By Dean Carroll, general manager at Xpedition, looks at the issues. 

The amount of time customer service teams spend face to face with their banking customers may have been eroded significantly over the last two years, but there are signs that things are bouncing back. Certainly, customers are starting to become more active – bank account switching was 32% higher in the last quarter of 2021 when compared to the same period in 2020. That’s according to the UK Customer Service Index for July 2021.

However, there are warning signs in the data. The uplift in switching could be an indicator that service levels aren’t where customers think they should be; banks and building societies score at least 1 point below other sector averages according to the Index.

Interestingly, 35% of customers say they would be prepared to pay more to guarantee excellent service. As more neo-banks enter the market making great service possible through well-constructed self-service apps, the pressure to attract and retain loyal customers increases.

Traditional models are at odds with this new world and while the incumbent financial service providers know that they need to be operationally fleet of foot, they are hamstrung on embarking on radical transformation by legacy systems and regulation. They were never designed to be digital but instead operate within regulated frameworks.

It’s also not helped by the persistent confusion over who owns the customer and therefore owns the strategy for change – is it marketing, customer service or technology? In fact, it’s everyone, but the lack of a designated figure head at board level is leading some companies to think transformation is too hard and too big.

Get the vision right

Incumbent banks that want to improve the customer experience will have to undergo some form of radical business and digital transformation. It’s the only way to increase revenue and drive longer lifetime value. There’s no room for half measures or passivity – it only leads to a diminished competitive advantage, reduced or missed revenue, and an inability to retain or attract talent.

Embarking on such extensive change requires a vision. It’s imperative to ask how things will change and even how things will feel for both employees and customers. Only when there is a common understanding between functions of the vision and the outcomes being pursued, can change really start to happen or be effective.

However, there is also skill in setting the vision. It’s a common error to set broad, generic aims which aren’t tightly matched to strategic goals or existing systems and process. If it’s not possible to directly show how the project will deliver a trackable and tangible return on investment over time, then the vision is more than likely to be too big, and therefore too hard to achieve.

Focus is needed to help build consensus around the value of investment in digital transformation, as well as to ensure that a project will progress according to a reasonable schedule.

This is often the stage at which organisations get a strategic partner involved, who can bring together key stakeholders and help them articulate what their future needs to look like and what must change to achieve it.

The plan for digital transformation, and the business case, can then be built according to the demands on technology, process, regulatory compliance and skills. Taking this approach paves the way for increased buy-in and commitment across the organisation at an early stage, which in turn produces a better and more successful outcome.

It also helps to prioritise which projects need to happen first, and which will deliver the most value. A phased approach then helps to make the vision a more manageable task and one that is less likely to fail.

Building a culture for change

Company culture can also be a roadblock and in many respects, cultural transformation and digital transformation are synonymous. No matter the size of the firm, embracing true change across the entire organisation is of paramount importance if it is to become more innovative, resilient and agile. This creates a culture that is far better equipped to adapt and pivot to the ever-increasing number of challenges that arise during times of uncertainty.

Setting up ‘day in the life’ design days, facilitated by an independent expert, is a useful technique to convert culture early on. People can discuss the goals for their specific function, map the user experience, compile a requirements list, and understand how their area of expertise must work with another to generate full value. This creates a sense of united commitment to the vision and promotes ownership all the way through the organisation.

Communicating and embracing a vision helps set the tone and creates objectives for teams and individuals. However, it can also uncover gaps in capability; very often ambitious projects require expertise the business doesn’t have.

A skills audit can help identify capability that can be transferred between functions. However, there’s often a need to engage external expertise to realise a project’s true value. Bringing in dedicated skill so that specific transformation can be delivered to time, budget and scope is imperative if the overall vision is to be realised.

Data clean up

While many organisations understand the role of technology in achieving their vision, they often overlook the importance of the data the technology will manage. This is a huge part of the transformation puzzle and can’t be overlooked.

This is a considerable challenge for any business with legacy systems. Multiple data repositories need to be brought together and aligned so that there is a single version of the truth at any one time; having unified data is critical to transformation success.

This means aggregating all data into a single cloud platform, for a comprehensive 360-degree view. However, creating a single repository is only a part of the solution. Data needs to be carefully managed and there needs to be a commitment from across the organisation to ensure there is both quality and trustworthy data.

As new data is added trends can be identified and predictive analytics can be used to identify the next ‘best action’ marketing teams need to take to manage a segment of customers who behave a certain way, or to launch a new product.

However, not every business is set up for intelligent back-office processes and operations and it’s very often why the notion of ‘too big and too hard’ takes hold. Legacy platforms and traditional data centres still dominate in many businesses, partly because they’re so difficult to move away from – a combination of cumbersome technology and concerns about any downtime that could result from getting a migration wrong.

But failure to move to the cloud will undoubtedly hold back transformation. The board must make brave decisions and build the momentum to move critical infrastructure onto the cloud. It’s the only way to create a reliable, trusted foundation of clean data to support future technological investments and strategic improvements.

It doesn’t need to be done in one go, however. It can be prioritised. Ensuring internal processes and systems are aligned and automated through modular cloud-based applications such as CRM (Customer Relationship Management systems) enables a migration path that can be phased. As such, companies can start to deliver a seamless experience to the customer and reduce costs whilst other migrations take place. In time, the gains made financially and the confidence from successful completion will help fund future projects and drive growth.

The risk of doing nothing

Transformation projects are often avoided because of the risks involved. However, doing nothing comes with great risk too, and often the longer the delay in getting started, the greater the cost. Not just in the amount of investment needed to catch up and close the gap on competitive advantage but also the costs associated with customer churn and brand perception. Customers are voting with their feet, because they want to get a different service; they know it exists and they will happily switch to get it. The banks that can capitalise on this will be the ones that win.