Banking UX

How banks can improve by implementing customer centricity

Bank of America ATM – getting customer centricity into your business culture.
Written by Roger Peverelli

Customer centricity should be at the heart of your business if you want it to survive, says Roger Peverelli.

Many banks are still struggling to survive. As a consequence, the change process that is the key to long-term survival isn’t getting sufficient attention: implementing customer centricity. Another reason is that the sheer size and complexity of banks makes it impossible to change from one day to another. Thorough plans for structural change are needed. In parallel, banks need to apply ‘accelerators’ to make the change tangible on short-term, to consumers and to staff.

First, let’s define customer centricity. Customer centricity is definitely not the same as striving for ultimate customer satisfaction. Customers can be very satisfied with their mortgage advisor and especially pleased that they can buy their dream house, but if they then sign up for a debt they cannot actually carry … On the other hand, a customer may be very unhappy if a mortgage is denied, while this may have prevented him or her from very large future problems.

The essence of customer centricity is the conviction that a strong vision of the added value that the company wants to deliver to customers is the cornerstone for the successful growth of the company.

Please note that the interest of the customer shouldn’t be the single perspective. It’s not like that. After a period of taking perhaps too many shareholders’ interests into account, we shouldn’t now completely forget the shareholder. The vision should be inspiring and engaging for all stakeholders: for customers, for employees, for society, and for shareholders. The credo of Unilever is an example: ‘Adding vitality to life’.

The vision must be rooted in the culture, in inspiring core values that are really lived. In fact, it must be translated into all aspects of the company:

  • Business models behind products shouldn’t make use of information backlog of customers.
  • Products and services should be developed based on deep customer insights.
  • Customers are actively involved in the continuous improvement of services.
  • Across the organization, there is a genuine interest in what drives customers.
  • ‘What we do for our clients’ is the primary measure of success for everyone in the organization.

We have identified more than 50 such leverage points where customer centricity can be made tangible, so that it resides in the veins of the company. (More about these leverage points in my next blog.) In view of the scale and complexity of large, established financial service providers, it’s unreasonable to expect the necessary changes can be realized overnight. Nevertheless, we see many banks working hard and investing heavily in implementing the focus on the client’s interest. Unfortunately, it’s not that these efforts are seen and appreciated by customers. The results and benefits are clearly insufficiently noticeable.

We also see that ‘customers first’ isn’t yet well understood and lived everywhere. The danger is that a large number of banks will reach no further than pursuing a higher customer satisfaction rate, so a phone call will be answered friendly and letters will be answered within three days (like a tick-the-box exercise), but in essence nothing more will change than a slight improvement of existing processes.

Two-tier approach to customer centricity

To achieve customer centricity, a two-tier approach is needed. Firstly, a systematic approach aimed at getting customer centricity in the veins of the company. This starts with a vision and consistently translating this to all aspects of the company – all leverage points for customer centricity. Benchmarking against best practices inside and outside the industry and a thorough gap analysis reveals what should change at every conceivable level, and serves as a frame of reference to set priorities. This first tier is essential and fundamental, but it takes some time before tangible results are achieved.

The second track revolves around a limited number of initiatives with high impact: ‘accelerators’ that almost instantly show the staff the company’s commitment to the customer. Three examples in the remainder of this blog.

Mango, one of the world’s biggest fashion brands, selects new employees on desired personality traits. Only if you prove to be humble and strive for harmony can you work at Mango. If you have the opposite of these traits, you don’t get a chance to work at Mango. Using core values associated with ‘customer first’ is easy to apply in talent recruitment, but also in training and assessing current employees (if these values are known, of course).

Acceleration is also possible by giving customers a visible role in the company. At Philips, the customer is actively involved in a structured way in every step of the primary process. If an employee has an idea for a new product, he or she is immediately asked on what customer insight this idea is based, and whether that customer insight is validated by real customers. Plus, how did this validation take place? Involving customers ensures that employees continuously face customers; it opens the eyes; employees see what really matters to customers and translate this into new, real added value. It accelerates a different way of working, that is from a customer perspective.

People’s behavior is for a substantial part determined by incentives. The third example of an accelerator is making the customer the most important measure of success. The ultimate goal of Allianz is that customers are willing to recommend the company. Using continuous measurement and feedback concerning this referral score, employees of the insurer are faced every day with ‘the customer’. The referral score is the main criterion for the assessment of each employee, including the board. It’s even part of the quarterly presentations to analysts.

Allianz has discovered that a direct relationship exists between the referral rate and the growth of the company. Many other best practices we’ve found around the world show that customer centricity isn’t a cost driver, but rather a driver of future growth. But you need to see that, and live it. Like the CEO of a global insurance company told us, “Customer centricity is an attitude. And an attitude by definition is for free.”

About the author

Roger Peverelli

Roger Peverelli is a partner at consultancy VODW, specializing in customer-focused strategies in financial services. He is also co-author of 'Reinventing Financial Services. What consumers expect from future banks and insurers'.

1 Comment

  • Interesting article. I certainly agree that “customer centricity is not
    a cost driver, but a driver of future growth”
    I am of view that Customer Centric “experience” has to be delivered at least cost and also contributes to
    the bottom-line.
     I have started 4 post series on “Customer Experience” via my blog at http://bit.ly/CC_E
    The first post looks at  how [QSR] MNC’s are “Customer Centric” when doing business in India.

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