The CX factor driving financial services transformation
The Financier Worldwide article, “The CX factor driving financial services transformation,” quoted Russell Reynolds Associates Consultant Robert Voth and featured the firm's research, "What Does Organizing around the Customer Experience Mean for Financial Services?" The article is excerpted below.
In a complex, competitive and rapidly changing financial environment – engendered by the likes of regulatory obligations, disruptive technologies and increasing media fragmentation – the pressure is firmly on financial services (FS) institutions to drive strategic growth and secure future success.
Among the options for achieving this is to boost customer experience (CX) – an essential aim if the FS industry is to transform and attract new customers, as well as retain existing ones. However, giving fresh impetus to CX is no easy task. The reality is that modern-day customers are sophisticated animals, demonstrably au fait with the latest social and technological trends. Meeting their expectations is therefore a major challenge.
Indeed, according to a 2017 report by Russell Reynolds Associates – ‘What Does Organizing around the Customer Experience Mean for Financial Services?’ – this loyalty is being hijacked by FinTech players able to offer products and services and a speed of service the FS industry finds difficult to match. Previously, notes the report, the finance industry prioritised product development and distribution over CX – a product-centric model which meant that FS institutions could grow and retain customers, mainly by differentiating themselves. Those days, however, are over.
“The result is not only a more crowded marketplace, but consumers who are far more demanding”, states the report. “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?”
“Expectations have been heightened and patience lowered,” states Robert Voth, leader of the global consumer financial services practice at Russell Reynolds Associates. “FS institutions have received the CX message loud and clear. However, decades of traditional processes and service philosophies have to be rewritten to successfully deliver what the customer of today expects.”
To meet contemporary financial needs and habits requires FS institutions to develop the experience that surrounds their products and services first, then see them through regulations and the profit cycle. Generally, institutions have a tendency to develop a product and run it through regulatory and revenue checks first, then roll it out to specific segments. “Reversing this is an exhausting and challenging exercise for FS veterans unused to digital competition and speed,” adds Mr Voth.
One of the main challenges facing FS institutions when implementing personalisation strategies is that such an approach does not necessarily return immediate profitability. “One of the world’s foremost CX experts, the United Services Automobile Association (USAA), has taken decades to build a culture based on putting its members first and balance sheet second,” notes Mr Voth. “This is foreign to many in FS institutions and is a painful but sometimes necessary trade off.”
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