Nearly 7 out of 10 banking customers surveyed in the USA think that having a relationship with their banking institution is low on their priority list, according to a study by BAI, in collaboration with Accenture, SAP, De La Rue and NewGround.
BAI surveyed more than 3,700 banking customers as part of The Frontline Experience study, asking for their views about relationship banking. The survey revealed that - whether through cynicism after service quality breakdowns or the desire to "play the field" - some 70% of banking customers are either sceptical about, or not interested in, a relationship with their bank.
According to Deborah L. Bianucci, president and CEO for BAI, "This is a wake up call for banking organisations who list relationship banking or service quality as their primary customer value proposition. In our 2004 Frontline Factor study, 90% of banks surveyed listed this as a goal. But, while banks tend to view relationships in the number of accounts a person has with the bank, a consumer views relationship banking in terms of trust and confidence that the institution is acting in the customer's best interest."
Indeed, according to Bianucci, trusting a bank as a financial advisor is the pinnacle of the consumer-bank relationship, but it is almost impossible to gain trust without improving the bank's performance at the front line.
Reaching real trust
Paul McAdam, senior managing director for BAI Research, added: "Banks have to get it right the first time with customers, with flawless execution during personal interactions in branches and contact centres, for people to graduate to the next level of relationship with a bank. But when service breakdowns occur they diminish not only confidence but also the level of trust that consumers have in their bank."
The study determined that a hierarchy of steps needs to be fulfilled for the customer to advance to new levels of trust in their bank, from a transaction-based relationship, to a service-based relationship, to the "pinnacle of trust" (which is a good, solid, advice-based relationship).
Two particular customer segments identified through the study ("Service Seekers" and "Product-Seeking Sophisticates") have characteristically low interest in developing a relationship with a bank. But, as these two segments comprise nearly half of the adult population - and have significant assets to invest - it is critical for banks to identify other ways to attract these groups.
For the Service Seekers (29% of respondents), BAI says the key is accessibility and the perception of service quality at the bank branch. These consumers tend to be the younger while having higher-than-average deposit balances. This group is willing to trade pricing options for attention and service. The research also revealed that loyalty and rewards-based programmes are an attractive option for banks to improve the relationship receptivity of this group.
The Product-Seeking Sophisticates (19% of respondents) are highly sceptical of their banks and prefer to distribute their investments across best-of-breed providers. They tend to be middle-aged, predominantly male, with high deposit balances and investable assets. They are very involved with their investments, and don't believe their banks are up to the task or have enough knowledge about the investments that are best for their situation. To attract this group, banks face a difficult challenge: to earn trust at lower tiers before earning respect for credibility and competency. Online tools and well-informed financial advisers are vital in attracting these consumers.
Three other customer segments emerged from the study: Relationship Enthusiasts (22%), Confident Relationship Enthusiasts (9%) and Uninvolved Sceptics (21%).