What is CX?
CX (or Customer eXperience) is how your company meets (or not) a consumer’s expectations from each interaction between them and your company .
It’s also worth mentioning that CX includes each and every customer contact with your employees, your product and services, and how they are delivered. CX has a quantifiable value that accumulates while you build relationships with customers through communication, trust, loyalty, and recommendations.
According to one leading research2 , CX has overtaken products, services, and price as the main brand differentiator.
What is the ROI of CX?
Investing in CX initiatives for your company has the potential to double your revenue within 36 months3 . Research in the same report also found that companies that earn $1 billion annually can expect to earn, on average, an additional $700 million within 3 years of investing in customer experience. Here are some more key findings:
• Customer-centric companies are 60% more profitable than companies that don’t focus on customers.
• 84% of companies that work to improve their customer experience report an increase in their revenue.
So how do Financial Services fare overall with CX?
CX in the finance world is a constant struggle. The coronavirus (COVID-19)crisis has highlightedthe importance of CX in the banking sector.
A study by Kantar found4 that financial institutions that lead in CX have a higher recommendation rate, a higher share of deposits, and a greater likelihood that customers will increase their portfolio of new products and services from their bank. Conversely, it was found that financial institutions that let their CXdecline risk losing up to 12.5% of their share of deposits.
While improved CXcan benefit financial services companies across the board, the opportunity is even more important for female consumers:
– 61% of female bank customers stay with their bank for more than five years, as on the whole they are less satisfied than men.
– Women have a lower preference score for their bank than men (65 for women vs. 76 for men), indicating that they may be more willing to switch if a better alternative presents itself.
– Women are also less willing than men to take up additional products or services with their bank (64.3% vs. 73% of men).
CX for Banking and Insurers in the UAE
SMEs represent more than 94% of companies in the UAE, employing about 86% of the country’s private sector workforce and generating 52% of the non-oil GDP6 . A 2019 survey by the National Bank of Fujairah, found that a critical factor in the UAE’s SMEs getting off the ground and being able to scale up their businesses is access to finance. Accessing this capital was/is proving to be one of the biggest challenges SMEs currently face. The other side of the coin is the cost of financial services which is effectively the same for SMEs as for large corporations.
While this is a well-documented and researched issue, I will share a few examples from my personal experience during my efforts to rebuild my small business since COVID-19 struck. These policies have been in place pre-Covid-19 too, but they have exacerbated the struggle. I am certain this will resonate with many small business owners.
1. Loans: I run a consulting business, which I started in 2016. However, my business is not eligible for a loan unless it has a meets a minimum threshold of a historical revenue. Hence there is no cashflow to build – or even retain the current level of business. This policy is to reduce the risk to the service provider Vs. the customer. (Read CX, above).
2. Health Insurance: Ironically, health insurance for a small business owner is far more costly than one for corporates. I get far fewer benefits such as access to hospitals, dental and optical services, while those who work for corporations receive many more benefits – though their employers are paying the same amount per employee. Again, a low risk for the service provider but hugely expensive for an SME owner. (Read CX, above).
3. Online payment gateways: In my professional capacity I reached out to one of the most highly rated online payment platforms. After providing all the required documents, I was informed that, to start my business before any transactions (income), the owner would need to deposit AED 50,000 – the reason was due to the fact that I was an SME.
4. Bank account opening: Recently, I changed my license and, as a result, lost my banking history since I had to close my account. I then opened a new account in the same bank with the new license. However, the bank called me as they were concerned about how I would fund my business activity. This was concerning as they had access to banking history on my old account which I held for 4 years. The bank wanted to see if I have any personal finances to fund the business. In other words, to build the business I have to have a personal fund and then go to a bank once it is an established success. In the end, the bank could not offer any helpful alternatives, and repeatedly stated this was just banking policy. (Read CX, above).
How can Financial Institution CX be improved?
One size doesn’t fit all. To succeed, financial institutions must find ways to customize, personalize and create advocacy from under-served consumers, namelySMEs. A great illustration is the example set by the Government (Govt) of Singapore which after one of the worst economic contractions in 2020, is now focusing on tools such as govt-backedSME loans, customised multi-lender restructuring schemes and lower interests on SME loans to boost the economy.
The vast majority of SMEs use funding from family and friends to build business –an unsustainable approach. The UAE canconsolidate its position as a global SME hub that is also a magnet for international investors and Venture Capitalists, by providing SMEs with extensive and easily accessible support at an early stage.
Financial institution’s risk mitigation policy must be balancedand be able toprovidefinancial assistance that is accessible to all SMEs. Even if repayment plans and interest rates are tiered by factors such as length of time of operation, size of business, industry sector.
SMEs in the UAE have been key to driving industry expansion, innovation and job creation in the country. We need to see a focus on CX in the financial sector that will contribute to building SMEs as the backbone of the economy.
