Winning in the German Retail Banking Battleground with Customer Experience
Modern consumers expect exceptional services and frictionless buying experiences irrespective of how big or small the product that they intend to purchase. When it comes to the retail banking sector, digital disruptors and fintech firms often succeed in delivering an enhanced customer experience (CX) when compared to incumbent banking companies. Although the importance and prominence [...]READ MORE >>
Modern consumers expect exceptional services and frictionless buying experiences irrespective of how big or small the product that they intend to purchase. When it comes to the retail banking sector, digital disruptors and fintech firms often succeed in delivering an enhanced customer experience (CX) when compared to incumbent banking companies. Although the importance and prominence of retail banking companies will not die down anytime in the near future, customer expectations from banking is not the same anymore. As a result, incumbent banks are increasingly reevaluating themselves on how they perceive customer experience and what needs to be done to meet the changing customer expectations.
German retail banking companies overview
The German retail banking sector faced a rough ride during the financial crisis. While some banks almost drove off the road, others managed to stay on track, allowing them to overtake their competitors. However, the road ahead remains unclear for German retail banking companies. Innovative trends are shaping new traffic patterns, putting additional pressure on all types of banks, even those that are in decent shape today. The next five years will be crucial for the German retail banking sector to decide which turn to take to avoid a dead end. The German banking market has a unique three-pillar structure of private, savings, and cooperative banks. This distinguishes it substantially from banking sector companies elsewhere. German banking is also characterized by its strong dependency on net interest income, an extensive branch network, and a prudent risk profile. The long-term profitability is of German retail banking companies are low compared to global peer markets, and German banks have difficulty earning their cost of capital due to factors including high competition, low prices, and lack of focus on customer experience.
Trends shaping German retail banking sector
What are the common pitfalls that retail banking companies encounter in CX?
Most of the companies in the German retail banking sector have ample room for improvement when it comes to enhancing customer journeys by improving the overall customer experience. As customers are gradually changing their perception of an ideal banking experience, German banks must attempt to adapt. We have seen banks across the globe enthusiastically embrace the value of improving customer experience only to step into common pitfalls. Here are some ways to avoid missteps and set your customer experience strategy up for success.
Focusing on isolated touchpoints
Customer experience is often misunderstood as customer pain points that needs to be addressed. While these efforts are certainly vital to improve the overall customer experience, focusing only on these factors leads companies in the retail banking sector missing out on the root cause of these pinpoints. Furthermore, simplistic solutions that have been merely copies from competitors could sometimes prove to be misleading. Customers who rate single points of contact as satisfactory often tend to rate the whole journey as a negative experience. In such cases, these customers are less likely to become the engaged, valuable customers that banks strive for.
Ignoring key customer journeys
Once banks in the German retail sector have realigned their thinking toward holistic customer journeys, the next step is to map their customer journeys and figure out which ones are most critical to business. This includes taking into consideration factors such as the areas of improvement, factors that could have an impact on brand image, and other value considerations. For improving critical journeys, banks should determine what degree of improvement will make the most economic sense and generate the most value. German Retail banking sector companies must arrive at a decision on how much needs to be invested to create that “wow” experience for customers and whether the effort is worth it, given the expected additional revenue.
Choosing right customer segments to prioritize
Direct banking companies often show the highest customer satisfaction levels when compared to big private banks. Corporative banks, and savings banks. This is because the latter has a more diverse customer base with a range of differing needs, making it harder to provide superior service across the board. This necessitates banks to identify their various customer groups and determine how important each is to the bank’s business. The value of a customer to a bank can vary based on the product or service being offered and can be measured by number of products, loyalty, credit, or future financial opportunity. Companies in the German retail banking sector need to understand the needs of each group in detail and target the segment with an exceptional and differentiated experience across the end-to-end customer journey.