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How to create a customer-centric bank

Twenty-five years ago (yes, I am seriously old!) I was a consultant to insurance companies and banks talking about Business Process Re-Engineering (BPR). The thrust of my focus was to redesign the company from a customer-centric view first. The consultancy did get business but rarely achieved this objective, as no insurance company or bank wanted to turn their organisation upside down. Shame.

Twenty-five years later, some insurance companies and banks are turning themselves upside down to redesign the experience from the outside-in, the customer’s viewpoint, rather than from the inside-out, the company’s viewpoint. They are being forced to do this because start-ups are seeing the lack of customer-centricity in insurance and banking apps as the incumbent’s weakness, which gives them opportunity.

I decided to revisit my notes from twenty-five years ago and brush up a little on what I said. This is a summary of my 1994 consulting manual:

“Creating customer-focused finance” by Chris Skinner

When we talk BPR, Business Process Re-Engineering. most of us are talking BPI, Business Process Improvement. BPI is far easier than BPR, because BPI means doing what you do today faster and cheaper. It does not demand that you fundamentally change what you are doing, even though maybe you should.

For example, SAS airlines transformed under CEO Jan Carlzon. Why? Because the airline was product focused on their major assets, the aeroplanes, rather than customer-focused. How did they do it? By focusing upon what they call moments-of-truth. Moments-of-truth are the interactions with customers whether that be with a call centre, a sales person, a check-in person or with staff during the flight.

Under Jan Carlzon’s leadership, the airline redesigned itself to focus upon the customer and became profitable within a year, following several years of heavy losses. How did this redesign work? First, the organised identified on a blank sheet of paper every single key customer interaction, the moments-of-truth. Having the moments-of-truth itemised, the airline then designed their services based upon that roadmap. It was a rebuild of the airline from the ground-up, based upon the customer’s key moments of interaction with the airline. This transformed their business almost overnight.

As Jan Carlzon describes it the airline’s focus before he joined was technical: make sure the aeroplanes fly safe. Afterwards, that was viewed as the hygiene factor for an airline and the important thing was to fill the flights with customers. He makes clear that the assets of the company are not the aeroplanes, but the people flying in those aeroplanes. That is what you must maximise, as happy people make happy customers which makes a happy business.

I call this Copernicus Banking. Nicolaus Copernicus was the Renaissance astronomer who created the model of the universe with the Sun at the centre, rather than the Earth. This model, which he could substantiate with mathematics and historical work. For example, he translated several works from Ancient Greece by Philolaus, Heraclides Ponticus and Aristarchus of Samos, which proposed that the Universe comprised several planets revolving around the Sun, of which Earth was one. Copernicus’s work fundamentally changed the way scholars and educators thought about our place in the universe. In antiquity people believed the Earth was the centre of the solar system and the universe, whereas now we know we are on just one of many planets orbiting the sun.

This revolution of thinking is what we need in financial services. Many firms are product-focused and operate in silos, with a fragmented view of the customer and no single vision around their moments-of-truth. For BPR, banks and insurance firms must fundamentally reorganise their organisations around customer-centricity. That begins with detailed the firm’s moments-of-truth, as SAS airlines did, and designing the firm upwards from those moments-of-truth.  In fact, it begins before that by outlining the customer journey.

A customer journey begins with their intent, not with the product. A customer’s intent is not to make a payment, but to buy something. A customer’s intent is not to get a mortgage, but to create a home. A customer’s intent is not to open a current account, but to manage their money. A customer’s intent is not to take out life assurance, but to cover their family’s needs if they die. You get the idea.

So, we should begin with outlining these customer journeys based upon their intentions and needs, document their moments-of-truth during these journeys, and then design how to provide the best customer service for those moments-of-truth.

Then we need to check that our planets align around the customer. Today, most banks and insurance companies deal with customers through what I call Earth Finance. They see their institution as the centre of their universe and think the customer (the Sun) flies around the Earth. I illustrate this by saying that the way in which most banks see their customer is through a cloud of planets called channels, products and organisational structure. The Sun is obscured and too far away as to be seen as the centre of the universe. It is far more likely that their colleagues, managers and executive team are seen as their universe.

That needs to be realigned, such that the customer shines through the organisation. How do you realign to create an organisation that circles the centre? Well, you need Copernicus Finance, placing the customer firmly as the centre of the organisation’s universe. That begins with designing for the customer first. It means seeing the organisation from the outside-in, not the inside-out. It means continual verification that products, processes, services and customer journeys are being delivered with exceptional services the exceeds expectations.

By focusing upon Copernicus rather than Earth Finance, financial institutions will excel and break away from their competition, who are product rather than customer aligned.

Back to 2018, and I am surprised how prescient these words still seem.