One in four customers ready to switch banks amid fierce rivalry
What the latest customer survey says about you and your bank
One in four customers are “ready to defect to another bank” and South African banks are increasingly losing our loyalty, the latest survey of banking products shows.
According to the South African Customer Satisfaction Index (SA-csi) for Banking Products, which provides insights into the overall level of satisfaction of customers across various banking products, “current accounts, credit cards, home loans, personal loans, savings accounts and vehicle finance are largely undifferentiated across the banking sector”. This has led to us banking with various banks to meet our various needs.
In other words, we have become “multi-banked”, the survey says.
Gone are the days when you would look no further than your primary bank – the one where your transactional account is held – when you’re in the market for a personal loan, vehicle finance or a home loan.
These days it’s not uncommon for consumers to have different banks as credit providers for different needs, and savings accounts with a bank other than their primary bank.
“With the exception of Absa’s excellent customer satisfaction results on personal loans and Capitec’s continued market leadership by a big margin on transactional (current account) banking, all banks are struggling to differentiate their product offerings.”
This is evident in almost all banks using fees and costs related to their offerings as the key drivers of customer satisfaction levels, the survey says.
“The reality is that as soon as price becomes the key driver of customer satisfaction, banks have lost the ability to differentiate on product benefits. Customer experience and outstanding service then becomes critical,” explains Professor Adré Schreuder, SA-csi founder.
Last week Nedbank announced that it has scrapped the R5.50 monthly fee on the bank’s Pay As You Use (PAYU) account, which Nedbank describes as its “no-frills” offering aimed at the emerging middle class. As is the case with most bank accounts today, card swipes on the PAYU account don’t attract a fee and nor do stop orders or internal debit orders.
Announcing the scrapping of the fee, Nedbank’s head of card, payments and transactional products, Vanesha Palani, said the bank was hoping to “make things easier for clients” who are cash-strapped and trying to keep their banking costs down.
This year will be a year of “fierce rivalry” as one in four customers were identified as ready to defect to another bank with three new digital disruptor banks (Discovery Bank, Bank Zero and TymeBank) ready to lure us, the survey says.
“Loyalty has been completely eroded and today people are looking for ‘fast-food’ banking products – allowing them to transact quickly, simply and cheaply,” Schreuder says.
It has been predicted that by 2020 most companies (89%) would differentiate predominantly on customer experience. In light of this, the banks are under huge pressure to get customer satisfaction and experience entrenched throughout their people, processes and platforms, he says.
“The reality is that banks do not have a single view of their customers’ portfolios due to legacy infrastructure issues that are complex and costly to resolve. New disruptor banks have a distinct advantage since they don’t have to deal with the challenges created by outdated systems, technology or processes.
“The future of banking will look fundamentally different and extend well beyond ‘financial services products’. New disruptors and fintech providers now provide the means for banks to become more than simple financial utilities, but inject themselves into almost every aspect of a consumer’s life.”
That appears to be precisely what FNB is trying to do with its “Nav” offering, which is a feature of the bank’s app. Nav – short for navigate – is functionality that is useful to you at junctures in your life when you are about to navigate a money-related decision.
Nav>> car, for example, provides you with free car value estimates, enables you to pay your traffic fines, and renew your vehicle licence registration, among other things. With Nav>> home you can obtain instant pre-approval for a home loan, or, if you’re selling, get a free property valuation or sell your home privately by connecting with FNB customers most likely to qualify for a home loan.