Rethinking Channel Strategy and the Mobile Customer FINANCIAL SERVICES PRACTICE CEB TOWERGROUP RETAIL BANKING 7 May 2014 Rethinking Channel Strategy and the Mobile Customer Breaking Barriers in the Digital Customer Experience Nicole Sturgill Research Director

Roadmap for the discussion The Digital Service Gap Multichannel Service Solutions CEB TowerGroup Retail Banking

Engagement declines for technology oriented customers Engagement Indicators by Channel Preference Percentage of Customers in Top Two Categories on a Five-Point Scale for Each Indicator by Channel Preference, 2010 60% Clear Understanding of Who and How to Contact Bank Bank Willing to Accept Feedback High-Quality 30% Product Guidance When Purchasing Bank Cares About Customers 0% Personal Personal Balance Technological Technological Only Leaning Multichannel Leaning Only N = 3,044 FINANCIAL SERVICES PRACTICE, CEB TOWERGROUP RETAIL BANKING Source: CEB TowerGroup research

Customer support is holding digital back Customer Preference for Personal vs. Digital Channels Banking Customers by Banking Task, 2013 80% 75% Personal Channels 66% Digital Channels 56% 54% 42% 42% 40% 38% 18% Explain survey No difference between digital preference customers between 2010 and 2013 survey – Why not? Biggest gap between personal and digital preference, and lowest preference by far for digital, was in receiving customer support Caused us to look closer at the service experience 0% Receive Customer Support Learn About Financial Products and Services Use or Access Financial Products and Services Purchase New Financial Products or Services n = 2,013. Source: 2013 CEB Customer Experience Survey. #CEBSUMMIT CEB TowerGroup Retail Banking © 2014 CEB. All Rights Reserved. CMBO8231314SYN 2

Poor service for digital customers Problem Resolution Metrics Spike for Digital Channels Percentage of North American Banking Customers, 2013 78% 80% Personal 71% 68% 69% Digital 41% 42% 39% 40% 30% These are reversed Digital customers more likely to face problem more than once and to have to interact with the FSI >3 times to get it resolved More likely to say that they had to put in a lot of effort to resolve the issues More likely to say that the resolution was ineffective 0% Faced Incident More Than Once Interacted with Institution More Than Three Times Good or Great Amount of Customer Effort Ineffective Resolution n = 341. Source: CEB 2013 Customer Experience Survey. #CEBSUMMIT CEB TowerGroup Retail Banking © 2014 CEB. All Rights Reserved. CMBO8231314SYN 3

Digital issue resolution falls short Even When the Issue is Resolved, Digital Channels Fall Behind Percentage of North American Banking Customers Who Believe the Institution…. 80% Personal 68% Digital 62% 49% 49% 44% 40% 37% 28% 23% This one is fine Digital customers less likely to say that the bank formally acknowledged the issue and that they were kept informed of the steps taken to resolve Less likely to say that the issue was resolved satisfactorily and less likely to say that expectations were exceeded With experiences like these, it’s no wonder that customers can’t really move to the digital channels completely 0% …Formally Acknowledged the Issue …Kept Me Informed of Steps It Was Taking to Resolve the Issue …Resolved My Issue in a Satisfactory Manner …Exceeded My Expectation in Resolving the Issue n = 174. Source: CEB 2013 Customer Experience Survey. #CEBSUMMIT CEB TowerGroup Retail Banking © 2014 CEB. All Rights Reserved. CMBO8231314SYN 4

But Improving the digital experience provides payoff Impact of Engagement on Loyalty Among Tech-Oriented Customers Percentage of Technology-Leaning or Technology-Only Customers Who Took Indicated Actions Within the Past Year by Level of Engagement, 2010 N = 1,348 FINANCIAL SERVICES PRACTICE, CEB TOWERGROUP RETAIL BANKING Source: CEB TowerGroup Retail Banking, Customer Experience Survey, 2010.

Roadmap for the discussion The Digital Service Gap Multichannel Service Solutions CEB TowerGroup Retail Banking

Functional consistency creates complexity without customer benefit Current Channel Access Goal Illustrative Main Challenges in Providing More Customer Choice Verbatim Banking Service Complexity Function Channels It wasn’t too long ago that you had to pick up the A 1 phone or a pen to contact us. Today there are so many customer service touchpoints—I can’t keep track.” B 2 C 3 Cost D 4 “Investing in new channels or building out a new functionality isn’t cheap, and it’s not like I have budget to spare.” E 5 Financial Institution Goal Enable customers to resolve any service request in any channel at any time. FINANCIAL SERVICES PRACTICE, CEB TOWERGROUP RETAIL BANKING Source: Customer Contact Leadership Council, CEB TowerGroup Retail Banking

Cross-channel consistency is necessary Breakdown Between Two Customer Types 100% Eff ort “The Ends” 50% Choice “The Means” 0% Means Focused: “My Way or the Highway” (16%) Ends Focused: “Just Get It Done” (84%) “I want to resolve this issue in the channel of my choice— “I want this issue resolved as quickly and easily as possible.” no matter what.” ■ Want fast issue resolution, typically on fi rst contact ■ Want issue resolved in their preferred channel ■ Don’t want to have to switch service channels ■ Willing to trade off ease and time to be able to choose ■ Want the experience to feel like it was low eff ort their preferred channel ■ Don’t necessarily care where issues are resolved N = 996 FINANCIAL SERVICES PRACTICE, CEB TOWERGROUP RETAIL BANKING Source: Customer Expectations Survey, CEB TowerGroup Retail Banking

Map functionality to the logical channel Feature/Function Branch Contact Center ATM Online Banking Mobile Check Balance Make Deposit Withdraw Cash Cash Check Account Alerts Bill Payment Transfer Funds Open Account Address Change Card Dispute FINANCIAL SERVICES PRACTICE, CEB TOWERGROUP RETAIL BANKING Source: Customer Expectations Survey, CEB TowerGroup Retail Banking

Perspective changes the priority The Realistic View of the Digital Customer Experience External Customer View, 2014 Positive Customer Experience Helpful Channel Interactions Simple Processes Agile Technology Source: CEB analysis. #CEBSUMMIT CEB TowerGroup Retail Banking © 2014 CEB. All Rights Reserved. CMBO8231314SYN 7

IMPROVING DIGITAL CUSTOMER SERVICE Indicators of Effective Service Opportunities for Effective Service Send regular updates via channel of choice. Keep customers informed Formally acknowledge the issue Send notice of acceptance. Resolve the issue to the customer’s satisfaction Measure resolution effectiveness over time. Review the business processes for ease of use. Exceed the customer’s expectations Think back to slide 4 and what worked well in the personal channels but not in digital, there were really 4 things. Read through “Indicators of Effective Service” The first two are easier to accomplish in the personal channels so what does that look like in the digital channels? Read through “Opportunities for Effective Service” Questions for panelists What additions would you make to this list? Any challenges to the list? Reasons why these things will or won’t work? What new technology excites you most as a new idea that could solve digital service issues? Source: CEB analysis. #CEBSUMMIT CEB TowerGroup Retail Banking © 2014 CEB. All Rights Reserved. CMBO8231314SYN 8