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Mary Clarke, CEO, Cognisco

It is commonly said people are more likely to get divorced than change their bank account, but that could soon all change.  The 7-Day Switch (officially called the Current Account Switch Service) was launched last month, making it easier for customers to change banks in just seven working days. This move will increase consumer choice and may lead to better deals, but it will also increase the pressures and competition in the retail banking world. The days of unwavering consumer fidelity look numbered. Banks will need to work harder than ever to improve the customer experience at every interaction, whether face to face, online, telephone or mobile in order to retain loyalty.

Bank Customer Service
Bank Customer Service

The financial crisis and the recent wave of banking scandals have damaged consumer trust and confidence, so this marks a new era of risks and opportunities for banks. A major report in 2010 from Ernst & Young, ‘Understanding Customer Behaviour in Retail Banking,’ surveyed over 6100 consumers in six European countries, including the UK, and revealed that 56% of people have decreased their trust in banks. 24% admitted they had switched bank accounts and a further 11% pledged to in the future. A quarter of those who planned to leave said that their lack of trust was their main driver. The report also highlighted that service quality is the most important criteria for people when switching banks.

However, getting customer services right is no easy task. Customer services representatives are required to consistently provide the most accurate and appropriate advice to customers on any number of different products in a professional and timely manner. Achieving this in a regulated, highly competitive market, where products, internal processes and regulations are complex and subject to continual change is challenging.

The risks are high too – poor customer services, including giving people the wrong information or advice can lead to customer defection or even legal and financial penalties if products are mis-sold. These issues can also lead to serious and lasting reputational damage.

Mary Clarke CEO Cognisco
Mary Clarke CEO Cognisco

A big challenge for managers is to ensure their customer service representatives can provide the levels of service that won’t put their business at risk. Some banks are already upping their investment in consumer engagement. Barclays is using the crowdsourcing site ‘Your Bank’ to gather ideas and feedback from customers about how it could improve its services. Other banks are using an ‘Omnichannel’ approach to handling customers which involves all divisions sharing ‘intelligence’ about customers to ensure the most personalised and consistent service is given at each interaction.

Such innovations will be wasted if fundamentals such as good customer service aren’t in place. Bank managers need to be confident that all of their employees are highly competent and knowledgeable about all aspects of their role. They also need to be certain their employees are handling customer queries correctly, providing appropriate advice and processing all requests accurately first time.

Yet in spite of significant investment in training in customer services and products, mistakes still happen regularly in banks, even with the simplest of requests. These errors may be small but they impact customers and can create a negative perception and obviously require banks to invest time and money in fixing the errors.

The only way to address and resolve this issue is to have the means to uncover the hidden specific gaps in each individual’s understanding of their roles and to establish a view of how each individual will apply their knowledge in any given circumstance – how they are likely to treat customers and the advice they will provide.

Standard approaches to training and assessment don’t go far enough. They may reveal what people know, but not how their knowledge is likely to be applied at work. Equally traditional training methods won’t pinpoint specific gaps in skills and knowledge or any ‘risky behaviours,’ which if left undetected could increase the risks of errors.

One solution to this dilemma being used by some banks, is introducing regular employee assessments that ask people a series of situational judgement questions based on common scenarios they face daily. Such assessments measure not only what people know but how knowledge is applied on the job and how confident people using their knowledge when interacting with customers.

The results of such assessments provide an accurate picture of how people perform and behave at work. Importantly, the assessments also reveal critical skills and knowledge gaps, which can be addressed immediately using targeted training to improve performance and reduce risk. Adopting a targeted approach to training can be highly effective, cost effective and produce good results quickly, boosting employee confidence at the same time.

With the 7-Day Switch promising increased competition in the sector, banks need to up their game and improve the service they give to their customers. It is no longer simply enough to rely on traditional training and development methods and hope that customer service levels will improve. Banks need to be more strategic and ensure they also uncover knowledge gaps and risks so they can provide people with the right interventions that will help them excel. With competition in the sector set to increase – there is no time like the present to get the fundamentals right.