Are we seeing the end of the back office? The innovator’s guide to the digital customer experience

In the first of three articles accompanying our recent series of BrightTalk webinars, Ian Curling, Service Modernisation Lead at Capita Life and Pensions, looks at changing models of customer service provision in the life and pensions sector.

The life and pensions industry has long operated with the familiar distinction between front and back office functions. The front office consists of customer-facing employees, including the tens of thousands who work in contact centres across the country and are typically expected to deliver rapid responses to routine enquiries. The back office, meanwhile, takes responsibility for the support functions that require more paperwork and heavier number-crunching. The gears in the back office tend to turn more slowly. There’s an expectation that some tasks take time. That’s just the way it is.

Or is it? The digital revolution sweeping through the financial services industry – accelerated by the Covid-19 pandemic – is transforming customer expectations. People are becoming more and more used to instant solutions, delivered at their convenience, accessible at their fingertips. It’s up to life and pensions providers to meet this requirement by modernising their services and reimagining the customer experience.

There are constraints, of course. The industry is littered with legacy infrastructure – dated IT systems that are no longer fit for purpose, with fragmented processes requiring high levels of manual intervention. Then there’s the issue of data quality, and the endless task of maintaining up-to-date and accurate customer data.

These things need to be addressed, but we mustn’t let them become barriers to innovation. If we invest money and time in upgrading technology and improving data, we have an opportunity to change the way we do things for the better. It can’t just be about reducing cost (even though that’s important) – we need to view the situation more holistically, and think about a variety of objectives: transforming the customer experience, for example, should be at the heart of everything we do.

At Capita we’ve been working with a large life and pensions provider on one such service modernisation project.

Using our innovative and highly effective three-stage programme – Simplify, Strengthen, Succeed – we’ve worked to significantly increase first-point resolution, reduce the number of customer hand-offs and reduce the need to request information from customers. This has allowed us to remove some non-value-adding back office processing, and it has created dramatic improvements in customer satisfaction scores as a result.

The assignment was not without its challenges. With more than 1.6 million life and pensions customers, the client’s back-office operations involved almost 3,000 individual workflow processes across four international sites. Many of these processes were fragmented, leading to a lack of transparency and control. Some outlying enquiries could take up to 100 days to process. Customers quickly made their dissatisfaction known. Service delivery received a negative Net Promoter Score (NPS) and overall customer satisfaction was less than 70%.

We used ‘cluster reporting’ to provide transparency and drive our re-engineering work, setting up a group of reporting members across multiple sites to configure multiple reporting members in a single cluster.

This eliminated errors and allowed us to truly understand and deliver on customers’ expectations. It also allowed us to provide greater performance with higher data through-put and a better indexing capacity. The new cluster reporting solution increased scale, improved reporting performance, and made our reporting and analytics solutions much more reliable.

As a result, the end-to-end customer experience, which had taken an average of 35 days from initial request to fulfilment, was reduced to just three days.

This was the context for a three-year programme of modernisation, based on streamlining the standard operating framework (Simplify), comprehensive process re-engineering measures (Strengthen), and continuous improvement by overlaying digital and enabling technologies (Succeed).

The results have been dramatic. The service now fulfils 90% of all customer demands at first-point resolution, and consistently delivers customer satisfaction scores of over 90%. Average end-to-end processing times have been reduced from 35 days to fewer than three. We’ve replaced inefficient manual processes with paperless digital verification. Complaints have been reduced by 50% and employee attrition by 70%, with a 50% improvement in productivity over the three years.

Our work with this particular client not only demonstrates our expertise but also shows the shape of things to come. Technology is making self-service the norm when it comes to simple customer requests for things like policy statements. As customers process the most basic enquiries themselves, front-office staff are liberated to handle more complex casework more quickly, and the back office begins to become an automated engine with provision of outputs through digital means. There are now more tangible benefits to customers in the form of faster turnaround and better service, which would have been lost due to hand-offs between departments. The black holes in the processes can be eliminated, taking away the multiple back-and-forth steps and long lag times. As a result, the reporting on individual functions demonstrated notable operational improvements, with much improved customer satisfaction and lower overall costs.

Service modernisations are transforming operating models to improve resilience, meet the pace of rising customer and regulator expectations, and deliver a significant reduction in operational costs to mitigate the financial effects of the global health crisis. This new model of working delivers better outcomes for customers, employees and employers alike. It really does make customer service operations simpler, stronger and more successful.