Financial institutions should put customersí needs first to win the battle for revenue growth

The battle for revenue growth among banks, insurers and asset management companies will be fought on three main fronts: improved technology, effective use of information and the ability to recruit, train and motivate customer-facing staff, says a new report from PricewaterhouseCoopers, carried out in association with the Economist Intelligence Unit (EIU). But the findings also reveal that many financial institutions are focusing their efforts on products and services and paying too little attention to the needs of their customers.

The report, entitled ëWinning the battle for growth: Building the customer-centric financial institutioní, surveyed more than 250 senior executives in financial institutions across the globe, on the subject of customer-centric growth.

Jeremy Scott, chairman, global financial services group, PricewaterhouseCoopers said:

ìTo win the battle for growth, financial institutions need first and foremost to gear their cultures towards serving the customer. This means putting customers needs, not short-term profits, first.

ìCurrently only 11% of survey respondents have a customer service head in charge of the customer experience. There is perhaps something to be learned from some of the successful retailers who have grown their profits by putting the customer at the heart of their operations.î

Asked to identify the obstacles standing in the way of becoming more customer-centric, 48% of survey respondents pointed to problems with technology. Many firms are still unable to share customer data across products, business units or customer channels, depriving institutions of a single view of the customer. Not surprisingly, 67% said that improving IT systems is the top strategic priority for the next 12 months as firms aim to retrieve relevant customer data in real-time and to analyse customer behaviour in order to anticipate and meet their needs.

Throughout the survey, respondents kept returning to the importance of the quality of customer facing staff. 65% of respondents said well-trained, responsive staff are likely to make their existing customers spend money with them. Just over two-thirds of respondents also said that the quality of service and staff would attract new customers to their organisations. But many institutions have been better at the rhetoric of customer-centricity than the practice, with 38% of respondents agreeing that their organisation is structured around products, not customers and 33% citing a lack of good information on customer satisfaction and expectations.

Ron Collard, partner, PricewaterhouseCoopers LLP said:

ìThe quality of customer-facing staff is critical in fostering loyalty, managing specific complaints that have the capacity to damage customer satisfaction irrevocably, and ultimately in driving revenue growth. Yet no more than a quarter of respondents rate the performance of their customer-facing staff across a number of dimensionsóthe extent to which staff are ëenabled and engagedí to deal with customers both ëefficiently and effectivelyíóas being of the highest quality.

ìThe winners will be those firms which invest in their people and integrate their whole approach to human resources with the customer in mind.î

When it comes to training, motivating and rewarding front line staff, the customer is again at the back of the queue. Over the past three years nearly 50% of survey respondents invested the most effort on product and service training for staff and 43% plan to continue doing this over the next 12 months.

John Bromfield, partner, PricewaterhouseCoopers LLP said:

ìFinancial institutions are more likely to collect financial metrics, such as average revenue per customer, than non-financial ones, such as customer satisfaction and loyalty. They also prioritise financial metrics when setting development priorities for staff. Yet respondents also recognise that financial metrics are generally less effective than non-financial metrics in showing how customer-friendly organisations are. Measuring and rewarding performance on the basis of non-financial customer-related metrics will encourage better behaviour.î

Anticipating and addressing shifting customer needs requires organisations to gather and analyse demographic data more effectively, to offer products that are more tailored to personal circumstances and to view the customerís future as well as present value. Such analysis is still rarely performed by organisations and data is more likely to be focused on customersí product histories than on their future value to the organisation or their loyalty profile. Indeed, 5-10% of customers annually vote with their feet precisely because financial institutions are not responding to their customersí changing circumstances.

Jeremy Scott concluded:

ìOnly by integrating information and procedures across channels with flexible technology and an open culture can financial institutions satisfy todayís customers and only by satisfying customers can they hope to grow their businesses in a sustainable way.î