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Customer experience in the financial services industry – Focus not where it should be yet

The Ask Afrika Orange Index® is like the Oscars of the customer experience industry. The Index is South Africa’s broadest service benchmark which tracks, ranks and understands service and loyalty drivers based on robust, nationally representative sample sizes.

“The Orange Index ranks brands from a service point of view,” Ask Afrika’s MD Sarina de Beer recently shared at one of their market research roadshow events. “The aim is to create a snapshot for South African companies, establish and maintain best of breed practices, and ultimately boost the country as a service destination.”

Tracking and comparing performance across 31 industries and ranking 181 companies in 2019, it is the most comprehensive customer experience benchmarking and performance measure available, allowing for comparisons within and across industries. In view of the financial service industry’s focus on the fair treatment of customers, the question is how did the industry perform?

Unpacking the financial services customer experience

According to the Ask Afrika results, the financial services industry is struggling with service levels. On an industry ranking level, long-term insurance is the best performing cluster, obtaining 9th position. This is followed by short-term insurance in 15th position, banking in 17th position, funeral policies 21st and medical aid in 27th position.

Although the Long-term Insurance industry performance has seen a slight decrease in 2019, it is still performing above the South Africa average. Eleven companies have been measured in this industry. The top five companies are performing well above the average, with the rest performing below the South African average, indicated by high levels of inconsistent experience across competitors.

Short-term insurance has remained relatively consistent from the previous year and almost on par with the industry average. Twelve companies have been measured, with the industry performing below the South African average. The STI Industry performance has seen a decline from 2017 to 2019 with 2019 being the lowest performance since 2014. New winners are emerging with previous winners now ending up in the bottom half within the industry ranking and performing below the average.

Despite a steady increase in performance for the Banking Industry up to 2017, 2019 has seen a significant decline in performance. The results show a big drop for banking institutions in general, performing well below the average and a significant decrease in customer experience from last year. The five big players are included in the measurement with only the winner of this category performing above the industry average. When comparing the best performing brand to the poorest performing brand, we see massive discrepancies between scores for loyalty, emotion and transactional satisfaction.

A similar trend is seen for medical aid when compared to financial services. Although the medical aid companies’ performance has been stable over time, a consistent downward shift is noticed, and the industry is struggling to improve on service levels. Interestingly, companies in this industry have average performance with little differentiation between scores.

Funeral policies and burial services are performing well under the South African average and have seen a decline in 2019. Of the three companies measured, they all perform either on par or well below the South Africa average.

So what is driving customer experience from customers within the sector?

“We are seeing the resurgence of the importance of Trust and Reputation driving customer experience, and this trend is especially strong for the financial sector,” the Ask Afrika team shares. “As customers are becoming increasingly sceptical of businesses, especially within the landscape where business leaders have severely disappointed due to corruption and mismanagement, it is to be expected that good and ethical corporate governance will be important focus points for customers.”

The team further points out that the human side of customer experience is also an important driver for customer experience. Service, fairness and emotion is also important to customers during their customer experience engagements. In a world where customers are increasingly confronted with AI, chatbots, and robots, there seems to be a need for emotional and human(e) engagement. Importantly, although customer effort is not one of the main drivers of loyalty, when customers are required to exert high efforts during their experience interactions, it detracts from their overall loyalty or commitment to the brand.

The research further indicated that when brand loyal customers are interviewed, they state that they are loyal to a specific brand due to it fitting their lifestyles. “It is brand I love”, and “It puts a smile on my face” are some of the comments in the interviews. “This increasingly points to the fact that for brands to remain relevant, a customer dominant perspective is vital. Winners of the future will be those financial services companies that transcend transactional interactions and design customer experience strategies that fit within the everyday lives of consumers, integrate with their needs, and provide them with emotional engagement,” Ask Afrika concluded.

Earlier this year a PwC report titled: “The productivity agenda – moving beyond cost reduction in financial services” which highlighted important challenges and opportunities facing the financial services industry. It also offered ways in which senior executives should respond if they wish to move beyond simple cost cutting and improve profitability in the long term. One of the outcomes of the report was that “financial services organisations must get customer-centricity right if they are to bring a meaningful customer experience strategy to life. Get the customer experience right, and the rewards will be abundant – loyal customers, reduced costs, satisfied employees and higher revenues.”

The embedding of TCF or Treating Customers Fairly in the financial services industry is therefore not just a three letter acronym, it’s about making the fair treatment of customers central to the corporate culture of your company.

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