Providing the right product at the right time for the right channel is no easy task, yet for three years running, according to the Capgemini Customer Experience Index (CEI), banks have improved or maintained their ability to do so. The streak ended this year when, for the first time, the Capgemini CEI declined, sounding a wake-up call for the industry.
Customer experience in every region of the globe (except Latin America) declined, reversing an appreciable gain made in 2013. Lower scores in nearly two-thirds of the 32 countries surveyed -- including decreases of more than 10 percent in the share of customers with positive experiences in nine markets -- decreased the global average by 0.6 percentage points to 72.9. Capgemini’s CEI, built upon responses from more than 17,000 customers and featured in the World Retail Banking Report 2014, offers insight into customer experiences across 80 different retail banking touch points and spans the full range of products, channels, and lifecycle stages.
The industry must work to reverse the decline, given the impact customer experience has on various behaviors that drive profitability. We found that measures of loyalty, cross-selling and referrals all suffer to a striking degree when positive customer experience declines. Customers with negative experiences are three to five times less likely to refer others, buy additional products, or stay with a bank.
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It is not enough to simply avoid negative experiences, since neutral experiences do not inspire nearly the same levels of loyalty, retention and attraction as positive ones. In North America, for example, only 51 percent of customers with neutral experiences say they are likely to stay with their bank, compared to 83 percent of those with positive experiences.
The growing influence of Generation Y, the tech-savvy population born between 1980 and 2000, appears to be at least partly responsible for the decline in CEI. These customers, which make up about a third of the population in many markets, are considerably less likely to have positive experiences than those in other age groups. In North America, the difference is particularly stark, with only 41.7 percent of those between 18 and 34 years citing positive experiences, compared to 63.4 percent of those of other ages, a difference of 21.7 percent.
To meet the high expectations and demands of Gen Y, banks need to upgrade their digital capabilities. We found that Gen Yers are far more interested in using the mobile channel compared to other age groups. At the same time, the importance they give to all the other channels -- branch, ATM, and phone -- has decreased to a greater degree over time, compared to other age groups.
The key to ensuring positive experiences across a bank’s entire customer base is to meet the demands of Gen Y, while still delivering on the basics of fair pricing, broad product sets, and dependable service. Fees and prices continue to be the number-one driver in choosing a bank in most regions, followed by quality service. Telephone and mobile banking, meanwhile, remain low on the list of priorities for non-Gen Y customers.
Banks interested in preparing for the future will need to maintain high-quality basic services, while also adding touch points for the next generation. Social media offers a powerful opportunity to address future expectations, as the vast majority of bank customers surveyed say they already have a social media account. We found retention, referrals, and cross-selling are likely to increase at banks that offer positive experiences through social media.
Banks still have a long way to go on the social media front. We found several mismatches between the functionality banks make available on social media and what customers would like them to offer. For example, customers rank access to account information via social media as important, but very few banks currently provide this service.
Given the broad appeal of social media and the prominent role it plays in everyday life, banks must establish a strategy for taking advantage of this highly flexible platform. A social media plan, combined with a solid focus on maintaining quality basic banking services, will aid banks in reversing the decline in customer experience.
Jean Lassignardie is the chief sales and marketing officer for Capgemini Global Financial Services.