Whether it's cynicism from service quality breakdowns or the desire to "play the field" with banking options, nearly seven in 10 banking customers say that having a relationship with their banking institution is low on their priority list, according to a study presented at the BAI Retail Delivery Conference in Florida.
In collaboration with Accenture, SAP, De La Rue and NewGround, the Bank Administration Institue (BAI) canvassed 3700 banking customers for their views of relationship banking, and found that 70% are uninterested or even skeptical of relationship banking.
Deborah Bianucci, president and cheif executive of the BAI says the results are a wake up call for banking organisations who list relationship banking or service quality as their primary customer value proposition
"While banks tend to view relationships in the number of accounts a person has with the bank, a consumer views relationship banking in terms of trust and confidence that the institution is acting in the customer's best interest," she says. This means that banks have to consistently deliver flawless performance in their front-line relationships with customers.
The study determined that a hierarchy of steps needs to be fulfilled for the customer to advance to new levels of trust with their bank, from a transaction-based relationship, to a service-based relationship, to the pinnacle of trust: advice-based relationship.
"Service Seekers" and "Product-Seeking Sophisticates" are two customer segments identified by the study that have low interest in developing a relationship with a bank. But, as these two segments comprise nearly half of the adult population and have significant assets to invest, it's critical for banks to identify ways to attract these groups.
For the Service Seekers (29% of respondents), the key is accessibility and perception of service quality at their branch. They tend to be the younger, but higher than average deposit balances. This group is willing to trade pricing options for attention and service. The research also revealed that loyalty and rewards-based programmes are an attractive option for banks to improve the relationship receptivity of Service Seekers.
The Product-Seeking Sophisticates (19% of respondents) are highly skeptical of their banks and prefer to distribute their investments across best-of-breed providers. They tend to be middle-aged, predominantly male, with a high deposit balances and investable assets. Product-Seeking Sophisticates are very involved with their investments, and don't believe their banks are up to the task or knowledgeable about the investments best for their situation. To attract this group, banks have an uphill challenge to earn trust at lower tiers before earning respect for their credibility and competency. Online tools and savvy financial advisers are key to attracting these customers, says the BAI.
"The common denominator for all customer segments is competent, personable and trustworthy interactions with knowledgeable frontline staff," states the research. "Yet fully a quarter of frontline employees interviewed say they felt they were not prepared to handle the demands of relationship banking."