For the second year in a row, improvement in global retail
bank customer experience levels has stalled with a decline of less
than one percent leaving banks challenged to drive top-line growth,
finds the twelfth annual World Retail Banking Report (WRBR)
released today by Capgemini and Efma. Stagnating global customer
experience levels combined with an alarming increase in customers
willing to leave their banks, points to weakening bank-customer
relationships and the increased possibility of disintermediation1
by non-bank competitors such as brand-name retailers, FinTech
firms, crowd-funding websites, peer-to-peer lenders,
Internet/mobile service providers, and Apple NFC-based payment
systems. These findings underscore the need for retail banks to
make investments to improve customer experience, especially with
middle and back offices2, which have historically been ignored and
are essential to providing engaging digital services through faster
processing times and reduction in errors. The report draws on
research insights from 32 markets and global data from over 16,000
retail banking customers as part of its annual Customer Experience
Index.
A graphic accompanying this release is available at
http://media.globenewswire.com/cache/29447/file/33452.pdf
Troubling Changes in Customer Behaviors
In addition to lower customer experience levels, the WRBR found
that globally customers' propensity to leave their primary bank3
(especially Gen Y4) is on the rise, while willingness to make
referrals or buy additional products has decreased significantly.
The percentage of customers who said they were likely to leave
their primary bank in the next six months rose into double-digits
in every region except Western Europe. According to the WRBR data,
customers' likelihood to leave their banks increased anywhere from
nearly 4 percentage points (pp) to over 12pp last year depending on
region. Globally, less than 50 percent of Gen Y customers are
likely to continue with their primary bank in the next six months.
Reasons for customers leaving banks could be the increase in
non-bank competition, growth of start-up banks which offer
attractive digital products, and the ease in logistically switching
banks.
Also concerning for banks was the expanding number of customers
who said they were not likely to make referrals or purchase an
additional product from their primary bank. Customers unlikely to
make referrals rose over 9.5pp in some regions (10.5 pp in
Asia-Pacific and 9.7 pp in Western Europe) and the unlikelihood to
purchase a second product from their primary bank increased as much
as 25pp in Western Europe.
Banks also appear to have stalled in their ability to steer
customers away from the branch toward lower-cost channels. Despite
significant leaps to high rates of usage for both the internet and
mobile channels, the impact on branch usage was minimal. In fact,
branch usage rose modestly in North America and Europe during 2014,
while decreasing only slightly in Latin America and barely at all
in Asia-Pacific.
Stage Is Set for Non-Bank Competitors to Gain a
Foothold
All of these factors provide non-banks with the opportunity to
attract customers away from their primary banks. Internet and
technology firms, in particular, with their simple, agile, and
intuitive offerings and freedom from legacy systems, are at the top
of the list of competitors, with 83 percent of bank executives
viewing customers as comfortable with banking through these
entities. Already, such firms have carved out a significant
presence in the area of payments and credit cards, particularly in
North America and Western Europe.
Middle and Back Offices Need Attention
Bank executives have not hesitated to invest in the front
office, with almost 93 percent citing customer experience as the
main driver behind such investments. However, underfunding in the
middle and back offices has undermined these front-office
investments through slow processing times, errors, and exceptions
that contribute greatly to reduced service in customer
interactions.
"Disenchanted customers, combined with the agility and
innovative nature of non-bank competitors, is leaving the door wide
open for capturing market-share," said Jean Lassignardie, Chief
Sales and Marketing Officer at Capgemini Global Financial Services.
"Improving customer experience is the best strategy to deflect
competition from non-bank players. While investments in improving
front office customer experience have expanded banks' offerings,
middle and back office transformation has been plagued by
under-investment and will be the key to resolving disjointed
customer experiences and improving longer term loyalty rates."
To overcome these challenges, banks need to develop a roadmap
that outlines a gradual approach to digital transformation,
encompassing digitization, simplification/agility and big data
analytics. Digitization seeks to replace manual processes with
digital routines. Simplification increases agility by reducing
multiple systems in to fewer and enabling faster time to market.
Big Data analytics puts in place the ability to capture, manage,
and derive insights from customer data effectively. The plan for
full digital maturity must place as high a priority on the middle
and back offices, as the front office as the majority (60 percent)
of customer dissatisfaction emanates from back office issues
leading to an increase in overall negative customer experience
levels5. "With a thoughtful, methodical plan for digital
transformation," said Patrick Desmarès, Secretary General of Efma,
"banks can begin to improve their customer experience scores and
position themselves to compete against nimbler, non-traditional
entrants."
The World Retail Banking Report
The World Retail Banking Report 2015 draws on research insights
from 32 markets. Featuring its annual Customer Experience Index,
the report presents the cumulative findings of its Voice of the
Customer survey which includes global data from over 16,000 retail
banking customers and executive interviews across six geographies.
Eighty customer interaction touch points were analyzed to present
an examination of the factors that are most important to banking
customers, measured across the entire banking customer journey.
For more information visit www.worldretailbankingreport.com
About Capgemini
With almost 145,000 people in over 40 countries, Capgemini is
one of the world's foremost providers of consulting, technology and
outsourcing services. The Group reported 2014 global revenues of
EUR 10.573 billion. Together with its clients, Capgemini creates
and delivers business and technology solutions that fit their needs
and drive the results they want. A deeply multicultural
organization, Capgemini has developed its own way of working, the
Collaborative Business Experience™, and draws on Rightshore®, its
worldwide delivery model.
Capgemini's Global Financial Services Business
Unit brings deep industry experience, innovative service
offerings and next generation global delivery to serve the
financial services industry. With a network of 24,000 professionals
serving over 900 clients worldwide Capgemini collaborates with
leading banks, insurers and capital market companies to deliver
business and IT solutions and thought leadership which create
tangible value.
Learn more about us at www.capgemini.com and
www.capgemini.com/financialservices.
Rightshore® is a trademark belonging to Capgemini
About Efma
As a global not-for-profit organization, Efma brings together
more than 3300 retail financial services companies from over 130
countries. With membership from almost a third of all large retail
banks worldwide, Efma has proven to be a valuable resource for the
global industry, offering members exclusive access to a multitude
of resources, databases, studies, articles, news feeds and
publications. Efma also provides numerous networking opportunities
through work groups, online communities and international
meetings.
Visit: www.efma.com
1 Disintermediation occurs when customers make
transactions directly with non-banks and bypass traditional
banks.
2 The banking customer journey value chain consists of front
office, middle office and back office interactions. The front
office represents the customer interface with the bank whether it
be digitally or in-person at a branch. The middle and back offices
consist of the inner workings of the bank to process
transactions.
3 A primary bank is the bank with which a customer does the
majority or most important banking transactions.
4 Generation Y consists of individuals born between 1980 and
2000 whom have always had digital connections as part of their
adult lives.
5 "Backing up the Digital Front: Digitizing the Banking Back
Office," Capgemini, 2013.
The photo is also available via AP PhotoExpress.
CONTACT: Capgemini Contacts:
Erin Riemer (North America)
erin.riemer@capgemini.com
+1 847 363 3927
Cortney Lusignan (EMEA)
Weber Shandwick for Capgemini
clusignan@webershandwick.com
+44 (0) 20 7067 0764
Efma Contact:
Boris Plantier
Efma
boris@efma.com
+33 1 47 42 67 69
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