Financial institutions have long juggled two significant and seemingly contradictory challenges: the need to respond to growing customer demand for digital offerings while controlling costs.
These trends have been exacerbated by COVID-19 and the subsequent economic disruption – with several big banks reporting recent profit drops. Customers who would have used traditional channels were forced online to do anything from apply for a mortgage, make a claim on their insurance or transfer a pension - something in which purely digital, disruptive entrants such as Monzo and Starling Bank have an innate advantage.
On the other hand, institutions that have struggled to deliver sustainable cost control measures are being challenged to cut costs further – and quickly – with increased insurance claims, mortgage arrears and an unstable economic environment adding to low rates and high capital requirements.
Traditionally, these challenges would be tackled separately within organisations through different means. But we believe these two trends are not only coincidental, but complementary. You can – and should – drive operational efficiency by delivering a fantastic experience for your customers. Using Lean thinking, institutions can reimagine whole sections of their operation, dramatically reduce operating costs and give the customer an excellent experience by following the actions outlined below:
The starting Lean principle is to define what customers value, then optimise the process so that each step contributes to the production of that value and nothing more. Customers today not only value the product or service they require at a competitive price, but also having this service delivered in a simple, clear way through a channel of their choosing.
It’s important to look beyond the process or technology and consider where the customer does and doesn’t value human interaction. By understanding this we can make sure we design low cost, fully digital experiences that deliver valued outcomes at a dramatically lower cost.
Delivering on these customer expectations leads to a lower cost operation. The latest studies show that every one per cent improvement in customer satisfaction leads to an increase in operating profit of nearly six per cent, as well as improvements to Return on Equity (ROE), Return on Assets (ROA) and operating revenue. It can also:
Monetising excellent customer experience often requires a dramatic rethinking of the purpose, organisation and capability of an operation. Typically, operations are organised by activity, which creates silos, overcomplicated processes and higher costs.
To move away from this legacy model and successfully deliver a digitally Lean, customer centric operation with excellent customer experience, organisations need to:
Moving to a lean, agile, customer-centric operation isn’t easy, but the benefits to customers, staff and cost of operations are clear and significant. To get there, it’s vital to stay true to the end-to-end vision of the customer experience when dealing with technological challenge and compromise. In the end, it’s customers’ engagement with technology that will yield the operational benefit and cost savings needed – so ensure they get the service they value first.
If we work together to reimagine larger customer interactions by combining digital technologies at scale, the opportunity to reduce operational costs is tremendous. Not often does an opportunity arise to resolve both greatest challenges at once.