5 Strategies for Creating a Seamless AI Experience

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The broad adoption of digital channels has been accompanied by hiring challenges for banks that often struggle to adequately staff their service channels and branches. This leads to an urgent drive to adopt virtual assistants and chatbots as a way to provide better and more comprehensive service options to their customers.

This comes at the same time as the Consumer Financial Protection Bureau surveys the experience of digital chatbots and virtual assistants at big banks. This is likely due to poor perception the consumers have of chatbot-based service.

Bank executives must balance the need to provide self-service, always available options without alienating consumers with sub-optimal experiences. But there are several simple strategies that can go a long way in achieving the best of both worlds, making AI-boosted customer experience truly seamless.

To start, consider some reasons behind this poor perception. Many virtual assistants and self-service experiences try to replace humans, containing the customer without escalating the conversation to a human service member. This can lead to overly eager assistants persistently asking customers to rephrase their query or choose from a slate of options. In the worst case scenario, virtual assistants emulate humans with the aim of fooling the customer — resulting in greater frustration when this illusion is shattered. Another common source of frustration are virtual assistants that ask a lot of questions before routing the customer to an appropriate human service member, just to have those same questions repeated by the human agent.

All these examples show how a virtual assistant makes it more difficult for customers to accomplish their goal, rather than simplifies it, and increases the customer’s required effort.

The key to improving the customer experience, while getting the benefit of self service, is to make the virtual experience seamless: help the consumer when possible and get out of the way otherwise.

Here are five practical suggestions to make your bank’s virtual assistant experience seamless, leading to happier and more satisfied customers.

  1. Make it clear to your customers when they are interacting with a virtual assistant versus a human. This helps set consumer expectations and helps develop trust in the service. Consumers may choose to use shorter, direct questions, instead of more verbose communication they would normally use with humans.
  2. Always provide an option for customers to bypass the virtual assistant and connect to a human. Customers can typically tell whether their question is something simple that can be answered by a virtual assistant, or something more complex that requires human intervention. Providing an option to engage with a human when customers choose allows them to self-select into an appropriate path and delivers an experience that’s better adopted to their needs.
  3. Where possible, make it clear the limitations of the virtual assistant up front. For example, certain types of disputes and fraud-related questions might not be able to be handled by the virtual assistant; letting the customer know up-front helps them understand any possible limitations.
  4. Remove repetitive questions from the virtual assistant-to-human transfer process. If questions are needed to better route the customer, take care that they don’t overlap with verification and authentication questions that the human would ask after the transfer. Answering the same questions over and over gives the impression that customers aren’t heard; changing the questions leads to a more seamless transfer.
  5. Supplement any off-hour self-service queries with follow-up options. In cases where a virtual assistant is not able to help the customer solve their issue or it requires human intervention, your institution can offer to follow up on their request and leverage the virtual assistant to collect the relevant information rather than force the customer to repeat the process or switch channels. This gives customers an impression that they’re valued and worthy of additional follow-up to solve their issue.

When surveying your customers on their experience in a hybrid customer service journey, it is crucial to consider the entire experience and not just focus on one pathway or channel. Ultimately, great human customer service will not be sufficient to offset an unpleasant experience in a self-service setting or vice versa. Getting a full picture is crucial to understanding consumer pain points for improvements.

3 Ways Customer Data Benefits Financial Services

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The financial service sector has seen sweeping changes in the past few years, due in large part to breakthroughs in technology and adaptations made in response to the pandemic, and banks are under a tremendous amount of pressure to cater to customers whose wants and expectations are dramatically different from before.

For financial firms to succeed, they must embrace digital transformation and set their strategy based on analyzing and using the mass of data at their fingertips. This data can help them in three crucial ways.

1. Gaining a deeper understanding of clients to cater to their needs

Banks, more so than other companies, have enormous datasets to wrangle. Every swipe someone makes with their debit or credit card is a piece of transactional data for financial companies — not to mention engagement with banking apps, calls to service centers and visits to branches. If banks are able to organize the data properly, they can understand their customers, predict their needs, personalize interactions and more.

No matter if you’re a boutique bank, or a large well-known brand — the key to success is customer loyalty, and that can be fostered by a positive experience. Customers expect their banks to predict their needs and tailor their interactions. With legible customer data, banks can identify and predict trends in customer behavior and create personalized approaches. Historically, banks have been more product-centric, for example focused on pushing credit cards or specific types of accounts. To build value, firms should move toward customer-centricity and concentrate on building brand value. This extra effort will result in happier customers, skyrocketing loyalty and retention, higher engagement and conversion rates and a more substantial return on investment.

2. Connecting with customers at pivotal life moments

Financial services is a lifecycle-based sector. To effectively serve customers, banks must understand what products and services will be of use to their clients at what stage in their lives. Customers don’t make big financial decisions when their banks want them to, but rather when pivotal life moments happen, such as marriage, moving out of state, or purchasing a home. By examining their data, banks can look at different indicators like customer engagements with other products or spending patterns, to anticipate important life events and prepare a product or offer for them in the right time frame.

3. Building a stronger business

If banks can form a complete view of their services based on customers’ usage and transaction data, they can discover where they fall short and how they can improve their business across multiple dimensions. There are many use cases that fall under the data and analytics category: Brands can develop new products and services, have better risk management capabilities and save money with more efficient internal operations. Using data even extends to financial investments: Brands can predict how the market may move and decide which companies or stocks to invest in.

Unlocking the potential of customer data in financial services depends on having a solid foundation of customer data. With that in place, banks can make informed decisions to drive adoption, increase revenue and boost customer satisfaction. But first, they must collect, clean, combine and analyze internal and external data from a variety of different sources. Without the right tools and guidance, this can be quite difficult, and often trips banks up; this is where a customer data platform (CDP) comes in.

A good CDP will help a bank make sense of messy data and turn it into valuable insights, allowing financial service companies to fuel their marketing efforts, cut back on costs and serve their customers better.

Why the Time is Right to Enable Payments on Real-Time Rails

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Despite strong adoption worldwide, U.S. financial institutions have been slow to embrace real-time payments.

This reluctance is largely due to the complexity of the financial landscape, established consumer payment habits and lack of a federal mandate driving change. But the coronavirus pandemic fueled greater demand for real-time payments, as consumers and businesses increasingly transact digitally. As the share of real-time payment transactions in the U.S. doubled in 2020, financial institutions have an opportunity to launch real-time services that meet demand and enhance the customer experience.

Real-time payments are irrevocable, account-to-account payments that can be initiated through any device — laptop, mobile, or tablet. Because they are cleared and settled nearly instantly, 24 hours a day, seven days a week, 365 days a year, the funds are available to the recipient immediately. This has significant cash flow and liquidity advantages over traditional payment options.

More than 60 countries are live with real-time payment systems today, and real-time payments grew 41% globally from 2019 to 2020. The U.S. ranks ninth worldwide with 1.2 billion transactions; well behind real-time leader India, which had 41 million real-time transactions per day in 2020.

The Clearing House was an initial driver of real-time in the U.S., launching its RTP® network in 2017. Currently reaching more than 60% of U.S demand deposit accounts, RTP is open to any federally insured depository institution. The Federal Reserve’s FedNow, which is now live with a pilot program, will drive further adoption when it launches in 2023. 

Real time payments have been primarily driven by person-to-person (P2P) and consumer-to-business (C2B) uses cases. Services like Zelle®, which was introduced in 2017 by Early Warning Services (EWS), have propelled adoption by making it easy for consumers to pay digitally; for example, paying a friend for dinner or making a rent payment on the day it’s due. In late 2020, Zelle® was integrated with RTP, making these transactions truly real time.

EWS reported a 51% year-over-year increase in Zelle® transactions in the third quarter of 2021, noting growing use of its service by businesses. Having the flexibility to pay rent, process payroll or pay for supplies in real time has particularly strong benefits for small businesses with liquidity challenges.

Disbursements also represent a growing use case, with businesses taking advantage of the ability to efficiently send refunds and make other payments in real time. An insurance company paying claims following a car accident or hurricane could avoid the overhead associated with processing paper checks. At the same time, real-time disbursements boost customer satisfaction by making funds available immediately. Payroll is another example, with the gig economy companies particularly benefitting from the ability to pay workers instantly.

Nowhere has the need for real-time payments been more apparent than in issuance of pandemic stimulus checks. As Federal Reserve Board Governor Lael Brainard said, “The rapid expenditure of COVID emergency relief payments highlighted the critical importance of having a resilient instant payments infrastructure with nationwide reach, especially for households and small businesses with cash flow constraints.”

Request for Payment
Popular in countries like India, Request for Payment is emerging as a convenient tool to facilitate real-time payments on a mobile device. A push notification and short series of prompts detail the payment request, and the payee can authorize payment from a banking app within a few clicks.

Businesses using Request for Payment benefit from immediate funds availability and a more efficient, cost-effective billing process; consumers gain convenience and control. Consumers issuing Requests for Payment can use it to avoid awkward reminders to friends or colleagues by simply sending a request digitally when money is owed.

Establishing a Real-Time Strategy
As financial institutions look to broaden their real-time payments offering, it’s important to consider the technological infrastructure needed to support them. As transactions and use cases continue to grow, both consumers and businesses will come to expect real-time options from their financial institution, and availability of well-established services like Zelle® and newer tools like Request for Payment will become table stakes.

A partnership with a digital banking provider that not only prioritizes real-time payment offerings today, but also has plans for future integrations with real-time focused fintechs, will prove critical to long-term success.

The Missing Piece in Customer Engagement Strategies

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Usage of appointments in banking has increased significantly since the outbreak of the coronavirus, and is expected to continue in a post-pandemic world.

Appointments increased nearly 50% in the second half of 2020, according to customer usage data, allowing banks to manage limited branch capacity while ensuring the best possible customer service. For example, Middletown, Rhode Island-based BankNewport experienced a month-over-month increase of more than a 466% in appointment volume between March and April of last year, with numbers remaining steady into May 2020. The $2 billion bank noted that these appointments allowed them to prepare for customers, solving their needs efficiently and safely.

Now, nearly a year later, appointment setting is helping banks to meet the transformative and digital-centric needs of their account holders. Online appointments enable any customer or prospective customers to schedule high-value meetings with the right banker who is prepared to speak on a specialized topics. In addition, these appointment holders can choose their preferred meeting channel, such as in-person, phone or virtual. But, how does this translate to customer engagement?

Customer engagement begins when a question or task needs to be done. As the customer or prospect starts searches for an answer on a local bank’s website, banks can use appointment scheduling to ensure that customers have options beyond self-service or automated customer service to connect one-on-one with staff. By optimizing consumer engagement strategies with high-value appointments, banks can increase revenue, boost operational efficiency and improve overall customer satisfaction.

Increase revenue
Today, many branches are faced with the challenge of maximizing revenue opportunities with highly compressed margins. This leads banks to search for more cross-sell opportunities such as opening new accounts, loans or alternative revenue-driving sources.

Appointments help banks maximize these opportunities by connecting customers or prospects with the most knowledgeable service representative to handle sensitive topics, such as account openings or wealth management inquiries. Banks should take full advantage of these crucial meetings because engaged customers are more apt to expand their relationship with an institution when provided with the right resources at a time they’ve scheduled. In fact, TimeTrade SilverCloud data shows that appointment scheduling increases the likelihood that a person will move forward with a loan or deposit by 25% to 40%; customers and employees are better equipped for the meeting’s purpose and have stronger intent to transact.

Boost operational efficiency
Proper branch and contact center staffing levels allows banks to be more efficient without adding to the overall headcount. In the absence of appointment scheduling, employees can be burdened by prolonged rescheduling of meetings and correcting inconsistent information, stemming from unproductive customer interactions and resulting in wasted time.

Appointment scheduling allows employees to prioritize their time to address complicated issues and ensure their full potential is being used during business hours.

This can be further optimized with customer self-service. As more account holders reach a resolution without staff interaction, employees can spend more time with complex customer inquiries. Bank of Oak Ridge saw technology-related questions decrease by 64% after implementating a consumer self-service solution, allowing employees at the Oak Ridge, North Carolina-based bank to expand existing relationships and focus on more critical tasks.

Improve customer satisfaction
Like employees, customers’ time is valuable and their money is personal. When their time is wasted by a low-value interaction, this can greatly impact the overall customer experience. Negative comments about unprepared or ill-informed staff can be detrimental to an institutions’ reputation and consumer trust.

It is paramount that banks route customers to the employee best suited to meet their financial needs and questions. Banks that cultivate a comprehensive customer engagement experience, using online appointment scheduling, will be well equipped to meet customer needs and provide a great experience.

Banking by appointment is a powerful tool in today’s new business environment. Banking competition is increasingly prominent, and going the extra mile to make financial transactions and consultations as easy as possible will be an essential differentiator among institutions. Enabling customers to connect with the right person at their right time, and capturing pertinent customer information at the time of scheduling, allows banks to provide the right answer, resulting in more satisfied customers, better served employees and a healthier bottom line.

Turn Credit Declines Into A Win-Win

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The pandemic has left millions of people needing credit at a time when lending standards are tightening. The result is a lose-lose situation: consumers receive a negative credit decline experience and financial institutions miss out on a lending opportunity. How can this be turned into a win-win?

Start by deconstructing the credit decline process: Most consumers are first encouraged to apply for a loan or credit card. The application process can be invasive, requiring significant time commitment and thoughtful and accurate inputs from the applicant.

After all that, many consumers are declined with a form letter or message that has little to no advice on what actions they can take to improve their credit worthiness. It’s no wonder that credit declines receive a poor Net Promoter Score (NPS) of 50 or, often, much worse. But on the flip side, forward-looking institutions could use this opportunity to provide post-decline credit advice. This is a compelling opportunity for several reasons:

  • Improved customer satisfaction. One financial institution learned that simply offering personalized coaching, regardless of whether or not consumers used it, increased their customer satisfaction by double digits.
  • More future lending opportunities. Post-decline financial coaching can help prospective customers position themselves for future borrowing needs, even beyond the product for which they were initially declined.
  • Increased trust. Quality financial advice helps build trust. A J.D. Power study found that, of the 58% of customers who want advice from financial institutions, only 12% receive it. When consumers do receive helpful advice, more than 90% report a high level of trust in their financial institution.

Provide cost-effective, high-quality advice
Virtual coaching tools powered by artificial intelligence can help banks turn declines into opportunities. These coaches can deliver step-by-step guidance and personalized advice experiences. The added benefit is easy and consistent compliance, enabled by automation. These AI-based solutions are even more powerful when they follow coaching best practices:

  • Bite-sized simplicity. Advice is most effective when it is reinforced with small action steps to gradually nurture customers without overwhelming them. This approach helps the prospective borrower build momentum and confidence.
  • Plain language. Deliver advice in friendly, jargon-free language.
  • Behavioral nudges. Best-practice nudges help customers make progress on their action plan. These nudges emulate a human coach, providing motivational reminders and celebrating progress.
  • Gamification. A digital coach can infuse fun into the financial wellness journey with challenges and rewards like contests, badges and gifts.

Virtual financial coaching, starting with reversing credit declines, represents a huge market opportunity for banks and their customers. Learn more about the industry’s first virtual financial coach.

Banks Risk Missing This Competitive Advantage

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Artificial intelligence is undergoing an evolution in the financial services space: from completely innovative “hype” to standard operating technology. Banks not currently exploring its many applications risk being left behind.

For now, artificial intelligence remains a competitive advantage at many institutions. But AI’s increasing adoption and deployment means institutions that are not currently investing and exploring its capabilities will eventually find themselves at a disadvantage when it comes to customer satisfaction, cost saves and productivity. For banks, AI is not an “if” — it’s a “when.”

AI has proven use cases within the bank and credit union space, offering a number of productivity and efficiency gains financial institutions  are searching for in this low-return, low-growth environment. The leading drivers behind AI adoption today are improvements in customer experience and employee productivity, according to a 2020 report from International Data Corporation. At Microsoft, we’ve found several bank-specific applications where AI technology can make a meaningful impact.

One is a front-office applications that create personalized insights for customers by analyzing their transaction data to generate insights that improve their experience, like a charge from an airline triggering a prompt to create a travel notification or analyzing monthly spend to create an automated savings plan. Personalized prompts on a bank’s mobile or online platform can increase engagement by 40% and customer satisfaction by 37%; this can translate to a 15% increase in deposits. Additionally, digital assistants and chatbots can divert call center and web traffic while creating a better experience for customers. In some cases, digital assistants can also serve as an extension of a company’s brand, like a chatbot with the personality of “Flo” that auto insurer Progressive created to interact with customers on platforms like Facebook, chat and mobile.

Middle-office fraud and compliance monitoring are other areas that can benefit from AI applications. These applications and capabilities come at a crucial time, given the increased fraud activity around account takeovers and openings, along with synthetic identity forgery. AI applications can identify fraudsters by their initial interaction while reducing enrollment friction by 95% and false positives by 30%. In fact, IDC found that just four use cases — automated customer service agents, sales process recommendation and automation, automated threat intelligence and prevention and IT automation — made up almost a third of all AI spending in 2020.

There are several steps executives should focus on after deciding to implement AI technology. The first is on data quality: eliminating data silos helps to ensure a unified single view of the customer and drives highly relevant decisions and insights. Next, its critical to assemble a diverse, cross-functional team from multiple areas of the bank like technology, legal, lending and security, to explore AI’s potential to create a plan or framework for the bank. Teams need to be empowered to plan and communicate how to best leverage data and new technologies to drive the bank’s operations and products.

Once infrastructure is in place, banks can then focus on incorporating the insights AI generates into strategy and decision-making. Using the data to understand how customers are interacting, which products they’re using most, and which channels can be leveraged to further engage — unlocking an entire new capability to deliver business and productivity results

In all this, bank leadership and governance have an important role to play when adopting and implementing technology like AI. Incorporating AI is a cultural shift; executives should approach it with constant communication around AI’s usage, expectations, guiderails and expected outcomes. They must establish a clear set of governance guiderails for when, and if, AI is appropriate to perform certain functions.

One reason why individual banks may have held off exploring AI’s potential is concern about how it will impact current bank staff — maybe even replace them. Executives should “demystify AI” for staff by offering a clear, basic understanding of AI and practical uses within an employee’s work that will boost their productivity or decrease repetitive aspects of their jobs. Providing training that focuses on the transformational impact of the applications, and proactively creating new career paths for individuals whose roles may be negatively impacted by AI show commitment to employees, customers, and the financial institution.

It is critical that executives and managers are aligned in this mission: AI is not an “if” for banks, it is “when.” Banks that are committed to making their employees’ and customers’ lives better should seriously consider investing in AI capabilities and applications.

 

Evaluating Executives’ 2020 Performance

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Bank boards know that the world has shifted dramatically since January, when they drafted  individual executives’ performance expectations. Using those outdated evaluations now may be a fruitless exercise.

As the impact of the pandemic and the social justice movements continue to unfold across the United States, boards may not feel that they have much more clarity on performance expectations currently than they did back in March. At many banks, credit quality has replaced loan volume as the key operating priority. Unprecedented interest rate cuts have further deteriorated earnings power.

Many boards of directors are revisiting how to evaluate the executive team’s individual performance for fiscal year 2020, considering these new realities for their businesses. Individual performance evaluations are a tool for evaluating leadership behaviors and abilities; as such, it sends a clear indication of what the board values from their leaders. After a year like this, all stakeholders will be interested to know what the board prioritized for their bank’s leadership. 

Considerations for Updated Individual Performance Evaluations
This year has been defined by unprecedented developments that broadly and deeply impact all stakeholders. More than any other industry, banks have been called on to support the country using every tool in their toolkit. Reflecting this broad impact, bank boards may find it useful to establish a revised framework for evaluating leadership performance using six “Critical Cs” for 2020:

  • Continuity of Business: How quickly and effectively was the bank able to transition to a new operating model (including remote work arrangements, staffing essential workers in office or branch, etc.) and minimize business disruption?
  • Customer Satisfaction: How were customers impacted by the change in the operating model? If measured, how did the scores vary from a normal year?
  • Credit Quality: Where are the trends moving and how are executives responding? Did the institution face legacy issues that took some time to address and may be compounding current issues?
  • Capital Management: What balance sheet actions did executives take to strengthen the bank’s position for the future?
  • Coworker Wellbeing: What was the “tone at the top”? How did executives respond to the needs of employees? If measured, how did the bank’s engagement scores vary from other years?
  • Community Support: What did the bank do to lead in our communities? How effective was the bank in delivering government stimulus programs like the Small Business Administration’s Paycheck Protection Program?

For publicly-traded banks, the compensation discussion and analysis section of the proxy statement should provide a thorough description of the rationale and process used for realigning these criteria and the evaluation approach used to assess performance. Operating results are likely to be well below early-year expectations for most banks; as a result, shareholders will be keenly interested in how leadership responded to the current environment and how that informed pay decisions by the board.

This year has created an unprecedented opportunity to test the leadership abilities of the executive team. Using the six “Critical Cs” will help boards assess the performance of their leadership teams in crises, craft a descriptive rationale for compensation decisions for fiscal year 2020, as well as evaluate leadership abilities for the future.

Small Business Lending: A Case for Digital Improvement

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lending-1-3-18.pngIn a world where we can summon a car to pick us up in five minutes, and pizzas are delivered by drones, banks are being challenged by small business owners to create a secure digital environment to meet all of their customers’ banking needs—including applying for a loan—at their convenience.

Banks today have a great opportunity for digital improvement in the area of lending. For example, in traditional small business lending, the administrative and overhead costs to underwrite a $50,000 loan and a $1 million loan are essentially the same. With the aid of technology, underwriting costs are greatly reduced through a more efficient process.

In addition to reducing the cost to generate a loan, another direct benefit is the reduction in time for both the borrower and bank staff. Banks that implement technology that allows new and existing customers to apply for a small business loan online can reduce end-to-end time for both the borrower and the lender. The borrower can apply for the loan, upload documents and receive all closing documents digitally. If the online borrower has questions, the customer is assigned to a lender who can provide help through the process via phone, email or even in person, if needed. As an added benefit, the banker can focus on the customer in front of him and can start an application in the branch for the borrower, who then can finish the application in their home or office.

We now live in an era where user experience is at the front and center of everything a company does, and a painful process or poor user experience means that a prospective borrower may go elsewhere to apply for a loan. Banks that embrace digital lending technology today can differentiate themselves by delivering exceptional customer service. In addition to reducing costs and streamlining the process, lenders and borrowers can see several additional advantages to a digital experience.

Borrowers complete the application in less time.
Technology is transforming the way banks can accept applications, and can provide borrowers with a secure application that can be completed anywhere on any device, including with their banker in a branch or online.

Documents are managed securely.
Digital lending technology is advantageous because it also enables the borrower to deliver important documents to the lender quickly and securely. Instead of the lender waiting for physical copies, borrowers can upload documents to a secure portal, helping to shorten the process.

A more efficient process increases customer satisfaction.
Paper-based applications take a lot of time to fill out, and can create frustration for the borrower and the lender if a section is missed. The more efficient the lending process is, the greater the borrower satisfaction rate will be—allowing your team to build better and larger relationships.

From slim interest rate margins to competitive alternative lenders, many financial institutions are facing pressure to find a way to make lending profitable again. Leveraging technology to streamline the loan process and improve the borrower experience will lead to increased profitability for financial institutions, which is possible today with the help of technology.

Customer Experience Can Make or Break Your Transaction

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mergers-4-11-17.pngStudies evaluating the accomplishment of mergers and acquisitions (M&A) consistently show how difficult it is to have a successful transaction. The statistics remain unchanged year-over-year in academic research: 70 to 90 percent of all deals fail to achieve the deal thesis or intended benefits—financial or operational—in the expected timeframe from the announcement of the deal. Yet, even with the deck stacked against them, financial institutions continue to be a source of significant deal activity for a variety of good reasons. So, how do you avoid becoming a statistic in an activity fraught with risk?

Begin with the end in mind—your customers. Customers in this case aren’t limited to just the acquired and existing customers, but include those who tend to be your most vocal customers: your employees. All too often, the mindset of dealmakers in financial services is focused on financials, the credit portfolio, and the capacity to gather deposits or market share. They completely forget that there are customers and clients behind all of those numbers, even though lip service may be paid.

Keeping customers front and center throughout the deal-making process increases your odds of success because it shifts the mindset in all phases: diligence through day one. Thousands of decisions go into transactions: name changes, product and service realignment, integration of sales practices, consolidation of back-offices, branch rationalization and new reporting relationships. But where do you begin?

Focus on Current and Acquired Customers

  • Analyze and segment the combined customer base during diligence. Not all banks have the same customers. Having an early understanding of the customers who are most important will have one of the greatest impacts on achieving deal benefits for the merger.
  • Build a target service model and identify the customer journey during and after integration, based on your customer segmentation.
  • Spend adequate time developing and executing tailored customer communication strategies based on your customer segmentation. Beyond regulatory requirements on minimum communications, successful institutions go beyond the typical change announcement and effectively communicate changes to customers in the way they want to receive such communication.
  • Develop and monitor customer feedback throughout the integration. Waiting until the call center is slammed over conversion weekend is too late.

Turn Your Employees into Advocates
The biggest failure in an integration is ignoring the employee experience since it is often just as important—if not more so—than the experiences your customers will have. Employees are often your biggest marketing asset and neglecting to include them and keep them informed about the transaction can turn employees into detractors. Don’t do that. Instead:

  • Be deliberate with your cultural integration. All too often, culture is overlooked during due diligence and planning, which results in nightmare scenarios later: decision making or alignment is slowed to a drip, detractors rally the masses and slow progress and unsatisfied staff talk to your customers.
  • Remember change management 101. As soon and as clearly as possible, give your employees the answer to the question “what’s in it for me?” Difficult decisions need to be made on tight timelines and employee communication of key changes and impacts throughout the integration is crucial; only communicating major changes through a press release, close announcement, and core conversion is not enough.
  • Establish a separate team to manage cultural integration and change management related efforts. This team, which is not the human resources department but can include members of it, can focus on identifying potential areas of conflict, assessing leadership strengths and weaknesses, and developing a comprehensive communications plan that engages all levels of the organization.

Create Your Own M&A “Playbook”
Successful institutions have playbooks in place and well defined target operating models ahead of a transaction, which consider all customers, external and internal.

The questions you need to answer to minimize the disruptive and risky nature of a deal are:

  • Do you know your customers? Do you know your target’s customers?
  • Do you know your culture? Do you know your target’s culture?
  • Do you know how you want to serve all customers on day one?

Achieve Tangible Results
By following a customer-centric approach, financial institutions can realize tangible benefits: accelerated decision making, faster integrations and less disruption. Making decisions with a customer-centric view minimizes status quo or one-size-fits-all choices that backfire eventually.

Finally, many banks struggle to meet the expectations of regulators who are looking more intently at integration planning and due diligence during and after the transaction. Robust and thoughtful methodologies around managing the customer experience is something regulators will view as evidence of a well-planned and lower-risk transaction. This can also act as a flywheel for execution speed on transactions for those of you that are serial acquirers.