Service without a smile: Why regional banks must step up

When was the last time you received exceptional service from your bank? Something that made you go, “Wow!”.

Last week? Last month? Last year? If you can’t remember, don’t try.

The banking industry in the Middle East – and globally – is not known for exceptional service levels. 

Take, for example, the recent UAE Banking Sentiment Index from PwC, which reveals a decline in consumer sentiment towards local banks. Despite increased social media conversations about the industry, consumer opinion has shown a downturn since 2022.

Net sentiment scores dropped for the leading UAE banks year on year, primarily due to operational or customer service shortcomings.

Why are banks traditionally so bad at customer service? The reasons are many. 

The first is legacy and outdated technology from the 1960s or 1970s that hobbles most banks. The average bank was born in a pre-digital era with inefficiently interconnected systems that are like messy spaghetti. 

The second is siloed data – despite all the detailed KYC (know your customer) forms that banks make you fill out, the data is hardly used effectively where and when it matters. 

The third is an increasing lack of empowerment at the frontline. Unlike in yesteryears, most branch managers today cannot independently approve a personal loan or refund a service charge since all authorities are typically centralised at head office. 

Fourth is a misalignment of incentives – most bank staff are incentivised for sales numbers, not good service levels. 

Finally, cost pressures have made banks reduce staff at branches and call centres, forcing customers to navigate automated voice-based systems and chatbots that are often frustratingly unintelligent.

And there is more. The pressure of compliance with increasingly complex local and international regulations and sanctions has increased pressure on banks who have to ask many more questions than in the past. This slows turnaround times, adds to paperwork and makes life more difficult for customers.

Reimagining service

What is the way forward? Banks have to reimagine all customer journeys end-to-end, from an outside-in perspective.

They must make more effective use of the tonnes of data they already possess on each of their customers, obviating the need to ask repetitive questions at every stage. 

In the digital age it is a shame that many banks still ask customers to sign and initial a dozen times on paper forms. Or put you on hold for 30 minutes when you contact the call centre with a query. Or take weeks to resolve a complaint.

Banks need to provide service guarantees, the same way a hotel chain such as Ritz-Carlton does.

For example, bank processing fees should be waived if a loan is not approved in 24 hours. Complex products such as investments or mortgages must mandatorily have free look-in periods.

For context, footwear retailer Zappos allows unworn shoes to be returned within 365 days, whereas most banks won’t let you change your mind on a loan even five days after signing up.

The most important shift banks need to make is moving from reactive to proactive customer service. If Starbucks can anticipate a customer’s favourite coffee through its app and have it ready before they even walk in, why do banks still treat every client like a stranger each time they visit a new branch?

For example, if a debit card is swallowed at an ATM, the bank should know about it before the customer reports it and then send out a replacement card.

Given banks’ extensive use of big data today, most servicing should be done via proactive outbound calling instead of customers calling banks to report issues.

Day of the customer

With the commoditisation of financial products and increasing competition from nimble fintech providers providing faster service, banks have no choice but to invest in service excellence, the only sustainable differentiator to retain customers. 

Banks in the GCC are rising to the challenge. They are focusing on staff training, process transformation, new-age customer relationship management (CRM) systems and incentive programmes which balance sales and service.

Artificial intelligence will arguably make a big difference and most leading regional banks are investing rapidly in AI platforms that will automate tasks, handle routine customer queries and monitor fraud. 

However, banks need to be careful that AI does not diminish the empathy and personal touch that discerning customers expect of their financial provider.

AI models can also perpetuate biases in credit decisions, so banks must proceed cautiously. 

The regulator is also playing its part. Most central banks have introduced consumer protection regulations which aim to improve customer service and ensure fair play. 

In the age of 24/7 social media, banks cannot afford to be seen as exploitative or indifferent. This is especially true given that customer loyalty is running thin.

Suvo Sarkar is the founder and CEO of consulting firm 3D Advisory and host of the ‘Money Majlis’ podcast. He is former group head of retail banking and wealth management at Emirates NBD

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