Fostering customer loyalty is a fundamental aspect of any banking strategy and is essential for retaining customers and delivering high-quality services that compel them to buy more. Improving the customer experience is a critical priority, yet banks today face many technological and cultural challenges that are holding them back.
With the emergence of digital-first startups, the business landscape in the banking and capital markets industry is more competitive than ever. Optimising the customer experience is a critical focus for banks as the industry faces changing customer expectations; increased competition; technology innovation; ever-growing government regulations; environmental, social and corporate governance considerations; and external factors such as the COVID-19 pandemic.
Today’s consumers expect seamless multichannel access to services, and banks are challenged to create meaningful and personalised banking experiences to attract, serve and retain customers. It has also become imperative for banks to have a single view of the customer while taking an omnichannel approach that is green, clean and secure.
Customer loyalty is fleeting these days, which makes customer retention harder than ever. Depending on the industry, the cost to attract a new customer can be five times more expensive than keeping an existing one, and research by Bain & Company asserts that in financial services, a 5% increase in retention produces more than a 25% increase in profit. The threshold for customers to switch banking providers is going down, making it crucial for banks to offer innovative services and digital experiences that will win customer loyalty.
Dealing with the legacy burden
Traditional banks are hamstrung by the burden of legacy IT. To optimise customer experiences that will translate to increased loyalty, banks need to address the issue of how best to deal with legacy systems and applications. Many traditional banking and financial service providers are running business-critical applications on very old systems. Also, banks historically have operated in silos where there is a disconnect between the corporate office and the branch network, whereas from a customer perspective, they need to be able to look across the organisation holistically.
Five pillars that drive customer loyalty
How can banks meet the many challenges they face? They need to begin by identifying the different technology capabilities required to better serve customers. First, cloud-based and data-driven services are foundational for addressing today’s challenges. Banks need to focus on developing new capabilities like comprehensive observability, orchestration and automation that are integrated to make everything work together to achieve business value.
Improving the customer experience is intertwined with improving customer loyalty. In banking, greater customer loyalty is achieved by offering relevant products and services that are easily accessible via mobile-friendly platforms, while providing superior customer service. To drive customer loyalty and, by extension, improve the customer experience, banks should focus on five pillars.
About the authors
Emre Kayaarma is vice president of the Analytics and Engineering (EMEA) practice at DXC Technology. The practice has been recognized as one of the market leaders in Data and Analytics services across his region and is one of the Top 10 global providers of engineering services. Emre also serves as a Board Member at DXC Deutschland GmbH.
Paul Sweetingham is the global solution leader, Banking and Customer Experience (CX), DXC Technology. He has over 25 years' global experience in leading financial services and customer experience, with all aspects of financial products and services across the value chain. This includes cards, payments & lending, ATMs, POS management, transaction switching and Business Process Services. Paul is a specialist in third party outsourced processing 'as-a-service' across international markets, solution consultancy and strategic sales. Direct experience in banking, consumer finance product consulting, strategy and business development.
Yvette Wise is managing director of Banking and Capital Markets, DXC Technology. She has over 20 years' experience in financial services, and especially in jump-starting strategic initiatives for growth, breaking new ground and leading senior stakeholder relationships. Yvette specialises in customer experience and is an active executive coach and regular chair, moderator and key note speaker with UK Finance, Customer Contact Association (CCA) and internationally with Customer Experience Professional Association (CXPA) and Awards International (AI). She is also the winner of 14 industry awards with clients in the past 8 years.