Australia's largest listed banks need to look overseas to learn how to sharpen their customers' experiences if they want to build a secure, sustainable and profitable future, according to a research paper by the financial services practice of Bain and Company."Australia's banks have not yet convinced their investors that better customer outcomes deliver higher customer lifetime value, which, in turn, yields greater shareholder value," the report asserts. Educating investors about the vital economic value of retaining customers long-term is a key part of changing how Australia's banks do business, Bain's research shows.The consulting firm also argues that while Australian banks have introduced multiple customer programs to build customer loyalty, most of these programs have failed. "Change is needed," said Katrina Cuthell, a partner at Bain & Company's financial services practice in Sydney, and one of the report's authors. One factor to overcome is the chronic underinvestment in improved customer experiences. Bain is unwilling to discuss specific Australian banks, but cites several overseas examples of best practice, such as DBS in Singapore."By assembling cross-functional teams to improve processes, DBS has removed 250 million hours in waiting time for customers over a two-year period. Being simple and digital first has helped the bank earn steadily higher loyalty over the past five years," Bain reports.The firm's research also reveals bank executives are blind to the impact their decisions are having on customers because they don't have the right metrics to measure customer experiences and outcomes. Net promoter score alone will not indicate a bank's "customer-centricity project" strategy has worked, said Richard Hatherall, a partner at Bain & Company's financial services practice, also one of the report's authors."The question was posed [in the report] is what has got in the way and what they need to do about it."He pointed to American Express, which runs a "customer balance sheet" that takes into account the characteristics of each customer segment, such as loyalty scores, income and their spending behaviours. Those metrics are used in the Amex return on investment calculation, including the predicted lifetime value of a card member relative to the total cost to acquire the member. Amex also removed metrics that might undermine a customer perspective, such as average handling time for contact centres.Cuthell says the major shift in mindset and culture recommended by her report will require years of investment and needs the buy-in of senior banking executives, boards, managers, employees and investors."With the focus on regulatory compliance, it's very easy to overlook opportunities to achieve multiple outcomes from that investment in that compliance," she said, adding that JP Morgan Chase had managed to do both.