Why Bank CEOs Are Using Lifestyle Services To Drive CX Transformation

Investing in CX transformation allows profitable customers to be leveraged in ways that create differentiation, and grows the scale and profitability of that segment.

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Banks worldwide are currently facing the perfect profit storm of low-interest rates, increased lending and geo-political risks, plus an enduring high-cost base of high-street branches that feels inefficient – especially given the rapid adoption of digital services during COVID-19. So, why are 75% of CEOs of the world’s 50 largest banks supporting new and increased investments in customer experience (CX) transformation in 2021 [1]? 

1. High-quality concierge services drive retention and acquisition of the profitable ‘mass affluent’ and ‘High-Net-Worth’ customers.   

A 2019 McKinsey report states, “Simply put, when customers are more satisfied, they are more engaged and generate more value for banks” [2]. Concierge, or lifestyle services, can act as a strategic solution to drive CX transformation, with case studies revealing the more engaged a customer is with new-generation concierge and its associated benefits, the more likely they are to be retained. 

In terms of driving acquisition, Ten Lifestyle Group has proven that valuable customers will start a new relationship with a retail or private bank – or climb the value ladder by concentrating assets and products in a single bank – in order to receive the best concierge and related lifestyle services.   

Examples:  

  • Leverage events. At events, dinners, and gigs, hosts (existing bank customers) inspire their guests (typically peers, friends, or family) to join the bank by the example of the service. 
  • Amplify word of mouth. Valuable customers are 12 times more likely to talk about their lifestyle services than their financial products to their peers. Lifestyle CX drives brand endorsement. 
  • Endorsement of the brand. Concierge use tends to drive overall bank NPS by 15-25 points.
  • Lifestyle CX as a channel partner. Ten creates a desire for concierge service amongst the affluent and High Net Worth and then directs them to those banks who offer the services as a complimentary benefit. This allows partner banks to win new customers at a lower ‘cost of acquisition’ via Ten.  
Member-get-member drives CX transformation
2. Concierge services help to drive profitability per customer.  

Competition within the financial sector is rapidly growing – in 2019, 19% of US financial institutions were new to the market and had already captured almost 4% of total banking revenues [3]. It’s therefore important for banks to create value-delivering, cross-channel offerings to monetize customer experience, driving improved revenue and profit expansion [4]. 

Concierge services can be specifically designed to drive product uptake from customers, which in turn helps increase customer profitability and revenues. Examples include: 

  • Offering a house doctoring service, which flags customers who may be interested in mortgage advice.  
  • A concierge action that generates a high NPS is shared (GDPR compliantly) and provides an effective ‘warm’ contact opportunity for a banker to reach out to a customer. One bank that underwent a CX transformation concluded that a satisfied customer willing to recommend their service to a friend was five to eight times more profitable than one with a negative perception [1]. 
  • Integrating the bank’s payment options into concierge transactions. 
  • Using concierge to create warmth amongst the broader family (spouse and NextGen) opens up opportunities for new product sales and growing AuM. For more information on how concierge can play a crucial role in engaging and retaining the next generation of clients, please visit our NextGen case study.
3. Digitally enabled concierge services allow efficient engagement with customers.   

More than ever, it’s important for banks to gain an information advantage over competitors to create an enhanced customer experience. Some 92% of surveyed bank executives consider it very or somewhat important to have advanced analytic capabilities [5]. However, few banks will be able to master the skills to integrate, analyze and act upon the insights they generate from their greatest resource – their customers. PWC states that the leading players in the industry will collect data from both traditional sources, as well as non-traditional sources [4],  including concierge.   

Ever since launching the first digital, global, transactional concierge platform in 2018, Ten has been consistently investing in supporting more activity online and over the phone. This has reduced the average cost per touchpoint whilst improving data gathering for the banks, user experience for the customers, and increased returns on investments. 

4. Concierge services have proven to be highly valued by customers during the pandemic.   

COVID-19 showed the value of concierge as a responsive benefit. Customers who had used Ten for global travel, restaurant access and live entertainment now utilized it for domestic breaks, ‘at home’ support and virtual events. In contrast, other benefits, such as event pre-sales and face-to-face client entertainment, were challenged either in terms of cost or relevance.  

Ten offers a highly personalized concierge service that is related to current needs/location, and delivered brilliantly. As a result of this investment, Ten’s corporate clients saw a higher and more proactive engagement and increased NPS and activity among valuable customers during the pandemic.

For more information on how Ten has been supporting members throughout the pandemic, have a look at this case study

Solo plane passenger with face mask
5. Concierge services offer a single channel through which to drive CX transformation through several initiatives.  

It’s no secret that cutting-edge CX will be one of the most powerful differentiators between competing banks in the future. According to The Financial Brand, some of the top customer experience trends in 2020 were [6]: 

  • Hyper-personalized services at scale 
  • Seamless multi-channel experiences 
  • ‘Humanized’ digital interactions 
  • Transparency, security, ethics and trust 

A valuable concierge service such as Ten will allow banks to deliver on all these targets by: 

  • Offering customers a hyper-personalized tech experience, with automated processes benefitting from years of experience working with banks and their customers.  
  • Offering multi-channel experiences by providing customers access to leading specialists in fields such as dining, travel and entertainment – and humanizing what would otherwise be a digital interaction.  
  • Earning, and maintaining, the trust of clients and members by investing in its people, process and technology to keep members’ data safe and secure. For more information on Ten’s information security, please read this article

While many CEOs see branch reductions and the continued commoditization of financial products as inevitable, investing in CX transformation through a digitally-enabled concierge allows them to leverage their installed base of profitable customers in ways that creates differentiation, and grows both the scale and profitability of that crucial segment.  

If you are a senior bank leader, we’d love to share more about our relevant experiences and listen to your objectives for 2021. Contact Ten for further information or for an informal chat – we’re here for you 24/7 and would love to help.  

Bibliography

  1. McKinsey & Company – Managing a customer-experience transformation in banking
  2. McKinsey Global Banking Annual Review 2019
  3. Accenture – Banks’ Revenue Growth at Risk Due to Unprecedented Competitive Pressure Resulting from Digital Disruption
  4. Accenture – How customer experience drives value in banking
  5. PWC – Retail Banking 2020 Evolution or Revolution?
  6. The Financial Brand – 5 Customer Experience Trends for Banking in 2020

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