Worldwide Survey Provides Valuable Customer Insights

An Ernst & Young study of retail banking customers around the world examines the views of more than 28,500 banking customers in 35 countries, gathered in March 2012. The 62-page survey which can be  downloaded here  provides insights into bank customer behaviors, including:

  • How many consumers have switched?
  • How many customers plan to switch and why?
  • Why are US customers they switching?
  • How many banks do they use?
  • What kind of banks do they use for different purposes?
  • Are they really satisfied and trusting of their banks?

How Many Have Switched Banking Providers?

  • 34% of customers worldwide have changed their main banking provider
  • 74% have done so in the last 10 years (marginally lower than in 2011.)
  • In the US and Canada, the number increased from 38% in 2011 to 45% in 2012.

How Many Plan to Switch and Why?

Customers planning to change banks worldwide since 2011:

  • increased from 7% to 12%.
  • 50% cite high fees and charges as the primary reason.
  • high fees or rates on deposits is the primary reason most switch primary banks.
  • Poor rates on accounts is an important factor for U.S., Canadian and European customers.

Top 10 Reasons U.S. Consumers Are Switching

Customers want more than a better deal and moreover, want the flexibility to shape the relationship, contacting their bank whenever and however they choose. They may prefer online channels for simple transactions, but demand high-quality, personalized services for more complex transactions.

  1. High fees.
  2. Poor account rates.
  3. Poor branch experience.
  4. Proximity of branches.
  5. Service failings.
  6. Lack of personalized contact.
  7. Poor call center experience and range of products.
  8. Poor internet/mobile experience.
  9. Poor brand image
  10. Poor adviser competency

How Many Banks Do Consumers Use?

Banking consumers are diversifying their relationships since 2011— spreading their money around.

  • Customers using only one bank dropped from 41% to 31%.
  • Those with three or more have increased from 21% to 32%.

Which Institutions Consumers Use For Specific Products

Customers tend to:

  • use their main bank primarily for checking, savings, credit cards,
  • diversify more for investments, retirement, insurance, mortgage, personal loans and car loans.

Are They Really Satisfied and Trusting?

Satisfaction High, Trust Low: Ernst & Young found that overall satisfaction remains high. However, trust levels remain low.

  • Consumer confidence dropped 40% globally.
  • In Europe’s more beleaguered countries it’s nearly double:
    • a 72% drop in Italy and 76% in Spain.
  • In the U.S., 50% say confidence in the banking sector has decreased over last year.
    • 9% say they are more confident.
    • 40% say there’s been no change in their feelings.

Bottom Line: What Should Banks Do?

Banks need to focus on providing a better customer experience to reduce churn and attrition rates. Ernst & Young researchers say that in order to retain their customers, banks must adapt their business models to cater to increased demands and also accommodate a wide range of customized services and products.

In contrast, the 3 models most commonly pursued by banks are based primarily on:

  • low-cost competition, or
  • high-touch service and/or
  • accessibility.

The Ernst & Young report offers this advice:

  • Make low-cost digital channels customers’ preferred choice. Banks should encourage customers to use digital channels whenever possible by using price incentives.
  • Make pricing and service promises transparent. Pricing is critical to customer satisfaction, but most customers have no idea how much they pay each year. Transparency over pricing and service promises is vital if banks are to deliver something customers value.
  • Offer tiered levels of customer experience. Customers should have the option to buy into certain products and services, and the ability to earn upgrades through loyalty, whether in terms of longevity or the share of wallet handled by a particular bank.
  • Encourage customer self service. Banks needs to improve the way they provide information and advice to interest and convince self-directed customers, including financial planning tools, ranges of product and pricing bundles.

Large, full-service banks need to defend market share against new entrants which offer greater specialization, while retaining the ability to meet a wide range of needs and sustain profitability.