Winning through customer experience - ey.com

1 Winning through customer experienceEY Global Consumer Banking Survey 2014 ContentsWelcomeExecutive summaryGlobal insights A promising, active environment The power of trust The experience is what matters Key opportunities for banksSegment insights Getting to know your customer segments Industry and institutional sentiments Opportunities for segment-driven investmentsWhy banks need to act nowConclusionResearch methodologyCountry contacts12620 34404244 WelcomeWhen EY s second global consumer banking survey was published in June 2012, the global ][gfgeq oYk kljm__daf_ lg j][gn]j Yf\ [gfkme]j [gf \]f[] af l`] af\mkljq j]eYaf]\ ]plj]e]dq dgo$ hYjla[mdYjdq af l`gk] [gmflja]k ZY\dq Y^^][l]\ Zq l`] _dgZYd fYf[aYd [jakak Yf\ alk Y^l]jeYl`&Fast forward to this new edition of our survey and the outlook for retail banking appears more hgkalan]& 9dl`gm_` kge] ][gfgea]k kladd kljm__d] lg \]dan]j kmklYafYZd] _jgol`$ l`] _dgZYd ][gfgea[ j][gn]jq Yhh]Yjk lg Z] lYcaf_ `gd\& ;gfkme]j [gf \]f[] af l`] ZYfcaf_ af\mkljq ak gf l`] jak]$ Yk ak ljmkl af af\ana\mYd afklalmlagfk$ Yf\ [mklge]jk Yj] ZjgY\dq kYlak ]\ oal` l`]aj hjaeYjq ZYfcaf_ j]dYlagfk`ahk&However, the primacy of the bank s relationship with its customers is under threat as never Z]^gj]& <]eYf\k Yf\ ]ph][lYlagfk [gflafm] lg ]ngdn]$ g^l]f ^m]d]\ Zq ]ph]ja]f[]k gmlka\] fYf[aYd k]jna[]k$ Yf\ [gfkme]jk Yj] af[j]Ykaf_dq dac]dq lg \]n]dgh j]dYlagfk`ahk oal` emdlahd] hjgna\]jk& =e]j_af_ l][`fgdg_q$ Yf\ l`] af[j]Ykaf_ mk] g^ egZad] \]na[]k ^gj Zgl` ZYfcaf_ Yf\ payments, is making it easier for new entrants to challenge the status quo and exploit areas of \akkYlak^Y[lagf Yf\ mf\]jafn]kle]fl&This year s survey includes responses from more than 32,000 retail banking customers across 43 countries and, although retail banking remains a local business, it is striking how many hYjYdd]dk o] [Yf \jYo Y[jgkk eYjc]lk& Af l`ak ]\alagf g^ l`] kmjn]q$ o] ^g[mk gf l`] ^gddgoaf_ key questions.

2 What is the role of trust in creating customer advocates, and how valuable is trust to the overall banking relationship? Are banks investing in the right aspects of the customer experience ? How well are banks performing on key interactions from the basics of day-to-day transactions, lg j]kgdnaf_ hjgZd]ek Yf\ `]dhaf_ [mklge]jk Y[`a]n] l`]aj fYf[aYd _gYdk7 How similar are customer behaviors across the globe? How well are banks prepared to fend off potential new market entrants?>gj l`] jkl lae]$ o] n] \]n]dgh]\ ]a_`l _dgZYd k]_e]flk lg hgjljYq k`a^laf_ [gfkme]j k]flae]fl$ g^l]f ajj]kh][lan] g^ _]g_jYh`q& O] ogmd\ o]d[ge] l`] ghhgjlmfalq lg e]]l oal` qgm Yf\ hjgna\] [mklgear]\ f\af_k lg \]dan]j Y\\alagfYd afka_`l$ Yf\ o] n] hjgna\]\ Y dakl g^ [gmfljq [gflY[lk Yl l`] ]f\ g^ l`ak j]hgjl& Hd]Yk] nakal mk Yl ooo&]q&[ge'_dgZYd[gfkme]jZYfcaf_kmjn]q ^gj egj] af^gjeYlagf$ af[dm\af_ l`] YZadalq lg Y[[]kk Y\\alagfYd kmjn]q \YlY Yl qgmj [gfn]fa]f[]& Bill Schlich Global Banking & Capital Markets Leader1 Winning through customer experienceExecutive summary ;gf \]f[] af l`] ZYfcaf_ af\mkljq ak gf l`] jak]$ Yf\ ljmkl af [mklge]jk gof fYf[aYd k]jna[]k hjgna\]jk ak `a_`& :ml [mklge]jk Yj] gf l`] egn]$ oal` mfhj][]\]fl]\ Y[[]kk lg [geh]laf_ ZYfck Yf\ lg f]o lqh]k g^ fYf[aYd k]jna[]k hjgna\]jk& :Yfck emkl ]Yjf l`] highest levels of trust in order to j]lYaf [mklge]jk$ oaf egj] Zmkaf]kk Yf\ [j]Yl] _]fmaf] dgqYdlq&The banking industry is poised for growth.

3 Gf \]f[] af l`] ZYfcaf_ af\mkljq ak j]lmjfaf_$ oal` ++ g^ [mklge]jk _Yafaf_ [gf \]f[] af l`] hYkl )* egfl`k Yf\ gfdq )1 dgkaf_ [gf \]f[]$ [gehYj]\ oal` Y ,( \][daf] af gmj dYkl kmjn]q& O`ad] em[` of the improvement may simply be a restoration of [gf \]f[] dgkl af l`] oYc] g^ l`] ?dgZYd >afYf[aYd Crisis, this improved sentiment can only help fYf[aYd afklalmlagfk Yk l`]q ogjc lg kgda\a^q Yf\ ]phYf\ j]dYlagfk`ahk oal` l`]aj [mklge]jk& L`]j] ak ka_fa [Yfl Zmkaf]kk ghhgjlmfalq Ykkg[aYl]\ with customers who are true advocates, those who are very likely to recommend their primary fYf[aYd k]jna[]k hjgna\]j H>KH!& Kh][a [Yddq$ ,, of advocates opened new accounts or services at l`]aj H>KH af l`] hYkl )* egfl`k Yf\ 1 afl]f\ lg [gfkgda\Yl] ]n]jql`af_ Yl l`]aj H>KH af l`] f]pl q]Yj& Kaf[] 0- g^ kmjn]q j]khgf\]flk \] f]\ l`]aj H>KH Yk Y ZYfc$ al ak Yf ghhgjlmf] lae] ^gj ZYfck to increase advocacy and expand their customer j]dYlagfk`ahk&An improved experience is key to realizing that growthCustomers generally trust their primary providers, but the highest level of trust is a clear differentiator in creating advocacy, and customer experience ak Y c]q \jan]j g^ l`Yl d]n]d g^ ljmkl& O`ad] gn]jYdd fYf[aYd klYZadalq oYk l`] lgh j]Ykgf ^gj [mklge]jk [gehd]l] ljmkl af l`]aj H>KH$ l`] k][gf\ egkl cited response was the way I am treated, followed closely by other elements of the experience , such as communications, quality of advice and complaint `Yf\daf_&Moreover, the most common reason customers cited for opening or closing accounts in the past q]Yj oYk l`] ]ph]ja]f[] oal` l`]aj fYf[aYd k]jna[]k hjgna\]jk$ ]\_af_ gml jYl]k'^]]k Yf\ [gfn]fa]f[]

4 Yf\ kmjhYkkaf_ ZjYf[` dg[Ylagfk Yf\ Y[[]kkaZadalq&So the experience drives not only complete trust, and thus advocacy and referrals, but also the amount of business customers are placing with their H>KH& Mf\]jklYf\af_ l`] aehgjlYf[] g^$ Yf\ l`]aj h]j^gjeYf[] gf$ kh][a [ Ykh][lk g^ l`] ]ph]ja]f[] oadd Yddgo fYf[aYd afklalmlagfk lg eYc] lYj_]l]\ afn]kle]flk&2ooo&]q&[ge'_dgZYd[gfkme]jZY fcaf_kmjn]qO`ad] [mklge]jk Yj] egkl dac]dq lg hjYak] l`]aj H>KH ^gj convenience and security, those have quickly become eafaeme j]imaj]e]flk& Em[` g^ l`] ]eh`Ykak oal`af \]n]dgh]\ [gmflja]k `Yk Z]]f gf aehjgnaf_ ljYfkY[lagfk& Dac] 9 LEk af l`] 0(k Yf\$ egj] j][]fldq$ gfdaf] banking, mobile banking was viewed initially as a point g^ \a^^]j]flaYlagf Yegf_ l`gk] fYf[aYd afklalmlagfk g^^]jaf_ al& @go]n]j$ fgo al ak ]ph][l]\$ Ydgf_ oal` l`] YZadalq lg egn] k]Yed]kkdq Y[jgkk [`Yff]dk& L`] fYf[aYd landscape is different in emerging markets, but no less [`Ydd]f_af_& L`] afl]_jYlagf g^ l][`fgdg_q$ ]kh][aYddq egZad]$ `Yk afljg\m[]\ hjgna\]jk lg Yf af mp g^ f]o [mklge]jk k]]caf_ ZYka[ fYf[aYd k]jna[]k&When asked to evaluate 31 experience elements or Z]f] lk kmjn]q j]khgfk]k hgafl]\ lg k`gjl^Yddk af meeting basic expectations, such as transparency of fees and communication, and the continued importance g^ ]^^][lan] hjgZd]e `Yf\daf_& Af Y\\alagf$ l`] j]kmdlk hjgna\]\ afka_`l aflg ghhgjlmfala]k ^gj H>KHk lg differentiate themselves by customizing products and solutions to meet customers needs and helping them Y[`a]n] l`]aj fYf[aYd _gYdk&Key improvement areas for banksTransparency of fees and simplicity of offers and communication.)

5 This is one of the most kgm_`l%Y^l]j Z]f] lk f]]\af_ aehjgn]e]fl& ;mklge]jk oYfl fYf[aYd afklalmlagfk lg Z] [d]Yj]j YZgml o`Yl l`]q g^^]j$ l`] ^]]k l`]q j] [`Yj_af_ Yf\ `go lg Ynga\ hYqaf_ ^]]k&Omni-channel experience . ;mklge]jk Yj] kYlak ]\ oal` l`] [gfn]fa]f[] g^ ljY\alagfYd banking but expectations are constantly rising as new technologies and consumer behaviors \]n]dgh& Af[j]Ykaf_dq$ [mklge]j Z]`Ynagj ak [`Yf_af_ lg afngdn] o]Z$ egZad]$ kg[aYd e]\aY Yf\ af%h]jkgf afl]jY[lagfk ^gj Y kaf_d] hmj[`Yk]& Lg klYq [geh]lalan]$ fYf[aYd afklalmlagfk f]]\ lg [gflafm] Zmad\af_ gml [`Yff]d [YhYZadala]k lg hjgna\] *,'/ j]Yd%lae] Y[[]kk lg ZYfcaf_$ k]Yed]kkdq$ Y[jgkk [`Yff]dk& More and better advice. Customers tell us they are willing to increase their accounts and ZYdYf[]k af ]p[`Yf_] ^gj ZYfck `]dhaf_ l`]e \]n]dgh l`]aj fYf[aYd hdYfk Yf\ _gYdk demonstrating the power of personalizing the experience and creating a mutual exchange g^ nYdm]& L`mk$ ZYfck f]]\ lg hjgna\] Y\na[] l`Yl ak [mklge]j%[]flja[$ ZYk]\ gf Y `gdakla[ h]jkh][lan] g^ l`] [mklge]j k mfaim] kalmYlagf Yf\ f]]\k& =imahhaf_ Y\nakgjk oal` l`] ja_`l kcadd k]lk$ af[]flan] kljm[lmj]k Yf\ f]logjc g^ kh][aYdaklk3 hgkalagfaf_ l`] ZjYf[` Yk Y kYd]k'Y\na[] []fl]j l`Yl hjgna\]k h]jkgfYdar]\ YkkaklYf[]3 Yf\ j]\] faf_ l`] jgd] g^ l`] [Ydd []fl]j Yk Y naYZd] [`Yff]d ^gj hjgna\af_ Y\na[] Yj] Ydd kljYl]_a]k l`Yl k`gmd\ Z] ]phdgj]\&Greater use of data and digital channels to empower customers.

6 Banks have access to vast data sets, both in-house and externally available, that they should leverage to h]jkgfYdar] l`] ]ph]ja]f[] Yf\ ]ehgo]j [mklge]jk lg eYc] \][akagfk& C]q l][`faim]k Yf\ lggdk af[dm\] eYcaf_ \a_alYd [gfl]fl \qfYea[ ZYk]\ gf [mklge]j hjg d]k$ k`goaf_ o`Yl [mklge]jk dac] qgm `Yn] Zgm_`l$ Yf\ hjgna\af_ h]jkgfYd fYf[aYd eYfY_]e]fl lggdk l`Yl `]dh [mklge]jk kYn]$ afn]kl Yf\ kh]f\ egj] oak]dq&Enhanced problem resolution experience . Solving problems in a way that leaves [mklge]jk n]jq kYlak ]\ oal` l`]aj j]kgdmlagf `Yk dgf_ Z]]f$ Yf\ j]eYafk$ g^ ka_fa [Yfl aehgjlYf[] af l`] j]dYlagfk`ah& O`ad] kge] hjgZd]ek Yj] k]d^%af a[l]\$ egkl kl]e ^jge Yf akkm] oal` l`] fYf[aYd k]jna[]k hjgna\]j gj Yfgl`]j [gehYfq'h]jkgf& @go l`] hjgZd]e ak `Yf\d]\ eYll]jk& L`] kmjn]q j]kmdlk km__]kl l`Yl l`]j] ak Yf Yklgmf\af_ mhka\] a^ [mklge]jk Yj] n]jq kYlak ]\ oal` l`]aj hjgZd]e j]kgdmlagf n]jkmk Y \gofoYj\ khajYd af ljmkl Yf\ l`] j]dYlagfk`ah a^ \akkYlak ]\& EYcaf_ al ]Ykq ^gj [mklge]jk lg jYak] akkm]k$ equipping the front line to handle certain problems and escalate others, explaining why the issue occurred, and following up to ensure resolution is complete are examples of ways to aehjgn] kYlak^Y[lagf oal` l`] ]ph]ja]f[]

7 &Make banking simple and clearHelp customers make the ja_`l fYf[aYd decisions in a complex environmentWork with customers when problems arise and become their advocateCustomers expect more3 Winning through customer experienceCustomers products, attitudes and preferences are not mfaim] lg Y kh][a [ [gmfljq gj j]_agf& O] _jgmh]\ l`] results of the more than 32,000 customers into eight segments that share common behaviors, expectations, hj]^]j]f[]k Yf\$ l`]j]^gj]$ kgdmlagfk& The segments vary in size, assets and willingness to pay egj] ^gj c]q Z]f] lk >a_mj] )!& L`gk] l`Yl Yj] egkl promising but view banks as having a limited competitive Y\nYflY_] gn]j Ydl]jfYlan] hjgna\]jk ]&_&$ l`] MhoYj\dq Mobile customers present the greatest challenge to traditional banks ability to retain all or part of the j]dYlagfk`ah& DYl]j af l`ak j]hgjl o] hjgna\] afka_`lk aflg l`] Z]f] lk l`Yl ]Y[` k]_e]fl nYdm]k egkl$ hj]^]jj]\ [`Yff]dk ^gj kh][a [ transactions, current products and services, engagement \jan]jk Yf\ egj]& L`] k]_e]flYlagf YfYdqkak hjgna\]k Y unique lens and highlights opportunities to consider segment-ZYk]\ kljYl]_a]k lg egj] ]^^][lan]dq afn]kl ZYfc j]kgmj[]k& O`ad].

8 ( g^ [mklge]jk \g fgl `Yn] \] fal] hdYfk lg gh]f or close any accounts in the next 12 months, this should fgl Z] afl]jhj]l]\ Yk dgqYdlq& G^ l`gk] o`g \] fal]dq intend to maintain their current relationships, 22% af\a[Yl]\ l`Yl Ydd fYf[aYd k]jna[] [gehYfa]k Yj] l`] kYe] Yf\ )/ klYl]\ l`Yl al oYk lgg \a^ [mdl gj lae] [gfkmeaf_ lg [`Yf_]& ;mklge]jk Yj] fgl Z]af_ j]lYaf]\3 afkl]Y\$ l`]q kaehdq j]eYaf Yf\ Yj] nmdf]jYZd] lg [geh]lalan] l`j]Ylk&Although traditional banks are currently seen as being af l`] Z]kl hgkalagf lg \]dan]j gf [gj] Z]f] lk km[` Yk branch and ATM access, they are most vulnerable on Z]f] lk Ykkg[aYl]\ oal` l`] `a_`]kl _jgol` hgl]flaYd$ ]&_&$ hjgY[lan]dq Yd]jlaf_ [mklge]jk lg hjg\m[lk Yf\ k]jna[]k Yf\ [mklgearaf_ l`]e lg l l`]aj f]]\k& Traditional banks scored lowest on mobile banking features vis vis the competition, and their competitive advantage in online banking features is also relatively keYdd& L][`fgdg_q affgnYlagf `Yk ]fYZd]\ \a^^]j]fl lqh]k of companies to provide banking services, particularly for transaction accounts, and banks may be on the verge of []\af_ l`]aj hgkalagf Yk l`] hjaeYjq hjgna\]j& Oal` gfdaf] banking being the second-most common product at H>KHk$ ^gddgo]\ Zq gl`]j ^j]im]

9 Fl%ljYfkY[lagf hjg\m[lk$ the threat of another provider dominating these offerings and then becoming customers primary provider is one l`Yl [Yffgl Z] a_fgj]\& LjY\alagfYd fYf[aYd k]jna[]k [gehYfa]k emkl respond to these challenges, as there is a multitude of new providers, including mobile telephone services, technology companies, and new types of banks with different technology and services ]fl]jaf_ Yf\ h]f]ljYlaf_ l`] eYjc]lhdY[]&Segmentation can provide actionable insight for improvementsTime is of the essenceAssets under management of total populationRelative population10% 19%20% or more1% 9% customer engagement oaddaf_f]kk lg hYq egj] ^gj c]q Z]f] lk!LargeUnhappy and UnmovingsK]d^%Km^ [a]flkBalancersSafety SeekersSmallBanks competitive differentiation vs. alternative providersLowHighElitesTraditionalistsNew WorldAdoptersUpwardly Mobiles>a_mj] )& Eight global through customer experienceGlobal insights A promising, active environment ;gf \]f[] af l`] _dgZYd ZYfcaf_ af\mkljq `Yk af[j]Yk]\ ka_fa [Yfldq gn]j l`] hYkl q]Yj& L`] h]j[]flY_] g^ [mklge]jk o`gk] [gf \]f[] `Yk jak]f fgo klYf\k Yl ++ $ Y -( _Yaf ^jge gmj dYkl kmjn]q$ o`a[` hYjlaYddq eYq j] ][l Y j]klgjYlagf g^ hjagj%q]Yj dgkk]k >a_mj] *!

10 & Af Y\\alagf$ [mklge]jk Yj] _]f]jYddq kYlak ]\ ]fgm_` oal` l`]aj ZYfcaf_ j]dYlagfk`ah lg j][gee]f\ l`]aj H>KH >a_mj] +!&>a_mj] +& How likely are you to recommend your PFSP?Mfdac]dqVery unlikelyVery likelyF]al`]j dac]dq fgj mfdac]dq f]mljYd!Likely1%40%3%37%19%>a_mj] *& @go `Yk qgmj [gf \]f[] toward the banking industry changed in the past 12 months?33%22%48%38%19%40%20122013 Increased<][j]Yk]\Remained the same6ooo&]q&[ge'_dgZYd[gfkme]jZYfcaf_kmjn]qThe value of advocacy9 c]q im]klagf ak `go em[` Zmkaf]kk Z]f] l ak Ykkg[aYl]\ oal` l`] `a_`]j jYlaf_$ n]jq dac]dq lg j][gee]f\& Af ^Y[l$ across the board, customers who are very likely to recommend their primary provider have already increased their Zmkaf]kk gj hdYf lg \g kg Yl Y _j]Yl]j jYl] l`Yf l`gk] o`g Yj] gfdq dac]dq lg j][gee]f\ >a_mj] ,!& 9k Y j]kmdl$ af l`ak j]hgjl Y\ng[Y[q ak \] f]\ Yk l`] klYlmk Y[`a]n]\ o`]f [mklge]jk Yj] very dac]dq lg j][gee]f\ l`]aj hjaeYjq hjgna\]j& PFSP relationship Our analysis is frequently done in the context of customers j]dYlagfk`ah oal` l`]aj H>KH$ kg al ak aehgjlYfl lg mf\]jklYf\ l`Yl l`]q Ydegkl YdoYqk \] f] l`ak Yk Y ZYfc >a_mj] -!