Banks know what customers want but won’t deliver

girl-using-atm-bank-machine

Arrogant? Greedy? Australians have a love-hate relationship with their banks and research released today confirms what many retail banking customers have known for years: banks know what their customers want but are not responding to their customers needs.

The research report titled “What’s Critical in the Vertical: Retail Banking In Australia” was produced by the CMO Council and sponsored by Ricoh Infoprint Solutions and ComputerShare. The survey of 1270 consumers and 113 bank marketers revealed that the banks’ marketers know what troubles their customers and yet put their focus elsewhere, perhaps as a result of internal pressures from upper management within the banks themselves.

“I think they (marketers) clearly know. It comes down to business priority and budget. If your boss is saying focus on new acquisitions then that’s what you do,” said Director, Precision Marketing and Sales, InfoPrint Solutions, Mr Lee Gallagher.  He went on to say that though marketers may know what would make a bank’s retail customers happy, upper management is not buying in.

With a high churn rate in the first one to five years, banks do have a bit of time to play with before they lose a new customer, if they act.

“I wouldn’t say banks have deliberately missed the mark but retention has definitely taken a back seat to acquisition, growing the customer base, taking market share,” said Mr Gallagher.

So get them in but don’t worry about keeping them seems to be the current focus of the Australian banking industry.

Reading between the lines, for banks, that means there’s a huge opportunity here. The first bank to genuinely respond to needs of customers should potentially score a landslide of new customers and do better at retaining its years one to five year churn customers.

“In the absence of competition, then service can get sloppy,” said Worldwide Customer Strategy Practice Leader with InfoPrint Solutions, Mr Mike Bryant. “Customers all want the same thing. What differentiates things here (in Australia) is the bank.”

What customers didn’t like about their bank were:

  • hidden fees or unexplained costs
  • billing errors
  • high fees and additional service charges for in-person service

What customers who changed banks said they wanted were:

  • lower rates
  • more options and services
  • no surcharges or fees
  • convenience of branch location

Though the marketers said they knew their customers biggest sources of pain are: unmet needs and expectations, poor customer service and increases in costs, fees and charges, what they’ll be spending their time on this year are: improving relevance and value of communication and driving customers to use automated, self-service models.

It’s cheaper to have people self serve, so a bank’s profit may look nicer, but it doesn’t make their customers happy, or loyal.

“Only about one out of the 44% of people (who trust their bank) is actually loyal to their institution”, said Mr Gallagher.

A significant number of people are also seriously questioning the business practices and ethics of their bank, and 61% of people surveyed tell friends and family about their banking problems. (Perhaps it’s no wonder that only one percent of marketers surveyed will be doing anything this year to try to drum up word of mouth referrals.)

The challenge now is for banks to deliver the efficient, value-added service options, and reduced costs, customers want. If the survey data holds true then the first to do so will win the lion’s share of new business in the coming years. Surely an obvious, but fairly attractive, acquisition strategy?

  • http://creditorwatch.com.au Dale Hurley

    Hi Elayn

    I have worked with 3 of the big 4 banks as a management consultant. The banks do know and really do want to implements what customers want. The biggest problems they face is getting the projects funded.

    There is a very good reason why the Core Banking projects are happening at the moment. Since the 70s it is really hard to change banks’ infrastructure. Now their arms are being twisted it is a billion project per each bank. COLBOL is still being used in all three of the banks I worked with.

    This said I do not feel self-service is the problem. I feel it is face-to-face. I had to do some business banking the other day and I had to go three different counters and three different tellers to complete the simple transactions.

    Dale