Australians are looking for a competent and convenient financial institution they can trust. Delivering this may sound straightforward, but authorized deposit-taking institutions (ADIs) must do more to boost the low rates of loyalty among their client base.
When we asked Australian consumers why they chose their main bank as part of our 2016 Retail Banking Insight Survey, they cited all the usual things. Generally they want a local bank with a good reputation in the market and among their social circle; one that is convenient to their home or workplace, easy to use, and has ethical values. Throw in a promotional rate of interest on a savings account and Australians should flock to your ADI. Unfortunately, there are some real challenges in appealing to these drivers for both big and small players.
One can see this in our customer retention model. The model takes into account factors such as consumers’ previous switching behavior, their level of overall satisfaction, and their likelihood to recommend their bank, together with other attitudinal attributes. In the end, only 3% of Australians were classified as loyal in 2016, with 18% classed as vulnerable – almost double the rate seen in the US, for example. If Australians were so easy to please, surely these numbers would be reversed?
Most of these drivers are interrelated, and the key factors are competence, convenience, and trustworthiness. For most modern everyday banking this comes down to two main aspects: a good digital platform that allows the customer to do what they need online quickly and efficiently, and good customer service when they can’t.
We know that for most Australians banking means logging into their internet banking platform, and increasingly mobile apps. For 68% of Australians online banking is their primary contact with their bank, happening weekly or more often. Keeping this customer experience top notch can be a challenge for even the largest of ADIs, and certainly costs the brand – witness the bruising that occurs on social media any time there is a glitch. And with few ADIs running a simple cohesive software package, these glitches remain an ever-present risk.
We also know from asking switchers why they jumped ship that poor customer service (at 64%, well above the next most important reason) was the leading reason for switching their main banking relationship. And that typically means staff were not empowered and effective in helping them troubleshoot digital banking issues.
Getting any one of these things wrong results in a knock to reputation, and certainly curtails recommendations from friends and family. Nor does an ADI that gives poor customer service appear to be ethical or easy to use. The solutions are simple but hard to implement. ADIs need to retire legacy systems, keeping their software suite as simple and streamlined as possible to limit the opportunity for glitches. And staff need to be trained and empowered to act in customers’ best interests so that when a problem does arise, as it inevitably will, a helpful staff member can quickly resolve it for the client. This will help turn the technical glitches that do crop up into moments of truth for the institution, showing that the ADI is competent and can be trusted to look after its clients.
By Andrew Haslip, Head of Asia Pacific Content