As bank customers, we're not as loyal as we used to be -- we're guided by price and we're not afraid to shop around.
Bank customers are guided by price and are showing more interest in shopping around for the best products, according to a recent Accenture survey.
The survey looked at interviews with 46 senior banking executives from 35 retail banks in 14 countries, including South Africa. The survey also found that nearly half of the top retail banks have seen their average customer profitability decline 5% to 15% since the global financial crisis (banks look at revenue from customers, together with product and service costs, to assess customer profitability and calculate banking profits).
Some 59% of banks reported decreased customer loyalty, while 63% say their customers are more price-sensitive and are “shopping around” more often. They are more confident when they make financial decisions themselves and are sceptical of bank brands, moving away from banks that give poor service.
In a bid to keep customers, banks are trying to cross-sell to existing customers (87%). About 54% are pursuing new customers and 33% are increasing the prices of their products and services to recover profit.
More than two-thirds (68%) of executives said they expect such independent consumer banking behaviours, which have emerged or accelerated from the crisis, to continue long term.
The survey indicates that banks will have a hard time meeting consumer demands, which include “direct” services (online, telephone and cellphone). Customers also want more personalised banking services and they want their price fears addressed.
“The banks that will win the race to rebuild profitability will be those that recognise their customer relationships have changed for good,” said Wendy Pienaar, a senior executive at Accenture South Africa’s Financial Services practice.
What do customers want?
In a nutshell, the average person who banks expects more sophisticated customer segmentation (which will deliver more personal service) and wants to define and select banking services. More affordable products and innovative technologies are also required.
The Accenture survey points out that there’s a shortfall between service demands and the current capacity of banks to meet those demands.
Other findings were:
- Nearly two-thirds of executives (63%) cited “lifetime” customer value as a primary factor they will use to manage customer profitability over the next three years.
- Fifty-three percent of executives acknowledged a decline of trust in banking brands as a key customer response to the financial crisis.
- Most said customer savings had increased (70%) and appetite for credit decreased (53%) in response to the crisis.
- Read more news, blogs, tips and Q&As in our Smart Money section. Post questions on the site for independent and researched information