Retaining customer trust and advocacy through periods of adversity

By Tom Goodey, Retail Banking Sector Lead, Huntswood

In recent months, it hasn’t been uncommon for banks to make the headlines – and it’s not always for the right reasons. Most recently, we have witnessed one of the best-known challenger banks announce an internal error in its calculations of the amount of capital it held, sending its share price down and leading to high levels of customer uncertainty.But more commonly, banks experiencing operational problems also tend to make the news. These are typically related to problems such as online banking becoming unavailable, issues with the mobile app, or a cash machine network going down.

Most customers are likely to accept this if it remains an isolated incident. But if problems begin to recur, or the same incident stretches on over an extended period of time, frustrations and complaints understandably intensify.

Monitoring service issues and provision through MI

Whether it’s a service issue or a deeper reputational matter, such problems can result in a breakdown of loyalty and trust between providers and their customers. It becomes essential to tackle this head on, by managing the fallout through effective communication and responsiveness.

We all know that in today’s environment, customers have high expectations and are quick to vent their frustrations, particularly through social media. Problems can quickly escalate as a sense of discontent spreads and amplifies through these channels.

It has therefore become a key part of banking operations to be able to continuously monitor and act upon customer sentiment and service delivery. Effective management information (MI) is critical to this. All banks need to be able to extract and analyse relevant data on customer satisfaction levels, and track how these are changing, in order to inform their operational processes moving forwards. Critically, should the data suggest a deterioration in service provision or sentiment, firms should be prepared for an uptick in associated customer contact.

Resourcing and recovery planning should the worst-case strike

What can make a difficult situation worse is when customers have difficulty getting through to their bank or fail to receive a satisfactory response. Ensuring the appropriate resourcing levels in contact centres and associated front, middle and back office functions is essential. It’s no good having scores of front-line staff available on the phone if most customers are communicating through webchat, for example.

Past experience can be an invaluable guide to the future. It is important to take the time to look back at any previous incidents and analyse what impact they had, through which channels, and make an honest assessment of how effectively they were handled.What could have been done better? What changes to the customer contact strategy need to be made?

In the wake of technical failings banks should ensure that they have a service recovery plan in place with trusted partners on hand to provide expertise and capacity ahead of systems migrations and major changes, during downtime and following recovery. Banks need to reassure regulators that steps have been put in place to protect impacted customers, while also being able to demonstrate that services are improving and issues are being resolved quickly.

Are challenger banks at a natural advantage?

It could be argued that challenger banks are better placed than their traditional counterparts as they do not have the same legacy constraints, with new systems all built in the digital age. This can potentially mean that where a problem does arise, they are better able to provide customers with a detailed breakdown of issues and rectify them more quickly.

However, at the same time, customers may have less tolerance of service issues with app-based challengers as their digital offerings will have been instrumental in choosing to do business with them. They also have less of a reputational legacy to draw on; controversies may hit them harder than the traditional high street banks who have much longer histories and established track records. It is therefore important that in the wake of a reputational blow, challengers are prepared for the influx of customer contact and are as transparent and honest with their customers as possible to retain loyalty and trust.

The truth is that no bank, no matter how long it has been around, is immune from the effects of reputational or service issues. Another serious parallel problem is that when such issues occur, the danger of concurrent opportunistic fraud or cyber security incidents happening risestoo. With customer security and protection such a priority, the stakes only become higher.

No bank wants to experience a crisis of public confidence. But if they do, the way in which they handle it is critical. Handled well, in some cases it can actually help to increase loyalty by impressing customers through accessibility, responsiveness and taking a customer-centric approach. Handled badly, it can drive customers away in an age where switching is already becoming easier – a risk no bank can afford to take.