For many years, banks have benefited from having a loyal customer base that's hesitant and discouraged to change providers. The onset of open banking means banks must allow third-party organisations (like app developers) access to account details. It puts customers' needs at the forefront as open banking can provide services like budgeting and savings advice tailored to the specific customer. Customers will, however, find it easier to switch providers — especially as new entrants can leverage the insights provided by a customer’s transaction data to create new solutions for currently uncovered and unmet needs.

For incumbent banks, this means rethinking their current engagement model to attract and retain customers, alongside reinvigorating their current offerings. Recently, we have observed several banks employing strategies to improve their customer experience (CX). They recognised the growing evidence around human-centered design practices has the power to drive bottom-line value. Many institutions have started interacting with their customers across new digital channels. However, banks are still struggling to meet demand and serve customers at a time when customers need their help the most.

Research into financial services, carried out by Forbes, has shown a correlation between improved customer experience and positive bottom-line results. But, with the COVID-19 pandemic, many banks have had to pivot their focus away from CX-led design to managing major service disruptions that have left customers hanging.

Three outcomes stand out where improved CX can deliver a balance of customer satisfaction and cost:

  1. Customers have a higher propensity to buy and stay loyal. This results in a lower cost for the bank to serve customers. A higher propensity to buy is directly linked to the service and sales experience.
  2. Pricing elasticity increases in line with CX. This willingness to tolerate higher interest or fees supports higher margins in banking. According to Bain & Co, as the economy comes back to life, the Australian consumer may be up to 11 per cent more likely to buy if the brand promise and CX aligns. In banks, that enables a huge advantage in the uptake of mortgages and business loans.
  3. Market share grows when an authentic brand is combined with great service. There is also a direct correlation between customer experience and customer retention. Bain & Co’s research indicates the retention gain can be as wide as 53 per cent between the highest customer experience compared to the lowest. A gap this wide can't be addressed without a system rethink of how CX is delivered and if a bank has the internal capability to deliver it. The competitive advantage of retaining your customers and their associated share of wallet (or how much a customer spends with you rather than a competitor) is a massive boost to an organisation looking to grow market share without spending big on acquisition.

Understanding where to start can be daunting and create inertia that results in unrealised potential never being attained. In Datacom’s experience, starting from an informed place, through a body of research, allows an experience map with target state experiences to be developed and visualised. Next, considering the organisational change needs of your organisation, findings are broken down to logical horizons to deliver the experience roadmap. Finally, service strategy is never static and in that light, we recommend working with the business to iterate and optimise the service experience based on customer feedback.

James Johnstone is Datacom’s head of commercial strategy for our Connect business. He is passionate about combining his experience in IT and customer service to advise on how to improve the service experience for our client’s customers.

Related industries
Financial services
Related solutions
Contact centres Customer experience