Rethinking service in the banking industry

Under growing scrutiny from regulators in the aftermath of the 2008 banking crisis, coupled with rapid advances in technology and new competitors, banks today are being challenged to fundamentally rethink the way they deliver financial services.

At the same time the industry is under pressure from savvy investors seeking better returns, while less sophisticated savers are asking for stronger regulation to protect their interests – even as many are tempted by risky investments.

How banks can meet those challenges was the subject of the 6th Wee Cho Yaw Singapore-China Finance and Banking Forum, held in late July. (The forum is organised by NUS Business School’s Centre for Asset Management Research and Investments, or CAMRI.)

atms280Established banks are facing growing competition from advances in technology and new playersSetting the tone for the forum, Hsieh Fu Hua, Chairman of Singapore’s UOB Bank, said it was important for banks to build “an authentic culture of service” to keep them focused on doing what is right for the customer “not just at that moment in time, but for the long term”.

Hsieh said that while the gap was narrowing between the vast knowledge of the financial service providers and the consumers who take financial decisions, much needed to be done to improve customers trust in the banking system.

The forum highlighted four key points:

1)    The banking industry needs to find new and better ways of servicing customers, building relationships and trust with them as long-term clients.

2)    While new technology offers opportunities and new products become available, similarly customers’ behaviour and expectations are evolving, putting pressure on the industry to keep in pace.

3)    There is a challenging relationship of users of financial services, the providers and the regulators in which protection has to be strengthened.

4)    To improve service performance, the financial services providers need to focus on developing staff to put their heart into thinking for the customer.

Hard-sell approach

In his keynote opening address UOB’s Hsieh said the vast information asymmetry between suppliers and customers is one of the factors unique to the financial services industry and poses a major challenge to those tasked with improving service delivery.

The gap becomes even more most pronounced, he said, when institutions take a short-term, hard-sell approach, resulting in many customers being pushed into buying inappropriate products.

hsiehfuhuah280Banks need to be focused on doing what is right for the customer “not just at that moment in time, but for the long term”In an effort to address that, Hsieh said, there have been moves recently by some banks to drop sales incentives, replacing them with performance incentives as well as tying to measures such as service satisfaction and sales quality.

While the industry now operates in an increasingly complex regulatory environment, for those with vision there is also opportunity he said. Banks that can manage new regulatory requirements without compromising service standards or the robustness of their processes will win more customers.

“I see technology playing a key role in making this possible,” Hsieh told the forum, noting that innovative use of technology, and the application of big data in particular, are avenues financial institutions are taking to improve levels of service.

Service benchmarks

Hsieh’s comments set the stage for panelists at the forum to examine the feasibility of benchmarking service levels in the finance sector to those in other industries – such as hospitality – as well as steps banks might take to rethink the concept of good service, particularly focusing on their role as information intermediaries.

Opening the panel discussion, Robert Lagerwey, Vice President, Operations, Capella Hotel Group Asia, shared his outlook on the concept of service based on his experience running a 100-room luxury hotel resort on Sentosa island in Singapore.

Service at the hotel, he said, is geared to keeping current customers, finding new ones, operating more efficiently and maximising the average spend by guests during their stay.

As happy employees and happy service generate happy customers who spend more money, he said, Capella believes in carefully training and empowering its staff to do a good job and act quickly to fix deficiencies.

Customer experience

Fellow panelist Piyush Gupta, Group CEO of Singapore’s DBS Bank, said that as banks are a fundamentally a service industry, the quality of the customer experience is critical for growth.

ThinkAloud4That, he said, was becoming more pressing as customers turn away from traditional bank branches in favour of e-banking services.

To improve service there has to be a process improvement agenda with the customer in the centre of it, he said, marrying the hardware and software effectively to achieve higher service levels.

As growing numbers of customers want self-service banking, Gupta said, banks will need to harness technology and yet also devise ways to retain one-on-one relationship with customers.

In his comments, Mr Eddie Khoo, Managing Director and Head, Group Personal Financial Services and Private Banking, UOB, noted that the rise of Asia had created substantial wealth but not a commensurate increate in the knowledge of how to manage it.

By placing emphasis on values like prudence, responsibility, hard work, long-term thinking and building long-term relationships, UOB had built up multi-generational customers, he said.

In the digital age, Khoo said, banks now have to think of providing new services in new ways as wealth management and investing online will become more popular.

Addressing the service and competitive challenges ahead, UOB’s Hsieh said banks must work to find “the right balance of driving financial performance with the very basic principle of acting in the best interests of the customer.”

“It is not just regulatory pressure that is now rebalancing the asymmetry of knowledge and empowering customers with more information. Banks themselves are investing vast amounts of money in technology to provide consumers access to a wealth of information on the market, products and services.”

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