Reinventing customer engagement … why the financial crisis was a blessing in disguise for financial services

January 12, 2017

I end up doing lots of work with banks – big and small, digital and decidedly analog, niche and full service – innovators like First Direct and Moven, and also giants who want to reinvent themselves, like Deutsche  and Santander. Whilst there is much they can do in terms of rethinking brands and business models, strategy and social purpose, there is one thing they are obsessed about more than any other industry – customers.

ING Bank is probably doing more than most. The Dutch company has 52,000 staff in 40 countries, all constantly searching for an edge – new insights, new propositions, new experiences. It was therefore interesting to read the foreword to a new book Reinventing Customer Engagement by ING Group CEO, Ralph Hammers, who sets out why, exactly, it is of upmost importance for financial institutions to place customer engagement at the top of their list of priorities:

“It sounds strange, but the financial crisis which began in 2008 may have been a blessing in disguise for the banking industry. It forced banks to rethink their business models. Being big and global wasn’t necessarily beautiful anymore. It forced us to rethink how we could be more relevant to the customer.

It has been said that people don’t need banks, but they do need banking. Finance plays an important role in the economic and social development in every country. Financial services are at the heart of daily life for individuals and business. To operate effectively and to completely fulfil their full role in society, banks need trust to operate.

This is where customer engagement comes in.

Roger Peverelli and Reggy de Feniks argue in their new book Reinventing Customer Engagement that customer engagement, if implemented effectively, can help restore trust, lead to greater customer relevance and ultimately value for customers as well as financial institutions. The issue that lies at the heart of the book is how to define customer engagement? Is it putting customers at the heart of everything a business does, and what does that actually mean. The truth is that many companies differ in their understanding of customer engagement.

Trust and customer engagement can’t simply be won by continuously talking about it in advertisements or through a branch makeover. It has to be achieved through a sustained superior delivery of products and services, and by establishing a very real connection with customers. Engaging with customers is more than simply trying to please customers, it is about bringing value to customers in different ways by providing continuously tailored products and services built on a deep understanding of customers’ needs: pro-actively at the right time in the right place. The most successful businesses have been those that have been able to continually create value for their customers.

In addition to becoming more relevant to customers, the authors argue that effective customer engagement can help businesses differentiate themselves from competitors, lead to customers making multiple purchases and to generally help build brand advocacy and longer and stronger relationships.

But building customer engagement is easier said than done. In retail banking, contact with customers is increasingly done via digital channels. The issue is how you make these contacts engaging and personal in a highly commoditized digital field.

At ING, we have invested much time and resources in understanding customer behaviour better. This involved being in constant dialogue with customers and sharing knowledge and information in a two-way exchange. Understanding customers’ needs is easier to do when people have multiple products, but more difficult to do, when they don’t. This is why it is so important to establish primary relationships with customers.

At ING, we know from our own dialogue with customers that they want us to be clear and easy, to be available anytime and anywhere, to empower them to realize their aspirations and to continuously improve our products and services.

As banking moves further down the digital path and customers become increasingly discerning and wooed by new entrants, the challenge is on to find ways to engage and retain customers in a mutually beneficial relationship. Reinventing Customer Engagement is an excellent source of ideas and inspiration to this end. I thoroughly recommend it as a resource for anyone interested in gaining a deeper understanding of customer engagement.

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