Bank Customers are Happy, But Their Loyalty is Fragile

Globally, customers are highly satisfied with their primary bank. However, security is a growing concern — and some say they would leave for better rates or lower fees.

The report: Consumer Banking Report [February 2024]

Source: EPAM

Why we picked it: EPAM’s annual Consumer Banking Report offers a great look into the sentiment of global banking customers.

Executive Summary

Now in its fourth year, EPAM’s Consumer Banking Report offers insight into the satisfaction of global banking customers. EPAM, a digital transformation services and product engineering company, surveyed 9,000 retail banking consumers across nine countries to learn more about the customer experience. It found that globally, consumers are largely happy with their primary bank.

Additionally, many consumers still like visiting branches and half do so weekly. However, satisfaction doesn’t necessarily equate to unconditional loyalty. Consumers are increasingly concerned about security — and half say they would leave their primary bank for higher yields or lower fees.

Key Takeaways:

 

  • Globally, 83% of respondents said they were happy with their primary bank.
  • Half of the respondents said they would leave for better interest rates and lower fees. However, only 13% changed primary banks in the past three years.
  • 86% globally reported using a physical brand in the past year, with 45% doing so monthly.
  • 91% say trust in the safety of their personal data was the most important ability for banks.

What we liked: EPAM’s survey offers a deep dive into customer experience and how global consumers feel about their banks.

Consumers Like Their Primary Banks

Consumers are largely happy with their primary bank. However, many would still consider leaving and have concerns about security and technology.

Good customer service = happy customers: Of the 83% of respondents who said they were happy with their banks, the greatest reason was excellent customer service (46%), followed by a strong reputation with the wider public (29%). Approximately a third of respondents who were unhappy with their bank said they would be happier if they offered better customer service.

Choosing a bank: Customers said they chose their primary bank for its brand recognition (37%), access to a local branch (33%), or because family or friends use the bank (24%).

 “In the face of rapidly changing market dynamics, marked by high interest rates, inflationary pressures and market volatility, banks have managed to uphold elevated levels of trust and customer satisfaction.”

— Balazs Fejes, EPAM.

Banking in the branch: 86% of respondents globally said they used a physical branch in the past year and 45% said they visit a branch at least monthly. When asked why they visited a branch, consumers said it was for help (66%), guidance (68%), complaints (61%), or money management (60%).

Will customers leave? Despite high satisfaction levels, three in ten respondents are considering changing banks in the next year. Half of those said it was for better interest rates or lower fees. Additionally, 38% who were dissatisfied with their current banks said their satisfaction would improve if they offered rewards or incentives.

Trust, Transparency and Innovation

While consumers largely trust their banks, data security is critical.

Personalized experiences and trust: The need for personalized experiences continues to grow. 70% say receiving personalized recommendations and experiences based on their behaviors and needs is important. Consumers also largely trust their banks and 81% said they trust their banks to handle their finances and keep their data safe.

Getting and using data: Banks can start by collecting data to learn more about customer habits, intentions, preferences and unmet needs. While this depends on a customer’s location, it can include financial data they have, financial data they do not have and non-financial data. To provide these human-centered experiences customers crave, banks need to employ AI, genAI and machine learning to generate valuable insights from their data.

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Customers want more innovation: Consumers are increasingly digitally engaged with their banks. Nearly a third use their bank’s app daily. However, they also want more. Over the next three years, 64% say they would like their bank to provide them access to a digital banker, while nearly 80% say instant payments are the most important feature their bank could offer.

Consumer hesitancy around AI: While banks are striving to find new applications for GenAI, many customers remain skeptical of AI playing a role in their finances. Slightly more than half (57%) said they would not be comfortable acting on financial advice provided by an AI service. However, 68% of respondents also said they would like their bank to offer better financial education. While consumers could benefit from AI, trust must be built before they embrace it.

Learn more:

Branches and the Teller of the Future

Consumers still like banking in person — but the role of branches is changing.

How customers are using bank branches: While consumers prefer to interact with their banks via mobile devices, they still want the option to visit a branch. 86% say they have used a physical brand in the past year, often for deposits. A majority said it was easier to do face-to-face (54%), while others sought financial guidance, to open an account, make a complaint, manage their money, or seek generalized help and support.

Bankers as educators: With consumers still seeking a branch experience for occasional needs, there is an opportunity for bankers to provide in-person support. Approximately two-thirds of consumers say they want better financial education from their bank and to give them advice on how to manage their money better.

Banks can leverage their in-person interactions to educate customers about the simplicity of digital services and show them how personal these digital experiences can be. However, bank branch employees must also be empowered with knowledge and training, educate customers on finances and give them the guidance they crave.

Dig deeper: Moves By Chase and PNC Re-ignite the Branch Versus Digital Debate

Creating a Competitive Advantage

EPAM’s research shows there are plenty of opportunities for banks to create and deliver the types of experiences consumers demand. Banks that integrate a human element into their digital services to reduce friction will find a competitive advantage in the coming years. There are several things they can do:

Meet the customer: While consumers enjoy digital banking, most still use branches and 45% do monthly. Banks must better educate customers on digital tools and services and connect them to a digital banking concierge when they experience friction.

Understand the impact of trust and transparency: While most consumers are happy with their banks, nearly a third say they would consider changing in the next twelve months. Nine in ten said protecting personal data was the most important capability their bank could offer.

Pursue personalization: Consumers repeatedly say they crave more knowledge and want their bank to offer more financial education or provide financial advice. Banks must leverage data to personalize these services and make them more impactful.

Embrace AI: As customer experience is such a critical part of customer happiness, banks can tap the capabilities of AI to provide customer service at scale. Half of the respondents said they would like their bank to provide access to an AI-powered digital assistant to help improve their finances over the next three years. Additionally, 96% of those who have used AI to help manage their finances say they were happy with the results.

Ensure systems are up to the task: As consumers want access to digital bankers and instant payments, banks must ensure they have an agile, cloud-enabled architecture that can rapidly integrate and scale the services consumers demand.

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