Public hostility towards financial institutions may be lingering, but Steve Whitty, head of customer experience and service definition measurement and costing at RBS, sees this as a chance for banks to improve. He talks to Philip Kleinfeld about how market conditions and technological change are affecting his company’s daily service delivery.
When a problem with vehicle safety forced Toyota to recall ten million cars in 2009, the corporate world anticipated the worst. Senior executives were frogmarched in front of congress to explain the disaster, which eventually cost the company $16.4m. Even the founder's grandson admitted the business was "grasping for salvation".
But things turned around. The company was cleared of several charges and never quite lost its status. By the following year, sales of the same car range that had been recalled were up by a staggering 48%.
According to Jeffrey Liker and Timothy Ogden - authors of a recent Toyota case study - it was a mixture of acceptance, absorbing blame and putting the customer first that helped Toyota through the crisis and towards what they call "a vision of improvement".
Finance call to change with CRM
After a brutal year for Europe's financial institutions, this is a message with significance. Mis-sold payment protection insurance, the rigging of the London interbank offered rate, money laundering in Mexico and illegal interest rate swaps have all added to the growing malaise.
If the Toyota story tells the banks anything, it's that customer experience management has a key role to play in solving problems with public relations. A recent survey by Ernst and Young places a series of CRM measures at the heart of its proposal for wider brand reform. Improvements to social media and digital channels, greater personalisation and consistency were all included on their list of vital changes.
It's something Steve Whitty, head of customer service and service definition measurement and costing at RBS, is in a good place to understand. His bank has faced a string of challenges since its failure and part-nationalisation in 2008. The problems were so deep that the then head of UK retail Brian Hartzer described the bank as having "lost the plot".
More recently, a simple upgrade to the group's IT infrastructure prompted what the Financial Times called "one of the most devastating system failures in banking history". Millions of RBS customers were left without access to their accounts, unable to receive paychecks and make transactions. The bank was left with a £125m fine and a headache over how to respond.
"The current market conditions have put an emphasis on banking delivery in general," says Whitty. "With low interest rates and poor trading conditions, you have to be much more targeted in service delivery. The media backdrop and heightened customer attention has provided a wonderful setting for change and improvement, a galvanising force for the bank to respond to. People are looking for change and want much more transparency. I really think you can create a positive experience out of every negative experience."
RBS's brand loyalty boost
In 2010, RBS introduced a new customer charter to help recover its reputation as "Britain's most helpful bank". The idea was to offset some of the deeper macroeconomic challenges it faces with a refocus on basic customer needs like call and queue times.
"There's a chance for a bank such as this one to drive forward improvements that offer a really differentiated service," Whitty says. "That's why we're being very transparent at the moment with the customer charter. You can see that, in one of our major media releases around emergency cash, the ability to take out money if you lose your wallet using a code at the ATM machine. More recently, we've introduced the ability to pay friends and family at the touch of a button based on the app process. We have a broad five-year transition plan that is going very well."
These changes are all part of a conscious strategy to improve brand loyalty. It's not an easy task. Recent figures from the ombudsman suggest almost half of the bank's customer base is dissatisfied in one way or another. As a publicly owned organisation, you'd expect that to be true. The tolerance customers have of their bank and its service delivery is likely to change dramatically once they perceive it to be their own. But Whitty is philosophical.
"You can't always control perceptions in the marketplace, because they are driven by the media and other exogenous factors," he says. "While it's certainly had an impact on the brand and trust within the organisation, there's not a lot we can do about it. Much of the research we've done suggests that most of the customer experience is driven out of the service interactions that people have. We just try and focus on what we can actually deliver, making sure it's right for the customer base."
Clarity through technology
Whitty isn't convinced that deep macroeconomic concerns really drive satisfaction levels with banks. His view is that issues of brand and trust are byproducts of how a bank actually delivers its service. Customers understand what is and isn't in their immediate sphere of control and can isolate problems with the global macroeconomy from the interactions they have with their current account. His argument is, in a sense, the same as Toyota's - that there is a way out of a crisis and customer experience is central to it.
"Issues like the eurozone crisis are outside our sphere of control," he says. "These are wider economic factors that I don't think our day-to-day customers are really focused on. Showing them what we're doing, how we're doing it and whether we're improving is what's important."
RBS is certainly making in-roads in improving its technological offering. The bank has concentrated its efforts on a range of different products from applications for mobiles, hand-held payment devices and account maintenance processes to new NFC technology.
"We're quite forward-thinking in this area," Whitty says. "If you look at some of the apps that are being generated across multiple platforms, whether it's on Android, Apple or BlackBerry, we've been first to market. Our broad idea is to reduce the amount of physical, mental and emotional effort that the customer has to go through. In all our segments, from affluent to basic customers, people expect us to be easy to do business with. It's effortless banking and digital has a really strong role to play."
But effortless banking isn't as straightforward as it seems. What seems natural for one person, might seem alarming to another. When it comes to payments and large financial decisions, people enjoy the experience of personal branch interaction and the reassurance of a thorough-looking security system. But, when it comes to a simple balance enquiry, individuals want something fast, precise and easy.
"It differs by segment and product" Whitty says. "As you move into different demographics, you have to cater for that kind of service delivery. If they're unwilling to use digital channels because of a lack of knowledge or technical ability, you have to cater for that. If you look at the younger generation, they are less risk-averse, and more interested in digital channels and speed. It's about multichannel - understanding your customer base well enough to be able to tailor the service and drive the right interaction."
Value of information
For a growing proportion of that customer base, social media is central. But, for the banks, a raft of regulatory and security issues have set back plans to develop a more integrated approach. For those that do use it - the challenges are endless. The way information passes so quickly and publicly has put bundles of additional pressure on the banks and their already beleaguered customer experience teams.
"Social media is very important to us," Whitty says. "Whether it's on Facebook, YouTube, Twitter or LinkedIn, we do a lot of data monitoring. It's important to understand real-time information, and to catch and understand sources of customer dissatisfaction."
With Twitter in particular, close monitoring is crucial. As much as the network functions as a forum to share positive experience, it's also a space for the dissemination of public hostility.
"For as many disgruntled customers, you get excited ones too," Whitty explains. "It's important not to over-react. It's about having a balanced perspective on what the information is telling you and using it to understand a bit more about what the sentiment and feeling is on the market and the service delivery you offer."
Whether customer perceptions are driven by wider exogenous factors or their daily interactions remains unclear. But, at a time of crisis across the entire banking industry, it's time to do as Toyota did - find the opportunities and improve customer experience.
"In many aspects of the banking industry, mediocrity reigns," Whitty says. "There's a big chance for a banks such as ours to become transparent and really move forward."