Confidence In Banking Still All About The Customer

While customer confidence in the banking industry is on the rise, the foundation of the relationship with banks and credit unions is still under threat as customer demands and expectations evolve, new channels emerge and new entrants engage.

After nearly a decade of sharp declines in confidence in banking, several industry surveys have found that customers’ loyalty, engagement, and satisfaction with their own banks is on the rise. According to Gallup, Americans’ confidence in U.S. banks increased to 26% in 2013, up from a record low of 21% a year earlier. As a result, the percentage of Americans saying they have “a great deal” or “quite a lot” of confidence in U.S. banks is now at its highest point since June 2008, but remains well below its pre-recession level of 41%, measured in June 2007, or the 53% in 2004.

gallup_consumer_confidence_in_banks

Interestingly, the percentage of Americans saying they have a great deal or quite a lot of confidence in banks is now about the same as those expressing little or no confidence (28%), moving closer to a net-positive confidence for the first time since 2009.

While it is definitely not time to break out the champagne, how can banks build on this momentum and leverage a stronger confidence level to build loyalty and to serve as a defense against new market entrants?

Using data collected during Gallup’s latest Retail Banking Study, there are four areas of opportunity for banks to increase customer confidence.

Advocacy

The component that has the biggest impact on confidence according to Gallup is customer advocacy. “Partnering with customers on managing their finances, making them feel confident about their financial future, and taking the lead when necessary helps them believe you are on their side and looking out for their best interests,” according to Beth Youra, Senior Consultant for Gallup. “This manifests itself in customers feeling like you are looking out for their financial well-being, which, in turn, makes you seem more selfless and gives customers the confidence that you are in it for them and not yourself.”

Read More: What Banks Can Learn From Apple, Zappos, Disney and Southwest )

gallup_confidence_drivers

Clarity

Clarity, simplicity and transparency all have a strong impact on confidence in a customer’s primary bank. According to Gallup, customers are more likely to agree that their banks always communicate with them in a clear and upfront manner than they are to agree that banks communicate with them about things that are meaningful. As a result, there is still room for improvement in both of these metrics. It is important to note, however, that there seems to be a positive impact from the work done by banks and credit unions over the past couple of years when it comes to simplicity and clarity in customer communications, since these numbers were significantly lower in previous studies.

Every interaction in every channel is an opportunity to demonstrate simplicity, clarity and transparency, which is particularly important when consumers are searching for a financial services provider or interested in understanding fees, rates, etc. With most consumers beginning their search online, financial institutions have control over how they present themselves to these shoppers.

Read More: Simplicity in Banking is Anything But Simple )

Positive Customer Experience

Customer experience is not only a key driver of confidence, but also a key driver of both attrition and retention. According to Youra from Gallup, “If customers are not having a consistently exceptional experience every time and every place they interact with you, you are not even in the game.” Unsurprisingly, the branch has been found to be better at driving confidence than digital channels, with a positive personal interaction more likely to inspire both confidence and engagement. Alternatively, Gallup found that the lack of satisfaction in digital channels is more likely to drive a negative outcome than satisfaction with these channels is to drive a positive outcome.

“People still like people and trust people more than technology, even if customers are increasingly interacting with technology,” says Youra.

Read More: Millennials Desperate for a Better Banking Experience )

Delivering on Promises

Variations on the following themes are prominent in today’s financial institution marketing.

  • “We let you bank anywhere, anytime, anyway you want”
  • “We are an integral part of your community”
  • “We reward you for the relationship you have with us”

While the Gallup research found that these attributes do positively impact the confidence people have in their bank, the majority of customers don’t agree that their bank is delivering on these promises. And while “lets me bank anywhere, anytime, anyway I want,” is the highest scoring attribute in the survey, “Rewards me for the relationship I have with them” is the lowest scoring attribute at 31%. Maybe the feeling of being rewarded for the business brought to the bank is not resonating, or maybe the rewards are just too hard to take advantage of. Either way, institutions need to step up their game when it comes to paying off on the promises made in today’s marketing.

Read More: Who Cares About Debit Reward Cards? )

Banks have the opportunity to benefit from the recent momentum in increased industry confidence. Focusing on customer advocacy, clarity, the overall customer experience and delivering on promises made can build engagement, loyalty and provide a defense against new market entrants. The overall improved feelings of financial well-being will also assist in further building confidence, but more needs to be done.

The use of customer insight to better understand the customer and their needs can have a significant impact on confidence as can the focus on a consistent experience across channels. These initiatives are important since in the end … it’s all about the customer.

Jim MarousJim Marous is co-publisher of The Financial Brand and publisher of the Digital Banking Report, a subscription-based publication that provides deep insights into the digitization of banking, with over 150 reports in the digital archive available to subscribers. You can follow Jim on Twitter and LinkedIn, or visit his professional website.

This article was originally published on April 14, 2014. All content © 2018 by The Financial Brand and may not be reproduced by any means without permission.

Speak Your Mind

*

Show Comments