“The current [banking] crisis is not yet over, and even when it is behind us, there will be repercussions from it for years to come,” said Jamie Dimon, JPMorgan Chase’s CEO. One of those repercussions may be the financial health of small banks, as consumers rush to withdraw funds due to concerns about the safety of their money. Bank leaders need to take active steps to build customer confidence and trust, and to reduce the risk of a bank run.
Distrust in Banks Isn’t New
Consumer trust in banks was declining even before the Silicon Valley Bank collapsed on March 10. According to Forrester’s 2022 US Banking Customer Experience Index, customer trust in banks dropped for the first time since 2018. Forrester predictions for 2023 included this one: “Banks will lose consumer trust during economic turmoil.” A Forrester analyst wrote. “As the economy continues to flash warning signals, consumers’ ire and resentment toward their bank will make it even harder to earn trust, so for most brands, trust will decline.”
Impact of the Banking Crisis on Customer Trust—and Bank Health
The recent failures of Silicon Valley Bank, Signature Bank and First Republic Bank have created anxiety even for people who don’t keep their money at those institutions. Consumers, workers and small business owners are now even more concerned about the financial system and the economy as a whole. Doubts about relatively healthy banks can create panicky behavior that becomes a self-fulfilling prophecy. A bank run (i.e., a large number of simultaneous withdrawals) can create major problems, forcing banks to quickly sell assets, often at a loss, to meet depositors’ demands for cash. These losses can drive a bank into insolvency.
Customers who lack confidence in their bank may reevaluate their choice, shopping around for a “safer” option. They may flee for a bigger bank, perceiving they’ll find greater security there. Deposits at small U.S. banks fell by a record amount ($119 billion) the week after Silicon Valley Bank collapsed. Even larger banking and financial service institutions face operational and market risks.
A recent report revealed that 186 banks are at risk of “impairment” of $300B worth of insured deposits. A bank run on one of those banks could cause a ripple effect leading to a recession or a broader financial and widespread banking crisis.
How can diversified financial service companies reduce the risk of a bank run and customer churn?
Deliver Consistent Multi-Channel Messages Throughout the Customer Journey
Many financial institutions focus primarily on individual touchpoints (usually sales), neglecting the customer experience throughout the customer journey. “Customer journey” refers to the sum of all interactions a consumer has with your brand, products or services—from researching products through applying for a loan or credit card, receiving and activating the card, receiving notifications regarding an overdraft or suspicious account activity, paying their bills, and receiving targeted offers.
To improve the customer experience and build trust/loyalty, brands need to pay attention to—and guide—customer interactions related to closing an account or switching banks. If a customer asks a question or expresses concern about financial safety, it is not acceptable to respond two days later.
You need to be able to listen and react to your customers across all channels (website, chat, mobile app and voice)—in real time. You need to know when a customer is considering closing an account so you can take immediate steps to keep their business.
How can you be so tuned in to each customer when your bank has hundreds of thousands of them?
Related Case Study: National Bank Stops Fraud with Proactive Alerts
Omnichannel Journey Orchestration
Omnichannel journey orchestration refers to using real-time customer data to analyze current behavior, predict future behavior, and send the right messages at the right time via the customer’s preferred communication channel. For example, one important customer journey involves receiving proactive alerts about suspicious credit card activity. When suspicious charges appear on customers’ accounts, they need to verify the charges or report them as fraudulent. In the latter case, they need to cancel their card and quickly get a new one.
To orchestrate this journey, banks must immediately deliver personalized fraud alert messages via the customer’s preferred communication channel, sending an email or text message with a link or interactive voice response (IVR) number to confirm the charges. The customer receives a confirmation message on the channel where they responded. If the customer does not recognize the charges, the message describes the next steps (e.g., contact the fraud department).
How Omnichannel Journey Orchestration Can Help Diversified Financial Service Companies
Omnichannel journey orchestration allows you to communicate proactively. Instead of just posting a generic message (“Your money is safe with us!”) on your website (that nobody reads), send each customer a personalized email (or text with a link to a longer message) that:
- Acknowledges potential fears/concerns. According to Forrester research, many consumers think their bank lacks empathy. Recognizing that people are worried about their financial security is one good way to express empathy.
- Provides specific information to allay those fears. Inform/remind customers that the FDIC insures deposits up to $250k.
- Recommends what action(s) (if any) to take. For example, businesses or individuals with accounts larger than $250k may need to diversify their investments.
- Invites them to contact customer support if they have any questions or concerns. If someone calls the contact center, an automated message can direct them to a (less expensive) digital channel (e.g., a special FAQ page on the website) to get more information.
Ready to Start Orchestrating Customer Journeys?
CSG Xponent Ignite for Financial Services is a customer engagement solution that includes pre-built customer journeys for diversified financial service companies. The foundation of Xponent Ignite is CSG Xponent, our industry-leading solution that combines a customer data platform, journey management and journey analytics to analyze customer behavior and preferences and deliver the right messages at the right time. Using CSG Xponent Ignite for Financial Services, you can quickly orchestrate customer journeys that enhance engagement on every communication channel.
A major U.S. bank reduced fraud, saved money, and satisfied customers by using CSG’s Xponent Ignite to deliver automated fraud notifications. The bank saw these results:
- 25% reduction in credit card fraud cases
- 12% decrease in inbound calls
- 46% reduction in average cost per call
- 95% customer satisfaction rating
What results will your business get? Contact us to get started.
