IN BANKING & INSURANCE ARE ON THE RISE - …...CMO, 24% CEO/Mng. Dir., 21% COO , 15% CCO (Chief Cust. Ofc.), 12% CXO , 12% CDO (Chief Dig. Ofc.) 12% CIO , 4% Marketing Communication

CX INVESTMENTS IN BANKING & INSURANCE ARE

ON THE RISE

WHITEPAPER SEPTEMBER 2018

PREPARED FOR:

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CX Investments in Banking and Insurance are on the Rise

P1 | © Keypoint Intelligence

Document Introduction ........................................................................................................................................ 2

Marketplace Invests in CX ............................................................................................................... 3

The Current State of CX .................................................................................................................... 4

How CX Should be Framed and Defined ..................................................................................... 6

The Hidden Costs of Not Bringing CCM into the CX Discussion ............................................ 7

CX Strategy Enabled by Growing Use of Cross-Functional Teams ...................................... 9

Conclusion .......................................................................................................................................... 10

Figures Figure 1: High Incidence of CX Strategies within UK Enterprises ................................................. 3

Figure 2: Development of Unified CX Strategies Remains a Work in Progress .......................... 4

Figure 3: Where Ultimate Responsibility of Customer Experience Resides ................................ 6

Figure 4: How Financial Institutions Should Approach CX Strategy ............................................ 7

Figure 5: How Consumers React When They Have Questions Pertaining to Statements ....... 8

Figure 6: Interviews Validate Many Banks Enabled Workflows to Drive Collaboration .......... 9

cont

ents

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Introduction Consumers have come to expect personalised experiences when they interact with

companies. Regardless of where they are in the customer journey, consumers want

companies to know the full range of products they engage with, anticipate needs or

interests and remember prior interactions. Financial services firms, many of whom are

behind the curve, recognise the need to enable better customer experience (CX) across

all phases of the customer journey and communication channels. This is driving substantial

increases in budgets allocated to CX-related initiatives.

Barriers between organisational silos are coming down gradually as financial services and

insurance companies strive to improve customer interactions. Change may be gradual;

however, momentum has undoubtably increased. Steering committees, a growing

number of formal CX teams, or in some instances CXO’s, are driving investments to

modernise customer journeys using APPs, web portals, email, SMS/text, etc.

Often the goals of CX investments is to employ the voice of the customer (VoC) to drive a

higher Net Promoter Score (NPS), or to achieve increased sales. Whilst these factors are

extremely important, they only consider specific phases of the customer journey. To be

truly effective, CX strategy should address the full spectrum of customer interactions.

Ironically, operational groups that manage high volumes of complex communications

(e.g. statements, bills, regulatory documents) are often not tightly integrated into CX

initiatives. Yet, customer communications management (CCM) plays a key role in CX

because of the sheer number of interactions that are involved, and the criticality of these

very personal interactions carry significant weight in the context of the overall experience.

Furthermore, CCM operations often oversee, or are considering implementing, software

that drive enablement of digital channels. This IT infrastructure enables the conversion of

print touchpoints to digital ones (e.g. secure email, SMS/text), which in turn allows for real-

time data capture that exposes how customers are interacting with communications.

Unfortunately, other areas of the enterprise tasked with a range of CX initiatives are often

not aware of the capabilities of CCM. They in turn are implementing additional software,

or engaging a range of third-parties, whose offerings are bolted onto legacy IT platforms.

As a result, financial services firms that strive to create a unified customer experience,

often overlook the benefits CCM can bring to CX. This raises an important question. How

should CCM operations be aligned with CX initiatives to leverage the full capabilities of

existing software investments or service provider capabilities?

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Marketplace Invests in CX Keypoint Intelligence recently conducted a study in the UK, interviewing senior executives

within banking and insurance firms. All the executives had responsibilities over consumer or

business products and had oversight over communication strategies designed to improve

customer interactions. Although they hailed from different roles and responsibilities, they

had one key factor in common. Their companies’ budgets allocated to improving

customer experience have increased significantly over the past two to three years.

Additional evidence of the rise in CX-related capital expenditures was found in two

different surveys Keypoint Intelligence fielded in late 2017. The first study focused on

business executives in banking, insurance, telecommunication, utilities and retail, whose

responsibilities involve oversite of transactional communications. The second study

surveyed executives with responsibilities involving marketing communications. Both surveys

had a sample size of 75 UK respondents. The study found that 91% of enterprises in the

transactional communication survey had a CX strategy in place. Within the marketing

communication study, 75% of enterprises had a CX strategy.

Figure 1: High Incidence of CX Strategies within UK Enterprises

The question is, however, what does it mean to have a CX strategy in place? Indeed, the

most recent study involving in-depth interviews with banking and insurance executives

revealed they have many different perceptions of what CX means, depending on where

they sit within their respective organisations. Their perspectives will be influenced and

shaped by the products and services that fall within their areas of responsibility, and the

unique customer journeys they are tasked with managing.

For some, the focus is on customer acquisition and retention. For others, onboarding is the

focus. Still others may be focused on loan applications, contact centre interactions,

91% 75%

TransactionalCommunications

MarketingCommunications

N = 75 UK respondents N = 75 UK respondents

The percent of UK companies indicating they havea customer experience strategy in place.

Source: 2017 Transactional and Marketing Communications Surveys

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customer web portals, or maybe even, transactional communications. The common

denominator is the goal to create more efficient customer journeys that address rapidly

changing customer expectations and to produce more profitable customer interactions.

The common tools are digital channels, more efficient use of data, and increasingly,

artificial intelligence (AI). Unfortunately, a common theme is that Customer Experience

strategies are often not holistic. They tend to focus on specific stages of the customer

journey; initiatives undertaken by the front office (sales, marketing and product teams) are

not coordinated with initiatives or investments made by the back office (operations).

The Current State of CX The disconnect between front office and back office operations is not surprising. Although

banking and insurance firms are making CX investments, most are a long way off from

developing a unified customer experience strategy. Among the executives interviewed,

the consensus was that their institutions are still in relatively early stages. When asked to

rate on a scale of one to five, how far along their company is in the process of developing

a unified customer strategy, the majority rated their institution a three. Each executive

spoke to their institution’s unique circumstances; however, all acknowledged that the

implementation of new technology and workflows is a slow process. This reality plays a role

in why the front office can overlook how back office CCM functions can contribute to CX

initiatives.

Figure 2: Development of Unified CX Strategies Remains a Work in Progress

Factors driving the slow pace of change are many. The size and complexity of these highly

regulated institutions typically necessitates a long planning process. For changes that are

How far along in developing a unified CX strategy?

Ideally we want to get customer centric in our strategies and decisioning;tends to be more product based. We would like to decision it

at a more customer level – Large UK Bank

1

Hasn’t started

2

Planning

3

Resourcing

4

Implementing

5

Implemented

• Slow planning process• Bureaucracy• Legacy systems• Customer adoption

The Challenge

“Probably a 3. I have been [here] for 21 years and have seen many technology projects taking place. I see there are still a lot of projects and investment to be made in the coming years to bring us to a “5”. Nevertheless, we are still ahead of the curve.” – Global Bank

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not fundamental to how the bank is run, tactical change management can be

implemented more rapidly (e.g. changing email templates for individual campaigns). In

other cases, CX initiatives that fundamentally change the customer journey (e.g.

partnering with a FinTech company to develop a loan application app) requires

substantial input from a broad range of stakeholders (e.g. legal, compliance, IT, etc.) and

across lines of business, which adds complexity. These initiatives also require approval of

additional budget and compete internally for funds with other CX projects.

There is also the challenge of getting new technologies to integrate with legacy systems.

As many executives chartered with customer journey enhancements will echo, the sharing

of data between legacy systems and other software systems or applications is never easy.

In many cases, banks would like to implement change more rapidly; however, segments of

their customers are slow to adopt new channels of interaction. As a result, the customer

journey must also encompass traditional channels of communication such as branch

offices, contact centres, and mailed statements.

Surmounting these challenges is difficult. As a result, groups chartered with driving CX

initiatives often take a narrower view that focuses on select components of the customer

journey. Another dynamic that fosters a narrower focus is that these projects often come

out of product groups. Keypoint Intelligence’s research found that product management,

customer experience or customer onboarding were common areas driving these

initiatives. This drives a bias towards customer acquisition and cross-sell, and by extension,

the role CCM operations can play was not considered.

Again, the 2017 surveys of executives with influence over either transactional or marketing

communications found that Chief Marketing Officers (CMO) are frequently those with

ultimate responsibility over customer experience. This helps explain why product

management groups are driving investments to improve customer journeys. Also, both

studies found that Chief Customer Officers (CCO), CEOs, and from the perspective of

transactional communications, CIOs, are frequently the ones with the ultimate

responsibility for improving customer experience. Moreover, the data show that the title of

Chief Experience Officer (CXO) is beginning to become a formal position for some

enterprises. Notably, both surveys highlight that Chief Operating Officers (COO) are rarely

the key stake holder when it comes to customer experience, which fosters an environment

that hinders consideration of how CCM, currently considered an operational function, can

contribute to more efficient customer journeys.

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Figure 3: Where Ultimate Responsibility of Customer Experience Resides

How CX Should be Framed and Defined Regardless of where banking and insurance firms are in the development of a codified CX

strategy, they should take a broad view when attempting to create value streams within

customer journeys. At its core, CX is about enabling personalised and streamlined

experiences to produce value, which is measured by acquisition & retention rates,

satisfaction, Net Promoter Score (NPS), and of course, revenue.

Keypoint Intelligence believes CX strategy should be grounded on the following principles:

• Build an infrastructure via a combination of technologies, processes and services

that enables personalised and efficient experiences across the customer journey

• Adopt a holistic view of touchpoints that customers engage with from cradle to

grave to help avoid unintended negative experiences

• Develop online and offline options for interaction targeted at specific phases of

the customer journey, without forgetting how other channels or touchpoints may

affect the customer experience

CIO, 28%

CMO, 20%CCO (Chief Cust. Ofc.),

17%

CEO/Mng. Dir., 15%

CDO (Chief Dig. Ofc.),

9%

COO , 7% CXO , 4%

Q: Who in your company is ultimately responsible for improving customer experience/engagement?

Transactional Communication Respondents

N = 75 UK Respondents

CMO, 24%

CEO/Mng. Dir., 21%

COO , 15%

CCO (Chief Cust. Ofc.),

12%

CXO , 12%

CDO (Chief Dig. Ofc.),

12%CIO , 4%

Marketing Communication Respondents

N = 75 UK Respondents

Source: Keypoint Intelligence 2017 Transactional and Marketing Communications Surveys

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Figure 4: How Financial Institutions Should Approach CX Strategy

If one adopts this view of how CX strategy should be approached, then it becomes clear

why operational functions, such as customer communications management and

transactional documents, should not be overlooked. Front office and back office groups

often share the same objective, which is to enable more digital channels. Also, they both

work towards the maintenance of consistent branding and they both play critical roles

that directly impact customer experience.

One of the interviewees summarised this point of view as follows: “CX strategy has

[historically] been siloed. There is now a team responsible for looking at CX and customer

journey. You have to do that across every event, or you won't be able to respond as you

should.”

The Hidden Costs of Not Bringing CCM into the CX Discussion By not taking a holistic view and including CCM operational teams in CX initiatives,

banking and financial services teams risk incurring unintended costs. Acquisition

campaigns on credit cards, personal loans or introductory offers for other products provide

a good example of how unintended consequences can occur.

When customers receive their first bills and statements, they will look to see if what they

signed up for is in fact what they are receiving. If customers misunderstand the information

in their first statement or bill, their first action is to call the contact centre - an expensive

proposition for any enterprise. The rise in partnerships with FinTech’s, which increases the

number of distribution channels, creates even more room for customers to have questions.

Often enterprises attempt to address anticipated questions within contact centres by

providing automated responses. However, this merely treats the symptom of the problem

and ignores the cause altogether. If CCM teams were an integral part of the CX

Targeted

Holistic view

Combination of processes, technologies and services

w Provides the infrastructure needed to enhance the multifaceted aspects of customer experience

w Encompassing the full spectrum of touchpoints within the customer journey

w Strategies that create efficient interactions across all types of interactions

Building Blocks of CX Strategy Development

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discussion, then thousands of phone calls, and negative first interactions, could be

avoided in the first place.

A Keypoint Intelligence 2017 survey of 500 UK consumers found that 59% of customers will

pick up the phone and call a service provider if they have a question regarding their

statements and bills. In fact, a phone call remains the most common means of

communication when consumers have questions.

Figure 5: How Consumers React When They Have Questions Pertaining to Statements

Compounding this problem is the fact that many enterprises cannot track the number of

calls that are triggered by communications. This reality was exposed in the recent study by

a respondent on the operational side of a large bank: “Currently we can’t track how

many calls we might be getting from communications.” Notably, for this bank at least, the

problem is being solved because of the implementation of CCM software, which illustrates

perfectly how CCM can positively impact CX.

There are also the opportunity costs associated with CX teams not being aware of CCM

investments and capabilities. For example, banks and financial institutions are investing to

drive more transactional communications through digital channels. This creates a

significant opportunity to capture real-time data on how frequently consumers interact

with their documents. In contrast, these institutions have little insight into how consumers

interact with mailed statements, except through contact centre interactions. The ability to

capture live data on documents that play an important role in the customer relationship

opens additional insights into critical touchpoints within the customer journey. All too often,

the opportunity is not exploited.

0%

6%

7%

8%

25%

39%

50%

59%

0% 10% 20% 30% 40% 50% 60% 70%

Other

Social media

SMS/Text message

Physical mail

Web contact form

Online chat

e-Mail

Telephone

Q: When you have a question about a bill or statement, how do you contact your provider?

N = 500 UK respondentsSource: Keypoint Intelligence 2017 Consumer Transactional Communications Survey

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Furthermore, marketing and product teams frequently deploy software or engage third-

parties to enable communication delivery via digital channels. Increasingly, these activities

are part of CX-related initiatives. This was a common trend identified within the discussions

with banking and insurance executives. Keypoint Intelligence’s marketing communication

survey validates this finding; it found that

• 45% of enterprises are using an email marketing platform or service and another

33% were planning to adopt

• 43% indicated they are using a CCM platform/service with another 35% indicating

they are planning on implementing soon

This leads to a multitude of third-parties being engaged, or duplicative software

investments, because operational teams are often simultaneously deploying CCM

software or engaging additional third-parties to support delivery of transactional

documents through digital channels.

CX Strategy Enabled by Growing Use of Cross-Functional Teams Fortunately, the recent research highlighted that important changes are taking place

within banking and financial services that create the environment whereby CCM

operations can become more central to the CX strategy.

Certainly, many enterprises struggle when making changes to the customer journey. This is

nothing new. However, the recent study revealed that in addition to spending increases

on CX initiatives, there has also been an increase in the use of cross functional teams when

implementing changes to customer journeys. The formation of steering committees and

change management teams is on the rise. Financial services, and banks in particular, are

proactively making investments to enable collaboration and interactive workflows to

ensure a return on investment from CX investments.

Figure 6: Interviews Validate Many Banks Enabled Workflows to Drive Collaboration

Change management teamincluding program managers and project

managers with IT and product team

All our departments,customer service, finance, IT, etc. all working together, not working in silos

Spent a lot of money to NOT be a siloed business

Col

labo

rativ

e

Marketing and operations work together

Interactive

Steering committee.Function is to join all the dots.

“[Our bank has a] strong cultural piece in stakeholder engagement – Who needs to know most about something before it is launched? Key thing we worked on is collaboration. To make sure you have the right people at the table” – Large UK Bank

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This change in the marketplace has important implications regarding organisational

alignment. As the use of multi-disciplinary teams rises, the barriers that have existed

between different business units and slowed the pace of change are coming down.

This change creates the opportunity for these enterprises to incorporate CCM operational

units within CX initiatives. One key benefit of this would be tighter governance over

marketing, operational and transactional communications. Currently, differences in

processes can exist when there are changes to communication templates. This leads to

inconsistent use of clear and concise language, voice, brand and customer effectiveness

reviews. Improved governance enabled by CCM, across all events, would

• Produce more consistent customer experiences

• Ensure improved regulatory compliance via consistent use of the appropriate

approval channels

• Enable the correct call to action embedded in the full spectrum of

communication types

Another benefit stemming from consistent governance processes is the ability to more

effectively monitor how customers interact with these communications, and to prevent –

you guessed it - unwanted calls into the contact centre.

Conclusion The financial services industry is taking customer experience seriously. Budgets for projects

designed to improve customer journeys have increased significantly, driven by changing

customer expectations. Along with the increasing expenditure have come changes to

organisational alignments. As a result, there are fewer barriers between the various

business units. Certainly not all financial institutions are progressing at the same pace.

Insurance companies, as a group tend to lag the broader market when it comes to CX

strategy and not all banks are equally progressive in their approach to customer

experience. Nevertheless, there is change afoot within the marketplace.

This changing environment presents banks and insurance companies with the opportunity

to take a broader, and more effective, approach to customer experience. They should

recognise the important contribution operational business units chartered with CCM make

to CX and integrate them into the growing number of interdisciplinary CX teams emerging.

Otherwise, as banks invest heavily to improve customer experience as individual business

units, they may inadvertently compound the complexity of legacy IT systems, deploy

instantly redundant software systems, proliferate the range and number of partners and

services vendors and potentially jeopardise the sought for CX improvement and

subsequent revenues that should follow.

Con

clus

ion

“We can then analyse complaints to make sure these letters are not driving customers to phone in and query because it is not clear from the letter.” – Large UK Bank

Documents

IN BANKING & INSURANCE ARE ON THE RISE - …...CMO, 24% CEO/Mng. Dir., 21% COO , 15% CCO (Chief Cust. Ofc.), 12% CXO , 12% CDO (Chief Dig. Ofc.) 12% CIO , 4% Marketing Communication