Let’s face it: we’ve all had problems with our bank or financial service provider; there have been times when we’ve sat across from a Customer Service Officer (CSO) and been unhappy about the answers we’ve been given. A few years ago, this very challenge led my colleagues and myself to think that there was a fundamental problem with how financial institutions respond to service issues – whilst staff are trained to respond with an appropriate attitude to customers, they are often incapable of addressing the underlying problem. Naturally, this leads to the problem reoccurring time after time. The fundamental challenge is not to respond nicely to customers – but to fix the underlying issue.
A decade has passed, and we’ve worked with as many as 20 financial institutions examining how they provide services to their customers, through an intensive workshop focused on management and staff perceptions of service delivery at the customer level. Our approach examines all aspects of service delivery, organised by the 8 Ps which are mnemonic for financial marketing: namely, People, Process, Price, Product, Promotion, Positioning, Place, and Physical Evidence. The workshop records the majority of service issues that workshop participants know occur frequently or that have significant impact. The difference is that with the issues appropriately collated, a strategy can be developed to resolve multiple service failings through a range of tailored actions.
Results can be significant! In one institution, the findings assisted with strategy improvements, which turned a significant loss to a significant profit in a single year. In a second bank, the findings contributed to changes in products and product strategies that significantly increased product usage and institutional profitability. In a third bank, the findings are informing and prioritising an ongoing process of change designed to deliver sustained improvements in service delivery.
The irony is how fast this process of discovery can be – the workshop and analysis takes a little more than a week, from start to finish.
So what are some of the highlights from our experience?
i. People: Most service issues are not created by the CSOs, and, as such, they do not have the ability to resolve many issues unassisted. To be effective, therefore, branch staff need to be able to categorise the issue and refer it to the most relevant person as efficiently and effectively as possible. Identified issues need to be addressed individually and. more importantly. Systemically, to ensure as far as possible that the identified issue does not recur.
Internal customer service: If external customer service is poor, the same can be said for the internal customer with slow service between departments – between operations and credit, between credit and legal, between operations and alternative business channels. Service Level Agreements are usually in place but they are simply not monitored and enforced.
Head office as an island: In institutions which truly seek to serve customers, they have advanced metrics for monitoring service, which they then match with the expectation that the senior management team actually visits branches. Mystery shopping is used to assess levels of performance. This level of interaction creates and reinforces a customer service culture. However, the reverse is often the case, with a gulf between head office and the branches.
Induction and training: Many financial institutions in Africa have a firm belief in the value of on-the-job training. No doubt this can be very cost effective, but it is unlikely to be effective unless the existing staff know what they are doing! For effective staff induction, training often needs to be increased, and institutions need to look more carefully at how they spend their scarce training budgets.
ii. Processes: Staff members usually follow a well-defined process, but what if the process itself is flawed, or on other occasions, new staff members do not know the processes they are supposed to follow? If a financial institution fails to regularly update and publicise its new procedures effectively – and then enforce process compliance, then many service issues will result. When Equity Bank worked on its procedures as long ago as 2003, and enforced process compliance – the income raised from ensuring process compliance on charging fees more than paid for the compliance function!
iii. Products: Products are an area of frequent confusion. It is hardly a surprise that members of staff who are not familiar with a new product or service are unable to sell effectively, or a product which has simply been copied from a competitor into a new context, fails to be taken up. Often, a poor product development approach is at fault, and the financial institution needs fewer products that respond well to market needs, than numerous individual products and services that can respond to every conceivable need.
iv. Pricing: Product pricing generally confuses customers. Our work clearly shows that there are pricing principles that should be adhered to; namely, transparency, fairness, and consistency. Pricing which comes up for criticism tends to break one of these principles. Every institution has examples of these: seemingly arbitrary lawyers’ fees, fees charged differently between branches in the same bank, and manually raised fees. Transaction-based pricing is often perceived to be fairer than ledger fees. Banking systems come in for criticism, too, for incorrect interest calculations or even for continuing to charge fees once loans have been completely discharged!
v. Promotion: If staff members are confused about products and services, then promotion and strategies around promotion are destined to under-deliver. Particular care needs to be taken not to over-promise and under-deliver. Of concern in mass retail financial services, particularly in developing countries, is the nexus between the head office marketing function (where marketing is envisioned) and the branches where customer-based marketing occurs. Branch-based marketing, developed locally, but supported by head office marketing departments, alongside centralised promotion initiatives, can significantly reinforce marketing effectiveness. The branch manager’s role is hugely important, both in conducting marketing to high net worth customers, and in conducting one-to-many marketing as well as in coordinating the marketing efforts of branch staff. However, our experience is that branch managers in our clients are rarely appointed for their business development or marketing skills, so they need help in the transition to a broader branch management role.
vi. Positioning: Many institutions are misaligned ― where the market positions the institution in a certain way, and the institution is driving it in another! A real-life example of this would arguably be K-Rep Bank in Kenya, which a few years ago was positioned by the market as a microfinance bank, and yet was spending significantly trying to move into corporate banking with limited success. Typically, positions evolve gradually and require coordinated brand building from the institution. Misalignment, whilst common, has a hugely detrimental impact on a financial institution, as it builds in non-delivery to customer expectations by design!
vii. Place: To be effective at serving customers, all channels should work! Systems should be stable, downtime should be minimised. Branches should be effectively used to communicate to customers and be well organised. Care should be given to optimise branches for peak customer loads. However, the reality is often different, with under-investment ― particularly in rural branches; limited, if any, communication material; systems which fail frequently; and branches which are poorly organised or inappropriately staffed.
viii. Physical Evidence: A financial institution sells intangible products ― we can’t touch financial services! Therefore, the physical collaterals which accompany the financial service need to provide customers with the assurance that they will be receiving quality service. Standards are important, yet frequently not set, or not kept – standards in clothing, in brochures, in use of language, in application of the brand, in infrastructure.
Once an institution has a more complete understanding of how it appears to its customers, that’s when the real fun begins. Driving forward the volume of customer-focused changes required to drive service excellence is an institution-wide, never-ending task. However, there is a huge and significant advantage of customer-focused change. It’s highly visible. It drives goodwill and builds the brand. It is, of itself, a cost-effective marketing approach.
This blog is titled, “Delivering Quality in Financial Services – Redefining Customer Service”. Financial institutions must take control of the quality of their financial services; to resolve issues permanently and not to rely upon explaining issues away!