NEW YORK (11/30/12)--Financial institutions' members/customers are changing their behavior and demanding lower fees for higher levels of service or other improvements, according to Ernst & Young's 2012 global consumer banking survey.
If their demands are not met, consumers increasingly are likely to shop around at other financial institutions for competitive rates for services and products.
Consumers are taking control of their banking relationships, are increasingly likely to change financial institutions and expect to be able to choose among a range of service levels and costs, the survey said.
About 28,560 banking customers across 35 countries were surveyed. It indicates that consumers also expect to be financially rewarded for their loyalty. Research was conducted between February and March, using an Internet questionnaire.
The survey suggests that for financial institutions, including credit unions, to remain competitive they must:
- Make promises and service offers more transparent so consumers can choose;
- Rebalance fee structures for the clarity and sustainability required by regulators and investors;
- Improve how they provide information and advice, recruit online affinity groups and develop flexible loyalty programs;
- Develop models around consumers' needs by reprioritizing spending, increasing the use of low-cost digital models and using more innovative technology.
"Customers are sending banks a very clear message--'we are taking control,'" said Pierre Pilorge, Ernst & Young's financial services advisory markets leader for Europe, Middle East, India and Africa. "In response, banks must re-evaluate customer trends region by region to prioritize products, enhance services, and ultimately give customers what they want."
Worldwide, 44% of consumers surveyed say their financial institution adapts products and services to meet their needs. Also, 70% of consumers would disclose personal information if it improved the services and products they were offered.
Loyalty reward plans are on the rise. Twenty-seven percent of consumers are enrolled in these, up 50% from 2011. However, most agreed that if they are offered three products or more with a bank they should get better service (86%), and be charged lower fees or given better rates on their savings accounts (91%).
Consumers also are becoming less loyal and increasing the number of financial institutions they use, the study indicated. Those who use only one financial institution have fallen to 31% from 41%. The number planning to change financial institutions has risen to 12% from 7% year on year and attrition rates have increased in several major markets.
Poor branch experience (31%) and lack of personalized contact or service (26%) are climbing the list of reasons for changing providers, although dissatisfaction with high fees continues to be the most commonly cited driver (50%) of attrition.
"Pricing remains critical to customer satisfaction, but most customers have no idea how much they pay each year," Pierre said. "As they start to take control of their banking relationships, clearer communication about fees is customers' most sought-after improvement. People are more willing than ever to shop around and want control over what they pay for the service they receive. Banks need to respond--pricing and service promises need to be transparent if banks are to deliver something customers value."
Financial institutions have made progress in improving their communication channels, said Ernst & Young. Both call center and mobile banking services have improved, with consumer satisfaction up 8% and 16% respectively, year on year. However, the power of the consumer voice has overtaken financial institutions' communication channels. Personal recommendations from family and friends are the top source of information about banking products, with 71% of consumers relying on that information as their primary source.
Fifty-five percent of consumers refer to online communities or social networks for advice and a third who use social networking use it to comment on the service they receive from their financial institution.
"Customers prefer turning to other sources than their bank for financial advice and to find the best deals. Comparison websites, relatively unknown five years ago, are now the second major source of influence, ranking higher than banking advisers, and the use of social media as a source of banking information is amplifying customers' voices, giving them greater power as advocates or critics," Pierre concluded.