The Formula for Building Customer Trust

November 9th, 2018

customer-11-9-18.pngDue to several recent data breaches and incidents of internal fraud at some of the world’s most recognizable financial brands, millions of consumers are impacted, loyalty is eroding, and risk is added to the bottom line. For banking leaders charged with driving the growth and managing that risk to their organizations, trust is a key to supporting both growth and financial performance.

A recent Carnegie Mellon study of customers of large banks showed those with fraudulent activity on their accounts were more likely to leave in the next six months. Following a series of internal scandals, a leading bank reported a 77 percent increase in unplanned operational expenses, a direct impact on performance.

These numbers tell a story of heightened risk in banking, but they also illuminate the critical role trust can play. Following risk incidents, every financial institution is impacted. The hard reality is trust and confidence in banks remain low across the industry, and have yet to recover to pre-financial crisis levels. In fact, 2018 Gallup polling data indicates only 30 percent of Americans have a “great deal” or “quite a lot” of confidence in banks, down from 41 percent before the crisis (2007). Risk is engrained in the banking industry’s DNA, and while recovery depends largely on a robust and adaptive risk management function, restoring trust with customers touches every area of the organization.

Banking leaders have an opportunity to rebuild trust by mobilizing their functional teams around Experience Design, or the entire experience a customer has with the bank. The benefits of taking an experience-led approach correlate directly to building trust in financial services. In fact, in the 2018 Edelman Trust Barometer, (1) user experience, (2) ease of human interaction, and (3) use of the latest technology were the top factors building trust in financial services—and all of these elements require the careful orchestration of human and digital touchpoints that Experience Design enables.

Banking services can no longer stand alone as customer decisions are being made around every interaction with the organization. There’s an opportunity for banks to differentiate and build trust by uncovering the gaps in their current experience engagement model, and designing experiences that align to customers’ needs and expectations.

To put Experience Design into action, banks must deeply understand their customers’ needs and preferences. Banks must identify the unifying experience they want to achieve through techniques such as Accelerated Service Design, which focuses on human needs and processes, as well as its systems and employees.

To trust a financial institution with deeply personal activities such as saving for retirement or managing credit and mortgages, customers need to feel the bank has their best interests at heart. Digital alone isn’t the answer to the trust challenge. Customers still value face-to-face interactions; one recent study by Celent found 93 percent of customers “still prefer at least some interactions” at a physical branch. In fact, according to the 2018 J.D. Power U.S. Retail Banking Satisfaction Study, digital-only and physical branch-only customers reported the lowest levels of satisfaction. What’s most important is developing an approach that intentionally weaves together human and digital touchpoints in a way that is authentic, smart and relevant.

As banking leaders shape a larger strategic vision around recovery from risk incidents, they should design consumer touchpoints with the Human Experience dimensions—relevance, ease, orchestration, and empathy—at heart. Those dimensions can be brought to life with a focus on embedding the following principles:

Human-centered: Organizations must center experiences and offerings on the human needs of their customers. This includes the services delivered, the processes used to deliver them, and the alignment of the organization and leadership behind that vision.

Co-created: Bank leadership must work with employees to build the internal foundation for a better experience. When trust is at a culture’s core, it permeates throughout the organization, and is felt by customers across all touchpoints.

Holistic: Experience must be viewed from an end-to-end perspective, similar to those provided by Airbnb and Uber. These companies orchestrate digital and physical experiences that seamlessly integrate with a customer’s lifestyle. In turn, these customers value the organization for the things it enables them to do, not the product or service provided. Examine how every touchpoint is influencing the customer experience, and how to better meet customer demand with a more seamless experience.

Iterative: Experience Design is not a “one and done” effort. Customer needs and preferences are always changing, and they are not making one-time transactions. Banks need to be a trusted partner to their customers throughout their relationship.

An experience-focused approach builds trust, and in turn, customer loyalty that drives the bottom line. By taking a comprehensive view of the customer experience, banks can build the trust that’s critical to sustainable risk incident recovery.

jjacques

Jill is North Highland’s Global Financial Services Lead with 19+ years of experience in consulting and industry leadership positions. She leads the Financial Services Advisory team and is a thought leader in shaping the industry's response to the new standard of care through her contributions to various publications.

smullen

As one of North Highland’s Financial Services experts, Scott Mullen interacts regularly with senior banking leaders across the industry. He regularly assists with strategic challenges being faced by banks and credit unions, and works to apply real-world solutions to address client needs. He has over 25 years of banking experience both internationally, and across the U.S.

jjohnston

Joe is the Senior Director of Service Design at Sparks Grove, the experience design division of North Highland. He focuses on envisioning and creating meaningful human experiences and breakthrough business strategies. He has over 18 years of experience in the areas of experience design, customer insight, and innovation for leading financial services, retail, and entertainment brands.