FORESEE EXPERIENCE INDEX BANKING REPORT · More than ever, customer experience (CX) across all the...
Transcript of FORESEE EXPERIENCE INDEX BANKING REPORT · More than ever, customer experience (CX) across all the...
F O R E S E E E X P E R I E N C E I N D E XB A N K I N G R E P O R TA U T H O R
Jason Conrad
R E S E A R C H A N A LY S T S
Angela DiNicola Andrew Hyclak Karly Szczepkowski
© 2017 ForeSee
Banks are struggling to gain new footholds amid mounting
industry disruption. Digital migration, increasing competition,
and rising customer expectations weigh heavily on the banking
industry, bound by regulatory hurdles and prone to cultural
inertia. Competition is fierce and relentless, notably from
fintech companies that offer everything from lending
to personal finance, payments, and investing, often at a
lower cost and with greater convenience.
Although consumer behavior has undoubtedly shifted to
web and mobile, banks can’t risk abandoning branches and
call centers.
More than ever, customer experience (CX) across all the
channels in the customer journey is a top business imperative
and key competitive differentiator for banks fighting to compete
and remain relevant. Great CX turns digital migration from
a challenge into an opportunity because CX is directly tied to
business impacts like revenue, overhead costs, acquisition rates,
loyalty, lifetime value, and Net Promoter Score (NPS).
Introduction
Introducing the ForeSee Experience Index (FXI): Banking Report. ForeSee’s proven measurement methodology quantifies key CX drivers in order to accurately predict which elements of the experience will drive desired behaviors. In this report, you’ll learn:
Map of the MarketCredit unions and local banks outperform large, national banks in terms of CX.
READ MORE
The Click-and-Mortar Customer JourneyBranches still matter. A lot. But digital touchpoints are important for retention and loyalty.
READ MORE
Breaking Up Is Hard to DoMost banks rely too much on captive loyalty to retain customers.
READ MORE
Fintech is the FutureNew technologies are a growing threat, but smart banks can adapt and learn from fintech successes.
READ MORE
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84
82
85
Map of the Market: Credit Unions Dominate
76%
more likely to buy additional
services
63%
more likely to continue their relationship
with the bank
86% 58%
more likely to recommend the
bank (NPS)
more likely to trust the bank
Mobile apps and branches get high marks from customers; credit union customers are the happiest across all channels.
FXI SCORES ON A 100-POINT SCALENET PROMOTER SCORE® ON A SCALE OF -100 TO +100
C U S T O M E R S L I K E A P E R S O N A L T O U C HCustomers rank credit unions above regional and national banks.
W H Y C X M A T T E R SBank and credit union customers who have a great CX are:
T O P P R I O R I T I E S F O R I M P R O V E M E N T
ForeSee’s methodology quantifies key drivers of
satisfaction in order to accurately predict which elements
of CX will have the biggest impact on future behaviors.AVERAGE
DESKTOP WEB MOBILE
WEB
MOBILE APP
BRANCHES
CONTACT CENTER
CHAT
F X I S C O R E
N P S S C O R E
CREDIT UNIONS
REGIONAL BANKS
NATIONAL BANKS
CREDIT UNIONS
REGIONAL BANKS
NATIONAL BANKS
82
45
85
87
85
8079
86
60
82
45
80
35 A focus on these elements will have the biggest impact on overall CX. Individual banks have may have varying priorities.
NATIONAL BANKS
CREDIT UNIONS
REGIONAL BANKS
8889
8786
81
8382
84
8786
FEESCONFIDENCE
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B R A N C H E S A N D D I G I T A L C H A N N E L S B O T H H A V E A R O L E
Leverage VOC Across the Entire Customer Journey
Invest in a consistent metric. Measure the experience across
every touchpoint. A common metric, such as satisfaction or NPS,
will give executives the holistic view.
Manage your assets. Be rigorous and disciplined in updating
customer journey maps, which need regular attention.
Ensure great returns with an executive sponsor. Building
great omnichannel CX requires purposeful leadership that can and will
articulate a vision.
Diversify! Build a cross-functional team. Get the right stakeholders in the
room from the outset and on an ongoing basis, including: marketing, digital,
mobile, branches, operations, call center, and—very importantly—IT.
Benchmark your metrics. Over time, across channels and
touchpoints, and against competitors and best-in-class – benchmarks
provide much needed context.
Our research shows that banks provide fairly high CX scores in individual
channels and touchpoints. However, burdened by strict industry
regulations and prone to slow internal processes, many banks struggle
to provide consistent and excellent CX across the customer journey and
through the customer lifecycle. It’s no surprise: The 2017 Digital Banking
Report found that two-thirds of retail banks lack a formal CX strategy.
And according to the Financial Brand, 72% of financial institutions
indicated that they would be increasing their investment in CX initiatives
in 2017, but only 28% said their program yielded a positive impact.
For some banks, reducing branch footprint is part of the strategy as
branch visits decline and branches increasingly become cost centers. Our
research shows that customers still want that face-to-face interaction,
and they rely on a variety of channels and touchpoints as they research,
purchase services, and conduct transactions.
The onus is on retail banks to deliver omnichannel efficiency while
balancing the needs of key customer segments. Measuring CX is the first
step towards managing it. Getting measurement right is critical.
The Click-and-Mortar Customer Journey
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D I G I T A L C O N T R I B U T I O N
Customer experiences in web and mobile play a critical role in their
customer journey. If you don't accurately measure and understand
digital's contribution to your business today, you might be
underestimating, or worse, underfunding your digital efforts.
5 Steps to Measure Digital Contribution
1. Capture email addresses using CX survey backed by a proven model.
2. Send digital visitors a short email survey asking what they did next.
3. Analyze what CX factors drive digital visitors who don’t convert,
or who convert with a competitor.
4. Report on digital’s contribution to the customer journey.
5. Prioritize strategic and tactical improvements with certainty.
The Click-and-Mortar Customer JourneyB R A N C H E S S T I L L M A T T E R . A L O T. If your bank’s online functionality was ideal, would you still want a branch?
H O W C U S T O M E R S R A N K B A N K I N G C H A N N E L SMobile apps score the highest in terms of CX, but branch CX outperforms desktop and mobile web.
19%weekly
Frequency of branch visits
40%monthly
62%last three months
49%SAY YES
85
DESKTOP WEB MOBILE
WEB
84
MOBILE APP
87BRANCH
86CONTACT CENTER
83CHAT
81
2/3 of website visitors leave digital experiences for another channel. Do you know why?
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The Customer Controls the Journey: Understand Their PathThe journey of a retail banking customer is complex and usually involves multiple touchpoints. Overall, nearly ⅔ (61%) of customers start their
journey in a digital channel (desktop and mobile web) when opening a new account. However, more than half (58%) who start their journey digitally
end up in a branch. It’s also useful to examine the customer journey by generation. In our research, as you might expect, Baby Boomers are more
likely to start and end their journey in a branch when opening a new account, while Millennials and Generation Z tend to prefer digital experiences.
31%
NATIONAL BANKSSTARTS IN ENDS IN
43%
44%
55%
88%
35%
25%19%13%
16%
41%WEB
WEB
23%MOBILE
MOBILE
CONTACT CENTER
4% CONTACT CENTER
BRANCH
31%BRANCH
CREDIT UNIONSSTARTS IN ENDS IN
59%
10%23%
58%
14%26%
63%
31%
91%
37%WEB
22%MOBILE
CONTACT CENTER
6%
WEB
MOBILE
CONTACT CENTER
BRANCH
BRANCH
35%
25%
REGIONAL BANKSSTARTS IN ENDS IN
WEB
36%WEB
MOBILE
18%MOBILE
CONTACT CENTER
CONTACT CENTER
5%
BRANCH
BRANCH
40%
67%
10%14%
59%
73%
94%
22%
of people who start their
journey in web end in branch
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B A N K S R I S K 2 1 % C U S T O M E R D E F E C T I O N I F S W I T C H I N G W E R E E A S I E R
Banking is where the telecommunications
industry was 20 years ago. Before “number
portability” was mandated back in 2003, many
cell phone users felt trapped by their wireless
carrier, because switching meant giving up
the phone number known to all their friends,
family, and business associates. Bank customers
today can relate; switching banks often doesn’t
seem worth the hassle or the potentially severe
consequences of missed payments on important
things like college tuition, electricity bills, or
even Netflix. Efforts to do the same for banking,
with the Freedom and Mobility in Consumer
Banking Act in 2013, failed but imagine the
competitive landgrab for banking customers
IF or WHEN switching banks is as easy as
switching cell carriers. In fact, our study shows
that 21% would switch banks today if it were as
easy as switching cell providers.
Banks can do better at earning customer loyalty
and not just banking on the captive loyalty they
enjoy today. ForeSee research reveals that while
CX is not a top reason customers select a bank,
a great online CX is a crucial retention tool, and
ranks as one of the top reasons people stay with
a bank. If banks improve their CX, they’ll spend
less time competing over and over again for the
same customers when they need new products.
Because right now that’s exactly what is
happening. How else could you square that 24%
of people wouldn’t consider their current bank
or credit union when looking for new products
or services!
Banks and credit unions are in the unique
position of being able to connect meaningfully
with their customers because they are a big part
of many of life's most memorable moments
from buying a first car, to building a dream
house, to opening a child's first savings account.
It makes sense to embrace these opportunities
to connect, and it becomes even more important
if switching banks ever becomes as easy as
switching cell phone providers.
Breaking Up Is Hard to Do
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L O Y A L , B U T N O T I N L O V E
of bank customers are loyal only because it's hard to switch Their satisfaction score is far lower (74) than average (82)
of bank customers would definitely consider their primary bank when in the market for new services
T H E Y O U N G A N D T H E R E S T L E S S
A C Q U I S I T I O N , L O Y A LT Y, A N D D E F E C T I O NDo you know what factors drive customer acquisition, retention, and defection?
1/4
38%
HOW TO GET AND KEEP CUSTOMERS
Acquisition
1. Convenience
2. Trust
3. Perception of stability/financial security
4. Availability of branches
Retention
1. Great online bank experience
2. Perception of stability/financial security
3. Fees and interest rates
4. Availability of branches
Defection
1. Availability of branches
2. Poor customer service
3. (Lack of) Trust
4. Fees and interest rates
1/5 of Gen Z have already switched banks at least once in their short lifetime
More than 1/4 of Gen Z banking customers would switch banks if it were easy
Both Gen Y & Z place a higher premium on ease and convenience than Gen X and Baby Boomers
If it were as easy to switch banks as it is to switch cell phones, would you do it? 21%
SAY YES
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F O U R T Y P E S O F C U S T O M E R L O Y A LT Y
1 Purchased Loyalty pays customers
to be loyal, and is a popular and
effective tactic for banks. Examples
include customer rewards programs,
memberships, coupons, and rebates.
Purchased loyalty can be easily stolen
if a competitor offers a better loyalty
program.
2 Restricted Loyalty is at play when
there’s no other game in town, often
true for utilities, cable companies,
etc., and less relevant for retail banks
especially in light of the emergence
of fintech companies. It only works
until industry regulations change and
competition increases but is one of the
most effective kinds of loyalty.
3 Convenience Loyalty can play a role in
driving earned loyalty. Whether it’s by
simplifying the processes for depositing
checks, to offering more ATMs or
branch locations than the competition,
convenience can play a significant
role in driving acquisition and loyalty.
However, when your competitor offers
a more convenient banking alternative,
falling back on earned, or true loyalty,
will remain your ultimate strategic
competitive advantage.
4 Earned Loyalty or “True Loyalty” is
the best kind. The only way to truly
earn loyalty is to provide a great
CX. Customer satisfaction drives
allegiance to a brand or product that
doesn’t depend on loyalty programs,
convenience, competition, or even price.
L O Y A LT Y M A T T E R S
Regional banks have the most to win and the
most to lose: their customers are more likely to
defect when they make mistakes, but also more
likely to be loyal when they provide a great CX.
Credit unions rely on consumer confidence for
loyalty more than other types of banks.
Large national banks have lower confidence
scores, but it also matters less for them
(it’s a lower priority for improvement).
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Fintech Is the FutureW H A T ’ S H A P P E N I N G ?
With fewer barriers to entry and loosening
regulatory burdens, new fintech companies
have emerged to meet the needs of digitally
demanding customers. They’re appealing
directly to this consumer for everything
from banking, to lending, personal finance,
payments, investing, home mortgage, and so
on. Fintech has not just created disruption and
competition, but also upped the ante for retail
banks to maximize cross-channel profitability.
The threat of disintermediation can’t be
overstated. According to PwC, 80% of financial
organizations believe their business is at
risk to innovators.
W H Y ?
The rise of the smartphone has irrevocably
changed consumer behavior across all industries,
and people now expect to handle their finances
and manage their money as easily as they shop
on Amazon or post a status update on Facebook.
Customers want to check accounts, change
investments, apply for a mortgage, or open a
new credit card from their phones. And while
many traditional banks are starting to offer
these services, most have not been able to do
so as easily, quickly, and efficiently as a host of
fintech startups.
W H AT D O E S I T M E A N TO YO U ?
Fintech is about removing friction from the
customer journey. Banks themselves have the
opportunity to offer many of these services,
and a captive audience of existing customers to
upsell and cross-sell. The ace in the hole is that
the banks have security and stability on their
side. Are you up for the challenge?
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F I N T E C H H O T L I S TQuick and mobile payments, budgeting, and financial advice/investment services are gaining in popularity.
F I N T E C H I N H I G H D E M A N DPeople want more fintech in their lives:
F I N T E C H I S G E N E R A T I O N A LWe asked who would use some kind of fintech services if offered by their primary bank. Here’s who said yes:
20%
Traditionalists (born before 1946)
29%
Baby Boomers (1946-1964)
Baby Boomers
50%
Gen X (1965-1976)
Gen X
70%
Millennials (1977-1995)
Millennials
76%
Gen Z (1996 and later)
Gen Z52%
30%27%
28%
21%
19% 19%
6%
10%
46%
32%
19%
of people would use fintech services through their bank if they were offered.
53%ON AVERAGE
PAYMENTS BUDGETING ADVICE
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ConclusionThe challenges facing retail banks are non-trivial.
Yet, the opportunities are significant and those
banks and credit unions that focus on delivering
on CX will have a strategic competitive advantage
in the marketplace. Highly satisfied customers are
more brand conscious and less sensitive to prices,
fees, and rates. In tough economic times they will
be the last ones to leave, and when the economy
rebounds they will be the first to return.
Much like banking customers are on a journey,
retail banks are on their own parallel journey
to retain and grow the customer base, increase
lifetime value, and win in a new era of the
empowered omnichannel customer. The stairway
shows the journey every bank and credit union
must complete to compete and win in this era
of immense competition and impressive
customer empowerment.
STEP 1MEASURE CX — EVERYWHERE
STEP 2ENRICH SEGMENTATION
STEP 3 IDENTIFY THE NEXT BEST ACTION
STEP 4 OPTIMIZE THE JOURNEY
STEP 5 GROW EARNED LOYALTY
“We don’t know how to measure and discern between loyal customers versus retained customers.”
“We don’t know how to optimize upsell opportunities across channels and products to customer segments.”
“We don’t know when to target the next best upsell, to whom, and through which channels.”
“We don’t have enough data on customer attitudes for key segments and where they are on their lifecycles.”
“We don’t have a consistent and proven way to measure CX across the omnichannel journey.”
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About the Author
Jason Conrad, Vice President, oversees
ForeSee’s retail banking business and is
a long-time advocate for delivering great
experiences. He is the author of numerous
articles about CX in the financial services
industry and speaks frequently about CX
analytics and best practices. Jason is a
member of the Digital Analytics Association
(DAA) and the Customer Experience
Professionals Association (CXPA) and is
a recipient of the coveted ForeSee Builder
Award. He is an alumni of California State
University, Northridge.
About the Research Analysts
Financial Services Team Lead Angela DiNicola works extensively with a team of analysts
who deliver actionable insights to finance
companies hoping to improve their CX across
all channels. She earned her B.A. in Marketing
and her M.S. in Marketing Research from
Michigan State University.
Andrew Hyclak is a Client Analyst who helps
companies in the financial services sector
understand their CX through solid survey design
and meaningful analysis. He graduated from the
University of Toledo with a Master of Business
and Administration in Marketing.
Karly Szczepkowski is an analyst who
has worked with some of ForeSee’s largest
clients to help them understand how they
can engage with their visitors to improve
loyalty, recommendations, and regular usage.
She also manages all of ForeSee’s more
than 600 benchmark categories. Karly was
previously an analyst at Wayne State University
in Detroit, MI. She graduated from Wayne
State University with a Master in Information
Science and from the University of Michigan
with a Bachelor in Engineering.
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About the FXI: Banking Report
The ForeSee Experience Index (FXI): Banking Report is the first study of its kind to assess
customer experience (CX) with national banks, regional banks, and credit unions. More than
4,000 banking customers were surveyed in July 2017. Using its proven model, ForeSee is able to
quantify customer satisfaction with a variety of banks and touchpoints, prioritizing for clients
the changes that will have the greatest business impact. ForeSee works with eight of the top 10
banks and half of the top 50 retail banks in the world.
About ForeSee
ForeSee pioneered customer experience intelligence in 2001 and has become a recognized leader
in Voice of Customer (VOC) solutions. The award-winning ForeSee CX Suite helps more than
2,000 companies worldwide transform their VOC programs into a strategic business discipline
that delivers economic impact. Only ForeSee offers a rigorous scientific approach to customer
experience measurement, access to an unmatched 200 million benchmarked experiences, and
actionable insights from a team of 200 expert analysts that give certainty to CX improvements.
ForeSee is headquartered in Ann Arbor, MI, and has offices in New York; Washington, DC;
St. Louis; Cleveland; San Francisco; Vancouver; and London.
For more information, visit www.foresee.com