By Siddharth Parashar, Chief Revenue Officer at Firstsource Solutions
Financial services companies are under more pressure than ever before to both defend and gain market share, and with so many businesses in the sector citing ‘customer experience’ as a key focus, or USP in order to win custom, it’s more important than ever that we know exactly what that means.
‘Customer experience’ is a massively catch-all term and it can encompass a vast variety of interactions – from applying for a mortgage to a simple balance check. This means that for many FS companies, there can be thousands, if not millions, of touch-points with customers every day, all contributing to their ‘experience’. Ensuring each and every one is successful is a herculean task. So, where to begin?
Define the customer journey
Banks should look away from this intimidatingly large umbrella term and focus on what’s more tangible. The customer journey is one of the most crucial elements of customer experience – and, getting it right is a significant challenge. A customer’s journey can be long or short, urgent or menial, profitable or loss making – but each one needs due care and attention. Something as small as a phone call to change address can become a negative experience if the customer doesn’t achieve the resolution they are after, or if it takes too long to complete.
In these days where customers extensively use apps and technology in their everyday lives, they are not only extremely well informed, but also impatient for response and excellent service – they require instant gratification.
Gaining a clear and precise understanding of the customer journey is a vital step for any financial services company to take. Banks need to take the time to look into when the first interaction starts and ends, how it differs for each customer, and how it differs for each sort of request? Stripping back to the basics is an important step banks often overlook when hoping to improve their ‘experience’, but without this, they can’t hope to make that ‘experience’ any better.
Of course, a uniform approach to all customers with a particular journey won’t be feasible, and some banks have a slightly easier task of pleasing their customers than others. For example, Monzo, which has been winning awards throughout this year for good customer service, are fortunate enough to have a very targeted audience. Challengers like Monzo have customers who are often younger millennials, or at least the tech savvy older generation who are jaded by the bigger banks. They’re not just okay with mobile banking, it’s their primary method of communicating with their bank. It’s therefore no surprise that chatbots work for the majority of their customers, fewer of them will be calling in the first instance, and so the customer journey is narrowed.
At the other end of the spectrum we have the legacy banks. They’ve been around for donkeys’ years and subsequently enjoy huge customer bases. Some of these customers may only want to use their branch for interactions, while others will prefer everything to be done on the phone with a real person. Some will want a top-notch app experience, with limited human contact, and others will want to do everything outside of business hours. This, as it sounds, is a real challenge for big banks.
The transformation in these legacy businesses has been immense in a relatively short period of time. In 2012, for example, Barclays had no mobile customers and their branch network handled around 1m customer interaction per month. In 2018, they have 6.5 mobile customers and need to handle 150m customer interactions per month. Each customer journey is significantly different, and so is each customer. Working out the customer journey is a much bigger challenge here, but that makes it all the more important.
Take immediate action:
Here’s the good news, defining the customer journey isn’t rocket science. Too many companies hold misconceptions about the process, which often acts as a blocker to what can actually be incredibly simple. In fact, there are two steps that companies can take to understand and define their customer journey accurately. Firstly, customer segmentation: which enables businesses to group customers into demographic groups such as age and location. This categorisation will be the first part of ensuring each group of customers embark on the most appropriate journey not only for their query, but their classification, Secondly, channel identification is critical. This process delves into the details of who is contacting you using what channel, and how those channels are working to accommodate different types of requests. What businesses can expect to get at the end of this, is a selection of ‘types of customer’ and which channels they’re most likely to use to contact their bank. This means that they can start to be more tailored in what they offer, and to whom.
Don’t be distracted by tech:
Much is made of the transformative power of technology. Challenger banks build their offering on it and legacy banks are working hard to incorporate it into many aspects of their businesses. But while tech is of course important, its role should be to enhance the customer journey, not be the sole driver of it. In other words, it is a facilitator but, to get the best out of technology, the end to end processes need to be thoroughly tested for optimal efficiency.
Companies often think ‘customer experience’ equals ‘the latest technology’. We’ve had requests to implement things like AI, VR chatbot assistants, and many other tech services over the years. All of this is of course possible, and while these technologies can be transformative, they are no use if they are being layered onto weak foundations. It is vital that financial services companies get the basics of the customer journey right first by looking at things like “why is this customer calling”, “how long is it taking to handle their call”, “how do they feel at the end of the call”?
When it comes to customer experience, or more specifically the customer journey, it’s surprising how many companies aren’t getting these basics right. We once worked with a large retail bank which had 17 different customer service numbers listed on their site with 15 of them being inactive. It’s a cheap and easy fix, which fresh eyes and the right consultancy can find quite easily. Another client found many customers were making phone enquiries about their balance, despite being registered for mobile banking, due to the fact the process was broken.
At a time where many companies want to offer financial service businesses big expensive transformation contracts, I cannot stress enough the importance of simplification. Good ‘customer experience’ experts won’t sell you technology, they’ll give you solutions to make your business better tomorrow, next week, and for years to come.
How can finance leaders regain a long-term planning focus amidst the Covid crisis?
Vicky Wordsworth carved a reputation as a financial management specialist within private-equity backed businesses, before becoming CFO of the 158-year-old family-owned group of communications specialists – Bailie Group. Here, she considers the need for finance leaders to look beyond the turbulence of the pandemic and plan for the future…
The role of a finance leader is multifaceted. At the core, is a need to protect the balance sheet. However, in supporting the strategic progress of a business, there is increasingly a need for the profession to manage uncertainty to mitigate risks and leverage opportunities too.
This was true long before the onset of Covid-19. A Gartner guide from 2019 for example, highlighted that finance leaders were spending 25-50% of their time navigating unfamiliar situations, even then. And many years earlier, a Wall Street Journal article from 2014 cited advice from Deloitte which encouraged senior finance executives to drive corporate-wide, critical decision-making, that balances strategy, risk and finance in uncertain times.
So, while the health crisis has been a colossal blow to not just the world of commerce, but humanity on the whole, from a finance perspective, we do know what to do.
The onset of short-termism
Another Gartner report, issued in the earlier wave of the pandemic, warned CFOs against short-term and unsustainable cost cutting measures, and understandably so – knee-jerk financial decisions can have devastating longer-term consequences in terms of everything from supply chain security to the retention of valued talent.
However, for many organisations – particularly those without the luxury of healthy cash reserves – it very quickly became about survival. So yes, finance leaders may have been forced to take some rapid actions they would have rather not, but in most cases the decisions will not have been made recklessly. They will still have been considered, albeit at pace.
This agility is an important trait for finance professionals – crisis or no crisis. As a private equity CFO – my former role – the fluidity of decision making reflected the speed with which stakeholders wanted to drive up the value of the business and realise an ROI as quickly as possible. Here aggressive targets may have been the pressure points – not a global pandemic – but the need to act fast and think about a comparatively more short-term outlook, was key.
Moving the dial
For businesses that are a going concern, the objectives are very different to those associated with the PE model. So, the challenge for CFOs in these environments, is to regain a longer-term outlook, ASAP.
Admittedly this isn’t easy amidst so much economic turbulence, and some companies, sadly, are having to manage cash on a daily basis just to ensure staff get paid. But we know that pure short-termism can jeopardise the future financial integrity of businesses, while stifling innovation in the process.
At Bailie Group, for example, the purpose of our organisation is to invest in ideas and people which make a positive difference, and properties that inspire. We therefore have some bold ambitions – not to mention a sharp monthly reporting rigour – and we’re continually growing, both organically and via acquisition. But we naturally have a longer horizon too, which cannot – and will not – fall by the wayside because of Covid. The board needs to support the company, the people within it, and society, far into the future.
Looking inwardly to develop long-term plans
To do this, last March was all about looking inwardly to check that we were OK. We temporarily paused a commercial property overhaul for example, and some due diligence work on an impending acquisition also took a momentary back seat while we ensured our ‘house was in order’. Thankfully, in our case, we have a robust management structure and strong cash reserves from previous years’ reinvestment, so our position was stable. But this evaluation exercise was important nonetheless as we certainly didn’t have ‘global pandemic’ on our risk register.
We formed a Covid-19 committee who met every day to make rapid decisions, under pressure, for the benefit of the business, our people, and clients. But we were quick to look outwardly again – after only 1-2 months – to begin focusing on the medium term.
The pace with which this shift can take place will naturally vary from one organisation to the next, and it would be wrong to suggest it’s easy. But the most important point to note is that the adjustment is almost always essential, as soon as practicably possible, and it’s never too late to turn the dial.
Nurturing a vision
Personally, 2020 was less about long-term planning for Bailie Group, as we were already in the final year of a three-year plan. We’re fortunate, in that respect, to have previously had that vision, not to mention an operating model which doesn’t bog decision makers down in tactical constraints.
But even without these fortunate elements, and however prolonged this period of difficulty may feel, finance executives and their senior management teams can still be visionary.
Presuming organisations have taken advantage of all funding currently available, and undertaken sensible cost reviews to remove unnecessary spend, the next key action is to devise a plan inclusive of clear milestones, roles and responsibilities, to bring it to life. Love or loathe the term ‘pivot’, it is evidence that lateral thinking can ignite previously untapped revenue streams, and some businesses may be yet to fully realise their potential here.
We’re about to currently formalise our new three-year plan – purely because we’re at that part in our strategic cycle, not because of Covid. And while our tactical goals for the next 12 months naturally reflect the current climate, our purpose remains true, and so our strategy is largely unchanged as a result. We’re going to push boundaries and drive more positive change in our communities, because that’s why we exist. We’re still looking out for additional acquisition opportunities, having completed on one in October 2020, and we have recently announced a substantial innovation fund to ignite the fire in the bellies of our progressive Group companies.
We’ve earmarked investment for wellbeing too, as the health of our people will prove crucial to our longer-term success, and training and development is currently in sharp focus. We’re keen to ensure our colleagues feel engaged, fulfilled and supported now, in readiness for us returning to some degree of BAU, in the future. In fact, this has been an essential part of our budget setting.
We also feel prepared, which is important. Nobody can say with any real certainty what the future holds for the economy. If confidence starts to build, particularly in H2, we will see GDP rise and market opportunities open up once again. We have to maintain that optimism, but we’re continually looking outwardly for cues that influence our ongoing decision making, and advice from peers who also want British business to succeed.
Britain’s financial watchdog appoints five women to top roles
By Huw Jones
LONDON (Reuters) – Britain’s financial watchdog announced five new appointments on Thursday, creating an executive committee dominated by women as it pressures the firms it regulates to get serious about diversity.
The Financial Conduct Authority, under CEO Nikhil Rathi who took up the reins last October, said Stephanie Cohen will be its new chief operating officer, with Jessica Rusu becoming its first chief data, information and intelligence officer.
Sarah Pritchard has been appointed executive director for markets, while Emily Shepperd will take up a newly created role of executive director for authorisations, it said.
The overhaul also comes as the watchdog aims to show lawmakers it has learned lessons after a damning report that said its executive committee was responsible for not responding fast enough to problems at now defunct London Capital & Finance investment fund.
The FCA also appointed Clare Cole as director of market oversight, and she will lead the watchdog’s response to a forthcoming review of UK company listings rules.
The review is expected to recommend changes to attract more tech and fintech listings.
Rathi, a former finance ministry and London Stock Exchange official, began an internal shake-up last November with a merger of retail and wholesale supervision units to create a “holistic” view of activities.
There are now seven women and four men on the FCA’s executive committee.
Rathi had said previously that he would seek to increase diversity within the FCA’s own ranks, and last year he said he wanted firms that it regulates to deliver on diversity in a sector where women and BAME communities remain underrepresented.
The FCA said the new appointments were part of its transformation into a “data-led” regulator of more than 60,000 firms, and were aimed at speeding up decision-making.
Britain’s large financial sector is navigating Brexit, which left it largely adrift from the European Union with chunks of stock and swaps trading shifting to the bloc, but freeing up the FCA to write its own rules.
(Reporting by Huw Jones; editing by Tom Wilson and Hugh Lawson)
Carbon offsets gird for lift-off as big money gets close to nature
By Susanna Twidale and Shadia Nasralla
LONDON (Reuters) – An expected dash by big corporations for offsets to meet their climate targets has prompted financial exchanges to launch carbon futures contracts to capitalise on what could be a multi-billion dollar market.
It’s a step change. Carbon offsets, generated by emissions reduction projects, such as tree planting or shifts to less polluting fuels, have struggled for years to gain credibility, but as climate action has become urgent, their market is expected to grow to as much as $50 billion by 2030.
Among the major corporations that say they expect to use them to compensate for any emissions they cannot cut from their operations and products are Unilever, EasyJet, Royal Dutch Shell and BP, which all have climate targets.
Singapore-based digital exchange AirCarbon told Reuters it planned to launch an offset futures contract by the second quarter.
“The entire concept behind carbon trading and offsets is to employ the profit motive in order to push decisions towards climate change mitigating activities. (We ensure) that you find the most efficiently priced offsets,” William Pazos, co-founder of AirCarbon, said.
The futures market would allow companies to buy a simple credit, effectively a promise to reduce a tonne of emissions but not specifying where that would take place, in contrast to the existing market that offers direct access to particular offset projects.
Advocates, such as AirCarbon, say the resulting liquidity and transparency are positive.
Critics, including some environmental groups and some project developers, say making the market bigger may just make it cheaper for emitters without providing any guarantee it will support the projects most effective in reducing emissions.
“There is a risk in a … switch from something which has a large proportion of over-the-counter buyers at least taking some interest in what they are buying and its quality to large wholesale transactions that aren’t so easily unpacked,” said Owen Hewlett, chief technical officer at Gold Standard, one of the biggest carbon offset registries.
SMALL AND OPAQUE
Carbon offset credits are currently traded in small, bilateral and typically project-specific deals.
An emitter can buy a credit awarded to a forestry or clean cooking stove project for a tonne of carbon dioxide emissions the project has prevented.
The buyer uses these credits to offset past or future emissions and the credit is “retired”, or removed from the system.
The retail price of an offset can vary from 50 cents for a renewable energy project in Asia to $15 for a clean cook stoves project in Africa to $50 for a plastic recycling project in eastern Europe.
These voluntary deals are distinct from compliance cap-and-trade markets, such as the European Union’s Emissions Trading System, based on lawmakers setting a carbon budget and allocating a finite number of allowances, which can be traded by emitters or market players.
The underlying principle echoes the carbon offset market in that those that have emitted too much carbon can buy pollution permits from those with allowances to spare.
As demand to limit carbon emissions grows, carbon prices in the EU ETS have soared to a record high of over 40 euros a tonne this year.
In the off-exchange, bilateral market for carbon offsets, some say they are struggling to navigate the proliferation of standard setters, registries, verifiers and criteria.
“The market today is very small. It’s difficult to be confident that the product you are investing in is credible,” said Bill Winters, CEO of Standard Chartered bank and Chair of a private sector task force seeking to create a multi-billion dollar offset market in the coming months.
This year in theory should mark the coming of age of carbon markets as decades of U.N. talks on tackling climate change reach a decisive stage.
Delegates at the United Nations climate conference in November in Glasgow, Scotland, are expected to work on designing a market to channel money into offset and emissions removal projects to prevent global temperatures from rising more than 1.5 degrees Celsius (2.7 degrees Fahrenheit) above the preindustrial average.
Some players, such as AirCarbon, are eager to launch their financial products sooner.
Global exchange CME, home of the main U.S. crude oil benchmark contract, will launch an offset futures contract in March.
“It is a brand new market for many players,” CME Chief Executive Peter Keavey told Reuters. “We can help provide standardised pricing benchmarks and improve price discovery in the voluntary offset market. That’s our goal.”
Ahead of the talks later this year on market design, both CME and AirCarbon plan to use standards set under the aviation CORSIA offset scheme, which many environmental campaigners have said are not rigorous enough as they allow the aviation sector to use most types of project to reach its emissions targets.
They say they fear a repeat of problems that beset the offset market of the Kyoto Protocol, the Clean Development Mechanism (CDM).
The market under Kyoto, a precursor of the Paris climate deal, was flooded with cheap credits from industrial gas projects, mainly from Asia. That led to price crashes and made it harder for other projects to attract funding.
“CORSIA allows a lot of project types and does not have particularly stringent criteria, such as forestry projects with permanence issues and old CDM (Kyoto) credits with little environmental benefit,” Gilles Dufrasne, policy officer at the non-governmental organisation Carbon Market Watch, said.
Asked about criticisms of CORSIA, the International Civil Aviation Organization (ICAO), which developed the scheme, said in an email CORSIA had been agreed by a consensus of member states and was “under constant review”.
Some project developers, brokers and environmental groups also question the wisdom of decoupling carbon units from their underlying project.
They say combining emissions-focused projects with those that might prioritise other issues, such as community engagement, education or biodiversity, could lead to a race to the bottom in terms of price.
This might make it harder for more capital intensive projects to attract buyers.
More broadly, green groups are concerned companies may place too much emphasis on offsets which, if priced too cheaply, could lead them to focus less on cutting their own emissions.
There are no rules on how many tonnes of carbon a company is allowed to offset a year.
Emitters, such as Royal Dutch Shell, BP and Unilever and project developers, say the first priority must be to reduce emissions.
“We have always acknowledged that offsetting can only be an interim solution while zero-emissions technology is developed,” EasyJet said in an email.
The private sector task force, chaired by Winters and promoted by former central banker Mark Carney, wants to encourage a range of participants, such as bankers and trading houses, as well as emitters to join the market to boost liquidity.
“Markets work best when they are efficient, and that efficiency comes from greater rather than smaller liquidity. So it’s important to have as many participants as possible, from all different types of background,” said Abyd Karmali, Managing Director, Climate Finance at Bank of America, who is also a member of the private sector task force.
Others question the role of speculative trading in a climate context.
“There might be a place for a bunch of traders flipping margins on some futures contracts, but at the end of the day I don’t see how the volume of trading going through (exchanges) has any positive impact on climate change,” said Wayne Sharpe, CEO and founder of ecommerce site Carbon TradeXchange.
(Reporting By Susanna Twidale and Shadia Nasralla; Editing by Katy Daigle, Veronica Brown and Barbara Lewis)
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