The Bankwatch

Tracking the consumer evolution of financial services

Customers often prefer branches, but for the wrong reasons

This article courtesy of Finextra, will have branch advocates cheering. Yet the background is not that rosy.

The majority of customers still prefer to do their banking and buy financial products at branches because of poor performance of Internet and telephone channels, according to a global retail banking study conducted by management consulting firm Booz Allen Hamilton.

Customers prefer branches because they cannot get good service, or worse avoid bad service, unless they insist on a personal experience with someone who knows them. This is a hindrance to both customers expectations, and Banks desire to further automate.

But the study found that call centre performance is poor, with almost half (48%) of banks scoring ‘low’ on time spent waiting to speak to a specialist adviser, while 43% scored ‘low’ on staff knowledge.

“Banks are failing to capitalise on the enormous potential of key growth channels such as online and mobile sales forces, because the performance of these channels does not meet customer needs and expectations,” says Alan Gemes, vice president at Booz Allen Hamilton.

A second point made here is that affluent customers, the more valuable ones, are leading the expectation to get out of the branch. We can only surmise they will go online to an organisation that provides the level of service they expect.

The trend away from the branch is being lead by affluent consumers who are 30% more likely to prefer using Internet services. But this group was found to be neglected by banks, with 72% of surveyed firms scoring ‘low’ on their segmented online facilities for mass affluent customers.

Relevance to Bankwatch:
A large part of the fault here can be laid at the feet of CRM implementations … not the theory, but the implementation.

Take something as simple as a customer rating. Does your bank have customer ratings, that evaluate the customers behaviours, account management, loan payback history etc. How many Banks rely on credit bureau ratings to evaluate their own customers?

Some of this information is known. There might be a flag in the loan system that indicates payments were on time, late once etc. But what about the management of the bank account, beyond the last 60/ 90 days? What about the average balance maintained over the last 15 years, in all products and services?

Generally, this type of thing requires the CSR to peruse whatever data can be brought up on the screen, which is a current snapshot, and they make instant judgements based on what they see. The historical reference is missing. All customers are equal at point of contact in those scenarios.

This problem really comes to light for online banking, ATM’s and telephone banking. That’s why its so hard to move beyond transactional banking in those channels. We are not talking about one off marketing campaigns. What is needed and what would encourage loyalty, is to be known at the point of contact, so that deposit at the ATM even though its well over the limit, would not be held. Or a large bill payment in online banking can go through despite being outside the normal parameters. Those decisions could be automated if the customer has a long, clean history.

But the right data is often not available in a clean electronic fashion, that can be used by the electronic channels, and the call centre. The systems have been built up assuming a person would review the information and make a decision .. hardly a scalable approach.

Hence we get this impact:

“Banks are failing to capitalise on the enormous potential of key growth channels such as online and mobile sales forces, because the performance of these channels does not meet customer needs and expectations,” says Alan Gemes, vice president at Booz Allen Hamilton.

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Written by Colin Henderson

June 13, 2007 at 13:50

3 Responses

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  1. I think there’s another problem that’s just as significant as CRM: availability of service in all channels. Part of the reason customers “prefer” buying products in a branch is because they can’t do everything online or over the phone, so they’re forced to go into a branch and surveys don’t always capture the nuance between “want to” and “have to”.

    It’s hard to put much weight in this when it’s comparing apples to oranges.

    Dan Dickinson

    June 14, 2007 at 12:42

  2. […] For further discussion of this, see Bankwatch. […]

  3. Hello peopledd918dee9d8476b0d9af26bb602f9816

    Yhanks you

    February 1, 2008 at 02:12


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