UK financial services companies will have to broaden their vision if they are to survive the intense competition and new markets in the 21st century. With an ageing population and growing individual wealth, the demand for personal financial products is on the increase. This rise in demand, coupled with new technology and opportunities for consolidation, makes financial services highly attractive to new entrants.
If the past few years have taught us anything, it is that competition is getting tougher and that new entrants, particularly from overseas, are capable of winning a material share of new business in the UK.
The main battle in the future will be about the ability of financial services suppliers to demonstrate that they truly understand and can meet fully the different needs of their customers. It will be about creating trust through knowledge that will lead to customers allowing their supplier the privilege of looking after more of their financial affairs. This battle will not just be fought nationally, or even regionally. It will be fought globally.
Consolidation and the trend to globalisation are accelerating and there will be no prisoners taken as companies compete for market supremacy.
As consolidation takes a grip and we see the emergence of a small number of global financial services providers, one thing will become clear. The real challenge in retail financial services in the next decade will be about looking after our customers more effectively.
Communication technology is developing and customers are demanding the freedom to carry out their banking any time, anywhere. The explosion of the internet has meant that companies are now dealing with a more sophisticated customer who is both financially literate and computer-literate.
To succeed in the face of intense competition, organisations have to set themselves apart from other suppliers. They will have to get much closer to customers, really understand what customers need, when they need it, and how they want it delivered. Those that cannot satisfy their customers' needs will not survive.
Lloyds TSB has a clear aim to deliver real value to its customers, putting them firmly at the centre of its strategy for growth. At the heart of that is our customer relationship management programme (CRM), which has three clear objectives:-
Really knowing our customers so that we can win more of their business; understanding that every customer is different and treating each one according to their needs; and making one-to-one contact with the customer truly beneficial.
This system will give staff access to a customer's complete portfolio with us. When a customer contacts us, the member of staff handling the enquiry will be able to recall when and why the customer last contacted us and the range of products that the customer holds.
Through CRM, we will be able to capture, analyse and apply customer information so that we can monitor and anticipate customers' needs more effectively.
We will also be able to collect and monitor information about customers' preferred ways of banking, whether by branch, telephone or internet. We have already seen an improvement in customer loyalty.
The benefits to customers are significant. Staff will be equipped with details of their most recent transactions with Lloyds TSB; any products and services information sent to customers will be relevant to their specific individual needs; customers will benefit from a tailored approach and greatly improved service.
Our staff also stand to bene-fit. They will have detailed information about the customer and will be able to offer more timely and relevant products and services. As a result, customers will be more likely to keep all their financial business with us.
It is important to remember that whereas more sales do not lead to better service, better service always leads to more sales. Even in this technologi-cal age, the most critical constituency in our success is our own people.
The real key to improving customer satisfaction is constantly to strive for new, different and better ways of serving our customers. While doing this we must always aim to provide them with real value.
Today, Lloyds TSB has 16 million customers. On average, each customer holds eight financial products, of which Lloyds TSB has only 2.3. Our target is to increase this to 2.5 products by the end of 2002. Through CRM and segmentation we aim to become world-class at customer relationship management.
The importance of a customer-oriented strategy is shared by many players in the industry, but to beat the competition and win the loyalty and trust of their customers, organisations will have to be single-mindedly customer-focused.
This will require a major transformation for many companies. The winners will be those organisations that can harness the power of technology and the expertise and commitment of their people to provide relevant products and excellent service - where, when and how the customer wishes to do business.