Why FES (and not NPS) is the Future for Banking, FinServ, FinTech sectors?

In the evolving landscape of financial services, measuring customer satisfaction and loyalty has transcended beyond the conventional Net Promoter Score (NPS). The rise of the Financial Empowerment Support (FES) score marks a significant shift towards a more holistic approach in evaluating customer experiences in sectors like FinServ, Fintech, and Retail Banking.

Beyond NPS: The Advantages of FES

NPS, which gauges the likelihood of customers recommending a service, offers a singular perspective limited to advocacy. In contrast, the FES score, as highlighted by Gartner's extensive research, encompasses broader dimensions that reflect true customer empowerment and satisfaction. This includes a variety of metrics that assess not just advocacy, but also engagement and financial outcomes from customer interactions.

Empirical Support and Industry Application

Gartner’s findings reveal that FES is a stronger predictor of positive customer relationships, significantly impacting revenue actions positively compared to NPS. It fosters an environment where financial services not only understand but also enhance their interactions with customers, leading to increased loyalty and financial growth.

NPS is a strong predictor of increases in positive revenue actions and decreases in negative revenue actions. This is true even when controlling for financial empowerment, interaction events, customer assets, channels used, gender, tenure at the bank, region, interaction quality, financial health, and bank primari-ness.

• Promoters have a 58% likelihood of taking positive revenue actions — 37 percentage points higher than detractors (Refer following figure)
• A customer’s likelihood of taking negative revenue actions decreases from 34% to 7% as they move from detractors to promoters. Seeking to improve customer NPS can thus be a productive strategy for financial services providers.

Gartner’s FES measure has predictive power similar to that of NPS for decreases in likelihood of negative revenue actions. FES, however, has a stronger effect on the probability of taking positive revenue actions among customers. Moving from low to high FES,

• customers are 45 percentage points more likely to take positive revenue actions (see following figure).

Overall, the analysis suggests that optimizing for FES results in a greater percentage of positive revenue customers than optimizing for NPS.

Additionally, insights from Sopra Banking emphasize that fostering financial empowerment can greatly enhance customer acquisition and retention. They propose a multi-faceted approach to customer support through guiding, educating, enabling, reassuring, and valuing customer interactions, which aligns perfectly with the principles of FES.

Understanding FES: Beyond Traditional Metrics

Gartner’s introduces a way to calculate the FES score, which evaluates customer experiences across multiple dimensions, far surpassing the simplicity of NPS. The core of FES is customer empowerment, encapsulated by five key aspects that predict positive customer-provider relationships:

1. Personal Benefit: Feeling better off after interactions with their provider.
2. Knowledge Enhancement: Learning about financial options.
3. Ease of Access: Simplified access to new financial services and products.
4. Value for Money: Satisfaction with the fees paid for services.
5. Financial Tools: Access to tools that aid in financial management.

This helps categorize customer experiences into low, medium, and high FES, revealing that increased levels of financial empowerment correlate directly with the likelihood of positive customer actions and reduced negative behaviors.

Above figure summarizes the overarching findings of Gartner's research and underlines the fact that the industry is at an inflection point. Not only do rising levels of provider support for financial empowerment progressively increase the likelihood of positive relationships, the opposite is also true. As customers feel increasingly unsupported in the realm of financial empowerment, the likelihood of them taking negative actions also increases. Such customers are more likely to reduce their savings or borrowings with a provider and disparage them in either private or public spaces, and are less likely to use their provider’s apps, tools and services

Five Pillars of Financial Empowerment

To effectively implement FES, financial providers can adopt a five-pillar approach to customer support, each aimed at elevating the sense of empowerment:

• Guide: Offering navigational aid through the financial landscape, ensuring customers feel supported in their financial decisions.
• Educate: Providing knowledge and insights to enhance understanding and confidence in financial matters.
• Enable: Facilitating access to financial tools and services that empower customers to take control of their financial health.
• Reassure: Ensuring customers feel secure in their financial interactions and decisions.
• Value: Demonstrating appreciation for customers, recognizing their needs, and delivering tailored financial solutions.

Strategic Implications for Industry Leaders

Embracing FES offers financial leaders a nuanced understanding of customer satisfaction and loyalty. By fostering an environment of financial empowerment, institutions can enhance customer retention, improve financial outcomes, and position themselves ahead in the competitive financial sector.

Conclusion

As financial services continue to evolve, the shift from NPS to FES marks a critical step towards more dynamic and meaningful customer relationship metrics. By focusing on financial empowerment, financial institutions are not only measuring satisfaction but are actively contributing to the financial well-being of their customers.

About the Author:

Ashutosh Karandikar, CCXP, is the author of "Beyond Customer Satisfaction", a seasoned Customer Experience thought leader and a management consultant with a proven track record of helping global brands accelerate their growth. With over 18 years of experience across various domains, including Sales/Marketing leadership, Customer Success, Brand/Product Management, and Digital Transformation, Ashutosh possesses a unique 360-degree perspective that enables him to take a holistic approach to strategic growth acceleration and CX Transformation.

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