Banks are being forced to rethink their raison d’être these days. It’s no longer enough to exist for the sole purpose of turning a profit. With a powerful purpose, banks can reconnect with the community they serve and rediscover the very human side of banking – and do well. But before delving into how to pursue purposeful banking, it’s important to understand why the time is ripe for soul-searching and what it is at stake.
First off, public trust has been broken. Banks are still grappling with the aftermath of the global financial crisis and the scandals of misrepresented products and price rigging. The ensuing public sentiment boils down to a distrust of banks who are singularly focused on maximizing profits and shareholder return, not the customer’s best interest.
Then there are the waves of disruption by fintechs who have offered a more compelling customer experience. The nimble newcomers have kept up with customer expectations and in doing so, challenged the traditional banking model of providing service.
Consequently, public sentiment has turned to questioning and this skepticism cannot be ignored. According to an Ernst & Young global survey which polled 55,000 customers across 32 markets, one in three consumers believes that there will not be a need for traditional banks at all in the future. Four out of 10 customers express both decreased dependence on their bank and increased excitement about what alternative companies can provide.
The importance of a cause
While survey after survey ranks customer experience as a top priority for banks, they continue to face big challenges when it comes to implementing a truly customer-centric experience at the heart of their business. But as challenging and time-consuming as it is, banks with a customer-driven agenda are better positioned to restore public confidence and ride the wave of disruptive forces. It starts with a compelling, authentic purpose that forms the backbone of all the bank’s activities.
Purpose: a competitive advantage
It turns out that the most profitable companies are not those that are the most profit-focused. A survey by Harvard Business Review Analytics and EY’s Beacon Institute defines purpose as “a new leading edge… those companies able to harness the power of purpose to drive performance and profitability enjoy a distinct competitive advantage”. This echos the findings of Built to Last which conducted research on “visionary” companies between 1926 and 1990. These companies were guided by a purpose beyond making money and returned six times more to shareholders than explicitly profit-driven rivals.
How to pursue purpose?
Identify what is unique. A bank’s purpose has to be consistent with its core competency. Each organization has something that sets it apart, whether it’s a wide reach within a demographic, a specific expertise or set of products. It’s important to identify these traits and find ways to leverage them for good.
Look for purpose on the inside first. Purpose matters internally. To be authentic, a sense of purpose has to resonate with employees. A purpose becomes tangible when the whole organization embraces and demonstrate the values driving your purpose. As employees model and embrace behaviors that bring purpose to life within a company, the organization tends to see higher levels of innovation, growth, and customer and employee engagement. If it is to succeed, purpose must be firmly at the centre of an organization’s culture, and backed up with initiatives that excite employees and give them an opportunity to make a difference.
Give it backbone. Define all activities, decisions and strategy through the lense of the bank’s purpose and ask: does this reflect who we are and does it further our purpose? Let purpose be your guiding principle.
Applying purpose to the customer experience
A purpose clearly defines what a bank stands for – and what it won’t stand for. It takes boldness to live out these principles in the industry and to apply them to the customer experience. A purpose-driven mission often means fundamentally re-framing the entire customer journey from a customer’s point of view and making some big changes to it.
Banks can begin this work by leveraging their authenticity and empathy for the customer. From the customer’s perspective, their journey begins with an intent, a need or a desire, not a product. A customer’s intent is not to open an account as the bank would frame it, but to manage their money. A customer’s intent is not to take out life insurance, but to take care of their family’s needs in case of dire need. By framing each interaction and moment of truth from a customer’s perspective, a bank can map out how each customer journey can be re-designed to reflect the values driving the bank’s purpose.
Sun Trust’s Path to Purpose
SunTrust is the seventh-largest bank in the United States with assets around $175 billion. It enjoys both the financial clout of a multinational bank with the reliable reputation of a “local” or regional bank. To truly focus on the customer experience, the bank needed to fundamentally reframe the way it saw itself, and took an “outside in” approach. “We needed to start with a different purpose to answer the question: Why is it that SunTrust exists?” says Jeff VanDeVelde, Head of Customer Experience.
To unpack that question, the bank asked more questions to drill down into their historical presence in the community: Who have we always been? Who are our customers? Why do they come to SunTrust? What impact could the bank deliver if it was truly aligned with its customers? The deep dive into the organization’s history and values even involved interviewing a 108-year-old customer. In re-discovering the organization’s historical customer base and values, it become clear that SunTrust has historically focused on building personal relationships with its customers to help restore financial confidence and wellbeing. By asking questions, and listening, they found their authentic purpose: “We believe everyone can achieve the financial confidence to live a life well spent”.
A Virtuous Circle of Benefit
As expensive and time consuming as this evolution can be for a bank, a customer-centric purpose creates a virtuous circle that continually benefits the customer and the bank. Banks with strong customer centric models are seeing sales campaign success rates improve by 50%-200% and customer attrition fall by up to 5%.
Purpose-driven banking kicks off this virtuous cycle. When banks engage authentically and genuinely with customers and live out their purpose, they are more successful at helping their customers; the more customers they attract, the more resources there are in to invest in employees and innovation which ultimately feeds back into the community and strengthens it.
Purpose starts with recognizing that financial institutions do not have a neutral role in society. They have the ability and the responsibility to allocate resources in ways that not only do no harm, but also create positive outcomes.