“Putting customers at the heart of the business” What does this mean for Financial Services organisations?

This is a phrase that is used across so many organisations these days but what does it really mean? Financial services providers, including both established players and start-up organisations, frequently claim that this is their business’s main priority. However, surely “putting customers at the heart of the business” is really a ‘hygiene factor’ that every successful business should be focusing on?

As researchers, we hear this phrase so often when talking to insight teams and their stakeholders, plus we never seem to attend a conference or research seminar without it being the topic of a paper. It feels like it is now a claim made so often that it lacks real meaning and impact.

So, what does it really mean for financial services companies and what do they need to do to truly be “putting customers at the heart of the business”? We’ve considered some of the approaches that financial services providers are adopting and we also asked members of our Fintech Beacon community what it means to them.

A ‘bottom-up’ rather than ‘top-down’ approach to product development

Development of successful products and services must come from looking at needs, behaviours and the lifestyle of customers, filling the gaps and finding ways to make their life easier. Those that are created ‘from the top’ with a heavily commercial focus rarely succeed as customers recognise if the product is missing a real benefit for them or of there is nothing to differentiate it from what is already available. Many financial organisations now hold regular ‘customer immersion’ or ‘customer closeness’ research workshops, where the focus is simply on understanding customers, and are the first step in any new product development.

“Making tangible efforts to understand the customers; their circumstances, their preferences; what they want from the business, their expectations of the service, what works for them – say, via careful data collection and research – and design products and services around that.”
(Age 30-39)

Employee engagement and empowerment

Many organisations are now very focused on engaging their frontline staff in the needs of the customers and empowering them more to support their individual requirements with flexibility and genuine care. This is achieved through training often involving staff in workshops with customers and other market research activity, which helps them to feel close to customers and demonstrates an appreciation of the important role they have.

“It needs to be backed up by excellent customer service so if you do have a problem they handle it well and treat you like you truly matter to them, not leave you tearing your hair out trying to communicate with someone who just parrots the company manual at you and has no interest in solving your problem.” (Age 30-39)

Talk to customers – and act on the feedback

Undertaking customer research is one thing, but is it always clear to the customers that their views are heard and considered? Many successful digital financial start-ups frequently encourage customers to provide feedback on their products and services, then communicate directly with them, via their app or email, to let them know when changes have been made as a result. In fact, when changes have to be made that aren’t as positive for the customer, these new players often communicate in this way and explain the reasons for the change, turning a potentially negative situation into a positive, as customers appreciate the honesty and transparency.

“Take customer feedback seriously and take actions that are visible to them. Currently, all companies ask for customer feedback, but I don’t see them taking any visible action on feedback.” (Female, age 30-39)

Show you are genuinely trying to help them

The financial services industry, especially the banks, have a particularly poor reputation since the financial crisis. Consumers understand that they are commercial organisations that need to make money, but they, of course, do not what to feel they are being sold to. Some financial providers are now focused on demonstrating a genuine interest in customers gaining access to the best products for them and making the most of the money, acknowledging that it may not actually result in them purchasing their products. Access to partners through their financial ‘marketplace’ and tools that show money that could be saved through switching accounts – or other services such as utilities – are just some of the ways this is being done.

“Banks are too large and too focused on profit rather than service. When you go in a bank all they want to do is sell you a product.” (Female, 50-59)

So, what next? How can financial providers differentiate themselves?

The real challenge is changing the mindset of consumers, so they realise that financial providers are on their side and want to help them. This is something that the new digital start-ups organisations are understandably excelling at, while the traditional banks are still struggling.

While customer focused product development and excellent service are vital for organisations to show that they are “putting customers at the heart of the business” we believe the best way to demonstrate this is to consider – and measure – the impact they are having on their customers’ financial capability, which is defined by the Money Advice Service and the UK Financial Capability Strategy as ‘the ability to manage money well – both day-to-day and through significant life events’.

Given the well-publicised issues around the poor financial capability of the UK population, and the close link between financial wellbeing and mental health, all financial services providers have a responsibility to support the focus on improvement. They should be demonstrating that the financial capability of their customers is high on their agenda and, more importantly, providing evidence that their products and services are having a positive impact on this – which it appears is the ‘missing link’ for many providers.

Going forward we propose that the aspiration for financial services organisations should be “putting customers’ financial wellbeing at the heart of the business” and this is where they can really differentiate themselves and build a positive reputation among customers.

If you would like to hear more about our work in this area or discuss how we could help you measure financial capability among your customers, please contact me:

Georgina Clarke, Director
Georgina.Clarke@IFFResearch.com
Tel: 020 7250 3035