In September, one of my columns focused on the common attributes that link customer centricity and risk management for bankers ("What Do Customer Centricity and Risk Management Have in Common?"). Last month I presented findings from my research in a BS & T hosted webinar ("Get on the Fast Track to Maximizing Customer Value"). For readers who may not have read the column or participated in the webinar, what do I mean by customer centricity? Customer centricity provides the foundation that is needed to support both the operational and business intelligence capabilities associated with delivering a sustainable, high quality customer relationship experience.
Both the column and the webinar provided an opportunity for bankers to reflect on the subject of organizing their bank's business model with a customer centric framework. One of the research findings that I shared in the webinar is the size of the U.S. consumer's financial wallet. Consumers accounted for $1.1 trillion in payments in 2008 for all financial services in the form of interest expense, fees of all types, asset management expenses, commissions, and premiums. And, the total financial wallet is declining slightly due to the economic recession.
The webinar was well attended by bankers. Questions were submitted that we did not have time to answer. I picked five of these questions, along with my responses, to share with readers.
1. Why should banks be thinking about becoming more customer-centric now?
Customers will always need financial services, and these needs will change during their lifecycle. How they decide spend their financial services wallet is increasingly open to better, more relevant and beneficial value for customers. The best customer centric institutions are growing faster and more successfully than the better product oriented institutions. Share of wallet gains by the customer centric institutions are meaningful and a competitive advantage over time.
2. What's the first step a bank can take towards this goal?
The C-level suite needs to recognize that customers are the key to their bank’s future. Top management must figure out how to shift from a product to customer orientation from top to bottom and back to the top. The bigger the institution, the more difficult this change will be.
3. From a title perspective, who typically owns the initiative to become more customer-centric?
At the best run customer centric institutions, including some of the largest financial institutions, the CEO owns and drives the initiative.
4. What are the best practices seen in your research that drives "Client Delight?"
Interestingly, the simple, reaching out customer touches are highly valued by customers particularly when the touch is not expected and can be replicated across the institution. One example is taking a piece of information from a customer interaction and turning it into a relevant follow up interaction, sometimes with another bank staff member.
5. Why have banks overseas done a better job of being customer-centric, when they started out as product-centric institutions also?
One obvious reason is that a number of developed countries are further along in bank consolidation, have universal banking, and have realized that share of wallet is a key objective. Some of the leading institutions in Canada and Australia are good examples of this focus.
Bill Bradway, founder and managing director of Bradway Research LLC, analyzes the business strategies and IT investments of US banks and credit unions.