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Squaring the expectations circle

Squaring the expectations circle

Time for some Christmas magic?


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One of the strange features of Christmas is the way we suddenly become enthusiastic about things that aren’t normally very popular. After all, the modern consumer doesn’t seem to demand mince pies, crackers, tinsel or Brussels sprouts for most of the year.

Few festive traditions provoke a stronger reaction than the Christmas Pantomime. But love it or hate it, Panto seems to be more popular than ever. Perhaps that’s down to the eternal appeal of the “Hero’s Journey”, as Aladdin or Dick Whittington overcome all obstacles in search of happiness.

For many businesses, it’s the need to satisfy shifting stakeholder expectations that is taking on the appearance of a heroic quest. My banking clients certainly seem to face a number of daunting trials in this area.

The first of these trials comes in the form of investor expectations. UK and European banks are struggling to generate shareholder returns in excess of their cost of capital. In some cases, it’s only because those costs are currently so low that banks are creating value at all. Some institutions can wait for interest rates to start rising and others look on in dread.

Of course, the banks might be tempted to blame these investor challenges on another group of stakeholders – regulators. UK and European banks continue to face a cascade of regulatory initiatives spawned by the G20’s post-crisis agenda. Basel IV and resolution planning are two examples of incoming changes that will increase banks’ capital requirements. The aim may be to strengthen the sector, but the effect is to make it harder for banks to satisfy their investors.

And regulation is not only having a financial effect. Post-crisis initiatives such as Open Banking and GDPR promise to upend traditional customer relationships, with a fundamental impact on retail banking business models.

It’s revealing – perhaps worrying – that it has taken me until my sixth paragraph to mention customers. It shows how the demands of investors and regulators can make it all too easy for banks to lose sight of customer journeys.

The Mortgage Market Review illustrates this perfectly. The mortgage application process is now far longer, slower and more demanding than it was five years ago. These changes have customers’ interests at heart and have helped to stabilise the market. But they also make it far harder for banks to deliver a seamless customer experience; something consumers demand more and more.

It’s not just banks that are struggling to deliver great experiences. KPMG Nunwood’s latest customer experience survey shows that UK brands across sectors including retail, travel, entertainment and telecoms are struggling to keep pace with rising customer expectations.

In fact, while a few companies in every sector are improving their customer experience scores, overall customer satisfaction with UK plc is at its lowest in the survey’s eight year history. The study shows that a handful of standard-setting companies are pushing up customer expectations across the board – and that most firms are unable to live up to those standards.

These findings show that satisfying different stakeholder groups cannot be an ‘either/or’ proposition for any business.

So if the Fairy Godmother were to offer businesses a Christmas Wish, perhaps they should ask for the ability to satisfy customers, regulators and investors at the same time – all the time. That’s a tall order - even for someone with a magic wand! But anything’s possible at Christmas….

© 2020 KPMG LLP, a UK limited liability partnership, and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved.

KPMG International Cooperative (“KPMG International”) is a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm.

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