How improving banking experience can further return on investment

With consumer expectations rising faster than ever, delivering emotionally rich journeys has become an imperative. At the same time, differentiation of products and pricing is becoming increasingly difficult and financial institutions should rethink how they can deliver an exceptional experience across the entire customer journey. 

Leading financial institutions should improve experiences by simplifying back-office processes and delivering intuitive solutions across all channels.

Studies suggest that the organisations that invest in improving the experience of people, processes and technology demonstrate superior performance, including reduced costs, improved employee satisfaction, increased revenues and greater loyalty.

Return on experience is the highest when companies deliver experiences customers enjoy instead of making them feel like self-service is a barrier between them and the help they need. 

Experience-driven financial institutions are more likely to exceed revenue growth expectations, improve customer satisfaction scores, and generate more website visits compared to other firms. 

Banks should transform their organisational structure with processes that can drive continuous improvement through customer insights, hire people who can design and deliver great experiences, and use technologies that can enable those experiences.

The Covid-19 pandemic has changed consumer behaviour. During the shutdown period, consumers had to respond immediately and adopt new habits. Many wondered whether these changes would be temporary or permanent.  

Studies found that the most changes are here to stay. Consumers are more price-sensitive, more savings-oriented, more digital, and more conscious of the environment. They also want organisations that look out for their well-being and are indigenous. 

We soon learnt that companies that make customer experience a priority can charge a higher premium for their products and services. 

The significance of return on experience

Financial institutions are increasingly focusing on return on experience, a metric that captures the results of investments in terms of digital experiences. 

The benefit of tracking these metrics is that it expands beyond traditional satisfaction scores or product-line measures to provide a global perspective on the bottom-line benefits of delivering superior experiences. This metric can also keep experience projects on track and make them more successful.

The return on experience equation = Net Value of Benefits/ Cost of Investment x 100%. 

To measure return on experience, we need to proactively track and measure key metrics related to the experience and the organisation's overall vision. 

In a digital world, lowering the cost of acquisition is key to competing with digital-first organisations. A great experience will lower the cost of acquisition because word of mouth replaces promotion costs. 

Experience is often positively or negatively impacted by the speed of task completion. Everything from opening the mobile app to making a deposit, transferring funds, updating account information or establishing a new relationship needs to be tracked. The more intuitive and fast the process is, the less the abandonment rate. 

Infographics: TBS

We also need to focus on the time to market, i.e., how much time does it take to develop and launch a new product or feature? The more agile the development and enhancement process, the more digitally mature your organisation is. 

In many cases, financial institutions leverage third-party solution providers to assist with improving the time to market. 

Improving digital experiences usually requires an investment in new technology, outside services and training. 

Alternatively, there may be a reduction in maintenance costs for outdated technology and processes. 

One of the newer metrics that has gained favour is relationship engagement rates. A customer is considered more loyal and the relationship is often more profitable based on the level of active engagement. The more inbound and outbound interaction, the better the experience. 

Instead of a traditional, single measure of satisfaction, digital satisfaction should be across channels and for each type of interaction. Without measuring satisfaction with individual experiences, it is difficult to improve the return on experience. 

When you want a customer to watch, read, download, share or buy, you need to know what percentage of the customers take the actions they are requesting. 

On top of that, an organisation should learn how many customers or how much sales have been lost because of the complexity and slowness of a process. 

In many cases, improving the sales conversion rate can greatly assist in the engagement of a third-party solution provider, investment in new technology and commitment to resources to improve a legacy process.

To measure the improvement in customer experience across an organisation, organisations need to build a baseline to assess where the organisations are today. 

Companies need to ask- how strong are the employee's emotional commitment to your brand purpose and the overall improvement of the customer experience? How big is the gap between knowing the critical components of the customer experience that need attention and taking action on them? Is the leadership and internal 'influencers' committed to your customer and employee experience initiatives? How much value do you add to the customer and employee experiences? Are initiatives being taken to measure any of the customer and employee experiences? Do you have a direct correlation identified between experience improvement and revenue enhancement?

As with all components of digital transformation, the foundation for a strong return on experience is the unified commitment of leadership in the endeavour and building a culture that fuses customer experience with a positive employee experience. 

Even in a digital world, consumers engage with humans, either on the branch-based front line or through other channels. Even employees that do not have direct customer contact have an impact on the customer journey.

There is a huge upside in investing in employee experiences to improve customer experiences. This includes product knowledge, access to advanced analytic insights about customers, and tools to assist customers across their journey. 

Additional actions that can go beyond building a feedback loop between customer experience and employee experience should improve the return on experience. 

Organisations should know where investments can be made to get the best return on experience results. They need to understand behavioural differences that can create unique customer profiles for personalised experiences. 

The incorporation of data and analytics should allow for content marketing and proactive solutions to be created. It also assists in delivering value in exchange for personal data giving the ultimate control of the data to the consumer. 

Transparency is imperative. Earn from the business by making the entire journey faster, easier and more empathetic than the competition. 

Customer experience is a high-return digital investment. Studies show that companies working on creating a customer-centric culture are more profitable than those not focused on it. 

Long before the days of digital platforms, financial institutions knew that service defined a depositor's perception of their brand. The banking industry uses high levels of customer service to win new relationships, keep them long-term and grow the number of products utilised by depositors.

As banks seek to extend their service to digital interactions at scale, they are focusing on how depositors are treated online, on an app or over email. 

Most institutions know they want to continue providing a great experience in digital interactions with members or customers. They want to know how to design a culture of service over digital platforms. Leaders can use a wide range of benefits to articulate results that merit investment in customer experience.

For starters, institutions already know the benefits of preventing attrition. A 2% improvement in customer retention has the same financial benefit as cutting costs by 10%. 

Acquiring new customers also can cost as much as five times more than keeping existing customers. Preventing attrition, though, is only half the battle—and provides significantly lower returns compared to a mindset of keeping depositors. 

Financial institutions should also assemble the information needed to calculate customer lifetime value. Since customer experience is about also doing better at serving customers, it is more of a journey than a destination. Once institutions take steps like these, they will create admirers who generate more customers for an institution. The result can transform an organisation's future, moulding it into a brand loved by its depositors and borrowers.

Disclaimer: The views and opinions expressed in this article are those of the authors and do not necessarily reflect the opinions and views of The Business Standard.