The Importance of Customer Service in Banking

Print this article By Malinda Zellman, eHow Contributor

A large amount of bank customer service takes place by telephone.

Excellent customer service can improve the bank's ability to lure affluent prospects, elevate the bank's profitability, lower bank operation costs, and/or create greater customer loyalty. When a bank invests in training its customer service staff, impressive results may follow. Customer service management software, sometimes referred to as CSM software, helps banks accomplish these goals.

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How to Improve Customer Service in Banks

Customer Service Bank Manager Job Description

1.

Customer Service Via New Technology

Customer service is obviously important to Citibank. According to Bank Technology News, "Citigroup's 'smart banking' branch design and strategy integrates the ultimate in self-service branches with plans for seamless connections to anytime mobile, ATM and Internet services." The state-of-the-art facility, which opened in Tokyo, Japan in 2010, includes self-serve customer workbenches, tabletop electronic kiosks for browsing products, ATM stations with video links to a teller or call center specialist, small conference rooms for in-person or video-linked banker conferences and a touchscreen media wall. North American banks have begun following Citibank's lead. Customer relationship management software handles the routine customer service so staff members are free to sell more effectively to the savvy, affluent market targeted by today's retail banks.

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Convenient Days and Hours of Operation

Chuck Salter, author of "Customer Service: Commerce Bank," says Commerce Bank is "America's most convenient bank, with a fanatical commitment to 'wowing' its customers." Commerce opens its branch offices seven days a week. Weekdays it opens at 7:30 a.m. and closes at 8 p.m. with shorter weekend hours. The bank always opens 10 minutes early and stays 10 minutes late. Commerce's astonishing service record has made them one of America's best-performing banks, with their stock increasing 2,000 percent in 10 years. Commerce Bank's positive results from its extreme customer service approach proves the importance of customer service in banking.
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Excellent Online Service

Improve your banking customers' online experience. When customers experience a positive online experience regularly, they can conduct much of their banking themselves, saving the bank money. According to the Customer Service Zone website, "Forrester Research estimates that a call centre response costs $32

while giving access to a self-service Internet portal is $1.17." This significant savings justifies fine-tuning the bank's 24/7 online customer service approach.

Customer Service Training

Thomas K. Brown, writing in Bank Director Magazine says, "Quality customer service can be a powerful competitive differentiator." Brown advocates selecting, training and investing in your staff so they can effectively meet all your customers' needs. He suggests you hire employees for their attitude, make certain they know the expectations, provide them with the technology and tools they need for quality customer service and reward the employees who excel--all because it gives your bank a powerful competitive differentiator.

Better Customer Service Results in Greater Customer Loyalty

Genesys Telecommunications surveyed bank customers and found that "48 percent of customers indicated that customer service was the primary factor in choosing to stay with an organization." Therefore, a bank garners a great competitive benefit when it optimizes customer service. According to Genesys, banks who create this sort of positive customer experience have earned "a tremendous competitive advantage." Superior customer service spurs customer loyalty in banking.

Importance of relationship marketing to the banking industry

Deshani Ratnayake is presently attached to Citibank, Colombo branch as a relationship manager, where her customer base includes financial institutions, insurance companies, leasing and finance companies and other non banking financial institutions. Deshani is a member of the Chartered Institute of Management Accountants, having also completed all three levels of the chartered financial analyst programme. What is relationship marketing?
Theodore Levitt described relationship marketing as an approach which emphasises the continuing relationships that should exist between an organisation and its customers. He also proceeded to state that in a great and increasing proportion of transactions, the relationship actually intensifies subsequent to the sale.' Traditional transaction marketing focuses on the completion of the transaction and the pursuit of maximising profits for each transaction. Relationship marketing, on the other hand, focuses on the establishment of strong relationships and stable partnerships in order to maximise the pursuit of the interests of all aspects of the relationship. When a bank claims to be practising relationship marketing, it signifies that they have undertaken an organisation wide strategy to manage and nurture their interaction with clients and sales prospects. Relationship marketing is not only at the customer service point or at relationship manager level but at every point in the organisation. The call centre representative handling a query or the operations personnel processing a transaction are both drivers of relationship marketing. The concept of relationship marketing has evolved as a result of intense global and local competition. Organisations have realised that long term mutually beneficial relationships are the way forward. One would think that with the growth of the internet and mobile technology, customers would be less interested in talking to unknown personnel in order to fulfil their banking needs. While this may be the case for very basic banking requirements, it can only do much to meet the more complex needs and build long term customer relationships that competition will find hard to break into.

Why relationship marketing?

The growth of technology and its impact on relationship marketing The rise of technology has complemented the relationship marketing aspect in banks, both in the way that banks analyse customer data internally and the way they communicate information to their customers. In analysing client activity, banks today are more cognisant of trends rather than simple shifts in volumes.

Smart systems automatically generate market news on customer financial performance, new ventures and generate possible avenues for new banking solutions. Customer reporting as a result of a focus on relationship marketing has evolved to be more user friendly and need based. On a separate note, an interesting theory by Leo YM Sin et al states that there are six dimensions or prerequisites to implementing relationship marketing (defined as relationship marketing orientation). These are trust, marketing communication, shared value, empathy, reciprocity and bonding. Trust Morgan and Hunt argued that trust is the willingness to rely on an exchange partner in whom one has confidence. A bank in which a client has confidence definitely stands ahead of competition. The results of trust can be seen in a banks profitability, growth, market share and customer retention. It is therefore an edge that banks can employ in their desire to gain a strategic advantage and survive in todays increasingly competitive environment. Bond As in any relationship, the one between a customer and a business provider (in this case, a bank) requires a bond that unites them together. Callahan and Lasry refer to it as the dimension of a relationship that result in two parties (customer and supplier or buyer and seller) acting in a unified manner towards a desired goal. When such a relationship exists, the customers are not only seen as clients, but also as partners. Marketing communication Several relationship marketing scholars agree that communication is a fundamental aspect of relationship development. The quality of information that is shared and the mode in which this is done plays a central role in a bank / customer relationship. Hence, careful design of communication means and forms must play a decisive role in complimenting the relationship marketing aspect of a bank. Shared value Value, according to Kotler and Keller, reflects the perceived tangible and intangible benefits and costs to customers. In any marketing concept, value is central. A trend that is seen today in the banking space as a result of relationship marketing relates to the values associated with the product offerings being shared between the bank and the customer. If a customer does not see himself treated as a partner by a bank deriving shared value, the relationship will not transcend to reap any higher benefits. Reciprocity This deals with the dimension of business relationships where it is believed that people owe one another because of their prior actions. This is premised on the fact that, if you desire assistance, you must first assist others. For example, a bank that steps to the forefront when a customer is in difficulty stands at an advantage over its peers. This builds a sense of loyalty and ensures the relationship is grounded firmly for the long term. Empathy Sin et al describe empathy as analysing a business relationship in such a way that enables the two parties involved to see the situation from the others perspective; i.e. seeking to understand somebody elses desires and goals. For example, the front office staff of a bank must be able place themselves in the customers position in order to serve them accordingly and ensure satisfaction.

Relationship marketing and Sri Lanka

Relationships are a key factor which makes up the Sri Lankan people. We dwell in our friendships and relationships. This is a key driving force in the banking industry as well. To build successful long-term partnerships, clients look for a bank that is more than a banker, one who is also interested in their general well being than purely in what can be sold to them. One would agree that a Sri Lankan bank operates in one of the most competitive markets worldwide, with 20 commercial banks fighting for the same client base. With the recent crunch in the financial industry and the movement towards enhanced quality, banks are looking to maintain cleaner balance sheets and are taking calculated risks. Blue chip companies today have several options in terms of a banking partner, as all banks are keen to have a blue chip name on their portfolios. Customers have today become more knowledgeable, sophisticated and assertive, with an increasing demand for tailormade and innovative products and services. Customers are no longer interested in buying off the shelf solutions, but require remedies that fit their business models and plans. It is therefore crucial for banks to have strong relationships with their evolving customers, in order to ensure they are at the right place at the right time.