Banks lose the human touch at their peril, expert says
(Australia) Banks that implement cutting edge CRM technologies yet fail to treat their customers as human beings run the risk of watching their market share plummet.
That’s the message from researcher, executive director of US-based Center for Information Based Competition, and all-round customer guru John McKean. Speaking at the ADMA/Pan-Pacific Marketing Conference in Sydney recently, McKean said banks had "feverishly gone after CRM" but that "technology had clouded the whole picture" when it came to servicing their clients.
"Banks are looking at what they’ve implemented and asking themselves why customers are still churning. They have to get back to a simpler proposition by valuing the customers," he told bankingnews.
McKean, who has consulted to all of Australia’s major banks since the mid-1990s, said service providers continued to make the mistake of viewing customers as consumers rather than people. Those that failed to rectify this viewpoint could pay the ultimate price, he said.
"Traditionally, it’s been easy to make money in the banking industry but it’s becoming more and more difficult. Over the next decade you’re going to see that banks either become really good with their customers and treat them as people, or they’ll no longer be there," McKean said.
"It’s always the case that pain in terms of losing market share drives change.
"But it will take the banks that get this concept to make the ones that don’t to wake up when they start to lose market share. It’ll be long term and by the time they realise it, it could be too late."
McKean said once this concept was understood, technology played an important role in "backing this up".
"It’s about giving customers a good price, good products and treating them like human beings – it’s that simple. It’s the banks that take this approach and implement it like a science, and put in the tools, technology and processes to be able to implement it, that will succeed."
However, he said most banks were struggling to attain whole-of-customer pictures as they currently had very little intelligence on their customers other than a name and address.
"They [banks] have to become more sophisticated about knowing the right things about the customer and having that as a usable part of the interface and interaction between customer and bank."
During his visit to Australia, McKean was aware that internal restructures were taking place in some of the major banks. While acknowledging that cost-cutting was a major objective of such exercises, he warned that excessive job cuts impacted customer service, "which inevitably translates into long term loyalty issues for customers".
"The problem with cutting staff is that a lot of times banks don’t do it intelligently," he said.
"They do it by measuring traditional costing stuff but they don’t measure the downstream revenue effects. It’s Ok to say ‘we’re going to do more with less’ but you’re always going to end up paying for it somewhere.
"In fact, some banks will see it as an opportunity and a revenue generation strategy to keep branches open rather than just blindly cutting them," McKean said.
That’s the message from researcher, executive director of US-based Center for Information Based Competition, and all-round customer guru John McKean. Speaking at the ADMA/Pan-Pacific Marketing Conference in Sydney recently, McKean said banks had "feverishly gone after CRM" but that "technology had clouded the whole picture" when it came to servicing their clients.
"Banks are looking at what they’ve implemented and asking themselves why customers are still churning. They have to get back to a simpler proposition by valuing the customers," he told bankingnews.
McKean, who has consulted to all of Australia’s major banks since the mid-1990s, said service providers continued to make the mistake of viewing customers as consumers rather than people. Those that failed to rectify this viewpoint could pay the ultimate price, he said.
"Traditionally, it’s been easy to make money in the banking industry but it’s becoming more and more difficult. Over the next decade you’re going to see that banks either become really good with their customers and treat them as people, or they’ll no longer be there," McKean said.
"It’s always the case that pain in terms of losing market share drives change.
"But it will take the banks that get this concept to make the ones that don’t to wake up when they start to lose market share. It’ll be long term and by the time they realise it, it could be too late."
McKean said once this concept was understood, technology played an important role in "backing this up".
"It’s about giving customers a good price, good products and treating them like human beings – it’s that simple. It’s the banks that take this approach and implement it like a science, and put in the tools, technology and processes to be able to implement it, that will succeed."
However, he said most banks were struggling to attain whole-of-customer pictures as they currently had very little intelligence on their customers other than a name and address.
"They [banks] have to become more sophisticated about knowing the right things about the customer and having that as a usable part of the interface and interaction between customer and bank."
During his visit to Australia, McKean was aware that internal restructures were taking place in some of the major banks. While acknowledging that cost-cutting was a major objective of such exercises, he warned that excessive job cuts impacted customer service, "which inevitably translates into long term loyalty issues for customers".
"The problem with cutting staff is that a lot of times banks don’t do it intelligently," he said.
"They do it by measuring traditional costing stuff but they don’t measure the downstream revenue effects. It’s Ok to say ‘we’re going to do more with less’ but you’re always going to end up paying for it somewhere.
"In fact, some banks will see it as an opportunity and a revenue generation strategy to keep branches open rather than just blindly cutting them," McKean said.
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