Marketing and customer experience are two sides of the same coin: Marketers are responsible for communicating the brand promise, and customer experience professionals are responsible for making sure that the promise is kept.
It’s that synergy between marketing and CX that led us to invite Jamie Moldafsky, CMO at Wells Fargo, to speak at Forrester’s Forum for Customer Experience Professionals in New York on the morning of June 25. As a run-up to our event, Jamie took the time to answer a few questions about why Wells Fargo cares about customer experience and how its approach to CX has evolved over the years.
Q: When did your company first begin focusing on customer experience? Why?
Treating customers with courtesy and respect has been a core value at Wells Fargo for more than 160 years. Back in 1888, its agents were given the following instructions: “Proper respect must be shown to all — let them be men, women, or children, rich or poor, white or black—it must not be forgotten that the Company is dependent on these same people for its business.”
Rising digital customer expectations advances in technology, and continued digital disruption threats from outside the industry will change the game for banks and credit unions. 2013 will be a pivotal year for eBusiness and channel strategy executives to start planning for the next generation of digital banking to both stay relevant to digital customers and thwart disruptors determined to take over those customer relationships.
Customers' digital financial expectations are high. With the proliferation of digital devices, consumers are highly connected to their financial providers. And with adoption of each new device comes higher expectations of those providers, especially among the younger generations. Get it wrong and you risk losing their loyalty.
Our app-driven world will require flexible and extensible digital platforms. Creating a durable competitive advantage, one that can't easily be copied, includes a move to open platforms. An open platform strategy will allow financial firms to use third-party providers to create app solutions that will create differentiation through a personalized user experience and segment-specific capabilities.
Mobile banking success is a moving target: Customers needs and expectations are changing rapidly, and eBusiness teams at banks are sprinting to get ahead of their customers’ expectations. To achieve this, firms are rolling out new features, optimizing existing services, and enhancing mobile experiences.
To understand which firms are leading in mobile banking — and to better gauge the mobile banking landscape overall — we used our Mobile Banking Functionality Benchmark to evaluate and rank the mobile banking efforts of 15 of the largest banks in North America, Western Europe, and Australia.
Highlights of this research include these findings:
Chase takes the top spot overall. Chase received the highest overall score among the banks we evaluated, netting a score of 71 out of 100. The bank offers mobile banking services across a range of touchpoints ranging from smartphone apps, strong mobile websites, and two-way SMS. In addition, Chase also has strong mobile money movement features such as bill pay – including the ability to add a payee – and mobile transfer capabilities.
On February 22, the Reserve Bank of India (RBI), an institution that supervises and regulates India’s financial sector, announced guidelines allowing corporations to enter the banking sector. Private companies, public-sector groups, and nonbanking financial firms will all be eligible to apply for a banking license. We expect RBI to start issuing new bank licenses by early 2014.
RBI guidelines state that companies receiving a banking license must open at least 25% of their branches in rural areas. Despite this guideline, I believe that new entrants will primarily target the same urban and semi-urban customers that existing banks target. The reason is simple: These are the most profitable customers. This helps explain why 85% of rural bank branches in India belong to public banks; it’s simply not an attractive market for private banks.
What it means for current Indian banking CIOs: Leverage big data to grow your business or prepare to be left behind.
As competition increases, businesses will expect new IT capabilities to understand and respond to customer needs better, faster, and cheaper. Banking CIOs who embrace this change will adopt big data technologies and become true business partners. The ones who don’t will be bypassed by new entrants (when they come to play) using big data approaches and internal data from whatever market they’re currently in to analyze the banking market. These new entrants will likely influence customer preferences, question existing assumptions, and look for ways to disrupt the market. I recommend that current Indian banking CIOs:
Banks have a reputation for being stodgy and conservative. But Credit Agricole (CA) has broken the stereotype. I had a great discussion a few weeks ago with Bernard Larrivière, Director of Innovation, and Emmanuel Methivier, the CA Store Manager, about the CA Store launched last fall. The store houses new services developed by third-party developers using the bank’s secure customer data — one small step for CA, one giant step for the banking industry and the data economy.
The CA Store was not only inspired by the Apple Store model but also by government open data initiatives. The public sector provided the model of exposing APIs to internal data and working with independent developers to encourage application creation. However, in a move that will likely be carefully watched by their public sector brethren, CA recognized the need for a better business model to incent developers to use the data, and to sustain the development and maintenance of the applications.
. . . Nor has it ever really been. Government data has long been a part of strategic business analysis. Census data provides insights into local standards of living and household budgets, health needs, education levels, and other factors that influence buying patterns for all kinds of goods and services. The US Bureau of Labor Statistics and the International Labour Organization provide data on employment and the availability of skilled labor that helps inform decisions on where to locate manufacturing or other facilities. The World Bank and UN data provides insights into global trends.
Moreover, the release of government data has itself spurred billion-dollar industries. Think weather data released in the 1970s by the National Oceanic and Atmospheric Administration – which gave birth to the weather industry and services like Accuweather, weather.com, wunderground, and newer services like ikitesurf.com’s “wind and where.” Data from the US Global Positioning System (GPS) was opened to civilian and commercial use in the 1980s and has given rise to thousands of location-based services. Think FourSquare, Yelp, and Where’s The Bus?
I was both encouraged and perplexed by an article in The Wall Street Journal that described the internal debate at Bank of America over how to grow revenue. One side of the debate wants to charge new fees for basic services like checking accounts. And who do they want to charge? Their unprofitable customers who “typically have less than $50,000 in annual household income.” Those customers do little business with the bank, and Bank of America reportedly loses a couple of hundred dollars a year on them.
The other side of the debate wants to raise revenues by getting these unprofitable customers to buy more financial products from the bank — for example, get a credit card or buy a CD or take out a mortgage. If that happened, the problematic customers would generate enough revenue to become a money-making proposition for Bank of America.
If I were picking the winner of this debate, the decision would be easy. A growth plan that depends on extracting ever-increasing fee revenue from the very people who can least afford to pay it – for services that were formerly free – doesn’t seem like a growth plan at all. But getting a bigger share of those same customers’ wallets by selling them products that they’re going to buy from someone is a strategy that’s already working today for a bank that I’ll talk about in a minute.
The real question in this debate should be, how can Bank of America get its unprofitable customers to do more business with it? The answer: Provide a vastly improved customer experience — toe-dipping will not get the job done.
Recently, Forrester released a report entitled “What Drives Retention and Sales In US Banking?” that tackles this question from the consumer point of view. Using regression analysis, we uncover how these drivers vary for acquisition, retention, and cross-selling in US retail banking.
What did we find? For one thing, consumers value trustworthiness from a bank above all else for both sales and retention. This comes as no surprise to us; with so many financial institutions to choose from, consumers want to do business with a bank that they trust. This finding also supports the key theme that Harley Manning and Kerry Bodine focus on in their recent book, Outside In: Treating your customers well and providing them with a positive customer experience pays off.
The graphic below shows the drivers of retention for the US retail banking customers: The perception of trustworthiness is off the charts as a driver of retention, and offering good customer service is the second-most influential driver. What our analysis shows to not impact retention — and even shows a negative relationship with retention — is having low APR and many locations.
Australian Banks have often been at the forefront of global banking trends, or at the very least, fast followers that learn quickly from the mistakes of others. In Australia, mobile banking has quickly become a "war" amongst the majors with a range of different banking services and approaches - from basic access to transactional histories, transfers, payments, integrated retail services, and even near-field-communications-based micro-payments systems.
But how much of the mobile banking channel do banks really need to own? Most banks no longer own or operate their own ATM networks. They control the flow of transactions through that channel, but they generally have little to no interest in owning the assets or operating ATM cash management processes. Mobile banking is a complex and costly business to be in. With the advent of Internet banking, it quickly became clear that the cost of delivering online banking services through the internet was rarely, if ever, a more cost-effective channel than the bank-owned and operated PC-based products (remember the dedicated dial-up modems!). But in theory it should have been. All of the cost modeling showed that it should be cheaper. Yet banks have continued to invest more and more in building out, maintaining, operating - and particularly securing - their Internet banking channels.
Apparently Citigroup is about to join a “growing number of banks and credit unions” that have adopted some version of a one-page disclosure form. That form makes it easier for customers to see and understand fees.
Now don’t get me wrong: Making it easier to understand fees is a step forward. After all, ease of doing business is the second level of the customer experience pyramid and only slightly less important than meeting customer needs.
What has me shaking my head is the next part of the article. It says that these new summary pages come in response to complaints about rising fees, including fees that few customers knew about in the first place, like a fee for getting a paper statement and — my personal favorite — a fee for closing an account.
A fee for closing an account? Really? I may be old-fashioned, but I’m used to paying people to perform a service for me, not paying them to stop performing a service for me.
Here’s why the whole “fee transparency” thing misses the point: Your bank really, really wants you to open more fee-generating accounts with it. When you add a savings account or CD to your checking account, or take out an auto loan or a home equity loan, you ring its cash register.