Want to improve your banking customer experiences? Start with your *candidate* experience.

‍Banks with great customer experiences enjoy better business outcomes.

But despite best efforts, many financial institutions struggle to improve the customer experience. A major root cause is the disconnect between the experience banks want to offer customers and the experience they offer prospective employees. One low-effort, high-impact area HR leaders can take control of is background screening. 

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If you’d raised the topic of customer experience in most bank boardrooms ten years ago, you’d have been roundly dismissed. But with the benefit of hindsight, you’d be hailed as a prescient genius because today, customer experience has become a major strategic priority. 

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But there are still huge disparities in customer experience between banks, often with new market disruptors running rings around traditional legacy providers. 

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It’s no coincidence that the same financial players offering great customer experiences are usually those offering great recruitment experiences, with fast, modern, respectful candidate journeys that empower better hiring decisions, faster.

Let’s unpack that. 

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Customer experience is banking’s biggest competitive differentiator…

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Consumers care more than ever about the banking experience — and are voting with their feet where financial providers fall short. But many traditional financial institutions were slow to recognise these changes in consumer mindset, making them vulnerable to disruption. 

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The legacy these traditional banks enjoyed of life-long customer loyalty has faded away, leaving an industry that’s highly competitive, poorly differentiated, and besieged by disruptors. 

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Now, faced with the threats of declining revenues, market share, and customer loyalty, banks are racing to catch back up. 

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Customer experience has established itself as the playing field, becoming the lynchpin of differentiation among a sea of same-same product portfolios and terms. As Qualtrics put it:

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“Marketplace differentiation is no longer determined by location, price or product, but by customer experience. This is particularly true of banks, as they offer similar products and many consumers perceive little difference between them. The real differentiation comes with the quality of a bank’s customer experience offering”

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This emphasis on customer experience has become even more important given the uncertain economic environment over the past 18-months or so. McKinsey’s research shows that customer behaviour is particularly buoyant at the moment, with changing financial needs driving re-evaluation of banking relationships:

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• Consumers are 2x more likely to open a new financial account
• 15% of consumers are open to a new banking relationship
• 20% of consumers are considering switching banks

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This situation brings both challenges and opportunities; winners and losers. The upshot is, great customer experiences are no longer a bonus added extra. They’re the major driver of better business outcomes. 

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• Attract more new customers
• Retain existing customers longer
• Increase up-sales and cross-sales
• Increase customer lifetime value
• Increase revenue and market share
• Accelerate business growth
• Increase total shareholder returns 

Customer experience leaders outperform customer experience laggards on total shareholder returns by 72%

McKinsey, 2023

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McKinsey’s data concurs, showing that improving customer experience creates “stacked wins” of higher returns, faster growth, and lower costs. Their research shows that customer experience leaders in banking outperform customer experience laggards on total shareholder returns by 72%. 

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… but many banks are struggling to make progress

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Most bank leaders recognise the importance of customer experience — but knowing and doing are often two different things. This can be a particular challenge for traditional banks.

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In Great Britain, the Competition and Markets Authority (CMA) publishes a services quality league table of personal and business current account providers, to help consumers compare providers. In August 2023, the top-ranked three providers were Monzo (1^st), Starling Bank (2^nd) and First Direct (3^rd). By contrast, the bottom three are more traditional institutions – Virgin Money (=15th), RBS, (=15th) and TSB (14th).

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The Which? customer score 2024 table reinforces these findings, with Starling, Monzo, and First Direct topping the table with an 83% and 82% customer score respectively. This compares to scores in the 60-percents for HSBC, TSB, Virgin Money, and Bank of Ireland UK.

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Given that banks can expect to see a 27.5% growth rate simply by improving their customer experience scores by 10%, these are significant differences.

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So – what could banks be doing differently? These disparities in customer experience aren’t happening because banks don’t want to make changes. But they’re still happening.

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There’s not one single answer to this question, of course. Customer experience in banking is extremely complex and multi-faceted. McKinsey analysis says that a typical regional bank has over 1500 customer journeys across business units, product lines, and customer interactions. 

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But there is one connecting thread throughout this complex customer web: people. That is, your workforce. The service your staff deliver and relationships they build. 

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Great customer experiences start from great candidate experiences

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Customers’ banking experience isn’t solely determined by people – but people play a heavy role. Having skilled, engaged, motivated, trustworthy people in the right places at the right times ultimately means delivering better experiences at every stage in the customer journey. 

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• Great customer support representatives improve the issue resolution process, transforming frustration into loyalty. 

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• Great frontline banking staff improve the in-branch experience, turning banking chores into moments that matter.

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• Great design, tech, and product teams improve online and mobile journeys with intuitive tech that better meets customers’ needs. 

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• Great leaders take a birds’ eye view of customer experience strategy, to improve holistic end-to-end journeys. 

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But that’s where many traditional banks are facing a problem. There’s often a major disconnect between the customer experience banks aspire to offer, and their recruitment experience. 

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When your candidate experience is slow, frustrating, time-consuming, and clunky, you lose great people. Usually to the same competitors who are also outperforming on customer experience, precisely because they’re getting the great people that experience hinges on. 

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For example, one study found that organisations with a positive candidate experience are 70% more likely to hire a top-quality candidate.

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And even once you successfully hire people you’re happy with, a poor candidate experience disrupts the customer experience. If new starters start with a bad taste in their mouth, they’re more likely to have a poor onboarding experience – and less likely to stay, excel, or deliver a great experience for customers. 

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Digitate find, for instance, that employees who had a negative new hire experience are twice as likely to look for new opportunities in the near future.

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Ultimately, a poor candidate experience means your reputation and employer brand suffers so you’re less able to hire the right people the next time. And people don’t reapply when they’re looking for a new role. And they certainly don’t recommend you to their network.

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The result is, recruitment becomes a vicious cycle where hiring continually feels like walking uphill through treacle. And the biggest casualties are, eventually, your customers.

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One area that’s ripe for change: background screening

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There are lots of components to the banking candidate experience, and plenty of opportunities for improvement throughout the candidate journey. But one area that’s especially low-hanging fruit is background screening.

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In banking and finance, background screening is often an enormous chunk of your time-to-hire. And robust checks and balances are absolutely vital. In such a highly regulated and risk-sensitive industry, maintaining compliance and ensuring the integrity of your workforce is critical.

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But often, this process is much slower, more bureaucratic, and more time-consuming for your team and candidates than it needs to be. And many banks have accepted this as ‘the way things are’.

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It doesn’t need to be. You don’t need to sacrifice speed, service, and ease for rigour, depth, and certainty. You can have both. 

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The banks that realise that are able to deliver a much better candidate experience and enjoy a much smoother HR experience, while meeting all their compliance obligations.

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One great example is Ocorian, a global leader in fund administration, capital markets, corporate and fiduciary services. Ocorian operates in a complex multi-jurisdictional environment with many different screening requirements and challenging hiring peaks and troughs that caused bottlenecks. 

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They’d found the background checks process was slow and complicated, leaving the Global HR Operations team waiting around for responses. Responses that then needed double-checking, taking even longer before hiring could go ahead.

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When the team made the decision to swap to modern, fast background screening partners with a flexible platform and excellent service, the checks process became much simpler, faster, and more reliable. 

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For Ocorian, swapping to Veremark has reduced the pre-employment checks process from around three months to six weeks. Watch the case study herecauseand operates. That’s a perfect example of taking control over the candidate experience — ultimately to hire the right people to deliver a better customer experience. 

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Banking and finance are highly competitive environments – both from a customer and a candidate perspective. The two are intimately connected, because great candidate experiences begin great employee experiences which drive great customer experiences.

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Improving your pre-employment checks processes isn’t a silver bullet, and there’s still plenty of work needed across financial institutions to continue to deliver stand-out customer experiences that deliver better business outcomes. But screening is a low-risk, high-yield area to focus on improving. One that’s easy to implement and offers a huge, and fast, potential impact.

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Transform background screening today. Learn more about Veremark for finance and banking.  

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