Contrary to expectation, call centers will not be the lynchpin of bank- customer communications, according to as yet unpublished research findings by Gartner. Bank calls that are now automatically directed to a call center will increasingly be handled by the customer's local branch, the Stamford, CT- based research firm suggests.
"That's not to say that call centers will diminish in importance," says Brad Adrian, senior research analyst in Gartner's financial services practice, in Durham, NC. "In fact, call volumes will increase in the next few years." The difference, he says, is that banks are also attempting to give branch personnel access to the same information that customer service representatives in call centers now have.
Another finding, from other research recently published by Gartner, suggests that banks should thank their lucky stars that new privacy regulations governing call centers do not go into effect, as originally scheduled, this month. Even though the Telephone Consumer Protection Act will not now go into effect until next July, banks face "tremendous difficulty" complying with it, Gartner's Adrian says. The Act requires telemarketers to comply with consumers' wishes if they ask not to be contacted.
Less than half of the 23 banks surveyed by Gartner late last year considered their efforts to honor such requests "effective." Success is partly technical: having centralized systems that universally distribute "do not call" lists. Gartner began to release those findings a couple of months ago.
Gartner only concluded its data collection for the other study, on the future role of the call center, about a month ago, and Adrian shared his preliminary analysis of the data. Both studies polled a representative cross- section of the banking industry.
"We're finding the role of the contact center is headed in a different direction than we thought a year and a half ago. Then, anybody who called their branch would be sent to the contact center. Now, the branch may have its own links into that customer data," says Adrian.
"Building a strong CRM (customer relationship management) model is becoming the main priority for many organizations," he adds. (See our research round-up, By The Numbers, page 22, which this month is devoted to CRM research.)
The emphasis on CRM may partly explain the wane in the short-hyped practice of establishing a center to serve Web customers separate from the regular call center. Not only would that be too costly, it would worsen banks' ability to form a composite picture of their customers from the fragmented images lying in different databases.
Obviously, one of the major trends affecting call centers in the past few years is the integration of Web-based service with traditional phone service-a topic treated by several of the stories in this section.
Another reason for branches again fielding calls is to increase customers' perception of the service they receive. Two years ago, while a principal of Actions Systems, a Dallas-based profitability specialist that is now part of Xchange Inc., an e-CRM company in Boston, Robert Hall noted a shift away from call centers. At least for their more profitable customers, whom they were eager to keep, banks began recouping calls from the call center to convey the personal touch, Hall said in an interview.
Banks, like other corporations, need help with their customer service. Arguably, banks need it more because consumers have higher expectations of them.
Support for that notion comes from a customer service study conducted in summer by Mobius Management Systems of Rye, NY. Every category of service provider that respondents were asked to rate was said to give worse service than their bank, yet respondents were quicker to change their bank over bad service than any other type of provider. See the accompanying tables, including one showing 62% of respondents reporting that they changed banks over bad service.
Eighty-one percent of those polled consider customer service "very important" when choosing a service provider. What most irked respondents about phone service was: being transferred back and forth between multiple parties; the representative not having immediate access to their account information; and "being made to feel that the problem I am calling about was my own fault."
Whether service is worse by phone or online depends on what kind of provider you're talking about. Respondents rated banks and insurers as worse online than off, whereas credit card companies, telephone companies and Internet Service Providers were considered to give worse service by phone.
About three times as many respondents considered banks' phone service to be "good" than considered their Web service to be "good" (64% versus 21%). Yet, with these and other results, banks can't feel too proud of their service.
Among Mobius respondents, 3% consider banks' phone service "terrible" and 5% consider their online service "terrible." Although Mobius provides customer service software, so some might question the objectivity of its findings, others have thrown the rap sheet at banks.
Banks' phone service is worsening, according to a study released in June by O'Connor & Associates, a Pittsford, NY, company that benchmarks call centers. Banks' call centers are marginally better than retailers', but the performance of both is deteriorating, the study found. Cross-selling by call centers worsened the most, with the banks' score slipping to 16% this spring, from 22% last year. Among the 15 depositories' call centers tested were Chase Manhattan Corp.'s and Citigroup's.
Independent research firm Cyber Dialogue Inc., New York, caused a stir last year by suggesting a 30% defection rate among online banking customers, largely as a result of bad service. Although the defection rate had moderated it seemed from an early analysis of this year's study, mid-summer, lost customers are still a major concern in online banking. For example, at least one-third of those who once tried paying bills online are understood to have given up.
It has been widely suggested that bank customer service is a particular problem online. Only about a year ago, it was common for banks to take two days to respond to customer emails, for example. Also, the newness of the medium prompted additional calls to traditional service centers.
"The call center still has an important role, especially in supporting emerging channels," says Gartner's Adrian, noting that the Web is one and wireless banking may be another, to a lesser degree.
By providing customers with greater financial incentives and the freedom to bank on their own schedule, online banks appear to have hit on a winning formula. However the less personalized and more automated variety of customer service offered by online banks through the telephone and online may prove to be their Achilles heel.
According to Brook Newcomb, senior analyst with Forrester Research of Cambridge, MA, "Those customers seeking a greater level of service will tend to gravitate toward the online offerings of traditional banks which combine the ease of use of online banking with traditional levels of service. One other factor that will affect customer retention at online banks is that customers attracted by the higher yields and lower fees will be hard to retain as they will be more likely to switch banks when a better deal comes along."
Therefore what may be the greatest challenge facing Internet banks will be finding a way to combine the flexibility and financial incentives they offer while providing a level of customer service that will allow them to retain their client base.
Thomas Condon, a freelance writer based in Nanuet, NY, also contributed to this story.
