Retaining and Growing Customer Loyalty with Empathetic Banking

Retaining and Growing Customer Loyalty with Empathetic Banking
banking on customer centricity, customer-centric solutions for banking, customer experience in financial services, customer-centric banking

The customer is constantly evolving in every sector and banking is no exception. Wanting to be at the focal point of business and services, the modern-day customer is looking to go beyond the periphery of the system and gain control of their interactions by having hyper-personalized engagements and availing on-demand availability of services. The need of the hour for banks is to evolve with the customer, meet their changing expectations, and stand out even as they tackle fierce competition from fintech and technology giants.

Digital transformation is the way forward. Especially now, as the outbreak of COVID-19 has made most banking organizations aware of the significance between digitalization and business continuity. In a post-COVID-19 world, banks will have to reinvent their operating models and strategies that primarily focus on customer-centricity, and work with the objective of delivering a top-notch banking experience.

Customer Centricity: For an enhanced Lifecycle, Experience, and Value.
A classic example of customer-centricity comes from Kotak Mahindra Bank. The bank is of the firm belief that customer-centricity lies at the intersection of the customer lifecycle, customer experience, and customer value. This concept was clearly explained by Puneet Kapoor, President – Products, Alternate Channels, and Customer Experience Delivery, Kotak Mahindra Bank Limited, at SunTec’s webinar on Retaining and Growing Customer Loyalty with Empathetic Banking. Kotak Mahindra believes that customer experience is always driven by the 3 I model – Information, Instruction, and Issue. The 3I model encapsulates the understanding of what brings a customer to a bank – the need for information, the intent of issuing some instruction for future action, and for the resolution of issues.

In a nutshell, a consistent, secure, personalized, and user-friendly interface with the bank across all touchpoints and requirements results in a delighted and loyal customer, especially when it is supplemented by value-driven services – both product and value-added services.

Leveraging Customer Identity for Better Solutions.
The first step to customer-centric transformation is to delve deeper into the needs and requirements of the customer, as a sharper understanding ensures better segmentation, and eventually, enhanced and customized services. As a result, banks can benefit from a significant increase in wallet size, and product holding parameters across the customer base. A case in point is when Kotak Mahindra Bank saw a rise in digital and mobile banking usage across customer segments. The bank has created theme-based engagements instead of vanilla product-based engagements.

Here’s how it worked – instead of connecting with customers for individual products under life insurance, home insurance, and car insurance, the bank bundled all products under one category and marketed it under the umbrella branding called ‘protection’ to different segments of customers ranging from salaried individuals, senior citizens and customers looking for car loans. The bundled marketing idea was communicated across various touchpoints that would see a good flow of customers, be it interactive ATM screens, phone banking messages, and brochures and pamphlets at the various branches.

The result was an incredible increase in relationship value, better product holding, increased primary banking, and greatly improved customer experience and loyalty.

Technology as an Enabler of Customer Centricity
Access to advanced analytics has helped Kotak Mahindra not only understand their customer needs well but also correlate the captured information against data collected at various touchpoints and events, thereby resulting in superlative offerings including best products and services. Take for example a KYC system from Kotak Mahindra Bank. What Kotak Mahindra did was that it implemented a video KYC system that allowed the customer to complete the process from the confines of their homes and speeded up the end-to-end process from 6 days to just 3 days. The bank also implemented a suitable communication campaign to create awareness and protect customers from scams and fraudulent attempts to procure account information.

From enabling remote and contactless transactions and remote working for phone banking employees, to ensuring safe banking and self-service, the pandemic has accelerated the pace of customer-centric transformation. Fact is, like Kotak Mahindra, banks can scale up rapidly and embrace new processes and systems provided they have a sound digital framework in place already.

A Digital Ready Value Proposition
Avishek Nandy, Partner, Bain & Company explained a comprehensive framework for modernizing banking infrastructure to move to a customer-centric model. Bain & Company believes banking has gone through a paradigm shift and is changing fast, and today’s banks need to consider themselves as technological giants with the expertise and license of a bank. What this means is technology adoption and modernization is must-haves and is the only way to create a value proposition.

Simple and Digital Customer Experience
Bain & Company’s framework for a “Simple and Digital” customer experience approach puts the customer at the center of the evolving modernization strategy. The bank’s vision and value proposition need to be revamped to align with this new focus to drive a seamless unified experience across every channel. And technology in the form of advanced data analytics solutions is the way to achieve these objectives.

For a successful customer-centric transformation, it’s time for banks to focus on creating a step-by-step delivery strategy with clear actionable objectives and evaluation measures & mechanisms for time-to-time course correction.

Mr.Nandy explains Bain & Company’s 4-step approach to implementing a successful digital modernization plan:
Why – Audit existing systems and identify how they are performing, which systems need to change, and the critical business objectives they must support
What – Identify the parts of the infrastructure that need to be addressed
How – Understand if objectives can be met by replacing existing systems or just modifying them
Delivery – Establish a clear roadmap for migration implementation including sequential approach, priority areas, and a features and releases schedule

Today’s customer is expecting a top-class banking experience and the pandemic has only raised the expectations. In the last 18 months alone, 35% of customers have increased their online banking usage while 40% moved to contactless payments. As banking goes through a transformative stage, it’s important for them to offer a greater degree of self-service, seamless access, and personalization.

Kotak Mahindra has shown us that anything is possible. Thanks to organizations like Bain & Company who have offered the right support system in place to ensure banks take the gigantic leap of switching to a customer-centric model.