IT can help in year of recovery

Lending Strategy Dec/Jan 2009

2010 will be the year lenders once again start to get to grips with the business of lending money, which suggests they will be looking for competitive advantage wherever they can get it

The Financial Services Authority’s Treating Customers Fairly initiative must form an integral part of every lender’s strategy in 2010. It requires no explanation here, save to say that it crystallises the need to put customers at the heart of everything lenders do. This means thinking about the experience your customers have when dealing with you, and technology can help in this regard.

As well as marketing and dealing with complaints TCF places stringent requirements on all aspects of a lender’s communication with its customers such as advice, information, sales and after-sales. Increasingly, technology is at the heart of these interactions and every touch-point between customer and lender adds up to the sometimes indistinct concept we understand as customer experience.

Regulation aside, 2010 will be the year lenders claw their way out of the turmoil of the credit crisis and once again start to get to grips with the business of lending money. That’s not to say that there will be a flood of new mortgage deals available but it does suggest they will be looking to establish competitive advantage wherever they can. This means being an attractive prospect to customers and keep- ing them from being unsatisfied and going elsewhere.

In the past year or so lenders have been primarily concerned with tightening their belts and self-preservation. Add to this the mayhem of recent merger activity between firms of all shapes and sizes and it can sometimes feel as though customers are taking a back seat.

There’s a big role for marketing and communications in managing customer perceptions but in this article I will focus on the role technology can play.

If lenders or their outsourced servicing partners want to make a dramatic impact they must be prepared to show a little pioneering spirit.
Playing it safe won’t cut it as customers’ expectations become ever more advanced. There’s a certain element of technological progress that consumers take for granted nowadays, and not keeping pace doesn’t reflect well.

The technology that can make a difference in customer satisfaction is evolving rapidly and grabbing it by the horns will be the key to success. Customers do business with financial services companies through many channels these days, but the risk is that the experience for them can become disjointed and inconsistent.

This can create customer confusion and frustration or even worse, customers who abandon you for the competition. It’s therefore vital to ensure that every channel of communication - contact centre, website, interactive voice response, written materials and other correspondence - is consistent with the perception you strive to create. All the above must live up to the promise of your brand.

Businesses need to continually find better ways of delivering the customer experience. I don’t intend to wax lyrical about things such as social networking websites but there is no doubt that they offer new opportunities to communicate and collaborate with customers to the benefit of both parties.

After all, it would be naive to think the financial sector is not affected by the fusion of media and communications.
The convergence trend is undoubtedly a driver for better customer experience in our industry. Technology providers are increasingly enabling multi-functional access on a single device.

For example, the average mobile phone can now be used for voice, SMS, MMS, Skype, video-calling, email and more. These devices increasingly have a level of intelligence to allow them to search for the best deals and easily access information wherever it exists. If today’s customers are reluctant to queue, tomorrow’s may refuse. So in future companies will need to consider their customer experience strategies to deliver efficiency, scaleability and quality in their offerings while keeping their dealings with customers fresh.

Customers will want better service around the clock. Their information will be guarded more fiercely and they will be ever more demanding of direct communication via the medium most convenient to them. So if a customer has specified that they prefer emails to the telephone and their lender then phones them, this will provoke indignation.

Automation and self-servicing are not new developments in financial services but they are increasingly important when looking to meet the growing demands of customers.

The idea that certain standardised transactions can be carried out without the involvement of one of your employees offers benefits to you and your customers in equal measure. Of course, getting this right is no easy job but when you do it means your live agents are freed up to answer the right calls and provide first-time resolutions because the process is more streamlined.

It also means customers are not frustrated by long-winded IVR processes or getting unclear information, and I’m sure we all know how soul-destroying it can be to deal with an automated system that doesn’t understand what we want.

Often, it’s simply a case of being sensible in what you seek to automate. For example, features such as the ability to go through security questions via the web in advance of a phone call or easy access to live agents if needed will streamline your processes. Non-standard enquires are usually best identified as early as possible in the process and left to real people!

To implement automated systems and processes requires meticulous market analysis. Key factors include knowing the cost of transactions via different channels and customer preferences by demographic as well as understanding the cap- abilities of the technology you are looking to deploy.

Automation can bring particular benefits when you are outsourcing elements of your customer service such as mortgage servicing. This is because when automation is implemented by a servicer it can provide more assurance of adherence to your strategies.

The elimination of manual intervention where appropriate helps to remove the risk of errors that can arise while ensuring consistency and accuracy, making sure customers are treated in accordance with your strategy and within a framework of TCF.

Lenders will benefit from better credit management results, with the aim of getting pre-litigation accounts to return to the point where there are no arrears - the point known as ‘cure’. Automation leaves a servicer’s personnel more time to liaise with customers and gain positive results.

Technology can also help model and automate the credit management strategies, data attributes and business rules of each client, of which there could be hundreds. This streamlines credit management, making it more efficient and con- sistent and placing it at the fingertips of all consultants in a servicer’s operation.

To put all this crystal ball-gazing into context I can report on our own experience as we are in the process of implementing some of these developments.

For example, our customer service representatives generally get 18% of all calls on the last working day of each month. We are introducing an automated verification process to allow every caller to pass through the necessary security and identification questions without needing to speak to a live operator until after the verification process.

This simple change will optimise the time spent on the phone between customers and operators, meaning that if an operator needs to be involved they will be but otherwise they can deal with other issues elsewhere.

The next system we will roll out will automatically match customer needs to the appropriate HML personnel. At this point we will be capable of identifying the requirement and connecting the customer not only to a member of our team but to the one best equipped to deal with the issue, according to that individual’s skill set.

This will eliminate a lot of wasted time for our advisers and for customers who will benefit from not being passed from pillar to post in our phone system.

All these developments fit in with our lean management philosophy. This involves identifying customer demand and meeting it in the most efficient way and cutting out waste at every stage of production to create a smooth flow.

We are training our staff to apply lean thinking in all their work. This isn’t simply a cost-saving exercise - it’s about improving our business.

A question of culture
To gain maximum benefits, initiatives such as this need to be embedded in the culture and operations of a business. For example, a basic tenet of lean management is what is known as root cause analysis.

We get about 40,000 calls every year to our service desk from customers with problems such as login trouble. We need a reliable incident management system that gets to the root of why each issue occurred because if problems are not resolved properly it can be expensive in terms of both time and money.

We now have the skills within our teams to identify root causes, investigate problems and minimise repeat incidents.

These principles can be applied to any business to positive effect. The combination of upskilling people and the automation and self-service technology men- tioned above can contribute to the goal of a slicker customer experience.

The less time customers spend on the phone being passed from department to department or going through lengthy security processes, the more satisfied they will be and the more time employees will have to work on tasks more suited to their expertise. It’s all part of the aim of enhancing the customer experience.

There’s no doubt that a good customer experience is important to any service-based business. The challenge lies in setting yourself up to deliver that exper- ience by having the right culture, people and technology in place. Being known for a great customer experience is something we all strive for, and it is likely be more important than ever in the next 12 LSmonths.