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Banks' digital strategies are failing customers

Stuart Lauchlan Profile picture for user slauchlan May 29, 2013
Banks are just really, really bad at customer interaction, yes? So why aren't they tapping into digital channels to improve the situation? Maybe they just don't care.

If you've suffered from any form of customer support interaction with a major retail bank, this may well be a statement of the bleedin' obvious, but it turns out that banks haven't really got their institutional heads around the idea of using digital channels as outreach and customer interaction mechanisms.

According to a new study of more than 3,300 retail financial services companies from over 130 countries - bankrolled by outsourcing firm Wipro Technologies and the European Financial Marketing Association (EFMA) - social media is not seen as part of the mainstream marketing strategy nor as a key customer interaction channel.

The Global Retail Banking Digital Marketing Report  looks at how well - or not well - banks are doing at digital marketing using an index based on eight different digital marketing capabilities, including the ability to have a real time single customer view across channels, and the ability to do real time event-driven marketing in digital channels.

According to the study's conclusions, only 13% of the banks surveyed demonstrate the highest level of maturity in digital marketing. The majority of the banks do not practise real-time event driven marketing and are unable to focus on personalisation.

What social media efforts that do exist are mainly managed by the marketing department followed by the branding and communications team. while for 80% of the banks surveyed, their social media spend was less than €500,000 per annum.


Other key findings:

  • 35% of banks reckon they have real time single customer view of products and transactions.
  • 40% say they are able to do segmentation on customer lifetime value. 
  • 57% of banks now have a real time view of all of a customer’s product holdings with the bank.
  • 35% have a real time view of customer product use or transactions.


  • Only 36% of banks can do real time event marketing.
  • Only 47% can make one-to- one personalised offers.
  • Only 15% of banks can use a customer lifetime value calculation to measure ROI on marketing investment (ROMI). 
  • Only 25% of banks are measuring ROMI in more than 75% of their digital marketing campaigns.
  • More than 50% either does not measure ROMI at all, or measures it in less than 25% of campaigns.

Let's assume the account is in credit rather than in the red (my natural inclination of course) and what this means is that there is potential for change across the beleaguered banking industry. Wipro VP and head of banking and financial services Rajan Kohli argues this means opportunity:

Digital technologies, social media and the explosion of data are redefining customer engagement models. If we look at the marketing spend reported by the banks in our survey, traditional advertising represented just 55% of the total marketing spend. The CMOs that we spoke with made it clear that the role of the CMO is changing as banks adapt to the development of new channels and capabilities.

What to do?

So with that in mind, what to do, what to do? Wipro/EFMA make some recommendations. Retail banks need to:

  • Consider how they expect customers to interact with the bank five years from now, and particularly how they envisage customers will buy financial products in the future.
  • Carefully assess current digital marketing capabilities.
  • Develop a plan for investment in digital marketing capabilities which will ensure that the bank is in a position to get ahead of, or at least keep pace with, competitors and changing consumer behavior.
  • Monitor closely the developments in "big data" and where possible take the initial steps of testing some applications of the new technologies that are available.

All of which comes back rather to the bleedin' obvious from the start of this article.


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CRM = Siebel, innit? 

The problem is that for all those (entirely sensible, if rather mundane) recommendations to work, there needs to be a willingness to do things differently and to view the customer - and how banks interact with that customer - in a different way.

One of the reasons CRM failed first time around was because too many people regarded it as a software solution you bought off the shelf.

One CIO once told me that his organisation's CRM strategy was "Siebel". No mention of culture or organisational process re-imagining or understanding the customer, just Siebel.

I suggested to him that all the software in the world wasn't going to improve the situation if your company's mindset was that the customer is a flaming nuisance, it was only to automate that attitude for you. But he wasn't really interested.

And so I fear it is still the case today with retail banks. They just don't care. My banking horror stories are legendary. I've changed bank so many times in my life that I'm genuinely running out of places to move to.

One of my recent 'favourite moments' was when a banking customer service person told me as I made a complaint about something to do with my current account that it wasn't my current account, it was their current account which I was just allowed to use. The implicit threat did nothing to improve customer relations.

On another occasion, a business account I held offered me a special VIP business line to use in the bank branch. I duly stood in it, only to be ignored for ten minutes by some hapless teller who finally looked up and told me he was going off to lunch now and I'd have to join the main line. When I objected, he shrugged and walked away.

I'm still trying to close that account down. Apparently in order to do so I have to call the mobile telephone number of someone I've never met, at another branch in another town, arrange an appointment, go in to the branch in person and fill out lots of forms. Then the account will be closed down - at some point. Perhaps. If they don't lose the paperwork! But as the person I need to call never returns my calls to her, it's a moot point.

Push back 

But customers are fighting back. In the UK, it's just been reported that the Financial Ombudsman ­Service - which deals with complaints from consumers against banks - has seen its caseload double to just under 509,000 in the year to April.

And that's just the complaints the Ombudsman decides to take on. There's around another 1,500,000 complaints that don't get that far.

(For what it's worth, Lloyds was the worst culprit - and I can testify to that! - with Barclays, Royal Bank of Scotland and HSBC - following suit.)

Natalie Ceeney, Chief Ombudsman, rightly highlights the cultural barriers inherent in bank/customer relationship management:

As levels of confidence in financial services have eroded, it is disappointing that we still haven’t seen any significant improvement in complaints handling.

Time to change

For his part, Patrick Desmares, Secretary General, EFMA, argues in the Wipro/EFMA report that there is an awareness of a need to change:

Everywhere we meet banks we find that online and mobile banking are at or near the top of their agendas. What services to introduce, how to engage customers, and how to use customer information to personalise marketing are typical questions. There is a high degree of uncertainty because banks are still learning and the digital environment is constantly changing.

So is it seat of the unknown? Or just ongoing indifference? Whichever, something has to give.

The ultimate recommendation from the Wipro/EFMA report is simple: look to best practice in digital marketing at 'information companies' such as Amazon and Google, but be aware of the need for culture change management as:

Digital marketing is more of a challenge for established banks operating in a more regulated environment.

That said, banks need to realise that their credit line is running out with customers who want to see real change:

With fewer customers visiting branches, banks have to come up with better ways of marketing through digital channels.


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