It’s certainly counter-intuitive, given the 2008-2009 financial crisis, but U.S. banks rank relatively high on a global scale when it comes to positive customer experiences.
That was one conclusion of the 2011 World Retail Banking Report conducted by the Capgemini consulting firm, UniCredit and Efma (European Financial Management Association), which was based on a survey of nearly 14,000 bank customers across 25 countries and 50 in-depth interviews with senior banking executives worldwide. The eighth iteration of this annual survey was notable for its introduction of the Capgemini Retail Banking Customer Experience Index (CEI), which gauges how customers perceive the quality of their interactions with their banks across three dimensions: products, channels and transactions.
Why did U.S. banks rank so highly in this study? As we discovered in the following interview with Capgemini Financial Services’ Jean Lassignardie, global head of sales and marketing, and Bill Sullivan, global head of market intelligence, U.S. banks score well compared to the global average, but that perhaps says as much about weaknesses in the other countries as it does about strengths in the U.S. After all, over half of U.S. customers do not report a positive or very positive customer experience – for most of those, the experience is mediocre.
The bottom line is that U.S. banks can still differentiate among themselves by improving their customer experience ranking in key delivery channels, such as branch, online or mobile, say the Capgemini consultants.
Q: How does the customer experience for U.S. banks rank compared to banks in other parts of the world?
Lassignardie: To answer that, I think it’s first useful to explain why the customer experience deserves specific attention and why we designed an index around it. In any industry, you have several areas of differentiation and traditionally in retail banking there have been two: innovation in products and services and then price.
The opportunity for banks to really differentiate themselves in terms of product innovation and price has become more restricted because of increased commoditization of the industry and heavier regulation. Only in terms of the customer’s interaction with the bank is there room to differentiate. But customer satisfaction overall doesn’t provide a clear enough identification of the areas where a bank can differentiate, so we move to the customer experience and Capgemini’s CEI to identify those areas that do the most for the client. We need to measure customer satisfaction across products, channels, and interaction points – the “moment of truth” for the customer.
Sullivan: If you ask customers in the U.S. about their general satisfaction with their primary banks, the U.S. actually ranked the highest of the 25 countries that we measured, with 73% of customers saying they were either satisfied or very satisfied. On a scale of one to seven, 73% ranked it as a six or a seven, compared to the global average of only 59%. The U.S. result is a pretty high rank, especially considering the financial crisis of a couple of years ago.
If we look at our CEI, instead of just taking a general satisfaction score, the U.S. again ranks highest of countries studied, 78.0% compared to a global average of 72.2%. But again, this is looking at an overall average. I think the key message is: there are very few customers who are having very bad experiences, but there are a lot in that middle range. If we start to look at U.S. customers in terms of what percentage of them have had a positive or very positive experience in the factors that matter most, that’s when we start to see some of the regional differences.
While 73% of U.S. banking customers had a positive satisfaction overall, only 53% had a positive average customer experience on the elements that were most important to them. So, I think that’s where we start to find some interesting results this year. At that point, the countries start to vary a lot more when we look at customer experience. The U.S. was at 53%; the overall global average was only 35.8%.
And you get some interesting results when you look at some of the individual leaders around the globe. India finished, surprisingly, the third highest out of all the countries in terms of customer experience. The reason is that customer satisfaction and experience have multiple factors. One factor is how well banks are able to meet expectations, but just as important is being able to understand the actual level of expectations that the customers have.
I’ve been living in India the past two years, for example, and know that the banking system there isn’t as advanced and sophisticated in terms of customer experience, compared to the U.S. But given the fact that, three or four years ago, the level of sophistication was very basic, they’ve made a lot of progress in the last couple of years so they’ve been able to deliver an improved customer experience.
Q: Are there any areas where U.S. banks need to improve?
Sullivan: There are no real serious weak points for banks in North America or specifically in the U.S. Across the board, when you look at the branch, the Internet and mobile, the U.S. is really quite ahead of the other countries.
If we look at some of the specific channels, and some of the nuances within those channels, the branch came out to be the highest rated in terms of customer experience. A close second was the Internet, also very strong.
Interestingly, the older generation typically reported higher levels of customer experience than some of the younger generation, and I think that may speak to the expectations the younger generation has in terms of wanting quicker access to everything. They have higher expectations.
Relatively speaking, mobile banking scored on the lower side for the U.S., which still has relatively high levels of satisfaction compared to other countries, but much lower than, say, with the branch or Internet channels.
Q: As you may know, the future of the branch is a hot issue with bankers in the U.S. What did your study turn up on that topic on a global basis?
Lassignardie: As you know, the death of the branch has been announced regularly for decades. Yet the branch remains vital. We have identified six different configurations of the role of the branch within the different channels. There is absolutely no question that the branch has a critical role to play globally in terms of the relationship between customers and their banks.
Sullivan: We’re expecting the role of the branch to shift a little bit farther away from financial transactions and more toward advisory services, although we’re not expecting that to happen overnight.
Q: So the branch remains, but what emerging channels do consumers in your study see as important?
Sullivan: In terms of what’s important right now, the branch and online banking are going to continue to play significant roles. I think it will be a long time coming before mobile or other options end up replacing those two channels. But mobile can be used as an enhancement so you can shift from doing a transaction in the branch to going mobile or using your mobile to speak to someone at a branch. It’s advancing to the point where you can have a multi-channel integrated approach.
The reality is, there are multiple approaches and different models are evolving. We identify six in the report. They could range from the branch being the core of a multi-channel network to shifting more toward the branch playing an advisory role and having transactions take place in other channels to an entirely virtual relationship at the other extreme.
Whether you’re talking about the U.S. or Europe or Asia Pacific, there really is no one specific model that’s going to evolve. Most firms are probably going to be taking multiple approaches, depending on where they are located and the specific needs of their customer base.
Q: What’s the main takeaway of your study for U.S. bankers?
Lassignardie: The issue is: how can you differentiate yourself from your competitors? U.S. banks have room to improve their customer experience in terms of refined segmentation of their customer base. Overall, nearly 50% of the U.S. customer base is not having a positive customer experience, these are the clients who can still be won over if banks can meet their expectations.
Sullivan: I agree. When we look at the customer experience overall, North America and the U.S. in particular performs well. But only 53% have a positive or very positive experience. Except for 2%, the remainder is not having a negative experience; rather they are having neutral or somewhat positive experiences. There are huge opportunities if you can understand what’s most important to those customers and can identify some specific areas for investment.
Mr. Cline is managing editor of BAI Banking Strategies. He can be reached at email@example.com.
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