NEW YORK, June 8, 2006 (PRIMEZONE) -- Most financial institutions are better at the rhetoric of customer centricity than the practice, according to a new report from PricewaterhouseCoopers and the Economist Intelligence Unit (EIU). The report, "Winning the Battle for Growth: Building the Customer-Centric Financial Institution," says that to become truly customer-centric, financial services companies need to improve their technology, effectively use customer information and invest in developing quality customer-facing staff.
Although the majority of respondents said that the quality of customer service and staff is more important to revenue growth than product performance, less than a quarter rated their customer-facing staff highly. Nearly half (48 percent) said they invest most in products and services training to improve staff performance -- more than three times the number who cited behavioral programs to improve customer service.
"The quality of customer-facing staff is critical in fostering customer loyalty, and ultimately in driving revenue growth," said Steve Davies, partner, PricewaterhouseCoopers. "Successful companies are those that invest in their people and integrate their whole approach to human resources with the customer in mind."
Many firms are still unable to share customer data across products, business units or customer channels, depriving institutions of a single view of the customer, the report found. Not surprisingly, 67 percent of senior financial services executives surveyed for the report said that improving IT systems is their company's top strategic priority for the next 12 months as firms aim to retrieve relevant customer data in real-time and to analyze customer behavior in order to anticipate and meet their needs.
"Achieving a single view of the customer is only part of the solution," said David Holtzman, managing director, PricewaterhouseCoopers. "Institutions also need to banish product silos. It is no good being able to exchange data between business units, branches or call centers if the people who work there are neither encouraged nor motivated to work together. Instead of treating each division as a separate profit center, firms need to ensure that all parts of the organization pull together in the interest of the customer, which means constructing profit centers around customers and customer segments."
Additionally, 38 percent of respondents said their organization is structured around products rather than customers and 33 percent cite a lack of good information on customer satisfaction and expectations.
"The winners in the financial services industry will be companies that improve their IT systems, create customer-focused information and invest in their people," said Davies. "Those companies that have already taken these customer-centric approaches are realizing considerable commercial success. Others have no choice but to follow."
The report concludes that financial institutions must take five steps to best meet customers' needs:
-- Abandon product silos: sharing data across product lines
-- Understand the customer: using data to get a full picture of
the customer and tailoring products to their needs
-- Identify and appoint a customer champion: having a powerful
advocate for the customer
-- Empower customer-facing staff: investing in training and
motivating staff to offer customer-centric solutions
-- Create and follow suitable customer metrics: collect and use
non-financial metrics in addition to financial metrics
According to the report, financial institutions must gather and analyze data more effectively in order to address shifting customer needs. The report shows that analysis of data is now more likely to be focused on customers' product histories rather than their loyalty or future value to the organization. Financial institutions are also more likely to collect financial metrics, such as average revenue per customer, than non-financial ones, such as customer satisfaction. They often prioritize financial metrics when setting goals for staff, although most report that financial metrics are less effective than non-financial metrics in illustrating how customer-friendly organizations are.
"Gathering data is only the first step," said Holtzman. "The problem is not so much about getting the data but about whether companies use it to attract, grow and retain profitable customers."
Just 38 percent of executives surveyed said that customer-related metrics (such as customer satisfaction levels, feedback, etc.) were used to identify and prioritize the development of staff within their company.
The report draws on survey results of more than 250 senior financial services executives, including 38 in the U.S. Nearly half of these executives, 48 percent, consider problems with technology the leading challenge to becoming more customer-centric.
PricewaterhouseCoopers (www.pwc.com) provides industry-focused assurance, tax and advisory services to build public trust and enhance value for its clients and their stakeholders. More than 130,000 people in 148 countries work collaboratively using connected thinking to develop fresh perspectives and practical advice.
"PricewaterhouseCoopers" refers to the network of member firms of PricewaterhouseCoopers International Limited, each of which is a separate and independent legal entity.
2006 PricewaterhouseCoopers. All rights reserved.
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Notes to Editor:
"Winning the Battle for Growth: Building the Customer-Centric Financial Institution" is the 14th report in the Financial Services Briefing Program from PricewaterhouseCoopers. The program addresses key strategic issues facing the industry with the emphasis on drawing conclusions about best practice and future trends. Other briefings in the series include:
-- Economic capital -- Offshoring -- Growth -- Improving Performance -- Risk management -- Governance -- Rebuilding public trust -- International Financial Reporting Standards -- Compliance -- Restructuring -- Wealth management