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Report Summary - Benchmarks for Excellence in Caribbean Retail Financial Services

Benchmarks for Excellence in Caribbean Retail Financial Services


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Benchmarking Report at-a-Glance


Featured Companies

STUDY BACKGROUND
The intensely competitive nature of the retail banking industry prompted members of the Barbadian retail financial services industry to join together to explore common pain points experienced by retail banks and credit unions in their search for customer service excellence. This benchmarking report was part of a pilot program in the Caribbean to demonstrate the efficacy of benchmarking as a productivity improvement tool. While the information presented in this report is particularly relevant to the Caribbean market, many guiding practices are transferable to the broader financial services industry. This report offers insights into the critical need for a cohesive interplay among back-office staff and frontline employees for building and supporting customer relationships. Moreover, clear-headed marketing strategies, targeted human resources initiatives, as well as technology consolidation and training emerged as essential aspects of a holistic customer service experience required to achieve customer service excellence.

Royal Bank of Canada RBTT Bank Barbados National Bank, Inc. Scotiabank Barbados Public Workers Co-operative Credit Union Ltd. Butterfield Bank City of Bridgetown CoOp Credit Union

Industry Analysis Leading Caribbean retail financial services companies seek to leverage process, technology and organizational best practices to enhance customer service excellence and reduce the cost of service delivery. Information Type

20 Data Graphics 40 Best Practices 109+ Metrics

Report Length

76 pages

Copyright Best Practices, LLC (919) 403-0251

Report Summary - Benchmarks for Excellence in Caribbean Retail Financial Services

STUDY SUMMARY
This best practice benchmarking study employed a two-pronged data gathering approach. The field research team designed and conducted a performance benchmark survey that gathered statistical insights from seven participating retail banks and credit unions, representing a cross-section of the industry. The Best Practices research team then conducted in-depth interviews with key industry executives at participating financial services institutions to harvest qualitative insights, process excellence observations and managerial lessons learned. Benchmarks for Excellence in Caribbean Retail Financial Services (OP-100) evaluates multiple fronts of retail financial services operations that have the greatest impact on customer service excellence. For example, certain marketing programs call for coordinated process interactions between frontline employees and back-office staff to avoid sabotaging customer service expectations. Marketing must take care not to set unrealistic customer expectations, which could eventually lead to poor customer perceptions. In addition, human resources practices that focus on hiring, training, career path development and performance management foster employee retention, which promotes continuity in customer relationships. Moreover, the varied application of technology across the industry reveals an important area of focus for improved efficiency aiding in customer retention. This report summary includes key findings, the report structure, sample practices, a table of contents illustrating the studys focus, and an order form to facilitate purchase.

KEY FINDINGS
Best Practices, LLC analysts identified several key elements that provide greater insight into achieving customer service excellence. The following findings represent a high-level, summarized version of the actual practices from the benchmarking report, with the report itself containing more detailed explanations including examples and quotes from executives within the interviewed companies.

Sales and Marketing: Focus marketing efforts on customer relationships and leverage all staff to execute marketing strategies to capture not only new customers but also increase the depth of assets within existing accounts.
The trend among benchmark companies is a shift away from product marketing towards customer relationship marketing, reflecting the notion that products are easily copied but strong relationships are not.

Customer Service Excellence: Design all processes, both front and back office, to improve the overall customer experience and customer service levels.
One critical customer service component for all benchmark companies revolved around better management of teller and other lines in the branches. Innovative solutions addressing this issue include the implementation of floating staff that can respond to key triage points.

Copyright Best Practices, LLC (919) 403-0251

Report Summary - Benchmarks for Excellence in Caribbean Retail Financial Services

Human Resources: Design innovative ways to manage people and provide incentives to ensure their behaviors are aligned with strategies, and create HR processes that measure and align capabilities with intended performance standards.
Benchmark companies share many of the same methods for solicitation of employees; however, stark differences emerged in the screening, hiring and training processes of the best-in-class participants. Performance management is another area where best practice companies demonstrated superior results over other participants by utilizing direct and visible ties between employee performance and compensation.

Back Office Processing: Utilize technology and shared services to streamline back office processes, improve speed and accuracy and further enhance the overall customer experience.
Utilization of outsourcing and shared services is one major trend being leveraged by benchmark companies to reduce overall cost and increase efficiency in back-office processing. Technology investments are another trend where benchmark partners report increased efficiency thereby enhancing customer services.

REPORT STRUCTURE AND ORGANIZATION


The project findings are organized into this executive summary and five chapters. Executive Overview This executive summary contains a project overview and a summary of key project findings, recommendations, and next steps to help participating Barbadian retail banking organizations identify and leverage best practices. Key Findings and Insights This section discusses the highlights of the analysis, focusing on the most critical learnings from the research. departments. Best Practice Chapters These chapters provide an analysis of survey findings, followed by the best practices gleaned from interviews with retail financial services executives.

The key findings summarize the top trends seen in leading market research

Introduction Marketing and Sales Excellence Service Excellence Human Resources and Management Excellence Transactional Excellence

Copyright Best Practices, LLC (919) 403-0251

Report Summary - Benchmarks for Excellence in Caribbean Retail Financial Services

SAMPLE PRACTICES
Leverage a depth-based marketing approach, focusing on relationships not products, to increase sales to existing customers.
Two basic marketing strategies exist to increase revenue and wallet-share. Their usage depends on whether companies are trying to penetrate a crowded market, as was the case for many of the international competitors over the past several years, or whether they are already entrenched with relatively large existing customer bases. First, some companies choose to focus marketing and sales on a wide-net approach that is, attract new customers with the latest banking fad of the week. While this works in the short-term to temporarily gain business, and may be one way to enter a market or provide new services within an existing market, it has a major drawback in the long-term. If customers do not have a long-term incentive to stay with your organization, they will easily be lured into the competitors product of the week next week. Retail banking customers tend to have very low switching costs when it comes to opportunistic products.

As a result, some organizations have found that an effective defense strategy is to focus their growth efforts by leveraging relationships with current customers rather than new customers to increase marketing productivity. The thought, while seemingly obvious at the surface, has profound implications on

Product campaigns can be copied. Relationships cannot. Entrench the relationship and the customer wont move.
-- -Marketing Manager

how the company runs marketing, sales, customer service and back office operations. When these companies do offer new products or services that attract new customers, the efforts are largely to retain them as customers for life, and to take over their entire asset portfolio. According to one marketing manager, Product campaigns can be copied. Relationships cannot. Entrench the relationship and the customer wont move.

We are growing because of the loyalty of our customersthey see us as there to help, they see us as people-oriented, intimate, and personal.
-- HR Manager

Many of the credit unions carved a niche in the market through this sort of approach. According to one manager, We are growing because of the loyalty of our customersthey see us as there to help, they see us as people-oriented, intimate, and personal. By stressing

the importance of personalized service and long-term interest in customer financial viability, organizations are less likely to lose customers when they see the next product for a discount.

Business executives and managers further stressed the need to focus on building the relationship around the most basic and fundamental needs that customers have. For example, one marketing executive stressed that when a customer wants a mortgage, the basic need is shelter. Sometimes, it is imperative to direct the customer away from the product or service if the need requires something else, such as long-term investment over an immediate mortgage. Often, customers may be better off in the long run.

Copyright Best Practices, LLC (919) 403-0251

Report Summary - Benchmarks for Excellence in Caribbean Retail Financial Services

Ultimately, this approach has profound implications in that it permeates every business activity e.g., the entire business operation. In order for this strategy to work, CSRs have to be extensively trained on how to diagnose these hidden customer needs, and sales and marketing programs need to have extreme courage in the face of the constant onslaught of new and opportunistic products and services. All HR programs from training through employee development and rewards need to be aligned with this approach. Finally, even back office personnel need to fully understand the implications of their work on the overall customer experience.

Employ motivational approaches with customer-facing employees to inspire world-class customer service.
How do benchmark companies motivate staff to achieve their best? Involvement in key meetings and decisionmaking is another way. Hiring the right people for the right jobs, and moving people to new and interesting positions to keep them challenged also increase employee engagement. Benchmark partners revealed that motivation and employee engagement are especially difficult challenges in Barbados, due to past cultural attitudes.

One best practice participant uses the huddle approach at the beginning of each day. For each branch, a daily five to ten minute kickoff meeting is held to start the day, similar to some big retail chains and many top restaurants. During that time, managers recognize outstanding efforts from the previous day. The primary focus of these meetings is delivering a positive message to try to get everyone in the right frame of mind to start the day. According to one HR manager, It is critical for the CSRs to be able to vent and share.

Do role-playing and sharing about customer situationsits critical for CSRs to be able to vent and share.
-- HR Manager

Also, in an effort to involve employees, managers are required to hold weekly sales and service meetings with staff again, focusing on inspirational messages. Once a month executives meet with managers to review any of the issues surfaced during the other meetings.

In addition, managers participate in weekly conference calls with executives. Managers are strongly encouraged to bring employees in to these executive meetings, based on the finding that one of the biggest motivators for employees is being informed and feeling that they are involved.

Finally, visibility of performance reviews and operational reviews is critical nothing is a secret. This encourages open rivalry between branches friendly competition that the organization finds motivating and energizing for employees.

Copyright Best Practices, LLC (919) 403-0251

Report Summary - Benchmarks for Excellence in Caribbean Retail Financial Services

Effectiveness of Motivational Tactics I


Work culture or environmental factors such as a persons relationship with their supervisor and frequency of communications are viewed as the most effective factors in motivating employees even more effective than development factors like career progression & mentoring.
Frequent communication Supervisor relationship Vision clarity Progression potential Extensive training Rotation programs Formal mentoring Exposure to clients 0% N=6 20% 17% 33% 20% 20% 67% 20% 20% 20% 33% 17% 60% 60% 50% 50% 20% 20% 17% 17% 40% 20% 20% 17% 80% 100% Effectiveness NA 1 (Least Effective) 2 3 4 5 (Most Effective)

40% 33% 20%

50% 40% 60%

We asked survey participants to rate the effectiveness of different motivational tactics. By far, the two most important tactics in motivating employees are the supervisor relationship and frequent communication, with 50 percent of respondents rating each of those tactics as a 5 (highest, most effective). Also, spot bonuses, rewards and recognition programs, vision clarity and progression potential scored reasonably high with at least 50 percent of respondents rating them as 4 or higher.

Surprisingly, tactics that rated lower were training, formal mentoring, exposure to client, and salary/benefits. This survey finding confirms what was heard during interviews and supports what countless management-consulting gurus have said about the relatively low effectiveness of salary as a motivator.

Effectiveness of Motivational Tactics II


Among the reward and recognition programs, the benchmark class is split about which tactic is more effective. Compared with work culture/environment factors (previous slide), reward and recognition tactics were viewed as less effective.
Of the tactical approaches you use to motivate all retail banking staff, please indicate how effective you feel each is.

Spot bonuses/rewards

17%

33%

33%

17% NA 1 (low) 2 3 4 5 (low)

Salary/fringe benefits

67%

17%

17%

Recognition programs

17%

33%

50%

N=6

0%

20%

40%

60%

80%

100%

Copyright Best Practices, LLC (919) 403-0251

Report Summary - Benchmarks for Excellence in Caribbean Retail Financial Services

TABLE OF CONTENTS

Executive Overview & Introduction

Project Background ....................................................... 5 Study Methodology & Benchmark Class ........................ 6 Report Structure and Organization................................. 7 Key Findings and Insights .............................................. 7 Path Forward............................................................... . 12

Marketing and Sales Excellence

Overview ...................................................................... 19 Adopt a Marketing and Sales Strategy Which Focuses on Customers, Not Products............................................. 22 Utilize All Staff to Deliver Personal Sales Opportunities................................................................. 29 Overview ...................................................................... 35 Design Customer Service Processes Around Customer Delight .......................................................................... 36 Develop Customer-Oriented Employees...................... 42 Design Customer Service Measures to Ensure Alignment With Customer Excellence Goals.................................. 44 Customer and Technology Practices ........................... 49

Service Excellence

Human Resources and Management Excellence

Overview ...................................................................... Staffing and Development Practices ............................ Performance Management Practices ........................... Training ........................................................................

52 53 57 64

Transactional Excellence

Overview ...................................................................... 67 Back Office Processing ................................................. 67 Loan Processing............................................................ 71

Copyright Best Practices, LLC (919) 403-0251

Report Summary - Benchmarks for Excellence in Caribbean Retail Financial Services

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