Customer satisfaction stagnates for banking leaders while Nedbank & ABSA narrow the gap

SA banks have achieved slightly higher customer satisfaction scores than last year, although expectations seem to be rising, according the South African Customer Satisfaction Index (SAcsi) released today. The overall score was 76.3 out of 100 (2013: 75.6).

The banks measured were FNB, Absa, Nedbank, Standard Bank and Capitec. They were selected on the basis of market share. The massive sample size of over 16 000 customers benchmarked Capitec and FNB as leaders, with scores of 82.2 and 79.3 respectively, both significantly higher than the average SAcsi score of 76.3 out of 100. The only real change in this year’s banking industry benchmark is the turn-around success of Absa. The bank showed an improvement of 2.4 points (from 72.4 to 74.8). Nedbank’s overall score was 74.8 whilst Standard Bank this year has fallen to the bottom of the log with an overall SAcsi score of 73.7 out of 100.

SAcsi is an independent measure of customer satisfaction with various industries which is released at regular intervals throughout the year by Consulta Research. The research into retail banking was conducted in the last quarter of 2014 and excludes the views of South African banks’ business clients.

Prof. Adré Schreuder, founder of SAcsi and CEO of Consulta Research, says that Absa’s performance has improved across all of the contributors to the SA customer satisfaction index. In addition, Absa’s Net Promoter Score (NPS) has improved from 8% to 15%.

There is a correlation between SAcsi scores and business performance, which has been proven over a number of years through the American Customer Satisfaction Index (ACSI). “Based on the improvement in the SAcsi score and NPS, Absa is likely to report greater customer acquisition and loyalty, as well as a larger share of wallet and ultimately even better financial performance. But competition will be tough and Absa still has a long way to go to catch up with Capitec and FNB,” says Prof. Schreuder.

The move away from the traditional banking environment to a greater reliance on electronic channels has an effect on satisfaction, as digital banking creates less room for human error. “It is important to remember that customer expectation is influenced by each customer’s individual experiences of consistency in service delivery as well as the promises made by competitors,” explains Prof. Schreuder.

Banking channels

The SAcsi also measured satisfaction with specific retail banking channels. In terms of ATMs, the five banks maintained similar scores to last year at 79.7 out of 100. Nedbank and Absa have shown an upward movement. “This particular score has a lot to do with ATM footprint,” explains Prof. Schreuder.

When it comes to branches, Capitec is seen as the leader in customer satisfaction, although Nedbank’s scored improved by 3.6% on last year.

The area of banking apps has shown the greatest upward movement, with all banks increasing their satisfaction scores for banking apps bar Nedbank, which maintained its position from last year. FNB and Standard Bank both recorded higher scores than last year, with FNB named as the leader in this segment.

FNB is still the leader in satisfaction with cell phone banking, although the gap seems to be closing. FNB was also the only bank to score above the industry average for online banking. Absa and Capitec improved on last year’s satisfaction scores. “FNB has maintained their leadership position in all of the electronic channels – banking apps, mobile banking and online banking,” says Prof. Schreuder.

Specific measures

The SAcsi examines a number of areas to obtain an overall score, including customer expectation, customer loyalty, perceived value and complaints. “Expectations in retail banking amongst FNB customers have started to reach a stable level. On the contrary, all the other banks’ customer expectations are slightly higher this year, “says Prof. Schreuder.

Capitec and FNB were the best performers in the field of perceived quality and exceeded their customers’ expectations. In this SAcsi measure ABSA was again the only bank that showed progress in their score, improving by two index points.

Capitec is a clear leader in the area of perceived value according to the SAcsi, beating the average by 12 points. “Capitec is giving their customers what they expect (value-for-money banking), which means they understand their target customer segment very well,” explains Prof. Schreuder. FNB’s perceived value is higher than the industry average. Absa has improved perceived value amongst customers by a significant margin.

Customers of South African banks still have high levels of complaints, with the industry average at 22 percent of customers. “This means that almost one fifth of banking customers complain on various forums,” says Prof. Schreuder. “It follows that effective problem handling is an important element of customer satisfaction. This year, we see that Capitec has the lowest level of complaints and the highest level of problem resolution, while the other four banks are on a par.”

Capitec and FNB recorded lower customer loyalty scores although they maintained their leadership position in this metric. Absa, however, has recorded an improved customer loyalty score.

In addition to the loyalty component of the benchmark, SAcsi also tracks the well known Net Promoter Score (NPS), which describes the likelihood of customers recommending a particular bank. The NPS has remained stable for the industry at large. “Capitec has the highest NPS of its peers, but Absa’s NPS has almost doubled,” says Prof. Schreuder.

“Customers have a higher propensity to switch if they are not satisfied with the products and services offered by their bank. This is evident in some recent popular advertising campaigns which appealed to customers to switch banks if they were unhappy. This behaviour makes customer retention a challenge, one that banks should not take lightly,” he concludes.

International comparison for banking industry

SAcsi is the only South African company to hold a license with the American Customer Satisfaction Index (ACSI) which allows the SAcsi to benchmark South African companies against international equivalents.

SA scored below the US (78), but higher than the UK (74) and South Korea (73). South African banks came in 3rd among the ACSI License-partner countries, with Kuwait setting the international benchmark for banking customer satisfaction at 79 out of 100. “Yet again the South African banking industry has demonstrated that it competes favourably with the traditional financial power houses such as the United States and the United Kingdom in terms of customer satisfaction. Both the South African and US industries appear to be in a reconciliatory phase, whilst the UK has managed to improve on satisfaction levels since the 2013 measure” explains Prof. Schreuder.

The fact that banks are choosing to subscribe to SAcsi to receive statistically sound information speaks volumes about the credibility of the index. “This is not research that is commissioned for marketing purposes, it is used as the basis for strategic management decisions,” says Prof. Schreuder.

The publication of SAcsi results also translates into good news for consumers. “Banks want to ensure that their customers are satisfied and that their performance improves over time. Now that customer satisfaction is being published, they will be under pressure to improve customer satisfaction,” he explains.