Updated on 27/04/2022
Introduction to customer experience in banking
Customer experience can be a fundamental lever for customer retention in the banking sector as long as you follow some digital trends and take advantage of the new touch points that social platforms offer. Below, how to build an effective customer experience in the bank.
For some time now, the importance of ensuring high levels of customer experience has been emphasized in order to allow a business to grow and to consolidate its relationships with customers. No sector has been immune to this growing interest in customer satisfaction and the banking sector is no exception.
Above all, banking institutions must also commit themselves to provide a quality customer experience. But what exactly does customer experience mean? And, above all, how can you concretely provide a quality experience?
The customer at the center
Defining customer experience is not easy, but it can be useful to understand the strategies and solutions that will necessary in order to achieve the benefits. According to an article in Harvard Business Review by Andre Schwager and Chris Meyer, customer experience is “the internal and subjective response customers have to any direct or indirect contact with a company.”
A customer has direct contact with a company when he or she buys a product or benefits from service. Such direct contact could include visiting a branch office or calling up the customer care or service department for advice, and direct contact is usually initiated by the customer.
Instead, indirect contact occurs outside the interpersonal context and through sales channels and communications activated by the company itself, through word of mouth or through other encounters with the customer that are unplanned, or happen by chance. The latter category includes, for example, advertising on various channels, events, press releases, recommendations and reviews from other consumers, and so on.
Whatever the business context, each customer experience must meet three requirements which determine the quality of the customer experience. Together, these three requirements form the so-called “pyramid model”, theorized by Harley Manning and Kerry Bodine in their book, “Outside In.”
First, any business must meet the needs of the customer. This is considered the base, or essential element, and it’s level zero in terms of what customers expect to receive from the product or service.
At the second level of the pyramid, we assess the ease of interaction between customer and company, in terms of time required or effort made to get those needs met.
Finally, at the top of the customer experience pyramid is the enjoyment factor, the ability of the company to provide a positive and enriching experience for customers. This occurs, through the correct and coordinated use of different points of contact, whether physical or virtual.
As you can see, the customer experience does not end with the conclusion of the transaction. It’s much more than that.
On the contrary, the actual conclusion of the sale (if it is a sale) of the product or service, is only a part, a moment, within a much wider and more articulated context. After all, it relates to all the experiences, emotions, and memories that the consumer associates with their interaction with the company, at any stage of the customer journey.
Precisely because it involves emotions and memories, the customer experience is central in experiential marketing, that is, strategic marketing that tends to enhance the customer experience (precisely) as a tool to convey the same added value compared to the simple purchase of the product or service.
Unlike traditional marketing, this approach takes the customer’s approach to purchasing into account. For example, customers aren’t just buying for utilitarian purposes, but also to fulfil needs that may be complex and urgent. As a result, customers will tend to look for experiences that are valuable and that involve both his rational and emotional reasoning.
Therefore, it’s not enough to guarantee quality products and services perfectly tailored to the needs of customers. Instead, each company must put strategies in place to involve consumers, placing them at the center not only of communication but also of the entire process leading up to and after the actual transaction.
Customer acquisition in the banking sector
Initially, experiential marketing was limited to a few sectors, such as art, culture, and luxury products. However, the idea of the customer journey is relevant for every sector, and this includes banking. Here, there is an increased urgency for banks to provide a customer experience that meets customer expectations.
Modern banking customers are different than the traditional customers of several years ago. customer acquisition in the banking sector is more difficult now, more than ever.
Thanks to the spread of social networks and the internet, customers have a wider selection of products and services to choose from, and they are more demanding when it comes to performance and the quality of the customer experience they are receiving. This diversity of options results in a customer who is less loyal than before. Research by PwC revealed that 60% of European banking customers claim to be “multi-bank,” i.e. they use accounts or instruments from multiple banking institutions. This indicates an important trend that banks must take into account.
Another phenomenon that pushes banking institutions to focus their efforts on improving the customer experience is the growth of so-called Financial Technologies (otherwise known as FinTech). These are companies, usually startups, with a very agile structure, that use digital technology to provide simple, effective services that can be completely managed online.
The birth and success of such companies that provide user-friendly and innovative banking services have changed the landscape of the sector, introducing an unusual and very aggressive competitor.
In some ways, this has created a new standard. Many consumers have tried this type of service and have been particularly satisfied with the customer experience provided, which is faster and more intuitive, and for this reason, they are more likely to recommend this new type of operator over c the traditional banking institutions.
In the face of this, to avoid losing customers, banks must evolve to meet these new customer expectations. How?
It all starts with listening
The first step in providing a customer experience that really puts the customer first may sound trivial: listening to the customer. In other words, we need to understand what the consumer needs, what he expects from the bank, and the type of services he would like to receive.
To this, we add “listening” via the internet to understand the trending topics and issues in order to provide valuable content and to better understand the context that the bank and its customers are operating in.
For example, it is interesting to note how out of the total Italian population, 51 million are active on the internet and that the penetration of mobile in Italy is among the highest in the world: about 35 million people access the internet through smartphones or tablets (source: youmark.it). Not only.
Going down a little more specifically in the banking sector, it turns out that the internet is considered, even if slightly (for 63%), the main channel on which to buy and manage products and banking and/ or financial services and only later the counter (58%) and the mobile device (24%).
Another interesting fact is the role attributed to the branch location. Customers now relegate this touch point to dealing with special issues, consultancy for investment or financing, and to morgage underwriting. Ordinary operations, on the other hand, are preferably carried out on the internet (both via the computer and mobile) for reasons of simplicity and convenience.
A new way to get in touch
The above information can help banks outline a new strategy. First of all, banks will want to rethink the branch location, since customers no longer need a physical location to feel close.
Instead, it will need to be transformed in order to bring it closer to a clientele that is more accustomed to mobility. To strengthen their customer-centric approach, banks could apply the idea of the concept store to branches, whose number is decreasing year by year. This will require the use of Interactive tech tools in the system to allow the customer to manage the various processes in semi-autonomy, and integrating the various channels the customers use to go online (for example, mobile and/or tablets).
This will allow the bank to exploit the opportunities of an omnichannel digital environment.
Digital is the only alternative
Another way to ensure a quality customer experience is to provide the customer with efficient digital tools or to make most processes digital.
Even if human contact is unavoidable and sometimes even required (such as for handling particularly complex operations or when consulting is required), manual, document-intensive processes and long waiting lines at the local branch are still destined to become extinct.
Customers want the same experience they get on Amazon, Facebook, Google, or with Apple products in other places where they do business, and that includes banking.
It should be noted that, where this digital shift has been implemented, digital channels have provided a significant boost to sales because they have allowed banks to meet the needs of their customers who have an important requirement: convenience. Digital is the key to customer acquisition in the banking sector.
This is at the heart of the reason why customers choose mobile banking. 66% consider as the main benefit of the digitalization of banking services the possibility of operating anywhere; 67% appreciate the fact of being able to operate in real time and 37% indicated as preferred aspect the simplification in the management of products (source: assets.kpmg).
Independence, time, simplification. These three words are enough to guide each bank in creating an effective customer experience.
To ensure a truly effective customer experience, banking institutions must also change the way they communicate with customers.
Since contact with the customer can no longer (only) take place through traditional contact points, the bank must use new channels. For this reason, presence on social platforms is essential. Only in this way can the bank address its customers directly and build ad hoc content that allows it to position itself differently from the competition.
Where the relationships with banking institutions used to be one way, social media allows customers to respond to and communicate directly with banks. This will require a marketing strategy structured closely according to your key objectives. For example, you can provide playful content to establish a dialogue with users or to instantly convey complex information and procedures. It could also include the creation of valuable content—content that customers consider relevant and of high quality, which can be further shared with their networks.
Customization is everything
Creating relevant content that enriches the customer experience and enhances customer acquisition in the banking sector is not easy. There are no magic formulas and success isn’t always predictable.
However, one thing is certain: truly quality customer experience is personalized.
Notwithstanding the above, The condition for a memorable experience is to perfectly tailor this experience for him. The more the bank is able to provide specific services and personalized content, the more positive the consumer sentiment will be.
This, in fact, is also a way to narrow the distance that divides the company and the customer. With personalization, the customer no longer feels like an account number or just another number in a list. Instead, he perceives that his needs matter to the bank and that his needs are listened to.
Ultimately, this means putting the customer and not the product at the center of the bank’s communication and marketing strategy. In doing so, it is certain that the customer experience will become a formidable lever for retaining customers, who in the ideal scenario, will then become ambassadors for the brand.
However, the bank does not always have the expertise to offer such customer experience. It is therefore essential to turn to experts like Doxee who offer innovative personalization services.
Doxee is a leader in the CCM sector who has helped many large companies enrich their customer experience with personalized video services or personalized micro websites that allow them to reach customers in a completely innovative way.