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7.5 Wrap Up: Win-Win Cycles and Client Value Generation

In the digital age, customers are in the driver's seat and are increasing choosing the business models that will provide them effectively and subjectively with added value. What is characteristic for a win-win situation in the customer-bank relationship is that there is an exchange relationship among equals, and an appropriate distribution of the success derived from this exchange relationship, for both the customer and the bank. How is the bank success from an exchange relationship with the customer structured when the customer is satisfied and “bound”, in a positive sense, to his bank? Which aspects influence client value—customer success in the digital age? And what influence do satisfied customers have on bank success? These are the key questions of the Client Value Generation.

The win-win cycles show how customer success influences the success of the bank and also that of other shareholders and stakeholders. The aspects of how the customer relationship influences bank success have already been analysed in detail in the literature, at least in a cross-sector manner. Thus, where there is an unequal distribution of information, reputation plays an important role in acquiring new customers. As soon as customers enter into a bank relationship, they can gain personal experience from the services provided by “their” bank. They build up trust in the form that they do not need to test the service provided by their bank each and every time, for example, by comparing it with the services of other banks. So what factors determine customer satisfaction?

Here, the components of the individual banks services can be divided into basic factors, performance factors and enthusiasm factors. Banks can use these to optimise their existing performance portfolio or to improve customer satisfaction in the area of new investments. While basic factors are simply a must-have, and a basic level must be fulfilled here, customer satisfaction can be increased with performance and enthusiasm factors. With regard to technological innovations, it should be examined where the technology can be deployed for the aforementioned factors, and how long, for example, advantages in the enthusiasm factor can be exploited before they mutate into a state-of-the-art technology, such as online banking, thereafter becoming merely a must-have.

Customer satisfaction can lead to customer loyalty, although there does not appear to be a linear correlation. Customer loyalty refers to the future behaviour of the customer, i.e., his intention to remain with the existing provider. There are areas in which an increase in customer satisfaction does not lead to additional customer loyalty. From a financial viewpoint, therefore, it is not attractive for a bank to expend more effort. In the banking sector the perceived value of a performance (offer, service, price) and the relationship quality seem to have a greater influence on customer loyalty than the brand image of a bank. But also the quantity of services availed of can influence customer loyalty.

What success can a bank gain from having satisfied, and therefor loyal

customers? They will repeatedly buy the same product, or a different product from the same provider, they have lower price sensitivity and a higher fault tolerance, and may even contribute to product development. This leads to an increase in turnover, a reduction in costs—for example with solvency risks, as the customers are known—, an increase in innovation potential, a decrease in innovation risk, and more loyal new customers if these have been acquired via recommendations. In an age of saturated markets and cutthroat competition, banks must have a vital interest in cultivating the existing group of customers.

The following customer success factors were considered previously from a classic business perspective: product, service, image and the manner of service provision. As customers in the digital age have a greater creative and selection power, and because their expectations of banks are changing ever more rapidly, it is absolutely necessary to go beyond the conventional viewpoint and to analyse what provides future-viable added value to the customer. Customers have demands that are placed on different levels of the financial needs pyramid. The better educated or informed a customer is, the more such new or previously ignored needs appear to play a role in the context of financial products. As well as the purely basic needs such as payment transactions or bank accounts, banks have also previously satisfied the need for security (safe investments or loan provision). Now, however, the authors believe that customers have increasing needs at a higher level of expectation. These include the need for participation and social exchange. This can be provided by involving customers in the development of financial products or in the exchange and enabling of advice from customer to customer in forums established by the bank (see the offers of the digital universal banks). The individual needs of the customer can be addressed by offering perfectly tailored financial services. This is likely to occur already with wealthy private customers, but this wish can also be fulfilled in retail banking, by means of individual mass customisation. The desire for self-actualisation can be realised by giving customers the opportunity to educate themselves further and to deal (mostly) autonomously with financial products. The customer's wish to know which economic, social and ecological impact the chosen financial product will have is also positioned on the highest level of the financial needs pyramid.

This lists of needs is certainly not rigid, but rather changes over time. For the analysis of customer needs it is essential to change perspective radically and to include the customer function, for which a number of different techniques can be used, such as customer journey. Then it is certainly worth discussing which needs of the respective customer groups can be fulfilled optimally by the respective bank at an appropriate price/performance ratio. First, however, it is more relevant to pursue this radical change in perspective and to place the customer at the centre of the analysis, instead of regarding him merely as a means towards profit optimisation. Increasingly, in an age of sinking information procurement costs, this behaviour can also be adopted by customers. This could then lead to economic disadvantages, as the described advantages of a long-term exchange relationship (from low solvency risks to low investment risks) can no longer be realised by banks. But for customers, too, permanently comparing services is also associated with costs and effort.

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