After years as both a banking customer and a supplier involved in automating banking processes, I find myself still intrigued by the paradox of certain banks investing substantial resources into streamlining the onboarding process, only to significantly reduce efforts once the customer is acquired. No doubt, creating a positive first impression is important, yet it is worth considering whether this upfront investment is truly less expensive than addressing a flood of complaints stemming from inadequate services.
According to an Invesp report, it costs five times as much to attract a new customer than to keep an existing one, but only 44% of companies have a greater focus on customer acquisition versus 18% that focus on retention.
Source: https://www.invespcro.com/blog/customer-acquisition-retention/
While the importance of a seamless onboarding experience cannot be ignored, the exorbitant focus on this initial step might obscure the potential for fostering customer engagement through continuous improvement. Often overlooked are subsequent touchpoints like claims processing and transaction handling, each representing a chance to deepen the customer’s loyalty.
Upon dissecting the various phases constituting a customer’s journey, a structured sequence of stages emerges: Reach, Acquire, Convert, Retain, and Loyalty:
- Reach: During this initial stage, an individual actively seeks out a service to address a personal concern, evaluating the offerings across different banks.
- Acquire: Once the person identifies a bank as a potential solution, they opt to engage by initiating contact through available communication channels.
- Convert: The pivotal point arrives when the individual transitions from a prospective customer to a genuine one, formalizing the commitment by signing an agreement for the desired banking service.
- Retain: At this point, the bank really starts tuning in to what the customer is feeling. They’re all ears for feedback to make their services even better.
- Loyalty: As the relationship matures, the customer transforms into a valuable bank asset, broadening their engagement by embracing supplementary banking services.
When banks direct their entire pool of resources towards simplifying the onboarding process, their primary focus tends to be confined to the initial three steps of Reach, Acquire, and Convert – with a heightened emphasis on the latter. Unfortunately, this turns into a tunnel vision approach which often leads to a disregard for the fourth and fifth stages of Retain and Loyalty. In my perspective this tight focus is a monumental misstep.
In a recent study conducted by 10x Banking, it has been revealed that global banks are experiencing a significant customer attrition rate, with one in five (20%) customers choosing to leave due to subpar customer experiences. This research underscores the critical importance of prioritizing customer satisfaction, a factor that has unfortunately been overlooked by these banks.
Leda Glyptis, Chief Client Officer at 10x, emphasized that the results of their study closely mirror the insights gained from interactions with both customers and potential clients. She highlighted that although innovation is on the rise, achieving substantial transformation remains a challenging endeavor. This discrepancy has led to mounting frustration among customers of prominent global banks.
Glyptis noted that digital transformation encounters numerous human and structural barriers. In order to surmount these challenges, leaders in the banking sector must adopt a new perspective, one that is primed to usher in the essential changes demanded by consumers within the realm of financial services.
This is precisely why placing careful consideration on the important decision of selecting an appropriate IT platform to support the entirety of the customer lifecycle is necessary. Opting for a specialized platform solely dedicated to streamlining the onboarding process while disregarding other critical customer needs could potentially lead to significant errors, causing banks to waste both time and financial resources.
Selecting an end-to-end platform capable of comprehensively automating internal processes is the key to enhancing the whole customer journey, encompassing all five stages mentioned earlier. This entails not only facilitating customer acquisition but also nurturing a long-term relationship.
Opt for an end-to-end platform over standalone apps
It’s very common to find different departments that want to address a specific challenge such as implementing RPA for capturing data from system screens or using OCR engines to extract pertinent information from documents. However, as the deployment of these standalone applications progresses, users often realize the absence of essential features crucial for achieving the bank’s goals. This gap leads to a search for new solutions in the market, inevitably causing a complete restart of the procurement process. This scenario not only squanders financial resources but also consumes valuable time. When the new implementation concludes, the business requirements have probably already changed, which renders the initially contracted solution unnecessary. This not only underscores the futility of the process, but also accentuates the need for a more encompassing approach.
“Banks are museums of technology, with every generation of software and hardware, much of it now off support and towards end of life.” Antony Jenkins – Barclays’ ex-CEO
In a recent study conducted among banking industry professionals, Antony Jenkins, the former CEO of Barclays and founder of core banking startup 10x, revealed a troubling trend: banks worldwide are losing a significant portion of their customer base to competitors. Surprisingly, 12% of banking leaders admitted to losing between 30-40% of their existing customers due to subpar customer experiences, and overall, customer attrition rates averaged 20%.
The same research also highlighted that 64% of senior decision makers within banks acknowledged that their slow progress in digital transformation directly led to missed opportunities in attracting new customers. These revelations demonstrate the urgency for banks to prioritize customer-centric strategies and accelerate their digital transformation efforts to remain competitive.
Unleashing the power: Key elements of the perfect automation platform
An essential feature of an appropriate automation platform is the ability to model and orchestrate an end-to-end process. This empowers bank business analysts to easily build automated processes without requiring coding skills. This agility facilitates the rapid adaptation and deployment of new or existing features as needed.
Collect is another crucial aspect. The platform should encompass a variety of modules capable of receiving customer requests from diverse channels, including Email, Chatbot, APIs, Portals, Scan, and Mobile capture. Recognizing the diverse needs and behaviors of customers, the platform’s ability to accommodate their preferred communication methods is crucial.
Furthermore, the automation platform must possess the capability to Understand. Leveraging a range of technologies including AI, ML, IDP (Intelligent Document Processing), and more, the platform should discern the nature of each transaction and the underlying customer request. This might involve distinguishing between a new customer submitting required documentation or an existing customer seeking a payment solution.
When it comes to making a decision, the automation platform should be prepared to Act effectively. Whenever possible, it should use tech components like AI, ML, data rules and business rules to rapidly process customer requests and deliver prompt responses. In case of exceptions, the platform should intelligently route transactions to specialized knowledge workers capable of analyze it.
Finally, Integration plays a vital role. Seamless integration with all available systems (APIs, Databases, XML, CSV) is essential for providing the most effective responses to customer queries. Given the intricate nature of a bank’s operational environment, where numerous systems and solutions coexist, an adept platform should easily interface with each of these components.
Strategically uniting automation platform features for exceptional efficiency
Selecting the right platform is crucial, but equally vital is understanding how and where to deploy it to achieve the desired results. For instance, when an existing customer inquiry about a new product or service, initiating an entirely new request process without acknowledging their existing status is counterproductive. To optimize such scenarios, the automated process should initially cross-reference all available internal systems to gather comprehensive customer information. This approach eliminates the need to request previously submitted documents, which slashes the response time, and enhances the overall customer experience. Though seemingly straightforward, this practice is notably common in various process implementations.
Another common oversight is keeping customers waiting for a response while the internal processes unfold. Ensuring continuous customer engagement by providing updates is imperative to foster their comfort and confidence in how fast they receive an answer. In some instances, customers are left waiting for days only to receive a response indicating that a document is expired or missing. An optimized business process should possess the capability to categorize and validate all received data, cross-referencing it with the request to proactively identify any missing information. Leveraging AI-powered modules, documents can be automatically classified, and in combination with decision-making modules, the process flow can swiftly deliver responses to customers within seconds, eliminating the need for human intervention.
The same issue arises when a customer submits a request through chat or email, and the request remains unanswered due to oversight. Integrating multiple capture channels into a unified process flow holds the potential to empower business departments to effectively receive and manage diverse transactions, mitigating the risk of inadvertently neglecting any of them. The automation platform should assume the responsibility of receiving requests and determining the optimal workflow for handling them. In many instances, an automated initial response can be dispatched within seconds. In reality, a common scenario unfolds where banking analysts primarily focus on managing Onboarding transactions, leaving insufficient time to address other requests adequately. An advanced platform must possess the capability to seamlessly receive, prioritize, and promptly respond to all incoming requests, regardless of the channel through which they were submitted.
Earn New Customers with Effort, Cultivate Loyalty with Dedication
Selecting a solution that appears to address a specific issue—such as Onboarding—might seem convenient and cost-effective at first glance. However, over time, it often evolves into a substantial waste of both time and financial resources. For customer-centric enterprises, the responsibility extends to managing the entire customer journey, ensuring that customers can effortlessly access solutions for various inquiries, be it for new products, services, or other needs.
According with a Invesp research existing customers are 50% more likely to try new products and services and spend 31% more when compared to new customers.
Source: https://www.invespcro.com/blog/customer-acquisition-retention/
Be careful! It can seem magical, but there is no magic involved
Beware of companies that boast emergent technologies as one-click fixes for complex decisions, particularly in this era where AI-driven solutions appear to hold answers to all challenges. Reality is more nuanced; it necessitates a skillful mix of multiple components. Collaborate with experts, carefully select an appropriate automation platform, and then deploy these technologies to accomplish your business objectives.
According to McKinsey research more than half of digital banking transformations exceed their initial timeline and budget or fail, because Leaders often underestimate the complexities of executing a digital transformation. Common mistakes include not fully involving all stakeholders in the development of the strategy and blueprint, miscalculating the extent to which existing business processes need to change, and not sufficiently implementing the magnitude of changes required to truly reap the benefits of the transformation.
Many companies that offer overly simplified solutions often fail to consider the broader context. As the implementation progresses, they tend to encounter intricate challenges that demand significant code customizations. Inevitably, this hampers the solution’s flexibility, making repeatable processes difficult, deployment complex, and maintenance costly. On the other hand, collaborating with an automation platform capable of seamless integration with other applications ensures a cutting-edge solution that leverages the best features of each product, all orchestrated in a centralized way. What ensures a smarter and flexible system for businesses is the ability to build an end-to-end solution that handles a wide range of requests, from simple to complex. This leads to way faster responses, lower costs, and boosts customer satisfaction – all contributing to what really counts: Loyalty.
This article draws on personal experience accumulated over the years, both as a banking customer and as an automation expert specializing in financial processes.
Acronyms used in the article:
- RPA: Robotic Process Automation
- OCR: Optical Character Recognition
- AI: Artificial Intelligence
- ML: Machine Learning
- IDP: Intelligent Document Processing
- API: Application Programming Interfaces
- XML: Extensible Markup Language
- CSV: Comma-Separated Values