World retail banking_report_2012

World Retail
Banking Report

2012

Contents
3 Preface

4 Key Findings

7 Chapter 1: Unlocking Pathways to Greater Customer Loyalty

8 Customers Express Conflicting Sentiments toward Banks

12 The Need for a Customer Experience Index

21 The Growth of Mobile Banking

2
5 Chapter 2: At a Crossroads, Retail Banks Must Identify
and Prioritize Core Strengths

26 The Ground Beneath Banks Is Shifting

28 Traditional Tactics Are Less Effective in the Current Environment

32 The Way Forward: Extreme Measures for Extreme Times

40 Methodology

41 About Us

Preface
Capgemini and Efma are pleased to present the 2012 World Retail Banking Report.

Retail banks around the world are struggling to maintain their competitiveness in the face of
severe external challenges. Massive debt loads are threatening the global economy, while stringent
regulations put in place as a result of the financial crisis of 2008 are staunching traditional revenue
streams. Customers, still distrustful of the industry, have become increasingly accepting of non-
bank alternatives, and social media is giving them an opportunity to publicly explore them.

More than ever, retail banks must strive to create stronger bonds with their customers. The
2012 World Retail Banking Report addresses this imperative by establishing a new framework for
identifying and measuring success in retail banking. Specifically, our Customer Experience Index
(CEI) offers a mechanism for accurately taking stock of the critical measure of customer loyalty.

The CEI improves upon traditional measures of customer attitudes by incorporating customers’
standards and expectations, alongside their channel preferences, to shed light on whether
customers are having positive experiences in the areas most important to them. Our findings show
that positive customer experience is an extremely predictive indicator of customer loyalty.

We created the CEI by beginning with a large, in-depth investigation of the many voices and
opinions around the world that make up the modern bank’s retail customer base. Our Voice of
the Customer surveys queried more than 18,000 customers in 35 countries across six geographic
regions, making it one of the most detailed studies of its kind.

Findings from the CEI led us to identify three models of emerging retail-banking specialists.
Focusing on one or two of the models—product leader, distributor, and utility/processor—will
give banks an opportunity to stand out in today’s increasingly competitive marketplace. Banks
should prioritize the movement toward a more focused approach as a long-term goal, executed in
sync with efforts to improve customer loyalty.

In this report, we also examine mobile banking’s role in improving the overall customer
experience. While mobile banking adoption is still low, it could become an extremely compelling
channel for large numbers of customers. Gaining a better understanding now of how to shape
positive experiences through mobile will position banks for the future.

As always, it is a pleasure to provide you with our findings. We hope you continue to find value in
the World Retail Banking Report’s insights.

Jean Lassignardie Patrick Desmarès
Global Head of Sales and Marketing Secretary General
Global Financial Services Efma
Capgemini

4 2012 World Retail Banking Report

Key
Findings
C ustomers may be the lifeblood
of retail banking, but to many
institutions they remain somewhat
inscrutable. Our surveys of thousands
of customers across the globe have found that
traditional measures of customer attitudes can
yield confusing results. For example, customers
say they are largely satisfied with their banking
relationships, even though most do not trust their
banks and half are unsure they will stay with them
in the short-term.

Banks recorded a global average of 65% in terms of customer satisfaction,
with North American banks having the highest average levels at 80%.
Despite this outcome, only 50% of customers are confident they will remain
with their primary bank over the next six months. Further, only 15% have
trust and confidence in the banking industry.

The inability of current measures to present a coherent picture of customer
expectations and behaviors is problematic, given the large number of secular
changes currently impacting the industry. Globally, extremely high debt levels,
political turmoil, regulatory change, and evolving customer habits are creating
an environment more difficult than any the industry has experienced in decades.

Key Findings 5

O ur 2012 World Retail Banking Report offers a mechanism for better understanding customers,
as well as a prescription for navigating the current terrain. Our Customer Experience Index
proved to be an effective indicator of customer loyalty, which is an essential element of retaining and
attracting customers. We found an almost linear relationship between positive customer experience
and the likelihood of staying with a bank.

While banks modestly increased their levels of positive customer experience from last year, they
still are not delivering enough positive experiences. Just over 40% of customers are having positive
experiences through most channels today. The mobile emerged as the channel through which the
greatest improvement in positive customer experience is likely to occur in most regions.

As they seek to improve the level of positive customer experience they offer, banks must also respond
to the changes occurring in the environment by developing a long-term strategic plan. Importantly,
the plan should not be to “do everything.” Rather, banks should focus on a specific area of expertise
within the distinct disciplines of product innovation, distribution, and utility/processing. A gradual
transformation, involving investment in core strengths, will help lay the groundwork for the future.

Having a long-term strategy and combining it with greater insight into customer
behaviors and attitudes offers a compelling argument for greater retail
banking success. While banks are making progress in this area,
our report suggests specific areas for further improvement.

7

Chapter 1

Unlocking Pathways to
Greater Customer Loyalty

ƒƒLong-standing measures point to contradictory customer feelings toward banks.
Customers around the world continue to have low trust and uncertain loyalty toward banks, yet
overall satisfaction remains high in most regions.
ƒƒGlobally, positive customer experience increased modestly from 35.8% in 2011 to 42.7%
in 2012. Canada led all countries with the highest levels of positive customer experience, defined
as satisfaction along the dimensions most important to customers. Other regional leaders were
Australia, Norway, Turkey, South Africa, and Argentina.
ƒƒPositive customer experiences generate loyalty, but few banks consistently deliver them.
Less than 50% of customers are having positive experiences through most channels today.
Banks need to work harder to ‘wow’ customers as a way to strengthen relationships, as well as to
improve loyalty and profitability.
ƒƒThe mobile channel had the highest increases in positive customer experience in most
regions, but the branch and internet remain the two most important channels. While
mobile banking is still nascent, uptake could accelerate more quickly than internet banking
adoption, despite concerns about security, consistency, and ease of usability.


Customers Express Conflicting Sentiments
toward Banks
ƒƒ Despite low levels of trust, confidence, and loyalty, is also the reason that many unbanked customers have
customer satisfaction with banks remains high in not put their money in a bank in the first place. The
most regions. lower the trust levels in banks, the wider the opportunity
ƒƒ Satisfaction levels have little impact on loyalty. Despite for newer entrants, including non-banks, to attract
overall high satisfaction, 40% of customers are not sure disenfranchised customers.
they will stay with their primary bank, and 9% are
likely to change in the next six months. Despite the importance of trust, the industry has
struggled, especially in recent years, to provide it. Trust
ƒƒ Canada’s banks led the world in customer satisfaction
in the banking industry has been especially tenuous since
at 82%, followed closely by those in Switzerland
the start of the global financial crisis. Twice as many
(79%), the United States (78%), India (78%), and the
customers around the globe (31%) say they have little or
Philippines (78%).
no trust in the banking system, compared to the 15.3%
ƒƒ Eight markets, including six in Europe, experienced who say they do (see Figure 1). The highest rates of
double-digit improvements in customer experience. distrust exist in the Middle East and Africa (50%), Asia-
Pacific (44%), and Latin America (38%).
Despite improvements, trust levels
are still low Compared to last year, some signs of improvement
Trust is a fundamental element of the banking system. emerged. Banks in North America experienced a 7%
Without it, consumers would have little reason to deposit increase in trust and confidence levels compared to 2011,
their income into current accounts or put their retirement while those in Western Europe experienced an increase
funds into long-term savings accounts. Low trust levels of 3%. These improvements are heartening, given the
create a less efficient system as customers pull their funds multitude of economic, regulatory, and competitive
out of banks in search for better options. A lack of trust challenges facing banks in the U.S. and euro zone.

Figure 1 Level of Agreement That Banking Customers Have Trust and Confidence
FIGURE 1 in the Banking Industry (%), 2011–2012
Level of Agreement That Banking Customers Have Trust and Conﬁdence in the Banking Industry (%), 2011–2012

Percentage Point Change Global Average Global Average Percentage Point Change
2011–12 (31%) (15%) 2011–12

-1 18% 23% 3
Western Europe
19% 20%

21% 20%
-8 North America 7
29% 13%

30% 13%
6 Central Europe –
24% 13%

38% 13%
-4 Latin America 6
42% 7%

50% 8%
NA Middle East & Africa NA
NA NA

44% 6%
10 Asia-Pacific -3
34% 9%

Disagree and Strongly Disagree Agree and Strongly Agree

2012 2012
2011 2011

Note: Total may not add to 100% as the percentage of respondents with answers corresponding to ‘Somewhat Disagree’, ‘Neutral’, and
‘Somewhat Agree’ have not been shown
Source: 2012 Retail Banking Voice of the Customer Survey, Capgemini, 2011, 2012

chapter 1 9

Customers do not feel strong loyalty Also, as customers increasingly use the internet to
In addition to anemic trust and confidence, banks are discover information about competitive financial
inspiring fairly low levels of customer loyalty, a critical offerings, loyalty may emerge as a large factor keeping
element of retail banking. Loyal customers not only buy some from switching. A significant regulatory shift in
more products over longer periods of time, they become some markets will even make it easier for customers to
advocates of a firm and inspire other people to buy its switch from one bank to another via a shared account
products. Especially in times of stress, as when the global database and account portability between banks (however
financial crisis and the European debt crisis caused the massive inertia may still mean this is not a watershed
banks in the U.S. and Europe to experience a surge in moment, more of an erosion). In such an environment,
withdrawals and a drop in loan applications, institutions customer loyalty would be essential not only to counter
with the most loyal customers benefit by having a reliable the ease of switching, but to keep retail banking from
base of individuals to supply both deposits and a demand becoming even more of a commodity than it already is.
for loans.
Despite the importance of having a loyal customer base,
Customer loyalty will become more important as non- only 51% of customers globally are confident they will
bank competitors enter the market and increase the array remain with their primary bank over the next six months.
of available financial transaction options for consumers. A large group of customers do not have strong feelings

Figure 2 Customers’ Likelihood to Change Their Primary Bank in the Next Six Months, by Country (%), 2012
FIGURE 2 Customers’ Likelihood to Change Their Primary Bank in the Next Six Months, by Country (%), 2012

Global Average Global Average Total Unsure or
(40%) (9%) Likely to Leave (%)
China 70% 12% 82%
Taiwan 76% 4% 80%
Vietnam 54% 15% 69%
Saudi Arabia 52% 15% 67%
UAE 44% 20% 64%
Germany 29% 33% 62%
India 47% 13% 60%
Hong Kong 56% 4% 60%
Austria 25% 34% 59%
Spain 45% 12% 57%
Mexico 45% 11% 56%
Brazil 48% 7% 55%
Japan 52% 2% 54%
Argentina 43% 10% 53%
Singapore 47% 6% 53%
Portugal 47% 4% 51%
Turkey 43% 8% 51%
Czech Republic 43% 7% 50%
Italy 45% 5% 50%
Poland 40% 7% 47%
Switzerland 24% 22% 46%
Sweden 38% 7% 45%
Philippines 41% 3% 44%
Russia 37% 6% 43%
UK 34% 6% 40%
Belgium 33% 7% 40%
Norway 30% 9% 39%
US 31% 7% 38%
South Africa 29% 8% 37%
Canada 31% 5% 36%
Australia 28% 5% 33%
Finland 30% 3% 33%
Denmark 27% 6% 33%
France 26% 5% 31%
Netherlands 26% 3% 29%

% Unsure % Very Likely and Likely

Source: 2012 Retail Banking Voice of the Customer Survey, Capgemini, 2012


about their bank. These are the 40% of customers who Banks in Asia-Pacific were least successful in satisfying
are unsure if they will stay with their bank. Another their customers, with their average of 53% putting them
9% of customers is likely to change banks in the next well below the global average. Asian-Pacific banks in
six months (see Figure 2). The customers most likely to several advanced Asian markets do not appear to have
switch banks are in Austria (34%), Germany (33%), and kept up with the high expectations and demands of
Switzerland (22%). the sophisticated clientele in their regions. Of all the
countries worldwide, Hong Kong and Japan scored the
Despite low loyalty, satisfaction levels lowest, with only about one-quarter of their banking
remain healthy customers expressing satisfaction.
Banks have long used customer satisfaction measures
to gain greater insight into how their products and Canada emerged as the country with the most customers
service levels meet or surpass customer expectations. expressing satisfaction, at 82%. Canada achieved this
Especially as the market has become more competitive, satisfaction level by increasing its satisfaction from last
banks have attached a high level of importance, as well year by 14%. It surpassed the U.S., last year’s leader,
as substantial internal resources, toward improving likely because of its solid performance throughout the
customer satisfaction. These efforts appear to be paying global financial crisis, as well as increased investment
off to some extent. in customer-focused technology. A quartet of countries
followed in the 78% range: Switzerland at 79%; the U.S.
Despite low levels of trust and loyalty, banks fared well at 78%; India at 78%, and the Philippines at 78%.
in terms of satisfaction, recording a global average of
65%. Banks in North America had the most success Russia emerged as the satisfaction leader of Central
in customer satisfaction, at 80% (see Figure 3). This Europe with 76% of its customers satisfied. This outcome
outcome is understandable in light of the investments represented a percentage-point increase of 22.6% from
in customer-focused technology North American banks 2011 and likely resulted from major service improvements
have been making for some time. North American made by state-owned Russian banks, which control a
banks also have had more success in identifying what is large part of the market. Mexico was the leader of Latin
important to their customers compared to banks in some America at 73%, and South Africa the leader of the
other regions, and some have even started partnering Middle Eastern and African nations at 73%.
with social media firms to better engage their customers.

Figure 3 Customer Satisfaction with Primary Bank (%) by Region, 2012
FIGURE 3 Customer Satisfaction with Primary Bank (%) by Region, 2012

Global Average Global Average
(4%) (65%)

2% North America 80%

3% Central Europe 71%

5% Latin America 69%

5% Middle East & Africa 67%

5% Western Europe 66%

2% Asia-Pacific 53%

Dissatisfied + Very Dissatisfied Satisfied + Very Satisfied

Note: Total may not add to 100% as the percentage of respondents with answers corresponding to ‘Somewhat Dissatisfied’, ‘Neutral’, and
‘Somewhat Satisfied’ have not been shown

chapter 1 11

Several countries experienced notable increases in loyalty. For the second year in a row, quality of service
satisfaction levels between 2011 and 2012. Six of the emerged as the leading reason customers leave their
eight countries that saw the highest increases were banks. Globally, more than half of customers (53%) said
European, including the Czech Republic, which had the they would leave their banks because of the quality of
highest percentage point increase (24%), putting it at a service they received (see Figure 4). Close behind, at
73% satisfaction level. India followed with an increase of number four, was ease of use, cited by 49% of customers.
23%, putting it at 78%, and Russia had the third-largest These findings indicate that banks able to offer high-
increase (23%), giving it 76% satisfaction. quality, easily understood, and convenient services have
an opportunity to differentiate themselves in the market.
The European debt crisis appeared to be driving some of
the results in the region. The relatively healthy nature of The second and third reasons customers leave their
the Czech Republic’s banks throughout the crisis likely banks are price-related, including fees, cited by 50% of
aided the large increase in satisfaction they experienced. customers, and interest rates, cited by 49%. Factors that
Similarly, the crisis seemed to weigh on banks in Spain, are less important to the decision to leave include reward
which at 50% had the lowest satisfaction level of the and loyalty programs at 28%, and a bank’s brand image
European banks. or reputation, at 29%. Emerging relatively low on the
list was a desire for personal relationships, cited by 34%
Customers want high-quality service of customers.
By identifying the factors that cause customers to attrite,
banks can begin to make changes aimed at moving
customers toward greater satisfaction, and ultimately,

Factors That AffectAffectCustomers Leave a Banka(%), 2012 2011-12
Figure 4
FIGURE 4 Factors That Why Why Customers Leave Bank (%),

53%
Quality of Service 55%
50%
Fees 50%
49%
Interest Rates 49%
49%
Ease of Use 51%
44%
Quality of Advice 45%
42%
Accessibility / Convenience 45%
40%
ATM Locations 39%
37%
Branch / Bank Locations 36%
37%
Product Availability 36%
34%
Personal Relationship 35%
29%
Brand Image / Reputation 27%
28%
Rewards / Loyalty Programs 24%
22%
Recommendations 19%

% Responses

2012
2011



The Need for a Customer Experience Index
ƒƒ Customer experience is an effective predictor of loyalty. These findings contribute to an unclear picture of the
Those enjoying a more positive experience are unlikely expectations and motivations of retail-banking customers.
to change banks. They indicate a need for greater precision in measuring
ƒƒ Customers who have been with their banks for at least retail-bank customer behaviors and attitudes, as a starting
five years are at much lower risk of leaving, no matter point for better serving them. In 2011, we introduced
how positive or negative their customer experience. the Capgemini Customer Experience Index (CEI),
which measures customers’ banking experiences across
ƒƒ Banks can grow profitable relationships by “wowing”
80 different touch points, as a means of gaining greater
customers through positive experiences. Similarly, they
insight into customer perceptions of their retail banking.
risk losing customers through negative experiences.
ƒƒ The ability to carry out day-to-day banking The CEI addresses the disconnect between measures
conveniently and efficiently is more important to of customer confidence, loyalty, and satisfaction by
customers than having specialized services. identifying the factors that are most important to
ƒƒ Globally, positive customer experience levels increased customers, and then measuring satisfaction specifically
modestly from 35.8% to 42.7%. At 56.2%, Canada had along those dimensions (see Figure 5). The CEI supports
the highest levels of positive customer experience. in-depth views of customer experience along three
ƒƒ The biggest improvements in customer experience
came from Western European countries, including
Norway with an increase of 12.3% and Netherlands Figure 5 Dimensions of Capgemini’s Customer
Experience Index (CEI)
with an increase of 10.9%. Central European countries
followed, including Russia with an increase of 9.8%,
Poland with one of 7.9%, and Turkey with one of 6.9%.
■ Current,
Depository ■ Information Gathering
Accounts & Payments ■ Transacting
Current measures offer a mixed picture
Cu

■ Credit Cards ■ Problem Resolution
sto

On the surface, the findings of our surveys of customer ■ Loans
ts

■ Account Status & History
me
uc

trust, loyalty, and satisfaction appear to raise more
rL

■ Mortgages
od

ife

CEI
Pr

questions than answers. One might expect, for example,
cy
cle

that extremely low trust levels would lead to less satisfied
Channels
customers. Yet the average global satisfaction level of
65% is much higher than the average global trust and ■ Branch ■ Phone

confidence level of 15%. One might also expect that ■ Internet ■ ATM

satisfied customers would be more loyal, yet the average ■ Mobile

global loyalty level of 51% is much lower than the global
satisfaction level. Source: Capgemini analysis, 2012

chapter 1 13

dimensions: products (including current, savings and samples of at least 500 retail-banking customers in every
payments accounts; credit cards; loans; and mortgages); country covered. The resulting data can be segmented by
channels (including branch; internet; mobile device; a wide range of customer variables, including the region,
phone; and ATM), and lifecycle stage (including country, or size of the city customers live in, as well as
information gathering; transacting; problem resolution; their age, gender, investable assets, employment status,
and account status and history). education, and other factors.

The CEI is built upon Voice of the Customer data from
over 18,000 banking customers in 35 countries across six
geographic regions (see Figure 6). Online surveys polled

Figure 6 Geographic Scope of Customer Experience Index, 2012

CENTRAL EUROPE
MIDDLE EAST & AFRICA
■ Czech Republic
■ Saudi Arabia
■ Poland
■ South Africa
■ Russia
■ UAE
■ Turkey
NORTH AMERICA
■ Canada
■ United States

WESTERN EUROPE ASIA-PAcific
■ Australia
■ Austria ■ Norway
lATIN AMERICA ■ China
■ Belgium ■ Portugal
■ Hong Kong
■ Argentina ■ Denmark ■ Spain
■ India
■ Brazil ■ Finland ■ Sweden
■ Japan
■ Mexico ■ France ■ Switzerland
■ Philippines
■ Germany ■ UK
■ Singapore
■ Italy
■ Taiwan
■ Netherlands
■ Vietnam

WRBR 2012 New Countries WRBR 2011, 2012 Countries

Note: Austria was considered to be part of Western Europe for analysis purposes in 2012
Country boundaries on diagram are approximate and representative only
Source: Capgemini analysis, 2012


Figure 7 Customer Experience Index by Country, 2011–2012

2012 Global Average 2011 Global Average Point Change
(72.1) (72.2) 2011–12
79.3
Canada 1.6
77.7
79.0
US 1.0
78.0
77.0
India 0.0
77.0
76.5
Australia 0.3
76.2
76.2
Norway 2.4
73.9
75.2
UK 0.8
74.5
74.7
Czech Republic 1.4
73.3
74.9
South Africa NA
NA
74.6
Germany 0.4
74.2
74.6
Turkey 1.5
73.1
74.6
Philippines NA
NA

73.7
Switzerland -2.3
76.0
73.4
Poland 1.3
72.2
72.7
Argentina NA
NA
72.3
Sweden -1.2
73.5
72.2
Mexico 0.7
71.5
71.8
Russia 2.7
69.1
71.9
Austria -3.5
75.4
71.2
Portugal NA
NA

71.2
Denmark NA
NA
70.2
Vietnam NA
NA
70.1
Belgium -1.7
71.8
70.0
Finland NA
NA

69.7
UAE NA
NA
69.5
Netherlands 1.5
68.0
69.5
Singapore -1.8
71.3
69.5
France 0.2
69.2
69.4
Brazil 0.3
69.1
68.8
Italy 0.2
68.6
68.5
Spain -2.0
70.5
67.6
China -1.1
68.7
66.8
Taiwan NA
NA
65.6
Saudi Arabia NA
NA
64.5
Hong Kong -0.9
65.4
63.4
Japan 1.3
62.2

0 10 20 30 40 50 60 70 80 90 100
CEI (On a Scale of 100)

2012
2011
Regional CEI Leader

Note: 10 markets were added to the Customer Experience Index only in 2012, and hence there is no 2011 data for these

chapter 1 15

North American markets continue to Banks are not “wowing” customers
lead the CEI Banks have been much less successful when it comes to
The overall CEI, which examines customer experience delivering positive satisfaction along the dimensions most
across all products, channels, and lifecycle stages, shows important to customers. These types of experiences are
banks doing an adequate job of delivering a positive crucial to truly delighting customers and winning their
customer experience. As in 2011, the vast majority of loyalty. Viewed from this more in-depth perspective,
countries are close to the global average CEI score of banks achieved a global positive experience average of
72.1, with Canada and the U.S. still residing in the top only 42.7%. This outcome represented a modest increase
spots at around 79 (see Figure 7). from the global average of 35.8% recorded in 2011.

India emerged as the regional leader for the Asia-Pacific Banks in North America were likely to offer the most
banks, scoring just behind the two North American positive customer experience levels, with Canada and the
leaders with a 77. Norway was the Western European U.S. achieving 56.2% and 55.7% respectively, followed
leader with a 76.2 and Czech Republic was the Eastern by Australia with 52.4%, Norway with 51.4%, and India
European leader with a 74.7. The Latin American with 49.8% (see Figure 8). The lowest positive customer
countries surfaced lower on the rankings, with Argentina experience scores came out of Asia-Pacific, with Japan
the leader in that region with a 72.7. and Hong Kong scoring 17.1% and 12.9%, respectively.

Figure 8
FIGURE 8 Customerswith a Positive/ Negative Experience by Country (%), 2012
Customers with a Positive/Negative Experience by Country (%), 2012

Global Average Global Average
(2.9%) (42.7%)
0.8% Canada 56.2%
1.6% US 55.7%
2.4% Australia 52.4%
3.8% Norway 51.4%
1.4% India 49.8%
3.3% Turkey 47.6%
2.8% South Africa 45.8%
2.1% UK 45.3%
2.1% Germany 45.2%
3.1% Switzerland 44.3%
4.5% Argentina 43.1%
2.0% Czech Republic 42.7%
1.9% Philippines 42.3%
2.9% Poland 41.2%
3.8% Denmark 40.5%
5.8% Portugal 39.0%
4.0% Austria 36.9%
4.9% UAE 36.8%
4.5% Netherlands 35.9%
5.2% Finland 35.8%
3.1% Mexico 35.7%
3.3% Russia 35.6%
8.5% Spain 34.6%
6.5% Vietnam 34.5%
7.0% France 33.8%
4.9% Belgium 33.8%
1.7% Sweden 31.2%
5.7% Brazil 30.1%
3.0% Singapore 28.2%
10.1% Saudi Arabia 26.6%
5.4% Italy 25.3%
7.8% China 25.2%
3.6% Taiwan 23.1%
6.5% Japan 17.1%
4.3% Hong Kong 12.9%

Negative Experience Positive Experience Regional Positive Experience Leader

Note: Total may not add up to 100% as the percentage of respondents with neutral answers has not been shown


Rounding out the bottom four countries were China More customers are satisfied, than are
at 25.2% and Taiwan at 23.1%. The poor performance having positive experiences
of Japan and Hong Kong may be due to the high As in 2011, general satisfaction levels are much higher
expectations that consumers in these advanced economies than positive customer experience rankings. In every
have of their banks. These expectations have not been country analyzed, there are significantly more satisfied
fulfilled in recent years by any novel or significant customers than there are customers having a positive
innovations in service delivery. experience (see Figure 9). In Italy, for example, banks are
approaching the global average of 65% in satisfaction, but
The five countries with the biggest gains in positive have a positive customer experience of only about 25%.
customer experience compared to 2011 are all European.
Banks in the two biggest gainer countries—Norway, with These findings indicate that banks should proceed with
an increase of 12.3% and Netherlands, with an increase caution when it comes to measuring customer satisfaction.
of 10.9%—have been investing in new channels and Clearly, high customer satisfaction levels are easier to
customer-focused technologies. Norway’s largest bank, achieve than high levels of positive customer experience.
DNB, introduced a new web platform and online bank, Yet it is only through the ability to “wow” customers
as well as 24/7 customer service in 2011. In Netherlands, through positive experiences that banks can expect to
a critical mass of customers adopted mobile banking in generate high levels of loyalty.
2011. In addition, almost all large Dutch banks are now
providing personal financial management tools to help Banks in a handful of countries significantly improved
customers optimize their finances. from 2011 their levels of both general satisfaction and
positive customer experience. These include banks from
The other countries that increased their positive customer Canada, the U.S., and Australia, as well as the European
experience ratings were all in Central Europe and nations of Norway, Germany, and Turkey (see Figure
included Russia, by 9.8%; Poland, by 7.9%; and Turkey, 10). Banks in other countries, including India, Italy,
by 6.9%. As in the case of satisfaction, Russian customers and Switzerland, increased overall satisfaction, but had
may be responding to general improvements in services virtually no impact on positive customer experience (see
being offered by state-owned banks. In addition, none of Figure 11). Banks in a few Asia-Pacific markets were
the five European gainers have been severely affected by
the European debt crisis.

Figure 9 Positive Customer Satisfactiona vs. Positive Customer Experienceb, by Country, 2012
FIGURE 9 Positive Customer Satisfactiona vs. Positive Customer Experienceb, by Country, 2011-2012

90%
Percent of Banking Customers with a Positive Satisfaction

South Africa Canada
India
Switzerland US
75% Czech R. Australia
Average Positive France Norway
Satisfaction (64.5%) Italy Sweden Belgium UK
Argentina
60% Portugal Netherlands
China Singapore
Saudi Arabia

45% Spain

Positive Satisfaction = Positive Experience
Taiwan

30% Hong Kong
Japan

15%

Average Positive
Customer Experience (42.7%) Regional CEI Leader
0%
0% 15% 30% 45% 60% 75% 90%
Percent of Banking Customers with a Positive Customer Experience

a) Positive Customer Satisfaction has been defined as positive or very positive; b) Positive Experience has been defined as positive or very positive

chapter 1 17

Figure 10 Positive Customer Satisfactiona vs. Positive Customer Experienceb for Select Countries with
FIGURE 10 Positive Customer Satisfactiona vs. Positive Customer Experienceb for Select Countries with
Improved Customer Satisfaction and Customer Experience by Country, 2011-2012
Improved Customer Satisfaction and Customer Experience by Country, 2011-2012

90%

75% Average Positive US
Satisfaction Australia Canada
Norway Germany
60%
Turkey

45%

30%

15%

Average Positive
Customer Experience
0%
0% 15% 30% 45% 60% 75% 90%

2011 2012


FIGURE 11 Positive Customer Satisfactiona vs. Positive Customer Experienceb for Select Countries
Improved Customer Satisfaction, by Country, 2011-2012
with Improved Customer Satisfaction, by Country, 2011-2012

90%

75% Average Positive
Switzerland
Satisfaction

UK
60%
Italy India

45%

30%

15%

Average Positive
Customer Experience
0%
0% 15% 30% 45% 60% 75% 90%

2011 2012



FIGURE 12 Positive Customer Satisfactiona vs. Positive Customer Experienceb for Select Countries
Decreased Customer Experience, by Country, 2011-2012
with Decreased Customer Experience, by Country, 2011-2012

90%

75% Average Positive
Satisfaction

Sweden
60% Singapore

China
45%

30%
Hong Kong

15%

Average Positive
Customer Experience
0%
0% 15% 30% 45% 60% 75% 90%

2011 2012


among the small group that experienced declines in years after becoming a customer. For customers who
positive customer experience along with only small or remain with their bank through the first five years, the
negligible increases in satisfaction (see Figure 12). probability of staying with the bank for a very long time
increases exponentially.
Positive customer experience
leads to loyalty One aspect of customer perception that appears to
The findings from our surveys of customer trust and have little impact on customer experience is trust and
satisfaction showed that these factors are not effective confidence. We found that customers could have high
indicators of the crucial measure of customer loyalty. positive experience without having much trust in their
A much better indicator of customer loyalty is positive banks. In Australia, for example, more than 50% of
customer experience. In fact, the likelihood of customers customers report a positive experience, but only about
to change their primary bank within the next six months 20% of those customers say they trust their banks.
increased almost linearly as the customer experience got
poorer (see Figure 13). Accordingly, as the experience gets Positive experience lacking in
more positive, the customer is less likely to change banks. important channels
The most loyal customers are those who are enjoying the Channel performance is a key element of the customer
most positive customer experiences. experience. That’s because delivery channels are
the prisms through which customers gauge their
These findings point to a prescription for minimizing experiences. The branch and the internet remained the
customer attrition. Banks should ensure customers most important channels, with roughly 70% to 90% of
are having positive experiences by improving their customers in all regions citing them as so. Yet banks were
satisfaction in the areas that matter most to them. This, not effective in delivering an experience to match the
in turn, should lead to increased customer loyalty, which level of importance customers placed on those channels.
could also translate to more cross-selling and result in a The percent of customers reporting a positive experience
more profitable customer relationship. through these channels ranged between only about 40%
and 60% (see Figure 14).
The greatest effort into improving the customer
experience should occur within the first five years of a Customers were less likely to view the phone and
customer’s relationship. This will help ensure that over a mobile channels as important, with only 40% to 60%
period of time, the bank is able to deepen the customer of customers in all regions indicating as much. The
relationship and make it more profitable by capturing exception is North American customers, of which
a larger share of the customer’s wallet. That’s because nearly 75% ranked the phone as important. Along
people are most likely to leave their bank one to four

chapter 1 19

Figure 13
FIGURE 13 Customer Experience Index vs. Likelihood to to Change Primary Bank, Global, 2012
Customer Experience Index vs. Likelihood Change Primary Bank, Global, 2012

100

The most loyal customers
were found to be the ones
90 who were enjoying the most
positive customer experience
The likelihood of customers Some customers who are
Customer Experience Index

to change their primary bank very likely to change their
within the next six months banks in the short-term may
79.5 was found to increase almost do so regardless of the
80 linearly as the customer experience, because they
experience got poorer may be strongly influenced
74.4
by other factors

70
68.9 69.6

65.9
64.5 64.3
60

0
1 2 3 4 5 6 7
Very Unlikely Not Sure Very Likely
Likelihood to Change Primary Bank


Figure 14 Positive Experience of Channels vs. Channel Importance by Region, 2012
FIGURE 14 Positive Experience of Channels vs. Channel Importance by Region, 2012

100%
Percent of Banking Customers with a Positive Experience

80%

60%

40%

20%

0%
0% 20% 40% 60% 80% 100%
Percent of Banking Customers Who View Channel As Important

Branch Internet Mobile Phone

North America (NA) Western Europe (WE) Central Europe (CE) Asia-Pacific (AP)



with identifying the phone and mobile channels as less A common finding of customer attitudes toward the
important, customers also experienced considerably lower different channels is that customers are more interested
levels of positive experience through these channels. in accomplishing a wide range of everyday banking
activities, than in receiving specialized services through
Given the importance of the branch and internet, banks those channels. In effect, banks must improve their
could benefit by improving the customer experience ability to conveniently fulfill fundamental banking needs
through these channels. Our Voice of the Customer through all channels, before they make investments in
survey found that, in terms of branch banking, customers more advanced, personalized services.
are most interested in having a knowledgeable staff
(67%) and low waiting times (65%). Not as important is The mobile channel has high potential for improving
personalized branch service (61%) and the ability to open overall levels of positive customer experience. In every
an account in less than 30 minutes (58%). region except North America and Asia-Pacific, mobile
had the highest increases in positive customer experience
In terms of internet banking, customers are looking for compared to 2011. Positive experience in the mobile
more complete services. They most highly value the channel increased by nine percentage points in Central
ability to carry out all types of transactions (70%), as Europe, four percentage points in Western Europe, and
well as have a holistic view of account information (68%). five percentage points in Latin America (see Figure
They also want to be able to find answers to all their 15). While positive experience in mobile increased by
queries (64%). Less important is having personalized four percentage points in Asia-Pacific, positive branch
service (58%). experiences in this region increased by slightly more (five
percentage points).
In ATM banking, basic account management emerged
as the most important attribute. Nearly 47% of customers The only region where positive mobile experiences
cited as important the ability to manage their accounts by did not increase was in North America. Here, positive
being able to make payments and transfers. The ability experience levels decreased by two percentage points.
to scan and deposit checks through the ATM is valuable North American banks may be having difficulty meeting
for 44% of customers, and finding answers to all banking the high expectation levels of North American customers
questions is important for 42% of customers. Less who are already accustomed to using mobile phones for a
important is having a customized interface (39%). multitude of purposes.

Figure 15 Customers with a Positive Experience by Channel and Region (%), 2011–2012

Branch Internet Phone Mobile

62% 63% 48% 37%
North
3% 3% -1% -2%
America
59% 60% 49% 39%

49% 56% 34% 35%
Central
7% 4% 6% 9%
Europe
42% 52% 28% 26%

43% 49% 31% 28%
Western
1% 2% 2% 4%
Europe
42% 47% 29% 24%

44% 46% 32% 34%
Middle East
NA NA NA NA
& Africa
NA NA NA NA

46% 45% 31% 31%
Latin
2% 4% 1% 5%
America
44% 41% 30% 26%

42% 42% 30% 30%
Asia
5% 3% 3% 4%
Pacific
37% 39% 27% 26%

2012 % Point Change 2011-2012
2011


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