It’s that time of year again, when a multitude of Christmas movies based on Charles Dickens’, A Christmas Carol, start running non-stop. The movies are so commonplace that Scrooge has become a household name. These tales recount the vibrant lesson of a well-resourced and miserly man who is completely out-of-touch with the needs of his employees.
While today’s financial institutions don’t rise to the levels of Scrooge, it should serve as a reminder to take a deeper look at the current challenges their members face.
It’s the thought that counts! And one-size fits all financial products rarely demonstrate that a customer’s unique needs are important. Deloitte’s 2020 report indicated that there was little differentiation between financial products and that few providers had a true understanding of the problems the product was built to solve. The report also concluded that building an emotional connection with customers through hyper-personalization is essential for pandemic recovery.
And you can’t simply rationalize that some banks or credit unions offer more empathy while your strengths lie elsewhere. An Accenture study determined that Empathetic Banking Leaders saw a revenue increase in 2020, while those identified as Empathetic Banking Laggards reported a revenue loss. Hyper-personalization and empathetic service delivery are necessary for recovery, growth, and customer retention.
In light of this imperative, it’s important to take a look at the average customer experience.
Sometimes the high wage earners and decision makers can overlook the average consumer struggles. It can be easy to forget that, even after the early reports of increased savings during the pandemic, 25% of Americans do not have any emergency savings, an increase of 4% over 2020. Additionally, 51% of households carry over $1,000 in credit card debt. That’s all on top of the rising cost of consumer goods and inflation.
For people facing financial difficulties, the pandemic health crisis had a compounding impact.
Humans do not thrive under long-term, sustained stress. People are designed to receive small bursts of Cortisol, the fight or flight hormone, to supercharge their reactions in a time of heightened stress. Ideally, people receive quick bursts of the stress hormone to combat a specific threat and once the crisis is averted the homeone dissipates.
During the last two years, humanity has been saturated in Cortisol. Fear of infection, economic uncertainty, and financial stress over job insecurity have exhausted the men and women these bank branches serve.
And these high hormone levels can have adverse impacts on health. Doctors report increased levels of anxiety, depression, and cognitive impairment including an inability to concentrate. However, in times of crisis, when people have the least bandwidth, the ability to focus on small details is crucial for making good financial decisions.
Less than 2 months into the pandemic, National Geographic, BBC, and Harvard Business Review were reporting on Zoom Fatigue. Quickly we were inundated with calls to be empathetic with ourselves and our coworkers due to the stress of this medium. But decision fatigue has garnered significantly less press. And the holidays are wrought with an extra helping of decisions.
Will you travel to see family? Do you need to purchase extra gifts in case you forget someone? Does your car need new snow tires or should you get your furnace serviced? There’s a myriad of seasonal decisions that need to be made. Increased decision making over an extended period of time is not only cognitively taxing, but often results in making a ‘default’ choice. Default choices are defined as those decisions that require the least amount of effort.
So yes, consumers may be eating out more or paying for convenience charges. Making decisions for ease often allows for more bandwidth in the current moment. By the way, not reading the fine print tops the list of decision fatigue choices and frequently results in unintended consequences.
December can be a brutal reality for those facing Seasonal Affective Disorder. Even for those unaffected by SAD, it's rough to wake up before the sun and return home after it’s already dark. And marketing and holiday movies messages about how this season should unfold, and you have a formula for melancholy.
For many, shopping can be a numbing activity that distracts from boredom, family stress, or general dissatisfaction. There’s also increased social pressure to ensure your children experience the best Christmas possible. Projection Bias is the belief that an item will bring greater satisfaction than it often does.
Both numbing and projection can lead to overspending on oneself and one’s family. However, the solution is far more complex than ‘only spend what you’ve budgeted.’ The social pressures and parenting guilt often play a far more immediate role in these decisions.
The traditional economics approach expects people to live within their means. But empathetic banking understands the emotional complexity of decision fatigue, information overload, and community pressures. Empathetic financial institutions know that this season demands more from customers, in a time when they are often least resourced to make their best decisions.
So what does empathetic banking look like?
Capital One recently announced that they’re eliminating all member overdraft and NSF fees beginning January 1. CEO, Rich Fairbank, estimates that this move will cost the bank an estimated $150 million in lost revenue. Overdraft fees historically hit financially strapped customers the hardest. And this move comes several months following Elizabeth Warren’s rebuke of JPMorgan for capitalizing on fees during the pandemic.
Even if you’re not ready to remove fees carte blanche, consider increasing the authority your customer service representatives have to waive fees. Eliminate overdraft and NSF fees for the month of January when the seasonal spending is most likely to take its toll. Review accounts when fees arise and suggest alternative products that may be a better, more affordable fit.
More fitting products could include a Bank On Coalition Account, such as Premier America Credit Union’s Smart Spending Account with no monthly service or overdraft. Bank On accounts are designed to reduce fees for those you frequently end up on the receiving end of banking fees and can produce a more positive experience for the unbanked or underbanked community.
In general, a happy customer is a loyal customer. And in most cases, you’ll spend less money retaining a customer than you will recruiting their replacement.
No one is proud to speak about their financial struggles. Acknowledge that the circumstances that lead to financial instability are complicated and may not be outside of that customer’s control. Avoid shaming—own when messaging is confusing, acknowledge that mistakes happen, and provide notifications that aren’t fear inducing.
In all communication, offer a warm invite for help. Good customer service takes time, and often people in crisis just need to feel heard. Make sure your customer service representatives feel authorized to spend more time with customers when necessary.
When people are in crisis they need to hear things more frequently than usual. Additionally, not all messaging will work for everyone. The variety of customers you have each have a preferred method of communication. So make sure messaging is presented in a multitude of ways.
Think about all the promotional materials you offer that have disclaimers footnoted. You can assume that attention to the small print goes out the window. Harvard Business Review concluded that strong leadership communicates with “transparency and empathy” in times of crisis. Consider ways to improve transparency in marketing and empathy when small details are missed.
Are you evaluating the right metrics? After reviewing at least 15 customer satisfaction surveys from financial institutions, all questionnaires explored the ability and friendliness of the customer service representative. However, none of the surveys asked about the quality of the financial product. Such omissions skew the feedback you receive.
Are you learning which marketing initiatives were most confusing or what products aren’t meeting customer needs? If you aren’t asking these questions, you may be investing attention in addressing the wrong areas.
It may be counter intuitive, but generosity directly benefits empathetic banks. Customers who receive targeted support to resolve issues and reduce pain points develop increased organizational trust. When your customers believe their financial institution is trustworthy, they are more likely to remain loyal members. And even during 2020, banks that implemented empathetic practices generated more revenue than their counterparts. Essentially, your customers’ success becomes your success.