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Digital transformations are happening everywhere as companies of all sizes across the globe contend with the changing nature of using new technology to deliver value to customers. What started simply enough as a new way of interacting with customers through the internet and mobile devices has evolved into a full-fledged business mandate to grow stronger, faster, and more efficient by building personalized customer experiences powered by data intelligence. Too often, though, “digital transformation” itself can feel like a buzzword, as companies rush to streamline operational efficiency and impress end users with slick new interfaces, without a focused approach to the real challenge at hand: How to deliver superior customer experiences in the digital age.
Exploring the Digital Dilemma in the Retail Banking Sector
At J.D Power, we’ve observed a trend we call the “digital dilemma,” whereby companies make tech-focused investments only to find that those investments often impede their ability to connect with customers. One example comes from the retail banking sector, which spent roughly $20.2 billion last year on hardware, software, services, and internal IT staff to develop digital transformation initiatives, according to IDC. To some extent, the investment worked. According to our 2018 U.S. Retail Banking Satisfaction Study, 28% of the patrons of retail banks are digital-only customers. Banks are succeeding in moving their customers from costlier branch-based interaction channels to more cost-effective digital channels.
Unfortunately, that digital growth is coming at the expense of customer satisfaction. When we looked at customer satisfaction scores across all retail bank customer profiles, we found that digital-only customers had the lowest scores. Now, a skeptic might read that and think that we may have only factored the opinions of less technically inclined users into our analysis. It’s easy to assume that smartphone-attached digital natives, such as millennial users, would be the first to forsake the in-person banking experience, right? Wrong. Surprisingly, the gap in satisfaction between digital-only and branch-centric bank customers is largest among millennials.
What could be causing this disconnect between customer experience (CX) and digital innovation? We found that digital-only retail bank customers are less likely to feel that the information they receive from their bank is tailored to them, less likely to understand the bank’s fee structure and the features and benefits of their accounts, and less likely to have a meaningful connection to the bank when they open a new account. Put simply, personalization and customer experience have taken a back seat to ease of use and digital reach. The move to digital banking has homogenized the banking experience to a point where customers feel little affinity toward any one bank.
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A CX Problem Across Every Industry
Digital dilemmas are not unique to retail banking; they exist in all industries. In the automobile industry, for example, the single factor that continues to pull down our annual Vehicle Dependability ratings is persistent customer dissatisfaction with the “center stack,” which is the area in the center of a car’s dashboard that houses things like built-in voice recognition systems, navigation, and Bluetooth connectivity. While the quality and reliability of the core elements of a car — the engine, the transmission, the braking systems — are the best they’ve ever been in history, automakers are struggling when it comes to the newer, fast-changing technologies that connect people to their cars.
In the utilities sector, residential customers are vexed by inconsistent communication from their local utilities, with information coming via a hodgepodge of snail mail, email, text alerts, and social media. Even in the wireless telecommunications market, which is arguably further along the digital transformation curve than other industries, customer service satisfaction scores are much higher when customers are assisted by humans than they are when people who need help must use purely self-service digital channels.
Though individual use cases vary widely across industries, the root issue is very much the same in every sector: Digital transformation initiatives implemented with a focus on technology — not the customer — may succeed in improving the efficiency of legacy processes, but they do not necessarily create new value.
Moving to a Platform-Based Approach
Digital transformation requires more than just automating existing processes; it requires new approaches to tracking customer pain points and trends, as well as agile pipelines for building products and services to address problems quickly. Customers expect personalization and relevance every time they interact with a brand, and that personal connection needs to shine through in digital engagement channels.
Take digital banking as an example. Real, sustainable digital transformation cannot happen in a tech silo where engineers focus on building the best possible banking app all by themselves. The entire process needs to be informed by intelligence drawn from across the business, incorporating data and user insights from physical branches and digital systems. For that reason, omnichannel customer journey optimization needs to be driven by a data and intelligence platform that has a user-centric view.
This type of platform-based approach to product development is challenging for many companies because it requires them to break down legacy silos in order to create a single repository of intelligence to share across the organization. The key to making that all happen? Follow the customer. By putting customer experience at the center of the universe and designing digital transformation around each customer’s complete journey, digital transformation efforts can succeed in driving new innovation without compromising meaningful customer connectivity. Some early successes we are seeing are doing just that. The banks that performed best in our Retail Banking Study, for example, have developed engaging and highly personalized digital interactions and they have fine-tuned their branch operations to better serve the needs of both digital-centric and branch-centric customers. This includes things like sending banking alerts, providing easy access to account balance information, offering people the ability to make person-to-person payments in the mobile environment, and taking the time to identify individual customer needs and offer tailored advice in the branch environment.
In a world where expectations are set by digital native companies like Amazon and Netflix, personalization and relevance are the new normal across channels and products. Only companies that put the customer at the center and build intelligent enterprise-level platforms will succeed in increasing overall satisfaction, loyalty, and trust.