25 June 2012

Ernst & Young: Power in the banking relationship shifts dramatically to the consumer

• Percentage of customers planning to change their bank has almost doubled in the last year
• 70 per cent of consumers would give banks more personal information if it improved service levels
• Only 44 per cent of customers say their bank currently adapts products and services to meet their needs
• 91 per cent of consumers expect financial rewards for loyalty to their banks

“Customers are sending banks a very clear message - ‘we are taking control’”, says Pierre Pilorge, Ernst & Young’s Financial Services Advisory Markets Leader for Europe, Middle East, India and Africa. “In response, banks must re-evaluate customer trends region by region to prioritise products, enhance services, and ultimately give customers what they want.”

“Customers are looking to banks to help them shape their experience. Banks need to reassess their offer and consider more tiered products and services”, adds Pilorge.

Loyalty reward schemes are on the rise. 27 per cent of customers are enrolled on a scheme, up 50 per cent from 2011. However, customers expect more – the overwhelming majority agreed that if you have three products or more with a bank you should get better service (86 per cent), and that you should be charged lower fees or given better rates on your savings accounts (91 per cent). Consumers are becoming less loyal and increasing the number of banks they use.

“Pricing remains critical to customer satisfaction, but most customers have no idea how much they pay each year, “says Pilorge. “As they start to take control of their banking relationships, clearer communication about fees is customers’ most sought-after improvement. People are more willing than ever to shop around and want control over what they pay for the service they receive. Banks need to respond – pricing and service promises need to be transparent if banks are to deliver something customers value.”

Banks have made progress in improving their communication channels. Both call centre and mobile banking services have improved, with customer satisfaction up 8 per cent and 16 per cent respectively year on year. However, the power of the consumer voice has overtaken banks' communication channels. Personal recommendations from family and friends are the top source of information about banking products, with 71 per cent of consumers relying on this information as their primary source. 55 per cent of consumers refer to online communities or social networks for advice, and a third of customers who use social networking use it to comment actively on the service they receive from their bank.

“Customers prefer turning to other sources than their bank for financial advice and to find the best deals. Comparison websites, relatively unknown five years ago, are now the second major source of influence, ranking higher than banking advisors, and the use of social media as a source of banking information is amplifying customers’ voices, giving them greater power as advocates or critics”, concludes Pilorge.

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