A new era of customer expectation - Global Consumer Banking Survey 2011
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A new era of customer expectation
Global Consumer Banking Survey 2011
Introduction 02Executive summary 05Rebuilding brand perceptions 13Preventing customer attrition 19Enhancing the customer experience 24The competitive landscape 29Conclusions 31How Ernst & Young can help 33Methodology 34At a glance and contacts 37
Since the start of the economic crisis all organizations, and banks in particular, have experienced huge challenges in maintaining existing customer relationships. The crisis has directly affected customers perceptions of their banks and the way that they interact with their providers. We have seen the emergence of a new post-crisis customer with a clear focus on brand integrity, value for money, and quality of service. Banks now need to deliver a more efficient, customer-focused and innovative offering than ever before to reconnect with their customers.
At the end of 2010, Ernst & Young conducted our first-ever global survey of customer behavior in retail banking, the results of which are detailed in this report. Following up on previous research conducted across six European countries and a report titled Retail banking in Asia Pacific that covered Australia, mainland China, Hong Kong, New Zealand and Singapore, this is our most comprehensive study yet of customer behavior across major markets.
We surveyed more than 20,500 individuals in Europe, the US, Canada, China, Japan, India, Latin America and South Africa. In line with our previous reports, which identified clear opportunities for banks to build increased advocacy and loyalty among their customers, we have once again asked our participants about their relationships with their banks.
We specifically asked respondents about their level of satisfaction, what they are looking for from institutions, and their intentions and demands going forward.
We conducted this research with the objectives of:
Highlighting the risks and opportunities facing the retail banking sector today
Analyzing what is relevant to a successful banking relationship, so that banks can achieve and maintain customer satisfaction in the new climate
Identifying and commenting on what we see as the key actions that banks must take to retain and expand their customer base in this challenging and increasingly sophisticated market
We would like to thank the participants for their valuable time and insights, and we hope that these findings will assist the banking sector to manage change and drive growth as it embarks on a new era of bank-customer relations.
Please contact one of our country representatives for further details and information on what this means for your organization and region.
Ernst & Young Global Consumer Banking Survey 10,021 Europeans | 4,018 Latin Americans 2,001 Americans | 1,008 Japanese 1,003 Canadians | 1,000 Chinese 1,000 Indians | 503 South Africans
Ernst & Young Global Consumer Banking Survey A new era of customer expectation
Globally, retail banks are entering a new era. The challenge remains to keep the customer experience and wider brand perceptions central to all strategic thinking.
Retail banking is a regional business directly influenced by local cultural drivers, so global trends are few and far between. We have found huge differences between the customers of the developing world and those in the mature markets. Nevertheless, as consumer behaviors become more homogenized and banks look to new markets, we believe there are opportunities to learn from the experiences of other economies. It is clear that as banks consider ways to rebuild trust, improve service to meet customer expectations, and reduce attrition, their efforts will need to be carefully tailored to the unique requirements of each domestic and regional market in which they operate.
For banks to compete, differentiate and grow in this new customer era, they must swiftly accelerate their innovation around banking products and service offerings. Those that do so will enrich their brands and protect and increase market share at a time when customer loyalty is no longer guaranteed.
This report highlights some of the key issues that need to be addressed as the retail banking industry of the future takes shape.
Rebuilding customer confidence and the power of the brand
Our findings highlight 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.
Globally, 44% of customers say their confidence in the banking industry 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 risen, with 75% of respondents in India, for example, saying their trust in banks increased last year
The banking industry in mature markets has witnessed a wholesale and ongoing shift in confidence, and never before has loyalty management and personal customer attention been such an issue for the sector. In contrast, the emerging markets now offer huge opportunities for banks looking to expand internationally, as most have felt less of an impact from the credit crisis and instead have a growing middle class of customers looking to diversify their bank relationships.
Rebuilding trust is a challenge for individual banks and for the industry as a whole, in particular across mature markets. Negative customer perceptions of the disruption banks have caused to the wider economy, through the under-capitalized and over-leveraged practices that led to the credit crisis, continue to prevail. In recent years, we have seen that being profitable is not enough. The role that banks play in supporting the wider economy has been highlighted, and a wide variety of stakeholders are now demanding a more responsible banking industry if there is to be a restoration of customer confidence.
Executive summaryGlobally, retail banks are entering a new era. Setting out a clear strategy is becoming more difficult as regulatory and political intervention changes the market structure, and banks are under enormous pressure to restore public confidence in the role that they play in society. As banks respond to these structural pressures across markets and strive to obtain a competitive advantage, the challenge remains to keep the customer experience and wider brand perceptions central to all strategic thinking.
Since the financial crisis, what has been the decrease in trust levels toward financial institutions?
At the same time, regulatory change at the macroeconomic level is significant, and consumer protection laws and other legislative developments are taking shape across major jurisdictions, with implications for cross-border product and service development. Addressing customer protection has been at the core of the G20 initiatives in the mature markets post- crisis, and the advent of consumer protection agencies, proposed in countries such as the US and the UK, might increase this even further, with the potential to introduce product regulation.
These regulatory changes have been highly publicized, and we are seeing customers taking a much closer interest in the values of their bank, particularly around executive compensation in some mature markets, where restoring trust is a big issue. Our findings show that the banking industries of the UK and US in particular witnessed a huge drop in confidence levels as a direct result of remuneration policies, with 80% and 69%, respectively, citing this as one of their reasons for a loss of faith in their banks.
Regardless of the impact of customer trust levels across the globe, the importance of a banks reputation and image is evident in all markets. Globally, brand strength was cited as the main reason for choosing a bank by 39% of those surveyed. A strong brand is particularly important in such markets as India, Brazil and South Africa, which are witnessing an influx of foreign institutions, and in certain European countries such as the UK and Spain, which have seen consolidation in recent years.
With brand strength important globally and given that it is much easier to damage a brand than to repair one, it is increasingly essential for banks to continue to develop and execute comprehensive brand enhancement programs. These initiatives need to reinforce customer values and deliver on obligations to the home economy through pragmatic and measurable steps. Activities must be effective at both a national and local level, for example, fulfilling national customer charters while at the same time showing demonstrable commitment to the local business community.
Tackling accelerated attrition
Attrition rates continue to rise following the financial crisis, but it appears that within mature markets attrition is set to slow, and indeed customers are holding an increasing number of products with their main bank. The increase in product holdings across mature markets is good news, as it implies that loyalty to the main bank relationship has endured, despite the considerable decrease in market confidence.
Globally, 36% of customers have changed their main bank in the past, and 7% of customers are planning to leave their bank
Indian and Chinese customers are more likely to move in the future, with 11% and 13%, respectively, thinking of switching their banks
Attrition in mature markets is slightly lower than the global average, with 5% of US customers, 5% of German customers and 6% of UK customers saying they plan