Getting a firm read on the confidence level of global banking customers is a difficult task, yet it appears that blue skies are on the horizon.
Following several years of sharp decline, confidence in the banking industry is on the rise, trust in individual banks is high, and most customers across the globe are satisfied enough to recommend their main banking provider, according to EY’s 2014 global consumer banking study.
The study, “Winning through Customer Experience,” which surveyed over 32,000 banking customers in 43 countries, revealed that banks are providing traditional banking services well, but are viewed as falling short on important aspects of the customer experience, and are also increasingly vulnerable to competition from new providers of banking services.
“Despite another challenging year in the banking industry, consumer confidence has actually gone up,” Heidi Boyle, EY’s Principal of Financial Services Customer Practice, said in the study. “But banks still have some way to go to improve this–for example, increasing transparency around fees and charges. Additionally, improving how they deal with resolving problems or complaints will be critical if banks are to continue to win confidence and build trust.”
Globally, one-third of customers reported an increase in confidence in the banking industry compared to a year ago. The number of customers whose confidence in the industry has declined in the past 12 months is at 19%–down from a high of 40% in 2012. Around the world, confidence is increasing most in India, where 77% of respondents expressed increased confidence, followed by Saudi Arabia (68%). To the contrary, overall confidence fell most markedly in Spain (by 60%) and Ireland (62%).
“The survey finds customer experience to be a main driver of trust, and customer experience is also the single most common reason that customers open and close accounts–it is more important than fees, rates, locations, press coverage or convenience,” Boyle added.
According to the study, 52% of customers have opened or closed at least one product in the past year and 40% plan to in the coming year. Of the 60% of respondents not planning to close or move their accounts, it is not necessarily because they are confident that they are with the right provider: 22% of those who plan to maintain their current relationships feel all companies are the same and 17% say it is just too difficult or time consuming to change.
“Bank customers are not being actively retained; they simply remain with their current provider through inertia and are therefore vulnerable to competitors,” Boyle explained. “Meanwhile, new types of financial services providers with new technologies and customized services are penetrating the global marketplace and cannot be ignored.”
More than 30% of respondents believe alternative banking providers are better able than traditional banks to improve how customers conduct business and reach financial goals.
“Traditional banks are performing well on basics like branch access and ATM availability, but they are most vulnerable in areas with the highest growth potential,” Boyle said. “There is real opportunity for alternative providers to dominate the digital offering, personalize the experience and become primary providers.”
About one-third of bank customers contacted their bank about a problem in the past 12 months with 25% feeling very satisfied, 42% feeling satisfied and 33% feeling less than satisfied with the outcome of their complaint. Of customers who were very satisfied, 58% gave the bank more business, while 32% of customers very dissatisfied with the problem-resolution experience closed some or all of their accounts.