Falling customer satisfaction
levels mean 1 in 10 Europeans will switch their main banking
provider this year, up from 4 percent in 2009, according to a
report from Ernst & Young. Regional differences are pronounced,
with customers in Spain and Italy most likely to switch, reports
Douglas
Blakey.
Go deeper with GlobalData
The economic crisis has
resulted in a marked change in customer attitudes towards banks,
with lenders facing a tough job to retain customers, restore public
confidence and provide the services customers really want,
according to a recent survey from accountants Ernst & Young
(E&Y).
The E&Y report, Understanding customer
behaviour in retail banks, a survey of 6,140 retail banking
customers in Belgium, France, Germany, Italy, Spain and the UK, was
published on 1 February.
Key findings included:
• Account
switching: Only 24 percent of those surveyed have changed
their main bank provider at some point in their life, but 10
percent did so in the last two years alone. A further 11 percent
said they planned to switch imminently;
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By GlobalData• Cross-sell
implications: If customers do not change provider, an
increasing number are looking to diversify their banking portfolio,
and spread financial products across a number of different
institutions to minimise their exposure to perceived risks.
While over 80 percent of customers
now use more than one bank, 74 percent have only one product type
with each of their other banks;
• Reasons to
switch: Price (43 percent), service (42 percent) and
products (31 percent) are the top three concerns driving customers
across the six countries to switch banks. But lack of trust was a
concern for a quarter of customers polled; and
• Customer loyalty
programmes: More than half (54 percent) of respondents
would welcome a customer loyalty programme and this is particularly
true in Spain (81 percent) and Italy (76 percent). Just 9 percent
of Germans were interested in a rewards scheme.
Clear country differences
The survey also noted
clear differences between each market about switching intentions
with customers in Spain (20 percent) and Italy (14 percent) most
likely to change banks with only 6 percent in Belgium and France
planning to do likewise.
In addition, the report stated:
• Price was a key reason for German
(55 percent) and Italian (50 percent) customers;
• A lack of trust would drive 26
percent of UK and Belgian customers to switch banks.
The majority of UK respondents (56
percent) said their trust in banks had decreased, but in Germany,
60 percent said the crisis had made no difference to their level of
trust in their bank;
• UK (39 percent) and German (38
percent) customers were most likely to move because of poor
service;
• Spanish customers were most likely
to switch because of product-related reasons (35 percent), and
• French customers were found to
demand better financial adviser competence (22 percent).
French and Belgian customers were noted to be
the most loyal, with 85 percent and 82 percent respectively banking
with their main provider for more than five years.
In contrast, only 39 percent of Germans had
been with their bank for more than five years, with 25 percent
banking at the same institution for 10 years or more.
Looking ahead, E&Y concluded there are
opportunities for banks to develop customer recognition programmes
that go beyond tried-and-tested loyalty schemes. It suggested
offering loyal customers real savings on products, either after a
number of years as a customer, or when they purchase more than a
certain number of products.
The number of respondents who said they were
very satisfied with their bank and therefore represent good
advocates was only 14 percent.
E&Y proposed banks that are not already
doing so should consider ‘recommend a friend’ or ‘member get
member’ initiatives that reward customers for generating new
clients.
It found that such schemes are attractive to
more than 1 in 10 customers and were by far the most cost-effective
way for a bank to attract new customers. It has the twin benefit of
enhancing loyalty in the satisfied customer who benefits from
spreading the word.
