Easy banking wins treasury client profits

Treasury management services are a key source of profitable fees and low-cost deposits. In an industry that is more than 40 years old and increasingly commodified, product is important, but the overall quality of the customer experience is driving the difference between one bank and the next. The bells and whistles of yesterday are table stakes in today’s mature market.  Innovations that once defined market leadership — like remote deposit capture to use a straightforward example — now become standard functionality in a matter of months. Only banks with operating models built around and for the customer will be able to excel, winning customers and market share. If easy banking isn’t the holy grail of corporate treasury management, our research suggests it should be.  Easy banking impacts financials in three ways:

1. Higher loyalty, growth and fees
2. Referrals and forgiveness
3. Operational efficiencies

Ease brings loyalty, growth and higher fees

Respondents stressed that user experience is the top factor in boosting customer loyalty and relationship growth. By reducing customer churn, ease can markedly increase profitability. For today’s busy treasurers, customer experience trumps relationship manager capability, service, credit availability or even price. While exceptional bankers can make interactions easier, their value cannot mask cumbersome processes. “Our bank with the best relationship team isn’t the one getting our new business,” said the assistant treasurer of a managed care facility. “Our primary contact can only do so much. As wonderful as he is, there’s still a process, and it’s awful.” Respondents said they value processes that are easy and avoid ones that are difficult, so much so that they will expand business with easy banks and pay a premium for their services:

• “Pricing was a key consideration in the initial establishment of a new banking relationship, but it was never a top consideration in decisions to add new accounts or services,” said a private equity CFO.
• “I am absolutely willing to pay more for easy. Make it easy and I shift into buying mode; when I know it’s hard, I shift into ‘defer it’ mode,” said a senior cash manager for a large global corporation.
• “Easy is a top criteria for us. It drives our decisions. We are willing to pay for quality relationships that make our life easier,” said the COO of a large university.

Easy banks reap referrals and forgiveness

Ease of doing business also helps banks win new customer referrals. Research shows that 90 percent of corporations would consider switching to a different financial institution for better client service around onboarding, account maintenance, service requests and inquiry handling.[1] Meanwhile, in the middle and large corporate sectors, ease is the top driver of a company’s willingness to provide banking referrals. These days, referrals are vital, rivaling ratings from financial services consultants. Our research found that while treasury clients believed that research by firms like Greenwich Associates accurately disclosed a bank’s positive qualities, these clients also valued the candid, unfiltered perspective of peer referrals.  “We take the bank reference process very seriously, lots more seriously than the banks think we do,” said the senior cash manager for a large corporation. “The best reference is somebody I know and trust – the banks should invest their time there first.” There are other benefits as well. Treasury clients said that loyalty built on ease also unlocks forgiveness for occasional errors, inoculating against potential lost clients.

Ease improves bank efficiency

Finally, we at West Monroe have discovered through extensive experience serving banks that ease helps lower a bank’s costs by reducing contact center traffic, increasing self-service and simplifying operations. If a bank makes things simpler for customers, it’s more often than not making them simpler for itself. The bank is collecting less information, simplifying processes, eliminating redundancy, and aligning to customer needs. This improves operational effectiveness and lowers costs associated with manual process and contact centers. The bottom line: An easy, satisfying customer experience produces excess returns by growing and extending relationships, attracting new business, driving revenues and reducing costs.

Read the rest of our report to learn the ten principles of easy banking.

[1] Finextra Corporate Banking Customer Satisfaction Survey, September 2015