James Edsberg from specialist consultancy, Gulland Padfield, previously a Chief Client Officer, looks at the origins of a role whose impact will continue to evolve in 2016.
The role of Chief Client Officer (the ‘CCO’) is one of the newest additions to the Executive Board. Unlike the well-established ‘C Suite’ roles of Chief Financial Officer, Chief Marketing Officer or Chief Technology Officer, the position of CCO and its responsibilities, remains unfamiliar and untested to many in the Banking and Financial Services sector.
To understand the particular challenges associated with the role and its purpose, it’s worth taking a moment to look its genesis.
The creation of the position of Chief Client Officer (in the Private Banking, Wealth Management and Institutional client world) as well as its counterpart, the Chief Customer Officer (in the retail banking sector) together with other roles with similar responsibilities which have sprung up in recent years (e.g. Director of Client Services, Head of Client Experience), has coincided with a major shift of emphasis in the focus and strategy of financial institutions.
Following the 2008 global financial crisis, and the period of low growth which followed it, banks and financial institutions took steps to align their business much more explicitly to the interests, as well as to the met and un-met needs, of their clients and customers.
Why has client focus become so important?
The reasons for this shift towards greater ‘client focus’, were multiple. I’ll mention three.
First, to re-establish the trust so badly damaged during the meltdown, banks recognised the importance of demonstrating a deeper commitment to their clients. It helped that global regulators also saw the lack of client and customer focus as one of the contributing factors of the crisis and the main driver to restore trust and performance to the sector.
Second, through a period of substantial internal transformation to re-boot structure, working practices and culture, it made sense for banks to anchor their point of focus for these changes around the client or the client segments that they were best able to service profitably.
Third, the banking and financial services sector has faced an era of unprecedented pressures to re-engineer its business model. Top of the list for investment to respond to these changes is technology - particularly the way technology will transform banks’ interactions with customers. Some of the investment ‘bets’ in this area are huge. The best way to consider these changes is by taking a rigorous client-centric view and to align investment plans and to clients and customers. Too often, particularly in the vast upgrading of legacy systems by banks, the benefit to the client experience isn’t always considered fully before management writes the cheque.
To respond to these and other industry trends, many institutions recognised the need to co-ordinate the measures and initiatives required to strengthen and in some cases transform the client focus of the bank.
While some CEOs spread the responsibility for this new layer of strategic objectives among existing senior roles, others chose to appoint a central, co-ordinating figure - the Chief Client Officer.
It is these and other industry changes that have put the Chief Client Officer and his/her equivalents in the front line of transformation at an exceptionally complex time in an exceptionally complex industry.
What’s the reason for banks’ recommitment to client and customer focus in recent years?
But there is another reason for this rediscovered emphasis on client focus and the rise of the Client Officer. The recent recession meant, as all recessions do, that banking institutions had to take steps to value and nurture their existing clients rather than trust that growth would come from new clients as it tends not to do, in times of downturn. Put another way, the link between a bank’s commitment to client focus and growth, was seen to be direct and important.
And that means the business has to take a look at a whole areas of strategy which impact the client and customer, including its structure, its process for developing and launching new products and services, its client service standards and how the firm is raising client satisfaction levels, customer loyalty and reducing churn, the need for client care programs, frontline staff training, culture change and brand re-positioning. All of these areas require leadership and championing. And all can fall within the scope of the new role of CCO.
There’s nothing new about client focus as a strategy
Now, as people often say, there’s nothing new about client and customer focus. True. There isn’t. What is new however, is the serious determination of many (unfortunately, not all) major banks and institutions, to go beyond the platitudes of client focus - which existed before 2008 - with the aim of positively transforming their business around the client.
That re-commitment to growth through client focus is new. In fact, some would go further and say that the drive to change banking authentically and profoundly and rebuild it around the client, is the challenge, the battle even, that needs to be resolved successfully inside most banks.
For those CEOs genuinely championing that drive, for those who want to take on the natural forces of resistance that exist inside their large institution, the Chief Client Officer and their team, is in the front line of helping the business to make those changes.
Implications for the role of Chief Client Officer
What are the implications of these changes for the Chief Client Officer and how he or she establishes and discharges their role successfully? There are several:
1. The CCO should be able to represent the Voice of the Client across the organization. For the Chief Client Officer do the job and to carry authority in discussions with the business, it is crucial that he/she is the ‘go to’ person when the business is looking to shape any initiative around the client. That means the CCO must have access to or manage the gathering, interpretation and communication of internal and external data relating to existing clients and crucially prospective target clients.
2. The CCO’s ability to co-ordinate complex priorities will determine successful client focus. Unlike the CFO, whose role and priorities at any point in the financial year or business cycle are well-known and usually well-defined, the role of the CCO isn’t. That means the CCO must have particularly sharp skills to prioritize his/her efforts and focus and be brutally realistic about how fast the institution can be changed and made more client-focused.
3. The CCO needs to be a master of internal communication and persuasion. These days, the best senior executives and business leaders appreciate the soft skills required to influence colleagues above, across and below in an organisation. But the ability to form constructive alliances with key business stakeholders is particularly vital for the CCO. Some would argue that influencing skills are even more necessary in a CCO than for any other C-level appointment. Few CCOs have large teams to help their work. Instead, much of their work will require changing existing practices by working with colleagues and will intrude on the spheres of other executives. That will require huge diplomacy and tact and skilled deployment of all the toolkit of change management.
Coming soon: Chief Client Officers? How to make a success of your first 100 days.
Are you a CEO considering how to define the role of a Chief Client Officer? Are you a CCO, new in post, and looking for a sounding board and ideas to shape your agenda? Would you like to see a program & plan to transform your institution around its clients and customers. If so, let’s continue the discussion by emailing James on email@example.com
James Edsberg is a Consultant in the strategy consultancy, Gulland Padfield and the author of the Client Centric Index www.clientcentricindex.com and its associated programs which many institutions have used to strengthen the client focus of their business.