Latest South African Customer Satisfaction Index for Banking Products shows customers see little difference between banking products and loyalty is declining
The core Banking Products of current accounts, credit cards, home loans, personal loans, savings accounts and vehicle finance are largely undifferentiated across the banking sector, leading to consumers becoming increasingly ‘multi-banked’ and less brand loyal as they struggle to find a bank that satisfies all their functional and service requirements across diverse product and servicing needs.
These are just some of the findings of the latest South African Customer Satisfaction Index (SA-csi) for Banking Products (2018) conducted by Consulta which provides highly scientific insights into the overall level of satisfaction of customers across various Banking Products. The SA-csi for Banking Products follows the recently released overall banking customer satisfaction index which showed that 2019 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 fully capitalise on these soft targets.
“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, which is evident in almost all banks using fees and costs related to their offerings as the key drivers of customer satisfaction levels. 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 and Chairperson.
“With Gartner’s prediction that by 2020 most companies (89%) would differentiate predominantly on customer experience, banks are under huge pressure to get customer satisfaction and experience entrenched throughout their people, processes, technology platforms and channels. It’s a massive task given the long legacy of silos that exist within banks across different product divisions. The reality is that banks simply do not have a single view of their customer’s portfolios due to legacy infrastructure issues that are complex and very costly to resolve. New disruptor banks coming to the market have a distinct advantage since they don’t have to deal with the challenges created by outdated systems, technology or processes. They come to market with a model that has been purposefully built from the ‘outside in’ based on meeting customer needs, rather than forcing an operating model onto customers because that’s the way the business has been structured,” explains Prof. Schreuder.
Key take-outs from the SA-csi for Banking Products 2018
Current Accounts - surveyed Absa, Capitec, FNB, Nedbank, Standard Bank
· Capitec leads by a big margin, followed by FNB. Absa shows the most improvement in many of the indices, while Standard Bank is still struggling with some of their product value propositions.
· Given that the current account is typically the core transactional account for most consumers, banks cannot continue to approach products in a siloed way – it is concerning that despite the transactional current account being the core of most customer experiences, none of the other banks are well differentiated or excelling in any aspects of customer satisfaction.
Personal Loans – surveyed Absa, African Bank, Capitec, FNB, Nedbank, Standard Bank
· Absa sets the bar in this product area with all other banks having significant work to catch up. Absa’s aggressive pricing and solid product offering has seen it snatch the lead from Nedbank and quickly gain leader status in 2018 with 8-index points.
· Perceived value is the most critical component for customers of personal loans since customers in this target market are highly fee and rate sensitive and consequently feel that the value associated with certain parts of the process is not worth the fees and rates charged.
· Customers value solutions like Home and Personal Loans that help them to progress.
· Interestingly the affluent customer segment sees the least value in the Personal Loans offering across the board.
Home Loans – Absa, FNB, Nedbank, SA Home Loans, Standard Bank
· FNB and SA Home Loans show the best satisfaction scores in a very undifferentiated product line. Standard Bank is the only provider to be on a below par position. SA Home Loans has shown the biggest improvement.
· None of the brands are currently on the positive end of the price versus quality gap – with customers reporting that they do not believe the quality of experience on offer justifies the costs surrounding their bond.
· While the mortgage origination process hasn’t fundamentally changed in decades and much of the initial customer engagement happens through intermediaries such as originators, online loan activity, research and processing is growing in every phase of the mortgage process. In terms of future focus, digital innovation in Home Loans is key, as more tech-conscious customers are entering the real estate market. Banks need to move rapidly in delivering a seamless digital mortgage service in order to dominate. Home Loan providers will be judged more and more on the usability, convenience and ease of the client experience.
Vehicle Finance – surveyed Absa, MFC (Nedbank), Wesbank (FNB), Standard Bank
· Across all banks, Vehicle Finance products are completely undifferentiated – here fees and costs, as well as interest rate are key drivers of satisfaction and no bank takes a lead in any of these. This generic undifferentiated view results in more white label vehicle finance products offered to clients in the dealership where the vehicle is purchased.
· Vehicle ownership across the globe and in South Africa is being disrupted by companies like Uber and our views on mobility challenged by improvements in public transport systems and concepts like lift clubs. There is a global shift from “ownership” to “usership” which is making the vehicle finance industry a perfect target for an innovative, disruptive entrant.
Savings Accounts – surveyed Absa, African Bank, Capitec, FNB, Nedbank, Standard Bank
· Capitec is the clear leader and pulling ahead with a clear margin, while African Bank follows also in a leader position. Absa, FNB and Nedbank comes in on industry par, while Standard Bank is below par in the overall customer satisfaction stakes.
· Consumers do not and cannot easily save in the current economic environment and banks are equally poor at marketing savings products to encourage consumer to manage their money better
· There are many new product offerings in the Savings and Investment space targeting 22.5 million banked adults in South Africa, of which 16 million hold low interest Savings Accounts. This remains an opaque and complex market where information is hard to find and decipher.
Credit Cards – surveyed Absa, Discovery Card, FNB, Nedbank, Standard Bank
· FNB leads the industry on Credit Cards, although Standard Bank is exceeding expectations well and is seeing rising perceived quality scores.
· Quality, value and overall SA-csi are trending upwards for the industry. Standard Bank and Nedbank remain below par, while customers feel that pricing and rates are the biggest factors causing dissatisfaction.
Customer Rewards – surveyed Absa Rewards, eBucks (FNB), Greenbacks (Nedbank), uCount (Standard Bank)
· eBucks is the leader, with a slight margin above the industry average while Absa Rewards and Greenbacks are on par, and uCount is below par.
· In the market of Rewards, banks need to fully understand customer behaviors in order to reward them accordingly. Banks should be innovative with their Reward programs. They should also always keep their customer up to date with the latest benefits and create general awareness around the rewards program.
· Customers currently view Rewards programmes as ‘vanilla’ or generic, while layers of complexity are being added. Rewards need to be approached as a strategic focus of the business rather than as a ‘bolt-on’ that stand outside the entire product offering.
· No bank seems to get it right in dealing with customer complaints in a constructive manner. This also has a big impact on the overall satisfaction.
· Banks should be wary what their Rewards programs promise. Customers are highly sensitive to under delivering on these promises. Overall the Rewards program index is the lowest of all the bank products, indicating that respondents are not totally satisfied with this product. This finding is almost ironic since the essence of a rewards programme is to show appreciation to the customer.
“The big consideration is the extent to which most customers are increasingly multi-banked with many product offerings from different banks. Customers have moved away from their main transactional current accounts to shop around for other bank products, indicating that customer loyalty is low. Banks continue to struggle with their legacy siloed approach to customer centricity and this is proving a huge hinderance in terms of upsell and cross-sell opportunities and entrenching their customers, as well as overall customer satisfaction and service. Banks are struggling with many product iterations across multiple channels and configurations. Loyalty has been completely eroded and today people are looking for ‘fast food’ Banking Products – which allow them to transact quickly, simply and cheaply,” adds Prof Schreuder.
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 actually inject themselves into almost every aspect of a consumer’s life.
“Banking sustainability goes far beyond closing physical branches and launching into the most advanced online and mobile offerings. Instead, it’s about moving further into the lives of customers before, during and after every financial transaction with simple, personalised service, in a channel of the customer’s preference, for the ultimate in customer centricity. Traditional banks cannot simply rely on providing Banking Products and access to money. The future of the banking industry will depend on its ability to leverage the power of customer insight, analytics and digital technology to deliver the ultimate in customer experience transformation,” concludes Prof. Schreuder
About the South African Customer Satisfaction Index
As a strategic tool for gauging the competitiveness of individual firms and predicting future profitability, an organisation’s customer satisfaction performance, as measured by the SA-csi methodology, provides a predictive indication of how well the firm will perform in terms of future revenue and earnings growth. Supported by both the scientific and practitioner community, the SA-csi is the first independent, comprehensive national customer satisfaction index with international comparability in South Africa and has collected data from more than 400 000 consumers since its inception in 2012. The SA-csi forms part of a global network of research groups, quality associations and universities that have adopted the methodology of the American Customer Satisfaction Index (ACSI) via its Global CSISM program.
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