Where is the ROI on Customer Experience in the Banking Industry?

When the banking industry started bandying about the term "customer experience," the discussion was mainly about aesthetics -- updating branches with cool furniture, showing video displays, offering beverages and generally creating a more welcoming physical atmosphere in the dominant delivery channel. Those efforts were almost literally window dressing, but they also were a legitimate response to the emerging reality that consumers increasingly were comparing their banks not with other financial services providers but with service standouts in other industries such as Starbucks and Nordstrom.

Since then, the customer experience point of reference has shifted from facilities to the online and digital channels, but it's the nonbanks that excel at providing their customers with customized, consistent and satisfying interactions that continue to develop the best practices. Amazon, Apple and Netflix provide the customer satisfaction benchmarks to which banks must aspire -- and like those companies, success hinges on combining insight with creativity, design and execution prowess.

[Good News -- And Room for Improvement -- About Banks' Customer Experience Efforts ]

This approach isn't something that financial institutions typically have done well, as illustrated by last year's firestorm around ">Bank of America's proposed $5 debit card fees, as well as the lingering ill will caused by the financial crisis. But there are encouraging signs the banking industry is getting more adept at defining and delivering the kinds of pleasing multichannel customer experiences that improve loyalty, spur cross-selling and generate growth.

Tailored Approach

New research from Accenture, which examines customer loyalty and the factors that inspire consumers to stay with or defect from a service provider, finds that retail banking is among the most effective industries at providing tailored experiences. Such experiences are critical to a strong customer relationship, Accenture says. Nearly half (48%) of the survey's respondents say that compared with a year ago, they have higher expectations of getting specialized treatment for being a "good" customer, and 31% say they prefer companies that use information about them to make their experience more efficient. At the same time, 47% say it frustrates them when companies don't use the information they have to make interactions and offers more relevant.

These numbers indicate that the massive investments banks are making in customer analytics and improved capabilities to build and deliver tailored products and services are paying off (or have the potential to do so). But customer experience will continue to be no more than window dressing if banks don't provide the infrastructure, tools and intellectual capital required to make it more meaningful. And without a rich customer experience, there's no other way banks are going to be able to go up against the new breed of digital competitors.

Katherine Burger is Editorial Director of Bank Systems & Technology and Insurance & Technology, members of UBM TechWeb's InformationWeek Financial Services. She assumed leadership of Bank Systems & Technology in 2003 and of Insurance & Technology in 1991. In addition to ... View Full Bio