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How can we consistently think from the customer’s perspective in banking

hpo Insights

How can we consistently think from the customer’s perspective in banking?

hpo Insights

Banks increase their future viability if they put their customers back at the center of their activities – without ifs and buts. In other words, you consistently align your value proposition, product and service portfolios, process, and organisational structures, and your employees with your customers. hpo Insights shows you how to tackle this.

Consistent customer orientation as an economic imperative – also for banks

Changed general conditions

Various factors and trends characterize the banking environment. These include regulatory requirements, competitive situations, but also customer satisfaction or technological developments. Observers even speak of a veritable identity crisis for the banking business model.


Dissatisfied customers willing to switch

Studies in Switzerland and neighboring countries show a relatively high proportion of unhappy bank customers. This can be attributed, among other things, to a gap between client needs and the actual offer. Per capita earnings from dissatisfied clients are significantly lower than those of particularly satisfied account holders who purchase more products, stay longer with the institution, and recommend it more often.


Need for strategic action

Our own observations show that many banking institutions give priority to automation to increase their efficiency. For a company’s future viability to be strengthened, it is essential to find the right balance between cost optimization and investment. This includes decisions on:

  • target customers;
  • product and service portfolios;
  • distribution channels, and
  • process organisation.

All this helps to increase efficiency and generate growth again. Finally, the mobilization and qualification of employees also play an essential role in the bank’s upcoming transformation tasks.


“There is nothing quite so useless as doing with great efficiency something that should not be done at all.” Peter Drucker

Four success factors in customer orientation

Success factor 1: demand-oriented target groups and value proposition

Traditional segmentation criteria (assets under management, domicile, age) serve internal bank needs – but not customer satisfaction. Replace them with a target group formation based on needs with corresponding performance promises.


Design philosophy hpo

  1. Not all customers are the same!
  2. The combination of factors that influence the behaviour of bank customers allows the identification of personas that represent homogeneous target groups.
  3. The needs of bank customers are influenced by several factors, including
    • their basic orientation (values)
    • their financial affinity (knowledge and interests), and
    • the origin of the money (heir, entrepreneur, employee).
  4. By analyzing the customer journey, the “journey” of the customer to satisfy a need, direct and indirect contact points (so-called “moments of truth” or “pain points”) can be identified, described and differentiated according to personas.


Practice proven approach


  • Understanding the current customer segmentation
  • Hypothesis-driven design of demand-oriented target groups and performance promises:
    • Description of different personas as representatives of target groups
    • Customer-journey workshops with customer advisors and segment and product managers from the bank to identify the needs and requirements of these personas
    • Derivation of target group-specific performance targets in response to customer expectations
    • Testing of the project results with bank customers as representatives of the personas described to identify possible internal errors in thinking efficiently


Personas (illustrative)


Customer benefits

  • Increasing customer satisfaction by identifying customer needs per customer segment and deriving a customer-oriented value proposition
  • This enables the Bank to:
    • strengthen customer loyalty;
    • increase of the share of wallet per customer, and
    • increased acquisition of new customers through positive word of mouth.

Success factor 2: customer-specific products and services

The target group-oriented performance promises must be reflected in the product and service portfolio. Develop the service as well as the way it is delivered to the customer and make it available for daily business.


Design philosophy hpo

  1. Innovation is a crucial factor in driving the organic growth of companies.
  2. According to our understanding, innovation comprises all activities that enable a company to offer new products and services to customers in the future, to develop necessary competencies, and to further develop the company in General.
  3. For banks to be able to offer needs-based products and services to their customers in the future, they must:
    • understand their future needs, derive performance promises from them and build up the necessary skills for various innovation stages (fundamentals – technologies – products and services) or purchase them via partners, and
    • implement innovation structures that are different from day-to-day business and enable portfolio-based innovation that is actively applied thanks to user-friendly tools.

Practice-proven approach

  • Analysis of the future needs of the target groups and the perceived value of the bank services
  • Design of the derived value proposition structure (services to be generated in day-to-day business and necessary preliminary services)
  • Design of the innovation architecture, which describes the capabilities for the (further) development of the company and its products and services
  • Construction of an innovation machine (process model with stage-gate logic to control specific innovation processes) and anchoring in the organisation
  • Digitization of the innovation machine with the help of a user-friendly management tool

Key Elements of the "Innovation machine"


Customer benefits

  • Customized products and services
  • By building an innovation machine, the bank achieves:
    • massively reduced time-to-market with innovations relevant from the customer’s point of view
    • increased innovative strength through transparency, manageability, and measurability of innovation processes
    • a decision basis for prioritizing projects and targeted budget allocation

Success factor 3: multi-channel-capable process and structures

Today, customers want to deal with simple requests online. For complex issues, they ask for seamless multi-channel advice. Translate changing customer behavior into end-to-end processes and structures with multi-channel capability that also relieve customer advisors of administrative tasks.


Design philosophy hpo

  1. The first step is to understand the relevant customer segments, their needs, the value proposition, and the derived benefits (products, services, inputs).
  2. Following this, all the activities are defined that are absolutely necessary along the customer life cycle to create this Service.
  3. According to the required competencies, these activities are “cascaded” and “segmented” to create:
    • consistent and measurable end-to-end responsibilities;
    • clearly defined interfaces, and
    • process variants according to the business case.
    • Finally, the processes are anchored in the organisation.

Practice-proven approach

  • Analysis of the current services, roles, and responsibilities of front-, mid-, and back-office areas of the bank along the customer life cycle
  • Analysis of business unit strategies and representative business incidents
  • Design of a multi-channel and competence-based business process model to increase customer orientation and thus sales effectiveness and efficiency
  • Development of a pilot concept for an optimized customer service process to relieve the customer advisors of administrative tasks
  • Rollout with support from professional change  management expertise


Multi-channel access in the customer life cycle


Customer benefits

  • Functional multi-channel access through enhanced self-service offerings, access to available service experts and personal customer advisors
  • By designing multi-channel capable structures, the bank achieves to:
    • exploit earning potential through increased customer satisfaction, and
    • increase the cost competitiveness through optimal service provision.

Success factor 4: customer-oriented corporate culture

Break up the thinking and acting in bank-internal silo structures and replace it with customer-oriented and process-based organisations. Adapt the profiles of client advisors to the changed conditions and mobilize employees in line with your strategy.


Design philosophy hpo

  1. An organisation can only successfully implement a strategy if it has the appropriate cultural foundations  – especially in times when, according to studies, almost 50% of all bank employees no longer identify with their job.
  2. Corporate culture is a set of shared values, norms, and attitudes that shape the decisions, actions and behaviour of the members of an organisation.
  3. Appearances of the culture can be changed, and thus new values and approaches can be anchored in the organisation.
  4. Individual measures to achieve the desired corporate culture (for example, “high market and customer orientation”) can be consolidated into actionable, communicable, and controllable fields of action.

Practice-proven approach (example)

A major bank integrated two sales organisations with very different cultures into one powerful new unit utilizing a strategy-based cultural change. The senior managers were involved in this process via interviews, and around 10% of employees were involved via cultural workshops.


This led to significant fields of action in which a common target culture was established through a targeted change in so-called “material manifestations,” which provided optimal support for the new strategic direction. This included, for example, defined career models or new advisory processes with a clear specialist and management model and a more focused approach with a higher client contact rate.


Manifestation of the corporate culture


Customer benefits

  • Improved customer experience through professional advice and support from motivated and qualified bank employees
  • The bank creates the conditions for successful implementation of the strategy by ensuring that employees understand it and identify and support specific transformation projects

Voices of satisfied hpo customers

Statements regarding success factor 1:
demand-oriented target groups and performance promises

Head of Private Clients Division,

Thurgauer Kantonalbank

“The approach recommended by hpo has allowed us to put ourselves in the shoes of our target customers with the help of personas and to optimally understand their needs and requirements, translate them and test them efficiently with real people.”


Head of Factoring,

UBS

“The question was how the bank could satisfy the high expectations of its customers with competitively priced services. Thanks to the support and open ‘challenge culture’ of hpo, it was possible to touch the ‘sacred cows’ and develop innovative solutions.”


Statements regarding success factor 2:

customer-specific products and services

Managing Director IT Solutions,

Erste Group

“The new enterprise design ensures a situation-specific balance between product and customer orientation, clarifies interfaces with our partners, and strengthens our innovative ability to be best prepared for the upcoming challenges.”


Head of Market Services,

Thurgauer Kantonalbank

“With the professional support of hpo’s industry and methodology experts, we are well on the way to consistently aligning our offering in the investment business in a customer-oriented manner.”

Statements regarding success factor 3:

multi-channel-capable process structures

Head of Central Switzerland Region,

Credit Suisse

“The consultants of hpo have supported us in a goal-oriented and efficient way of transferring the customer-focused multi-channel strategy into a sustainable business process model.”


CEO,

Bank-now

“hpo is an ideal partner when great importance is attached to the successful implementation of a  strategic reorientation.”


Head of Product and Sales Management Bundles,

Credit Suisse

“hpo has helped us to structure our service provision optimally and to align it to the needs of our customers consistently. As a coach, hpo provided us with targeted support, thus laying the foundation for the digitization of our processes.”


Statements regarding success factor 4:

customer-oriented corporate culture

Head of Consumer Banking,

Credit Suisse

“Change processes in a company require a strong vision and a prudent change management process to succeed. hpo has accompanied us from the very beginning with its methodology of ‘strategy-based cultural change.’”


Head of Central Plateau Region,

Credit Suisse

“With their systematic top-down–bottom-up approach and perseverance, the consultants of hpo have ensured that the jointly developed solutions can be implemented and are supported by our Credit Suisse employees. After all, successful transformation in times of digitization also requires necessary changes in corporate cultures.”

Your strategy consultancy for enterprise design

Who is hpo?


hpo makes companies more successful and more innovative. The strategy consultancy for enterprise design boasts more than 20 years of experience in the creation of strategies and organisations spanning many different industries. The management consultants at hpo specialise in the meticulous development of strategies, processes, business models, innovation and culture, and in the consistent alignment of these together with their targeted implementation.


The hpo design approach enables companies to better cope with strategic and organisational challenges and to realise substantial competitive advantages. The basis of the industry-spanning design approach is an academically grounded methodology with which companies are shaped and which is continually further developed with the latest findings from research and practice.


The management consultants at hpo come from a commercial or technology background and stand out with their high level of analytical and emotional intelligence. They are passionate in their dedication to the client’s concerns and enjoy working in a team.


hpo – we design organisations
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