By Mr. Nanda Kumar, CEO at SunTec
Over the last decade or so, ‘customer centricity’ has gone from almost an alien term in retail banking to being a real victim of over-exposure. Now, while it would be wrong to suggest that this is all talk and no action, there certainly hasn’t been the huge leap forward in customer service which the rhetoric would suggest.
Why is this? Are retail banking executives simply full of hot air? Is it just because it’s a bank’s job to tell consumers they don’t have any money? Or is it simply that financial imperatives always trump customer ones? Well, the first and second charges can, I think, be dismissed without rancour. However, the third is more problematic. Not only does it come uncomfortably close to the truth, but it is also, in many ways, a contradiction in terms.
The Challenge Ahead
Ask any senior business leader from retail, telecoms, healthcare, leisure or, indeed, almost any other sector, whether they would prefer to prioritise customer satisfaction or financial success, and most give you a blank look, and decide you know nothing at all about business. In any industry where it is easy for a customer to take their business elsewhere (and that, after all, is pretty much the definition of the capitalist system), customer satisfaction and financial success are one and the same thing.
Until recently, of course, European retail banks have been protected from real competition, but a combination of governmental action and market conditions have begun to change that. Legacy banks will have to respond, or face a steady erosion of their current commanding market share.
So, what can be done? Well, an (often-ignored) truism of modern customer service is that customer centricity does not start with an app. Great customer service starts at a more basic level. Customers do not care about how advanced your technology is if you cannot guarantee that it will work when they actually need it. Banks must be able to provide customers with access to their funds at all times, and this quality has not always been in evidence amongst banks in the UK.
The issues caused by the legacy IT infrastructures in place at our largest banks is a problem much deliberated by the press, and the horror stories of bills unpaid and inaccessible funds are now well publicised. Fixing these issues is easier said than done, however. At SunTec, we know from our long experience all over the globe that core banking IT renewal is one of the most challenging projects a financial institution can undertake. Even with an unlimited war-chest this is a very hard task, and some system integrators and consultancies make it seem nigh-on impossible.
The right approach to change
By and large, this is because many senior technology chiefs fall victim to a kind of grandiose fallacy – the thought that with one binge of IT spending, they will be able to put right all the ills of the organisation. However, the truth is, even if total core IT replacement was easy to achieve, it still wouldn’t necessarily have the transformative effect its instigators generally hope for. Where banks have achieved a successful customer-centric transformation they have largely only done so through tackling other issues in the organisation as well. While business leaders in banking do love to blame IT for any failing in the organisation, the truth is that poor IT is very often a reflection of poor organisation in the rest of the business. Siloed, slow, inward looking and poorly configured IT quite often reflects an organisational structure and attitude to data that displays these same characteristics.
In even the better-managed financial institutions, the information handling procedures and structures are often simply faster, slicker versions of the paper-based structures and processes that preceded them. While this was a fantastic advance in 1975, any business leader who thinks that this is the goal of modern-day IT has probably been living under a rock for the last twenty years. Leaders in almost every industries demand that IT gives them real insight into data, rather than just moving it around faster, and bank chiefs ought to demand the same.
Towards customer insight
Delivering accurate, real-time customer insight is the difference between keeping and losing a customer. Having a holistic view of the customer is the first step towards satisfying customer wants and needs in a manner consistent with expectations of the digital consumer who has the ability to find out the best current accounts for him or her with a click of a button.
Reuniting data locked away in the technology silos can facilitate the kind of relationship-based pricing models which have allowed telecom companies to form such a dynamic part of the consumer marketplace over the last decade or so, creating a market with happy customers, good-value products and great service. The insights of unified data within retail banks will help internally as well as Relationship Managers will have accurate, in-depth details on their laptop or mobile screens when they are meeting with customers and relying on guesswork to see what the customers want.
There is still time for retail banks to resolve the technical and operational issues and allow them to press home their advantages such as the long established customer relationships to respond to the challenge of the smaller, web-based newcomers. This will only happen, however, if legacy banks focus on creating processes and structures dedicated to making data work harder for the business. Legacy banks must break down the information silos which prevent them from accurately predicting and meeting customer needs.