Banks seek to woo wandering consumers into exclusive relationships

The struggles of banks and financial institutions in meeting evolving customer expectations lead many Asian consumers to maintain relationships with multiple banking partners. Diverse cultures and the different levels of economic development around the region complicate the issue, as they require banks to develop different plans for different markets.

Recent research by SunGard in its latest Bank Readiness Report reveals the extent of the problem. Among the 40 per cent of consumers who have three or more financial service providers, 65 per cent cited convenience as the top factor, while 44 blamed product range.

Undertaken in Q3 by Loudhouse Research, the study involved 1,000 consumers in Indonesia, Malaysia, Philippines, Thailand, Kuwait, Qatar, Saudi Arabia, United Arab Emirates, Jordan and Bahrain.

Damien Ryan, owner at Ryan Financial Communications, said that banks seeking to be more relevant to individual customers must compete effectively on both product and platform.

Damien Ryan

“A bank that can offer a single customer, for example, personal loans, stock trading, private banking, business financing—all via traditional banking and digital means, has a better shot of deepening a relationship and increasing share of wallet,” he told Campaign Asia-Pacific.

Keeping a customer in-house also marks an obvious opportunity for cross-selling. For example, banks can promote services such as insurance and loans for customers who use their bank account for transactions and card products only.

According to Christine Wood, managing director at FTI Consulting, the banking and financial industry is beginning to make real investments in alternative channels, such as social-media platforms that go beyond corporate feeds to provide more personalised service.

For example, banks are making increasing efforts to target high-net-worth individuals with tailored information and offers.

“Technology has a role to play,” she said. “The use of technology on a very personal level with social media is the norm for GenY, and banks have realised that they need to offer more than free cinema tickets.”

In its report, SunGard stated that nearly 50 per cent of consumers either disagree that they get personalised service from their bank, or are ambivalent about it. More than a third are unsatisfied about the consistency of service they receive across their bank’s different channels. The clear challenge to banks? Improve and standardise the customer experience across all platforms.

Half of the respondents said they would share their experience with a company, be it good or bad, on Facebook, while 21 per cent reported that they would tweet about it.

Wood said banks are changing the way they communicate and build relationships with their customers. Whereas previously they focused purely on ‘transactional’ communications, the reputation damage they incurred from the global financial crisis opened their eyes to the need to change.

“Banks have to make changes within their organisations to engage successfully with customers,” Wood said. “The winners in the war for our 'share of wallet' are those who have realised that they need to offer much more than a faceless transactional relationship.”

The SunGard report further revealed that the number of consumers using tablet devices and smartphones to access the Internet has more than doubled year on year. Indonesians are the most avid users of smartphones, while Malaysians lead the way with tablet devices.

Dissatisfaction with the mobile banking channel is high, with 47 per cent stating they currently do not use this particular channel even though it is a preferred method. However, half of consumers expect their banks to provide a better mobile experience in the future.

As technology is quickly making traditional ‘bricks and mortar’ banking less relevant, high mobile penetration across Asia is leading to greater opportunities for transactions ranging from simple bank transfers through to applying for a mortgage, Ryan said.

“Demand for digital banking in Asia is rapidly growing,” he said. “The industry’s challenge remains how to tap into that demand by delivering effective platforms that marry both convenience and security.”

Despite the increasing importance of online channels, some things in banking will never change. Branches remain an important channel for customers, with 95 per cent of consumers visiting the branch network on a regular basis, according to SunGard. Some 10 per cent of consumers also visit their branch as much as twice a week.

“Getting help and advice is by far the highest motivator for a branch visit, with security concerns and the preference for human interaction a close second and third respectively,” the report stated. “A positive face-to-face service experience during a new account opening process is almost as critical to customers as the simplicity of the process itself and strong online banking features.”