Banking User Experience

Customer experiences must improve, forcing banks to re-evaluate their business models

worldretailbankingreport2012
Written by Jelmer de Jong

Today, Capgemini and Efma released the ninth annual World Retail Banking Report which found that while bank customers citing a “positive customer experience” increased modestly by seven percent globally from last year, customer retention is in flux. Nine percent of customers are likely to leave their banks in the next six months while 40 percent are unsure they’ll stay long term.

The report shows banks have a significant opportunity to close the customer sentiment gap and address the factors that matter most to them to increase loyalty. Quality of service (53 percent), fees, (50 percent), ease of use (49 percent) and interest rates (49 percent) represent the biggest impact areas to keep customers from leaving. The report also reveals that mobile banking services have yet to be fully leveraged.

On the positive side: banks are gradually closing the customer sentiment gap and improving their business and offerings to attain higher levels of customer satisfaction, however, the survey noted that some regions are slightly ahead of others. North American customers are most satisfied with their banks (80 percent), followed by Central Europe (71 percent), Latin America (69 percent), Western Europe (66 percent), and Asia Pacific at (53 percent).

Banks should be applauded for taking the necessary, initial steps to sustain customer relationships,

said Jean Lassignardie at Capgemini.

However, as more non-bank competitors enter the market, banks must differentiate by building innovative products, improving channel management and service, and enhancing their mobile offerings.

Preventing Customer Loss Demands New Approaches to Traditional Strategies
The report found that banks that have opted to pursue a traditional strategy of “do-everything” to improve customer experience need to consider differentiating on only one or two dimensions, prioritizing their investments to strengthen core competencies that address their customers’ most pressing demands.

Twenty-three percent of bankers identified their banks as offering end-to-end models, but in these uncertain times, sustaining this strategy is very challenging,

said Patrick Desmarès, Secretary General, Efma.

Right now, banks need to focus on building holistic, prioritized, nimble, and future-proof strategies or risk losing more of their customer base.

The report offers three potential business models to help retail banks be successful:

  • Product Leader: Product leaders possess superior skills in developing, bundling, and pricing products, while also managing customer risk and are less concerned about the quantity of new customers acquired. They offer a mix of optimally priced products, taking into account product demand, as well as a customer’s risk profile, potential profitability and lifetime value.
  • Utilities/Processor: Utilities/processors excel in cost-effective transaction processing and operate their internal systems at optimum transaction speeds and capacity levels, allowing them to scale to meet future processing needs, locally, regionally or globally.
  • Distributor: Distributors specialize in channel management and have a strong customer relationship management infrastructure to support a consistent picture of clients across channels. In addition to having superior sales productivity, distributors are experts at optimizing a mix of channels and offer an unparalleled self-service experience.

Banks need to re-assess their core competencies and decide on one or two areas to focus on to differentiate themselves and evolve into one of these three new business models, either as a product leader, utility/processor or distributor. Following these steps will allow retail banks to achieve a more positive customer experience and cultivate stronger, long-term customer relationships.

Mobile Seen as Channel with Most Potential
While mobile banking is still in a relatively nascent state of maturity, it is a channel that will warrant more investment by banks to improve the customer experience. By 2015, more than 60 percent of customers worldwide will likely use mobile banking, according to the report. Although mobile is currently offering the least positive customer experience, it has also improved the most amongst all channels. To succeed in this market, banks will need to align their mobile strategies to better fit the size, profile and region of their targeted customer segments.

About the author

Jelmer de Jong

Next to being founder of BankNXT, Jelmer de Jong is global head of marketing at Backbase, a software company that produces a digital banking platform that delivers seamless customer experiences across multiple devices. He specializes in marketing the next generation of online and mobile technology to banks and financial institutions so they have the tools to create a superior online customer experience in the engagement banking era.

4 Comments

  • Interesting report. Thanks for sharing! But what I’m missing is some numbers with regards to mobile vs. internet growth and spending at the larger banks. Because “by 2015, more than 60 percent of customers worldwide will likely use mobile banking” as written here, is this not already the case in most countries?

  • “Right now, banks need to focus on building holistic, prioritized, nimble, and future-proof strategies or risk losing more of their customer base.” sounds like an open door to me. Is this not the case for EVERY company? I’d rather see a strong advice: build a mobile only bank next to your regular business or the first bank to cancel cheques is a winner. Just my cents.

  • Mobile Banking is much more complicated than it has to me. The only difference between mobile and online banking is the device you are using. Today mobile phones are just smaller computers. People just may behave differently when banking through mobile for example people on a mobile phone have more urgent needs while people on a tablet may be more apt to browse for information or new offerings.

  • One simple improvement for banks with RDC customers is to offer cleaning cards for each check scanning device. This will limit the number of failed transactions which lead to customer dissatisfaction. 

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