By Mike Ferguson, Redpoint Global Vice President Services, EMEA

As a boy, in the 1970s, my father took me to the local bank to open my first savings account. Dad said it was important that the bank manager could see that I was sensible with my money so that when it came time to ask for a mortgage loan, the bank manager would know me as a good customer and grant me a great mortgage deal.

Nearly 50 years on, I’ve had a few mortgage deals and have never once actually met the bank manager. However, the idea of a benevolent individual there to help me with my finances taunts me in moments of frustration when I’m trying to work out which of a range of complex financial products are the best value for me as an individual. I get even more frustrated when my loyalty to a brand means that I can’t access introductory deals targeted at acquiring new customers from other brands.

A recent survey that Redpoint Global conducted with Dynata Research drives the point home, revealing a major disconnect between the level of personalized service that customers expect and the service that banks provide. Of the 1,000 customers surveyed, 82% said they expect their bank to personally understand them, while just 38% said their bank meets that expectation. 

Why is there a customer experience gap in banking?

The transition to digital banking has been accompanied by a move to a self-service strategy – the customer pays in cheques via an ATM, checks their balance through a mobile app, picks finance products on a website. The availability of bank customer service staff has been drastically reduced to channel customers to these new interfaces.

In this self-service world, the concept of the customer is reduced to a set of financial products and banks become even more product focused.

The Open Banking initiative was created in part to help customers get a holistic view by linking accounts and viewing everything on a single portal. In the Open Banking 2020 annual report, the Nesta Challenge survey revealed that 38% of consumers that adopted Open Banking attributed the switch to a desire for personalised support. But this does not address the core issue for banks – that the banks themselves are not satisfying expectations for personalized banking. 

What would it take to close the customer experience gap?

What would we expect our 1970’s bank manager to know about their customers? Income, outgoings, credit risk, loans, savings, investments as standard, but also what’s going on in that customer’s life: Is the customer recently married? Is the customer/household soon-to-be empty-nesters, or maybe saving for university? With the full picture, our ideal bank manager instinctively understands the customer lifetime value and sees the customer as a whole person.

In an industry where banks compete to get customers to switch providers, and the customer benefits of brand loyalty have been minimised, we see that the uptake of switch offers is limited and customer satisfaction declines. Can banks switch their approach and differentiate by rewarding long-term business relationships by providing a great customer experience?

So today, is it possible for a financial institution to know each customer as an individual, understand their life stage and lifetime value and use these insights to be relevant within the context of the customer journey? Surely this adds value to the customer and the bank independent of the product portfolio or total assets. By restoring the traditional bank manager view with a deep, personal understanding, a financial institution is rewarded with more satisfied – and loyal – customers. 

In a digital world, how do we restore the ‘bank manager’ view of the customer?

The first step to a customer-centric approach is to break down data, processes and business siloes that are indicative of a product-focused approach. By combining all customer data sources into a single customer view, a financial institution forms a strong data foundation that is the core of creating personalized omnichannel experiences. 

The curation of a complete customer data set then drives two further challenges, how to create insight and understanding from that data (the bank manager view) and how to provide suggestions and decisions to customers at the speed of a webpage click or a chatbot?

Creating insight from data at scale and at speed requires automated machine learning (AML). Machine learning models embedded in a digital customer experience platform can be set up to identify the patterns and clusters of customer behaviour and to make decisions to optimize any metric (customer lifetime value, product discounts, etc.) By placing the machine learning in-line with the data flows the models will not go stale and do not have to rely on error-prone human judgment for audience segmentation. Rather, embedded machine learning enables hundreds or thousands of models to run simultaneously, always testing and optimizing the next-best action or offer for each customer segment. 

A real-time capability for both data gathering and response through the bank’s digital channels is essential for providing the best customer experience. Real-time empowers the financial institution to deliver a next-best action or offer to a customer on any channel that is in sync with the customer’s interests and needs at the moment of interaction.

In a recent Digital Banking Report that asked global financial institutions about their top strategic priorities through 2021, digital banking transformation (75%) and improving customer experience (51%) polled as the top two areas of focus. An improved customer experience was defined as an institution knowing its customers, their behaviours and needs, and providing contextual guidance and recommendations based on real-time needs and opportunities. 

This combination of the single customer view, AML and real-time decisions are all needed to create that elusive bank manager quality customer experience.