Despite an increased focus on customer experience initiatives by banks of all sizes, new research has found that not all of these efforts may be resulting in revenue growth.

In fact, while some banks and credit unions are significantly outperforming peers, others aren’t focusing on efforts that customers care about most.

In a just released study from PeopleMetrics entitled, “A Shifting Landscape: Customer Experience Trends and Practices in Retail Banking“, it was found that banks are engaged in a surprisingly large number of customer experience initiatives. In fact, it was found that 7 out of 10 executives were working on customer-centric practices.

While a good start, the research found that most banks have shied away from activities that require investment of human or financial resources. Part of the problem is a lack of association by banks between customer experience initiatives and a tangible ROI.

The important question is which activities lead to revenue growth. By evaluating activities being implemented at growth and non-growth banks, the research found that there were four fundamental customer experience practices that could be directly tied to revenue growth at financial institutions. These insights were drawn from a more encompassing PeopleMetrics study 2013 Most Engaging Customer Experiences (MECx) completed earlier this year.

The practices that were found to be most correlated with financial performance were:

        1. Taking action on individual customer feedback
        2. Utilizing a decision-making process that emphasizes the customer
        3. Sharing a common definition of what a positive customer experience is
        4. Establishing a goal for customer experience improvement

The two most important differentiators are that growth banks have invested in technology that helps to close the loop between customers who report a problem, indicate a need or recognize an employee who performs well. Growth banks and credit unions also have a set of criteria they follow when prioritizing, funding and resourcing customer-aligned initiatives.

According to Kate Feather, EVP of PeopleMetrics, “Growth banks have embraced practices that create customer understanding and action taking at all levels of the company. Banks just beginning their customer experience transformation, or struggling to see results from their current efforts, should start with these four disciplines.”

Perception Versus Reality Disconnect

Unfortunately, while bank executives are well intentioned in their customer experience efforts, many may be focusing on the wrong objectives and the result is a disconnect between the impact banks believe they are making and the impact customers feel on a daily basis. In fact, the PeopleMetrics study found that 78% of bank executives believed their efforts were successful, while only 28% of customers said they had seen noticeable improvements in their banking experience.

Moving forward, it will be important for banks to align their priorities around what the customer cares about most. For instance, while banks continue to focus on technology advancements as a way to improve the customer experience, the customers place technology improvements much farther down their list of needs. Alternatively, customers believe banks should focus on improved products and a stronger focus on putting them first, with banks similarly giving these improvements less focus.

Because moving forward with new technologies is still important to most banks, the key will be for banks to build out technology in a way that demonstrates a customer centricity.