Banks Prepare For Customer Experience Wars

Greetings from day 2 at Forrester’s Finance Forum 2007 in New York. There was a lot going on today. Bill Doyle, one of Forrester’s top analysts, kicked off today’s session by announcing the results from Forrester’s 2007 Customer Advocacy rankings. USAA, once again, topped our list (see my earlier post about USAA). These rankings are based on feedback by consumers about whether or not they think their financial insitutions act in their (the consumer’s) best interest. There’s too much to say about customer advocacy to squeeze it into this post, so I’ll be spending more time on this concept in future posts.

As I mentioned yesterday, we published the results from a joint survey on customer experience in banking that we did with the American Banker. My report that analyzed the data is called “Banks Prepare For Customer Experience Wars” (full report is only available to Forrester clients) just went live on the Forrester Website. The research looked at some of Forrester’s consumer data alongside the survey of 190 North American banking executives that we did with American Banker. When we look at the overall responses from banks, we find that they:

  • Know that customer experience is important — 97% said that it was either very important or critical.
  • Are focusing on organic growth — outpacing the focus on customer acquisition.
  • Recognize that they aren’t meeting customers’ needs — especially online, where less than one-third of respondents gave their interactions a vote of confidence.
  • Lack a solid customer experience strategy — nearly half of the banks point to a lack of a clear customer experience strategy as a major problem.

Then we looked at the difference in responses between large banks (>$30 billion in assets) and smaller banks (<$30 billion in assets). Here’s some of what we found:

  • Customer acquisition is more important to smaller banks.
  • Online experiences plague all banks — especially smaller ones.
  • Branch experiences are better at smaller banks.
  • The lack of cooperation causes major problems for large banks.
  • There are more customer experience activities underway at large banks.

If banks know that customer experience is important, why do they deliver such poor experiences? Often times the issue comes down to one word: “Silos.” Banks have created stovepiped organizations; each group focuses on its own channel (e.g., Web, call center, agent, branch), its own product (e.g., deposit, mortgage, credit card, brokerage, insurance), or its own functional area (e.g., marketing, IT, retail delivery). As a result, most banks lack enough of a coordinated effort to meet their customers’ needs.

But times are changing. The convergence of three factors – consumers, competition, and capabilities – will put enormous pressure on financial services firms to break down their rigid silos and improve their customer experiences.

What do banks need to do? If you’ve been reading my blog posts, then I think you can guess what I’m about to say. They need to head towards Experience-Based Differentiation.

Written by 

I'm an experience (XM) management catalyst; helping organizations improve results by engaging the hearts and minds of their employees, customers, and partners. I enjoy researching and speaking about leading-edge XM topics. I lead the Qualtrics XM Institute, which is the world's best job. We're igniting a global community of XM Professionals who are inspired and empowered to radically improve the human experience. To achieve this goal, my team focuses on thought leadership, training, and community building. My work is driven by a set of fundamental beliefs: 1) Everything starts and ends with human beings, so you need to understand how people think, feel, and behave; 2) XM is a discipline that needs to be woven throughout an organization's entire operating fabric; and 3) Building the XM discipline requires a combination of culture, competency, and technology.

3 thoughts on “Banks Prepare For Customer Experience Wars”

  1. Great posts (this one and the one on EBD) on customer experience in the banking world. I agree that silos are a big issue. I think another big problem, which may be created by the silos, is that there is no clear method to “measure” the customer experience in banks. If you can’t get agreement on how to measure it, then how can you improve it?
    If there is a good way to measure it, could you please share it? How did you determine that the branch experience was better at smaller banks?

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