The dangers of digitization without customer insight

12 October, 2015 (13:56) | Blog | By: admin

Written by Banking Tech

In bygone days the bank manager knew each of his customers by name but could offer them only the narrowest range of products. Today the computer can tailor bespoke financial solutions in a mass market – but has no empathy with which to convey its expertise, writes Ian McVey.

This charmless technology has personalized the customer relationship in revolutionary ways; technically, banks ‘know the customer’ much better than they did in the days of Captain Mainwaring. But Captain Mainframe lacks the ‘pull’ factor of human interaction. It has usurped the customer relationship and still has a long way to go before adding to it. While we can all use 24 hour banking and mobile apps, I wonder if technology has improved our understanding and appreciation of financial services?

Against a background of rising customer expectations, UK banks have never been under so much pressure, or scrutiny. A costly rise in the number of ‘touch points’ and a drop in customer trust coincide with attempts to acquire the most profitable customers, at lower risk, against a backdrop of competitive disruption, customer disloyalty and regulatory change. It is small wonder the voice of the customer often struggles to be heard among management silos.

Generation Y wants more, just as banks struggle to maintain the IT spends necessary to placate them, as ever more transactions are being placed on line.

Digital transformation means replacing human contact with technology, but ‘pushing out’ technology cannot work without ‘pulling in’ feedback through data. In its absence, the race to get digital functionality to market risks becoming a scatter gun, or sledgehammer strategy, unsupported by solid customer research. There is no ability to ‘test and pivot’ or to make data driven decisions. The role of data as a ‘pull’ factor, particularly in customer engagement, where insight is information advantage, is dangerously underestimated.

The technology to ‘pull’ the data, however, has evolved more quickly than some banks realize. The world of insight surveys has undergone radical changes to be able to keep pace with the dynamic nature of the customer. Gone are the days of the static annual survey. Insight is continuous, with regular ‘pulse’ surveys that report in real time. These depend on agile, modular SaaS technology that integrates with existing systems, with no need to rip, replace or upgrade hardware. Questionnaires encourage engagement, not abstention, and results quickly shared with all those who need to be ‘in the know’.

Rather than profit from such inexpensive and effective solutions however, many of those with whom I’ve spoken still struggle to assign responsibility and establish best practice in the way customer insight is achieved. CRM is regularly caught in the crossfire between internal silos and external consultancies. More frequently, VOC teams are too reactive to the business, which recognizes the need for NPS but lacks the skills to structure it, with no precedent on which to grasp its power. Customer facing teams are not pushing back on the business to help them understand best practices for NPS programs and I have seen the resulting thirty question survey sets that leave the customer cold. The NPS box is ticked, proper procedures are followed, and the bank is none the wiser and the customers go unheard, which makes them feel taken for granted.

Those that do get it right know how to put data to work. These banks do not wait for outdated reaction. Instead they profit from fast data quickly analyzed, by leveraging saas into their technology. They are informed at every stage of their customers’ journey. They adopt inexpensive, thoroughly modern software as a service that engages the business as much as it does the customer. In a knowledge economy, everybody knows what to do. Management has access to platforms that are simple to understand and interpret, data flows across silos, products are tested against customer response and guesswork is relegated to the past. VOC programs are scaled across management and customer touch points, surveys are created, put into the field and analyzed with no need for programmers or video editors. Data scientists can pool data delivered in real time and draw insights, discovering gems of information they simply did not know. In a sector built on silos, where banks have never had a unified view of the customer, this software overcomes the dangers of disparate platforms and systems that have never collated data centrally.

Furthermore, these newly empowered banks quickly find that they have the wind in their sales, because they are engaging customers who actively want to share their thoughts, to make things better. In the connected age, these customers are basking in social recognition and social power. Much as workers have become associates, so have these customers become partners.

What is more, this inclusion, driven by digitization, adds a new dimension in the financial world, known too well for its exclusivity and tendency to cherry pick its customers. People positively want to interact, engage and debate and the trend will only get stronger. ONS reports 38 million adults (76%) in Great Britain accessing the Internet every day, 74% of all adults buying goods or services online up from 53% in 2008 and access to the internet using a ‘phone doubling between 2010 (24%) and 2014 (58%).

Customers will come if you build the right product, but you cannot build the product without knowing what the customer wants. Banks need to ask themselves where their customer feedback is being fed back into. Across the business? To intelligent people who know how to intervene in the data set, to collate, extrapolate and share it? Or to the same algorithm that asked the question in the first place.

Customer insight does not push out surveys, it pulls in data, the lifeblood of markets and the foundations of a digital economy in which the sharing society thrives. It is invaluable, and customers expect it to be taken seriously. Without it, the process of digitization risks disenfranchising more customers than it attracts.

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