by Jim Kearney, Zameer Baber

The financial services industry is facing unprecedented disruption from all directions. Here’s how to leverage this disruption to gain a competitive advantage through innovative customer interactions. 

Social distancing and the effects of COVID-19 have required multiple organizations to rethink and, in some cases, accelerate their customer experience initiatives. Financial services and insurance (FSI) companies are no different. Moving forward, finding ways to deliver new and existing offerings through an effortless client experience is top of mind for retail banks, insurance companies, asset management firms and financial services enterprises.    

While FSIs are dealing with the current customer experience (CX) challenges, they’re also trying to continue transformational initiatives that were already in flight prior to the crisis. Meanwhile, consumers in the space continue to demand personalized, targeted experiences based on their individual needs. However, the complexities associated with meeting the needs of multiple consumer generations creates a need for digital savvy and self-service CX that leverages consistent, omnichannel approaches, whether a customer engages online, through mobile form factors, in branch, or over the phone with call centers. But what is the best approach for doing so? What does it really mean to create an effortless interaction in this environment, through any of these channels and through a digital channel, specifically?  Let’s find out.  

What is Effortless CX?

Effortless experiences mean removing barriers to transactions, making it simple and easy to buy products and services.

Digital is the key to enabling effortless transactions. The fewer transactions it takes to get something done, the better for the customer. Think of Amazon’s one-click shopping. FSI customers compare a good customer experience today to what they get from Amazon, not necessarily from the competing bank or insurance company down the street. Industry lines are blurring, meaning a good CX baseline defined by a retail company becomes the baseline for CX from their financial provider, doctor, or any other service.  

Challenges – and Benefits – of Effortless CX in FSIs

In delivering effortless interactions, FSIs are at a disadvantage compared to other industries due to regulatory obligations and constraints. As a result, data cannot flow across technologies as seamlessly as it can in retail and media companies due to know your customer (KYC) and anti-money laundering (AML) concerns. The more checks and balances, the more inhibitors there are to seamless experiences.

FSIs are traditionally fragmented and siloed by lines of business or function, often moving in different directions at different times. Data and technology are not leveraged to maximum potential, and most teams do not have thought leaders who will push the boundaries of creative thinking.

Another challenge is determining the ROI of effortless CX. Traditionally, organizations prioritize using age-old calculations of ROI based either in reducing operating expense or increasing revenue. This reinforces the old ways of working where sub-organizations “own” budgets without seeing the broader, enterprise level picture.

Recognizing that most companies cannot switch entirely away from traditional ROI metrics to rationalize digital investments, we recommend adding “effort” as an additional metric to rationalize innovation. Incorporating effort into your prioritization process may also yield opportunities that may not fall in line with traditional ROI but could be activated through opportunity or R&D budgets.

There are many ways effortless CX can benefit FSIs.  One example is improving customer loyalty. The banking space, specifically, has historically seen low levels of customer turnover due to inertia and the hassle of making the change, among other factors.  As digital banking interactions increase and CX improves, it’s now far easier to switch from one bank to another.  Banking clients demand better online experiences and services in today’s world - and will switch providers without hesitation if they don’t receive it.  Expectations that clients will stay at the legacy provider for the next 15-20 years are dated.  Reducing effort is synonymous with increasing loyalty. A recent survey from Gartner showed that 96% of customers become disloyal to an organization when they perceive that experiences involve high effort 1. As client retention becomes more challenging, banks need to focus on creating more effortless digital interactions for their clients.

The insurance marketplace is no different as consumers seek services that are easier to use. Nothing is worse than experiencing a home or car accident and not being able to seamlessly interact with an insurance provider. How easy is it for your customers to file a claim and receive payment? Imagine creating a customer journey that removes the hubris and challenges of the interaction itself and allows you to focus on the most important aspects of the reason you’re reaching out in the first place – your customers’ well-being.  Insurance companies who master effortless interactions will make their brand stickier, creating cross-sell opportunities, among other benefits.

Bringing a 100-year Old Institution into the 21st Century

Point B has helped numerous organizations create ROI through effortless interactions. In one example, we worked with a global risk, retirement, and health insurance provider to better understand its overall customer interactions across marketing, call centers, and website. Upon analysis of the company’s digital and analog communication platforms, we discovered inconsistent ways investments were being rationalized, such as KPIs for marketing that were focused on increasing revenue; KPIs for call centers focused on reducing operating savings; and KPIs for the website that was a combination of increasing revenue and reducing costs, but were nascent at best due to technical limitations of integrating insights between Google and Adobe.

Adding to the challenge: This particular organization was over 100 years old, meaning enacting change on something as fundamental as how technology investments are rationalized across multiple organizational owners would take time, effort, and political clout. The culture was not equipped to quickly adjust to a new model.  As a result, the company took a different approach rather than attempting to make a global enterprise-wide transformation.

Point B immediately brought together CX insights that were wholly-owned in siloed organizations across marketing, call centers, and digital. This revealed some interesting insights, namely that a majority of the customer interactions did not occur entirely within one channel. Customers would often switch between online and offline. Technology investments and rationalization justifications were focused on improving KPIs within one channel due to ownership of that channel within the organization. And call center investments were focused purely on improving operating expenses. As a result, revenue opportunities for upselling and cross-selling at the call centers were lost, and online platforms created unnecessary work for customers and had high fallout rates from increased call center volume.

By looking at the marketing campaign responsiveness data, the company could have realized that the target demographic was not quite accustomed to doing business either entirely online or offline. Their targets were both too old to do business entirely online, but still young enough to use online channels to make important decisions.

With regards to new investments, the firm decided to test and learn around offline and online experiences that would impact the customer interactions. A small innovation budget was allocated to test new capabilities that would focus on improving the experience by going between digital and analog experiences. Effort was used as a proxy to determine which innovation investments would be approved. The more effort an investment would reduce, i.e. the more transactions were removed from offline to online and vice versa, the higher chance that investment would be approved.

Inevitably, and given that only a small budget was allocated to innovation, only minimum viable product (MVP) solutions could be approved. However, the MVP solutions were enough to push change on the organization.  Small MVP solutions included manually providing call centers with web data to help cross-sell or upsell to test impact on sales, or creating data fields online that were filled in based on past call center interactions to test impact on call volume.  This test and learn approach inevitably resulted in enough performance data to rationalize operationalizing of new capabilities across the enterprise. 

Point B’s Perspective

With the COVID-19 situation, online adoption across all population segments has increased substantially. This is likely a permanent change in customer behavior.  Consider bringing together marketing, sales, digital, and customer support data to fully understand your customers’ interactions.  Your customers do not experience interactions through the silos of your organization, but rather as a whole. As such, your investments should reflect simplification of all experiences across the customer lifecycle. Effort is a proxy for simplification and can help you better understand how to make investment decisions that span all experiences.  Don’t be tempted to view investments as a way to increase revenue or decrease operating costs. Relying on these metrics alone will likely reinforce investments only within organizational silos which have set age-old KPIs.

The Bottom Line

In a strong economy, investments in digital have typically focused on increasing revenue. In a weak economy, investments in digital have traditionally focused on reducing operating costs. With the COVID situation, companies have been forced to quickly re-baseline their investments to optimize savings. When the economy rebounds, companies will again have to re-baseline investments towards increasing revenue. Continuous re-baselining of investments to market conditions will only hamper your ability to focus on long-term technology goals. Given the pace of change for technology, stay ahead of the curve by continuing to invest in new capabilities.  The data shows that understanding effort is a way to identify opportunities that both increase revenue and decrease costs. Companies that can truly drive innovation for the long-term are the ones that can invest in capabilities that are relevant in any market environment.  Embracing effortless interactions that improve the CX is the best way for FSI’s to stay ahead of competition, in any market environment, by delivering an experience that consumers find easy and, in this environment, safe.