During the global financial crisis, governments spent billions to bail out banks in an effort to keep liquidity in the banking sector, largely so that lending could continue at a time when businesses needed as much help as they could get. However, in a financial crisis when the economy is in recession, it is counter-intuitive for a bank to lend money to customers who might get into further trouble. So the bail out didn't work in stimulating the economy the way it was intended. The autopilot 'internal' risk function kicked in and prevented it from doing so.
Some could argue that the 'risk' function within banking, while acting to protect institutions, may have actually negatively impacted the speed of recovery. While we have all sorts of classifications around risk within the business environment today (operational, legal, socio-political, financial and market) the greatest risk we potentially face in the banking sector is actually none of these. Our risk "compass" needs to be re-tuned in the light of customer behavioral shift.
Industry Reputational Risk
So will trust return? This is a big theme this year. We are essentially dealing with reputational risk. Not for an individual brand or institution, but the collective reputation of the industry as a whole.
That's the regulator's job...
The problem with this approach is that regulators can only regulate, they can't make us do good things for our customers. Despite strong regulation, 11 banks (Including the Big 4) are facing class action in Australia by customers over fees. Despite toughening regulation in the United States, the "Move Your Money" campaign continues to live on to this day. It is also why peer-to-peer lending networks are flourishing, why Mint and Blippy are garnering the trust of millions, and why PayPal is the world's leading online payment network. Customers are moving on, plainly because the industry is no longer differentiated by a reputation built on trust.
Let's face it - regulation is not going to restore trust. The only two things that will fix this gap is building transparency and delivering great service at the coal face.
Restoring trust requires us to be un-bank-like...
The problem is if you screw up with customers today when they're standing in the branch in a lengthy queue during their lunch break, they are just as likely to start Tweeting or shouting out to friends on Facebook about how "hopeless bank ABC is in the city branch today, this queue is massive!"
- Most ignore these Tweets as inconsequential - does that restore trust?
- Some respond positively to the tweet, explaining how sorry they are and what they are doing to resolve it...
- Unfortunately, some Respond negatively; I'm sorry the customer feels this way, but this is not what we are like - really, some people are just never happy!
Excellence is trustworthy
- Simplify bank language through a plain-language initiative - refer Centre for Plain Language and Whitney Quesenbery
- Make it easy to find the best phone numbers to speak to the right area of the bank on your website, circumvent IVR menu trees where possible. Citi in the US does this pretty well.
- Mystery shop, not competitors, but the most common processes in your multi-channel environment and see where these need to be drastically simplified, and use Observational Field Studies to see how customers work in real-world settings.
- Put a social media listening post in place and respond positively and openly at every opportunity - check out Gatorade's Mission Control
- Review the biggest complaints you get in the call centre, and try to fix those customer journeys proactively. We call these Torch Points...