Banking Customer LoyaltyBelieving one thing, when the reality is something entirely different is never a good thing. Especially when it comes to customer loyalty and trust.

A new IBM study reveals there are serious gaps between how banking executives believe they are doing, and how their customers really feel. Among retail banking executives surveyed, 62% think they are delivering an excellent customer service, but only 35% of retail customers agree.

Only 30% of customers believe they are receiving a personalized customer experience, while 45% of bankers indicate they think they are delivering on that promise.

The global banking and consumer study by the IBM Institute for Business Value, Banking Redefined: Disruption, transformation and the next-generation bank, found that while banks can satisfy the most basic customer demands, banking executives are far too optimistic on many fronts. Customers don’t believe their banks are providing differentiated or personalized service, and for the most part, they would readily change banks.

“Traditional concepts of what a bank does will change fundamentally and permanently,” said Likhit Wagle, IBM Global Industry Leader for Banking & Financial Markets. “Bankers will no longer be bankers in the traditional sense. The most successful banks will be focused on collaboration, agility, innovation, analytics and above all on going beyond digital and transforming into becoming a Cognitive Bank.”Customer Loyalty and Trust

This study represents a major wakeup call for banks faced with increasing competition.

Here are some other eye-opening statistics from the study:

Customer Loyalty and Trust are Not What They Seem: The study indicates customer trust is also overestimated by banking executives. As many as 96% of bankers believe their customers trust them more than other non-bank competitors–yet only 70% of customers agree. And fewer still, 67% of customers, trust their primary bank compared to other bank competitors. Likewise there are gaps in the area of customer loyalty; 48% of banks think they are doing a good job encouraging strong customer loyalty while only 35% of customers agree.

Social Media Isn't All That: Bankers may also be surprised about the use, or lack thereof, of social media. Bank executives surveyed believe social is key and 54% expect to foster social communities among customers and prospects in the future. But only 18% of customers expect to engage this way. Customers are also less interested in learning about products and services via social media than bankers would like to believe.

Mobile Banking is Driving Satisfaction: 50% of customers are satisfied with the way banks answer questions accurately. And overwhelmingly, customers are encouraged by the use of mobile apps. Eighty percent believe their banking mobile apps are user friendly and 86% believe they are easy to use. Bankers and customers alike agree on the growing importance of mobile banking, yet only 10% of banking executives believe the majority of transactions will be conducted through mobile devices in the future. Forty-one percent of customers expect their transactions to be conducted on a device in the next three years.

Banks will need to use their leadership to build broad portfolios of partners and deliver compelling banking experiences and services to their customers, the study notes. It is these deep relationships traditional banks have with customers that will allow them to position themselves as the principal gatekeeper to their customers, creating an ecosystem of even better services and experiences.

The new study from IBM was based on a survey of 1,060 banking executives in 38 countries and 1,600 banking customers in the United States, Germany, United Kingdom, Singapore, and China.

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