The UK Banking Empathy Experience Index (EXi)

Why read this report

It has been over a year since government legislation has changed the way organizations do business and deliver experiences to their customers. During this time, loyalty has been impacted dramatically. Brands are now in the difficult position of needing to rebuild loyalty among their customer base. The best way for brands to do this is through empathy-driven experiences. 

In this report, we explain why empathy is the key to building loyalty. 

We also examine what traditional UK banks and fintechs are doing to drive these empathy-driven experiences. Empathy should be a top-down initiative within organizations. Chief Executive Officers can use these findings to understand where they should prioritize their investments to achieve higher ROI. Chief Marketing Officers can use this report to understand how their brand scores on empathy across digital and non-digital touchpoints. Chief Product Officers can better understand how they can build products and services that drive these empathy-driven experiences. Finally, Chief Experience Officers can use these findings to understand which touchpoint to focus on to drive seamless experiences across all channels.

Key takeaways

The UserTesting Empathy Experience Index (EXi) benchmarks companies on how well they deliver empathy-driven experiences that strengthen loyalty. Using the EXi, this report identified three key takeaways:

1. Banks need to humanize the digital experience by taking the best from non-digital interactions and bringing them into the digital journey.

In general, fintechs scored higher than traditional banks on the EXi. This is due to the emphasis fintechs place on creating exceptional digital experiences. However, customers do not want to lose the human-to-human touch that is offered in traditional banks’ non-digital experiences. These experiences are a safe haven for customers. With this in mind, both traditional banks and fintechs need to understand what their customers want for a human connection during digital journeys.

2. If you want to build empathy-driven experiences, focus on creating positive emotional experiences.

Emotional empathy is the most important aspect of empathy. Traditional banks and fintechs need to understand the array of emotions their customers experience as they interact with the brand. The goal should be to maximize the number of positive emotions felt and minimize the number of negative emotions. When customers of traditional banks and fintechs feel a positive emotion during an interaction, they have significantly higher empathy and loyalty scores than individuals who feel negative emotions during an interaction. 

3. From the customer perspective, the future of banking is a combination of traditional bank and fintech offerings.

Traditional banks have the data to understand and predict what customer segments want and need when interacting with a bank. Fintechs have the technology to offer these customized and personalized experiences. Traditional banks and fintechs need to partner to deliver exceptional experiences to their customers. This is what customers want and expect.

The evolution of CX

Customer experience (CX) is not a new term. However, CX has changed a lot over the past decade. If we go back ten or so years, companies that emphasized delivering good experiences to their customers were able to differentiate themselves and gain a competitive advantage. Fast forward a few years, CX became one of the biggest buzzwords in the industry. CX became something that all businesses began to implement. This made CX the battleground where businesses tried to outperform each other. Unless organizations delivered exceptional experiences across all channels and touchpoints, it was very difficult to gain any type of competitive advantage. 

Fast forward another couple of years, and the idea of values-based CX came about. Values-based CX is grounded in the fact that customers and prospective customers want to do business with those brands who share the same values as them. These individuals could look past holes in the experience because of those shared values. What we found is that there is a gap. Even if customers did not share the values of a brand, or even were against the values of a brand, they would still interact and be loyal to the brand. The reason for this is that these brands were able to provide empathy-driven experiences to these customers (see Figure 1).

Figure 1: How CX has shifted over the last decade.

This is why UserTesting set out to build a measure of empathy that businesses can use to benchmark how well they are delivering empathy-driven experiences. What we found is that empathy is based on three pillars: emotion, cognition, and compassion. If brands can make the interactions that individuals have with them positive (emotion), if they can actually understand the needs of these individuals (cognition), and build experiences that work well for them (compassion), they would be able to deliver empathy. 

If brands are able to deliver empathy-driven experiences, they will also be able to gain loyalty. We look at loyalty in three dimensions: the ability of brands to retain customers, make them spend more, and have them recommend others. The Empathy Experience Index (EXi) looks at how empathy is able to strengthen loyalty (see Figure 2).

Figure 2: The UserTesting Empathy Experience Index (EXi)

The UserTesting EXi benchmarks companies on how well they deliver empathy-driven experiences that strengthen loyalty. These scores can be looked at within five categories:

The banking industry has a lot of room for improvement in how they deliver empathy-driven experiences. Looking at traditional banks, 34% of customers had very poor or poor empathy-driven experiences with their banks. 30% of fintech customers’ experiences were very poor or poor. Traditional banks and fintechs want to create excellent empathy-driven experiences because those experiences will lead to loyalty and increased revenue. Only 12% of traditional banks and 15% of fintechs had customers with excellent experiences. Nationwide, on the other hand, was able to elicit excellent experiences from 19% of customers. 

Emotion is the most important aspect of empathy. Your customers need to feel positive when interacting with you. Our study found that the gap in EXi scores for those who felt a negative emotion compared to those who felt a positive emotion when interacting with a traditional bank or fintech was 11.2 points. This 11.2-point difference translates to millions of dollars banks are losing every year.

UK Banking and Fintech Empathy Experience Index (EXi) Rankings

Digital journeys need to be optimized

Banks need to look at their non-digital journeys, find what works best, and build that into digital journeys.

In the last few years, there has been a need for traditional banks to catch up to the technology that fintechs come to market with. Both sectors approach the market very differently. A fintech is focused on the fact that the technology and rich feature set will set them apart. Traditional banks have been competing on the basis of customer service for years. Over the years of competing with other banks, this has forced them to put in place systems and processes that will highlight the experience that you have when interacting within the physical bank.

This recent study of banking in the UK showed that customers feel happiest when they are able to interact with a branch, especially when an issue arises regarding an account. Two of the areas where banks can make adjustments that will make an impact is when customers feel like more than just the value of their underlying accounts. Only 42% of survey respondents stated that they felt like the bank treated them as more than just the value of their accounts. Also, when they feel like a bank is anticipating their specific needs, again, only 42% of respondents felt that the bank performed well on this.  

Participants in the study said that when interacting with banks, they wanted to feel a sense of community and that they desired the bank to give them personalized recommendations with products that could help them with their specific needs. This sense of community helps humanize the digital experience for customers since they interact with others who share the same interests as them. Banks have the opportunity to use these communities to gather insights on current products and services, along with the opportunity to co-create future products and services. These communities give banks a direct line to their end customer. HSBC has over 2.9 million people who follow its Facebook page (see Figure 4). This is an enormous pool of individuals to gather insights from to help make exceptional experiences. 

Banks that scored particularly low were those that were closing branches across the UK. The branches that a bank has remain its biggest connection to its customers, and when you sever that connection, you are taking away a key differentiating factor in the marketplace. Translating the feel of an in-branch experience into a digital experience is something that will be very difficult to replicate. As such, banks will need to learn how to innovate and build that sense of community within the digital framework. A great example of this is Starling Bank and the way they showcase the customers on the home page. This allows prospective customers to connect and empathize with people who look and feel like them (see Figure 5).

Figure 4: Facebook page for HSBC UK.

Figure 5: Starling Bank homepage customer stories.

Experiences need to focus on emotion

If banks want to maximize loyalty by creating empathy-driven experiences, they need to focus on emotion. 

If brands want to optimize the experiences their customers have with them, they need to map out these experiences. More importantly, these experiences need to be mapped to the customer's perspective. Many organizations try to map out customer journeys without ever talking to customers; this is not customer journey mapping. Brands need to understand the emotions their customers feel at each stage and touchpoint of the journey. This will help brands to understand where they should prioritize their investments. 

When creating empathy-driven experiences, brands should focus on eliciting as many positive emotions as possible while minimizing the negative emotions. For traditional banks, the positive emotions that have the largest impact on driving empathy are trust and joy. Trust is an emotion that comes up frequently in analysis. Whenever customers interact with a brand, they want to trust that the brand has their best interest and isn't just focused on the bottom line. This is more prevalent in the financial sector. When an individual feels trust during an interaction with a traditional bank, it will drive 46% higher EXi scores. For fintechs, feeling trust during an interaction can increase the EXi score by 48%. Similarly, by eliciting feelings of joy during interactions, EXi scores increase by 25% and 24% for traditional banks and fintechs, respectively. 

The negative emotions that have the largest impact on lowering the EXi score for traditional banks include anger (-23%) and disgust (-11%). For fintechs, those negative emotions include anger (-21%), sadness (-17%), and anticipation (-9%). Traditional banks and fintechs need to map out their customer journeys to understand which emotions their customers are feeling at each touchpoint. It is also likely that the touchpoints that have the highest negative emotions associated with them also have the lowest employee engagement. This is where service blueprinting becomes important.  

Fintechs are able to elicit 12% more positive emotions than traditional banks. They are able to do this by focusing on creating products that span the customer's lifespan. For example, Starling Bank created Kite, a portion of the app that enables customers to help their children manage their own money and learn valuable financial skills. More importantly, Starling understands that the journey the parents go through using Kite is different from a child’s journey. Therefore, the parents can control the flow of money from their app while the child has a different app that they log in to in order to see the transactions they are making (see Figure 6 for the child’s experience and Figure 7 for the parent's experience).

Figure 6: The Starling Bank Kite experience for children.

Figure 7: The Starling Bank Kite experience for parents.

Monzo provides products for different types of individual needs. For example, Monzo enables customers to use pots for their money. These pots empower customers to put money into certain areas they choose. A customer who is saving for a trip can create a pot for that trip. The customer is able to automatically place a portion of their paycheck into these pots. Monzo also helps their customers who want to travel. Customers who travel have the ability to use their Monzo card in any country that takes MasterCard. There are no exchange rate fees, and Monzo allows customers to withdraw money in different countries for little to no fee. Monzo also places customers first by empowering them to have a say in what the company does. In 2017, Monzo announced that it needed to charge fees for cash withdrawals outside of the European Economic Area (EEA). Monzo decided to come up with three pricing options and let their customers vote on which one the company should adopt. This strategy makes customers feel heard and that the company sees them as individuals and not just accounts. 

With more traditional banks closing branches and shifting focus to online banking, customer service will need to become a strategic imperative. Fintechs will also see the need to place a focus on customer service since they will see more competition from traditional banks. In 2014, Barclays launched face-to-face video banking to their customers. This service enables customers to talk to someone face-to-face at any time of the day to take care of most banking needs. Customers can do everything from changing personal information to managing their personal power of attorney. This helps customers receive that human-to-human connection while going through digital journeys. Companies want to empower their customer service representatives (CSRs) to handle anything that comes their way. Companies should make CSRs feel that they can make decisions based on what is best for their customers. 

To aid in these initiatives, software should be adopted to help CSRs understand what customers feel when they interact with a live representative or AI-powered chatbot. What companies do not want to do is script their CSRs. When CSRs are scripted, it is difficult to empathize with customers. CSRs not only want to be empowered to help customers achieve their goals, but they also want to do it in a way that is empathy-driven. Companies such as Cogito help empower CSRs to be knowledgeable and empathize with their customers. Cogito is a call center software company that uses AI to empower employees to create empathy-driven connections with humans. The software will listen in on the calls CSRs are having with customers, and in real-time, give feedback to the CSR (see Figure 8).

Figure 8: Cogito’s empathy-driven software

Put the customer first

Traditional banks and fintechs should partner to put the customer first.

Traditional banks have a huge amount of data on their customers. They have data from when a person opens their first account through retirement. Traditional banks still struggle with the personalization and customization of their product and service offerings. Fintechs are able to create personalised and customised products and services to meet the expectations of their customers. However, they do not have the amounts of data that traditional banks have. Additionally, traditional banks do not have the technology needed to create the types of products and services that their changing customer segments want and need. 

Traditional banks have also developed customer service strategies that are tried and tested. Traditional banks are beginning to hire individuals with extensive knowledge in the fintech industry. These individuals bring many hats to traditional banks. They are entrepreneurial-minded, have backgrounds in new product development, and understand the changing landscape of banking. These individuals are tasked with helping traditional banks transform their offerings to cater to customers’ changing behaviours. However, this strategy takes time. Fintechs have already developed these strategies. What banking customers want is the intersection of traditional banks and fintechs. Many UK individuals have accounts with both traditional banks and fintechs. They want these two types of institutions to work together. This is even more relevant since open banking has come along. Open banking forced the UK’s largest banks to make data more accessible by other entities. This gave the industry a way to create products and services that were personalised to customers. The banking industry could start innovating on aspects of banking that have not changed for years. 

Banking customers want easy ways to gain access across different account types that they have with different banks. Since businesses should be thinking of putting the customer at the heart of every decision they make, it would make sense for traditional banks and fintechs to partner to create product and service offerings that their shared customers want. Our study looked at individuals who had accounts with both traditional banks and fintechs. Participants said that their ideal banking experience would be a mix of traditional bank and fintech offerings.

“If traditional banks and fintechs combine their strengths or improve their weaknesses they will create an amazing experience such as quality customer service, a wide range of services, and accessibility of traditional banks combined with high quality online experience by fintechs will have a big positive impact on the experience.”

-Study participant

“Traditional banks and fintechs should cooperate more to exchange data about customers to provide more open banking services. This would enable financial providers to offer more innovative financial products and more attractive rates for customers.”

-Study participant

Outcomes for banks and fintechs

What does this mean for traditional banks and fintechs?

1. Traditional banks and fintechs should focus on retention, not advocacy.

Switching financial providers in the UK is an easy process. This means that both traditional banks and fintechs need to focus on customer loyalty. This means that you need to keep up with your customers’ changing behaviours. 

Customers are going through experiences within the financial services industry and other industries every day. Each experience they go through heightens their expectations from brands they use. You need to benchmark your experiences not only within the financial services industry but also across the best in class brands that your customers use. This will help you create empathy-driven experiences that will continue to delight your customers and make them want to stay with you.

2. Focus on understanding the emotions throughout customer journeys. 

When customers, prospects, and employees interact with a company, it is important to make them have positive emotional experiences. Making customers feel trust and joy elicits the highest empathy scores. On the other hand, customers who feel anger, disgust, sadness, and anticipation elicit a negative impact on empathy. 

Map out the journey customers take when interacting with your business to determine which emotional states occur at each touchpoint. From here, use qualitative data to determine what each of those emotions means to your customers. Remember, the definition of emotions are not necessarily consistent from customer to customer. Determine the overarching themes that define each emotional state. Finally, train your employees to notice the emotional states that customers are in so they feel empowered to take care of all customer needs. 

3. Invest in customer service channels. 

Both traditional banks and fintechs will need to invest heavily in their customer service channels. In prior years, traditional banks could get away with having subpar customer service channels. The banks that did this well were able to increase satisfaction among their customer base. However, moving forward, these types of channels will be table stakes. The banks that have really good customer service will not necessarily increase their satisfaction scores, but the banks that do not have good customer service will see their customer satisfaction scores plummet. Fintechs will need to place a huge emphasis on these channels as well. Their customers are growing to expect expectational customer service, but they will expect this even more as competition from traditional banks keeps increasing.

Recommendations

1. Take what customers love about non-digital experiences and embed that into your digital experiences.

The future of banking is digital. However, customers never want to give up that feeling of personal connections to their banks. Customers have a need to feel like more than just the value of their accounts. They gain so much joy from walking into a branch and having that employee know them by their name, knowing about their families, and knowing about their accounts. These types of experiences help customers trust their banks. Therefore, banks need to take these experiences and build them out digitally. 

NatWest is able to do this by understanding its customers’ needs at specific moments in time. NatWest understands that their customers will go through times of financial hardship, and they have built experiences to help customers through these tough times. NatWest has developed programmes that train employees to understand the signs of financial hardship and be able to speak to customers and recommend services to help them. These programmes have trained thousands of employees to be able to recommend support to these customers. Most of these recommendations are done outside of bank branches. These recommendations come from customer service representatives along with financial account analyses being conducted on customer accounts. Always keep your customers’ best interests at heart, and they will repay you with loyalty.

2. Do not forget about the employee experience (EX). 

Happy employees lead to happy customers. Therefore, we can also say that employees that feel like their company empathises with them will be better at empathising with their customers. As traditional banks and fintechs build out their customer journey maps, ensure that you are mapping the employee experience with it. 

Where you see channels that have negative emotions surfacing, there are most likely negative emotions from the employee side as well. Train your employees to be able to handle customer inquiries themselves, without having to seek approval from management. Provide them with training programmes to make them better at their jobs. Show how what each employee does affects the customer experience. Share highlights throughout the company of the amazing things employees do for their customers.

3. Brands are competing with customers’ last exceptional experience; be that brand.

Look outside of your industry to determine what those best-in-class experiences are that your customers are experiencing, and bring them into your business. Ensure that these experiences are being co-created with these customers and align with your brand promise. Do not be afraid to potentially lose money in a specific channel because you are empathising with customers. If you empathise with customers and create exceptional experiences, you will gain higher loyalty, customer lifetime value, and share of wallet. Think of your empathy-driven experience holistically, and determine how each channel and touchpoint works together to drive empathy with your customers.

Survey methodology

The UK Banking and Fintech Empathy Experience Index (EXi) survey was launched to 3,820 individuals in the UK. Individuals needed to have a personal current or savings account with the bank. The brands that were scored on the EXi included Barclays (N = 302), Lloyds Banking Group (N = 301), NatWest (N = 300), HSBC (N = 304), Santander (N = 300), Nationwide (N = 300), Monzo (N = 300), Revolut (N = 300), First Direct Bank (N = 306), and Starling Bank (N = 302).

The survey was in the field from July 8, 2021 through July 27, 2021. Additionally, each brand was run through the UserTesting Human Insight Platform for a sample of N = 20 to gain qualitative insights.

About the authors