How can banks win back customer loyalty? One word provides the answer.

Consumers have expressed dissatisfaction with a number of industries in recent years, but some of their strongest complaints have been leveled at financial services providers. Perhaps that’s why 1 out of every 2 consumers is at risk of leaving their current bank, and only 1 in 4 view their bank as a trusted partner.

The good news is that these complaints also provide clarity about potential solutions. For example, it’s becoming apparent that one ingredient in particular – empathy – leads to solutions that improve trust between consumers and banks. Yet, while many financial services providers have expressed a desire to incorporate empathy into their business, sometimes identifying the path forward can be challenging.

Acknowledging some simple truths is a good start:

Financial consumers need a hero.

Research indicates that many bank customers continue to feel victimized by the Great Recession and its aftermath. In fact, money is the single biggest source of stress for Americans today. More than ever, consumers need to feel protected by anyone involved in their financial landscape. 

Financial consumers are changing. A lot.

Today’s consumers are diverse. They are multi-generational and multi-cultural.

Baby Boomers continue to be the single largest consumer segment for banks in the U.S.

Millennials, the biggest generation the U.S. has ever produced, are rapidly gaining economic clout and will be the recipients of the biggest wealth transfer in history ($30 trillion from their Baby Boomer parents).

Women of all generations have become an economic force. They make 70-80% of all purchase decisions and now control over half of all U.S. personal wealth (a number that is only going to increase). Forbes calls women, “the world’s most powerful consumers.” 

Hispanics are the fastest-growing consumer segment in the U.S. Yet, while one in five Americans will be Hispanic by 2020, over 48 percent of Latino households are “unbanked” or “under-banked.”     

The connecting thread

When it comes to money, this diverse set of consumers shares one thing in common: They think banks put business goals first and customer needs second. In other words, they think banks lack empathy.

How can banks show empathy for today’s consumers?

There are three aspects of banking that consumers seem to find particularly frustrating. Using empathy to inform solutions can help banks address these challenges in a way that greatly improves their bond with consumers:

1. Service design

Imagine calling your bank and getting lost in a series of automated messages, then attempting a visit to a local branch office, but finding it isn’t open at a time that works for your schedule. Good service design, which is the practice of making services better by researching and testing ideas and contexts (i.e. focusing on customer needs and preferences) prevents experiences like that from happening. Banks need more of it. 

2. Technology

Predictions say there will be one billion mobile banking users worldwide by the end of 2017, and that customer centricity is now the key to success in mobile banking technology. A number of recent studies have concluded that consumers don’t want technology for technology’s sake. Instead, they want technology that makes their lives simpler and easier, while providing a holistic view of their financial picture. Banks cannot afford to ignore this preference.

3. Customer service

74% of surveyed consumers visit their bank at least five times a year, and the quality of their interactions with bank staff is important. Unfortunately, bad customer service is often listed as one of the top complaints of bank customers. One of the primary reasons customers visit a bank is a desire for expertise. They want a professional to help them navigate the complexities of financial decision-making. Customer service representatives who robotically convey data will find it difficult to make a meaningful connection with these customers. But making customers feel ‘heard’ and developing authentic human connections with them can help representatives win their loyalty.

By the way…

The desire for meaningful customer service interactions spans all generations, which makes it quite disturbing that fifty-five (55!) percent of all Americans believe that banks treat them like a number. What a huge opportunity for banks whose representatives make their customers feel recognized and valued as individuals!

Conclusion

Banks that successfully shift to empathy-driven service design, technology and customer service behavior have, essentially, developed a new business model, one that is built to adapt and thrive in today’s disruptive economy. The bottom line is this: A human-centered financial institution stands a very good chance of being embraced by the humans it serves.