• August 1, 2012

Power in the Banking Relationship Shifts Dramatically to the Consumer

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: Wwe are taking control,'" said Pierre Pilorge, Ernst & Young's Financial Services Advisory Markets Leader for Europe, the Middle East, India and Africa, in a statement.  "In response, banks must re-evaluate customer trends region by region to prioritize products, enhance services, and ultimately give customers what they want."

Globally only 44 percent of customers say their bank adapts products and services to meet their needs. Seventy percent 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," Pilorge added.

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

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

Consumers are becoming less loyal and increasing the number of banks they use. Consumers who use only one bank have fallen from 41 percent to 31 percent. The number of consumers planning to change banks has risen from 7 percent to 12 percent year on year and attrition rates have increased in several major markets. Poor branch experience (31 percent) and lack of personalized contact or service (26 percent) 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 percent of respondents.

"Pricing remains critical to customer satisfaction, but most customers have no idea how much they pay each year, " Pikorge said. "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 center and mobile banking services have improved, with customer satisfaction up 8 percent and 16 percent 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 percent of consumers relying on this information as their primary source. Fifty-five percent 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 Web sites, 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," Pilorge concluded.

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