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Banks that demonstrate low fraud rates will be able to offer frictionless customer experience by escaping legal requirement for extra authentication.

The upcoming Payment Services Directive - due to come into full force in January - has the sometimes competing objectives of facilitating innovation while also strengthening security and protecting customers.

New technology developments in the industry have been known to create sharp increases in the amount of fraud. Losses due to online banking fraud grew by 64 percent from £81.million in 2014 to reach £133.5million in 2015. Yet, high levels of investment in fraud detection and prevention technologies by banks have now helped to reverse the trend - with losses falling 24% in 2016.[1]

The developments under PSD2 will require a new emphasis on tackling the issue. The number of payment service providers who have access to customer data will increase. A greater range of companies will become part of the transaction chain.

Whilst the PSD2 seeks to bring more frictionless transactions for customers, it also includes a legal requirement for payment service providers to use Strong Customer Authentication (SCA) if their fraud detection and prevention rates are not robust enough. Firms will pay a double price if fraud rates increase after PSD2, as they will be required to introduce more friction into the customer experience of payments.

As PSD2 opens up the transaction chain to more providers, Farida Gibbs, of technology consultancy Gibbs Hybrid, warns that banks will have to adapt their fraud detection systems, but can use their fraud prevention capabilities to deliver real competitive advantage.

Farida Gibbs, CEO of Gibbs Hybrid, comments: “As Open Banking creates increased competition in payment services, it will be increasingly important for banks to demonstrate low levels of fraud. SCA, which requires added authentication from the user and can result in customers searching for an alternative payment processor, which is able to process payments without this layer.

“Banks and other financial services firms have put a lot of time and effort into technologies behind fraud detection and prevention. Technology that enables a firm to pick up early warning signs of fraud and promptly send text and email alerts to customers, for example, has been very important in keeping losses to a minimum. And banks have had to implement this despite the challenges of legacy systems and outdated technology processes.

“Their success in reducing the level of fraud losses through online banking is testament to the forward-thinking work that is being done. This will become even more important as Open Banking approaches.

“The legal requirement to put in place Strong Customer Authentication (SCA) will create much greater friction for consumers, but those firms who are able to demonstrate outstanding fraud management will be allowed to use Transaction Risk Analysis (TRA) instead. This has the great benefit of being invisible to customers, introducing no further delays into their payments.

“Analysing transactions behind the scenes for unusual behaviour is not a new method, and is one that banks should be able to adapt to the demands of the new Open Banking environment. The stakes are high – if they can demonstrate success in this area, providers will be able to create a great customer experience for payments, whilst keeping security uncompromised.”

(Source: Gibbs Hybrid)

Customer satisfaction isn’t something that resonates when we think about insurance companies, so what are they getting wrong? Karen Wheeler, Country Manager and Vice-President of Affinion UK, here presents for Finance Monthly 4 ways insurers can improve customer fulfilment.

The insurance industry didn’t have much cause for celebration when the Institute of Customer Satisfaction released its latest Customer Satisfaction Index. In a survey of over 10,000 UK customers, the sector faced the unenviable accolade of being the only sector not to improve its satisfaction index score compared to the previous six months. In contrast, banks, leisure and telcos were some of the sectors to show improved levels of customer satisfaction. This bad news was echoed by research by The Actuary, which revealed 27.9% find the insurance sector the worst when it comes to customer service.

So, for an industry which is notorious for low customer loyalty and bad service, what can providers do to build better relationships with their customers?

  1. Stand out in a crowded market

The challenge insurers’ face is that they operate in a highly commoditised environment, with customers faced with a sea of overwhelming choice. And the truth is that customers are often only basing their choice on price. According to research by Marks & Spencer, 95% of respondents stated that price was one of the most important factors to them when deciding which insurance provider to choose.

Insurers also know their customers will typically only make contact when they either need to make a claim, or renew a policy. And making a claim usually happens at a point of crisis, for example theft, damage or loss – when people are, understandably, feeling worried about their possessions, health or family.

These factors combined means insurers need to work hard to differentiate themselves from competitors by engaging with customers in a positive way, and finding new reasons to be a part of their lives. For example, thinking beyond the traditional, physical products insurance policies cover – homes, cars, phones – to solutions that can help customers keep their personal data safe online.

  1. Deliver the right digital service

In a world where we live our lives through our devices – using apps to transfer money, ordering shopping to be delivered on the same day – it’s clear that insurers need to keep pace with the digital age. However, there are still improvements to be made, a recent survey by Eptica found the UK’s leading insurance companies fail to accurately answer more than two thirds (68%) of routine questions asked through the web, email, Twitter and Facebook.

Looking to the US for inspiration, digital insurer Lemonade is making waves for its digital-first, fuss-free approach to claims. At the start of 2017, its virtual assistant Jim set a world record as it reviewed, processed and paid a claim in 3 seconds – with no paperwork. If all insurers can aim to deliver this level of service, which brings cost and time-saving benefits to consumers, this could lead to increased engagement, loyalty and advocacy.

  1. Think outside the box

Many people take out insurance policies and never have to make a claim. The appeal of a policy is the peace of mind it offers; consumers feel better knowing that if the worst happens, they have the support in place to help them. Of course, it isn’t just physical possessions – houses, cars, phones – that people want to protect.

With cyber hacking scandals hitting the headlines every week, consumers are increasingly aware, and worried about, the threat of online fraud. According to research by Callcredit Information Group, 66% of consumers perceive the risk of identity theft and online fraud as one of their biggest concerns around sharing personal information online.

As the old saying goes, prevention is better than cure – and this is certainly the case when it comes to online fraud. If a hacker finds out the password a person uses across several sites, it can quickly snowball out of control. This is clearly a risk many take, with Callcredit also revealing less than half (49%) of consumers regularly change their passwords as a way to prevent fraud.

  1. Become their digital guardian angel

So what can insurers do to help their customers? When you consider the perception consumers’ have of their insurers as guardians of their belongings, there is a natural role they can play in helping customers to prevent and detect fraud incidents before they have even occurred – and help assist and resolve issues if they do arise. For example, providing cyber prevention and detection services that continually monitor their customers’ activity online and flags incidents when they’re at risk.

With insurance often seen as a necessary, but not particularly enjoyable part, of life, insurers need to think beyond their remit and consider how else they can add value and benefits to consumers’ lives. That way, they may well move up the table in the next Customer Satisfaction Index.

The world of banking, perhaps more than any other industry, has undergone significant change in recent years. As technology, strategies and partnerships progress, we’re beginning to see new avenues of growth such as gamification, which according to Karen Wheeler, Vice President and Country Manager UK at Affinion, may hold the key to enhanced customer engagement for the banking sector.

The digital revolution has transformed the way people interact with their banks, within-branch visits falling  as the rise of mobile banking has led to customers being able to manage their finances whenever, and wherever they are. And this trend is set to continue, with new figures from CACI revealing that mobile transactions are set to rise by around 121% between 2017-2022, and the average branch visits dropping from seven to four by 2022.

Traditional providers have also been faced with the uprising of challenger banks, which are striving to capture the attention of millennials with their agile, digital offerings. The territory of the high street stalwarts is being encroached on by the likes of PayPal and ApplePay which have disrupted the payments market, traditionally an area which banks dominated.

To stay relevant and encourage loyalty in an increasingly competitive industry, banks know they need find new ways to engage with their customer base. With today’s consumers never far from their smartphones, and moving fluidly between digital platforms, could gamification be the answer in the quest for greater engagement?

Gamification explained

Gamification originates from the computer games industry, and aims to engage with the principles of basic human psychology. In particular, it involves an understanding of what motivates people, how we want to be rewarded – and what will make us play again. Or, for banks: stay loyal.  At its core, gamification has a human centred design; optimised for feelings, motivation, insecurities and engagement.

Some of the aims of gamification include: driving a level of competition within users that results in increased usage and engagement; tapping into the human need for esteem and self-actualisation to increase the levels of motivation; playing on the human desire for power in an attempt to drive users to log back in and increase their status; and evoking similar reactions to those elicited by gaming by releasing chemicals which invoke feelings of excitement, euphoria and pleasure.

So, what does this mean in practice; how can gamification be used within the customer experience?

Bringing gamification to life

There are normally a number of different mechanics used in gamification which include points (normally the main method of currency in a gamified system, as they play on the human urge to collect resources), and rewards, when a user earns points which can be translated into a ‘currency’ for exchange of goods and services (whether real or virtual), and gives the user something to work towards.

Building on the idea that we are all naturally seeking power and status, badges are also used to symbolise accomplishments and play on the human desire to show competence, and leaderboards are used to recognise achievements and promote friendly competition between users.

In recent years, gamification has evolved from its traditional rewards-based platform, to one fuelled by sophisticated data-driven capabilities which allows businesses to offer personalised, user-centric experiences. This is no surprise when you consider the way we now live our lives; the proliferation of devices, apps and social media channels means our expectations of the digital customer experience are high.

How can banks use gamification in the customer experience?

Gamification is actually not a new concept in banking; it has always been part of their  set-up and is now growing, driven by customer behaviour and digital capabilities. Back in 2011, Gartner predicted by 2015, more than 50 percent of organisations that manage innovation processes will gamify those processes. With this date now far behind us, how accurate was this prediction?

Back in 2013, Spanish bank BBVA led the way with incorporating gamification into the experience it offered customers. The provider analysed how its customers interacted, and found that many felt more secure in going to the branch to complete their transactions. BBVA Game was launched to encourage customers to use its digital platform; with the ultimate aim to improve their customer retention and online customer experience.

The game allows people to make account enquiries, pay bills and carry out different kinds of transactions. Where the gamification element comes in to the mix is that, with each completed transaction, the users will earn points. There are also challenges and missions for users to undertake, with medals and badges being rewarded – which can then be shared to social media.

What can traditional banks learn from challengers?

BBVA has also invested in the development of Atom, the digital bank leading the charge for challengers. In a clear sign that Atom wants to its customers something different, it acquired software company Grasp, which specialises in games and virtual reality development, to build its digital platforms. Atom claims to “celebrate your individuality in every way”, by allowing its customers to choose a logo, name and colours to personalise the app experience.

By allowing customers to adapt the interface to suit their preferences, Atom is tapping into the psychology of taking control by allowing customers to make their banking experience truly unique. European bank OTP banka Hrvatska has also recently announced impressive results from its new gamification platform, with 16.1% more clients signed up for mobile banking services and the number of clients using prepaid Mastercard increasing by 12.8%.

The future of gamification

Banks have to work hard to keep customers loyal, so changing the perception of banking away from a boring necessity to something more engaging is essential if they want to maintain their relevance and value in people’s lives. Gamification should be seen as a route to engagement; a part of the customer journey, not something separate.

Gaming creates positive emotion, drives social relationships and fosters feelings of accomplishment, by combining banking with fun, personalised and reward-based games.. This shift away from ‘banking as a service’ to ‘banking as an experience’ gels with the gamification model, and is one we can expect to see financial providers – both new and old – capitalise on as the digital revolution marches on.

The answer is that they are so much more. In a study released today, Dun & Bradstreet revealed data that uncovers the changing role finance leaders play in stewarding their organisation’s customer experience, a mandate traditionally viewed as one of the chief marketing officer. Because positive business results are often fuelled by great customer experiences, chief financial officers are increasingly using data and analytics to become customer-obsessed to ensure their organisation’s customer strategy is rooted in insights that will drive favourable outcomes.

The Customer-Obsessed Finance Leader, a study commissioned by Dun & Bradstreet and conducted by Forrester Consulting, found:

CFOs, with their leadership position, cross-organisational perspective, and ability to understand complex sets of data, are uniquely positioned to implement insights-driven behaviours and processes within their organisations. Investing in the right tools and technology, as well as augmenting internal data with third-party data and analytics are some of the key actions leading finance executives are taking.

Challenges to becoming truly customer-obsessed persist; disconnected strategies within the organisation, disparate data, inconsistent metrics, and a lack of investment in technology are among respondents’ most cited obstacles.

The study further outlines seven critical data competencies to master, qualities and resulting metrics that set customer-obsessed finance leaders and followers apart, and how-to strategies to focus efforts around using data and analytics to become a customer-obsessed organisation.

The survey, fielded within North America, Europe, and Asia Pacific in February 2017, included feedback from 250 finance executives (CFOs or EVPs of finance) from companies in multiple industries generating $150 million or more in revenue.

(Source: Dun & Bradstreet)

With the introduction of the Insurance Act 2015, everything changed, and one year ahead of its implementation, Tanmaya Varma, Global Head of Industry Solutions at SugarCRM, tells Finance Monthly about the impact it’s had on the market, its insurers and customers.

It’s no secret that the insurance industry is one of the most cut throat when it comes to customer loyalty. With competitive rates available at the click of a button on price comparison websites, customers have the freedom to pick and choose their providers with minimal effort, from the comfort of their homes. The abundance of insurance companies in the market means they are on a constant uphill struggle to provide not only a competitive price, but a customer experience that sets them apart from the rest. With Gartner estimating that 89% of organisations now compete solely on this, this is the new benchmark of success for insurers.

In a competitive market, retaining that loyal ‘golden customer’ is challenging. Insurers need to show they are evolving to meet the needs of modern customers, and are not just companies who do little more than churn out cheap holiday or housing cover. Research from The Institute of Customer Service revealed an increase in customer satisfaction from July - December 2016 compared to the six months before it, with a number of insurers listed in the Top 50 organisations for customer satisfaction, such as LV and Aviva. Despite this, the sector still experienced a 9.9 point drop in Net Promoter Score, a figure which summarises the overall neglect and disconnect between insurers and their customers.

So what are insurers already doing to address this, and what more can they do to improve customer loyalty?

Changing laws

It’s clear that how insurers treat their customers is being monitored at the highest level. Prior to 2016, the insurance industry had been left to stagnate. In a sense, it was an industry complacent with its low retention rates and poor customer service. This changed last year with the introduction of the Insurance Act 2015 which set a new precedent – with BIBA  marking it the “the biggest change in insurance laws in 100 years.”

The introduction of the Insurance Act promised to deliver greater transparency between companies and consumers. In an industry notorious for false claims, well-hidden small print and poor customer service, the shift was a much needed one. With this new act underway, it’s now more essential than ever that insurers have access to up-to-date data.

Providers were also instructed to improve communications across all channels to ensure clarity at all points in the customer journey. There is also an onus on customers to ensure they’re providing the correct information, and understand the policies they are signing up to.

Turning to technology

The right technology is of paramount importance to any customer-facing business. Insurers must harness tech to empower employees to work more efficiently.  One way this can be done is through customer relationship software systems, which allow customer data to be collected, stored and managed to deliver a 360-degree view of the customer.

By giving employees everything they need at the press of a button, this can help alleviate lengthy, confusing calls and improve the customer experience.  An easily-accessible system can deliver increased efficiency, better communication and happier customers. If we consider that in a survey conducted by Realwire 68% of questions asked digitally are inaccurately answered, it’s essential that insurers become more digitally focused and capable.

Some insurers are already adopting a digitally forward stance. The insurer Lemonade, for example, developed a virtual assistant at the start of 2017 called Jim who is able to process insurance claims in seconds. This virtual assistant reflects the advancements of AI and how some insurers recognise the power of tech. Realwire’s study concludes that with 91% of consumers saying good digital customer service from insurers makes them more loyal, it’s essential that insurers can deliver this.

The importance of the human touch 

The benefits, and potential, of technology as part of the customer experience are endless, but have their limitations. Yes, there have been significant advancements in Artificial Intelligence (AI), and the rise of the chatbot is a forever trending topic. But despite a continued integration of AI in to customer service, research by Vanson Bourne concludes that 91% of respondents still preferred to contact a real person.

AI is great in automating mundane tasks, and taking care of repetitive jobs where humans don’t add value. But, so far, a robot can’t empathise with a distraught traveller half way across the world who wants to check the small print of their holiday insurance policy. That’s something that only a human can do at present. This is proven further through SugarCRM and Flamingo’s research, that found that three quarters of people surveyed still aren’t happy with talking to chatbots – a figure which clearly translates across all industries.

The future of the customer experience

Machines are great at automating repetitive tasks, and chatbots are undoubtedly becoming more sophisticated – and at a growing rate. But the real benefits of technology appear when it aids and empowers employees, and helps customers be autonomous in self-service functions where the human touch isn’t needed.

For an industry that, according to Realwire, saw a 47% decline in performance in 2016, it’s essential that insurers act quickly to evaluate the customer experience they offer at every touchpoint. The insurance industry has generally been slow to adopt a better digital approach, but, when customer dissatisfaction is often rife, it could be the difference between keeping or losing a customer.

We’re living in a data rich world. IBM estimates that 90% of the data in the world today has been created in the last two years aloneThis means it’s crucial that businesses keep control of their sensitive customer data. Tanmaya Varma,  Global Head of Industry Solutions at SugarCRM, illustrates to Finance Monthly the true potential of data use in the financial services sector.

For banks in particular, the safe and efficient storage of data is not just a ‘nice to have’ but a requirement governed by legislation and industry standards. I believe that whether on-premise or in the cloud, banks should strive to capture all their customers’ data together in one place. Why? Because it will empower employees with the right information to give customers the best experience possible.

Bringing together data streams

Perhaps more than any other industry, financial services firm have a huge number of channels to collect customer data from; in-branch, over the phone, via social media platforms. This means they need to have the right data systems in place which can bind together all of their data to build a complete picture of a customer.

The right system needs to bring together front-office data – calls, meetings, leads, opportunities – and back-office data – accounts, transactions, delivery schedules, fulfilment and so on. There is also a need, particularly for capital markets, to have external data integrated, for example LinkedIn data (where did this prospect use to work?) and trading figures.

In terms of where the data is stored, in my experience banks generally choose to keep their customer data in the cloud. No modern business – bank or otherwise – should keep their customer data in siloes, as this immediately breaks a 360-degree view of the customer.

Meeting customer expectations

Today’s customers expect the best experience possible. The instantaneous pace we now live at doesn’t leave much time for patience – so consumers expect an instant response to their demands.  This means customer-facing employees need to have easy access to their customers’ background as soon as the interaction begins, if they are to stand a chance of delivering the best possible experience.

Customers need to know that, regardless of the channel, they’ll receive the same level of service and understanding of their needs and expectations. This all amounts to the overall customer experience, which is crucial when customers are faced with so much choice. The threat of losing customers because of bad service is very real. According to Accenture’s UK research, 34% of customers who switched financial providers in 2014 did so because of a poor customer service.

All customer-facing teams (sales, marketing, customer service and so on) therefore need to have the right tools in place. Technology should empower employees in their interactions with customers; giving them all the information they need, when they need it. For example, providing clear information on the customers’ previous interactions (when did they last contact us? What other products do they hold with us?) – to enable a seamless experience which proves to the customer they are valued and understood.

Turning to technology

Looking ahead, AI will become increasingly important for banks when it comes to the customer journey. Many banks are already open to the possibilities of machine learning – and it has to be said, the capabilities of chatbots is becoming very impressive. Swedbank’s web assistant Nina, for example, now has an average of 30,000 conversations per month and can handle more than 350 different customer questions.

But the customer experience depends on both the quality of the data, and how well employees can use it to then bring insight to their interactions. In my opinion, customer-facing employees and technology should work side by side to enrich the customer experience. The role of chatbots, virtual reality, NLP and so on should be to bring efficiencies to business operations, particularly when it comes to automating tasks and processes where humans don’t add value. In fact, a recent report by Accenture found 79% of banking professionals agree that AI will revolutionise the way they gain information from and interact with customers.

If banks rise to the challenge to store and manage all their data together, and their employees are supported with the right training and technology to quickly access customer data and understand – and even pre-empt – their needs, they’ll be on the path to success.

The customer experience is at the heart of every brand’s interaction with its consumer. For financial service brands, experience has become even more important to consumers who are increasingly accustomed to taking more control over their financial affairs - brands are judged by their products, communication and interaction too. Below, Finance Monthly hears from Kirsty Maxey, Managing Director at Teamspirit, and Caroline Bates, Group Board Director at Chime Insight & Engagement Group, who give us their thoughts on how your business can better its brand by investing in the individual.

In recent years, the Financial Services marketplace has changed beyond all recognition. We have seen the emergence of challenger banks, mobile only brands and other disrupters that were once a rarity but are today an everyday experience for consumers increasingly accustomed to taking more control over their financial affairs. Changing regulation means that consumers have no choice but to take decisions they have never taken before, such as in the recent pension freedoms.

Meanwhile, the brands who were hard hit by the credit crunch have by no means gone away. Many are upgrading their back-end service and CRM systems and embracing innovation with as much enthusiasm as the challengers. They are playing to their strengths, using their reach and resources to flex their muscles. Others are seeking a more meaningful connection with consumers, repositioning themselves around their heritage, their values and their social purpose.

At the same time, consumers are no longer merely passive, or even grateful recipients of products and brand messages and are increasingly vocal in their criticism of those which don’t deliver on expectations. The concept of instant gratification, once confined to the FMCG and entertainment categories, has made consumers raise their voices – and brands, likewise, raise their game.

In the light of this change and in the wake of the Referendum, Chime Insight & Engagement and Teamspirit set out to identify the key drivers and dynamics within this new landscape. We sought to understand how consumers feel about Financial Services brands, what their expectations are in terms of brand behaviours and the criteria against which they are evaluating their choices.

To this end, CIE/TS conducted proprietary online research in Q4 2016, surveying a nationally representative base of 2,000 UK consumers on 20 consumer FS brands across multiple dimensions grouped under 4 key metrics named as the four E’s:

The brands included traditional leading banks, insurance and financial planning providers and payment providers and solutions.

Better customer experiences

The study found that consumers are backing financial brands that don’t just do good, but do more. They want brands that put their purpose into action, with better products, better customer experiences and better communication and interaction, not just better ethics.

The best performing brands have taken their social purpose and put it to work as a set of operational behaviours, in terms of the products they develop, the unmet needs they address and the customer experience they deliver rather than a more passive ethos of values and beliefs that sounds good, but ultimately serve little practical purpose.

The top drivers for Experience were:

By contrast, being contactable via social channels such as Twitter scored poorly with respondents. Only 13% considered this essential to their customer experience.

This shows how ultimately people want to feel that they matter to the brand and that their problems and needs are the reason why the brand is in business. “It’s not what you do, but what you do for me” is the prevailing theme when it comes to experience

Customers vs non customers

The results also revealed interesting differences as well as correlations in the attitudes of customers and non-customers of the surveyed brands. By giving customer and non-customer audiences equal weighting, regardless of the actual sizes of the audience, we were able to gain new insights into the high scores in the study overall of brands that have very small user bases but big reputations and conversely, brands which enjoy very high penetration but without the corresponding fame.

We were able to use this data to create 4 separate segmentations, which could be applied to each E in turn and also to create an overall market map.

Authentic brands included First Direct, Apple Pay and Nationwide. These are the brands that have a high degree of consistency between the external promise and the internal experience. They include Apple Pay, First Direct, Money Supermarket, Nationwide and Prudential

Discovery brands, which included PayPal and LV= are the brands that you need to experience in order to fully understand. In PayPal’s case, for example, it makes perfect sense, because if a person has never used it, they are unlikely to appreciate its security and convenience in any meaningful way.

Seduction brands, which include TSB, Santander and Standard Life tend to be those which have recently raised their profile in the market, through advertising or a new strategy, driving awareness and interest among non-customers whilst it’s business as usual for existing customers.

Outcast brands, which perform poorly with both customers and non-customers tend to be those with a legacy of a poor reputation.

It’s also interesting that the findings around the attributes on which customers rated a brand most highly, were often different to those chosen by non-customers. This suggests that what brands are promising in their marketing messages is not reflected in the customer experience and highlights the importance of ensuring that the brand and its customers are telling the same stories in order to present a united front.

Drilling deeper

The research study also looked at the perceptions of customers vs non-customers individually per ‘E’, that is specifically for Experience, Engagement, Ethics and Evangelism. This provided some interesting insights into consumer attitudes towards these brands and the factors behind what it takes to get an Authentic positioning.

Overall, although customers of all the brands in the survey rated them more highly that non-customers, there were some important differences that help to shed new light on how brands can ensure internal and external perceptions match and that the journey from non-customer to customer is seamless, satisfying and inspires the right storytelling.

When it came to experience, the Authentic brands of Apple Pay, First Direct and Money Supermarket had higher scores for both non-customers and customers than across the 4 Es overall. This would indicate that higher than average expectations by non-customers are matched by higher than average experiences by non-customers. By comparison, Nationwide and Prudential both scored lower for both groups on this measure, although still above average. This would indicate that despite scoring above average for both customers and non-customers, Nationwide and Prudential’s Authenticity is driven by something other than ease of doing business (our experience measure).

For engagement, every Authentic brand except Money Supermarket had a lower (although still above average) score for both customers and non-customers compared to their overall score. This would indicate that likeability is a less influential factor than might be assumed. But it’s interesting that for Money Supermarket, engagement is a driving factor in its Authentic positioning, perhaps as a result of its recent marketing campaigns.

Similarly, for evangelism, all the Authentic brands scored lower than against their overall score, albeit still above average. Apple Pay and First Direct in particular have a much bigger difference between their customers and their non-customer scores for propensity to recommend, showing how both brands rely on their customers to recommend them

By contrast, when it came to ethics, every brand in the Authentic quadrant scored more highly with both customers and non-customers. This contrasts with the broader findings in which respondents were ascribed an equal weight and experience was seen to be the key driver. When we attribute equal weight to customers and non-customers regardless of the actual relative sizes of the audiences, it’s ethics that really matters.

First Direct scored very highly with both groups, but particularly with its customers with 85% agreeing that they do the right thing. Prudential likewise scored particularly highly with its customers for ethics, with an 89% score, showing how its reputation for integrity and reliability as embodied in the Man from the Pru, is still an important part of the company’s brand equity.

Online vs branch customers

We also discovered some key differences when it comes to online vs branch customers. The need for personal attention is considerably more important, with 81% of branch customers considering staff with authority to solve their problems being their most important criteria, but only 30% ranking an easy to use online or mobile service as their number one. This shows how branch customers clearly don’t believe that an online or mobile service is an adequate substitute for a face to face experience and will lack the empathy and personal responsibility they need.

Nationwide performed very strongly on the measure of Experience with 76% of respondents believing that the brand is easy to deal with. This most likely reflects Nationwide’s commitment to being easy to deal with, attributing its mutual status to its customer-centric approach and bringing its ethos to life in its operations. It’s worth noting that Nationwide have recently reverted to calling itself a Building Society again in order to differentiate itself in the market – and create some clear water between it and the banks.

Verbatims from the research bear this out:

“UK based customer care centre, always answer phone quickly and resolve problem/answer query with minimal fuss”.

“Their website is simple to use and when you have a query they get back to you very quickly”

By contrast, branch users rated being told when there is a better deal or offer available and long standing experience in the financial sector more highly. After all, they won’t be able to shop around and keep up to date in the way that online users can, and are unlikely to have connected with the brand via social media, so will be more reliant on brands letting them know directly, in this case, via the branch. What the research shows is that branch customers are just as keen on the latest news and best offers as online users are, so should be looking to their branches as a real-world information hub.

To some extent, this can be explained by the demographic differences between online and branch users, who are naturally older. However, it does illustrate the vulnerability gap that online brands need to fill and need to not only claim, but prove, their reliability in order to be recommended to the older demographic.

Perception is reality

Perhaps the final point worth making is to never underestimate the halo effect of delivering a great experience and having a strong brand image. Both Apple Pay and First Direct score particularly highly among non-customers, demonstrating that perceptions of a good experience can be strong drivers of recommendation, as well as actual experience.

In Apple Pay’s case, as the only brand to score highly among both customers and non-customers, reflects the strength of the Apple brand’s halo effect on perceptions of the product and the attributes that even non-customers automatically associate with it.

All of which comes back to financial services communications benefitting from a clear brand purpose, demonstrated through behaviours. It gets both customers and non-customers talking and leads to brand evangelism. It doesn’t get better than that.

Customer services dominated the UK outsourcing market in 2016 while the sector remained stable in the face of high economic and political volatility, according to the Arvato UK Outsourcing Index.

The research, compiled by business process outsourcing (BPO) provider Arvato and industry analyst NelsonHall, revealed customer services contracts accounted for 17% of UK outsourcing spend over the year, with a total value of £1.04 billion (2015: £449m), up from 7% in 2015.

The majority of the deals were to be delivered in the UK, with just 4% of agreements going to offshore locations, compared to six% in 2015.

The findings suggest that integrating digital and traditional contact channels remains a key driver for customer service deals, with the vast majority (87%) of contracts signed last year featuring multi-channel delivery, compared with 59% in 2015.

Media and telecoms businesses were the most active buyers of outsourced customer services in 2016 spending £707 million, followed by retail firms which were responsible for £194 million.

IT application and network management were the next most popular service lines outsourced in the UK market, with deals agreed worth £906.7 million and £503.3 million respectively, according to the findings.

Debra Maxwell, CEO of CRM Solutions, Arvato UK & Ireland, said: “The findings of the latest Index reflect the fact that excellent customer service is a key differentiator for businesses serving an increasingly digital customer base. With customers now also in the driving seat when it comes to how they communicate with brands, providing a seamless approach to the customer journey has become the norm. A growing number of businesses are partnering with specialist providers to deliver a multi-channel service which brings together both digital and traditional channels.”

The overall UK outsourcing market remained largely stable in 2016, according to the research. The findings revealed a 7% year-on-year rise in the number of outsourcing deals procured across the UK last year, despite the overall value of the market falling by 5% over the period. Outsourcing deals worth a total of £6.2 billion were agreed in the UK over the period.

The research partners say there has been a shift away from the traditional large, multi-process contracts towards procuring smaller, more focused deals. Overall, average UK contract values fell by 11% year-on-year in 2016, with the average length of deals signed remaining constant at 53 months.

Outsourcing growth among financial services businesses.

The financial services sector saw strong growth in outsourcing activity in 2016, with the value of contracts procured reaching £769 million, up 11% on the previous year.

According to the research, the rise can be attributed to a sharp increase in BPO spending as businesses turned their attention to deals in policy services, HR and property and casualty claims processing. The findings show BPO contracts worth £621 million were signed across the sector last year, up 87% on 2015.

Patrick Quinn, CEO of Arvato Financial Solutions UK & Ireland, said: “The financial services industry remains under pressure to transform, both in terms of improving services for customers and finding new cost savings.”

“It’s clear from the research that a growing number of companies across the industry see outsourcing as a viable strategy to address these challenges through introducing new innovations and ways of working. There are some very positive signs for the sector’s health looking forward, with a high proportion of first-time outsourcing deals (57%) procured last year.”

The Arvato UK Outsourcing Index is compiled by leading BPO and IT outsourcing research and analysis firm Nelson Hall, in partnership with Arvato UK. The research is based on an analysis of all outsourcing contracts procured in the UK market during 2016.

(Source: Arvato UK & Ireland)

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