Tag Archives: banking; customer service; customer satisfaction; customer focus; customer centric leadership

Why it’s time for the banks to shift their corporate cultures

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Big banks and investment houses around the world have been guilty of bad behavior stemming from unacceptable corporate cultures that have led to the disaster of the global financial crisis in 2007-2009. This was followed by the London foreign exchange scandal in May 2015 when six global players agreed to pay $US6.5 billion in fines for their misbehavior. On a smaller, but still significant scale, behavior of the big four Australian banks has come under scrutiny and evidence indicates that they have failed the culture test. A banking enquiry was instigated in Australia with several recommendations made, but not yet implemented.

A big part of the answer to poor corporate culture lies in the large banks developing a strong customer-centric culture. This is a culture where the well-being of their customers is a central philosophy and value that guides decision-making. It is a philosophy embodied in a bank’s vision and purpose that is well beyond making money. It is a mindset acted out at all levels that says “what’s best for the customer is best for the bank”. This doesn’t mean that the banks give their customers everything they want. It means that they understand the needs of their customers and deliver what they promise embodied in their strategy to deliver value and a good experience.

The leaders of big banks will tell you they are customer centric and do this. They point to improving customer satisfaction and net promoter scores. That may be evidence of improving customer centricity, but it does not give us the direct evidence of a strong customer culture. To show that evidence they have to measure it directly – not just some type of anecdotal absolute measure, but using a valid tool that compares their customer culture with the best in the world like Amazon, Virgin and Lego. These companies and others have a powerful purpose that aligns vision, values and strategy around serving their customers and communities that is embedded as a culture in everyone in the organization at all levels and all functions. It is led, role modeled and reinforced in their decision making by their senior leaders.

There is such a valid benchmarking tool available called the Market Responsiveness Index (MRI). This tool based on extensive research and validation testing now enables a bank to benchmark itself in a global database of more than 250 organizations on 8 decisive cultural capabilities. It points out cultural strengths and weaknesses and guidelines for fixing them. It provides credible evidence of a bank’s level of customer culture. This can provide the checks and balances that banking leaders need to be confident that their culture is as it should be – serving customers and the community (profitably).

The Customer Culture Imperative – an award winning book – provides the framework for measuring customer culture directly and the research that underpins the MRI benchmarking tool.

This can help bankers sleep at night as well as the rest of us in the community. And it can allay the fears held by regulators of potential ongoing problems that stem from poor cultures in large banks.

Does customer focus matter in banking?

Customer Service in Banking Does it Pay?

Customer Focus in Banking Does it Pay?

A recent article in the New York Times highlighted one bank analyst’s view that “Spending time solving problems with people is not selling products…. Its wasting time”.

As a bank analyst his role is to review the bank’s financials and make buy, sell or hold recommendations to his clients. His statements came after having a poor customer experience at his local Wells Fargo. He lamented, “I’m struck by the fact that the service is so bad, and yet the company is so good.”

This particular analyst has a history of being controversial so what he says has to be taken with a grain a salt, however, does he have a point?

The analyst decided to change banks as a result of the poor experience. Did he expect other customers not to respond in the same way? By letting their feet do the talking?

This incident raises challenges relevant to all leaders trying to improve customer focus.

Would you use a single example of failure to conclude this is the way Wells Fargo does business? Common sense suggests the answer would be “no”.

Was this experience and an anomaly or symptom of greater problems? Was it a one off issue confined to one employee in a single branch or a sign of a broader cultural issue?

In Wells Fargo’s case the evidence suggests the former. Over the past few years the bank has a string of top place finishes in customer satisfaction independently measured by the American Customer Satisfaction Index.

Based on our research we know that companies with high levels of satisfaction are more profitable. The reason Wells Fargo is doing well is because of its customer focus not in spite of it as the analyst suggests.

Another question highlighted by this story is how important is “customer service” to the banking experience?

Customer service is part of a customer’s consideration set but it will vary in importance depending on the customer. Customers have different needs and will use the bank’s services in different ways. A customer looking for a mortgage will be more sensitive to the bank mortgage rate than one that only has a checking account. Some customers may never enter a bank branch. They conduct all their banking online. Customer service from them only becomes an issue when something goes wrong.

As a business leader what is more important to understand is how customer centric is the company’s culture. Am I setting sending the right messages to our team about the importance of customers? Am I role modeling the behavior that I know will make us successful in the customer’s eyes?

What do you think?

Is this a bank analyst just trying to be controversial to get publicity? Is it a one off or an early warning sign?