How Elevating Customer Experience Drives Down Cost and Risk

Banks and financial institutions face dual pressure today: delivering a game-changing customer experience while prioritizing cost reduction and risk mitigation. How can they further invest in customer experience (CX) while also achieving operational cost-savings?

Despite doubts among some banking leaders, we firmly believe that investing in customer experience initiatives doesn't have to be at odds with cost reduction. In fact, optimizing customer experience can be one of the most effective ways to lower costs  without sacrificing value.
 

1. Debunking the notion that cost optimization and customer-centricity are mutually exclusive

Cost is often driven by inefficient, inconsistent and duplicative business capabilities and processes. Streamlining these not only cuts costs but also enhances customer value. For example, customer service staff have more time to deal with complex client concerns if their time isn’t taken up by repetitive tasks.

According to the Customer Experience Growth Index (CXGX) developed by Publicis Sapient, high customer experience scores today are linked to a greater willingness among consumers to interact with a bank in the future. For banks looking to sustain or accelerate growth, this is an important insight.
 

Two factors affecting CXGX growth

1. This bank has an industry-worst desktop website experience but good performance in its mobile app. Migrating 5% of desktop website users to the mobile app would increase CXGX to 8.9 (+0.3).

2. Live chat has twice the CXGX of call centers, but roughly equal usage. Moving 5% of call center users to live chat would increase CXGX by 0.2 and reduce costs.

Source: CXGX: The CX Growth Index Financial Services

By optimizing performance through data-driven insights and evaluating which processes and procedures are truly needed, banks can enhance customer service while achieving remarkable cost-effectiveness. Spearheading this transformative approach are the proven methodologies of service design and human-centered design (HCD).

2. The legacy approach: A missed opportunity

Traditionally, the financial services  industry has leaned into straightforward mechanisms like process streamlining or technology overhauls for cost refinement. Customer experience was relegated to the back seat, seen as more of a luxury than a core strategic element.

Although some organizations may claim to be customer-centric, there is still a failure to align their processes, structures and teams to a customer-centric approach.

At Publicis Sapient, we believe that a simple yet  profound philosophy guides our approach: world-class customer experiences naturally lead to streamlined operations. By refining customer touchpoints, we see reduced error rates, diminished support overheads and a boost in overall operational efficiency.

Source: Global Banking Benchmark Study

We’ve been part of major programs where a customer-centric perspective transformed the way banks approach cost reduction, funding and allocation of resources. Instead of focusing solely on the operating model, this approach asks whether the solution or capability driving cost is even needed in the first place.

By putting the customer at the center of your decision-making, you can identify and remove any barriers to value delivery, ultimately leading to a more efficient and customer-centric organization.

Our commitment to this approach is underpinned by two transformative methodologies:

• Service Design's Macro Lens allows us to oversee the entire customer journey and lifecycle as we pinpoint inefficiencies  and design strategies to address them, which translates to tangible cost savings. . This is where we find and eliminate zombie processes, channels and rework
• Our HCD’s User-Centric perspective ensures we are immersed in the user's world as we craft solutions that are instinctively user-centric, promoting smooth interactions, reducing bottlenecks, and minimizing operational issues
  

Uplifting user experiences reduces the dependency on support, translating to direct savings.

For example, consider the myriad of customer queries a bank receives daily about password resets. By simply refining the user experience with a self-service password reset feature that's easy to find and use, customers can resolve their issues without calling support. This reduction in call volume not only decreases operational costs but also frees up support teams to tackle more complex issues, enhancing overall service quality.

Another ever-increasing concern is online security. By understanding user behavior, a bank can introduce timely security prompts or multi-factor authentication during unusual or high-value transactions. By integrating these features based on user insights, the bank can mitigate the risks associated with fraud or unauthorized access, ensuring both the customer's and the institution's assets are secure.

Aligning design with the customer's journey and lifecycle, rather than confining it to operational compartments, manifests in organic efficiencies and streamlines for efficiency. There are many new ideas being developed regarding the loan application process, such as interactive document guidance and submission, real-time credit score visualization, instant scenario testing and emotion responsive feedback.

How CX boosts the bottom line

A wide body of research shows that optimizing customer experience directly correlates with heightened operational efficiency, diminished risk and significant cost savings. According to Gartner, 89 percent of companies across all sectors now compete primarily on customer experience, compared with just 36 percent in 2010. In a Forbes survey, 75 percent of companies said their top objective was to improve customer experience .

Public Sapient’s Global Banking Benchmark Study underlines this. For banks that are "transformation leaders,” 99 percent regard customer experience as a key metric. These banks are most focused on innovating core product streams (41 percent) and creating new products and services that blur the lines of traditional financial services offerings (37 percent).