3 Things Banks Need To Do At A Minimum To Improve Customer Service

If there is one thing we can all improve on its customer service. While the industry as a whole continues to show top ranking for satisfaction among all customers, the dispersion within the industry is getting wider. According to Gallup polls, the banking industry ranks near the top of all businesses in the country for customer satisfaction along with pharmacies. J.D. Power, in their last satisfaction study, shows that their dispersion among its rating categories continues to widen and more banks than ever are falling into the bottom category. To help stem this tide, we would like to share two case studies that highlight some differences in customer service and apply those differences to community banking.

Case Studies

A very large communications company which we will call AD&D bills its customer for internet service monthly. The website allows and encourages paperless billing, but repeatedly fails to email the invoice. As a result, when one bill becomes past due by 14 days, the data service is turned off without notice to the customer. If that wasn’t a service transgression enough, a call to customer service runs into problems when the Company can only look up an account by account number and not by name. Further, verification can only be done via a pin code that the customer cannot remember and no other form of verification will work. After multiple transfers and multiple re-verifications taking 5 reps and 40 minutes, the service is cleared to be restored but cannot be done until 9am that morning when another department opens for business. While the service and experience for the customer is inferior, the future expectation for customer satisfaction for AD&D is much worse (explained below). 

Another example of failed customer service issues involves a debit card from a large online bank which we will call ALLOY Bank.  The customer is traveling in a new geography and trips their fraud detection algorithm which then attempts to notify the customer. The notification is via email and goes into a spam folder. The next time the customer attempts to withdraw funds on the card, the ATM eats the card. In an attempt to correct the issue, customer service is contacted the verification is through a set of self-selected questions and instead of transferring the customer the rep stays with the customer and pulls in the appropriate department to solve the issue.

In both the above cases, customer service as far from flawless, but the later was superior. However, here is the kicker: the bank asked for customer feedback after the call and received it (it was not all positive, but mostly supportive and the bank will learn from this experience). The communications company never gave the customer a chance to provide feedback and in fact when the customer asked where they could provide feedback, they were told, “We do not take customer feedback for any of our interactions.” Very clearly, the communications company is not competing on service because it does not measure it and is not interested in improving it.

What Does Service Mean To Your Bank?

Each bank that competes on service must measure that service both through customer feedback and through internal quantitative measurement. The measurement must be tracked over time, attributed to each product, each department and each employee. Employees and management must be held accountable to that service and tasked with improving the service to certain milestones and benchmarks. Finally, achieving service levels must be tied to performance reviews and preferably translated to compensation. 

Service must be measured on the following parameters: 

Process Efficiency: Banks must design their process to allow customer satisfaction. The communications company discontinued internet service at midnight while the only department that could turn on the service was not available to perform its function until 9am. The company designed a process that would frustrate a customer and no amount of service from a customer representative could overcome this design flaw.

Responsiveness: A bank must hire and motivate employees to be willing to help customers and provide prompt service. Transferring a customer from rep to rep is the complete antithesis to customer service. A service rep should not pick up the phone to interact with a customer unless they are willing to follow through to resolve a customer’s need (even if they need to stay on the line silently to observe the resolution completed by another rep).

Reliability and Assurance: A bank must have front line employees that have the ability to perform the promised service dependably and accurately. Those employees must be knowledgeable and courteous and convey trust and confidence. Banks that spend the money on competent and well-trained employees will succeed in customer satisfaction. On the other hand, there is no way to excel in customer satisfaction on the cheap.

Most importantly, as shown in the difference in the two case studies above, companies that do not measure the level of their customer satisfaction will not be able to improve on the above service parameters. Not every bank needs to compete on service. There are banks that have a virtual monopoly in their local markets, other banks that can effectively compete on price and still others that have unique and non-replicable products. However, if your bank wants to compete on service then you must measure that service, set standards and incent management and employees to achieve those standards.

Conclusion

We often hear managers position and differentiate their bank on service. While most managers measure and set goals based on margin, ROA, revenue, loan production or deposit production we do not see the same efforts for service and customer satisfaction. For example, there may be some customers that value access to the bank CEO in the local market, however, banks need to measure that value and assess its effectiveness in winning business. Until bankers can quantitatively measure service, set standards for service levels and incent employees to meet these service levels, banks cannot effectively compete on service.

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CenterState Bank is a $4.7B community bank in Florida experimenting their way on a journey to be a $10B top performing institution. CenterState has one of the largest correspondent bank networks in the banking industry and makes its data, policies, vendor analysis, products and thoughts available to any institution that wants to take the journey with us.