Bank Loyalty On The Wane
An amazingly high number of over eight million people have switched their bank in 2007 with lack of satisfaction with staff and services.
This is double the number of customers who were switching banks only four years ago. However, those who want to switch are being delayed in doing by outdated legacy systems which the banks are still using.
Seemingly it is not just banks who can't command our loyalty in the UK. Britain appears to be the biggest country for defections or 'churning' in the West, across industries such as mobile phones, the internet and utility providers, according to research by data provider Pitney Bowes Group 1 Software.
However, whereas some other industries have higher defection rates, such as mobile phone providers being changed by just under 39%, it is banking which has seen the highest proportional increase in the last four years.
Eight million changing customers represents 18.3% of the market, an increase from a traditional average of less than one in ten. In 2003 the rate of change was only 8%.
In Europe, France seems to have the most satisfied banking customers, with a defection rate of 16.6%, but the US outstrips even the UK, with just over a quarter of customers changing banks each year.
Around half of the UK customers surveyed said that the reason they wanted to change bank was because they were not recognised as a valuable customer and the staff were unhelpful. Forty percent of respondents also said that banks had ineffective call centres.
What customers would like is a more personalised, informal service from their bank, a report from research group Coleman Parkes said. Over 65% of respondents said that banks are too impersonal in their communications and need to be more informal.
Incredibly, around the same percentage of banks in the survey across Europe said that they were not always able to access the data of an individual to facilitate a one-to-one communication.
According to the survey just less than half of banks in the UK use call centres from customer communication, although there are plans to move towards more direct contact methods over the next three years, such as instant chat online and digital TV.
Vice-president of Pitney Bowes, Andrew Greenyer, said: "Banking, it seems, can no longer rely on customer inertia. Traditionally, churn levels have been in the sub-10% range, but have now rocketed to virtually the same level as the mobile phone industry on average across Europe. As the branch network comes back into favour as a worthwhile element of customer service, we can expect to see high value customer privileges and rewards being delivered through this channel."
Director at Coleman Parkes, Ian Parkes, commented: "Banks can ill-afford to make mistakes. Poor customer service and a major error by the bank are two of the top three issues that will drive a consumer to change banks, so banks need to focus on a high level of customer service and quality of information management."
Mr Parkes also said that many banks across Europe may find it difficult to increase their one-to-one communication with customers as their IT budgets may be hit by the recent squeeze on credit.
Published on December 11, 2007
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