After a number of years of sharp decline, confidence in the banking industry is on the rise, trust in individual banks is high and most customers across the globe are satisfied enough to recommend their main banking provider, finds EY’s 2014 global consumer banking survey. The study, Winning through customer experience, which surveyed over 32,000 banking customers in 43 countries, shows banks are providing traditional banking services well but are viewed as falling short on important aspects of the customer experience, and are also increasingly vulnerable to competition from new providers of banking services.
Heidi Boyle, EY’s Principal of Financial Services Customer Practice, says: “Despite another challenging year in the banking industry, consumer confidence has actually gone up. But banks still have some way to go to improve this – for example, increasing transparency around fees and charges. Additionally, improving how they deal with resolving problems or complaints will be critical if banks are to continue to win confidence and build trust.”
Confidence and trust are building among bank customers. Globally, one-third of customers reported an increase in confidence in the banking industry compared to a year ago. This is a marked increase on the figures from the previous survey in June 2012, when just 22% reported an increase in optimism. The number of customers whose confidence in the industry has declined in the last 12 months is at 19% – down from a high of 40% in 2012. Around the world, confidence is increasing most in India, where 77% of respondents expressed increased confidence, followed by Saudi Arabia (68%). To the contrary, overall confidence fell most markedly in Spain (by 60%) and Ireland (62%). Most customers (93%) said that they trust their primary financial services provider; naming, “the way I am treated” as the most important reason for having complete trust in their bank after “financial stability.” Recent articles or news stories are in fact one of the lowest influences of trust, with just 8% of customers taking them into account as a reason that impacts how much they trust their bank. “The survey finds customer experience to be a main driver of trust, and customer experience is also the single most common reason that customers open and close accounts – it is more important than fees, rates, locations, press coverage or convenience,” says Boyle.
Customers are on the move. Fifty-two percent of customers have opened or closed at least one product in the past year and 40% plan to in the coming year. Of the 60% of respondents not planning to close or move their accounts, it is not necessarily because they are confident that they are with the right provider: Twenty-two percent of those who plan to maintain their current relationships feel all companies are the same and 17% say it is just too difficult or time consuming to change. “Bank customers are not being actively retained; they simply remain with their current provider through inertia and are therefore vulnerable to competitors. Meanwhile, new types of financial services providers with new technologies and customized services are penetrating the global marketplace and cannot be ignored.” adds Boyle. Despite improving confidence, customers feel that banks do not always have significant advantage over newer types of banks and technology companies, even when it comes to providing financial advice. More than 30% of respondents believe alternative banking providers are better able than traditional banks to improve how customers conduct business and reach financial goals. “Traditional banks are performing well on basics like branch access and ATM availability but they are most vulnerable in areas with the highest growth potential. There is real opportunity for alternative providers to dominate the digital offering, personalize the experience and become primary providers,” Boyle says.
Complaint levels are high but handling problems well wins customers. Approximately one-third of bank customers contacted their bank about a problem in the past 12 months with 25% feeling very satisfied, 42% feeling satisfied and 33% feeling less than satisfied with the outcome of their complaint. Of customers who were very satisfied, 58% gave the bank more business, while 32% of customers very dissatisfied with the problem-resolution experience closed some or all of their accounts. Transparency about fees, charges and guidance on how to avoid them are consistently one of the biggest issues for banks across the globe to tackle. They represent 15% of all problems reported and are second only to denials of credit/loan requests and charges when making a purchase as a source of dissatisfaction. “The high level of customer complaints is a strong signal that banks need to get better at communicating their fees and charges with their customers. The good news is that solving a problem or addressing a complaint creates a critical customer interaction, which, if done well, can actually increase a customer’s business,” says Boyle.
Taking a fresh approach to segmentation. The extensive survey examines 31 core elements of customers’ banking expectations and preferences. In the report, the 35,642 customers were grouped into consumer segments sharing behavioral characteristics, products, channel preference and reasons for trust – rather than only traditional age, geography or income metrics. See the infograph below to learn more about the eight customer segments that were identified.