The twelth annual World Retail Banking Report from Capgemini and Efma makes depressing reading for established banks as it charts an industry struggling to engage with customers and increasingly challenged by a raft of new competitors.
The report, which draws on research insights from 32 markets and global data from over 16,000 retail banking customers, find stagnating global customer experience levels combined with an alarming increase in customers willing to leave their banks.
The percentage of customers who said they were likely to leave their primary bank in the next six months rose into double-digits in every region except Western Europe. Globally, less than 50% of Gen Y customers are likely to continue with their primary bank in the next six months. Reasons cited include an increase in non-bank competition, growth of start-up banks which offer attractive digital products, and the ease in logistically switching banks.
Banks also appear to have stalled in their ability to steer customers away from the branch toward lower-cost channels. Despite significant leaps to high rates of usage for both the internet and mobile channels, the impact on branch footfall was minimal. In fact, branch visits rose modestly in North America and Europe during 2014, while decreasing only slightly in Latin America and barely at all in Asia-Pacific.
Bank executives have not hesitated to invest in the front office, with almost 93% citing customer experience as the main driver behind such investments. However, underfunding in the middle and back offices has undermined these front-office investments, says the report, through slow processing times, errors, and exceptions that contribute greatly to reduced service in customer interactions.
“Disenchanted customers, combined with the agility and innovative nature of non-bank competitors, is leaving the door wide open for capturing market-share,” says Jean Lassignardie, chief sales and marketing officer at Capgemini Global Financial Services. “Improving customer experience is the best strategy to deflect competition from non-bank players. While investments in improving front office customer experience have expanded banks’ offerings, middle and back office transformation has been plagued by under-investment and will be the key to resolving disjointed customer experiences and improving longer term loyalty rates.”