Reshaping the customer experience in retail banking 3 Banks that have recognized and attempted to satisfy these new demands are viewed positively by consumers.1 Yet while the majority of organizations cite customer experience as a top strategic priority, only a small fraction (30%) are actually allocating funds to understanding and improving it.2 The benefits of superior customer experience—bottom-line results and stronger customer and frontline-worker loyalty—are not lost on banks. This bank’s story is not unique. We'll email you when new articles are published on this topic. The role of customer care in a customer experience transformation. As practitioners like Amazon and Apple have demonstrated, real value resides not only in the products and services a company provides but also in the way that it delivers them. We use cookies essential for this site to function well. Monitor and optimize the customer experience across all your touchpoints to understand customer behavior and deliver personalized, premium experiences for banking and credit union customers. Reshaping the customer experience in retail banking 3 Banks that have recognized and attempted to satisfy these new demands are viewed positively by consumers.1 Yet while the majority of organizations cite customer experience as a top strategic priority, only a small fraction (30%) are actually allocating funds to understanding and improving it.2 Share. Transforming customer experience in a bank requires bringing stakeholders from distribution, product, risk, legal, pricing, and other departments to the table. Our flagship business publication has been defining and informing the senior-management agenda since 1964. Many customer-experience programs are launched off the back of analyses such as this. In all cases, the CEO must make customer experience a priority, and in some cases the appointment of a chief customer officer can serve to underline that commitment. One bank found that customers willing to promote the bank were four times more likely than neutral customers to add additional products. 04.05.2017 - McKinsey & Company | Digital services and operations are raising the competitive bar in every sector. Our mission is to help leaders in multiple sectors develop a deeper understanding of the global economy. Remaking banking customer experience in response to coronavirus. Lyn Hunsaker in CustomerThink said Customer experience value creation occurs when you empower customers to achieve their goals with greater satisfaction in a win-win approach . PwC’s 2019 Consumer Digital Banking Survey comes as the industry is still learning how to solve the banking needs of younger and tech-savvy consumers. Learn about collaboration with select social media and trusted analytics partners In our experience, a handful of elements are necessary to execute any program that will deliver durable impact. In a truly omnichannel banking experience, customers can switch from one channel to another without fear of the bank losing track of their journey. Flip the odds. The greatest latent demand exists in countries where the bank branch experience is more time-consuming and cumbersome, such as India and Mexico; there, 91% and 81% of respondents, respectively, expressed a willingness to run their finances through major tech firms. Our mission is to help leaders in multiple sectors develop a deeper understanding of the global economy. Please email us at: McKinsey Insights - Get our latest thinking on your iPhone, iPad, or Android device. Managers selected the five customer journeys that drove about 20 percent of calls and redesigned them with the aim of eliminating all the calls. Senior management balked at committing additional time and energy. Subscribed to {PRACTICE_NAME} email alerts. A customer’s banking relationship includes key journeys that range from onboarding and transacting to maintenance and problem resolution. According to the J.D. The "Improving Customer Experience in Banking" report shares the results of a global survey done to determine the CX maturity of banks and credit unions. That makes it crucial that the technology supporting human interaction is unobtrusive and works seamlessly across platforms. As if a decade of razor-thin margins and reputation issues weren’t enough, the mix of challenges facing global banks makes it easy to see why so many now voice a commitment to improved customer experience as a legitimate differentiator in an increasingly competitive environment. “The primary driver in emerging Asia is really the underlying potential and demographic growth we are seeing,” says Joydeep Sengupta, head of McKinsey’s Apac banking practice. Reinvent your business. You should seriously consider attending the Summit if you are an executive of a financial institution with responsibilities in one or more of these areas: McKinsey uses cookies to improve site functionality, provide you with a better browsing experience, and to enable our partners to advertise to you. Banking is one industry where customer experience offers enormous scope for differentiation. Resolving these barriers requires active sponsorship from the top. To help, a recent McKinsey article sheds some interesting light on shifting consumer behaviors following the crisis. At the next level, the team defined an overall target for improving the journey and established an “agile studio” to stimulate solution ideas and execute improvements. 2. One bank saw an increase of 30 percent in sales when there was an appropriate and timely (24-48 hours) human response compared to a purely digital journey. In the rush to digitally enable customer journeys and transform the customer experience, it’s easy to be swept away by a bias for technological solutions. Instead, they compare their experience to leading firms in other industries. Regulation. Something went wrong. In the EU and UK, PSD2 and the Open Banking Initiative are giving more control to the customer over personal account data. Learn more about cookies, Opens in new Customer journeys in banking are a bit like a romance, from the initial meeting when you’re trying to figure out if the bank and its products and channels are right for you, to the building of the relationship where of you learn more about each other, and finally to the engagement and marriage of what will hopefully be a happy, productive and successful long-term relationship. In fact, digital experiences are usually synergistic in how they relate to the branch, allowing consumers an easy means to check their balance and perform routine banking activities while retaining the option to visit their bank location should they choose. From the experience, the company gained a suite of compelling new … By Gerard du Toit and Maureen Burns. (Leading on the Edge of Chaos, Emmet Murphy and Mark Murphy) • In the retail banking industry, customers who are fully engaged bring 37% more annual revenue to their primary bank than do customers who are actively disengaged. Against this deeper understanding of the sources of customer experience, the team was then able to put in place an iterative process of developing and testing rapid prototypes of minimum viable products and refining knowledge with each new application. CX in the digital era is constantly evolving, which is why marketers must make an effort to keep up with the latest customer experience trends.In fact, improving and personalizing customer experience which leads to better customer satisfaction is the top priority for over 55% of companies. But in the case of a CVA (Customer Value Added) measurement, the questions are asked of the decision maker, not the user who has been in the … However, this is difficult to measure. The result is a transformation that delivers early impact and momentum and an opportunity to evolve as needs change, without the disruptive shock of tearing up an operating model in the fragile, early stages. ETBFSI; December 17, … Analysis of the 50 largest global banks’ annual reports and investor presentations for the latest financial year; based on the S&P Global Market Intelligence list of banks by total assets. McKinsey & Company today announced that it has been named a leader in Forrester's The Forrester Wave™: Customer Experience Strategy Consulting Practices, Q4 2020 report dated December 2, 2020. The customer’s voice is often left silent as change agents latch onto digitization to leapfrog competitors, self-service improvements, and revamped staffing models. Data on utilities were not collected before 2013. Even banks that have thoughtfully created a flexible, iterative improvement process at times inadvertently overlook the most critical stakeholder: the customer. Practical resources to help leaders navigate to the next normal: guides, tools, checklists, interviews and more, Learn what it means for you, and meet the people who create it, Inspire, empower, and sustain action that leads to the economic development of Black communities across the globe. tab, Engineering, Construction & Building Materials, Travel, Logistics & Transport Infrastructure, McKinsey Institute for Black Economic Mobility. Monitor and optimize the customer experience across all your touchpoints to understand customer behavior and deliver personalized, premium experiences for banking and credit union customers. With research finding that more than 50% of customer experience is based on the message and content received, it is clear why organizations need to focus on their consumer communication. Today’s customers want personalized interactions, simplified banking … Positive customer experiences influence 75% of customer decisions in banking. As value is demonstrated, larger and larger parts of the organization are included. Despite a large investment of time and money, however, its gold-plated solution proved too complex to implement all at once. Press enter to select and open the results on a new page. The financial benefits of improving customer experience are clear. In these “hot periods,” lasting several weeks, the teams react to all customer feedback that requires structural adjustments that are larger than can be handled alongside day-to-day operations. One way is to set up a dedicated customer-experience organization within the bank. Customer experience — A banking provider’s ability to fulfill consumers’ expectations across all channels. One way is to set up a dedicated customer-experience organization within the bank. Dedicated teams encourage a continuous focus on customer experience across product, service, and geographical silos. It’s hard to quantify the return your business can expect when investing in customer experience, and perhaps even more difficult to know when and where investments in customer experience should be made. Collect, analyze, control and take actions on your customer feedback. Banks face an expanding array of new competitors. But data by themselves are insufficient. Our initial review of the data shows great variety in age-related differences, how consumers define their primary bank relationship, and where consumers find trust with their banking needs. Never miss an insight. Currently, 62% of customers who report that they prefer mobile banking fall between 18 Accessing bank products and services should be a simple, seamless experience – clean menus that don’t require countless clicks or tons of taps to access basic banking tasks. In a digital world, customers expect banks to connect all the dots and deliver omni-channel experiences that are seamless, personalized, and yes, delightful. Agile, iterative testing then allows a team to test new approaches, learn from failure, and refine and start over again at a high metabolic rate. 1. hereLearn more about cookies, Opens in new To that end, we find it useful for banks to apply the same rigor of value attribution to customer experience as they do for productivity programs. Learn more about cookies, Opens in new In our experience we’ve found banks increasingly finding success with “at scale” transformation efforts. During implementation, the team realized that it had a broader opportunity for improving the vast majority of its customer-service interactions over a period of several years. Product companies understand better than banks and other service organizations that using customer insights is a way to develop a superior product. Digital upends old models. Patiently building a business case can fund them, secure buy-in, and build momentum. Leaders in customer experience pursue a number of approaches to overcome this kind of complexity. McKinsey in its review titled “A test of resilience: Banking through the crisis, and beyond,” said banks globally were questioning their business models largely on account of the prevalence of low or negative interest rates, as well as FinTechs encroaching the core banking business. Often the first round of initiatives will not deliver the desired satisfaction levels. Customer journey mapping provides a better understanding of how consumers interact and engage with your brand, and how to be the right channel at the right time. The next step was to then systematically redesign and reengineer the customer journeys at scale. With skill shortages looming, companies need multiple tactics to close the capability gap. Should banks worry about Amazon's quiet moves into financial products, including Amazon Cash? Please try again later. Despite the growing awareness of the value in superior customer experience, efforts to improve it are rarely held to the same rigor as an effort behind, say, a traditional productivity transformation. Without a common language, the bank struggled to approach customer-experience transformation in a uniform way across functions, handcuffing efforts to collect the right facts to jointly identify and resolve pain points. cookies, Explore all our insights on the next normal beyond coronavirus. tab. Constantly test to refine the customer experience. One way is to set up a dedicated customer-experience organization within the bank. Every customer-experience transformation following such a model relies on certain prerequisites (Exhibit 1). Banks struggle to pursue customer-experience transformation amid the complexities of running their day-to-day business. The Bank Customer Experience Summit was created for banking industry executives who want to learn about innovative technology for engaging and growing their customer base. If you would like information about this content we will be happy to work with you. Constantly test to refine the customer experience. Banking Needs a Customer Experience Wake-Up Call Subscribe Now Get The Financial Brand Newsletter for FREE - Sign Up Now The "Improving Customer Experience in Banking" report shares the results of a global survey done to determine the CX maturity of banks and credit unions. Come to McKinsey to do the best work, with the best teams and truly be at your best. Last, obstacles to information sharing and collaboration sometimes muted customer care’s influence on shaping customer-experience … 2 * Source: McKinsey Cost per Trade Survey, Thomson Reuters “KYC Compliance: The Rising Challenge for Financial Institutions” report, GLEIS 2.0 voice of customer and expert interviews. Internet retailers and other e-commerce players typically sit atop customer-satisfaction rankings. One bank that undertook a customer-experience transformation concluded that the lifetime profitability of a satisfied customer willing to actively recommend the bank to his or her friends was five to eight times greater than one who had a negative perception. Banks often lumber in the middle of the pack. Creating a pipeline of feedback and actions, rather than simply reporting metrics, is one way to ensure that the customer’s voice is always present in any transformation effort. collaboration with select social media and trusted analytics partners Without a quantified link to value and a sound business case, transformation efforts can’t show early gains, build momentum among functional executives, or earn a seat at the executive team’s table. Source: McKinsey Payments Practice Exhibit 2 Global open-banking developments Data sharing and open banking Consulting firm McKinsey & Company recently published its 2020 Global Banking Annual Review. Too often, retail banks build oversize, bespoke teams and processes to address individual customer journeys with inadequate ways of collaborating across functions and measuring progress. Practical resources to help leaders navigate to the next normal: guides, tools, checklists, interviews and more. Regular risks include potentially conflicting agendas or timelines. 3 ways data can transform customer experience in banking Read the whitepaper. 2Survey was not conducted in 2012 and 2014. Here are three keys to action. Customer Journey Mapping Provides Path to Digital Banking Loyalty Subscribe Now Get The Financial Brand Newsletter for FREE - Sign Up Now Customer journey mapping is an important tool for visualizing the consumer’s experience as they shop, research, purchase and use … Managers set out to systematically reengineer key steps along customer journeys but found they were inhibited by the lack of a common language to define those journeys. But by combining a common taxonomy with a structured maturity model, it is possible to quickly identify customer pain points and to create minimum viable products. The maturity model addressed four key gates to pass through on the way to customer-experience improvement (Exhibit 3). For the biggest banks, how they treat their customers is becoming more of a political issue, as any CEO who has been called before a congressional or parliamentary inquiry can attest. 2. Some of the successful transformations we’ve observed have included customers in their design via a variety of techniques: structured interviews, customer panels, zero-based-design workshops, and executives spending time in call centers and branches to experience firsthand what customers encounter and to shape customer-centric responses. cookies, Read our latest thinking on the banking customer experience, larger and larger parts of the organization are included, McKinsey_Website_Accessibility@mckinsey.com, quantified link to value and a sound business case, dedicated customer-experience organization. But key customers can easily become skeptical about not having a human representative to call when things go wrong. Nontraditional competitors. Ironically, another way that customer-experience transformation efforts go awry is by leaving the customer out of a front-and-center focus in propelling a change effort. Many customer-experience transformations stall because leaders can’t show how these efforts create value. Customer experience is often the deciding factor when it comes to banking. We strive to provide individuals with disabilities equal access to our website. This article explores the ways that some banks have implemented these and other critical steps in constructing successful customer-experience transformations. Practical resources to help leaders navigate to the next normal: guides, tools, checklists, interviews and more. Most transformations fail. 2. Over time, by emphasizing this type of agile collaboration, organizational structures can be revamped to deliver the new experiences sustainably over multiple years. A seamless customer experience can be worth at least as much as a superior product or efficient process—building customer loyalty, reducing costs, making employees happier, and boosting revenues significantly. According to McKinsey, improving customer experience increase customers likelihood to renew or buy new products by between 30-50%. The right balance requires study, but when interactions are new or particularly complex, the personal touch is still an important differentiator of customer service. But banks have rarely invested the same way in service design. We use cookies essential for this site to function well. As banks pour more effort into improving experience, we find three missteps to be the most likely culprits when efforts fall short of the mark. Launching a successful new digital-banking business requires a marriage of traditional consumer research and a deep, real-time understanding of the behavior and pain points of individual customers. On a scale ranging from negative 100 to 100. NEW YORK and LONDON, Jan. 7, 2021 /PRNewswire/ — McKinsey & Company today announced that it has been named a leader in Forrester’s The Forrester Wave™: Customer Experience Strategy Consulting Practices, Q4 2020 report dated December 2, 2020.The report provides a guide to service providers in the Customer Experience (CX) Strategy consulting market, an area that has gained … Similarly, gathering and segmenting data are classic starting points in understanding customers. Many studies highlight relationships between financial metrics and customer experience. Another consequence is that players outside the traditional financial-services industry are starting to set the benchmarks for customer experience in banking. The imperative to offer a great customer experience reflects the fundamentally new world in which banks operate. People create and sustain change. We’ll help you assess your current CX strategy and deploy a best-in-class program specific to your business. The common language achieved could then be used to broaden the customer-experience transformation across multiple parts of the organization. Improving customer journeys is not a linear process. So while customer care remained at the center of customer experience, functions such as sales and marketing were viewed as having a better understanding of customers. Customer Journey Analytics and Big Data Any use of this material without specific permission of McKinsey & Company is strictly prohibited McKinsey on Marketing & Sales – Slideshare Brief April 2013 Customer Journey Analytics and Big Data ; McKinsey & Company | 1 Across sectors, companies in the U.S. store at least 100 Terabytes of data – many have over 1 Petabyte . Credit cards and banking might not be areas where customers love to spend their time, but improving the customer experience can lead to great results of satisfied customers. Executives on the marketing side thought about life events, while product owners viewed the customer experience through the lens of purchasing products. The benefits of such a strategy have been increasingly clear for some time across sectors and geographies. Executives would be wise to make it the centerpiece of any effort to transform the customer experience. Unleash their potential. Use minimal essential However, few of these programs home in on where the value comes from. Moving from good improvement to great will require regularly going back to the drawing board and maintaining patience and a mind-set of always pushing for more in the interest of customers. These include, among other things, a consistent focus on value, ensuring the customer’s central role in any transformation, and the ability to scale a program. Effective transformations must not only recognize the complexity of these relationships but must also make a priority of the parts of the experience that matter most—in order to manage the cross-functional, end-to-end nature of customer needs rather than deferring to existing organizational structures. At the beginning of its customer-experience transformation, it identified and redesigned each of its most important journeys. Distributed banking, Ingo Money CEO Drew Edwards said, allows banks to evolve capacities in the constantly changing digital financial services ecosystem. To capture the opportunity, incumbents should embrace a new operating model that dramatically improves the digital customer experience. CX in the digital era is constantly evolving, which is why marketers must make an effort to keep up with the latest customer experience trends.In fact, improving and personalizing customer experience which leads to better customer satisfaction is the top priority for over 55% of companies. In the context of COVID-19, banks can better serve customers in distress by enhancing support in the use of digital tools and new products and services. One European bank established a rhythm of regularly recurring customer-journey improvements. Throughout the process, the team also continuously tracked impact via customer and employee feedback. A second benefit accrues from continuously improving service design. We analyzed the main customer journeys at a sample of US financial institutions to expose “choke points” where banks consistently underperform and explore opportunities to address them. At the center of such efforts lies a dedication to a customer’s end-to-end experience with his or her bank—that is, the whole journey rather than individual, transactional touchpoints in the relationship. 3 ways data can transform customer experience in banking Read the whitepaper. In order to provide senior management with a consistent way of discussing the status of journey redesign, bank managers set out to define a common “maturity” model that could be applied across all journeys. Leaders in customer experience pursue a number of approaches to overcome this kind of complexity. According to Google, 46% of people managing their finances online switch between devices before completing the activity, often starting from mobile and switching to PC/tablet. What is an institution’s rating for its mobile app? They also include commitment to a bottom-up feedback loop to measure progress and involve employees in implementing and refining improvements. For example, regulators around the world increasingly examine customer complaints for examples of problematic sales practices and inadequate customer service. And if a customer is used to a mobile interface, they don’t want to have to relearn how to bank on a different desktop or tablet display. hereLearn more about cookies, Opens in new Reinvent your business. Understand what drives your customer experience in an easy and affordable manner. Dedicated teams encourage a continuous focus on customer experience across product, service, and geographical silos. Learn about Many consumers are open to buying financial products from established tech firms (see Figure 1). The end result: a set of actions that encouraged earlier, better conversations with the customer on price. McKinsey conducted a voice of the customer exercise involving interviews of over 70 stakeholders, including market Finally, banks often fail to set up transformation programs with scaling in mind. 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