The FINANCIAL -- Amidst shifting American attitudes about money and wealth – from what defines “the good life” to technology’s growing role in commerce – many retail banks are missing the mark when it comes to creating meaningful connections with customers.
According to a new study by global market research firm GfK and Personetics, a leader in personalization technology for banks, less than one-third (31%) of customers feel their banks know them and their financial needs well. And nearly the same percentage (28%) says that their banks put their own interests ahead of customers’ needs.
While the study found many consumers feeling disconnected from their banks, the good news is banks have some runway to turn the relationships around. The vast majority of customers do not have plans to switch banks any time soon, with only 5% saying they are likely to do so in the next 6 months.
The study segmented US consumers into three personal relationship groups based on whether the customer perceives his or her bank as a:
Necessary Utility (must use to manage day-to-day finances)
Useful Service (helpful but not personal to the customer or his/her situation)
Trusted Partner (offers personalized guidance and support)
The research found that only about one-quarter (27%) of respondents view their banks as trusted partners, while nearly 40% see them simply as necessary utilities – entities they have to do business with to manage finances. About a third of consumers are in the middle, seeing their banks as generally helpful, but not on a direct, personal level.
“At a time when consumers have so many financial options, banks need to do more to shore up their all-important relationships with customers,” said Keith Bossey, Senior Vice President at GfK. “Our findings suggest that this trend is actually weakening engagement and loyalty, in no small measure because customers are not finding their bank helpful when it comes to improving financial well-being.”
Chart 1. Are Banks Looking After Their Customers?
Things change when banks get personal
The study found that perceived value in an increasingly digital banking environment is not just about access, data and ease of use; when consumers see their banks as trusted partners that help them with their day-to-day finances, a variety of other important measures are also enhanced:
Likely promoters of the bank’s brand more than doubles, from 35% to 74%
The proportion of potential defectors to other banks falls from 34% to 7%
Reported emotional states when dealing with one’s bank improve markedly:
“Am looking forward to the future” jumps from 35% to 59%
“Feel gratitude in relation to my bank” jumps from 34% to 62%
“Feel happiness when dealing with my bank” nearly doubles, from 36% to 66%
“Am pleasantly surprised when dealing with my bank” doubles, from 20% to 39%
“Feel a sense of control” goes from 52% to 73%
How might banks drive higher trust and engagement through personalization? See Chart 2 for examples of customer insights that a few innovative banks are beginning to offer customers. According to Personetics, consumer reaction to this type of personalized guidance has been highly positive; but the GfK-Personetics survey results reveal that most banking customers are not receiving such guidance from their banks.
Chart 2: My Bank Provides Theese Services to Me
“The way banks interact and communicate with customers is shifting rapidly, from face-to-face to digital channels, and technology is opening up new opportunities to drive trust and engagement in ways that previously were not possible,” said Personetics CEO David Sosna. “Success in this new digital banking era will be defined by a bank’s ability to deliver meaningful, trusted interactions that help customers manage their financial lives.”