Financial institutions have come a long way on the path to customer centricity. Many have made significant efforts to challenge an ingrained actuarial mindset. For some, it has even been a journey to recognize that customers are real people, with needs and
expectations, not just risk profiles.
The road has been long — but, today, most financial institutions have invested in organizational structures that are dedicated to customer experience (CX). Some
90% of organizations now have a Chief Customer Officer or equivalent. And it is telling that
86% of financial institutions assign upwards of a quarter of their budget to CX — with nearly half planning to increase investments in the coming months.
All financial institutions today “do CX” in some shape or form.
And yet, the financial sector is not even close to best-of-breed, with leading banks and insurers still failing to match the experiences that other industries deliver.
Financial services’ experience gap
The financial sector is a prime illustration of the classic
delivery gap — essentially, while 80% of organizations believe they have invested to deliver a superior proposition, only 8% of customers agree.
According to a recent study from Harvard Business Review, despite significant investment,
heritage financial institutions lag digital service providers for product/service quality and ease of use. Similarly, annual reporting from Ipsos and the Competition and Markets Authority continues to show that
UK retail banks are failing to move the needle in service quality, with legacy players all clustered in the same range, behind agile new entrants.
Technology for analyzing customer signals and suggesting interventions will get institutions part of the way there. The challenge, then, becomes translating insights into actions.
This requires that organizations think about governance.
Governance and accountability
In CX, the purpose of governance is to enable decision making, by clarifying accountability at different levels. The precise model will vary, depending on how an organization is structured (we will shortly explore a number of different frameworks). But,
in all cases, there are some ‘must haves’.
Most important, financial institutions should ensure that their governance models include key stakeholders who are empowered with:
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End-to-end responsibility for customer operations — to ensure visibility and understanding of customer journeys across functions (for example: contact center, digital and locations)
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Decision-making authority — including the ability to prioritize initiatives across different departments
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Budgetary autonomy — to ensure resource allocation and investment in prioritized customer-focused initiatives
The absence of these focal points can be a sign that leadership is insufficiently engaged. It is imperative that CX teams find a way of bringing the appropriate individuals to the table — otherwise, it is exponentially harder to drive meaningful change.
Centralized vs decentralized models
Next, financial institutions should consider how their organization makes decisions — this is vital to determine the organizational structures you need, to enable action taking. Most organizations fall into either centralized or decentralized models.
Centralized customer experience programs are characterized by a higher degree of ‘command-and-control’ from the corporate program team. Support comes from functional business owners, who act as champions in key departments — but the process for driving actions
derived from customer insights is managed out of group.
Decentralized programs, on the other hand, are characterized by a higher degree of autonomy in business units or geographies. In addition to a program team at corporate level, decentralized frameworks will typically include customer experience program owners
in each market or business/product line. In such models, the corporate team’s remit becomes less about driving actions, and more about sharing best practices across the various teams.
It may feel like a binary determination, but it’s more accurate to think of centralized and decentralized as opposite ends of a spectrum. Most organizations fall somewhere between the two. Some industries, like retail, tend to cluster around the centralized
end of the scale — consider your favorite retailer and the standardized in-store experience they typically deliver, wherever in the world you happen to be shopping.
In financial services, however, each market represents a different competitive landscape, necessitating different products and services, and the ability to capture different insights and take different actions. Financial institutions that operate across
geographies must factor these requirements into their governance frameworks. Meanwhile, regional providers — whose operations may lack multi-market complexity — will still have different functions, with different needs when it comes to customer experience
(from underwriting, to claims, marketing, customer service, digital and so on).
Consequently, many financial institutions lean towards the decentralized end of the scale. This means that markets and functions typically assume a greater degree of ownership for driving customer-centric action.
Some centralized best practices
Typically in centralized programs, the corporate CX team will set the overall strategy, but will also run all aspects of the day-to-day program. This may include reviewing monthly trend analyses and preparing summaries for the group executive. The corporate
team will also lead discussions around cross-functional improvement initiatives, supporting executive-level decision making around any strategic trade-offs to be made.
The various functions are generally responsible for specific touchpoints or ‘listening posts’, each with their own feedback source. For example, retail branches will be responsible for the branch experience and responding to alerts regarding in-branch feedback.
Each function will ideally have a designated business manager who owns the ‘insights to action’ process within that function, including training customer-facing teams and periodically analyzing data to understand trends and the impact of actions taken.
In such centralized models, it is the corporate team’s role to facilitate alignment across the business.
For example, in one North American credit union, the corporate team convenes a monthly meeting, where the various functions discuss actions that require choreography across departments. The functional business owners feed into this with a view of themes
they’re seeing that have cross-functional relevance.
Some decentralized best practices
In decentralized models, while the objective of alignment is the same, the roles and responsibilities are different. For example, in multi-market contexts, it typically falls to country leadership to make decisions about CX delivery and improvement actions,
This leaves the corporate team to focus more specifically on those aspects of CX methodology that should be standardized — for example, a shared customer perception metric to enable benchmarking across geographies.
In this regard, an engaged country leader is often the lynchpin in successful multi-market models: not only must they play the role of executive sponsor within each market, but they must also lead cross-functional discussions and ultimately approve resources
and budget allocation. Ultimately, you need a senior leader in each market with authority over the three focal points discussed (budgeting, decision making, and end-to-end customer responsibility) — otherwise, cross-functional meetings can devolve into forums
where problems get aired but nothing gets done.
Institutions that are decentralized by division rather than by market are similar, but the role played by the country leader is instead taken by the divisional executive. There will always be competing priorities across departments; eventually someone needs
to break the tie.
A further consideration should always be the interplay between the corporate team and the function or market. For instance, the program’s corporate sponsor should have a regular touchpoint with divisional or country leadership to ensure buy-in and visibility.
Organizing for CX success
Program governance is a huge and essential topic — with many more considerations than an article of this length can encompass. But the north star for any organization should always be those three aforementioned focal points for accountability — budgeting,
decision making and visibility across customer operations. Financial institutions that can identify where those focal points come together in their organization, and look to build forums for decision-making around them, will find they can outpace the market
in translating insights into actions.