Swedbank Strengthens Position with SME Customers Via Multiple Delivery Channels
Multichannel banking is no longer an expected service only among consumers. Business customers now expect it, too. Unfortunately, however, while many retail banks have made the transition to a multichannel banking environment, business banking has fallen behind. Financial services firms need to create a business banking environment that mirrors its consumer services, particularly for its small business clients.
Flexibility is critical for small business banking customers, both for personal and business banking. They are increasingly moving away from the branch to conduct business online and over the phone. They need channels that revolve around their schedules. On the bank side, the ability to serve small and micro business customers, who generally have small margins, in an efficient and effective way can have a positive bottom-line impact.
The goal for banks should be to deliver an outstanding customer experience seamlessly across channels. To accomplish this, they need to pay attention how the channels will complement each other and what role each channel will play in delivering a positive customer experience.
This is easier said than done. According to the Customer Experience Benchmark: Retail Banking 2010 report, conducted by Peppers & Rogers Group and the European Financial Management and Marketing Association, delivering seamless and consistent service across channels is still a key challenge for banks. Banks rated their capability and overall score 3.6 out of 7. Even the banks who say they provide an excellent customer experience admit there is room for improvement, rating themselves 4.5 out of 7.
Swedbank embraces SME customers
It's a challenge, but one many banks are working to overcome. Swedbank is one firm making this transition. The bank serves personal and business banking customers in Sweden and the Baltics, with recent expansion to Russia and Ukraine. With almost 35 percent market share of the SME market in Sweden, business customers are an important customer base. Patrik Rylander, head of corporate online banking, discusses the bank's strategy to leverage alternative delivery channels for its small business customers.
Swedbank segments its small business customers into three groups:
- Micro customers – self-employed with no employees
- Small enterprises – up to €1 million in turnover
- Medium enterprises -- €1 million to €10 million in turnover
The absolute majority of Swedbank's entire business customer base are SME or smaller and they represent a substantial part of the company's profit. And of its SME customers, a large majority is made up of small and micro customers.
"For the smallest customers, we mainly focus on a distribution model," says Rylander. "We handle the customer as efficiently as possible while at the same time being available to them and providing first-class service. The online channel and the contact center naturally play a significant role there."
Rylander says that most small business customers think of banking as a necessary evil. "The small business customer sees the bank as something necessary but not very fun. It's something they do on a Sunday night after everything else. It has to be simple and fast for them when they need the bank."
He says that in general the micro and small enterprise segments think it's important to have a local branch and personal relationship manager nearby, but it's more important for them to do their banking online. Most have everyday banking products like savings, checking, and insurance accounts, and do both their personal and business banking with Swedbank. Some may have loans or other products as well. The larger the company, the more complex the products become. It's then that the branch and personal relationship become more important.
"Today we are focusing on increasing product penetration for the smallest customers, to get them to have their entire banking business with us," Rylander says. "The majority of the absolutely smallest banking customers only have one bank, but when you get up to the medium size they tend to shop around and use more than one bank. The major focus there is to try to get all of their business."
The company currently uses the branch and SME-designated agents in the contact center as the primary cross-sell and upsell channels, but is working to improve the online functionality for such activities. Currently, business users can manage their accounts, make payments, purchase mutual funds and other investment products, and apply for credit cards from Swedbank's website. Future plans include adding insurance products and e-loans to its online offerings for business customers.
In addition, Swedbank is focused on increasing customer satisfaction along with customer profitability and the efficiency with which customers are handled. "The way to increase customer satisfaction is to find the right model to serve these customers in an efficient way so that we are able to serve as many as possible," Rylander says. "And a lot of them don't have to meet us in person in the branches if we have the right services and the right functionality in the other channels." Consequently, Swedbank is bolstering the online experience for both sales and service.
Building relationships online
Like many other banks, Rylander admits that Swedbank has primarily focused on serving personal banking customers when it comes to the non transaction-based services with its online strategy. The focus for business customers has so far mainly been on handling transactions and information in an efficient way. For example, only personal banking customers can currently apply for loans online. But that is changing. "In general, business customers have already moved to the online channel and would like us to provide more services there." Customers in every region have a high online adoption rate, and the average business customer visits Swedbank's website 15 times per month, which is every other day. Its business services online need to match customer expectations.
"In the next five years we will see a lot of relationship management move online," Rylander says. "We will need to provide advice and counseling through the channel. The challenge will be to make it personal, to make it human. It puts much more demand on us to be less transaction focused and instead be a business partner." He says tools such as live chat, searchable knowledgebase, and individual advice on solutions, services, and products are planned to meet this challenge.
The future will be one in which the branch will transform into a meeting place for professional advisors to offer assistance and advice to customers on complex products and services. The remainder of banking transactions will occur online, Rylander says, with the contact center acting in support of the online channel. Customers can start the purchase process of a new savings account online, and then move to the contact center to finish it, for example. "The clear goal is to move sales of everyday products to the contact center or online, and the majority of products used by small enterprises will be available online," he says. The emerging mobile channel will become a version of the online experience, he says, focused on the specific services that are most appropriate for the mobile platform. "For the small business customers I think the most important thing is to have control," Rylander says. "We should therefore give them mobile services that help them to be in control of their customers, their cash flow, taxes and so on, for example."
Overcoming cultural barriers
One challenge to advancing these alternative delivery channels is that currently most financial services companies keep the power in the branches. At Swedbank, the branch ultimately owns the customer, and each branch is responsible for the relationship, even if the customer never sets foot inside a branch. It is up to each branch to decide which customer gets a personal relationship manager, as well what offers and communications are presented to build relationship strength and share of wallet.
Historically, each channel has operated in its own silo, Rylander says, but there is a shift toward developing complementary and integrated services. "When we develop new products or services, we always look at how it should be managed in each channel." But, he adds, much more sharing of information between channels is needed.
Three key success factors for SMEs
As Swedbank works to improve its business banking relationships, Rylander has noted several best practices. He shares three key success factors when working with SME business clients:
- Personal banking is very important. Find a good model to handle both personal and business relationships. "Look at the entire economy of the micro and small [enterprise] business customer."
- Find efficient models to handle customers outside the branch. Have a service model based on meeting customers in the online channel. It can be automated or personal client manager contacts via email or text.
- Work toward full channel integration. Tomorrow's customer will demand it. "Few banks have multichannel solutions," he says. "They have multiple channel solutions." The potential for true multichannel banking hasn't been reached yet.
Swedbank is just one of many financial services companies looking at alternative ways to serve its small business clients both efficiently and effectively in the new banking ecosystem. "Many small business customers don't have very high expectations when it comes to the [bank] relationship," Rylander says. If the bank provides them with personal advice on what to do and suggests better solutions while interacting with customers when, where, and how they want to interact for both business and personal banking, it will build relationship strength and loyalty while improving the bank's bottom line.
By Aysegul Bahcivanoglu, Director, Peppers & Rogers Group