A recent Aberdeen report provides a year-over-year trend analysis of financial firms’ performance in key trends and best practices around client expectations. It also provides a comparison of how financial firms stack up against Best-in-Class organizations, highlighting areas of improvement these companies should focus on.
Customer Experience Management (CEM) in Financial Services: State of the Market in 2015
Annual CEM Scorecard of Financial Firms
As important as compliance is for financial firms, these companies must also remember that customer loyalty is not solely based on regulatory compliance. In fact, most corporate and private clients don’t directly factor regulatory compliance in when considering service providers. They rather assume that potential providers already follow the necessary regulatory requirements and reward financial firms based on their ability to meet and exceed the precise needs of each client.
Between 2012 and 2015, Aberdeen surveyed several hundred financial services organizations regarding the key trends and best practices influencing their CEM activities. Trend analysis done across those studies conducted over the past four years shows that financial firms struggle in creating happy clients and, as a result, experience decreasing account spend.
The findings illustrated above should serve as a wake-up call to financial firms. While many firms understand the importance of balancing focus on regulatory compliance with better customer service, it’s clear that financial firms haven’t yet figured out how to accomplish this goal. The good news, however, is that there is a leading group of organizations, including several financial firms, who successfully, meet and exceed customer expectations – in addition to attaining other objectives driving their business activities.
How Do Financial Firms Stack Up Against the Best-in-Class?
Findings from Aberdeen’s March 2015 CEM Executive’s Agenda 2015: Leading the Customer Journey to Success study show that delighting clients and growing the financial health of the business is not a hopeless pursuit – but rather one that savvy organizations are able to achieve. Aberdeen identified top-performing organizations with high marks across measures as the Best-in-Class. These companies distinguish themselves through a keen eye on regularly tracking and addressing customer needs, as well as striving for continuous operational excellence. Figure 2 shows how financial firms stack up against those savvy organizations as well as those classified as All Others.
When looked at broadly, the findings in the above figure reveal that financial firms are trailing both the Best-in-Class and All Others across every performance metric depicted above. In other words, their overall performance is associated with the lowest performing organizations in CEM.
Understanding the root cause of these results requires drilling down a layer deeper into the findings. This means observing the nature of the performance measures that point to the shortcomings of financial firms when it comes to managing customer expectations. These performance measures can be grouped into three categories – each one pointing to the priorities financial firms should focus on to improve their results :
- Customer-centricity: This category refers to an organization’s ability to weave customer-centricity within the very fabric of the business. In other words, it refers to financial firms aligning all their activities – from teller transactions at a bank branch to the monthly bills sent for account balances – with the goal of delivering personalized experiences that meet and exceed client expectations. Companies that ingrain a ‘customer-first’ approach to their activities enjoy year-over-year gains in client satisfaction scores. Happy customers also share their positive experiences interacting with these savvy organizations. As such, companies with a keen eye on account satisfaction benefit from positive mentions of their brand and products /services through social media networks such as Twitter, Facebook and Linkedin.
- Operational excellence: This category refers to an organization’s ability to design and executive activities that are compliant with industry regulations and that require minimal customer involvement to get client needs addressed. For example, a financial firm excelling in this category would ensure that it complies with relevant regulations when issuing a mortgage loan, while also making sure the process is seamless for the client. Companies that lead the way in operational excellence enjoy the fruits of their labour through improvements in key metrics such as response time to customer needs.
- Employee empowerment: The activities listed above are vital to help companies balance industry regulations with the ability to deliver great customer experiences. However, their benefits are further amplified when companies enable their knowledge workers to fully understand their role in influencing customer behaviour and sentiment, as well as provide them with the right tools to do their jobs.
Comparing the performance of financial firms with companies that deliver a Best-in-Class customer experience across all industries, including financial services, reveals the factors that give rise to the performance results highlighted in this document. Data shows that financial firms are falling behind in weaving customer-centricity within the very fabric of their businesses. They also struggle in optimizing and aligning each activity (e.g. a credit card application) with the unique needs of clients in order to deliver a truly personalized and top-notch experience. Finally, they also fall behind in providing their employees with the right tools and acknowledge to do their jobs better.
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