More Than Ever, Bad Experiences Kill Customer Loyalty

Jim Marous (00:13):

Hello, and welcome to Banking Transformed, the top podcast in retail banking. I'm your host, Jim Marous, Founder and CEO of the Digital Banking Report and co-publisher of The Financial Brand.

Jim Marous (00:22):

Expectations about what makes a great customer experience are rising faster than most organizations can keep up with, and consumers are not afraid to walk away when their needs are not being met. The good news is that most organizations understand the gap that exists between expectations and delivery, and are investing more to increase engagement.

Jim Marous (00:45):

We have David Porter, Managing Director of the Financial Services area of Genesys on the Banking Transformed Podcast. David discusses how innovative organizations are redefining what's possible using digital technologies and artificial intelligence.

Jim Marous (01:02):

According to research from Genesys, the financial services industry is trailing when it comes to a unified omnichannel strategy. Worse yet, nearly, half either have no plans or have yet to make plans to put this in place. Alternatively, nearly 60% cite implementing a customer experience platform that integrates systems as a priority initiative.

Jim Marous (01:27):

So, David, can you share a little bit more about why there are so many gaps that seem to exist in banking between what customers and employees and even institutions say they want to do, and what is actually happening?

David Porter (01:43):

Jim, absolutely. And thank you for having me on your show. If it's okay, before I get to the question, let me just give people in the audience two seconds about Genesys.

David Porter (01:51):

So, in terms of who we are, Genesys is a San Francisco-based technology company. We've been in business for around 30 years. We do business worldwide. Our revenues are over 2 billion a year. We employ about 6,000 people. And we are still privately held.

David Porter (02:08):

Now, in terms of what we do, if you call the 1-800 number on the back of your debit card or credit card or at the top of your brokerage account, the chances are it's Genesys technology that is powering that call, the data that's collected and called up, how notes are taken, how the call's recorded the actual bank training, et cetera. So, we do all of that.

David Porter (02:30):

And that would stop if we were having this conversation 10 years ago, Jim. But today, of course, we also power the SMS, text, email, voice chatbots, voice bots, et cetera that underpin so much of banking technology. So, that's who we are and what we do in terms of our business model.

David Porter (02:47):

In terms of why is there a disconnect between what banks say they want to do and what they're actually able to deliver, I think there are three areas. And in our research, we found that over two thirds of the CX leaders see internal silos as the biggest issue.

David Porter (03:05):

Now, I think that means this — it means, first of all, most large banks have historic complex spaghetti technology and systems, and it's really hard to operate in those environments, to undo them and redo them. That's just difficult.

David Porter (03:20):

And if you want to take as a torture test, as a proof point, think of address change — why is it so hard to change your address across like your credit card, your debit card, your brokerage account, et cetera? Well, it's because the core systems that power say the card business come from TSYS, the core system in your deposit engine comes from Fiserv. Your wealth business is powered by Broadridge and Pershing.

David Porter (03:47):

So, to get those three systems all to talk together at the same time and change your address seamlessly across all three, it's really hard to do. It's just hard. So, there's no kind of malfeasance involved here. There's no kind of ill intent, it's just really hard to do that.

David Porter (04:01):

And finally, funding flexibility is difficult. Like you have a finite number of dollars to invest in technology. And frankly, for most banks these days, the majority of your technology investments are going to non-discretionary items. So, the funding that you have available to change is difficult.

David Porter (04:20):

The good news in our research is that nearly 60% of financial institutions are prioritizing implementing new CX platforms that will integrate those data and systems. So, people know about it, they're on it, it's just taking time for those reasons, Jim.

Jim Marous (04:37):

Well, it doesn't help the consumer is actually changing their dynamic of definition of a good customer experience almost as we speak. In fact, your research shows that there's a very low tolerance for bad experience across all industries.

Jim Marous (04:53):

But in financial services, as we discussed before we went on air, customers don't always leave their banker credit union the same way they leave their retailer. In fact, they sometimes diversify their relationships as opposed to actually closing a relationship. Is this silent attrition more concerning than an outright abandonment?

David Porter (05:17):

It depends, Jim. So, I used to work for AmEx many years ago, and of course, if you have an AmEx gold card, a platinum card, and you no longer want to use it, well, you will cancel the account because you don't want to pay the fee.

David Porter (05:28):

If you have a brokerage account that it took some time to open, it wasn't the easiest thing in the world to open it. And you used the brokerage account, it's great, but then for whatever reason, you switch, the switching tends to mean you will leave the account open. You simply transfer the funds, you cut it out into a different brokerage or a banking platform.

David Porter (05:49):

And so, suddenly, you have now a brokerage account that's still open. So, there's no account attrition, but there is, as you call it, Jim, the silent attrition of all the money's gone. So, the account no longer has value to you or to the bank. And you could — and I think I heard it in your question, why do those things take place?

David Porter (06:08):

And I think there's three reasons as to why that takes place. And the first is, there's just a natural human condition to try new. So, as I mentioned, I worked for AmEx for years, and we could launch a new card product and it was awesome and people love it, but you still get 20 to 25% attrition after the first year. You just still get that.

David Porter (06:30):

Secondly, within financial services specifically, loyalty usually relates to usage, and conditions change. So, if you have a product that you no longer find useful or fits your life, you stop using it. So, in effect, you have a trite already even if you then close the account and finally a trite, I mean, that's just what happens.

David Porter (06:51):

Finally, in our research, we found that 7% of consumers will switch brands after five or fewer negative interactions with the brand's customer service. So, that just speaks to poor customer experiences, as in poor CX. It plays a significant role in customer attrition.

Jim Marous (07:12):

So, your research shows that really the consumer's tolerance for bad experiences has gotten worse. Do you see this as a technology change where consumers are just more apt to know how technology works or is it somehow related to what happened in the pandemic, or is that one of the same thing?

David Porter (07:31):

Well, I think it gets back to have expectations changed over the last two, three years. And of course, the answer is, well, yes, but then why have they changed? is it because big banks A, have a much better website than brokerage firm B? And the answer of course is no.

David Porter (07:51):

What's changing the expectations that clients have today is the experiences that they have in their everyday lives with Amazon or Uber or Google, and those companies are shaping the experiences that we want and like to have in our daily lives.

David Porter (08:09):

And of course, so many of those experiences are really good. And for banking, that means that the bar continually gets kind of reset and raised. And that's the challenge when you're dealing with all of the kind of complex infrastructures and regulatory burdens that other industries don't have. And as I mentioned in terms of the infrastructures, it just takes time to get them all turned around. So, that's I think the reasons.

Jim Marous (08:35):

Your research also talks quite a bit about the importance of an omnichannel experience. Can you share some of your findings around that and why consumers find that to be so important?

David Porter (08:48):

Sure. Now, I'm going to give you an example from a particular industry, and in this case we'll go with wealth management in terms of like what's omnichannel. And I like to use this example with folks, what would Beyoncé do if she wants to kind of buy 10,000 shares in Apple?

David Porter (09:05):

Well, if she wants to do that, she'll probably do it for herself and she'll do it on her bank's app in real time, just like us. And then she'll transfer the funds to her trading account on her phone. She'll text her advisor to tell her that she thinks Apple's a great buy. Then she'll still call her advisor to tell her what she wants to do tomorrow.

David Porter (09:22):

And then the advisor sets up a 30-minute Wednesday video call where they chat and interact with each other, and hear about each other's investment ideas, and then go off and play some real time trades.

David Porter (09:35):

And what I just talked about there were like five or six different channels, voice, texting, video calling, core platforms working, and they're all much better if they work kind of seamlessly together. And when we say omnichannel, that's I think really what we mean.

David Porter (09:51):

Like a consumer doesn't know what that means, Beyoncé doesn't know what it means. But it means all of those communication devices that you want to use when you interact with your bank are available, and you use them, and you want them all to work together. And they're much better, obviously, if they work together, the devices, the patterns, the actions are all joined up, monitored to meet SEC and FINRA requirements.

David Porter (10:13):

So, designing the kind of omnichannel experience to be smooth obviously is just that important. Now, our research found that nearly a third of customers actually abandoned brands to competitors last year due to poor experiences.

David Porter (10:28):

And back to the omnichannel point, Jim, the three most frustrating customer experiences that folks were having, it's the classics: dropped calls, an inability to connect from a chatbot to a live agent. Then within the call center environment, reaching a dead end in the menus, which are all horribly undesirable, both for us in our everyday lives. And of course, for Beyoncé too, when she tries to make her trades.

David Porter (10:52):

So, that omnichannel experiencing kind of experience that you need to make a seamless and easy to do business with a possible … it takes some time. It takes some time because of the infrastructures that banks are working with that we've touched upon. It takes time to get right because of regulatory burdens and requirements, et cetera.

Jim Marous (11:12):

So, when you look at the financial service industry, what are some of the key strategies that you see that financial institutions can use to improve the customer experience in a short-term window and in a longer-term window?

David Porter (11:28):

In the short-term, I think having a prioritization of resources is super important. Like you've got to have a plan. And it means that your resources are laid out across technology operations, IT, your digital teams to work together against shared common goals. So, that commonality of goal is important.

David Porter (11:53):

In the slightly longer-term, I think it's important to kind of stay ahead of what consumers both want and demand from you today, but also to stay ahead of what they might anticipate that they'd like to see in the future.

David Porter (12:05):

And so, in my role at Genesys, I travel around the world and I see a lot of different banks and a lot of different innovations. So, for large banks in the U.S., I think it's super important to constantly travel and kind of mystery shop experiences from all around the world.

David Porter (12:24):

And of course, great experiences in banking (and today, I'm afraid not being originated in North America or Europe), they're coming from crazy places like New Zealand, like Israel, Turkey, that's where you find really crazy things and interesting things happening.

David Porter (12:35):

And at the same time, of course, you've got to keep researching your clients. I mean, as we're doing it with own research, you have to keep asking them what they're looking for. And don't ask them, of course, like what do you want from your bank? Because they'll always say the same thing.

David Porter (12:51):

They'll say, well, we want better service, better products, lower fees, and better returns. They always say the same thing, but ask them for what do they see as great client kind of and experiential changes and improvements that they see in their lives. And then go look at those things. And then I think we'll give you an answer in terms of what your longer-term strategies and linings need to be.

Jim Marous (13:11):

So, we're at a time when organizations are trying to determine how to leverage all different kinds of channels, digital channels, digital communication channels, legacy channels, chat, live interactions. Have you found a mix or a formula for what channels are the most effective? Or do you have a perception on where organizations really have to up their game?

David Porter (13:36):

Oh, sure. Well, if you think about everyday transactions, Jim, like obviously, ask any banker, a consumer banker, let's just go with that as the example. Tele volumes: down, ATM volumes: down, dot com volumes: down, where's all the volume gone? Oh, we know where it's gone, it's all gone to mobile. So, that's where the transactional volume has been going.

David Porter (13:59):

Now, when something goes wrong, our research interestingly says that voice remains customers number one preferred channel for engaging with organizations, preferred channel. However, for the first time, email has taken over as the most used. So, there's probably some kind of demographic or shift in change. And of course, banking takes a long time to change.

David Porter (14:20):

Voice is still preferred because of course, who are you serving? You're going to get folks that have certain preferences. Emails finally kind of taking over as the most used within our survey kind of findings.

David Porter (14:34):

But we also find emails in the bottom half of the channels that customers actually feel satisfied with, likely because of the slower response times. So, I guess the answer is channel preferences and mix is changing. There is new technology coming through now in terms of like chatbots, voice bots, and think of how we feel about using these things.

David Porter (14:58):

Five years ago, they were terrible. I mean, it would be, I'm asking a question online, like something's wrong with my credit card. And the answer from a chatbot would be, "David, you're interested in credit cards" and it'd give you a link to the website to sell you a credit card. That was the chatbot, it was terrible.

David Porter (15:13):

Now, they've got much, much better. They've really come a long way. So, that kind of experiential improvement is the type of thing, of course, the banks are really closely monitoring and wanting to see much more of.

David Porter (15:26):

So, I think our own consumer adoption is changing in that space too. So, channels are changing, frequency of use is changing. What isn't changing is volume. Everyone's contacting the back more, volumes are way up actually overall.

Jim Marous (15:37):

Yeah. And I think it's not just about things are going wrong. I mean, sometimes it's just interactions and we're seeing a movement not away from customer experience, but the concept of customer experience really evolving towards customer engagement, the back and forth discussions.

Jim Marous (15:54):

You mentioned chat and we mentioned the future of chat. How do you see ChatGPT and conversational AI changing the customer experience and customer engagement equation?

David Porter (16:08):

Well, so first of all, there are large banks out there like JPMorgan Chase who have said globally, our staff are not to use this tool. And there was a research note from Morgan Stanley last week that said, "Hey, when you actually have a complex question and you plug it into ChatGPT, it can hallucinate and give you a really convincing sounding, but actually incorrect answer.

David Porter (16:35):

So, that's just some large bank perspective. Now, in terms though, if you kind of take that to one side and well, where are the areas of where something like kind of ChatGPT can be impactful in banking?

David Porter (16:45):

Well, obviously customer service, obviously fraud detection, risk, wealth management, financial planning — there's a huge array of opportunities for applications in that space because of the ability to kind of crunch so much volume very quickly with really smart algorithms that turn into meaningful information.

David Porter (17:07):

A couple of weeks back, they issued like the next version like ChatGPT 4, and I don't whether you saw, but it has really smart graphical capabilities. So, with graphical capability, of course, it means you can, I don't know, pull weather patterns on the West Coast for the last 30 years and pull car sales for the last 30 years and find the correlations between the two.

David Porter (17:27):

And then you can predict out car sales based on weather patterns for the next three weeks or something like that. Which of course, would've been the job of investment banking analyst up until three days ago. Now, it still will be because JP Morgan says no ChatGPT, but you can see the future unfolding there. So, I think there's a whole bunch of opportunities.

David Porter (17:46):

There are areas like sentiment tracking that banks are kind of interested in right now, but more advanced sentiment tracking I think will be useful for the bank, for the client, for everyone: how we're feeling, the words we use, can they be indicative of fraud or stress or happiness? What could that mean for a bank in terms of not a marketing campaign, but in terms of CX, product offers, and support over the next six months.

David Porter (18:14):

So, I think the type of capability that is starting to be investigated now is going to be super useful over the next couple of years.

Jim Marous (18:22):

So, let's take a short break and recognize the sponsor of this podcast.

[Music Playing]

Jim Marous (18:25):

Welcome back. I'm joined today by David Porter, Managing Director of Financial Services at Genesys. We've been discussing recent customer satisfaction research done by Genesys and how financial institutions should prioritize customer experience investments in the future.

Jim Marous (18:44):

So, David, what are the biggest barriers to success you see in the financial services industry achieving major progress in customer experience?

David Porter (18:55):

Oh, the barriers. Well, we've touched upon some of them. Some of them are kind of people-related. And there's a concern — and by that what I mean is that there's a concern in banking that the most innovative forward thinking like younger talent is going to work for a FinTech or for Google or Microsoft, not for a bank anymore.

David Porter (19:15):

That's a concern, but I don't it's necessarily true. I think smart people will look at a JPMorgan Chase or a Bank of America and say, these are fabulous places to work, and they are. Regulation is both a blessing and a curse. Like you can't do business without it. And there's the blessing. And of course, you want a stable, well-regulated financial system.

David Porter (19:35):

The curse is for many banks, it's awfully expensive and really difficult to keep every single regulatory agency happy all at the same time. In fact, some CEOs, I'm sure will take next to possible, so that's hard. And of course, it's expensive, and that burden takes attention away from innovation. So, that's both a blessing and a curse.

David Porter (20:00):

Technology is expensive, and that means that technology improvement at scale is expensive, which is why you see so many mergers these days. It's much easier to spread those costs over a much larger client base.

David Porter (20:16):

I think some other barriers are more ... large banks like to do things at scale in the same way repeatable, same process. And that's beautiful, but it's kind of a barrier to real innovation too. So, again, it's a blessing and a curse.

David Porter (20:42):

So, I don't think there are these huge one-off blockers, Jim. I think that there are just nuances that make change difficult, if that makes sense.

Jim Marous (20:49):

Yeah, yeah. Change sucks, as I say often on this podcast that it's the biggest challenge financial institutions have, is to change the way they've done things in the past when they don't feel like they're broken, but when they really are.

Jim Marous (21:03):

Speaking of things that seem broken, we often talk about delivering personalized experiences. We also define personalization differently across different channels. How does the consumer define personalized experiences and which experiences would be most valuable to them going forward with regard to that whole humanized or personalized experience?

David Porter (21:31):

So, Jim, I bet you get correspondence from your bank that used to say, "Dear valued client ..." And now, it says, "Dear Jim," and you're like, "Oh, that's nice." And it is nice, it's friendly, but it's not personalization, is just really not. So, I think it needs a better definition. And most folks in banking are ... it's a buzzword right now, let's face it.

David Porter (21:55):

So, the definition, the way I would think about it is truly unique personalization and banking happens when the customer-facing employees and digital technologies provide the right solutions for each customer to help them immediately.

David Porter (22:11):

And then with more advanced applications of personalization, banks can actually anticipate customer's needs in advance.

David Porter (22:22):

You had a credit card declined, you contact your bank, whether it's a chatbot, a call, and the bank says to you, "Jim, your credit card was just declined. We think there's a problem with it, do you want to have a new card?" And you go, "Oh yeah, I do actually," you just anticipated your need, that was real personalization, that little story right there.

David Porter (22:38):

And we did a survey actually a few weeks back, it was a Financial Times longitudinal study. And in terms of the banks that were considered CX leaders by their peers, there were four things that made them stand out in this space.

David Porter (22:54):

Firstly, tailoring the products and services to the real-time needs and life stages of their customers, which is kind of what I just said. Then matching advisors to the right customers. Thirdly, being available on the channel that customers want when they want it. And then fourthly, using individual data patterns to drive the offers or experiences, the kind of marketing if you like. Now, so that's kind of like, I think where personalization stands.

David Porter (23:24):

Now, the banks that get it right obviously have the potential to unlock a lot more revenue opportunity. And our research found that nearly 80% of customers will recommend an organization to others if they receive constantly personalized experience, just like the ones I just described. So, I think that's kind of important. Like I think that's a key to the future.

David Porter (23:48):

Now, you can think about personalization in so many ways. I mean, well, imagine if you're walking through Best Buy and your phone beeps and says, "Jim, to you, this flat screen TV isn't like $950, it's $902 just because of who you are and your loyalty as a client," that would be pretty cool.

David Porter (24:04):

So, I think that kind of personalization of kind of offers, experiences, service, financial kind of integration with your everyday kind of needs in life, I think that's where the future's going to be.

Jim Marous (24:19):

It's interesting because it really gets down to, and you've referenced in your research empathetic experiences, show that you really are looking out for me as a person as opposed to a segment or as opposed to the entire customer base with customer experience talk, as opposed to really showing that you understand what my needs are.

Jim Marous (24:39):

And it's interesting because we have found in our research that consumers are more willing to share information the more you do with it and show them the benefit. It's a value proposition, a value transfer proposition. So, from a technology standpoint, what technology initiatives are being used from your perspective to support the strategic priorities around customer experience?

David Porter (25:03):

So, from a Genesys standpoint, obviously we're spending a lot of time in terms of getting our products and platforms into cloud-based environments. The cloud-based environments, of course, are cheaper for banks, more efficient, and of course, some of the best engineers will want to work in cloud. So, you get like better connectivity with kind of talent and engineering resource.

David Porter (25:24):

So, that's kind of an internal perspective. From a client's per perspective, they don't care about that. What they will care about is once you're in a cloud environment, you can connect our systems together very easily and the APIs, you can connect Genesys with Adobe, with Salesforce, with your core TSYS systems.

David Porter (25:43):

And when you connect those things together in a cloud-based environment, the client ends up having a really smooth, seamless experience in terms of what they're actually experiencing.

David Porter (25:56):

So, I think that kind of technology switch is super important and our research kind of really shows that that kind of digital focus migration into the cloud and kind of client journey orchestration is super important right now, both for us as a company, for clients themselves, and for banks.

Jim Marous (26:19):

Finally, what's the biggest opportunity out there for financial institutions as they try to up their game in the customer experience marketplace?

David Porter (26:30):

So, I think it's important to understand, well, what do consumers and customers value the most. And the banks understand that the best will, I think do the best.

David Porter (26:43):

So, you could say, well, David, that's a cop out. Like what do customers want the most? And of course, the answer is, well, it depends. It depends on the age demographics, are you a Gen Z, a millennial, a boomer? It depends on are you a consumer or a small business, a corporate.

David Porter (26:57):

But everyone wants to have a trusted brand and easy-to-use products that work well. Everyone wants that regardless of those factors above. And the bank that consistently delivers in that space, I think is going to do really well.

David Porter (27:15):

Then when something does go wrong or you do have questions, our research actually has found that having really fast response times and having issues that get resolved during the first interaction, those are really two incredibly important elements for a great client experience. So, if you get those things right, then I think you'll be in a good spot.

Jim Marous (27:38):

David, thank you so much for being on the show today. We're going to reference and have a link to the research in our show notes so that people can actually access the research you've done. But again, we really appreciate you spending some time talking about something that we talk about a lot, but do less than we probably need to do.

Jim Marous (27:57):

And as we reference both of us in different parts of this podcast, the reality is the customer expectations are not being driven by other financial institutions, they are being driven by all these other industries that are doing extraordinarily well at delivering data-driven decisioning and experiences almost ahead of the time I worry about my experience. So, thank you again for being on the show.

[Music Playing]

Jim Marous (28:25):

Thanks for listening to Banking Transformed, the winner of three international awards for podcast excellence. If you enjoyed today's interview, please give our show a five-star rating on your preferred podcast app. Also, be sure to catch my recent articles on the financial brand, and the research we're doing for the Digital Banking Report.

Jim Marous (28:44):

This has been a production of Evergreen Podcasts, a special thank you to our senior producer, Leah Haslage; audio engineer, Sean Rule-Hoffman, and video producer, Will Pritts. I'm your host, Jim Marous.

Jim Marous (28:57):

Until next time, remember that to increase loyalty, organizations must be more people-centric. In addition, they must have a unified approach to both customer experiences and employee experiences.