World Banking Report: Optimizing Consumer Experience

With more ways for customers to interact with their banks than ever before, how can today’s retail banks keep pace with consumer expectations? How can they ensure that their company is always being best represented?

This overarching question is just one of the many subjects analyzed as part of a new report by IT service provider Capgemini and retail finance company Efma in their 2013 World Retail Banking Report. In total, the 40-page release surveyed more than 18,000 banking customers in 35 countries to form what it calls “one of the most detailed studies of its kind.”

While the study included positive data points – its customer experience index (CEI) rose from last year and certain markets saw sizable consumer satisfaction increases during that time – it ultimately painted a somewhat grim picture of the issues the industry must confront.

“One of the biggest problems facing retail banks today is their inability to stand out in an increasingly commoditized and competitive marketplace,” the report’s opening statement reads. “Few banks are forging innovation in developing new products. Nor are they connecting with customers in a personalized way as the role of the branch continues to diminish.”

Still, the researchers identified core elements that they say can help banks rebuild strong relationships with customers.

In this PYMNTS.com Data Point, we break down the study’s three chapters, highlighting its major findings and recommendations.

Achieving Differentiation In A Commoditized Market

Overall customer service at retail banks improved in 2013, with the report’s CEI rising 1.4 percent from 2012’s figures. Further, in select markets notable improvements were seen. The study indicated that in 11 of the 35 regions observed, jumps of more than 20 percent in customer satisfaction were recorded.

Improvements were the most pronounced among respondents in Latin America, Western Europe and North America, which saw positive consumer experiences climb by 11.9 percent, 7.2 percent and 5.5 percent, respectively. Bank customers in the United States, the Philippines and Australia were the most likely to have positive experiences at a retail bank overall, as more than 50 percent of total respondents in these nations reported such interactions.

Consumers banking in the Middle East and Africa reported to have the strongest growth in overall positive experience. The region’s positive report could be attributed to its banks investing much time in introducing modern banking channels that customers are quickly accepting.

Central Europe represented the only region to report a decline in positive experience across channels. Customers in Central Europe expressed they found banking transactions and programs to be complicated, such as applying for loans and mortgages through various channels.

Perhaps the most surprising finding, however, was that despite improvements, less than 50 percent of banking customers indicate that they believe they are likely to stay with their current bank. This was despite the fact that the research noted that overall service was the primary motivating factor in such a switch.

“Customer satisfaction levels often overestimate customers’ likelihood to stay with their bank, whereas positive experiences are more closely correlated with retention,” the report said.

Unlocking The Potential of Mobility

The second part of the study focused on mobile banking, one of the newer services to be offered by most major banks. In accordance with recent surveys that have shown mobile smartphone use is on the rise, the study found that more customers are evaluating the quality of their mobile services when choosing a bank.

One issue that banks may benefit from correcting, the study says, is the gap in perception of how well these services cater to their customers’ needs. For instance, younger consumers, who said they placed a greater emphasis on the quality of mobile, were on average less satisfied with their current mobile banking options.

In order to retain more consumer through mobile banking, banks focus on strategies to optimize consumer experience when using the mobile channel. Emerging markets, such as the Middle East and Africa, are expected to have the strongest growth in mobile data traffic.

Banks can also manipulate Internet use and social media space for multiple benefits. Initially, banks were beginning to use mobile and online banking to connect with underbanked consumer areas. Reaching out to customers via social media was intended to offer customer service and technical support but banks began to realize it also served as a valuable marketing and branding tool. Online banking could be used to join consumer conversation and build brand loyalty.

Becoming A Customer-Centered Bank By Leveraging Data

In its last section, the Capgemini and Efma report looked back at how bank-customer relationships have evolved, noting that in the 1950s face-to-face transactions were the hallmark of banking.

Today, the number of customer interactions has increased, while the level of service the user expects has not. Banks have successfully expanded channels through advanced ATMs, mobile technology, NFC terminals, online banking and more. Despite an increase in channels, it seems the customer-bank relationship has failed to remain consistent throughout the process. Customers are feeling less connected and more confused.

However, researchers said that the increase in user data collected by banks could be a determining factor in rectifying this issue. If banks invest more into data annalistic capabilities they will be in a better position to identify consumer issues and increase the customer management relationship. 

To read the full 2013 Word Banking Report click here.