The following article by Ben Richards, Chief Experience Officer at VMLY&R London, was published by Business Reporter.
Businesses should put customers first.
It isn’t a groundbreaking insight. If anything, it’s on the first page of the first chapter in a ’Business 101’ handbook. And for a good reason. The businesses that best serve their customers’ needs ultimately retain and attract more of them - driving better results to their bottom line.
Putting customers first was an unwritten rule of good business practice. But now it is very much a written one.
The Financial Conduct Authority (FCA) has recently announced that senior bosses at City firms will face fines and have their bonuses docked if they fail to put consumer needs first. The new regulations force financial firms – including banks, insurers and investment firms – to focus on delivering "good outcomes" for customers.
It will end some frustrating practices that have become commonplace in financial services. Now there is a direct incentive for these businesses to reduce call wait times, end rip-off fees through clearer promotions, and make it easier to cancel or switch investments.
It is a good thing. But why is it only happening now?
In the current economic uncertainty and rising living costs, people are highly conscious of their expenditures. They look to banks and financial services brands to support them through this challenging period. And many are turning to buy-now-pay-later (BNPL) services such as Klarna, which make it easy to sign up and check out, helping people with their discretionary purchases.
But there is an essential difference between supporting and exploiting. And unfortunately, little effort has gone into ensuring customers understand what they agree to with such services; consequently, 41% of shoppers missed their Klarna payments this year.
It creates an ethical challenge for brands and retailers who cannot entirely wash their hands of the responsibility of their plug-in partners.
Retailers can make assumptions about their customers’ financial situation based on the decision to pay in instalments, giving them insight into what experience they need. If someone uses BNPL to buy a low-cost item, should we sell more to that person? Can we optimise their experience to guide them to the right decision?
The key lies with customer experience (CX). Good CX fundamentally means caring for your customers, which makes them feel good about your brand. And investing in CX could be a brand’s most meaningful differentiator. Bad CX looks like the T&Cs step we’ve all experienced when installing a new app; the goal is to get us to tick and accept, not to understand.
Under the new FCA rulings, the CXO/CTO/CMO overseeing an operation will be directly responsible for any financial services products built which are deliberately complex or work against the interest of consumers. So it is crucial to know what a good experience looks like.
Brands that have good CX will grow faster than those that don’t. So brands need to consider what they include in their user journey carefully. Some easily missed elements are pivotal CX pieces and great reputation builders. Speaking in plain English and explaining things clearly is a good start.
Positive friction should not be dismissed. Banking apps are increasingly using facial recognition software to approve mobile payments.
But which customers need more protection, and what technology do they use? The UK is still the ’capital of fraud’ in Europe, and the most vulnerable are the older customers, who are also least likely to use mobile banking.
Brands need their agency partners to be accountable too. They should help them build the structures that enable good CX and the measurement frameworks to demonstrate progress.
Today we have the technology to measure everything from customer outcome to customer effort scores or the more well known customer satisfaction scores. It lets us track where the experience is smooth and where friction may be necessary.
When it comes to CX, the rising tide will lift all boats. Challenger brands such as Monzo and Revolut have made significant inroads into a historically impenetrable market by attacking the CX gap. And the changes by the FCA are a huge opportunity for Financial Services businesses to drive loyalty, increase customer satisfaction and boost referrals.
And that change is coming to your industry sooner than you might think! Good CX will quickly be a requirement across all sectors through new regulations, disruptors, or smart people applying good business practices and listening to what their customers want.