Delivering operational efficiency through excellent customer experience

Financial institutions have long juggled two significant and seemingly contradictory challenges: the need to respond to growing customer demand for digital offerings while controlling costs.

These trends have been exacerbated by COVID-19 and the subsequent economic disruption – with several big banks reporting recent profit drops. Customers who would have used traditional channels were forced online to do anything from apply for a mortgage, make a claim on their insurance or transfer a pension - something in which purely digital, disruptive entrants such as Monzo and Starling Bank have an innate advantage.

On the other hand, institutions that have struggled to deliver sustainable cost control measures are being challenged to cut costs further – and quickly – with increased insurance claims, mortgage arrears and an unstable economic environment adding to low rates and high capital requirements.

Traditionally, these challenges would be tackled separately within organisations through different means. But we believe these two trends are not only coincidental, but complementary. You can – and should – drive operational efficiency by delivering a fantastic experience for your customers. Using Lean thinking, institutions can reimagine whole sections of their operation, dramatically reduce operating costs and give the customer an excellent experience by following the actions outlined below:

What’s good for the customer is good for the operation

The starting Lean principle is to define what customers value, then optimise the process so that each step contributes to the production of that value and nothing more. Customers today not only value the product or service they require at a competitive price, but also having this service delivered in a simple, clear way through a channel of their choosing.

It’s important to look beyond the process or technology and consider where the customer does and doesn’t value human interaction. By understanding this we can make sure we design low cost, fully digital experiences that deliver valued outcomes at a dramatically lower cost.

Delivering on these customer expectations leads to a lower cost operation. The latest studies show that every one per cent improvement in customer satisfaction leads to an increase in operating profit of nearly six per cent, as well as improvements to Return on Equity (ROE), Return on Assets (ROA) and operating revenue. It can also:

• reduce demand on the operation by reducing customer contact and engagement. Working with a major consumer bank, we reduced contact volume by 50 per cent by providing chatbot services, digital portals and online access to information, bringing down the average cost of contact by 10 to 20 per cent
• lower the cost of sale and retention by reducing friction. Working with one investment management organisation, we reduced onboarding costs by more than 40 per cent
• reduce attrition and staff costs, enabling people to focus on higher value, higher skill interactions. This raises the value of customer facing roles and improves morale, and we’ve seen organisations lower the costs of attrition and staff training by over 20 per cent while increasing digital engagement.

Delivering a customer-centric operation

Monetising excellent customer experience often requires a dramatic rethinking of the purpose, organisation and capability of an operation. Typically, operations are organised by activity, which creates silos, overcomplicated processes and higher costs.

To move away from this legacy model and successfully deliver a digitally Lean, customer centric operation with excellent customer experience, organisations need to:

• start with the customer vision and work backwards, understanding customers’ needs and journeys across channels, including all digital and human interactions. This ensures the promotion of straight-through processing
• apply digital technology at scale, looking beyond point solutions in a single function and applying technologies in combination and at scale. This achieves fully digitised interactions for customers and the operation, releasing value and enabling an excellent end to end experience
• reorganise the operation to align to customer activity, ensuring customers can complete their interaction simply, interact with the fewest number of people possible and have any issues resolved first time. This means breaking organisational silos and taking management layers out of the operation
• ensure data transparency and visibility by ensuring data is available to agents and that virtual assistants and chatbots have access to customer engagement history. This means linking customer data, call or contact history across all channels and ‘customer next action’ technology throughout the operation, combining it with competency frameworks to ensure the right agent is assigned to meet the unique needs of the customer at hand
• build agile and cultural capabilities for staff who will be required to engage in more meaningful, valuable activities. Staff will need the skills to engage emotionally with customers to solve complex issues, offer sales advice and deal with challenging interactions.

Design for vision, deliver through compromise

Moving to a lean, agile, customer-centric operation isn’t easy, but the benefits to customers, staff and cost of operations are clear and significant. To get there, it’s vital to stay true to the end-to-end vision of the customer experience when dealing with technological challenge and compromise. In the end, it’s customers’ engagement with technology that will yield the operational benefit and cost savings needed – so ensure they get the service they value first.

If we work together to reimagine larger customer interactions by combining digital technologies at scale, the opportunity to reduce operational costs is tremendous. Not often does an opportunity arise to resolve both greatest challenges at once.