Are retail banks realising the full potential of their customers?

Given the competitive retail banking landscape, banks need to be capturing the full potential from their existing customers. Yet customer experience in the financial sector has become an emerging battleground, as banks look to obtain higher revenues from existing customers while ensuring greater customer value.

The launch of Discovery Bank in early 2018 will further challenge South African retail banks, as they will need to decide how to respond to the rising level of competition targeting increasingly distressed consumers. While a common defence to a new competitor is to lower prices, the recent scrutiny of bank fees and charges has led to a price competition, making it difficult to pull this lever.

Looking for new growth avenues

Product design has been a strength among South Africa’s large retail banks, but the increasingly commoditised nature of banking products is making this more challenging. Capitec’s simple, transparent offering and easy-to-use experience has positioned them as a leader in this regard. Discovery Bank will be able to draw on Discovery’s inherent ability to design innovative products and services and use this strength as a competitive advantage in the retail banking market.

 That leaves the customer and distribution networks as two pivotal assets for competitor banks to utilise as growth avenues. The size and reach of South Africa’s retail banks gives them the potential to use their customer and distribution assets to counter the current threat from Capitec and the new threat from Discovery. These assets are sizeable, at the end of 2015 the four large-volume banks had 2 862 points-of-presence and significant customer bases1.  At the end of June 2016, South African retail banking customers ranged from 11,4 million at Standard Bank to 7,6 million at Nedbank2.

Percentage of respondents that use each channel at least once per week:

pv1

Using a multi-disciplinary approach to deliver significant business impact

Improving the customer experience is a top priority for most organisations, yet finding and implementing the right initiatives can be challenging. Many small-scale changes don’t have a significant business impact, while large changes can take too long to implement or often be too complicated and momentum is lost.

Most organisations are investing heavily into business and IT, combined with various internal initiatives, to maximise customer value—a key imperative for organisations to enable them to achieve their three to five year goals. This requires flow across the entire client value chain, by breaking down organisational silos that impact customers’ experiences.

BSG’s 20 years of experience ensures we understand the challenges faced by organisations when overcoming these silos. Delivering the required results also necessitates an understanding of how the change will impact the entire ecosystem. Too often we see meaningful work taking place independently within business areas, or being duplicated or double counted from a business case perspective.

Are retail banks realising the full potential of their customers?

Are retail banks realising the full potential of their customers?

Are retail banks realising the full potential of their customers?

Are retail banks realising the full potential of their customers?Conclusion

The impact from this multi-disciplinary approach is a set of customer insights to build engagement and support the retention of primary bank relationships:

  • Personalised onboarding and service experiences based on customer preferences, even to the point of matching service agents to customers in the call centre channel
  • Frictionless sales and service processes e.g. an application process started on a mobile app and completed seamlessly in the branch
  • Profiling of more successful sales and service staff, distinguished from less successful staff
  • Measurement criteria and targets can subsequently be aligned to behavioural indicators related to profitable customer
    relationships rather than short-term sales
  • A deeper understanding of the drivers of product use and loyal customer behaviour. This can be used to shape sales and
    service strategy and tactics, such as campaigns, as well as branch staff training and development programmes

References:

  1. http://www.moneyweb.co.za/news/companies-and-deals/banks-have-been-cutting-branches-for-years/
  2. http://www.moneyweb.co.za/news/companies-and-deals/not-all-bank-customers-are-equal-or-equally-profitable/
  3. Africa Banking Industry: Retail Customer Satisfaction Survey, September 2016, KPMG

Photography for BSG in July 2016 by Jeremy Glyn.

About the author: An executive responsible for knowledge and insights, Gary Stocks is passionate about unlocking potential and accelerating performance at BSG’s clients and people. His focus is on creating value in an increasingly digital world through customer-centric thinking and data-driven insights.

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