Here's part 2 of "what I learned in Q2 24": ๐๐๐๐๐ผ๐บ๐ฒ๐ฟ ๐ฒ๐ ๐ฝ๐ฒ๐ฟ๐ถ๐ฒ๐ป๐ฐ๐ฒ (๐๐ซ) ๐ฎ๐ ๐ฎ ๐บ๐ฎ๐ป๐ฎ๐ด๐ฒ๐บ๐ฒ๐ป๐ ๐ณ๐ฎ๐ฑ ๐ถ๐ ๐ฑ๐ฒ๐ฎ๐ฑ ๐ฎ๐ป๐ฑ ๐ฏ๐ฎ๐ป๐ธ๐ ๐ป๐ฒ๐ฒ๐ฑ ๐๐ผ ๐บ๐ผ๐๐ฒ ๐๐ฝ ๐๐ต๐ฒ ๐ฝ๐ฟ๐ผ๐ฑ๐๐ฐ๐ ๐๐ฎ๐น๐๐ฒ ๐น๐ฎ๐ฑ๐ฑ๐ฒ๐ฟ. For 20+ years now, I've heard the self-proclaimed "customer experiencists" tell us how important "the CX" is (like there's just one experience). From a banking experience, CX is in serious decline, and here's why: Consumers' financial lives now encompass so many providers (of accounts and tools--see my "Cameron and MacKenzie" picture) that any one FI (or financial provider) only controls a very small part of a consumer's overall "banking" (or "financial") experience. This is why Apple, Google, and even firms like Klarna are battling to be the primary point of financial management--not the "primary FI." What are banks' and credit unions' response to this? If you're JPMorganChase you fight head on w/ the Big Tech firms. If you're a community-based financial institution, though, you need to fight back with products--i.e., products that designed for particular niches and segments of the market. Some FIs I've talked get this (Northeast Credit Union), but most don't. Most are still going to market with a basic checking (i.e., payment) account, and trying to differentiate it with digital "access" (digital banking app). They then have to accept whatever digital banking features their vendor of choice provides with little ability to customize those features. For sure, there are technological hurdles here, but there's a management shortcoming at play: Lack of understanding of the product value ladder. Some smart consultant probably came up with a better label for this concept, but basically, it means that you have to continually enhance the value proposition of a product (and your product set) over time. Many tech vendors have a product roadmap for their products--which is good (although sometimes unrealistic)--but if they aren't figuring out how to increase and expand their value proposition over time, their growth prospects are diminished. Look at the history of Microsoft and Google. MS started as an operating system company (remember MS-DOS? you probably don't), Google started with a search engine. Both companies have failed miserably over time with many of their new product launches, but that hasn't stopped them from continuing to innovate on the product front, as they climb the product value ladder. Why don't financial institutions get this concept? The overwhelming majority of FIs seem content to offer a "checking account" differentiated by "their people and their service." Oh please. Differentiation through product design and value is where it's at today. FIs have ignored this for too long, choosing to chase the "differentiate through CX" mantra. #banking
In #BankingOnDigitalGrowth I predicted experiences --and even digital experiences-- would become commoditized. When that happens what is a financial brand left with? Expertise. The future... #BankingOnExpertise, where leaders, lenders, and advisors accelerate trust by unlocking, capturing, and amplifying their expertise to generate and nurture leads that lead to loans and deposits. This will only be possible where leaders, lenders, and advisors commit to deep-level expertise. And that expertise will only be found in niche markets with large enough TAMs.
100% agreeโฆ..110%! โPeopleโ, โServiceโ, โOLBโ, even branch locations are ALL commoditized. It should be assumed that 100% of your competition has perfected those things (and if any of them havenโt, then they arenโt your competition anyway because theyโre not long for this world). I shudder when I hear FIs cling to โbetter serviceโ as the differentiator. Itโs almost as much a losing battle as lower prices (unless you can manage to do that without sacrificing the other stuff). Want to win? Figure out what you can do REALLY well and then do it a little better every dayโฆand never stop.
Frankly, I think you need to do a bit both. Experience does matter and large providers in the space have skated along on subpar experiences for their client FIs for years. Service is also critical, but all FIs lean into service like itโs their big differentiator. Hard to differentiate when you are selling the same spiel - service, community impact, and all running the same antiquated platforms. That said, products and pricing are more important, as is trust which included being able to actually pick up the phone and talk to someone when you need to. In my mind, the winning recipe combines all of these elements if you can deploy them strategically and at scale.
Sadly, โcustomer experienceโ has been hijacked by traditional customer service concepts and consultants and the denizens of all things digital. (And the digital space is almost pure commodity play) The original concept of โexperienceโ was to create and deliver emotionally durable memories. Clients like Clearview in Pittsburgh, MAPS in Salem, Or, Go Energy in Atlanta to name a few have done just that. Because so few attempt to deliver meaningful experiences in banking and others think they have by bolting on a new digital platform, has no impact on the potential of experience, particularly for local and regional institutions.
My sense is that it's easy for banks to assume "if I'm getting the business, why does the front-end customer experience matter?" Two things: 1. An outdated or legacy backend can ruin the front-end CX, no matter who's responsible for that. 2. If you don't own the CX, you don't own the customer. If your name is part of the conversation, if you're not the one responsible for shepherding the customer through a journey, you'll be replaced by the next backend provider.
The vast majority of FIโs aggregate the relationship at the customer level. Maybe some should try at the household level.
100% Ron. I started my career in Tech where people know that today's premium product is tomorrow's commodity as technology drives reduced friction, reduced switching costs, and information symmetry. When I entered Banking, I was so surprised that core banking products have remained essentially the same for decades if not centuries and the only change was the UI. In fact, the very organizational constructs and motivations of the product-based P&Ls often undermine the ability for the organizations to synthesize and create new value. If banks could harness the power of their data to truly reinvent a customer's financial life so that they could accomplish non-financial endeavors, then we could see new value creation. Today, the reason why CX still exists is because banks still grapple with defects and issues on their core offerings.
While creating the right type of innovative product is essential for the future of Credit Unions and any company for that matter, it's crucial to remember that in the digital age, your product and experience are one. You need the right experience around a product so people can understand and use it. A great product without customers is just another idea in the graveyard of poorly executed good ideas. That experience can be brought to life in many ways. CU public sites, for example, are critical shopping tools for prospects and members. Our analysis and experience with dozens of CUs show that 25% to 30% of their visitors are not members and are actively shopping for CU products and services. The problem is that CUs generally don't understand their visitors' intent, don't present the right products, and don't create personalized experiences, thus losing potential members. Believing any one "thing" can make a difference is a mistake. It's a constant journey of optimizing, testing, learning, and adjusting. There is no single path, other than ensuring you understand and remain relevant to your customer.
I think youโre right that product is essential to differentiation and profitable growth. But customer experience is table stakes - a strategic necessity. It doesnโt have to be the best but it has to not suck and include the basics. If you donโt offer good self-service tools youโd better answer the d$&@ phone! Will the next gen that inherits Boomer money tolerate a bank with a bad mobile app? Or will they move the money out? Below average CX isnโt sustainable for most even if you have the best specialty lending programs.
Season, Published Writer, Researcher, Adjunct Professor, Communications Exec, and Brand Whisperer - Helping For-Profit and Non-Profits Authenticate Their Brand, Understand Their Target Market, and Message Effectively
2wI remember MS-DOS! Whatโs the prize? A walker?