Retail banking is a complex industry, subject to an array of outside factors that have a significant impact on account holders and their experiences in banking.
The customer experience in retail banking
All customers have different experiences based on their needs. It’s important to recognize these different needs to truly understand the details of the customer experience.
Staff productivity, balance sheets, portfolios, new accounts opened, and sales figures for financial products are all considered in the success of a bank. But the key metrics should be customer retention rates and loyalty.
The foundation for improving these metrics has evolved from a pure numbers approach to a customer relationship approach. Cultivating relationships with account holders can improve customers’ overall retail banking experience and strengthen brand loyalty.
Banks must also be aware of the growing importance of online reviews. According to consulting firm EY, reputation is a “very important” factor in a customer’s decision about whether or not to trust a financial services provider.
Today, it’s simple for customers to post their honest thoughts about their experience at a bank, and potential customers make decisions based on these reviews.
Trust is an important factor in customer loyalty
The extent to which a customer trusts a bank is a central factor in whether or not the customer will remain loyal to – and advocate for – a bank, according to EY.
Building trust takes time, patience and a carefully crafted approach that keeps the account-holder at the forefront of every decision. For example, a banker should be transparent about the services and products that are of interest to the customer. In addition, banks should be proactive in protecting customer data. The EY research showed that almost 60 percent of global consumers are fearful that their bank information will be hacked.
Fair and responsible banking
In the US, the Consumer Financial Protection Bureau makes sure financial companies are in compliance with state and federal regulations. Banks can leverage online reviews to promote fair and responsible banking. So if banks pay attention to what their customers are saying about the banking experience on all online channels, they can potentially solve or avoid a compliance issue and a possible customer experience disaster.
For example, if there’s a pattern in reviews showing that customers feel they were discriminated against based on their color, and if this occurs across multiple locations, this could be in violation of the Equal Credit Opportunity Act.
Federal and state regulations are complex, deep, and always evolving. In just one example, there’s a customer identification component to these rules that puts the burden of “knowing their customers” heavily on banks.
Financial institutions must verify the identity of prospective account holders. Company policies and procedures related to everyday banking tasks are subject to extensive rules that were put in place to fight money laundering, terrorism, and fraud. Other rules govern customers’ privacy protection, and support lending to low-income populations.
Strict compliance with state and federal regulations is taken very seriously. Running afoul of the law can mean serious consequences, like penalties or even lawsuits. Compliance audits are performed periodically to ensure adherence.
Communication is key
Communication is key in a bank’s relationship with its customers. Customers’ understanding of how banks protect account-holder information and fight financial crimes (which in turn protects consumers, keeps the bank from losing money and so saves the consumer money) is hugely significant.
A strong, trusting relationship with their bank will help customers to feel that someone’s looking out for them financially – and that can go a long way.