1. Chartered Banker The voice of financial professionalism22
TRUST: CUSTOMER PERCEPTIONS
As retail banks try to re-engage customers and restore their faith, says
PHILIP BROOKS, Senior Associate Director at Harris Interactive, they could
do worse than take their inspiration from the legendary Mahatma Gandhi.
was a banker
“A customer,” that legendary
Indian leader Mahatma
Gandhi once taught, “is the
most important visitor on
our premises.
“He is not dependent on us. We
are dependent on him. He is not an
interruption in our work. He is the purpose
of it. He is not an outsider in our business. He
is part of it. We are not doing him a favour by
serving him. He is doing us a favour by giving us
an opportunity to do so.”
We could do worse, it seems to me, than take
inspiration from Gandhi’s words as we try to
re-engage customers and restore their faith in
the banking sector.
In recent years, it’s fair to say that retail
banking has had more downs than ups –
the pension mis-selling and endowment
mortgages debacle in the late 1980s, the
more recent ATM charges, irresponsible
lending, overdraft charges, PPI claims:
these have both foreshadowed and
intensified the financial crisis. The sector
has a steep climb ahead as it seeks to drag its
reputation out of the pit.
As we strove for greater shareholder value,
efficiencies and profit, we lost sight of what
mattered most and what’s at the heart of every
bank – the customer. We took for granted the
levels of trust and confidence our customers had
in us: they believed the products and services
Gandhi
If

2. August/September 2012www.charteredbanker.com 23
Most businesses target effectively
and design products to meet
rational needs, but unless a business truly
understands what makes customers tick,
it will struggle to connect emotionally.”
we offered were designed around them
and that we had their interests at heart,
so it’s no surprise consumers today feel
sceptical (39%), powerless (39%) and
disappointed (38%).
The past is the past, though. It’s
time to move on – and take a leaf out of
Mahatma Gandhi’s wise book. Some early
positive signs are there: while more than
a quarter of consumers in our study still
blame the sector outright for today’s
economic climate, the numbers are falling
– down from 35% to 28% in a six-month
period. Consumers are starting to accept
that everybody shares responsibility.
And confidence in banks has now
stabilised. That may seem surprising as
we enter another recession and the euro
crisis deepens. And it’s more striking
still (see Table B) when you consider the
still deteriorating levels of consumer
confidence in named institutions like the
“Bank of England” and “The Government”,
as well as in sectoral collectives like
“Insurance companies” and “IFAs”.
So, although perceptions of the
banking sector as a whole may not fully
recover until the economy does, the truth
is that individual institutions can help
themselves and the wider sector
by deepening their relationships with
their customers.
And most are building on what
looks like solid ground. Our research
demonstrates that customers hold a
much more confident view of their own
bank (82%) than of the sector as a whole
(just 64%).
Moreover, they seem open and
ready to listen to their bank – 50% of
the customers we surveyed want a
closer relationship with the financial
institutions they deal with.
Indeed, it’s clear from our research
just how important well-managed
relationships are. Retail banking already
performs strongly on those rational,
emotional and intentional dimensions
that contribute to their management of
customer relationships
(see Table C). Although
there’s room for
improvement, retail
banking compares
favourably with providers
of other financial and
non-financial services.
Managing customer
relationships effectively
isn’t simply about
integrating the latest
technology or software,
nor about mining data to identify your
most profitable customers. (And it’s
not even, dare I say it, only about a
marketing or market research project.)
All these are simply enablers. It’s only
when you actually sit back and consider
what you’re trying to manage – that’s to
say, what customers think and feel and
how they’ll act in the future – that you
begin to see the enormity of the task.
Most businesses can target effectively
and design products to meet rational
needs, but unless a business truly
understands what makes its customers
tick, it will struggle to connect
emotionally.
Effective customer relationship
management is a culture, not a process.
That’s why, alongside welcoming
innovation and change, it’s so important
for financial services to have customer-
centric values like fairness, trust and
respect ingrained into the ethos of their
organisation.
It is only when those values become
part of the organisation’s DNA that we
can truly begin to see through customers’
eyes and improve the third dimension
of the relationship: how they intend to
behave.
What’s on the mind of today’s
consumer is pretty clear: 89% are
Special report
>>
Table A: Positive and negative
perceptions of financial institutions
Which of the following words would you
use to describe how financial institutions
make you feel?
NET POSITIVE: 16% NET NEGATIVE: 77%
Satisfied 6%
Valued 4%
Optimistic 4%
Secure 4%
Confident 3%
Appreciated 3%
Relaxed 3%
Reassured 2%
Grateful 2%
Happy 2%
Sceptical 39%
Powerless 39%
Disappointed 38%
Frustrated 33%
Annoyed 33%
Worried 28%
Angry 26%
Disgusted 25%
Resentful 20%
How we feel
Base: HPOL Omnibus May 2012 (1084)
Table B: How consumer attitudes
have changed in the last six years
How much confidence do you have
personally in each of the following? A
great deal, quite a lot, some or very little?
NET%Atleastsomeconfidence
date
80
70
60
50
40
30
20
Feb 06 Nov 08 Apr 09 May 10 Nov 10 May 11 Nov 11 May 12
Bank of England
The Government
High-street banks
Insurance companies
IFAs
82% have confidence
“in their own bank”
Base: All respondents Feb 2006 (2000), Nov 2008 (1962), Apr 2009 (2124),
May 2010 (2036), Nov 2010 (1988), May 2011 (2134), Nov 2011 (1029), May 2012 (1084)
Questions of confidence
Table C: Bank loyalties compared
with other service providers
The emotional strengths
Banks
Credit cards
TV subscription
Mobile networks
Home insurance
Car insurance
Energy
Relationship score %
52
49
48
48
45
43
38

3. August/September 2012www.charteredbanker.com 25
Special reportTRUST: CUSTOMER PERCEPTIONS
concerned about the level of personal
debt in the UK. And, given the state of
the economy, it’s no surprise that 33%
say they find it a constant struggle
to keep up with their bills and other
repayments.
What can we do to support them?
Remember, half of customers do want
a closer relationship with their bank
and what’s clear is that many are in
dire need of a financial review, not just
those experiencing difficulties. The sad
thing is that many probably don’t know
where to turn.
Technology ought to help. While
past technological advances may have
distanced us from our customers, future
improvements should still help to reduce
costs but will hopefully do so in a way
that also helps to engage customers and
strengthen our emotional bond with
them.
After all, that’s the decisive
expectation of customers themselves (see
Table D). Consumers above all say they
want to deal with financial institutions
they can trust (71%), and which deliver
excellent service (64%). They want banks
to provide good value (57%) and have
knowledgeable staff (53%).
Just as revealing is the prominence of
some of the “softer” traits – showing they
care (50%), being ethical and relevant to
them personally. In fact, being ethical
and relevant (both 28%) are considered
more important than being up to date
(25%), having a strong online presence
(21%) and almost as relevant as the
bricks and mortar strength of a large
branch network (32%). Given the current
situation, for customer relationships
to improve, the banks have to take
the initiative, be more personable,
demonstrate they understand their
customers’ holistic needs and have their
best interests at heart.
Banks that fail to create strong
relationships will also leave themselves
open to challenge by new entrants: Virgin
Half of customers do want a closer
relationship with their bank and many are
in dire need of a financial review. The sad thing is
that many probably don’t know where to turn.”
Money is named by 24% of potential
account switchers which puts that
challenger up with Nationwide (27%) and
the Co-operative (24%).
Both M&S (14%) and Tesco (12%)
also perform well – they actually
outperform established players like First
Direct (12%), Yorkshire Bank
(11%) and RBS (8%).
So, all the new entrants will clearly
pose a serious threat when they
finally decide to take the plunge. Their
big challenge is going to be how to
encourage customers to switch. Only 5%
of customers actually did switch their
main banking account in the last 12
months, and only 7% are likely to switch
in the next year. However, if further
service failures emerge similar to the
recent NatWest and RBS examples, these
new players are waiting to capitalise.
>>
Table D: How consumers rate
the “hard” and “soft” skills of
financial institutions.
When selecting a financial services
company, which of the below do you think
are important? Respondents could select up
to 10 of 20 attributes (top 15 shown here).
Trustworthy 71%
Excellent service 64%
Treat customers fairly 60%
Provide good value 57%
Knowledgeable staff 53%
Really care about customers 50%
Act responsibly 49%
Friendly staff 45%
Wide range of products 36%
Large branch network 32%
Ethical 28%
Relevant 28%
Up to date 25%
Leading company 22%
Strong online presence 21%
Base: All Bank account holders HPOL Omnibus May 2012 (1709)
What we want
Table E: The providers to which
consumers say they might take
their accounts.
Nationwide 27
The Co-operative/Smile 24
Virgin Money 24
HSBC 23
NatWest 21
Barclays 21
Santander 20
Lloyds TSB 19
Marks & Spencer 14
HBOS 13
Tesco 12
First Direct 12
Yorkshire Bank 11
Yorkshire Building Society 10
RBS 8
Sainsbury’s 7
John Lewis 7
%
Base: Current account holders who were able to name a company (862).
[1709 claimed to hold a bank account]
Where we’d switch