Customer Experience Gap in Digital Banking: Why It Matters and How to Close It

Banks and financial institutions are under immense pressure to innovate and modernize their services. The goal is clear: enhance customer experience (CX) to stay competitive in a market where customer expectations are higher than ever. However, significant investments and hard work do not always translate into success. This article explores a real-life example of a bank that faced unexpected challenges after launching a new mobile app, highlighting the critical importance of recognizing and bridging the customer experience gap.

Embarking on a Digital Transformation Journey

Several years ago, a reputable European bank recognized the urgent need to modernize its digital offerings. In particular, their existing mobile banking application was outdated and held a mediocre user rating of 3.5 out of 5. To improve their image and competitiveness in the digital market, the bank's management decided to develop a new, modern-looking and frictionless mobile app. They ambitiously set a six-month timeline for the design and development process, aiming for a swift launch to capture market share.

Despite the initial plan, the project timeline extended significantly. The bank ended up spending one year and eight months—three times longer than anticipated—developing the new application in-house. This prolonged development period not only delayed the app's release but also substantially increased costs.

Contrary to the bank's expectations, the launch of the new application did not enhance customer satisfaction. In fact, it had the opposite effect. After the release, the app's user rating plummeted from 3.5 to 2.4 and continued to decline even a year later. Instead of delivering an improved user experience, the new app significantly worsened it, leading to widespread customer dissatisfaction.

Analyzing the Failure: The Experience Gap

This situation raises a critical question: How could such a significant investment aimed at improving user experience result in decreased customer satisfaction?

The core issue lies in what is known as the customer experience gap. Despite the dedicated efforts of dozens of the bank's top professionals over 20 months and substantial financial investment, the product failed to meet user expectations. This gap often goes unrecognized within organizations, as companies tend to attribute such failures to external factors:

• Market Changes: Shifts in the financial landscape.
• Competitive Activity: Aggressive strategies by rival banks.
• Technological Innovations: Rapid emergence of new technologies.
• Consumer Behavior Shifts: Changes in how customers interact with digital services.

While these external factors can influence outcomes, relying on them as scapegoats prevents organizations from addressing internal shortcomings. The most critical measure of a company's adaptability and effectiveness is how well its services meet or exceed customer expectations. Companies unaware of the gap between their services and customer expectations are ill-equipped to adapt and thrive.

Additionally, the bank's management was confident in the significant improvements made and invested heavily in advertising the new app. Marketing campaigns promoted it as a brand-new, modern, innovative, and user-friendly mobile app, which raised high expectations among consumers. However, upon release, customers found that the app did not live up to the hype. In fact, it was less user-friendly than the previous version.

This disconnect led to a massive wave of negative reviews, not only on the App Store and Google Play but also across social media platforms. Customers expressed their frustration and disappointment publicly, with many sarcastically commenting on the bank's failed digitalization efforts. The bank's reputation suffered as a result.

Unawareness: The Main Threat

The critical issue here is the bank's unawareness of the customer experience gap. Such gaps are often unnoticed within organizations because their causes are not immediately apparent and exist at multiple levels simultaneously. Their subtle influence can lead to destructive consequences unexpectedly, and by the time the impact is realized, it may be too late to prevent market failure.

One of the main challenges in bridging the experience gap is that awareness diminishes higher up the organizational hierarchy. The root causes often lie at the top levels of management, where decision-makers may be disconnected from the day-to-day realities faced by customers and front-line employees. Conversely, employees on the lower rungs of the hierarchy, who interact directly with customers, are more acutely aware of the problems and gaps. However, they often lack the authority or means to address these issues due to organizational culture and constraints.

In this particular case, the support department was inundated with thousands of calls daily from customers struggling with the new app. Due to fragmented business processes and internal silos, support staff were unable to escalate or resolve these issues effectively. Their hands were tied by bureaucracy and a lack of responsiveness from higher management.

Internal Resistance to Change

As customer frustration grew, users faced issues that made it difficult to perform even the simplest everyday banking tasks. Instead of receiving assistance, customers were told by bank employees that they were "not the only ones struggling" and that the bank was currently focused on developing new features rather than fixing existing problems. This response further alienated customers, who felt their concerns were not being taken seriously.

Complicating matters further, the internal processes contributing to the experience gap were rooted in the same mechanisms that had previously facilitated the company's survival and growth. Organizational inertia, supported by entrenched beliefs and values, created resistance to recognizing and addressing the gap. Efforts to identify and close the experience gap were hindered by:

• Cultural Resistance: A company culture that did not prioritize customer feedback or frontline employee insights.
• Siloed Departments: Lack of communication and collaboration between departments, leading to fragmented efforts.
• Management Disconnect: Leadership that was out of touch with customer needs and employee feedback.

To effectively bridge the gap, the issue needed to be addressed at the management level. Without leadership acknowledging and prioritizing the problem, frontline employees remained powerless to enact meaningful change.

The 7 Specific Types of Experience Gaps in Banking CX / UX

According to Forrester's research top challenges to delivering a good CX are internal struggles: the lack of a cohesive strategy across teams (48%) and silos of various CX operations and functions across the organization (38%). The main experience gap may be caused by blindspots in one or several of the seven levels (culture, feedback, execution, design, value, brand promise, emotional connection) in the financial organization.

1. The Culture Gap

The lack of customer-centricity at the level of culture prevents employees from bringing service closer to customer expectations and causes a "culture gap". The processes and activities that contribute to customer-centricity in a company with a "culture gap" will not have priority and resources will not be allocated to them.

2. The Feedback Gap

Lack of data about customer expectations and their experience with a product or service creates a "gap of feedback". Here, financial companies often even collect the data but it's not analyzed and no action is taken to improve the situation.

3. The Design Gap

Even if a customer-centered approach is a priority and a large amount of data about customer expectations is collected, there could still be a gap concerning the design competence and methodology. Having the right expertise in place allows to build a high-quality ecosystem of digital products that will provide the best possible service according to customer needs.

4. The Execution Gap

This gap is associated with poor design execution. If user-centered product design is not a priority, decisions and efforts to create the final product and service are of low quality and efficiency. This determines the company's ability to create competitive services and products in the digital age.

5. The Value Gap

The value gap can form if the design ecosystem is not in compliance with user expectations at the five levels of the User Experience Value pyramid: functionality, usability, aesthetics, status, mission.

6. Gap of Overpromise

As my example with the bank demonstrates, if a company aggressively promotes its service, promising something that the product is not able to provide, it will lead to even higher disappointment in user expectations. As a result, the negative assessment of the service could double since the advertising promises don't meet reality.

7. Emotional Gap

If brand communication is purely informational, focused on functional features, then an emotional connection with users can't be formed. Since humans make decisions based on emotions, building service value on an emotional basis has a positive effect on customer expectations and the end user experience.

Detect Digital Customer Experience Gaps in Your Company

This survey is designed to help financial companies identify gaps in their digital customer experience. By assessing various aspects of your organization's culture, processes, and customer interactions, you can pinpoint areas for improvement and develop strategies to enhance customer satisfaction and loyalty.

Instructions: For each statement below, please indicate your level of agreement based on the following scale:

1 - Strongly Disagree
2 - Disagree
3 - Neutral
4 - Agree
5 - Strongly Agree

Scores 4 and 5 indicate strengths in that area.

Scores 1 and 2 suggest potential gaps that need addressing.

Section 1: Culture Gap

Purpose: Assess the level of customer-centricity within your organization's culture.

1. Our leadership emphasizes the importance of customer satisfaction in all business decisions.
2. Employees at all levels prioritize customer needs over internal metrics.
3. We foster a culture that encourages innovation to improve customer experience.
4. Customer-centric values are embedded in our company's mission and values.
5. Resources are primary allocated to initiatives that enhance customer experience.

Section 2: Feedback Gap

Purpose: Evaluate how effectively your organization collects and utilizes customer feedback.

6. We regularly collect customer feedback through surveys, interviews, or focus groups.
7. Customer feedback is systematically analyzed and shared across departments.
8. Action plans are developed based on customer feedback to improve services.
9. We have easy-to-use channels for customers to provide feedback or report issues.
10. Feedback from customers directly influences our product development and service improvements.

Section 3: Design Gap

Purpose: Determine the effectiveness of your digital product design and UX methodologies.

11. Our digital products are designed using user-centered design principles.
12. We involve actual users during the design and testing phases of product development.
13. Our design team has the expertise and tools needed to create high-quality user experiences.
14. Usability testing is a standard part of our product development process.
15. We have a clear design strategy that aligns with our brand and user expectations.

Section 4: Execution Gap

Purpose: Assess the quality and efficiency of executing design and development projects.

16. Projects are delivered on time and meet the defined quality standards.
17. There is effective collaboration between design, development, and marketing teams.
18. We have efficient UX tools and customer-centered processes in place to execute digital initiatives.
19. Our team can quickly adapt to changes in project scope or market demands.
20. We conduct regular reviews to improve our execution processes.

Section 5: Value Gap

Purpose: Evaluate whether your products deliver value across all levels of the Value Pyramid.

21. Our digital products fulfill the basic functional needs of our customers effectively.
22. Users find our digital platforms intuitive and easy to navigate.
23. The UX/UI design of our products enhances user engagement and satisfaction.
24. Our products offer features that align with the needs, lifestyles, and aspirations of our target audience.
25. We communicate a clear mission that resonates with our customers and inspires them.

Section 6: Overpromise Gap

Purpose: Check if there's alignment between marketing promises and actual customer experience.

26. Our marketing accurately reflects the capabilities of our products and services.
27. Customers feel that our digital products meet or exceed their expectations.
28. We avoid making unrealistic promises in our advertising campaigns.
29. Marketing and product teams collaborate to ensure consistent messaging.
30. We monitor customer satisfaction to ensure our promises align with their experiences.

Section 7: Emotional Gap

Purpose: Assess the emotional connection between your brand and your customers.

31. Our brand messaging evokes positive emotions in our customers.
32. Customers feel a personal connection with our brand.
33. We engage with customers on an emotional level, not just transactional.
34. Our customer service interactions are empathetic and personalized.
35. We foster a community where customers feel valued and connected.

By completing this survey, you will gain insights into areas where your organization excels and areas that may require improvement to enhance your digital customer experience. Analyzing the results can help you develop targeted strategies to close these gaps, leading to improved customer satisfaction, loyalty, and business performance.

Check out my blog about financial and banking UX design >>