back to latest articles

🎧 Customer Experience Gap Model: Blindspots That Ruin Digital Banking

0

🎧 Customer Experience Gap Model: Blindspots That Ruin Digital Banking

How would you react if your company spent half a million and two years on developing a new app but after launching it, the customer satisfaction decreased? There are several non-obvious factors that can completely sabotage all of the huge investments and efforts of creating delightful customer experience in banking or Fintech. So, let's explore customer experience gap model to find out why customers might not like your expensive new product.

There's no doubt that great customer experience (UX/CX) is mandatory to retain a competitive edge in the digital world.

Despite that, the efforts to ensure exceptional customer experience do not always lead to success due to certain critical blindspots. It happens that failure is pre-installed into the service, regardless of the budget size and the efforts of the team.

In fact, if implemented inaccurately, it can lead to losses caused by the so-called “customer experience gap”. 

The customer experience gap refers to the difference between the level of customer service that a company aims to provide and the actual level of service that customers experience. For example, if a company has a goal of providing excellent customer service, but customers frequently have negative experiences or report poor service, then there is a gap between the company's desired level of service and the actual level of service that customers are receiving. Various factors, such as inadequate business mindset, profit-driven corporate culture, inefficient processes, lack of customer-centricity or poor funding can cause this gap. Closing the customer experience gap is often a key focus for companies, as it can help to improve customer satisfaction and loyalty.

Listen to this article in audio format:

Customer Experience Gap Model Blindspots Ruin Digital Banking CX UX

Banking customer experience Gap Model as a part of UXDA's Financial UX Design methodology

Download the Customer Experience Gap Model framework in PDF to share and discuss with your team.

A certain bank invested nearly half a million dollars to improve its mobile banking app but it resulted in a decrease of the overall customer satisfaction. The root cause of it was several internal experience gaps at different levels of the financial company that the team failed to spot and prevent. We need to identify and avoid these blindspots in time to protect the success of expensive, large-scale digitization projects.

Banking CX Efforts Can Fail Even With Huge Budgets

In the last decade, a huge amount of research has been carried out confirming the priority influence of customer experience on a company's market efficiency. If bad CX leads to multiple business problems, then positive CX increases referrals, retention rates and revenue, because 86% of customers are ready to pay more for a better customer experience, according to Oracle report.

The main reason for that can be explained through the “experience gap”. It is the negative difference between customers' expectations and the experience they get from a financial digital service. If the experience is significantly worse than expected, it can have many unpleasant consequences, like decreased customer loyalty, tons of negative reviews, and even customers who decide to leave the brand.

In most cases, the real experience gap is not recognized. It is hard for leaders and employees of the company to detect what exactly and why to improve, even if they feel that something is wrong. If something is not consciously realized, it is not possible to manage it.

Bridging the customer experience gap is important for banks and other financial companies because it helps them to provide better service to their customers, which can lead to increased customer satisfaction and loyalty. Customers today have high expectations for their banking experience, and if a bank is unable to meet those expectations, they may be more likely to switch to a different institution. By bridging the customer experience gap, financial brands can differentiate themselves from their competitors and build stronger relationships with their customers. In addition, providing a seamless and consistent customer experience across all channels (e.g., online, mobile, in-person) can help banks to reduce operational costs and improve efficiency.

In general there are several steps that financial companies can do to bridge the customer experience gap:

1. Identify the root causes of the gap

The first step to bridging the customer experience gap is to identify the underlying causes of the gap. This should involve gathering feedback from customers, conducting surveys, and analyzing customer service data.

2. Develop a customer-centric strategy

Financial organizations should focus on developing a customer-centric strategy that is designed to address the needs and concerns of customers. This may involve creating a customer journey map to understand the customer experience and identify bottle-necks for improvement.

3. Invest in training and development

Providing customer service staff with the necessary training and development can help to improve the level of service that customers receive. This may involve training on customer service best practices, product knowledge, and communication skills.

4. Implement efficient processes

Inefficient processes can contribute to a negative customer experience. Banks can work to streamline processes and eliminate unnecessary steps to make it easier for customers to get the help they need.

5. Make it easy for customers to get in touch

Providing multiple channels for customers to get in touch with customer service can help to improve the overall customer experience. This may include phone, email, live chat, and social media.

6. Follow up with customers

After a customer has interacted with customer service, following up with them can help to ensure that their needs were met and any issues were resolved to their satisfaction. This can help to build trust and improve the customer experience.

7. Leverage technology

Technology can be used to improve the customer experience in a number of ways, such as by implementing self-service options or using AI chatbots to handle simple inquiries fast.

8. Foster a customer-centric banking culture

Creating a culture within the organization that puts customer in the center can help to ensure that all employees are focused on delivering a positive customer experience.

9. Measure and track progress

It is important for banks to measure and track progress towards closing the customer experience gap. This may involve collecting and analyzing customer feedback, conducting surveys, or tracking customer-centric key performance indicators such as NPS, CSI.

10. Continuously improve

Finally, banks should be proactive in seeking out opportunities to continuously improve the customer experience. This may involve soliciting feedback from customers, identifying new technologies or processes that could enhance the customer experience, and researching customer needs and concerns.

UXDA process CX UX methodology approach remarkable financial service

Real-Life Example: Customer Experience Gap Model in Action

To explain the way that the “experience gap” might cause trouble, I'd like to share a real-life example. Several years ago a quite known and respectable Central European bank embarked on a voluminous digital transformation journey. The bank's application had a rating of 3.5 and was outdated. In order to digitalize, improve the bank's image and the competitive chances in the growing digital market, the management intended to urgently create and launch a modern looking banking application. Therefore, the initial design and development period was 6 months.

Nevertheless, the bank spent three times as much time building the new application by themselves: 1 year and 8 months. This was a serious project not only in terms of time but also the budget invested. Judging by the scope of the project, the improvements made and the timeline, the overall costs could be estimated at around half a million.

However, the result did not live up to expectations at all. After the new application was released it decreased to 2.4 from the previous 3.5 and has kept dropping even a year after its first release as it did not improve, but significantly worsened the customer experience.

How could this happen if the bank did everything to improve the user experience and the whole team worked hard for almost two years?

In this case, there was an “experience gap”. Despite that dozens of the bank's top professionals have spent 20 months and half a million creating an improved product, it has failed to meet user expectations.

Though the real reason for customer dissatisfaction is the unconscious experience gap, often the financial companies tend to explain it by blaming external circumstances. Such as changes in the market, the activity of competitors, the emergence of innovations, changes in consumer patterns. Of course, there's objective truth in that, but a company capable of effectively adapting uses these factors for its growth, not as a scapegoat.

But the most important way how the effectiveness of adaptation can be measured is by how well the company's service meets or even exceeds the expectations of consumers.

Companies that are unaware of the gap between their service and customer expectations are unable to adapt.

In some cases, the company's actions even lead to broadening the experience gap to critical levels. This often leads to an alarming drop in demand for the company's products and services.

If we go back to the example, it seemed that management was confident about the success of the significant improvements made, and devoted large funds and efforts to advertising. The ads promoting the brand new modern, innovative, and user-friendly mobile app caused overestimated expectations among consumers that significantly exceeded the actual quality of the service. As a result, when the product was finally released, the customers were surprised to find out that their expectations are disappointed and that the new app is even worse than the old one. This led to a massive wave of negative reviews not only on the App Store and Google Play but also on social media. People were tweeting their struggles ironizing about the failed digitalization project of the bank.

Unawareness of the Gap is the Main Threat

Let's explore how the gap was formed between the digital service and user expectations, and why no one was able to prevent it. In fact, the biggest challenge is that these types of gaps are often not noticed in the organization. Their reasons are not obvious and are found at several levels of the organization at once. Moreover, their influence is so imperceptible that it leads to destructive consequences unexpectedly. In the end, no one understands what the reason is until the team faces the product failure in the market.

The main difficulty in bridging the gap is that the higher the hierarchy level, the higher the unawareness of the experience gap. In fact, at the top of the hierarchy, the root cause of the gap is usually found. The lower in the hierarchy, the more employees feel problems and gaps, but they often do not have the authority and ability to eliminate them, they are constrained by culture.

In this particular case, the support department received thousands of calls every day about the struggles caused by the new product but due to fragmented business processes, they weren't able to do anything about it.

Customer frustration grew even stronger. They faced issues that made it difficult to execute even the simplest everyday scenarios but the “support” they got from the bank employees was that they are not the only ones struggling and that currently, the bank is busy working on new features, instead of fixing the current ones.

What makes things complicated is the fact that the internal processes behind the experience gap are caused by the same mechanisms that have facilitated company survival and growth in the past. Since any organization has inertia, these mechanisms are supported by inner beliefs and values and create resistance to attempts to recognize and close the experience gap.

First of all, the gap should be addressed at the management level. Thus, the lower in the hierarchy, the farther from the leadership and the closer to clients, the more the gap is felt and recognized. Naturally, front-line workers will have the most data. They got it from the clients whose expectations are not being met.

Uxda portfolio financial digital product inspire industry ux

The 7 Specific Types of Experience Gaps in Banking CX / UX

According to Forrester's research top challenges to delivering a good CX are internal struggles: the lack of a cohesive strategy across teams (48%) and silos of various CX operations and functions across the organization (38%). The main experience gap may be caused by blindspots in one or several of the seven levels (culture, feedback, execution, design, value, brand promise, emotional connection) in the financial organization.

1. The Culture Gap

The lack of customer-centricity at the level of culture prevents employees from bringing service closer to customer expectations and causes a "culture gap". The processes and activities that contribute to customer-centricity in a company with a "culture gap" will not have priority and resources will not be allocated to them.

2. The Feedback Gap

Lack of data about customer expectations and their experience with a product or service creates a "gap of feedback". Here, financial companies often even collect the data but it's not analyzed and no action is taken to improve the situation.

3. The Design Gap

Even if a customer-centered approach is a priority and a large amount of data about customer expectations is collected, there could still be a gap concerning the design competence and methodology. Having the right expertise in place allows to build a high-quality ecosystem of digital products that will provide the best possible service according to customer needs.

4. The Execution Gap

This gap is associated with poor design execution. If user-centered product design is not a priority, decisions and efforts to create the final product and service are of low quality and efficiency. This determines the company's ability to create competitive services and products in the digital age.

5. The Value Gap

6. Gap of Overpromise

As my example with the bank demonstrates, if a company aggressively promotes its service, promising something that the product is not able to provide, it will lead to even higher disappointment in user expectations. As a result, the negative assessment of the service could double since the advertising promises don't meet reality.

7. Emotional Gap

If brand communication is purely informational, focused on functional features, then an emotional connection with users can't be formed. Since humans make decisions based on emotions, building service value on an emotional basis has a positive effect on customer expectations and the end user experience.

Bridging the 7 Specific Types of Experience Gap in Banking

Each client unconsciously evaluates the service they receive according to their expectations.

The emotions caused by the quality of user experience form the brand's reputation. In the modern world, digital channels have become the main “marketing” and PR of the brand. A negative experience with a mobile application can sabotage all the efforts of brand promotion even if it has a hundred-year history of serving clients and an excellent service on other channels.

It's simply because in the digital age, the mobile channel dominantes and for some, it's becoming the only way to interact with the brand. That's why it's so important to be aware of the ways to bridge these seven experience gaps that might arise when creating digital products in banking.

1. Bridging the Culture Gap

2. Bridging the Feedback Gap

In our particular example with the bank, the first step to start bridging the gap would be to dive deep into the most common of complaints shared on social media and calls to the support department. These are the clients who are closest to the gap. In fact, they have more insight into fixing it, than the management, and are often eager to actively share their emotions and be heard. If a company is open enough and ready for critics, it can use this data to bridge the gap and improve agility.

3. Bridging the Design Gap

4. Bridging the Execution Gap

5. Bridging the Value Gap

6. Bridging the Gap of Overpromise

The customers of the digital age demand transparency, care, honesty and open communication. Due to the network effect, it has become nearly impossible to sell a bad quality product because everyone can post negative feedback on social media. This damages customer trust deeply. So, it's crucial to make promises that can be not only fulfilled but even over delivered on.

7. Bridging the Emotional Gap

Find out how UXDA methodology bridge the gap

Pathway Towards Becoming a Beloved Financial Brand

This covers the seven main experience gaps that can sabotage the creation of digital financial products, as well as the seven bridges that can help to avoid and solve them. The financial brands aware of these banking CX blindspots can instantly gain a significant market advantage of their competitors who are still in the blind zone.

In particular, overcoming the customer experience gap in banking can help financial company to grow profit through several aspects:

1. Reduced customer churn

By providing a better customer experience, banks can reduce the number of customers who switch to a different institution, which can help to increase profit by retaining customers and avoiding the cost of acquiring new ones.

2. Increased customer acquisition

Providing an exceptional customer experience can also attract new customers to the bank, which can help to increase profit by expanding the customer base.

3. Increased customer lifetime value

Satisfied customers are more likely to engage in more profitable behaviors, such as using more products and services or referring others to the bank. This can help to increase the overall lifetime value of each customer.

4. Increased cross-selling

By understanding customer needs and preferences, banks can better tailor their products and services to meet those needs, which can lead to increased cross-selling and upselling opportunities.

5. Increased efficiency

By improving the customer experience, banks can also increase efficiency by reducing the time and resources needed to resolve customer issues or inquiries. This can lead to increased profit by allowing banks to serve more customers in the same amount of time.

6. Increased customer advocacy

Satisfied customers are also more likely to recommend the bank to others, which can help to increase profit through word-of-mouth advertising.

7. Enhanced brand image

Providing a good customer experience can help to improve the bank's brand reputation and image, which can lead to increased profit by attracting new customers and building trust with existing ones.

8. Reduced operational costs

Providing a seamless and consistent customer experience across all channels can help banks to streamline their processes and reduce operational costs, which can lead to increased profit.

9. Increased customer loyalty

Providing a good customer experience can also increase customer loyalty, which can lead to increased profit through repeat business and positive word-of-mouth advertising.

10. Increased market share

By providing a better customer experience than competitors, banks can increase their market share and capture a larger share of the overall banking market, which can lead to increased profit.

Awareness of the customer experience gap in banking alone makes a huge difference, but awareness combined with action leads to a long term success in becoming a greatly demanded and loved financial brand.

Get UXDA Research-Based White Paper "How to Win the Hearts of Digital Customers":

uxda white paper win hearts digital ux cx customers research based release finance with soul

Did You Enjoy This Article? Share Your Thoughts!

If you are seeking your financial product SOUL and also an exceptional competitive advantage in the digital age, contact us. With the power of financial UX design, we can help you turn your business into a beloved financial brand that has a strong emotional connection with your clients, resulting in success, demand and long-term customer loyalty.

Share:

Listen to our podcast:

More from our blog

Ten Psychology Insights to Design User-Centered Banking

Let's explore the psychology of financial and banking product users by looking into their minds, behaviours and main aspects of why certain products are disliked while others are desired.

UXDA Wins Platinum At The Summit International Awards

UXDA started 2022 as a Platinum winner in the Financial Marketing category of the Summit International Awards.

🎧 Provide Maximum Value with Digital Channels in Banking

How can financial companies survive the GAFA attack and ensure a successful digital transformation while it's not too late? The only way to avoid losing clients is to focus sharply on the value financial product provides to the customers.

Underestimated Power of Design in Banking Digital Transformation

There's a great misconception about digital products that not a lot of people are aware of - design is NOT a matter of how your product looks like, it is about what your customer feels, the emotions.

UX Design Success Story: Constant High-Quality Results

What does it feel like to work with the world's leading financial design agency? In a series of articles, we are inviting you to join the journey of our clients and explore their insights collected by Clutch about the work of UXDA.

ITTI UX Case Study: Core Banking Digital Transformation in Financial Services

With ITTI Digital’s permission, we are sharing an exclusive step-by-step case study on designing a next-generation banking back office that will definitely become a game changer in the industry.

🎧 UXDA Methodology: Banking Needs Purpose-Driven Mindset for the Digital Age

There are hugely successful digital companies that achieve fantastic results with minimal resources. What's their secret? We’ve identified five brilliant trends that lead the transition to digital and make it successful.

iGTB UX Case Study: Digital Corporate Banking Design of 5K Screens

In an exclusive case study we uncover the TOP insights of creating an exceptional UX for a corporate banking product by iGTB that consists of 5,000+ screens.

Innovations in Banking Industry VS User Experience: Blockchain, Open Banking and AI

Finance has always been quite conservative but it hasn’t missed out on technological progress. Due to the development of technologies, banks are becoming separated from their customers. According to research, 40% of American bank customers don’t go to...

ABOUT THE AUTHOR

Alex
Alex, Founder/ CEO/ UX Strategist

Alex has dedicated half of his life to studying human psychology, as well as business success, developing 100+ digital projects and 30+ startups. He spent 10 years researching UX and finance to create UXDA's methodology. Alex is a passionate visionary who's capable of solving any challenge to improve the financial industry.