit unions also have a set of criteria they follow when prioritizing, funding and resourcing customer-aligned initiatives. 

According to Kate Feather, EVP of PeopleMetrics, "Growth banks have embraced practices that create customer understanding and action taking at all levels of the company. Banks just beginning their customer experience transformation, or struggling to see results from their current efforts, should start with these four disciplines."

Perception Versus Reality Disconnect

Unfortunately, while bank executives are well intentioned in their customer experience efforts, many may be focusing on the wrong objectives and the result is a disconnect between the impact banks believe they are making and the impact customers feel on a daily basis. In fact, the PeopleMetrics study found that 78% of bank executives believed their efforts were successful, while only 28% of customers said they had seen noticeable improvements in their banking experience.

Moving forward, it will be important for banks to align their priorities around what the customer cares about most. For instance, while banks continue to focus on technology advancements as a way to improve the customer experience, the customers place technology improvements much farther down their list of needs. Alternatively, customers believe banks should focus on improved products and a stronger focus on putting them first, with banks similarly giving these improvements less focus.

Because moving forward with new technologies is still important to most banks, the key will be for banks to build out technology in a way that demonstrates a customer centricity.

 

What Are Customers Looking For?

As most research studies confirm, customers banking with community banks and credit unions give their institutions, on average, higher customer satisfaction ratings. But size alone doesn't matter. USAA and other larger organizations reviewed in the study still show they can deliver a strong customer experience. 

The PeopleMetrics study found that regardless of the size of organization, all customers are first and foremost looking for an 'enjoyable experience' followed by functional elements such as 'easy' and meets needs'. When organizations of different sizes were reviewed, the largest gap between organizations was in the 'enjoyable' dimension (15 points). 

Since 'enjoyable' is more of an emotional dimension, it is more difficult for a bank to achieve (when was your last enjoyable banking experience?). PeopleMetrics has an extensive discussion of this concept with case studies provided in their report (available for free download here), but five dimensions were found to be the most impactful with organizations who make the customer feel valued, appreciated and cared for doing the best:

• Secure
• Confident
• Cared For
• Appreciated
• Valued

Recommendations

PeopleMetrics provides several recommendations to organizations that want to realize revenue gains from their customer experience initiatives.

Take Action on Feedback

Growth banks not only ask for customer feedback, but have made the investment in technology that allows them to take action on the feedback immediately. Without this feedback loop, both customers and employees will not get maximum benefit from customer experience initiatives.

Commit to Guiding Principles

Moven and other growth banks examined in the study put the customer experience at the center of all that is done by the organization. These Guiding Principles not only lead the organization but provide a standard for measurement.

Make It Personal

While smaller organizations have an inherent advantage in making the customer experience personal and enjoyable, larger organizations can leverage technology that can help to replicate this engagement. With the help of internal and external data, larger organizations can better identify needs and provide solutions that are in the best interest of the customer.

Invest in Long Term Relationships

Moving from a transactional mindset to a customer centric view benefits both the institution and the customer. By taking a long term view, banks and credit unions can focus on growing relationships that are mutually beneficial.

Focus on Your People

The foundation of a strong customer experience culture is the ability to find (and keep) the best possible front line employees. Through effective training and a Cx rewards structure, it is possible for any organization to take the customer experience to the next level.

According to Kate Feather from PeopleMetrics, “For banks and credit unions who have mastered the practices discussed in the study, there’s a big opportunity to create a truly innovative customer experience." She adds, "Customers in the study told us they want banks to make them feel 'valued' and 'cared for'. This is far beyond the functional elements of banking, and offers insight on how leaders can design a customer experience that actually builds lasting, emotional connection with a customer.”

Additional Resources

2013 Most Engaging Customer Experiences (MECx) - PeopleMetrics (2013)

Retail Banking: Customer Experience Transformation Trends and Priorities - PeopleMetrics (June 2013)

A Shifting Landscape: Customer Experience Trends and Practices in Retail Banking - PeopleMetrics (June 2013)

Do Customers Look Forward to Seeing You? - CustomerThink/Jeanne Bliss (May 2013)

Are Corporate Customer Experience Intentions Overwhelmed by Senior Exec Risk Aversion and Other Roadblocks? Can That Be Changed? - CustomerThink/Michael Lowenstein (February 2013)

How Chase Delivered an 'Enjoyable' Banking Experience to Me - CustomerThink/Jessica Sampel (May 2013)

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