How to improve customer experience in banking? - Omoto

How to improve customer experience in banking?

Many management pundits claim that we are living in the experience economy. One of the most notable work in this direction was published by Pine and Gilmore in 1999 – The Experience Economy. The book rightly asserts that organisations undergo an evolution in their business model from trading to developing branded products and ultimately delivering a great experience that makes the brand sticky. Interestingly, there are a few industries that are still not up to speed with this idea. Consider telecom, banking, airlines, or insurance, and you may concur with my thoughts. These industries are far behind in the race of delivering memorable customer experience when compared with internet companies like Amazon, Airbnb, or even PayPal for that matter.

For the past few weeks, I have been researching on how and why a critical service like banking is missing this opportunity.

As a banking customer myself, I have been frustrated with my bank on several occasions. I wouldn’t be surprised if you share this feeling. Whether it is an experience concerning account opening or a normal teller transaction, we’ve all had one of those nightmarish journeys that made us think that there has to be a better way to do this!

I was going through a similar phase when trying to get all the paperwork done for a foreign currency wire-transfer to our company account. With every new set of documents furnished, I was asked to bring a new set of documents for the next step. Then, the documents received from the foreign bank were rejected because they were not in the expected format! I couldn’t believe that in today’s digital world, we still need to submit hard copies. I wouldn’t blame you if you are thinking which horrendous and archaic bank I am banking with!? You’d not believe if I told that it is one of the leading banks in India. Nevertheless, I was curious to understand why this bank was so oblivious to the CX blunder it was making. In my curiosity to know more, I also researched about the customer experience threats today’s banks face and what they need to do about it.

The more I learnt about the customer experience situation in banking, the more I appreciated a bank’s inability to deliver the expected experience. Let me share what I’ve learned so far.

Why is it important to improve customer experience in banking?

Customer experience is, of course, the next big battleground for organisations. However, from an organisation’s standpoint, customer acquisition is the key to its survival and growth. An organisation that doesn’t focus on customer acquisition would not have the means to deliver great customer experience. Then how did CX become the battleground? Haven’t we all been fighting over acquisition with no definitive victor for decades?

The thing is, customer experience starts even before the sale. Today’s customers expect their purchase experience to be as good as the product or service experience. Without a great experience during the buying cycle, you are at risk of not converting the sale at all. Additionally, customer reviews and word of mouth have a greater influence on buying decision. Ultimately, you can expect positive reviews and word of mouth only when customers have a positive experience with your product.

Apart from this, banks, in particular, are facing a new kind of challenge from the agile, new-age, technology-driven fintech startups. The millennial customer prefers to not visit a bank but rather transact through mobile phones. Young professionals are used to instant gratification and therefore don’t wish to fill out long procedural forms and wait for their approval in order to avail a loan that they are definitively eligible for. Further, today, the world is going cashless when it comes to paying for everyday goods and services. Just in Europe, the number of non-cash transactions almost doubled between 2005 and 2015.
Statistic: Number of non-cash payments in Europe from 2005 to 2020* (in billions) | Statista | customer experience in banking

Statistic: Number of non-cash payments in Europe from 2005 to 2020* (in billions) | Source: Statista

Furthermore, countries like Sweden are inching towards becoming a completely cashless economy in the near future.

sweden-cashless-economy | customer experience in banking

Signs like these are becoming common in Sweden | Source:

Such economic developments have paved the path for payment solutions and non-branch banking services by startups, all of which are disrupting the banking industry altogether. The only way for banks to compete in this market is via a personalised human experience that perhaps the tech-heavy startups might not be able to deliver. Despite these challenges, consumers still have a trust bias towards traditional banks for large financial transactions. Therefore, it is worth investing in improving customer experience so that banks improve their customer retention.

In a case study on Idaho Central Credit Union, we’ve discussed how Idaho Central benefitted from focussing on CX. By tracking and acting on NPS feedback, Idaho Central improved its profitability, share of wallet, and customer referrals manifold. This also shows that improving CX leads to tangible financial gains. Improving customer experience in banking is, therefore, imperative and not a choice anymore.

What are the challenges in improving customer experience in banking?

Not having a clear understanding of what good customer experience is for the bank

One of the biggest challenges with improving customer experience is that it is defined as this all-encompassing concept about how a company should always deliver a great experience to each and every customer. It is so broad that it excludes nothing. Everything and anything that a brand does today is labeled as a CX initiative. However, unfortunately, there is a huge difference between the boardroom discussions on such initiatives and the practical execution by managers and the frontline staff.

A customer’s experience starts from the time the customer becomes aware of the brand’s existence and lasts to the time he buys and experiences the product over its lifetime. As you can imagine, this experience would be influenced by factors including, but not limited to, the brand’s market perception, other customers’ reviews, the salesperson, the marketing ads that the customer might have been bombarded with, the environment, and the emotional state of the customer. Much of this is not even in your control! Of course, this makes a CX manager’s job overwhelmingly vast. Therefore, it is important to first define what customer experience for your company is.

I believe this is actually the biggest gap that banks have in their CX initiative. I have seen countless banks get to dreaming big outcomes for their CX initiative and jumping straight to using NPS as an employee KPI without defining what good customer experience means to them.

Approaching the CX initiative holistically

This was an interesting learning for me while reading a case study on how Royal Bank of Scotland1 implemented a customer experience improvement and turned the organisation around. The authors of this case study suggest that a customer experience program needs to be implemented from the bottom-up, and not the other way around. They argue that a customer experience program should be implemented “atomistically” and not “holistically.” As much as a holistic view of the organisation helps in designing process flows and customer journeys, when it comes to practical implementation, managers are faced with pertinent questions such as:

  1. Where does one start? This could be one of the most daunting questions when something as new as a customer experience program is being implemented. There is no one-size-fits-all approach or a blueprint on “Start here” to “End here.” Is there only one way to start? Or if organisations take different paths, would they see completely different results?
  2. How does one set a realistic scope for experience management? Without having a clear outline of the scope of experience management, it is easy to get lost in the woods. As you can imagine, projects with moving scope never see an end. Also, understanding what are the most important factors that affect the customer’s experience is important. Most often people “think” they know what is causing bad customer experience and would like to solve that first. It’s always best to first check with the customers to know the reality.
  3. How does one allocate resources to different parts of the experience? “No experience manager will have unlimited resources with which to work and knowing from which pocket to take the money and where to invest it for best return is not addressed in the experience management literature.1” I could not have said this better. It is extremely important to know how much and where the resources will be put to make the biggest impact on the customer experience. The top management should also be clear on what it means to say “Yes” to the projects that come out of the experience management program.

These questions are extremely detail oriented questions and, hence, are really tough to find an answer to if you are looking top-down. Banks need to focus on identifying the ground level realities to be able to improve their customer experience.

Scaling the management skill gap

Generally, a customer experience management program would be allocated to a handful of star performers or enthusiastic volunteers from existing employees. Unfortunately, such an approach to improving customer experience in banking is bound to fail. Here are the reasons for the same. Firstly, these customer experience managers might not have a full-time accountability towards customer experience. Secondly, improving customer experience requires a different set of skills and capabilities that generally people from sales or marketing might not possess.

Getting an outside consultant is a good way to start; however, a consultant will never know the deeper nuances of your organisation. Additionally, the short term that a consultant will spend at a bank is just not sufficient for a customer experience transformation. It is extremely important that a bank thinks about how it will scale its knowledge gap. In the long run, it is only prudent that the bank sets up an internal centre of excellence for customer experience management that can be tapped throughout the organisation as CX management matures.

Overcoming the cultural bias

Traditionally, the banking industry’s culture has been product focussed. Every activity in a bank is driven towards either selling more of the current product, developing new products, or copying a competitor’s product. The business of banks is loans and interest on those loans is their income. Credit card is perhaps one of the most commoditised loan product that you’d ever come across. In such a business, where the product has almost zero differentiation, internal competition is also cut-throat. Changing the culture from product focussed to customer focussed is not an easy task.

If you look closely, you’d observe that banks are also structured around products. In such a setting, a customer experience manager is faced with additional challenges of re-aligning people and processes. The idea of visualising the experience from a customer’s perspective and building processes that delivers that dream is unimaginable to most employees at a bank. Developing standardised experience protocol would not only fit the usual banking culture but also pass the cost and predictability metrics. However, it is highly likely that such a standardised experience program would fall short of customer expectations.

Proving a positive ROI 

It is possible to present anecdotal evidence of the benefits of improving customer experience in banking. However, it is difficult to make a strong business case to convince the top management on investing in this initiative especially without showing a positive ROI on such an initiative. The overall cost is an important factor too. A transformational initiative that improves the customer experience for a bank is bound to have a demanding cost plan with a project horizon of at least three years if everything goes as per plan. The ROI, then, becomes even less convincing.

How to improve customer experience in banking?

Start from wherever you are, with whatever you have

When Royal Bank of Scotland (RBS) publicly declared a “Customer Charter” in 2010 – after the bank was recovered from the 2008 financial meltdown through the largest ever quantitative easing in British history – it was under public scrutiny to improve the customer experience and stand up to every promise in the charter. At that time, the bank did not know how this goal will be achieved. But, because of the undeterred stand towards delivering better customer experience, the company put together a framework that would transform the organisation in the next couple of years.

Without looking for outside help, RBS created a separate team of 12 analysts and appointed Steve Whitty, a charter engineer with Six Sigma Master Black Belt, to lead the team. This team started with the retail current account business of the bank and dug deep into the existing data points. With meticulous analysis and constant customer feedback, it identified simple changes that would impact the customer experience. For example, the 500gms. paper-based welcome kit that was given to a new customer was replaced with a digital welcome pack. The paper based kit was expensive to print and deliver via post and it was rarely appreciated by new customers. The small switch not only improved customer experience, it also saved cost for the bank!

Prepare a customer experience vision and declare it

RBS’s customer charter was its guiding light throughout the CX implementation process. Every step was measured against the charter: whether the results aligned with the charter. In order to improve customer experience in banking, this step is a must do. Most banks have a financial goal, not a customer experience goal. Without such a goal, it is impossible to achieve great results out of a customer experience program.

By publicly declaring the customer charter, RBS also demonstrated courage and commitment. To improve customer experience, it is important for businesses to realise that they need to align the entire organisation towards this goal. When a goal is shared with others, people are more inclined to achieve it. It is a psychological pressure that keeps people committed to their goals.

Define the measures of success

The right framework of customer experience management would also have to consider the right measures of success. In its journey to customer experience excellence, RBS realised that merely defining and aiming for an ideal customer journey that may or may not be achievable with reasonable investment is a failing strategy. On the other hand, if the bank designs a customer experience program from an operational standpoint, it will deliver a highly standardised and predictable experience. However, such an experience would not meet the customer charter’s goals.

In this case, RBS adopted three important apects of success for the program: customer, cost, and quality. Every service delivered to the customer was analysed to undestand the real cost of delivery, the customer’s experience with the service, and the operational quality of the same. By defining these three parameters of success, RBS was able to define a balanced metric. For example, an extremely costly approach to delivering good customer experience is unsustainable.

It is, therefore, crucial that organisations define the right measures of success from the beginning.

Don’t bite more than you can chew

By setting up a small team to look after the customer experience program, RBS created a constraint on how much work the team could take on. This deliberate limitation ensured that the team functioned in a step-by-step manner. The team worked with one business unit at a time and created a framework that was refined and repurposed as it worked with another business unit. A program that promises organisation-wide transformation at one go might be too ambitious and lead to mismanagement to the extent of it finally falling flat on the ground.

It is important that banks consider this when thinking of improving customer experience. Don’t bite more than you can chew.

Set up a separate team

There are two very specific reasons why you should setup a separate team to work on the customer experience management program.

  1. The skills required to successfully execute a customer experience management function is different from those required in any other function in the organisation.
  2. Without a seperate dedicated team working on customer experience management, people involved in this activity are bound to get distracted by their core functions.

Often banks would either pick star performers from marketing or customer service teams and assign them to the task of leading or managing the customer experience program. If such people approach the customer experience improvement task with the same mental constructs of their erstwhile role, they are definitely going to be making costly mistakes.

Ask what’s important to the customer; don’t assume

Making assumptions about what the customer likes or dislikes about the banking services could be harmful. Without understanding the real reasons behind customer happiness and unhappiness, any organisation will spend valuable resources in activities that create minimal impact on the customer experience.

It is important in this case that banks conduct regular customer feedback surveys to learn what’s working and what’s not working for their customers. Using feedback data and analysing the same to understand the drivers of customer happiness and unhappiness, banks have a strong hand in repeating the goods and reducing the bads.

Remember that technology can be a distraction

Technology isn’t the answer to every customer experience problem in banks! It is easy to get distracted by technological advancements in the banking industry especially now that banks are competing with modern mobile payment solutions and online aggregators of services.

Even in the case of Royal Bank of Scotland, it was easy to use an enterprise banking technology or digital engagement blueprint that could fix customer experience problems. However, the customer experience management team stuck to just spreadsheets and statistical analysis tools to identify, analyse, and resolve the customer experience problems in the bank before suggesting any major IT overhaul. Of course, new technology would improve the future customer journey. However, the banking needs of customers will not change in the coming years.

It is important that banks focus on delivering their core services in the most frictionless way. This would generally involve people and process improvements more than technological advancements.

Use data to make conclusions

RBS built an evidence-based approach to improving the customer experience. It used data from all resources to understand the real problem and fix them through meticulous change management. But the fixes were not taken for granted. Every change was constantly monitored and analysed to assess whether it was producing the right results.

Collecting regular customer feedback and using metrics like Net Promoters Score is the best way for banks to measure and manage their customer experience programs. It is also important to not fall prey to convenience metrics. For example, it is easy to improve your social media engagement by incentivising customers to take a particular action. Such an initiative would definitely show an increase in customer engagement but the conclusion would be flawed if the incentives are not considered.


Improving customer experience in banking is as important as it can be. Great customer experience is also one of the key differentiators that banks can use to build their competitive advantage. Remember that great experiences are the toughest to develop and deliver sustainably. But truly memorable customer experience is also the hardest to replicate.

I believe that if banks take a systematic approach towards developing their customer experience management program, build this program as a strategic initiative and not as a project, and finally appoint a separate team that solely looks after this function, they will be successful in achieving great results.

1. Maklan, Stan & Antonetti, Paolo & Whitty, Steve. (2017). A Better Way to Manage Customer Experience: Lessons from the Royal Bank of Scotland. California Management Review

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