Grant de Leeuw, Global Sales Manager, TALKINGTECH

Consumer behaviour and expectations have changed beyond all recognition in the past 10 years. The ways in which financial services providers service and communicatewith their customers has evolved, as has consumer adoption of digital technologies, such as mobile payments and apps. Customers expect a reliable, highly personalised, effective customer experience and many of them expect theseinteractions to be digitally powered.

Retail financial institutions are being kept on their toes by challenger banks and those adopting technology to make their services more efficient. Amazing strides in technologies powering retail payments have been made over the past few years, yet it is the less visible payment processesof regular payments and collections that are often been left behind. The misconception is that these processes have less impact on customer loyalty and engagement. This is a dangerous stance to take because we have seen that the opposite is true: they can be crucially important in the customer lifecycle.

The relationships that banks have with their customers can last for decades. Therefore, it’s crucial that they adopt engagement strategies around regular payments and collections.

Customer experience must drive decisions

Organisations should integrate all of the data that it has to better understand each customer and develop communications strategies to align with their preferences. The brand experience is just as important and valid in a bill reminder as it is in-branch. Each communication is an opportunity to deliver on promises.

Yet banks don’t need to make huge investments in technology or instigate a company-wide digital transformation project. First, they need to be able to extract meaningful insights from the data that they already have access to. As McKinsey said in its report Trailblazing Trends in Global Payments – 16 in 2016 “Knowing how to extract value from data is the core competitive requirement in multi-channel commerce”.

Secondly, digital initiatives don’t have to overwhelm. Digital transformation is seen as complex and costly, often too sprawling to implement.  Banks should adopt gradual digital adoption, choosing the best technology-driven processes to improve customer service and increase revenues. Often technologies, such as ‘Pay by SMS’, card registration, IVR and web bill payments don’t require significant infrastructure investments. It’s fine to take a lower risk and incremental approach.

Widen payment options

Too many financial service providers still rely on standing orders, current accounts and direct debits for collecting regular payments, despite evolving consumer behaviour.

Offering additional payment methods, based on known customer preferences, can increase customer satisfaction and collections reducing the need to charge additional fees or spend extra time on call-based collections.  As consumers become more comfortable with digital payment technologies, organisations should look to mobile channels to not only communicate with their customers, but also as channel for them to pay unpaid bills. Other technologies, such as powerful predictive IVRs (interactive voice response) can encourage customers to call in when it suits them.  This results in fewer outbound calls, numbers of which are restricted by Ofcom regulations, and delivers a better customer experience.

Personalising payment preferences

Customers expect to have flexibility in how they engage with a company.  Service providers that use intelligent systems to analyse customer behaviour means they can better set preferences around payment dates, service methods and billing.

Payments UK’s recent report on its ‘World Class Payments’ project, highlighted four key priorities that should “offer the greatest potential benefit to customers”.  One of these was that customers should be given “more control over requested outgoing payments, enabling flexibility over the timing of their regular payments to fit with income and money management needs”.

I couldn’t agree more.  Personalised payments and the communication around these payments increases customer satisfaction and reduces churn. It also significantly reduces the cost and effort associated with collecting overdue payments.

Managing and anticipating payment behaviours

Data is at our fingertips and banks that can use this data to better understand customers and their payment history can foster better relationships with them. Communicating with customers at an earlier stage in the collections cycle, before implications become critical, will reduce the operational cost of each payment and relationship.  Small touch points, such as sending high-risk customers a friendly reminder before their payment is due, offering different channels for payment, can make a huge difference. Further automated reminders can then be set across multiple channels If the account becomes overdue.Retail banks have the financial knowledge of their customers over long periods to achieve this.

Prioritising payments and collections

Re-evaluating operational practices and processes to push payments and collections further up the priority list should be high on the agenda.  Not least because the latest[1] UK Customer Satisfaction Index (UKCSI) report by The Institute of Customer Service showed that the banking industry is the only sector, out of 13 measured in the UK, that hasn’t improved its customer satisfaction rating in the last year.

These are exciting times for the financial services sector and there is still a great deal of opportunity and change ahead. Innovations can help banks reduce the friction around payments, collections, security and identity verification. Regulatory changes are starting to support this innovation and encourage competition. Now is the time for banks and financial providers to examine and improve their payments and collections processes.

[1] 19 July 2016: https://www.instituteofcustomerservice.com/media-centre/press-releases/article/new-report-shows-clock-is-ticking-for-banks-with-poor-customer-service