It was the COVID-19 pandemic that led Vanguard to the realization that it had to zero in on customer experience to compete — and that the journey started with modernization.
“Into COVID, we realized that we have a CX problem,” Nathan Zahm, head of investing and savings journey at Vanguard, said during a session at Reuters Customer Service and Experience East conference last week.
The biggest problem the company faced was meeting the client service expectation, Zahm said. Pre-COVID, the client experience function was fragmented. There was a call center, relationship management, distribution function and product management, and the experience reflected that division.
At the same time, new entrants to the financial services industry offered niche service and exceptional experiences. Customer expectations for digital service rose.
“If you're going to be competing against both very flashy new entrants as well as your major competitors, how are you going to step up to that plate?” Zahm said. “And CX was it. We knew the product was good, but the CX had to catch up.”
To justify the modernization effort, Zahm had to present the big picture from a business outcome standpoint: Vanguard’s end game is to deepen relationships with clients to win a larger share of wallet. Next came explaining how the client experience division would get there.
“Well, then you're going to need an experience that encourages engagement and aligns to solving a problem that client can solve,” Zahm said. “How do you do that? Well, personalization. How do you do that? And it becomes data construction. And then how do you do that? It becomes that modernization journey that we started with.”
Zahm would go from the big picture to the “molecular level” to explain why it was important to have developers spend time modernizing the code base and data.
“Anytime we're in a capital allocation decision, we're going to tell that whole story almost every time, just to remind people of why you're spending a lot of money on that back end,” Zahm said. “It's not cheap.”
Starting four years ago, Vanguard went “all the way back to the very foundation of the firm and all of the infrastructure,” Zahm said. It had an on-premise data center and a lot of legacy infrastructure.
The goal is to not just fix the “problem du jour,” but set Vanguard up to fix the problems that are going to occur through the 2030s, Zahm said. The firm is set to finish that modernization by the end of the year.
Customers are already benefiting from improved journey flows and system reliability, Zahm said. Vanguard achieved 99.99% availability year to date, for instance. In 2021, the firm had 43 hours of downtime; in 2025, the business had less than 52 minutes.
Modernizing the base is just one step. The company formalized a client experience division and began navigating how that works with product function, the call center function, relationship management and distribution.
“Today, it is a true partnership,” Zahm said. “All those functions would view CX as a partner sitting at the table and interacting, and that’s literally how we have it set up. Me and my peers would sit at the different tables of all of our retail division — a client experience person is there along with finance and the operations and business and client owners to make sure all of those voices are there.”
