The Increasing Importance of the Customer Experience in Financial Services
It’s time for consumer financial services organizations to refocus, defining the customer experience as equal to product performance and features. Hiring a chief customer experience officer (CCO) will have the greatest immediate impact, letting the organization know that the customer experience is a strategic priority.
Throughout the financial services industry, product development and distribution have long been prioritized over the customer experience. Consumer banks in particular have won business based on the quality of product offerings, reward programs, and the strength of the branch network and other distribution channels – rather than on customer interactions with the firm.
The success of this product-centric model in growing and retaining customers has depended primarily on firms’ ability to differentiate themselves. Larger, more established financial institutions have naturally had the advantage, given their superior access to resources.
Yet the industry today has changed. Rapidly evolving digital technologies are destroying barriers to entry. As a result, FinTech players are exploding onto the scene, using superior experience and technology to offer the same products that legacy firms took years to develop. FinTech platforms also bring a speed of service that is difficult to match.
The end result is not only a more crowded marketplace, but consumers who are far more demanding. These consumers are increasingly shopping around for the best experience, rather than the best product. When quality and value are comparable across products, why would customers settle for anything less than a seamless, interactive experience?
In the face of this customer-experience evolution, financial institutions are at a crossroads: they can prioritize the customer experience or watch their customers scatter towards more progressive firms or their FinTech alternatives.
An essential step towards the appropriate prioritization is the appointment of a chief customer experience officer. Appointing a CCO makes a strong statement of commitment to the customer experience and a rallying cry for the organization to follow.
As the conversation intensifies around the customer experience in financial services, so too will the need for creative solutions. At Russell Reynolds, we have seen demand for new customer-experience roles emerge and steadily increase from what was previously a non-existent market a decade ago. As a result, institutions must ask themselves some difficult questions, including:
Who owns the customer agenda?
Does that person have a specific vision laid out, with performance metrics and execution steps?
Is there clear alignment among the digital, marketing and IT departments around go-to-market strategy?
After answering the tough questions, firms can begin to think about finding and hiring the right customer-experience talent. Where should they look, and what are they looking for?
What to look for?
To learn more about the ideal customer-experience executive, RRA conducted an analysis of 43 individuals in customer-experience leadership roles across a sampling of global financial firms. We observed four predominate archetypes that lead to success in this role. Each archetype has inherent strengths and potential weaknesses. In the right context, each of these leadership types can be successful; however, it is essential for companies to think about their strategic needs and their current operational makeup and how they align with the talent available in the market. Since many firms today are treating the CCO role as an expansion of marketing, sales and marketing backgrounds are most prevalent. This balance may change over time as firms begin to experiment with different talent options. Given the inherent digital nature of the evolving customer experience, it’s important to note that digital knowledge and skills cut horizontally across all archetypes.
Robert Voth leads the firm’s Global Consumer & Commercial Financial Services practice. He is based in Chicago.
Chris Davis specializes in FinTech within the firm’s Financial Services practice. He is based in Toronto.
Thomas Kleyn is the firm’s Knowledge Analyst for Financial Services in the United States. He is based in Boston.