Despite an organization’s best intentions, there are thousands, if not millions, of cases where a company’s overall operation, specific line of business, or even a particular product is ineffective because it has lost touch with the expectations and needs of the customer. In my experience working in the financial services industry, banks are often especially guilty of missing the boat on being customer-centric. Over time, many banks have been so focused on their internal technological or operational constraints that they have overlooked what the customer really wants. In recent years, this mindset has deteriorated even further with the economic and capital challenges coming out of the Great Recession.
To reverse this practice, financial institutions should be much more customer-focused when developing an operating model or product offering. At West Monroe Partners, we have partnered with numerous clients in banking in recent years to define a more customer-centric operating model and more effective products. Our approach focuses on identifying the aspirational aspects of the future state client experience and then defining the operation or product to directly support those objectives. In addition to developing the strategy, we work closely with our clients to construct an easily understandable roadmap to implement the upgrades to the operation or product as well as the business case to support it.
It is commonly held that becoming more customer-centric curtails an organization’s profit but I am here to tell you that this does not have to be the case. One recent success story with one of our client yielded approximately $3.5-$4.5 million in net incremental interest revenue in year 1 and a long-term conservative expectation of $13-$15 million annually by year 3. This achievement was solely based on making customer-centric improvements to one specific consumer loan product and could have a significantly greater impact to the organization’s bottom line if applied throughout the organization.
Another more recent success story involved developing a new target operating model for a specialty line of business at one of our bank clients. Through the customer-focused transformation of this banking segment, the business case projected an $80 million reduction in annual deposit attrition and growth in annual deposits by over $300 million within less than five years.
Jordan Sternlieb is a leader in West Monroe Partners’ West Coast Banking and Credit Unions Practice. For more information on customer-centric product delivery and operating models, please contact him directly at firstname.lastname@example.org.