- Eroding Banking Relationships and Impacting Agile Growth
New consumer research undertaken by SunGard has found that banks in some of the world’s fastest-growing emerging markets are still struggling to meet evolving customer expectations. This is negatively impacting the customer experience and driving a trend towards multiple banking relationships, which could affect future profitability and agile growth. This is a conclusive finding of the research*, which surveyed more than 1,000 consumers in 10 countries across the Middle East and South East Asia, about current attitudes and expectations of the consumer banking relationship.
Key findings of the research revealed:
Trust is high but consumer perception is modest at best, impacting loyalty:
- While over 75% of respondents in the Middle East and South East Asia trust their bank, less than half of respondents felt their bank understands their needs well. This is evident in the increasing trend towards multiple banking relationships, driven partly by growing demand for service personalization.
- Banks are not seen as the primary financial advisor. Consumers in South East Asia and the Middle East are almost twice as likely to turn to family for help in personal financial decision making. 37% of respondents claim to have little or no financial knowledge, presenting an opportunity for banks to educate and advise their customers more to deliver an improved client service and drive agile growth for their business.
Banks are ignoring customer demand for an improved, integrated multichannel experience:
- 95% of respondents in the Middle East and South East Asia still regularly visit the branch. When asked to select one or more reasons for doing so, 58% said they went primarily to get help and advice. Avoiding security concerns with digital channels was another key concern, with 36% of respondents flagging it. Face-to-face interaction was also important to 35% of respondents. Despite such high usage, the branch was ranked as a top three improvement area, with resolution of complaints cited as the worst part of branch service.
- Dissatisfaction with digital channels is also high. When asked to name one or more areas they would like to see their banks improve, 55% highlighted online banking and 45% mobile banking services. This is another area of opportunity for banks, as 47% of respondents are currently not using mobile banking and could be targets for this increasingly popular banking feature. One in two respondents expects the bank to deliver a better mobile experience in the future.
The quest for convenience, product range and personalized service are driving multiple banking relationships:
- Convenience is the biggest driver of multi-bank relationships, with 65% of consumers citing this as the top factor for having more than one financial service provider. 40% of consumers have relationships with three or more financial service providers.
- Product range was the second highest factor driving multi-bank relationships, ranked by 44%. A view of the financial products used reveals significant opportunity for cross- and upselling by banks. For example, customers tend to use their primary bank for account and card products and services, but far less for insurance or loans.
- 25% regard service personalization as the driver to hold more than one banking relationship. Only about half of the respondents felt their bank delivers a very personalized service and less than half felt their bank understands their needs well. However, nearly 60% of respondents are willing to offer more personal information to receive customized products and services.
Dean Young, vice president of product management for SunGard’s retail banking business, said: “Despite the fact that banks in emerging markets enjoy a high level of consumer trust, this research illustrates that they are not capitalizing on this. Consequently, more consumers are pursuing multiple banking relationships which can result in erosion of primary bank profitability and growth. Banks must invest in enhancing their multi-channel propositions to empower staff to serve customers more effectively and drive greater revenue from existing relationships and prospective customers.”
*The Bank Readiness research was undertaken in Q3 2013. The study is based on a survey of 1,000 consumers undertaken by Loudhouse Research. The survey covers the following 10 countries:
- Southeast Asia: Indonesia, Malaysia, Philippines, Thailand
- Middle East: Kuwait, Qatar, Saudi Arabia, United Arab Emirates, Jordan, Bahrain