A device of the times – how digital banking is shaping customer experience management

5 August 2015

Customer experience – and getting it right – is a challenge for any business, particularly in the financial services sector. Competition is increasing and margins narrowing, while many banks struggle to reconcile legacy systems with new digital platforms. Nationwide Building Society’s divisional director for group retail strategy, Barnaby Davis, tells Sarah Williams how digital banking is shaping the future of customer experience management.

The number of cash payments made by UK consumers, businesses and financial organisations was exceeded by the number of non-cash payments for the first time last year, according to figures from the Payments Council. As customers turn more frequently to electronic means of paying for goods and services - from the increasingly popular contactless debit card to automated payments, online transfers and mobile payments - the need for banks to provide a comprehensive, helpful and up-to-date digital offering is clear.

While financial technology (fintech) start-ups vie for position in developing their version of the 'next big thing' in digital finance, many traditional banks and financial services institutions have made slow progress, finding the transition peppered with difficulty. Part of the issue arises from the scale and expense of updating existing core systems to make them compatible with the of-the-minute concepts needed to meet customer and market expectations.

The digital dilemma

However, for Barnaby Davis, divisional director for group retail strategy at Nationwide Building Society, going digital is far from a troublesome necessity. Instead, it provides banks with a fantastic opportunity to make banking easier and more fulfilling for customers, and to build stronger relationships with them. With mobile internet becoming more prominent, the opportunity to improve the customer experience becomes even greater.

"I only see positive implications in the move towards smartphones and tablets," Davis says, "partly because those two devices tend to be on the person rather than in a location, so the smartphone in particular becomes a 'context' rather than a channel.

"It’s said that the smartphone has become the ‘remote control for people’s lives’ and so naturally it is also the remote control for someone’s banking relationship."

"It's said that the smartphone has become the 'remote control for people's lives' and so naturally it is also the remote control for someone's banking relationship. It increases the frequency and velocity of customer contact with the organisation. Customers do significantly more on a smartphone than they did with online banking, and that allows a greater depth of relationship with the customer as they become more financially empowered."

Power to the customer

This idea of returning the power to the customer through digital services chimes perfectly with Nationwide's overall mission as a bank owned by its members.

"It allows us to do what we've always wanted to do, which is to service hard but sell easy," Davis says. "The customer is actually much more in control of the buying relationship now. I think this is very positive in the regulated world we live in."

For Davis, there are six key elements for building successful customer relationships through digital. Banks and institutions must:

  • safeguard the security of the relationship
  • ensure ease of use
  • meet customer expectations
  • make the offering personal
  • ensure it is also customisable
  • achieve a level of empathy.

While security remains essential, Davis argues that ease comes close to topping the priority list. Customers will only use something they find is straightforward, helpful and adds value; creating the safest app possible becomes irrelevant if no one adopts it.

It's a factor that some banks are guilty of ignoring when designing their digital services, forgetting to consider the customer as a user first and foremost.

"I see a lot of rationalisation as to why things are the way they are; for example, when there's something slightly awkward or unusable about an app," Davis says. "Organisations become good apologists for infrastructure constraints, which mean 'that's just the way it's got to be'. But actually, if you look at it through the customer's eyes, you begin to think of service design and user experience very differently."

This focus is central to Nationwide's overall attitude, which Davies describes as "fanatically obsessed" with customer service. Helped by the fact that Nationwide is owned by and answerable to its members rather than shareholders, Nationwide's abiding question is always: "Do our members have a need for something?" This, Davies says, applies very effectively to innovation when it comes to digital.

"Innovation for innovation's sake is a waste of time, but innovation that makes life easier for our members is a quick box to tick," he says. "We fundamentally believe it's an 'and, and, and' thing - it's not about digital taking the place of something, but about digital creating a context for customers, which might then be executed in many different ways."

With this in mind, Nationwide's digital offering centres around its 'single customer view'. Awarded best overall online provider in the Your Money Direct Awards 2014, Nationwide is committed to marrying its services to ensure a member's interactions with the society can be tracked across all channels to ensure a through-line of service.

The aim has to be that a customer can start something in one format - say on a PC or smartphone - and then potentially continue that in a face-to-face environment over video or in branch, or call and ask about it. The organisation needs to be able to move with the customer through that journey. I don't think the customer is at all interested in how we're configured internally, but they know pretty quickly whether an organisation knows them and has followed their journey."

It's all in the presentation

Presenting customers with data in an interesting way is another important aspect of providing a helpful, comprehensive service, and can be a key driver of retention.

"We have lots of data about our customers, and digital gives you a way of sharing that with them and bringing useful things to their attention," Davis says. "In the future, you'll be predicting when the customer might be about to run out of money, or you'll see that a debit card is being used overseas, and we can contact them easily to check that their location. So there are many sensible reasons why we might be alerting and notifying customers to certain elements, and the relationship deepens as a result of that."

Nationwide's ability to grow its capabilities within these services rests on its strong CRM system and its commitment to attaining the necessary technology behind the scenes.

"We have invested heavily in real-time systems and middleware to help accelerate the speed with which we can do things in the future. There is a need for a much greater level of agility, and everybody here is aware of the rate at which things are changing and the fact that the organisation must be able to respond."

Some of the drivers of change are those fintech companies mentioned earlier and their constant drive to introduce new concepts - and new competition - into the world of finance. While some may see these as a threat, Nationwide sees collaboration as key and actively engages with start-ups through various programmes, including this year's Accenture FinTech Innovation Lab.

"It gives us the opportunity to mentor fintech start-ups in the early stages of their development, and to see a whole multitude of ideas - some you might have thought of, some that are completely new. It's also been an opportunity to engage the senior leadership across Nationwide who mentor some of the fintech start-ups and help them to shape their propositions around the real-world challenges and opportunities that financial services institutions face."

Collaboration between such savvy young companies and financial services institutions can lead as far as outsourcing arrangements, including increasingly complex bespoke software development. However, Davis cautions that maintaining a very strong in-house capability is essential.

"In three to five years’ time, executive committees looking back will probably be thinking: ‘Actually, we were all chief digital officers."

"An area that I'm really focused on for Nationwide is that we should do a lot of the service design and the user experience in house; we should outsource a lot less of it and build it as a core capability, because that's really the battleground of the future. The organisation that makes something easiest for the customer wins, it's as straightforward as that.

"I think security is a hygiene factor. The customer would expect that, but the minute you make something easy for a customer, they will adopt and do it at a multiple of the times that they did it before."

Foresight for the future

Listening to customers is essential, Davis says, as is a strategic approach to tech; for example, being prepared to reuse software on different platforms by ensuring it is adaptable. Davis cites the example of Nationwide's Quick Balance, an app for the Android watch that made Nationwide the first UK financial institution to launch a wearable banking service last November, which was based on an existing mobile banking feature.

"We were able to do it because somebody had the foresight to see what was happening in the future," Davis says. "I think more of that will happen, because your competitive advantage really lies in the speed with which you can respond to changing trends."

Everyone, think digital

In recognising this commercial need to react swiftly to developments, it's no wonder that Davis's hypothesis for the executive's tech agenda in five years' time imagines a fundamental change in attitude and an acceptance of the importance of digital.

"In three to five years' time, executive committees looking back will probably be thinking: 'Actually, we were all chief digital officers. That was never a role that one single person could have held in an organisation'. Every senior leader needs to be aware of the power and potential of digital as a customer context, and embrace and harness the considerable organisational and customer benefits."

It's a mindset that all banks and financial service institutions would do well to adopt, acknowledging the need to close the gap between traditional banking structure and the digital future. In doing so, creating more comprehensive and beneficial customer experiences can only lead to stronger, longer-lasting banking relationships.

Barnaby Davis is divisional director for group retail strategy at Nationwide, where he is accountable for customer data and insight, digital, mobile and wearable banking, branch location strategy, branch design, next-generation branch technology, group retail strategy articulation and strategy delivery.
Wearable technology must be catered to for banking customers of the future.