What means Customer Experience anno 2014?

…From history to the drivers for change in this year…

For this blog I had the honor to interview B. Joseph Pine II. Author of several best-selling management books around Customization and Experience, speaker at TEDx conferences and contributor to several research papers for the Harvard Business Review. During my last blog I discussed customization of banking services and referred to his thinking already. This blog therefore is an interesting follow-up on that.

I used the inputs from this interview across my blog and want to thank Joe Pine for his contributions at the beginning of my blog.


Banking in the past was perceived as something for very smart guys and customers missed the understanding of it. They really needed their bank and its advisors to manage their cash. Today the world looks different. The (product) information is freely available and written in a more understandable way. Customers are looking more at how and when they do their banking. The customers know what is possible and expect it to be delivered in a simple and seamless way. Banks seem to understand that they need not only their customers’ money but the customers in person too!

Although this change is widely accepted and we regularly stepping over to it quickly in our publications, it is interesting to understand how this evolvement took place so quickly. With 2008’s financial crisis and the Smartphone development we have the 2 key components together.

Trust in banks went to an all time low during and after the financial crisis with customers that wanted to be much closer involved in management of their financials. Although we experience a strong increase in customers trust towards banks again, customers will never ever let them act stand alone anymore. They will always be more closely involved than pre-2008 levels.

This is partly due to the fact that they can easily connect with their bank online or by mobile. The ease and speed of those channels make the barriers almost disappearing to do so. What does this mean for customer experience anno 2014?

Need for speed

 “There is more and more self service than we have seen in the past. Customers tend to prefer to use the technology, because they are not getting the experience from the bank they want. With the commoditization of banking in general you expect banking to be quick and easy (doing it yourself)”, according to B. Joseph Pine II. Unfortunately we are not there yet as we still experience difficulties in doing all banking activities in the way we want them to do.

With regards to customer experience and what it means today Joseph Pine II is clear in the distinction he sees in customer experience approaches. “We are moving from a service economy to an experience economy. With experiences, people value the time they spend with companies.

The fact is that banks are following a ‘cost-driven’ strategy, which is the main reason they are not able to deliver the desired experience. They are trying to make transactions around existing things (products) more nice and convenient, which is not what a true experience is about. The product thinking — a push mentality – should be gone.” So this means for banks that a focus just on products will not deliver the outcomes customers want.

In one of his articles in 2008 Joseph Pine referred to ‘authenticity’ as something customers were looking for. It seems like this ‘authenticity’ thinking is becoming outdated with customers that are increasingly looking for banks, or companies in general, that are just providing what they want. Joseph Pine argues that there is still a case for ‘authenticity’, but the financial crisis impacted this a lot. “Customers found out some of the companies they were connected with were kind of ‘fake’. Highly valued banking principles apparently had been less important for the banks themselves. So customers even more so treated banking like a commodity”.

Based on this we can say those customers are placing less importance to the brand of the bank. First they are looking on how they want to do their banking, Secondly what is offered in the industry and as last which bank offers this. Joseph Pine agrees with this point, “but the brand has still value, so you cannot exclude it from the decision customers make in their choice for a bank. Meaning there is definitely place for a brand”. But overall we can say that just a focus on the brand position will not deliver the outcomes customers want.

This is also related to customers’ loyalty to banks. In a July 2013 whitepaper ⁱ the AIIA Financial Services Innovation Group described a strong decrease in customers’ loyalty. They argue that FSIs (Financial Services Institutions) are struggling to differentiate, make it easy to do business with, and hold onto, their profitable customers.

We already mentioned the commodization of the general banking services. Quoting Joseph Pine’s view from 2006: “Banks have had the attitude that spending time with customers costs them money, rather than realizing that spending time with customers gives them a tremendous opportunity. So, they pushed people out of branches to use ATMs”. When I read this for the first time I argued this to be the other way around anno 2014. Customers want to have the facilities so they do not have to go to the branch if they don’t want to. It is not that black and white according to Pine:  “We cannot say this to be the other way around today, but it is a fact banks finally achieved what they want. Customers do not want to spend time with them”. We can conclude that a focus on products or brands alone won’t provide the desired customer outcome.

Customer Centric Banking

With customers financial data spread around multiple financial institutions I would argue to see new opportunities for banks to provide customer centricity by bringing it all together. I also understand this to be not very easy, because client information is not openly shared between financial institutions.

“Most banks will never be able to offer that”, according to Pine, “but there is the opportunity for one bank to guide the clients trust”.  Mint.com is doing so. Customers need one place where they group all their different accounts.


I personally think that all banks should be able to deliver that customer centric thinking, but maybe non-banks will jump in this gap. Something I am looking for is the possibility to build my own mobile banking interface on an App (Lets give it the easy name: ‘My Mobile Banking’), providing access to all your bank accounts (from the different banks where you have accounts). An empty app everyone can tailor with the options they want for the banking you would like to do. Money transfers, balancing accounts etc. Forgetting any barriers between banks, by creating your own banking environment. If it is there I would love to receive a message and be a first user!

Joseph Pine: “Maybe it can go even further, with providing advice, coaching and training”. “I see a huge opportunity for bank transformations by helping customers achieve their goals and not only providing a respective experience. The barriers for this are the old and traditional mindset banks are having. This goes beyond products and services”.

“Customers do not think in channels, they just think in different views’

Over the past year much is said and written about Multi-channel or Omni-channel. Every bank is doing something in this space and if they are not, they really have missed a message in the past years. This also affected the experience customers received. But how much did they actually experienced on a daily basis (e.g. with regards to transactions)? Customers still do not have access to everything all the time, but when you offer it, it could really help the right customer groups onto the right channels (for them).

During a regular day, think about how you could read the newspaper in the morning finding the interest rates for the previous day, having your mobile app when you are at work for fast checks on your account balance and the branch to visit during lunchtime for a mortgage application (although I hope this could be done without a branch soon).

“Channels have a push mentality. Customers do not think in channels, they just in think in different views. They expect a continuing experience in every ‘view’ they have, so that every interaction with a bank should be part of an overarching seamless experience. Everything else is just an exception,” according to Pine. The only thing is to have not too many exceptions!

Furthermore Pine argues: “The customer-centric mentality in banking is extremely important. They should think in a customer-centric way, one that does not start by pushing out ‘products and experiences’ but rather by starting with customer needs and then pulling the right – ideally customized – offerings to meet those needs.”  This is very similar to what I heard several times during my conversations with private bankers and their marketeers. There are so many people keen on making that change, being innovative and use digitization to close that gap between what customers want and what banks currently offer. The biggest challenge they are facing is to convince the decision makers in their organisation. They have become at those positions (pre-crisis) based on sales and product thinking. When they are willing to change, banks can act quickly!

The Umpqua Bank in the center of the community

“No bank fully understands how an experience needs to be staged to be honest, but Umpqua Bank (Portland Oregon) is an example of what is possible. Umpqua started as a local bank, growing to become more regional. They created an environment like a community center. Having coffee bars, non-banking services available, possibilities for drop-off services from the cleaner etc,” says Pine. A great example of how the role of a bank gets a more communal role and that is where a bank should be, in the center of the community. Please have look at a video of their Capitol Hill branch.


 Larger banks also tried to be ‘the local bank’ like HSBC. Today almost all banks offer a kind of coffee bar to their clients, but they don’t create a setting Umpqua does, being a place where you really want to go and not only for your banking. Banking should be part of the reason why you go there, but it is great if there is more! Therefore I argue that also the big banks should be able to deliver similar experiences!

3 most important drivers for an improved customer experience in 2014 (by Joseph Pine)

  1. Competition – If banks are moving to a customer-centric way of thinking and leave behind product thinking they can differentiate themselves from their competitors.
  2. Changing Customer Behavior – Customers have changed and will be changing supported by the shorter lifecycle of technological innovations. Banks have to keep in pace with their customers, or at least understand what customers expect to receive from their bank. Although banks think they know what their customers want, the best way to start is just to ask them! No customer ever felt misunderstood by such a question.
  3. Need to create Economic Value – When delivering a service to or staging an experience for your customers it should be very clear what kind of (added) economic value it creates for customers. Customers are not willing to pay for something just because it is fancy, but because it delivers value. On the other hand, private banking exists for this reason. They are willing to pay for something fancier.

I am looking forward to any discussion around this blog. Thanks again to Joe Pine for contributing to it!



BJP2 ShorelineJoseph Pine II is the co-founder of Strategic Horizons LLP of Aurora, Ohio, USA, a thinking studio for helping companies conceive of new ways of creating economic value. He is the author of many books in this arena, including Mass Customization, Authenticity, Infinite Possibility: Creating Customer Value on the Digital Frontier, and most notably The Experience Economy. He can be reached at bjp2 at StrategicHorizons.com or +1 330-995-4680.

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