There has been conflicting information bantered about lately having to do with Big Banks’ Customer Satisfaction scores, coming from both sides of the pond.
A recent J.D Powers survey on retail banking shows a spike in customer satisfaction levels in the top six U.S. banks. One reason for the improvement is the investment in better customer facing technology, and the expansion of digital banking options.
However, in the UK, big banks customer satisfaction ratings are on a downward slide, as big banks struggle to buoy up the lowest approval ratings they’ve ever seen. One of the most egregious offending practices under scrutiny (and reason for the big banks’ gravitational pull to the bottom of the rankings) is how difficult bank products and associated fees are to understand.
You know, fee transparency.
Even bankers are hyper aware of the need to “[raise] awareness and education of products” not just for customers, but across the banking industry.
Digital banking may improve customer satisfaction, but lack of fee transparency imposes a ceiling on just how satisfied customers actually are.
Transparency & Innovation
Paul Bromford recently shared six ideas to revive innovation and creativity, and frankly, banks ought to pay attention to these ideas as they get to working on bringing those customer satisfaction scores back to heady heights (lofty goal, but surprising and delighting customers is heady — I suspect most customers would be happy with middling to average service, as it would be an improvement to the status quo).
Two principles stand out most, and are endemic in banking: over complication and silo working. Legacy IT systems in financial services are both, in spades. And so is the customer experience, especially in organizations that do not have a single view of the customer across the entire bank.
Legacy bank technology is infamous for being a spaghetti quagmire. Modernized, open-architected systems are surprisingly refined, and — dare I say it — simple. Part of this simplicity is based on automation, where a single data point gets pushed across the needful systems in order to execute a command: from debiting a customer account when a payment is transacted, to updating a promotional price in a product catalog being reflected on the monthly billing statement.
There is no greatness where there is no simplicity, goodness and truth. — Leo Tolstoy
Inherent in simplicity is transparency. Take a look at any terms and conditions disclosure document, and tell me that isn’t a perfect example of opaque obtuseness. When did it become de rigor to give customers complicated explanations for the fees charged to access and move their money? Maybe the better question is when did it become so difficult to be transparent?
The Occam’s Razor simple answer would be: when systems are a quagmire, so is the muddled answer coming out of those systems.
True fee transparency for products, pricing, and services is foundational in building customer trust. Trust is the building block of customer satisfaction, it’s the keystone of the relationship. Deloitte has noted that customers are clamoring for greater transparency, for clear explanations of what they are paying and why. Most complex legacy IT systems are not built to provide this clarity to customers, with product centric siloed systems with no real product lifecycle management.
To note, Deloitte offers a rationale for unbundling pricing to increase transparency, and it has merit, although I’d argue bundling is not inherently un-transparent, and full disclosure is possible for dynamically priced and bundled offerings, and a bank can still relate the price to cost of each service of the bundle without charging the customer for the unneeded extras.
This is especially relevant when customers are allowed to customize their personal banking bundles, as it offers a preventive measure for the “unneeded extras”, not to mention individualizes a bespoke financial service to the end client — a basic tenet of customer centricity.
But back to transparency, and the omni-channel experience — it’s a no brainer that digital, mobile, and (a seemingly last resort for digital natives) customer service centers should be able to clearly, concisely, and simply relate all of the necessary information about any fee incurred. One impediment to executing this obvious mandate: the dreaded legacy IT systems.
Are you staring to see the common culprit yet? A digital strategy is not enough to improve customer satisfaction, especially when it’s anchored by legacy IT systems.
In the UK, the Competition and Markets Authority (CMA) is pushing banks to disclose exactly how much the bank has taken in fees. And while this prompts heated debate on cross-subsidization and the potential externality of encouraging customers to opt for less costly services to the detriment of the banks’ profit source, the argument for increased fee transparency is rooted in basic good business practices.
Fee transparency is also crucial to rebuilding trust in banking as an institution, and accurately communicating the value — not just the perceived value — of financial services.
Customer trust is the belief that the bank’s benevolence, honesty, and competence to act in the best interest of the relationship is active and real. It is also permeates every aspect of customer satisfaction. Customer Satisfaction is tangible, and impacts bank profitability, customer loyalty, and the bank’s ability to attract wallet share.
It’s simple logic, really:
Transparency => Trust.
Trust => Customer Satisfaction.
Customer Satisfaction => Good business.
Good business => Profitability.
It’s a win/win: both customers and banks benefit from it. Need I say more?