What’s different about customer experience in the banking and credit card industries? Glad you asked. The customer experience research I directed last year (http://bit.ly/oDzXg8) showed that, in general, consumers place greater emphasis on “customer service” than on price when evaluating financial services providers compared to other industries. Banks appear to be rising to the demand for better service, while credit card providers are failing to live up to customers’ expectations.
Today we’ll look at customer experience in banking according to the 1,900 U.S. consumers surveyed in 2010. Here’s a short list of differences between customer experiences in banking and other industries aggregated:
- 44% of customers don’t think banks have a good understanding of customer experience, which is on par with other industries (average=45%). But 62% of customers don’t think their banks listen to feedback and take action. This is significantly higher than other industries (average=39%).
- Perception of change are similar to other industries. 76% of banking customers say service has stayed the same or gotten worse since 2008 (average=77%). However, service was perceptually 20% worse for those with income $100K+, a key segment.
- 95% think banks offer the right service channels. Perceived strengths are self-service web sites, live web chat, and email. Channels needing improvement: in-person visits and live phone calls.
- 41% of customers recalled a bad experience with a bank (average 43%), up from 29% in 2008. (34% Seniors, 46% Boomers, 49% Gen-X, 33% Millennials). The primary reason: resolution took too long.
- 64% of customers reported their bad experience to the bank (average 66%), up from 56% in 2008. 32% said their issue was resolved, but 37% still defected (average=30%). 42% said their issue was not resolved, but 83% defected if the issue was not resolved (average=50%). This represents the highest rate of defection of all verticals when there is no issue resolution.
- Employee preparedness to deliver good customer service has declined by 6% since 2008. The primary reasons: 73% of front-line employees are empowered to resolve customer’s problems (down from 77%), and 68% have access to all of the customer data they need (down from 77%).
- Despite all this, banking customers had 81% satisfaction with their most recent experiences (average=67%), scoring the highest of all industries. Additionally, 70% of customers said they were loyal to their bank, also the highest of all industries. Loyalty varies by generation, with 82% of Seniors, 70% of Boomers, 60% of Gen-X’ers, and 70% of Millennials feeling loyal.
Conclusions: Banking customers want to be loyal and satisfied, but see service levels slipping. Banking still beats other industries on many measures, but their weaknesses are serious. In particular, banks should be taking note of the fact that 62% of customers don’t think banks listen to feedback and that customers perceived an 8% increase in bad experiences in recent years. Banks must NOT ignore the fact that banking customers are more willing to defect than customers in any other industry. Whereas in general, about half of customers will walk if they have a bad experience, contact the company and get no resolution, 83% of banking customers will leave if they get no resolution to their reported issues. Can any business afford to continuously lose their base to bad experiences? Banks, a word to the wise, don’t rest easy based on your c-sat scores.
Addendum: If, as the media report this week, BofA and other major banks are planning to charge customers a $5 monthly fee for using their Debit cards, they can expect to lose
many customers. Because as we discussed in the above blog, banking customers are more willing to defect than customers in any other industry. Even if the banks have experienced large losses on their mortgage portfolios, driving their customers away with bad experiences isn’t the way to reverse their fortunes.