Power in Banking Relationship Shifts Dramatically to Consumer

June 26, 2012 /

Consumers are taking control of their banking relationships, are increasingly likely to change banks and expect to be able to choose between a range of service levels and costs according to Ernst & Young’s 2012 global consumer banking survey.

The study, which questioned 28,560 banking customers across 35 countries, highlights how customers also expect to be financially rewarded for their loyalty.

“Customers are sending banks a very clear message – ‘we are taking control,’” says Pierre Pilorge, Ernst & Young’s Financial Services Advisory Markets Leader for Europe, Middle East, India and Africa. “In response, banks must re-evaluate customer trends region by region to prioritize products, enhance services, and ultimately give customers what they want.”

Banks need to make it personal…

Globally only 44% of customers say their bank adapts products and services to meet their needs. 70% of customers would be happy to disclose personal information if it improved the level of service and products they were offered.

“Customers are looking to banks to help them shape their experience. Banks need to reassess their offer and consider more tiered products and services,” adds Pierre.

… and reward loyalty properly

Loyalty reward schemes are on the rise. 27% of customers are enrolled on a scheme, up 50% 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%), and that you should be charged lower fees or given better rates on your savings accounts (91%).

“Across multiple business sectors, technology has empowered customers to seek tangible rewards and now banks are facing that reality,” says Pierre. “Customers expect to be rewarded for the value of their business not just the duration of their banking relationships.”

Customers more likely to shop around

Consumers are becoming less loyal and increasing the number of banks they use. Consumers who use only one bank have fallen from 41% to 31%. The number of consumers planning to change banks has risen from 7% to 12% year on year and attrition rates have increased in several major markets.

Poor branch experience (31%) and lack of personalized contact or service (26%) 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% of respondents.

“Pricing remains critical to customer satisfaction, but most customers have no idea how much they pay each year, “says Pierre.

“As they start to take control of their banking relationships, clearer communication about fees is customers’ most sought-after improvement. People are more willing than ever to shop around and want control over what they pay for the service they receive. Banks need to respond – pricing and service promises need to be transparent if banks are to deliver something customers value.”

Banks have made progress in improving their communication channels. Both call centre and mobile banking services have improved, with customer satisfaction up 8% and 16% respectively year on year, however the power of the consumer voice has overtaken banks communication channels.

Personal recommendations from family and friends are the top source of information about banking products, with 71% of consumers relying on this information as their primary source. 55% 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.

“Customers prefer turning to other sources than their bank for financial advice and to find the best deals. Comparison websites, relatively unknown five years ago, are now the second major source of influence, ranking higher than banking advisors, and the use of social media as a source of banking information is amplifying customers’ voices, giving them greater power as advocates or critics,” concludes Pierre.

 

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