Based on the Ernst & Young Global Consumer Banking Survey 2012, customers are taking more control of their banking relationships, switching banks, changing their behaviour and demanding improvements.
In response, banks need to rethink their assumptions and fundamentally change how they interact with their customers.
They need to embrace change by giving their customers greater flexibility, choice and control, and by reconfiguring their business models around customer needs. Giving more power to customers may feel uncomfortable but in the long run, banks that do so will position themselves for success in the future.
Globally only 44 per cent of customers say their bank adapts products and services to meet their needs. Some 70 per cent of customers would be happy to disclose personal information if it improved the level of service and products they were offered.
Pierre Pilorge, Ernst & Young’s Financial Services Advisory markets leader for Europe, Middle East, India, said: “In response, banks must re-evaluate customer trends region by region to prioritize products, enhance services, and ultimately give customers what they want.”
In addition, loyalty reward schemes are on the rise; 27 per cent of customers are enrolled in a scheme, up 50 per cent from 2011. However, customers expect more – the overwhelming majority agreed that if you have three products or more with a bank, you should get better service (86 per cent) and you should be charged lower fees or given better rates on savings accounts (91 per cent).
“Across multiple business sectors, technology has empowered customers to seek tangible rewards and now banks are facing that reality,” said Pilorge. “Customers expect to be rewarded for the value of their business, not just the duration of their banking relationships.”
More likely to shop around
The study also showed that consumers are becoming less loyal and increasing the number of banks they use. Consumers who use only one bank have fallen from 41 per cent to 31 per cent. The number of consumers planning to change banks has risen from seven per cent to 12 per cent year on year, and attrition rates have increased in several major markets. Poor branch experience (31 per cent) and lack of personalized contact or service (26 per cent) are rising up the list of reasons for changing provider, although dissatisfaction with high fees continues to be the most commonly cited driver of attrition, cited by 50 per cent of respondents.
Customer voice
Banks have made progress in improving their communication channels. Both call centre and mobile banking services have improved, with customer satisfaction up eight per cent and 16 per cent, respectively, year on year.
However, the power of the consumer voice has overtaken banks’ communication channels. Personal recommendation from family and friends is the top source of information on banking products, 71 per cent of consumers relying on this information as their primary source; 55 per cent of consumers refer to online communities or social networks for advice, and a third of customers who use social networking use it to actively comment on the service they receive from their bank.
Rendra Gopee, Ernst & Young Barbados Assurance Services partner, said, “Banks are competing for the business and loyalty of increasingly demanding customers. In response, different models are emerging to serve different customer needs.
“Some are based on low-cost competition, some on high-touch service, and some on accessibility.
“Large, full-service banks need to defend market share against specialist competitors focusing on particular products or customer segments, as well as new entrants in the payments space.
“At the same time, full-service banks need to retain the ability to meet a huge range of customer needs.” (GE)
