Not a lot of things seem certain in the UK economy at the moment, but most people seem to agree on the fact that the Bank of England may well raise interest rates in the not-too-distant future. As any lender or homeowner knows, this means significant changes both for mortgage holders and providers, and over the longer term, increased costs.

These costs don’t just come directly from higher rates; to communicate these changes to their customers would cost a mortgage provider, on average, 40p each time to send a letter to every single customer. This kind of mass communication can rack up a significant bill when multiplied by the number of customers the typical mortgage provider has. More daunting is that industry conditions can change at any time – meaning more communications, and more frustration for customers. So how can financial institutions turn this kind of costly situation into an opportunity to thrive?

Keeping customers on side

Added cost from rising interest rates, or any other source, is bound to sour any relationship the customer had with its mortgage provider, no matter how happy they were previously. As a result, it is increasingly important that the bank does all it can to keep its customers happy. Research from Quadient found that more than three quarters (76 percent) of European consumers said they would be likely to switch from a business that doesn’t meet their expectations on communication.

This means consistently communicating to the customer with the right message, at the right time, and in the right way. Failing to do this – for instance, by only letting Tom from Bicester know about the changes to interest rates by post when he only ever checks email, and after the increased rates have taken effect – is taking the wrong steps to ensuring a fruitful relationship with the customer. It can also introduce unnecessary costs, such as spending money on posting letters to customers who only use email. Putting the customer first and ensuring communication is consistent will go a long way in getting past any obstacles.

Offering more value-added services

A time-honoured way of reducing the impact of bad news is to accompany it with good news. Banks can do this by offering customers services that will give them added value. This means in addition to sharing news of interest rate rises, also sharing more positive messages – such as suggesting alternative products the customer may want to consider, or ways to help save money elsewhere.

For example, the bank could suggest swapping current accounts to give customers cashback on mortgage repayments. By opening up the customer conversation, banks will increase their chances of upselling and cross-selling products, while also giving the customer something they will benefit from in turn. This approach to looking after the customer will reduce the risk of customer churn, as well as positioning the organisation as a trusted advisor. A bank that misses these opportunities could seriously damage its relationship with a customer if it fails to communicate how they could save money, or worse, only gives the best offers to its new customers – setting the stage for resentment from existing customers and from these new customers in a few years’ time.  

Getting into the customer mindset

Knowing customers well enough to know exactly what value-added services to offer them, and when, can seem an overwhelming task. But if a bank has a clear view of a customer’s journey with them and maps what steps the customer has taken at every point of contact – from when a bill was sent to a complaint on social media – it will make the task far easier. By utilising a customer journey mapping tool, banks can gain a better understanding of the customer and know exactly what value-added services would benefit them the most. For example, if Tanya has notified the bank that she has moved to the US for six months, she will not be interested in hearing about the new savings account that offers better rates for only those living permanently in the UK. But she will be interested to hear about the reduced card fees for customers travelling abroad.

Proactivity is king

With this setup in place, financial institutions can be on the front foot, whether the Bank of England raises rates or not, ensuring any duty-bound communications will represent opportunities rather than irritating costs, benefitting both the customer and the company.

At a time when nothing is certain but the importance of the consumer to a bank, everything must be done to prioritise the customer experience. If banks can take the time to understand who the customer is and what they value the most, they can open up the conversation to ensure they are able to give the customer what they’re looking for. By looking at the customer journey and understanding what works for them, banks will be able to ride the waves of uncertainty, while keeping the customer happy.