Published by Gbaf News
Posted on October 5, 2016
10 min readLast updated: January 22, 2026
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Why have we seen an increased focus on customer service within the retail banking industry over the past few years?
“To answer this, it’s important to consider the growth of the empowered customer and how they form their expectations. Today, customers expect the same level of service from their banks as they do their shops, restaurants and couriers. No longer do customers discriminate, they form their expectations through comparing and contrasting brands – irrespective of the industry. This means the banking customer experience is pitched against the greats of services from the likes of Amazon, Waitrose and John Lewis.”
How does the financial services industry stack up when it’s compared to other sectors?
Larry Augustin
“Well, simply, not great. According to the latest UK Customer Satisfaction Index (UKCSI) released by the Institute of Customer Service, banks and building societies slipped down the sector rankings in the last year, dropping from fourth to seventh place. Despite the considerable efforts to improve customer service, banking is the only industry in the survey that didn’t improve its rating for customer satisfaction. Interestingly, the Institute’s European Customer Satisfaction Index scores the UK with the highest levelsof overall customer satisfaction in Europe for the Retail Banking sector.”
If the sector is performing so poorly,where is the disconnect with the customers?
“Customers today are now more connected and knowledgeable than ever before, they use an array of different digital channels to contact companies with questions and complaints. You only have to look at the dramatic decrease in footfall in bank branches over the last five years to gauge how the interaction with customers has changed. Therefore, what banks need to be asking themselves in a marketplace that is increasingly centred around technology, mobility and social media is; have they adapted their customer approach to accommodate these preferred new channels?
If not, they need to. To get ahead in this new world the most successful banks will be the ones who focus on digital customer engagement; providing consistent, personalised experiences that reach customers just as they need them and, through the channels most relevant to them.”
What else needs to be considered on top of digital capability?
“Well to maximise the potential of digital capability you need quality staff with the right tools at their disposal. To confirm the importance of having this, the top 50 organisations in the Customer Service Index are differentiated by high performance in complaint handling, helpfulness and competence of employees, especially over the phone.
With customers engaging with businesses across multiple channels, each provides a different kind of interaction and a piece of a customer’s history. Businesses must make sure they’re capturing all the relevant information that is available across these platforms. By doing so, customer-service teams can have all the information they need at their fingertips to build a complete picture of the situation and the customer they are dealing with. Simply, access to the right information about each customer, in the right context, at the right time will empower customer-service teams to respond and handle complaints effectively and efficiently.”
Can you provide some insight on why customer experience is so important today compared to five or ten years ago?
“Many banking products today are undifferentiated commodities. This means that retail banks are constantly looking for ways to set themselves apart from the competition to help them win and retain customers, and improve the bottom line. As more customers begin to view all banks as the same and make their product selections based solely on the best price, one method that retail banks can employ to differentiate themselves is to optimise their customer service. Its importance is also about to grow further, the Competition and Markets Authority in the UK is beginning to impose measures which will make it even easier for consumers to switch banks.”
Where did these new initiatives come from and, with them in place what will banks be required to do? Should retail banks be worried about this shake-up?
“The package of measures set to be imposed over the next two years are based on the findings that older and larger banks do not have to compete hard enough for customers’ business. The new initiatives will demand transparency, as banks will be required to publish trustworthy and objective information on quality of service not only in their branches but on their websites. This will allow customers to see how their own bank shapes up. Furthermore, a core measure will be whether a personal customer or small business is willing to recommend their bank to friends, family and colleagues.
In terms of how worried banks should be, within the first nine days of the Vickers Accounting Switching Legislation coming into force – which provides consumers with a quicker and simpler way to switch their accounts from one bank to another – over 35,000 consumers switched their current account to a different bank.”
If this is the case, what can retail banks do to stop a mass exodus of customers over the next few years?
“If banks are to optimise customer relationships and loyalty in this new environment, they need to integrate processes and technologies that enable them to build − and then act upon − a detailed view of what each customer wants. This all starts with achieving a single view of the customer. Doing this is integral to improved customer insight, better targeting, increased customer satisfaction, and improved customer service. The right Customer Relationship Management technology can provide just that, offering an individualised service based on a 360-degree view of the customer.”
Why have we seen an increased focus on customer service within the retail banking industry over the past few years?
“To answer this, it’s important to consider the growth of the empowered customer and how they form their expectations. Today, customers expect the same level of service from their banks as they do their shops, restaurants and couriers. No longer do customers discriminate, they form their expectations through comparing and contrasting brands – irrespective of the industry. This means the banking customer experience is pitched against the greats of services from the likes of Amazon, Waitrose and John Lewis.”
How does the financial services industry stack up when it’s compared to other sectors?
Larry Augustin
“Well, simply, not great. According to the latest UK Customer Satisfaction Index (UKCSI) released by the Institute of Customer Service, banks and building societies slipped down the sector rankings in the last year, dropping from fourth to seventh place. Despite the considerable efforts to improve customer service, banking is the only industry in the survey that didn’t improve its rating for customer satisfaction. Interestingly, the Institute’s European Customer Satisfaction Index scores the UK with the highest levelsof overall customer satisfaction in Europe for the Retail Banking sector.”
If the sector is performing so poorly,where is the disconnect with the customers?
“Customers today are now more connected and knowledgeable than ever before, they use an array of different digital channels to contact companies with questions and complaints. You only have to look at the dramatic decrease in footfall in bank branches over the last five years to gauge how the interaction with customers has changed. Therefore, what banks need to be asking themselves in a marketplace that is increasingly centred around technology, mobility and social media is; have they adapted their customer approach to accommodate these preferred new channels?
If not, they need to. To get ahead in this new world the most successful banks will be the ones who focus on digital customer engagement; providing consistent, personalised experiences that reach customers just as they need them and, through the channels most relevant to them.”
What else needs to be considered on top of digital capability?
“Well to maximise the potential of digital capability you need quality staff with the right tools at their disposal. To confirm the importance of having this, the top 50 organisations in the Customer Service Index are differentiated by high performance in complaint handling, helpfulness and competence of employees, especially over the phone.
With customers engaging with businesses across multiple channels, each provides a different kind of interaction and a piece of a customer’s history. Businesses must make sure they’re capturing all the relevant information that is available across these platforms. By doing so, customer-service teams can have all the information they need at their fingertips to build a complete picture of the situation and the customer they are dealing with. Simply, access to the right information about each customer, in the right context, at the right time will empower customer-service teams to respond and handle complaints effectively and efficiently.”
Can you provide some insight on why customer experience is so important today compared to five or ten years ago?
“Many banking products today are undifferentiated commodities. This means that retail banks are constantly looking for ways to set themselves apart from the competition to help them win and retain customers, and improve the bottom line. As more customers begin to view all banks as the same and make their product selections based solely on the best price, one method that retail banks can employ to differentiate themselves is to optimise their customer service. Its importance is also about to grow further, the Competition and Markets Authority in the UK is beginning to impose measures which will make it even easier for consumers to switch banks.”
Where did these new initiatives come from and, with them in place what will banks be required to do? Should retail banks be worried about this shake-up?
“The package of measures set to be imposed over the next two years are based on the findings that older and larger banks do not have to compete hard enough for customers’ business. The new initiatives will demand transparency, as banks will be required to publish trustworthy and objective information on quality of service not only in their branches but on their websites. This will allow customers to see how their own bank shapes up. Furthermore, a core measure will be whether a personal customer or small business is willing to recommend their bank to friends, family and colleagues.
In terms of how worried banks should be, within the first nine days of the Vickers Accounting Switching Legislation coming into force – which provides consumers with a quicker and simpler way to switch their accounts from one bank to another – over 35,000 consumers switched their current account to a different bank.”
If this is the case, what can retail banks do to stop a mass exodus of customers over the next few years?
“If banks are to optimise customer relationships and loyalty in this new environment, they need to integrate processes and technologies that enable them to build − and then act upon − a detailed view of what each customer wants. This all starts with achieving a single view of the customer. Doing this is integral to improved customer insight, better targeting, increased customer satisfaction, and improved customer service. The right Customer Relationship Management technology can provide just that, offering an individualised service based on a 360-degree view of the customer.”
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