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Financial industry must improve online services to satisfy customer expectations

The recession and the emergence of social networks, mobile-enabled applications and Web self-service have created a new type of customer for all, and financial services in particular need to find ways to serve them.

As consumers do more of their banking and other financial transactions online, what do they expect in customer services? Where do they go to find out about mortgage rates or apply for a home equity loan? How important is CRM in general for the financial industry?

Banks, stock brokerages, credit card companies and other financial institutions are moving to automate and “Webify” more of the customer service functions, but unlike retail or trade associations, financial firms have to tread a much finer line, weighing both the risk and cost of online endeavors against the danger of appearing confused or careless.

Facebook is an example of that conundrum, analysts say. Many consumers are financially savvy and want to keep up on the products, services and rates available at their banks.

“We conducted a survey, and one question was if people were following or 'liking' their financial institutions on a network -- and 25% were actually following their bank,” said Marc DeCastro, research manager for IDC’s consumer banking division.

Consumers increasingly expect some basic level of online access to their financial products. A survey this year by Intuit found that one-third of those who switched banks did so "due to lack of online tools.”

Customer service S.O.S.

Some of the technology improvements in CRM, such as interactive voice responses (IVRs) and self-service account management over the Web, have had both a good and not-so-good impact on customer service. Automated phone systems and call centers have helped banks and other businesses deal with mounting volumes of customers. But at the same time, the same improvements have frustrated customers whose problems aren't resoled by the automated answers or by junior customer service reps at call centers. They have also given some customers the impression that the bank can't or won't help its customers.

In some cases questions have become more complicated. When a customer needs help with a financial question, it often takes on much greater significance than her simply wanting to return a sweater.

In a poor economy, the need to get financial-services customers help with complex questions is even greater. For instance, more customers are trying to re-negotiate mortgage payments, shift their stock portfolios or deal with account overdrafts.

The backlash on IVRs or long waits in the call center queue has sent more customers to public social channels for help. These well-traveled public channels serve as a sort of S.O.S. service for desperate customers. That, in turn, will lead to greater adoption of social forums as CRM tools by financial firms.

DeCastro offered his own experience with bank customer service as an example.

"I just refinanced with a large institution and I called the local number to ask a question, then another number," he said. "Finally, I went on Twitter and looked up the bank's name and I posed my issue on Twitter. Within a couple of minutes I got a reply from a bank employee and within a couple of hours a mortgage specialist called me on the phone.

"In the past, I might have sent a letter to the bank president. Anyone who is educated and somewhat resourceful will eventually find the soft underbelly of the corporation, and often that is a social channel," DeCastro said.

Kate Leggett, senior analyst at Forrester Research Inc. and a leading expert on CRM, believes that banks and other financial services firms will want to integrate their CRM Web offerings into a corporate Facebook page so that customers don't have to jump between the two sites but can get the same, consistent online Web services at either place.

"We see some companies -- though not yet many banks -- offering customer service on Facebook. They can engage with customer service staff directly, through click to chat, or they can browse the knowledge base," Leggett said. "I believe it is the next wave."

One bank that is using social CRM is ING Direct, an online bank that has no brick-and-mortar branches and caters mainly to younger, middle-income consumers. Leggett sees ING's efforts in online self-service to be a good example of how financial companies can improve their customer service without outpacing the actual net value of the customer to the company.

"ING customers expect to serve themselves over the Web, with virtual agents," Leggett said, noting that high-end clients with more complex portfolios should be getting a live person. For more high-touch needs, the service is better handled person-to-person.

Corporate clients want online CRM services too

An October 2010 report by Finextra Research and Pegasystems found that the top two reasons corporate customers scale back their business with a bank were a poor  access to services and information/insufficient channels (46%) and inconsistent customer service across channels, regions and lines of business (also 46%).  

The survey also revealed that business customers were willing to pay more for better online services, such as a web portal with more sophisticated self-service that lets them manage their entire portfolio online. Fifty-three percent of respondents said they’d do more business with their banks if they got quick turnaround times to requests and inquiries.

Corporate clients are likely to do more banking and are worth more in revenue, so keeping them happy is especially important. Quick resolution of complex problems requires increased integration with customized applications that many financial institutions already have in place. CRM vendors are already taking this into account in their product development, said Chris Fletcher, research director for Gartner Inc.

“At the end of the day, it’s tougher to differentiate yourself in customer service based on packaged software applications," Fletcher said. "You’re going to see more and more integration capabilities between packaged CRM applications, e-commerce environments and social software, with some mobile as well."

In the long run, he expects to see the financial companies offer the same type of social CRM amenities that many retail firms already do today.  

“The bar is always rising for financial institutions to have those same experiences on their websites," Fletcher said. "I think many customers expect more of a Facebook-like experience from their financial services provider, with the ability to make trades, information feeds, video, interaction and other Web 2.0 experiences.”

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