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Managing a Customer-Experience Transformation in Banking



Regulation, fickle customer loyalties, nontraditional competitors are some of the woes of the global banking industry. As if a decade of razor-thin margins and reputation issues weren’t enough, the mix of challenges facing global banks makes it easy to see why so many now voice a commitment to improved customer experience as a legitimate differentiator in an increasingly competitive environment. The global large banks have now pledge themselves to some form of customer-experience transformation.

The benefits of such a strategy have been increasingly clear for some time across sectors and geographies. As demonstrated by some practitioners, real value resides not only in the products and services a company provides but also in the way that it delivers them.

A seamless customer experience can be worth at least as much as a superior product or efficient process—building customer loyalty, reducing costs, making employees happier, and boosting revenues significantly. One bank that undertook a customer-experience transformation concluded that the lifetime profitability of a satisfied customer willing to actively recommend the bank to his or her friends was five to eight times greater than one who had a negative perception.

Many leading banks are pouring tremendous resources into transforming the customer experience, often with mixed results. This is understandable. A customer’s banking relationship includes key journeys that range from onboarding and transacting to maintenance and problem resolution.

Effective transformations must not only recognize the complexity of these relationships but must also make a priority of the parts of the experience that matter most—in order to manage the cross-functional, end-to-end nature of customer needs rather than deferring to existing organizational structures.

Depending on a bank’s customer-experience goals, transformations can vary in regard to the time and resources required. A handful of elements are necessary to execute any program that will deliver durable impact. These include, among other things, a consistent focus on value, ensuring the customer’s central role in any transformation, and the ability to scale a program.

The following explores the ways that some banks have implemented these and other critical steps in constructing successful customer-experience transformations.



Customers are central to a wave of new opportunities and challenges facing banking executives, with regulators increasingly expecting banks to deliver on more than just credit-risk management and associated capital requirements. For example, regulators around the world increasingly examine customer complaints for examples of problematic sales practices and inadequate customer service. For the biggest banks, how they treat their customers is becoming more of a political issue.

Customers’ loyalty is also at risk. Banks face an expanding array of new competitors. The entry of companies like Alipay, Amazon Cash, Facebook Messenger P2P, WeChat, and other services skilled at customer ease and experience may, in the longer term, disintermediate traditional banks from customer relationships and reduce banks’ distribution margins.

Another consequence is that players outside the traditional financial-services industry are starting to set the benchmarks for customer experience in banking. Internet retailers and other e-commerce players typically sit atop customer-satisfaction rankings. Banks often lumber in the middle of the pack.

As banks pour more effort into improving experience, we find three missteps to be the most likely culprits when efforts fall short of the mark. First, many banks ignore the need to achieve early, quick wins to demonstrate value and build momentum for change.

Teams eager to achieve dramatic impact set out to create moments of customer delight and fix pain points across all journeys or processes at the same time and are often overwhelmed by the complexity and costs of redesign.

Ironically, another way that customer-experience transformation efforts go awry is by leaving the customer out of a front-and-center focus in propelling a change effort. Despite the growing awareness of the value in superior customer experience, efforts to improve it are rarely held to the same rigor as an effort behind, say, a traditional productivity transformation. The customer’s voice is often left silent as change agents latch onto digitization to leapfrog competitors, self-service improvements, and revamped staffing models.

Finally, banks often fail to set up transformation programs with scaling in mind. In complex organizations it is easy for change efforts to get stuck in the depths of business silos, even when the objective is to create a cross-functional platform for tracking customer preferences and improving outcomes.

Efforts that don’t give customer experience the same top-team and board attention as large-scale productivity-improvement efforts, and that don’t devote the same resources to oversight and measurement, risk lapsing into cursory efforts marked by meaningless bulletin-board slogans such as “customer experience is everyone’s job.”



Banks increasingly finding success with “at scale” transformation efforts. These efforts define the bank as a series of customer journeys that can be reimagined and applied across functions and the organization as a whole. As value is demonstrated, larger and larger parts of the organization are included.

In the early stages, such transformations take advantage of cross-functional teams that work within existing roles and in parallel with reporting structures. Over time, by emphasizing this type of agile collaboration, organizational structures can be revamped to deliver the new experiences sustainably over multiple years.

The result is a transformation that delivers early impact and momentum and an opportunity to evolve as needs change, without the disruptive shock of tearing up an operating model in the fragile, early stages.

Every customer-experience transformation following such a model relies on certain prerequisites:

These begin with a top-down, unwavering C-suite commitment to the program and to modeling the customer-experience behaviors that the organization espouses. They also include commitment to a bottom-up feedback loop to measure progress and involve employees in implementing and refining improvements.

At the center of such efforts lies a dedication to a customer’s end-to-end experience with his or her bank—that is, the whole journey rather than individual, transactional touchpoints in the relationship. In turning that commitment into a successful business strategy for banks, there are five elements critical to implementing a superior customer-journey and experience transformation at scale.


Hard wire customer experience to value

The financial benefits of improving customer experience are clear. Some customers see their banks as their main financial institution—a key driver of overall lifetime revenue. Many customer-experience programs are launched off the back of analyses such as this. However, few of these programs home in on where the value comes from. In addition, many do not hold themselves accountable to deliver greater profitability. Without a quantified link to value and a sound business case, transformation efforts can’t show early gains, build momentum among functional executives, or earn a seat at the executive team’s table.

To that end, it is useful for banks to apply the same rigor of value attribution to customer experience as they do for productivity programs.


Stay agile to ensure scalability

While the overall transformation needs to be broken up into manageable work efforts, setting up for scale should be the goal from the first day. Too often, retail banks build oversize, bespoke teams and processes to address individual customer journeys with inadequate ways of collaborating across functions and measuring progress.

The next step was to then systematically redesign and reengineer the customer journeys at scale. In order to provide senior management with a consistent way of discussing the status of journey redesign, bank managers set out to define a common “maturity” model that could be applied across all journeys.

The maturity model addressed four key gates to pass through on the way to customer-experience improvement.

The work at level one is to establish a fact base behind prioritized customer journeys, for example, understanding what truly drives customer experience and satisfaction in securing a home loan.


At the next level, define an overall target for improving the journey and established an “agile studio” to stimulate solution ideas and execute improvements. Such sprints take place over periods of two to four weeks. At the third level, map pain points to the underlying elements for each critical step in the journey and their importance to overall customer experience.

The end result: a set of actions that encourages early, better conversations with the customer on price. Throughout the process, a team also continuously tracks impact via customer and employee feedback.


Don’t forget the customer

Even banks that have thoughtfully created a flexible, iterative improvement process at times inadvertently overlook the most critical stakeholder: the customer. In the rush to digitally enable customer journeys and transform the customer experience, it’s easy to be swept away by a bias for technological solutions. But key customers can easily become skeptical about not having a human representative to call when things go wrong.

The right balance requires study, but when interactions are new or particularly complex, the personal touch is still an important differentiator of customer service. Without an explicit link to and inclusion of the customer, no transformation will ever be fully right.

Similarly, gathering and segmenting data are classic starting points in understanding customers. But data by themselves are insufficient. The most successful customer-experience efforts apply a human filter to collected information to address key questions about the motivations and wishes of customers.

Some of the successful transformations we’ve observed have included customers in their design via a variety of techniques: structured interviews, customer panels, zero-based-design workshops, and executives spending time in call centers and branches to experience firsthand what customers encounter and to shape customer-centric responses.


Continuously push for more value

Improving customer journeys is not a linear process. Often the first round of initiatives will not deliver the desired satisfaction levels. Moving from good improvement to great will require regularly going back to the drawing board and maintaining patience and a mind-set of always pushing for more in the interest of customers.

Such a continuous-improvement regimen can help foster a superior customer-experience mind-set. One way is at the front line, with employees closing the loop with customers on direct feedback, then using those insights to change the way the process is designed. A second benefit accrues from continuously improving service design.

Product companies understand better than banks and other service organizations that using customer insights is a way to develop a superior product. But banks have rarely invested the same way in service design. Creating a pipeline of feedback and actions, rather than simply reporting metrics, is one way to ensure that the customer’s voice is always present in any transformation effort.


Establish a cross-functional team with C-suite backing

Transforming customer experience in a bank requires bringing stakeholders from distribution, product, risk, legal, pricing, and other departments to the table. Regular risks include potentially conflicting agendas or timelines. Resolving these barriers requires active sponsorship from the top.

Leaders in customer experience pursue a number of approaches to overcome this kind of complexity. One way is to set up a dedicated customer-experience organization within the bank. Dedicated teams encourage a continuous focus on customer experience across product, service, and geographical silos. In contrast, trying to fit customer-experience team members seamlessly into the existing organization can wind up emphasizing narrow customer touchpoints, which reduces effectiveness. In all cases, the CEO must make customer experience a priority, and in some cases the appointment of a chief customer officer can serve to underline that commitment.

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The bank branch of the future – The smart-branch model



With technology disrupting every area of businesses, the banking industry is one of sectors that is mostly affected. Bank branches are beginning to witness smart models and digital technology has proven to hold the key to the branch of the future.

The bank branch as we know it, with tellers behind windows and bankers huddled in cubicles with desktop computers, needs reinvention. Most customers now carry a bank in their pockets in the form of a smartphone and only visit an actual branch to get cash or, occasionally, advice. Globally, financial institutions now process far more transactions digitally than in branches.

Despite such systemic changes, branches remain an essential part of banks’ operations and customer-advisory functions. Brick-and-mortar locations are still one of the leading sales channels. Even in digitally advanced European nations, a higher percentage of customers still prefer to do at least some of their banking at branches, according to research.

Changing customer behavior and the emergence of new technologies spell not the end of the branch but rather the advent of the “smart branch.” Smart branches use technology to boost sales and improve customer experience significantly. When done right, applying the concept transforms the way a bank branch operates (reduced staffing), significantly lowers real-estate requirements, and alters customer interaction (targeted, relevant sales and service-to-sales programs)—with a resulting 60 to 70 percent improvement in branch effectiveness, as measured by cost savings and increased sales.

Research shows that although many banks have started to adopt elements of the smart-branch model, most are not extracting the full value potential. Making branches smart is not a matter of simply installing new machines or buying a suite of tablet computers. Smart-branch transformation builds on three pillars:

  • The seamless integration of cutting-edge branch technology, which has become cheaper, more reliable, and more accessible.
  • The adoption of radically new, teller- and desk-free branch formats at every location.
  • The use of digital technology and advanced analytics to improve the operating model in branches, including personalized, data-driven sales and real-time performance management and skill development.

Smart-branch technology

For retail banks, technology has several goals: the migration of transactions and sales to digital channels, 24/7 customer access for every interaction, a personalized approach to sales, and a unified, omnichannel user experience—meaning that customers get a seamless experience whether they are online, on an app, or at the branch.

Customers should be able to come into a smart branch any time of day or night and get anything they need, from new products like loans or credit cards to service, quickly. And no matter what device they use, the user experience should be consistent. A number of technology solutions can enable these goals (Exhibit 2).

Next-generation banker tablets

Tablets give bankers the freedom to roam the branch enabling them to increase sales and provide superior customer service. The following four critical features allow bankers to be truly effective:

  • Live customer-transparency dashboards. These dashboards alert bankers when customers make transactions at branch machines, like ATMs, so they can offer support or personalized offers.
  • Advanced customer-relationship-management software. This software gives bankers a holistic view of a customer relationship and history of interactions with the bank, including applications, payments, and product holdings.
  • Digital sales modules. These modules allow bankers to use their tablets to meet customer product needs, including credit cards, automobile loans, mortgages, insurance, overdraft protection, and deposit accounts. They also support new-customer onboarding.
  • Assisted migration modules. These modules allow bankers to migrate customers to digital channels for services such as money transfers, address and email updates, check cashing, and large-check deposits and withdrawals.

Interactive teller machines

Interactive teller machines (ITMs) embed most branch services into a machine; in remote locations, they can function as a “branch in a box.” By incorporating remote connection to a human banker, ITMs effectively extend branch hours to 24/7 and allow customers to do most of the things they would normally come to a branch for, such as making deposits, performing account transfers, cashing checks, getting statements, and authenticating over-the-limit cash withdrawals and money transfers.

Customers can also apply for and receive products like credit cards, debit cards, and loans. Customer-authentication technologies include national ID and passport readers, fingerprint scanners, two-step mobile authentication, digital-signature verification, and even facial recognition. 

Service terminals

With fewer features than ITMs, service terminals are simple, inexpensive devices that can be placed both inside and outside of branches (for example, in shopping malls). Their main objective is to help less digitally inclined customers feel comfortable with the experience of digital banking.

They provide the same user experience and interface customers would get on a mobile device and process nonfinancial transactions, such as statement requests; they can also transfer money between accounts and accept applications for new products, such as credit cards.

Video-conference rooms

Located in the self-service area of the branch, a dedicated, secure room equipped with video-conference technology and co-browsing software is accessible at all hours. While most individual customers will gravitate toward ITMs, video-conferencing rooms mainly serve small and medium-size businesses or individual customers with complex product needs, such as mortgages. Customers can use video conferencing to get sophisticated advice, open lines of credit, sign letters of guarantee, and update their business details, all in a confidential environment.

Interactive welcome screens and walls

Imagine a customer passing by a large video monitor inside her bank branch. She is recognized by facial-recognition software and identified through data analytics as not owning a car. Immediately, her image is superimposed in front of a new vehicle; the screen prompts her to knock on the window, which opens the “car door” and gives her a view from the driver’s seat. She is asked if she is interested in a car like the one shown, and if she replies, “Yes,” she is offered a low-cost loan, based on the bank’s existing data on her.

A nearby banker, alerted by his tablet’s customer-transparency dashboard, comes over to provide more information. This is one example of how interactive walls can capture customers’ attention and gamify interactions and product marketing. On a more basic level, interactive welcome screens can greet customers and immediately direct them to appropriate channels.

Smart-branch formats

In a traditional bank branch, 70 percent of the floor space is devoted to tellers and other assisted-sales and -servicing areas, with 30 percent dedicated to self-service. Smart branches flip this ratio and have a significantly smaller, simpler, and more streamlined footprint. Instead of wandering around trying to figure out where they need to go, customers are immediately approached by employees who guide them to intuitive pieces of technology or assist them directly on their tablets. Except for a few large, flagship branches, teller counters and most of the back offices are gone. In their place is a distinctive layout constructed from the following three building blocks:

  • Self-service area. Located at the entrance of the branch and taking up most of the space, the self-service area is the core of the smart branch. It is open 24 hours a day and offers ATMs, ITMs, service terminals, interactive digital walls, robot greeters, and a video-conferencing room.
  • Standing-desk zone. Within the self-service area, bankers at standing desks can proactively approach customers for sales and assisted services. Standing desks also signal to customers that transactions will be quick and efficient—with no need for a long sit-down.
  • Priority lounge. Larger branches can include priority areas for customers and businesses to receive premium advisory services and support.

Smart branches will all share a streamlined, more efficient design, but there are several archetypes banks can use based on what is most effective for a particular location (Exhibit 3).

A new operating model for a new branch

The advent of the smart branch has implications beyond the redesign and reformatting of customer interactions. It also requires fundamental shifts in how banks think about and support the branch and its employees. 

A technology-first and needs-focused mind-set

Digital technology should not be an add-on to existing practices and processes. It should be built into customer interactions and employees’ day-to-day work. The goal should be to migrate more than 90 percent of simple customer activities to assisted or self-service formats; to have simple, unified, paperless processes for sales and service; and to use next-generation analytics to deliver personalized offers that are truly relevant for customers. While traditional bank branches are reactive and service oriented, smart branches are proactive and focused squarely on customer needs.

Transformed roles and capabilities

In the smart-branch model, almost all branch employees will be multiskilled sales and service bankers and will spend 90 percent of their time on targeted, analytics-driven activities. With most simple sales and service customer needs met through self-service tools, the need for greeters or tellers will be reduced. And the employees that do staff the branch will be equipped to deliver more for customers when they need it.

Importantly, technology doesn’t just make life easier for customers; there are effective tools to train bankers in the higher-value functions of delivering advice and sales offers.

Digital performance management

Digital tools can improve performance of branch employees and the branches themselves. Digital huddle boards, for instance, can be highly effective for planning the daily goals and strategies of both individual bankers and teams. They add to self-reported performance metrics by looping in data from sources such as ITMs and tablets with an analysis of customer movements within a branch that are generated from facial-recognition software. Branch managers can get transparency into employee performance through a simplified command center on their tablets.

Recent time and motion studies have shown that the expectations of branch-resourcing models are considerably out of line with the actual workload. An accurate view of the duration of common activities, such as transactions, and untracked customer demand leads to more realistic resourcing models. Advanced management dashboards that track real-time workloads and sales results give managers the flexibility to shift resources as required in a fact-based manner.


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