Three women brainstorming in meeting

How can banks generate greater value through improved customer service

Effective customer service transformation requires both cost reduction and a value-generation strategy built on technology and people.

In brief

  • Providing a high-quality customer service experience is essential if traditional banks are to meet the challenge of new market entrants and fintechs.
  • Transforming customer service operations involves both cutting costs and developing value-generating opportunities through applying insights and proactivity.
  • Success depends on multiple factors – investing in the right technology, skills and creating agile organizations.

Customer service transformation is firmly on the agenda of traditional European banks for important reasons. Achieving meaningful transformation is highly challenging due to the combined need to reduce customer service costs and delivering a high-quality customer experience.

Success for traditional banks requires taking a more strategic view of customer service operations – looking for opportunities to generate real value by applying customer knowledge and insights for more proactive product development and service delivery. It also depends on developing the right skills across customer service operations and applying technology effectively to support multi-channel service delivery. Lessons in agile operations can be learned from sectors outside banking to speed up effective transformation.


Chapter 1

Drivers for customer service transformation

Traditional European banks have many good reasons to focus on customer service improvements.

New banks and fintechs have differentiated their product and service offering by focusing on the customer experience – so raising the bar for the whole banking market. At the same time, customer expectations have changed, particularly influenced by positive experiences with online shopping and entertainment platforms. Customers across all banking sectors in Europe – retail, corporate, commercial and small and medium-sized enterprise (CCSB) banking – now have higher expectations for service delivery. They want it to be convenient, reliable and readily accessible.

The COVID-19 pandemic has also had an impact on banks and their customers. Banks have experienced shifts in revenue patterns, due to changing customer product needs. They have also had to adapt branch opening hours, while adjusting operations to rapidly increase at-home working. They have needed both to protect their own employees while also responding to the new challenges faced by customers, and the resulting increased requests for support. From the customer perspective, many individuals have suffered income shocks, whether through furlough or sickness. Many businesses have lost revenue, while also been focused on accessing government-backed support measures. 

Banks have responded to higher demand for support through increased use of chatbots, virtual assistants and the direction of customers toward self-service solutions where possible. However, customers with more complex financial problems or those with limited access or experience with digital apps, have often wanted help to be given by a real person, resulting in long wait times for telephone support.

Such dynamics increase the spotlight on banks’ customer service organizations – traditionally operations with high staff levels and accompanying high costs. Banks recognize the need to optimize and reduce the customer service cost base – while simultaneously meeting customers’ expectations for a high-quality service experience. They need to transform their customer service operations to satisfy changing future customer needs, while also reducing costs now.

Transformation is challenging at any time. In a period when the demands made of customer service operations have dramatically increased – when firefighting to handle volume is the dominant challenge – transformation can be even harder to achieve. Nevertheless, it is vital that European banks make the space to think more strategically about future customer-service needs in a cost-pressurized environment – and what could be done now to meet those needs.


Chapter 2

Moving from reactive cost center to proactive value generator

The potential exists for customer service operations to become proactive value generators.

The customer service operation in a traditional bank has typically been viewed as a reactive organization with a focus on responding to customer queries. However, value could be generated by feeding insights gained from customer conversations into product and service design. Customer service agents know the challenges and needs of individuals and businesses better than anyone else within a bank, but that knowledge is rarely applied.

Value-generating opportunities could also come from a more proactive approach to meeting customer needs. Traditional European banks have a huge amount of data on their customers, but typically don’t use it in a holistic way to spot service-generating and revenue-earning opportunities. For example, retail customers buying mortgage products are likely to have additional service needs related to insurance, utilities and moving services, among others. Banks could become more proactive by reaching out to such customers to explore their requirements and offer additional support.

The relationships that banks can build in this way should not be underestimated. For many financial services customers, the COVID-19 crisis appears to have reaffirmed the value of having a relationship with a provider with people on hand to explain things, help decision making and generally provide support through moments of uncertainty, vulnerability and financial difficulty. In this way, legacy and scale have become a differentiator.

Banks can look to build on their customer relationships by offering wider services that tap into a larger part of any customer journey. One way to do this is as part of an ecosystem – joining up with third parties and bundling services beyond banking to offer customers a friction-free and far-reaching service. Banks can position themselves in a variety of ways in any ecosystem, but there will always be new customer service challenges. For example, building an ecosystem platform is just one requirement for success. Banks will also need an agile resource of front-line agents capable of holding successful conversations with clients about their wider product and service needs.


Chapter 3

Evolving customer service skills

Transformation of customer service operations creates new demands for the people working in them.

Most organizations are aiming to digitize 50%-80% of their transactions. As banks digitize simpler interactions with customers, this changes the requirements of customer service personnel. The workforce is likely to need heightened and more empathetic skills to handle the more complex needs of customers, where the personal rather than digital touch is often preferred or still needed. EY research has found that where individuals are unlikely to access banking services more digitally in future, this can be because they believe the service experience to be better in person or view face-to-face service as more personalized.

Traditional customer service operations are people centric. However, as banks digitize more transactions and interactions, human contact between banking staff and their customers reduces. From one perspective, this means that every instance of human contact is an increasingly important opportunity for generating brand value. Banks need to make the most of these increasingly rare interactions.

Success in customer service operations may no longer be based on the speed with which customer queries are handled, but rather the achievement of maximum value for both the customer and the bank.

This again has important implications for the skills and capabilities required of the people working in customer service teams – and creates additional talent pressures for traditional banks. Recruiting and retaining the individuals with the required capabilities to achieve value-generating, high-quality service outcomes are likely to be increasingly challenging in a competitive market that includes new banks and fintech entrants.

The way that customer service teams work is also affected by the adoption of a scaled agile approach to customer service operations. Some banks are looking at moving away from a traditional, manufacturing-style call center where employee groups handle specific activities and where performance is measured primarily on speed of completion. They are moving toward a more agile environment with pods of workers that could include developers, product owners and customer service agents. Traditional silos are being replaced by a new style of organizational design focused around the customer.

European banks that adapt to such approaches to their customers’ needs could reap benefits such as greater proactivity in offering new, relevant services, as well as an improved customer experience overall.


Chapter 4

Harnessing technology for enhanced customer service

Apps, online channels and other service innovations have been embraced by banking customers.

Banking investment in digital technology before the COVID-19 pandemic played a major part in helping the sector cope with the crisis. Service delivery could be shifted rapidly from in-branch and face-to-face to apps, online and call centers. Customers have been directed where possible toward self-service channels, for example, by call screening and chatbots. Video conferencing has also been successfully used to maintain contact with vulnerable customers needing extra support.

EY teams worked with a major retail bank on a project where the goals included simplifying cost center operations, reducing operating costs and improving service quality. We supported the bank in demand elimination (categorizing contacts based on value to the bank and its customers), self-service migration and improving the performance of all contact centers by measures such as simplifying processes, designing an optimal contact center operating model and transferring skills to build a sustainable improvement culture. Our efforts drove out significant costs in the first six months as well as achieving a 15% reduction in call volume in year one, a 22% reduction in time to answer, a 10% reduction in contact center full-time employees and increased digital adoption and migration across interactive voice response, mobile and online.

Across financial services, customers have made use of digital and virtual channels, with a 72% rise in the use of fintech apps in Europe after the pandemic hit. The percentage of customers using internet banking increased from 49% to 67% in just a few months in 2020. In addition, 48% of customers are using banking services (personal or family) more digitally now than before COVID-19 restrictions began. Around four in five of those customers likely to continue accessing such services digitally post-pandemic, primarily due to convenience, accessibility and the ease with which tasks and activities can be completed online.

According to EY Seren Research & Insight looking at service channels in 2025, artificial intelligence is set to play its biggest role yet – although transparency in the way it is used, and how it can add value, will be vital. Designing beautifully concise and simple service experiences will be more important than ever as digital platforms and devices increase in complexity.

The types of customer demand that banks need to support will continue to evolve over the coming years. Banks that are able to provide simple services across multiple channels will meet customers’ support needs the best.


Market competition, cost pressures and changing customer expectations create an imperative for banks to transform their customer service operations. Such transformation needs to go beyond cost reduction to also deliver improved customer experience. 

Success depends on a multifaceted approach that blends investments in technology and people to give customers the omni-channel access they require. Self-service capability needs to be supported by in-person support for more complex customer queries. Strategic transformation should also seek to turn a traditionally reactive cost center into a proactive generator of increased revenues and brand value.

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