Ernst & Young has released
its first global survey of customer behaviour in retail banking,
building on regional surveys it conducted in 2009. Globally an
average of 7% of customers are planning to switch their main
banking provider this year but regional differences are pronounced
reports Douglas Blakey.
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The global financial crisis
has had a marked effect on consumer attitudes towards banks, with
lenders under pressure to retain customers, restore public
confidence and provide the services and channel choices customers
really want.
The financial services consulting
arm of Ernst & Young (E&Y), has released one of the most
comprehensive studies of customer behaviour, a survey of more than
20,500 individuals in Europe, the US, Canada, China, Japan, India,
Latin America and South Africa.
The E&Y report, A new era
of customer expectation: Global Consumer Banking Survey 2011,
highlighted the intense and ongoing impact of the credit crisis on
trust levels while demonstrating the dichotomy across local banking
markets in the mature and emerging countries.
Pierre Pilorge, Ernst & Young’s
Financial Services Customer Leader said:
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By GlobalData“In developed markets, customer
confidence and trust in financial institutions has been severely
damaged by the economic crisis, and our findings show that it
remains under threat.
“Emerging market economies have
suffered less from the credit crisis and recession and so their
banks have seen trust endure.”
Key findings included:
- Consumer confidence:
Globally, 44% of customers said their confidence in the banking
industry has decreased in 2010. Within Europe, the UK (63%),
Germany (61%) and Spain (58%) have seen the largest falls in
customer confidence. However, in emerging markets trust has
improved with, for example, 75% of respondents in India saying
trust in their banks had risen; - Customer satisfaction:
Globally, 37% of customers are dissatisfied with their main bank,
with the highest satisfaction levels generally found in the
emerging markets. Customers in the US, Canada, China, India and
Brazil are the most satisfied. Across Europe, Polish, Hungarian and
Dutch customers are the most satisfied. The least satisfied with
their main bank are customers from Germany, where 54% gave their
bank a low score of just one or two out of five; - Account switching: 7% of
customers worldwide said they planned to change their main bank and
the number of Europeans who have changed their main bank increased
by 15% compared with a year ago. Countries in the emerging markets
benefit from the lowest attrition rates to date. The majority of
customers in India, Japan and China said that they have never
changed their main bank. Yet in India and China, more than 1 in 10
customers now plan to move their main banking relationship,
suggesting increased future mobility among the customer
base; - Choice of Bank: Brand
strength was cited at the main reason for choosing a bank for 39%
of those surveyed, closely followed by low cost (36%);
and - Customer service: 48% of customers around the world plan
to change banks because of general levels of service, ahead of 43%
who will switch because of price.
Mature and emerging markets
The results of the E&Y survey also
highlight the differences in “main bank” relationship behaviour
between customers in Europe, the US and Canada and consumers in the
emerging markets, with Western customers having a much higher
tendency to bank with a single provider than their emerging markets
counterparts.
Despite the declining trust in the
banking sector of mature markets, more than half of US customers
source all their banking products from one institution, while in
Europe, 46% of customers do so. The difference in behaviour in
emerging markets is stark. In China, 96% of customers bank with two
or more providers; in India, 88% use two or more banks, while in
Brazil the figure is 66%.
The report flagged up regional
variations in terms of potential customer attrition, with attrition
rates set to slow within mature markets such as Italy, Spain and
the UK.
Customers in some emerging markets
are more willing to pay for independent financial advice than
customers in other geographies. For example, 60% of Chinese and 55%
of Indians would pay for advice, while in Europe only 23% of
customers are willing to do so.
It is widely acknowledged that
customers who hold more products with their main bank are likely to
be the most loyal and unlikely to leave; 81% of the survey
respondents held two or more products with their main bank.
More customers in the US, the UK
and Japan held just one product with their main bank, at 23%, 25%
and 34% of respondents respectively.
Within Europe, product holdings
with the main bank have increased in the past year, perhaps driven
by consolidation in the market and the disappearance of certain
banks from the high street.
This shift is particularly obvious in Italy, where the number of
customers holding two or more products with their main bank
increased from 75% to 85%.
Personalised service
Across the globe, Indian (81%), US
(67%) and Canadian (66%) respondents rate the personalised service
they receive the highest, while only 11% of Japanese customers said
they receive a good or very personalised service and 45% said they
receive absolutely no attention.
Across Europe, 56% of respondents
receive good or very personalised service with the highest
satisfaction levels evident in Belgium (66%) and Spain (65%).
More positive, were the findings relating to multi-channel
satisfaction; consumers responded positively to the convenience,
accessibility and reliability provided by digital channels.
Globally, 79% of customers were
satisfied with branches and ATMs, with an even higher number, 83%
satisfied with online banking.
Overall, 42% of respondents said they
never use mobile banking, and 30% never access call centers or
email services.
Mobile banking and other new channels
were more popular in emerging markets, where E&Y said there was
less skepticism among customers toward such innovations.
Customers in the US (86%), Canada (85%),
India (84% and South Africa (82%) had the highest levels of
satisfaction when it came to branch banking, while Canadian (82%)
and Chinese (87%) customers were most satisfied with
ATMs.
Conclusions
Looking ahead, E&Y concluded the
industry needs to be agile to meet ever-increasing and ever more
demanding customer needs.
Specific recommendations
included:
- Restoring brand confidence:
All elements of the customer experience, at both the national and
local level, need to be reassessed with continued investments made
in customer charters and innovative approaches to marketing the
bank’s ethos and service offering; - Online innovation: Adopting
a coherent social media approach will help improve brand
perceptions and leverage the benefits of online
advocacy; - Invest in customer analysis:
Capturing and successfully leveraging customer information to
optimise offer development, pricing decisions and rewarding loyalty
will be a major competitive differentiator; - Identify advocates: Make it
easy for customers to provide feedback at all touch points with the
bank; - Target switching offers:
Maximise the opportunity to acquire new customers and prevent the
most damaging impacts of attrition; - Improving the customer
experience: Simplify the branch processes and improve online
capabilities – using methods such as digital banking – to help
create a consistent and integrated personalised service without the
need for extensive manual intervention for time-poor
customers; - Create differentiated
customer value propositions: Increase customer loyalty by offering
a combination of product bundling, pricing and access to
value-added services to make multiple product holdings more
attractive; - Invest in traditional and
future distribution channels: Branch investment should include
staff training, while a strong mobile strategy will help meet the
need for personalised services.
According to Pilorge:
“Customers are demanding a more
personalised service if they are to remain loyal.
“The successful institutions of the
future will be those who offer customer-focused innovative
services. Those that do will be able to differentiate their
organisation and drive for growth.
“The keys to success will be brand management, personalised
services and efficient pricing. Retail banks that can deliver all
three will prosper in a highly regulated and constantly changing
global financial services market.”
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