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Retail banking in ASPAC...a must read for all financial services industry professionals

Retail banking in ASPAC...a must read for all financial services industry professionals

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  • 1. Retail bankingin Asia PacificPursuing customerloyalty
  • 2. Customers across Asia Pacific are increasingly using multiplefinancial institutions to meet their banking needs and across the region there is a diminishing role for the main bank. Customer Loyalty in Financial Services Retail Banking
  • 3. ContentsIntroduction 3Executive summary 4Customer loyalty: Mind the expectation gap 6Customer advocacy: Creating the platform for growth 10Customer experience: Reducing effort and increasing attention 14Conclusion: How can Ernst & Young help 18Methodology 19Contacts 20Ernst & Young 1
  • 4. We asked more than 4,700 customersabout their relationship with their banksand what would make them increasetheir loyalty2 Customer Loyalty in Financial Services Retail Banking
  • 5. IntroductionThe Asia Pacific banking system came out of the global financial crisis (GFC) in a comparatively strong position toits US and European counterparts, without requiring anywhere near the same scale of government support andbailouts. Never-the-less, to varying degrees, the banks across the region have been the beneficiaries of taxpayer-funded support while also experiencing increased wholesale funding costs, some of which they have passed on totheir customers.Despite the market turbulence, banks have continued to invest in improving their customer services and, in manycountries, achieving increased levels of customer satisfaction. However, customers across Asia Pacific stilltypically hold fewer products with their main banks than their European counterparts.This poses some important questions for banks:• Are customers across Asia Pacific open to deepening their relationships with their main banks?• What will make customers become more loyal and increase their product holdings?• What do customers really want in their day to day interactions with their banks?To find out, Ernst & Young surveyed bank customers across five Asia Pacific countries: Australia, China, HongKong, New Zealand and Singapore. We asked more than 4,700 people about their relationship with their banks,including what products they currently hold, what makes them change banks, their opinion of different channelsand services and what would make them increase their loyalty and become an advocate for their main bank.The following research reveals important insights about the mindset of banking customers across the region,which is often in stark contrast to the results of a similar study in Europe. It also highlights the similarities and thedifferences in customer behaviour across Asia and identifies clear opportunities for banks to build increasedadvocacy and loyalty with their customers.We hope this research assists the region’s banking industry to pursue and achieve the goals of increasedcustomer loyalty and advocacy.Andrew Taggart Steve FergusonFinancial Services Customer Leader Banking and Capital Markets Sector Leader Ernst & Young 3
  • 6. Executive summary The rapid growth of customer incentive programs in almost every industry has raised customer expectations of recognition and rewards for their loyalty. Currently, many customers feel their main bank does not sufficiently acknowledge and reward their multiple product holdings or provide sufficiently personalised and easy to use services. In response to this growing perception that their custom is not fully appreciated, customers are increasingly shopping around and using multiple financial service providers to meet their banking needs. How customers are managing their banking Given the relatively low level of product holdings, banks needs and services across Asia Pacific today across Asia Pacific have a significant opportunity if they Customers are increasingly using multiple financial can cross sell more to their existing customers to achieve institutions to meet their banking needs and across the the same levels of product holdings as their European region there is a diminishing role for the main bank. counterparts. More than half of the customers surveyed Many customers have long relationship tenures with reported no concerns with holding all of their financial their main bank but this is not translating into products with one bank. Interestingly, this does vary increased product holdings. In a world where customers across Asia Pacific with Australians and New Zealanders are more than ever time poor and tech savvy, the less concerned about concentrating their product majority use the Internet and ATM channels to holdings with one bank, than their counterparts in China, self-serve but 70% of customers across the region also Hong Kong and Singapore in particular. use branches. While many customers have no concerns about The key findings on how customers are managing their holding more products, it is clear that there are banking needs are: currently barriers to customers consolidating their banking needs with their main banks. • Long standing relationships dominate the market with over 50% of customers in Australia, Hong Kong, Gaps in what customers are expecting and New Zealand and Singapore who have a main banks are delivering banking relationship greater than ten years. To uncover what these barriers to increased loyalty Unsurprisingly, China with its newer market has may be for customers, we asked respondents how they shorter tenures. feel about the treatment and services they receive. The • While 79% of customers say they hold two or more research exposed clear gaps between customer products with their main bank, only 26% say they expectations and bank delivery: hold more than four products compared to 46% of • 62% of customers believe that their bank is aware of customers in Europe who said they have four or their multiple product holdings, yet only 29% feel more products. rewarded for these multiple products. • The vast majority of customers use self-service for • 79% of customers would value a loyalty program. some or all of their transactions with 90% using ATMs and 77% using the Internet, however only • 75% of customers believe personalised attention is 21% of customers are using their mobile phones highly important, but only 52% believe they are for banking. receiving it. • 70% of customers use branches; 48% of customers • In a time poor world, 53% of customers rated their use call centres. last banking interaction as requiring a moderate to very high amount of personal effort.4 Customer Loyalty in Financial Services Retail Banking
  • 7. • Customers across Asia Pacific identified branches as In addition to pushing cross sell initiatives, banks the channel requiring the most improvement, with have an opportunity to create more pull from their 38% identifying speed of service as the key customers to hold more products. It is clear customers improvement area. who are loyal, in terms of tenure, are often not loyal in• 32% of customers would not recommend their main terms of product holdings as they do not feel bank to a friend or colleague, presenting a sizeable incentivised to buy more products. Banks need to opportunity for conversion. provide these incentives through loyalty programs which offer customers real savings on products, eitherCustomer expectations of their banks continue to after a number of years as a customer or holding aincrease, often shaped by innovations in offers and certain number of products. There is a need to expressservices provided by other industries. Customers are gratitude, recognise loyalty and give real rewardsexpecting more from their banks in how they recognise through savings but also through tiered access toand reward loyalty and they want faster, easier, more additional value added services.personalised interactions. The net effect of thecurrent expectation gap is the preference towards Customers also want faster, easier, more personalisedmultiple banking relationships and almost a third of interactions with their banks. Banks need to continuecustomers not being willing to recommend their main to invest in improving customer experiences across allbank to others. channels, particularly focusing on measuring and reducing the personal effort of their increasingly timeA saving grace is that customers are being restrained by poor customers. As branches are the channel whereinertia and apathy, with few actually planning to change customers often go for the most complex transactions,their main banks - only 6% of customers reported having then process simplification, staff skills and knowledgechanged their main bank in the last 12 months are key areas to improve. New Web 2.0 technologiescompared to 24% in Europe. While there is a risk that coupled with a complete view of customer informationswitching may increase across the sector if customers provide opportunities to innovate more personalisedperceive there are attractive alternatives to make the customer experiences on the Internet, ATM andeffort of switching worthwhile, the bigger issue for banks mobile phone channels. Improved customeris customers shopping around when they have a new experiences will provide a platform to increaseneed and the main bank is often not winning the customer advocacy and loyalty.business, further commoditising the industry. In most banks, many of the people, process andThe opportunity to increase customer loyalty technology ingredients required to increase loyaltyWith customers shopping around more, the already exist or are under development. The challengeopportunity is there for banks to proactively make is about integrating multiple customer strategies andcompelling offers to meet their customers’ needs capabilities across the broad and complex organisationbefore they start shopping. This requires proactive structures of twenty-first century banks to driveexecution of offers based on the combination of effective execution at the front line between banks andcustomer life stages, current and future needs and their customers. The banks that succeed in thispreferences for interaction across channels. The endeavour will continue to prosper in the years ahead.resources and efforts of banks need to be guided bycustomer segmentations which prioritise customersbased on potential value and the propensity of thecustomer to become loyal. Success requires effectivecross functional collaboration and teaming, backed byappropriate training, measures and incentives. Ernst & Young 5
  • 8. Customer loyalty: mind the expectation gap Banks across Asia Pacific must close the gap between customer expectations and the way banks recognise and reward loyalty. Given the ease of shopping around for better offers, banks must give their loyal customers more compelling reasons to stay and buy more products. The banking sector across the surveyed Asia Pacific Relationships with multiple institutions countries has weathered the Global Financial Crisis Across Asia Pacific, customer allegiance to their main better than in Europe. Over the last 12 months, only 6% banking provider is diminishing, with people moving of the region’s customers reported a declining view of away from the idea of a main bank and developing the industry, compared to 45% of those in Europe. In relationships with multiple providers. In many cases, fact, most Asia Pacific customers felt little or no change. this is not customers switching from one bank to another but choosing to go to different institutions as The survey found numerous trends suggesting customer new needs arise. loyalty is low in many banks, including: relationships with several institutions; low product penetration; poor A massive 63% of respondents across Asia Pacific have loyalty levels among new customers; and customers with one or more products outside their main bank, a trend multiple products feeling unappreciated. led by Singapore, China and Hong Kong. In particular, customers in Hong Kong and Singapore tend to have a The issue is not that bank service quality has declined transaction banking relationship with one bank and – in many instances it has improved – it’s that customer investment relationships with at least two others. In expectations of loyalty have changed. The tougher China, due to central bank limitations on the banking economic environment and the massive investments, products and services available, wealthy Chinese by retailers and airlines in particular, into developing customers often look towards Hong Kong for more ever more sophisticated loyalty schemes, has resulted sophisticated investment products. in customers expecting more from their banks. And with the easy availability of information on the internet, The most common products held outside main banks customers are more empowered than ever to make are: Everyday Bank Accounts; Savings Accounts; and decisions about where to bank for each specific Credit Cards. financial need. How many products* do you have with your main bank? % 100 80 60 40 Four+ 20 Two - Three One 0 Europe UK AsiaPac Australia New Zealand Singapore China Hong Kong * Products considered: transaction accounts, investments, savings, loans, insurance and credit cards6 Customer Loyalty in Financial Services Retail Banking
  • 9. Low levels of product holdings Multiple product holders feel unappreciatedDespite their history of long customer relationships, While 62% of customers believe their bank is aware ofAsia Pacific banks have achieved relatively low product their multiple product holdings, only 29% feel theypenetration. Only 26% of customers have more than four are being rewarded for this loyalty and custom. Thisproducts with their main bank, compared to 46% in reflects a clear gap between expectations and deliveryEurope. One in five Asia Pacific respondents has only one and highlights the lack of perceived incentives forproduct with what they consider to be their main bank. customers to hold more products with their main bank. Also startling, is the fact that more than a third ofThis is concerning, because product holdings are a key customers across Asia feel their bank is not even awaredriver of retention: the more products a customer has, of their multiple product holdings, although this issue isthe less likely they are to change their banking significantly more pronounced in Singapore, China andrelationship. Customers with four or more products Hong Kong than in Australia and New Zealand.are significantly more likely to stay with their mainbank than those with fewer ties.When we asked customers whether they were usingmore than one bank due to concerns over having ‘alltheir eggs in one basket’, responses differed greatlyacross the region. In Singapore, where consumers areworried about the quality of investment advice, 68%said they would be concerned if they had all theirfinancial products with the one bank. More than halfthe respondents in China (56%) and Hong Kong (53%)felt similarly. However, in Australia (28%) and NewZealand (36%) customers were less concerned aboutthis issue. Do you feel your main bank is aware of the multiple Do you feel your main bank rewards you for the multiple products you hold with them? No products you hold with them? No % Yes Yes 100 % 100 80 80 60 60 40 40 20 20 0 AsiaPac Australia New Zealand Singapore China Hong Kong 0 AsiaPac Australia New Zealand Singapore China Hong Kong Ernst & Young 7
  • 10. Action Addressing loyalty While many banks have made considerable progress in Interestingly, almost 80% of customers across the increasing customer satisfaction, this is still not region said they would value a loyalty program, with translating into loyalty. To build loyalty, customers want 90% in Singapore responding positively to this idea. their banks to be more proactive in understanding and This was significantly higher than in Europe, where just meeting individual banking needs. In particular, the over half the respondents were interested in a loyalty research uncovered the following opportunities: program. Loyalty programs do not need to be restricted to traditional reward point schemes but could also Incentivise and reward loyalty include tailored packages of recognition and rewards Customers feel they have little encouragement or including communications, points, discounts, exclusive incentive to buy more products from their banks. Banks access to information and events and provision of can adjust their value propositions through a additional value adding services. Banks also have combination of product bundling, pricing and access to potential opportunities to further leverage their value added services to make multiple product holdings existing credit card reward programs across the whole more attractive and rewarding for customers. By banking relationship with their customers. addressing this issue, banks can shift and open customers’ minds to holding more products. So when Manage customer expectations on loyalty bank staff are discussing financial needs with their Customers are currently forming their own opinions customers, they will do so armed with more compelling about what they ‘deserve’ as loyal customers. offers and to more receptive customers. Banks need to be very clear about the expectations they set with regard to loyalty reward and recognition In some Asian countries, banks will have to overcome in their customer value propositions. When banks fail to customer concerns about concentrating all their meet these expectations, customers either switch financial products with the one bank. If this is not towards a better offer or remain where they are, but possible, there will be clear opportunities for new become a damaging detractor. Banks must shape entrants to provide wealth creation products for Asia’s customer expectations. rapidly growing middle classes. If your bank was to launch a loyalty program would that be of value to you? % 100 80 60 40 20 No Yes 0 Europe UK AsiaPac Australia New Zealand Singapore China Hong Kong8 Customer Loyalty in Financial Services Retail Banking
  • 11. Build loyalty from day oneNew customers typically feel low levels of loyalty totheir banks. Therefore, banks have an opportunity tofocus on retaining recently acquired customers whilstnot ignoring their longer held relationships. Loyaltyfocused value propositions will help banks to buildloyalty more quickly. Rather than leaving thesecustomers to their own devices, they should be quicklyassessed for other financial product needs. The moreproducts new customers acquire with their main bank,the more quickly loyalty will grow.Customers with longer tenures and multiple productsare more likely to remain loyal, however this does notmean banks can rest on their laurels with thissegment. Currently, multiple product holders feelunappreciated and unrewarded. As a simple, buteffective measure, banks should acknowledgelong-standing customers and their product holdings inall communications. The risk with loyal customers isthat they are typically the ones with the higherexpectations on loyalty, so if they do shop around andfind better offers elsewhere they are likely to quicklybecome detractors who will either switch to the otherprovider or stay on, disgruntled and detracting.Customers feel they have little encouragementor incentive to buy more products. Banks canadjust their value propositions to make multipleproduct holdings more attractive and rewardingfor their customers. Ernst & Young 9
  • 12. Customer advocacy: creating the platform for growth Customers are reporting low levels of customer advocacy across the region, however they are not switching main banks in large numbers. Many of those customers who are staying with their main banks are doing so out of apathy and inertia, not loyalty. Importantly many customers are not leaving their main bank, but they are going elsewhere as new needs arise for other banking products. In the last 12 months, 6% of customers say they have Across Asia Pacific, banking customers recorded low changed their main bank and a further 12% say they advocacy scores, with only 28% stating they are are planning to leave. Apart from China, where the likely to recommend their main bank to a friend or figures are characteristic of the nascent market, the colleague and 32% classing themselves as detractors results were remarkably consistent across the Asia who would not recommend their bank. Secondary Pacific countries surveyed. banks fared even worse, with only 8% willing to recommend these institutions and 55% of customers Notably, the region recorded a much better retention admitting to being detractors. rate than in Europe, where a quarter of respondents had already changed banks and another 11% planned Those who are advocates for their main bank tend to be to do so. customers who receive personalised attention. When asked why they recommended their banks, 30% cited Low levels of customer advocacy good service and 18% were impressed by convenience. While the majority of customers may not be planning to Notably, customers who have to invest a high level of leave their main banks, this may be down to apathy or personal effort in their banking interactions are less inertia, rather than loyalty. Customer satisfaction has likely to be advocates. improved for many banks in recent years, however banks still have work to do in converting more of their customers into advocates who recommend them to others. As well as proactively recommending, advocates typically hold more products themselves – growing a bank’s client base and dramatically reducing its cost of sale. Main Bank - How likely are you to recommend a friend or colleagues? NPS and Net Promoter Score are trademarks of Satmetrix Systems, Inc., Bain & Company, and Fred Reichheld. % 100 80 60 40 20 Promotor Passive Detractor 0 AsiaPac Australia New Zealand Singapore China Hong Kong10 Customer Loyalty in Financial Services Retail Banking
  • 13. Low levels of switching When asked what banks could do to improve theirDespite the relatively high levels of detractors, this is relationships, Australian and New Zealand customersnot translating into high levels of switching. Only 6% of primarily nominated lowering fees and giving discounts.customers across Asia Pacific have reported changing Customers in Singapore asked for simplified servicetheir main bank in the last 12 months versus 24% in processes and procedures. This was also important forEurope. A further 12% of customers say they are customers in China, along with quality of service andplanning to change their main bank. The implication for services that address particular customer needs.banks is that many of their customers are staying on Quality online banking services were named as thewith them despite saying they would not recommend most important aspect in banking relationships for allthe bank to others. However, there is a clear trend for countries except Hong Kong, where this issue is rankedcustomers to move away from a main banking second to having a large branch network. Hong Kong’srelationship. Add to this low advocacy and the view branch network issues were also reflected in thethat loyalty is not recognised, and there is a significant switching results, where the proximity of branches wasrisk that switching will increase across the sector. the second highest reason for changing banks.When customers have changed or are planning to Trust is the second highest issue for banking customerschange their main bank, the primary reasons customers in Australia and New Zealand, with interest rates ongave were: fees; branch service quality; and the deposit products for Singapore and banks “getting itproximity of branches. This is largely consistent with right, first time” for China.European results where price, service and lack of trustwere the three highest reasons for customers to switch. The research also revealed banks in Asia Pacific take a long time to instil customer loyalty. In Europe, tenureSome country-specific issues skewed the regional doesn’t appear to affect switching behaviour to theresults. China’s primary issue was ease of internet same extent as in Asia Pacific, where it takes up to fivebanking (38%), access to banking services (36%) and years before new customers achieve a sense of loyalty.change in circumstances (34%). Access was also an Until then, they are more likely to switch their main bankissue in Hong Kong, where proximity of branches rated than more established customers. Very new customershighly (43%). In Singapore, customers were driven to are particularly at risk, with one in ten switchers havingswitch by special offers (39%) and better interest rates been with their bank for less than a year.on deposit products (31%).Have you changed or are you planning to change your main bank? %100 80 60 40 20 No No, but planning to Yes 0 Europe UK AsiaPac Australia New Zealand Singapore China Hong Kong Ernst & Young 11
  • 14. Action Generating advocacy and retaining business Given the high cost of customer acquisition in the Get to customers before they shop around banking sector and the growing ease of shopping While it is important to maintain a focus on retaining around for new needs, banks need to build customer existing customer business, banks also need to advocacy as a platform for growth and minimise the continue to improve their ability to proactively value leakage of existing customers shopping around. anticipate customer needs to acquire and retain more potential business from customers. This requires more Better understand the drivers of advocacy sophisticated customer segmentations, based on With customers currently more likely to be detractors customer life stage and potential value, to guide and than promoters, banks need to develop new strategies prioritise the activities of front line sales and service to target disaffected customers, turn them into staff. Bank staff need to be equipped with cross-sales advocates or at least passives and, equally, to turn product knowledge and motivated to proactively passives into advocates. A key starting point is to make uncover and fulfil customer needs, which the analytics it easy for customers to provide feedback at all touch can point them towards. The key ingredients for points with the bank. This needs to be coupled with a increasing product holdings are; customers already culture to make customer feedback visible, ensure predisposed to holding more products due to the prompt action and response to customers and address recognition and reward of their loyalty, combined with root cause issues. More targeted use of customer suitably equipped and motivated staff guided by analytics around customer advocacy and feedback data sophisticated customer analytics. will allow banks to better understand which customers are likely to promote, detract or be passive. Once banks can better predict advocacy triggers, they will be better equipped to proactively engage those customers at Would you be concerned if all your No risk, with targeted strategies to increase advocacy. products were with one bank? Yes % Focus on equipping employees to improve advocacy 100 With low numbers of customers prepared to promote their banks, bank staff need to be equipped with the 80 knowledge, skills and motivation for turning customers into advocates. Given the wide disparity in the knowledge and performance of staff across large 60 banks, identifying the practices of the better performers in relation to achieving customer advocacy and transferring those practices through coaching, 40 training and incentives is a key lever banks can pull to improve advocacy and loyalty. The trick with measuring advocacy at an individual scorecard level is to measure 20 the drivers of advocacy which the individual can influence and not just the overall outcomes, which may or may not be within the individual’s control. 0 AsiaPac Australia New Zealand Singapore China Hong Kong12 Customer Loyalty in Financial Services Retail Banking
  • 15. Banks need to build customer advocacy as a platform for growth and minimise the value leakage from existing customers shopping around.Ernst & Young 13
  • 16. Customer experience: reducing effort and increasing attention More than ever, customers are: time poor; educated and savvy on their banking choices; and interacting with banks through more channels. In this environment, banks need to continually work to provide the experiences customer expect. To improve customer experiences banks must focus Too much effort on recognising each customer’s needs and preferences The research identified that the personal customer through personalisation and ensuring that channels are effort required in interacting with banks is a key driver easy to use and require low personal effort. of customer loyalty, and a leading indicator for customer advocacy. Worryingly, 53% of customers Continuing rise of self-service and importance rated their last interaction as requiring a moderate to of branches very high amount of personal effort. Banking customers across Asia Pacific use a wide range Customers stated that moderate to high level of of channels to access their services, with ATMs and effort was not exclusive to the inconvenience of internet banking the most popular, as the trend to self having to physically get to branches. Slow service, service continues. Across the region, 90% of customers particularly in Singapore and Hong Kong, add edgreatly use ATMs and 77% use the internet, while 70% use to customer frustration, with poor staff knowledge branches which remain an important channel for cited as a major contributor to increased effort in customers in all the surveyed countries. New Zealand and Australia. The increasing ubiquity and functionality of the internet is reducing the need for call centres, which are used by Lack of personalised attention less than half the respondents. Even though customers The research revealed a clear divergence between what were aware that call centre help was available, 37% did customers value and what banks provide, particularly not use this channel at all. when it comes to a personalised service. Customers are not yet adopting mobile phone banking in Across the region, 75% of customers rated personalised large numbers – only 21% state they are using this attention as highly important to them in banking channel yet 40% say they have access but are not using it. relationships. However, this need is not being Adoption does vary across the region with customers in sufficiently met, with only 52% of respondents believing China leading the way with 30% using their phones for they receive personalised attention. This varied across banking while Australia is the lowest at 14%. How much effort was required in What channels does your main No but I would like it High - Very High the last banking interaction? bank offer and which do you use? No, and I am not interested Moderate Attributed to the Corporate Executive Board’s (CEB) Yes, but I don’t use it Customer Contact Council (CCC) None to Low % Yes, and I use it % 100 100 80 80 60 60 40 40 20 20 0 0 AsiaPac Australia New Zealand Singapore China Hong Kong Branches Call Centres ATM Internet Mobile Phone14 Customer Loyalty in Financial Services Retail Banking
  • 17. the region, with customers in China reported to be For call centres, customers were united in citing speedreceiving the greatest level of personalised attention of service as the big issue requiring improvement.(65%) and with Singapore reporting the least (33%). While almost a quarter of customers were concerned about online security, most are happy with their bank’sServices in need of improvements internet services. Only 14% nominated this as theAcross Asia Pacific, customers singled out branches channel most in need of improvement.as the channel needing the most improvement withrespondents nominating speed of service, access and For those using mobile phone banking, 20% singled outavailability as the key problem areas. the cost of using this service as needing to improve.Customers also said that access and availability was an In Hong Kong, customers highlighted security as aissue for ATMs across all Asia Pacific countries, as were major issue across all channels, which was only justsecurity and speed of service. behind speed of service. Which channel needs to be improved the most? % 100 80 60 Email Mobile Phone services 40 Internet Call Centre 20 Automatic Teller Machines Branches/Offices 0 AsiaPac Australia New Zealand Singapore China Hong Kong Areas most needing improvement % 100 80 Other (Please Specify) 60 Security Access and availability Ease of use 40 Cost of using this channel to do my banking Making me feel valued 20 Accuracy of service Speed of service 0 Branches/Offices Automatic Teller Call Centre Internet Mobile Phone services Email Machines Ernst & Young 15
  • 18. Action Improving the customer experience Banks can improve customer experiences across all Measure and reduce customer effort channels through continuing to simplify processes, Time poor customers want and value investing low tailoring services to be more personalised and explicitly levels of personal effort in banking interactions. Banks recognising customer value. therefore need to continue to invest in simplifying branch processes and improving online capabilities to Increase personalisation ensure they are always easy to deal with across all The study also revealed that customers who receive channels. In branches and call centres, customers personalised attention are less likely to change their reported significant opportunities to improve on speed banking provider. This does not mean every customer of service and ease of access, both of which were major requires a relationship manager. Banks have pain points. opportunities to create a personalised experience This requires capturing customer feedback on effort through online, ATM, face to face and call centre and embedding this into measurement systems to interactions by better using customer information monitor and manage performance on the ease of and leveraging new technology capabilities such as interacting through each channel from a customer’s Web 2.0 to increase the level of context and perspective. It also requires reducing the number of personalisation in interactions. unnecessary customer contacts which are driven by Personalised attention also requires banks to build their failures in processes. capability to offer individual appropriate services at the appropriate time. The easiest sale to a customer is when they are offered a service they genuinely need. Thus, banks who do not address this requirement are missing valuable sales opportunities, not just failing to fix a customer service issue. With many respondents feeling that their relationship is not adequately recognised, banks must ensure customer loyalty is visibly acknowledged through key interactions and communications to make these customers feel valued. To this end, banks need to make customer tenure and product holding information available to customer representatives. With many respondents feeling that their relationship is not adequately recognised, banks need to acknowledge customer loyalty through key interactions to make these customers feel valued.16 Customer Loyalty in Financial Services Retail Banking
  • 19. Ernst & Young 17
  • 20. Conclusion: how Ernst & Young can help Increasing customer insight, transforming customer strategy into business action and delivering measurable improvements for banks and their customers. Our research reveals a clear opportunity for banks to 2. Customer Value Optimisation increase the sophistication of their offers and • Identifying untapped customer needs and value communications to customers around recognising and creation opportunities rewarding loyalty. The size of the prize of increased • Improving cross sell effectiveness product holdings per customer, longer tenures and customer advocacy is substantial. • Diagnosing and resolving customer retention issues In most banks, many of the people, process and 3. Sales & Service Delivery technology ingredients to support this already exist or • Improving customer experiences across channels are under development. The challenge is about • Increasing the efficiency and effectiveness of contact integrating customer strategies and capabilities across centres the broad and complex organisation structures of 21st century banks to drive effective execution at the front • Reducing sales and service performance variation line between banks and their customers. across channels Ernst & Young has assembled a team with deep 4. Customer Systems Transformation experience in customer advisory and banking in our • Architecting and program managing customer Asia Pacific Financial Services Advisory practice. The systems transformations to deliver improved team blends leading edge management consulting, customer experiences advanced customer analytics and deep line • Improving internet security to build customer trust management experiences from top tier banks, to help our banking clients solve complex problems with their • Leveraging Web 2.0 to innovate customer customers. Our Asia Pacific practice is a key part of our experiences global investment in the Customer domain, providing In increasingly competitive banking markets with rising our team with ready access to leading practices in customer expectations, unlocking the keys to increasing banking from around the world. products per customer will be the key success factor for Our breadth of skills and experience has enabled us to driving profitable organic growth in the retail banking work with our clients, from strategy to execution, to sector. Realising this opportunity will require the market help them solve the complex issues of increasing to move beyond customer satisfaction to pursue customer advocacy, retention and loyalty around four customer advocacy and loyalty. focus areas: 1. Customer Strategy & Operating Model • Creating differentiated customer value propositions • Transforming operating models to be more customer focused and lower cost • Optimising and aligning distribution to better meet customer needs18 Customer Loyalty in Financial Services Retail Banking
  • 21. MethodologyThe customer surveys were conducted in May 2010 using an internet based questionnaireby an internationally recognised research firm. The survey did not attempt to gather oranalyse statistically significant demographic sub segments including age, income or genderbased sub segments within the population of each country sampled. The total sample sizewas 4,722 which is statistically significant across all geographies.The survey participants are broken down as follows: Methodology Hong Kong Australia 16% 17% New Zealand Male 47% Female 53% 17% China 34% Singapore 16% Methodology - Age group % 100 80 75+ 60 65-74 55-64 40 45-54 35-44 20 25-34 18-24 0 Australia New Zealand Singapore China Hong Kong AsiaPac Ernst & Young 19
  • 22. Contacts Australia Andrew Price Financial Services Sector Leader Tel: +61 2 9248 5946 andrew.price@au.ey.com Steve Ferguson Banking and Capital Markets Leader Tel: +61 2 9248 4518 steve.ferguson@au.ey.com Andrew Taggart Financial Services Customer Leader Tel: +61 2 9276 9342 andrew.taggart@au.ey.com China Jack Chan Financial Services Advisory Leader Tel: +852 2629 3508 jack.chan@hk.ey.com Hong Kong Keith Pogson Financial Services Sector Leader Tel: +852 2849 9227 keith.pogson@hk.ey.com New Zealand Chris de Wit Financial Services Advisory Leader Tel: +64 9 300 8219 chris.dewit@nz.ey.com Singapore Nam Soon Lieuw Financial Services Advisory Leader Tel: +65 6309 8092 nam-soon.liew@sg.ey.com20 Customer Loyalty in Financial Services Retail Banking
  • 23. Ernst & Young has assembled a team withdeep experience in customer advisory andbanking in our Asia Pacific Financial ServicesAdvisory practice.The team blends leading edge managementconsulting, advanced customer analytics and deepline management experiences from top tier banks,to help our banking clients solve complexproblems with their customers. Ernst & Young 21
  • 24. Ernst & YoungAssurance | Tax | Transactions | AdvisoryAbout Ernst & YoungErnst & Young is a global leader in assurance, tax, transaction and advisory services. Worldwide,our 144,000 people are united by our shared values and an unwavering commitment to quality.We make a difference by helping our people, our clients and our wider communities achievetheir potential.Ernst & Young refers to the global organisation of member firms of Ernst & Young Global Limited,each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited byguarantee, does not provide services to clients. For more information about our organisation,please visit www.ey.com© 2010 Ernst & Young, Australia.All Rights Reserved.SCORE No. OC00000088This communication provides general information which is current as at the time of production. Theinformation contained in this communication does not constitute advice and should not be relied onas such. Professional advice should be sought prior to any action being taken in reliance on any of theinformation. Ernst & Young disclaims all responsibility and liability (including, without limitation, for anydirect or indirect or consequential costs, loss or damage or loss of profits) arising from anything doneor omitted to be done by any party in reliance, whether wholly or partially, on any of the information.Any party that relies on the information does so at its own risk.Liability limited by a scheme approved under Professional Standards Legislation. M1021759