A recent EFMA report which surveyed 18,000 banking customers across 34 markets provided conclusions sure to make banks uncomfortable:
- 10% of retail banking customers are likely to leave their banks in the next six months.
- An additional 41% are unsure if they will stay or go.
Data may provide an opportunity: of the customers surveyed, 79% with positive experiences said they felt their banks understood their needs. Of the negative responses, 31% felt the bank did not understand their banking needs.
EFMA’s conclusion? To improve those relationships and reduce the likelihood of defections, banks need to make much better sense of the mass quantities of customer data, and further mobile capabilities. In the process, banks can perhaps claim the ‘customer-centric’ mantra their advertising message aspires to.
Banks have their work cut out for them. At a time when customers are demanding a personalized customer experience, most banks are still stuck in old business processes that reflect highly complex system landscapes. Too often, they are unable to react quickly to changing customer requirements and demands - even when they wish to do so.
We see three areas where banks need to focus:
1. Customers are looking for an integrated banking experience – banks need to provide it. Consumers want to be recognized as a valued individual with a unified history across different channels. Consumers want their transactions instantly reflected across their banking experience. For example, if they pay off a credit card balance online, the credit limit should be immediately reset. If a deposit is made at an ATM in the morning, they should be able to use those funds to pay bills via their smartphone by lunch time. They want approvals to take place in as close to real-time as is possible.
When banks cannot meet today’s consumer expectations in multi-channel banking, a new class of online competitors like PayPal and Transferwise is ready to step into the transaction space.
2. Banks need to tackle the customer data challenge head on. Banks are deluged by customer data in the form of structured, semi-structured, and unstructured information. The EFMA report concludes that only a small portion of that data is converted into insight, and only a portion of that insight is acted upon for real business outcomes. As a senior banking executive from National Australia Bank put it, ‘Big data is useless, if it is not made small and relevant, whilst adding value to the employee and customer. If you are able to add value, this is significant.’
In the case of the National Australia Bank, they set up a 24 hour/7 day a week 'social media command center' to monitor customer feedback and engage on service issues. They now store and assess the unstructured information gleaned from these interactions. Meantime, a retail bank in Brazil addressed their issues with a big data appliance, still in the testing phase, that will integrated structured and unstructured data with batch and real-time capabilities.
3, Banks need to use mobile applications as a way to personalize and increase loyalty.
Taking a cue from retail, banks are aggressively pursuing mobile applications to attract and retain customers, but there are pitfalls. When executed correctly, the numbers look good. For example, EFMA found that in Portugal, where customers’ positive banking experiences improved to the tune of 20 percent, a key factor was being able to gather loan information and resolve loan problems via mobile devices.
Mobile adoption is accelerating, compelling banks to respond with quality mobile services. In the EFMA survey, the percentage of customers viewing mobile as important increased the most between 2012 and 2013 versus any other channels. Customer interest in mobile solutions spanned regions, including increases in mobile interest in Central/Western Europe and Asia Pacific.
Banks are just beginning to catch up to where consumers want to be with mobile experiences, but the regional and age differences that impact mobile use are another area where banks need better data – if they want to roll out services that truly influence customers and sales.
Exhibit A: this recent piece on Bank of the West reviews how the bank had to redo its mobile application from scratch because its rudimentary features were not enough to stave off competitors.
Innovation is never as easy as it sounds and banking is no exception. The best opportunities may lie outside of services in new sales capacities, such as collaborations with retail where consumers have indicated they often prefer making their purchases from within their mobile banking app. As usual, those banks that aren’t moving ahead are falling seriously behind.
To learn more about how banks are capitalizing on these market changes, please download our in-depth report How to Make Consumers Love Their Banks. To discover key trends impacting many businesses, visit the SAP Center for Business Insight.
Grace Bormann, SAP Global Sales Operations Banking Delivery Hub & Partner Manager, Banking Services and Jesper Behr, consultant in the Industry Solution Management Banking division of SAP, also contributed to this article.
Image credit: man giving money © Greatbass.com - Fotolia.com
SAP is a diginomica premier partner.