Achieving A Customer Centric Bank

By M. Isi Eromosele

A customer-centric bank is not one that fits a customer into one-size-fits-all products and services, but one that starts with the customer and configures the relationship to uniquely reflect his needs and the means by which he will use the shared services of the bank.

Achieving a customer centric financial organization requires answering the following questions:

• How do you improve your efficiency while also increasing your value to the customer?
• How can you streamline business processes to improve your go-to-market speed?
• How do you enable front-line associates to provide real time, unique offerings to your customers?
• How do you improve the customer experience while also increasing operational efficiency?

There should be only one profit center concept for your organization. That is the customer. It is not only a sound philosophy for keeping your customers satisfied, but it  also focuses the rationale for everything (and the cost of everything) you do around how it meets the needs of customer acquisition, retention, and satisfaction.

As such, the first step in achieving customer centricity is to understand how each and every business process of your organization ultimately exists to satisfy your customers. If a bank can’t attribute something it does to a customer or acquisition of a customer, it is likely redundant.

It is very important for your organization to understand the costs of serving, retaining and acquiring customers. Each of your customers will use the shared services of the organization uniquely, and as a result, there is a unique cost associated with attracting and serving that customer.

Activity Based Costing

Activity Based Costing is a much viable business practice financial services institutions can use to accurately allocate the enormous pool of shared services a bank devotes to individual customer relationships.

The simplest way of thinking about Activity Based Costing is to map every resource of the organization (e.g. costs, people, technology, fixed assets) to the activity they support.

In turn, these activities are then mapped to what is generically referred to as a cost object, the purpose for which this activity was expended. In this case, as it should be in all cases, the customer is the cost object.

Improving Customer Interactions

There is a general assumption that the great cure for unprofitable customer relationships is in cross selling. However, on average, profitable and unprofitable customers generally have the same number of accounts at banks: 2.

As such, why is there the believe that cross selling will improve customer profitability when each account is often handled separately from the other(s)? When systems are separated, as are customer interactions and channels, chances are that customer interaction related to one account is completely blind to any other relationships that the bank has with a specific customer.

The idea that more accounts translates to greater profitability is predicated on the notion of economies of scale. If no economies exist, cross selling really doesn’t do much good.

Adopting Flexible Banking Processes

The ability to differentiate individual customer relationships is of little use if the core systems and technologies a bank has in place cannot accommodate this strategy.

Moreover, delays in new product introduction due to organizational or technological bottlenecks translate into missed opportunities that your competition will take full market advantage of.

Organizations can build market responsiveness by adopting flexible core banking processes using open standards. Using technology to reflect the business processes you want rather than the other way around (creating business processes to conform to static, inflexible technology).

New open standards technologies such as service oriented architecture (SOA) and Business Process Execution Language (BPEL) can facilitate this change.

360-degree View Of The Customer

You enable your front line to become customer centric when you can deliver the following to them:

• The ability and the authority for real-time decisions
• A 360-degree view of the customer

A complete view of your customer quite simply allows for intelligent customer interactions that engender excellent customer experience. Customers are not left shaking their heads wondering why customer service associates were not aware of all the relationships they have with your bank. 

Additionally, customers walk away from engagements with your banking institution with the sense that the bank understands them and what their needs are. The benefit: stronger loyalty that results in long-term profitable relationships between the bank and their customers.

From the bank’s perspective, a complete view of the customer permits it to know what the bank can sell the customer next. This view of the customer should be available, regardless of transaction and channel.

Providing Excellent Customer Service

Providing a consistent customer experience will improve the attitude of the customer toward your bank. In addition, if your bank has one place, regardless of channel for all policies, standards and procedures, it has substantially lowered its operational risk as there is less chance for inconsistent accounting policies being applied.

Customer management and campaign management also need to seamlessly span and be consistent across multiple channels. Building the technology around the business process rather than conforming it to all the discrete core banking systems a bank has in place generates a consistent, reliable experience that is ultimately more cost-effective to deliver.

Real-time decisions enable a bank’s front line to immediately pursue sales opportunities as they arise and facilitate the ability to tailor these opportunities specifically to customers’ needs.

Banks need to return to their business model roots as service companies. The phrase financial “services” company should be taken to heart. From the customer’s point of view, they are receiving a basket of services from you, not a commoditized product.

Although technology can help enable a customer-centric organization, it is the people and processes of the organization that will ultimately ensure the success of this important transformation.

M. Isi Eromosele is the President | Chief Executive Officer | Executive Creative Director of Oseme Group - Oseme Creative | Oseme Consulting | Oseme Finance

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