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CUSTOMER LOYALTY IN RETAIL BANKING: GLOBAL EDITION 2014
Going DigicalSM: Customers love thesmart fusion of digital and physical assets
Copyright © 2014 Bain & Company, Inc. All rights reserved.
Customer loyalty in retail banking: Global edition 2014 | Bain & Company, Inc.
Page i
Contents
Going Digical . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . pg. 1
1. Global loyalty trends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . pg. 7
2. Channel behavior and its infl uence on loyalty . . . . . . . . . . . . . . . . . . . . . pg. 11
3. Product purchasing and ownership trends . . . . . . . . . . . . . . . . . . . . . . . pg. 21
Page ii
• Customers conducted more than 50% of their banking interactions through digital channels in 18 of 22 countries surveyed.
• Mobile is the most-used banking channel in 13 of 22 countries and accounts for around 30% of all interactions worldwide.
• The share of customers using mobile applications rose by19 percentage points in the past year. Online usage via computers dropped 3 percentage points.
• More than half of customers used both digital and physical channels such as branches and call centers.
• These “omnichannel” customers gave their bank a Net Promoter Score 16 percentage points higher than customers using only digital channels and 22 points higher than those using only physical channels.
• Customers use several channels to research and buy new banking products. 47% of US customers con- sulted their bank’s website, and 37% got recommen- dations from bank employees.
• Hidden defection of customers from their primary bank is rampant: More than one-third bought a product from a competitor during the past year.
By the numbers: Mobility and the state of customer loyalty in banking
Customer loyalty in retail banking: Global edition 2014 | Bain & Company, Inc.
Page 1
Going Digical
Banking customers now handle more of their banking interactions, on average, via smartphones and tablets than
through any other channel, this year’s report shows—and the mobile channel has become a key element in the bid
to earn customer loyalty. Increased loyalty, in turn, pays off for a bank with customers buying more products and
making more referrals, which allow the bank to capture more than its fair share of new sales.
Mobile does not stand alone, however; it must be integrated with other channels like branches and contact centers
to deliver seamless and simple customer experiences. Most banks realize that they need to reimagine their end-
to-end customer experiences across all channels to make the most of the new mobile capabilities. But they have
been struggling to integrate channels across the numerous departments of their large, complex organizations.
Still, many of the largest banks worldwide have made progress in closing the loyalty gap with the loyalty leaders,
which often are smaller, more focused and nimble banks.
JPMorgan Chase, for instance, has gained in almost every region of the US; Royal Bank of Canada made strides
during the year; and all four big banks in Australia improved their scores signifi cantly. The banks that have begun
to pull ahead will likely accelerate their progress as they further sharpen their focus on earning loyalty. Those that
don’t pick up the pace risk falling further behind.
This year’s report, based on Bain’s survey of roughly 83,000 consumers in 22 countries, explores how people
do their banking and how banks are adapting their distribution and service channels to address customer needs
and improve the economics of the business. The research occurred online in July through November 2014, through
market research fi rm Research Now.
The meteoric rise of mobile
Mobile has become the dominant means for consumers to interact with their banks. Customers completed more
interactions with their banks via smartphones or tablets than through any other channel in 13 of 22 countries we
surveyed. And the share of customers using a using a bank’s mobile app rose a striking 19 percentage points
during 2014, with strong increases across all age groups in most markets.
Until recently, consumers layered digital onto other ways of interacting with their bank—for instance, using mobile
devices to check their balance more often while keeping their use of other channels the same. This year, the data
shows a meaningful decline in usage of not only branches and ATMs but even online via computers; the latter
dropped an average of 3 percentage points. (It’s possible that our survey slightly overstates growth in mobile usage,
because the survey is conducted online and survey companies have been making questionnaires easier to answer
via mobile devices. But we’re confi dent the trends are valid.)
Mobile does not replace other channels but fundamentally changes how consumers use them. Most customers
in most markets (60% of respondents overall) used a combination of digital and physical channels to do their
banking—what we call “omnichannel” behavior. This is critical for effective service, marketing and selling,
because customers expect to be able to hop from one channel to another.
Customer loyalty in retail banking: Global edition 2014 | Bain & Company, Inc.
Page 2
A virtuous circle: More channels, greater loyalty, more money
Omnichannel customers gave their bank an NPS that is 16 percentage points higher, on average, than the score customers
who rely only on digital channels gave and 22 percentage points higher than the score given by those who use only physical
channels. And NPS was even higher for omnichannel customers who had more interactions.
The payoff is higher product ownership: Omnichannel customers held an average of 1.0 more product with their
primary bank than digital-only customers and 1.3 more than branch-only customers. While the data doesn’t prove
a linear cause-and-effect relationship, it shows a virtuous circle of greater engagement across channels, greater
loyalty and increased product holdings.
For many years, interactions in person or via phone were critical for delighting or angering customers during
moments of truth, such as seeking advice. Now, leading banks are investing heavily in digital innovations designed
to become powerful “wow” factors in their own right. In Spain, NPS leader Bankinter has an early lead in infusing
its branches with useful digital technologies, such as biometric signatures for contracts, which save time, and
tablets that enable self-service.
Likewise, Citibank in the US has steadily improved its NPS over the past four years, in part by deploying practical
digital innovations. Examples include sending fraud alert texts to customers at the point of sale and deploying smart
ATMs that allow customers to open accounts or hold videoconferences with experts. Several Asian banks, meanwhile,
have pioneered personalization features. Shinhan in South Korea maintains a human touch through its use of
“smart letters,” delivered through a mobile app. These letters range from simple birthday greetings to coupons
providing higher interest rates.
Banks that pull ahead in loyalty by investing heavily in mobile to deliver a better experience will reap fi nancial
benefi ts. Those banks that lag in effectively investing in the mobile advantage will miss reaping the fi nancial
benefi ts and also fall further behind in their ability to invest.
The hidden defection problem—and opportunity
Accelerating the development of mobile sales capabilities will help banks address a signifi cant but little-noticed
problem: the hidden defection of customers who go to another provider for additional products such as mortgages
and credit cards. Globally, more than one-third of customers bought a new banking product at a bank other than
their primary bank this year.
Imagine the uproar that would ensue if one-third of a bank’s customers were completely defecting each year. Yet
the defection highlighted here passes unnoticed because banks usually don’t know their customers were
shopping in the fi rst place and seldom know that they lost the sale. Mobile banking has the potential to
either exacerbate or mitigate this problem.
Hidden defection could worsen as digital start-ups and specialist fi rms that are less encumbered by legacy systems
and regulations offer better, simpler solutions and make it easy for people to fi nd them. Banks that fail to respond
risk getting saddled with the bulk of low-margin accounts, while other fi rms siphon off high-margin products
like credit cards and mortgages. Young fi rms such as Betterment, which simplifi es the process of investing, or
Customer loyalty in retail banking: Global edition 2014 | Bain & Company, Inc.
Page 3
Kabbage, which has developed an underwriting process to instantly lend up to $100,000, stand to capture a
greater share of banks’ more profi table lines of business.
Some banks, such as JPMorgan Chase and USAA in the US, Nationwide in the UK and Hang Seng in Hong Kong,
have begun to address defection through different combinations of earning strong loyalty, fi elding strong
products and improving sales capabilities. But for all banks, digital technology increasingly is critical for effective
selling. When US consumers researched or considered a new fi nancial product like a mortgage, they typically
used at least four or five sources of information, with the most frequently used source being their bank’s
website and the least used being mobile apps. Deploying mobile apps to make it easy for customers to con-
nect to the right bank resources and employees during their shopping process, and preapproving them for the best
offer, could substantially raise the odds of winning the sale.
How is the hard part
Winning in a Digical world, by fusing the best of customer-friendly digital tools and processes with physical assets,
presents a challenge for banks, especially with their current operating model. Most banks’ operating models
are characterized by products and channels that operate in silos and by processes that require extensive signoff from
compliance, legal, fi nance, operations, marketing and other functions to make any change—50 people who can
say no against just one who can say yes.
Banks will need to redesign their operating model, and they can take a cue from leading retailers. Macy’s, for example,
has integrated most of its online shopping with its physical facilities, turning virtually all of its stores into omnichannel
fulfi llment centers. Its iconic Herald Square store in New York is undergoing a $400 million remodeling that features
innovations such as interactive directories, digital signage, widespread use of radio-frequency identifi cation (RFID)
tagging and a new mobile app to guide customers as they shop. Macy’s has evolved its operating model in order to
pursue this integration. The company now has a chief omnichannel offi cer, who reports directly to the CEO and
manages the development of strategies to closely integrate stores and online and mobile activities. He also has
responsibility for systems and technology, logistics and related operating functions.
Apple likewise recognized a need to change how it manages its online and physical stores. When Apple hired
Angela Ahrendts, the former Burberry chief executive, it gave her responsibility for both online and retail stores,
with a mission to make the customer experience seamless across channels.
Some leading banks are overcoming their organizational obstacles by taking a fresh “design, build, use” approach
to developing exceptional customer experiences. Notably, the approach enlists customers to create the experience
(see Figure 1). Here’s how it works.
1. Design for the customer’s ideal experience.
Effective digital design focuses on the customers’ priorities—buy a home, provide for a daughter’s college edu-
cation, manage cash and so on. Leading banks have found it useful to select the critical customer journeys by
ranking them according to frequency of use and emotional importance (see Figure 2). The next step is to
reimagine each journey from the customer’s perspective. Buying a home, for instance, should start at the moment
the customer considers house hunting and extend all the way through moving in.
Customer loyalty in retail banking: Global edition 2014 | Bain & Company, Inc.
Page 4
Journey mapping and benchmarking against banking competitors and best-in-class fi rms in other industries provide
a data-driven audit to identify gaps in capabilities and appeal. It should be easy and intuitive for customers to
navigate a website or a mobile app, and the presentation should feel empathetic and not clinical.
Benchmarking must be complemented by a design process that will allow a bank to stand out from the crowd.
We have found that an effective mechanism to bring key customer moments to life is a storyboard created with
the help of artists and writers. Storyboards, when combined with engaging real customers to cocreate digital tools
through rapid prototyping and hands-on testing, lead to a clear view of the next horizon for each customer journey.
2. Build with a modern development model.
Given the speed of digital innovation these days, banks can’t afford to use the traditional waterfall IT development
approach, which relies on remote release dates and thus struggles to catch up as the marketplace changes. The
trend among leading organizations, such as Capital One Labs, is toward Agile delivery models. These deliver function-
ality in many bite-sized pieces.
Just installing Agile development teams is not enough. The entire ecosystem around the team needs to be
redesigned and should include a process to ensure that the team building a particular journey has a pre-allocated
budget, resources and approvals. The Agile model should also involve relevant compliance and legal staff on the
team from the start. It should maintain regular communications with a senior executive leading the relevant line
of business. And it can employ cloud-based development environments in order to reduce cycle times.
Figure 1: Guiding principles for digital innovations
Personalized to the customer, reflects wants and needs
Intuitive, simple and easy to use
Has human touch and clear, jargon-free language
Available anywhere, any time and on any device
Has everything the customer wants
Map and prioritize experiences that matter most to customers
Engages customers and business partners
Uses rapid prototyping to test ideas Simplify processes and reinforce behaviors
Identify choke points and organize for nimble development
Build
Use
Adopt Agile development models
Employ “test and learn” for continuous improvement
Des
ign
prin
cipl
esD
esig
n pr
oces
s
Reimagine the key end-to-end experiences
What does your digital experience look like? How do you develop your digital properties?
Source: Bain & Company
Customer loyalty in retail banking: Global edition 2014 | Bain & Company, Inc.
Page 5
3. Use what really works with customers and employees.
In most bank trials, new approaches tend to succeed initially through small pilots in highly managed, carefully
selected situations. But they fail to deliver the expected results in a mass rollout with all its complexity and variation.
The more effective approach, which complements Agile development, is to test and learn more broadly, based
on fast loops of customer feedback.
The test-and-learn approach relies on behavioral psychology, in which slight nuances can spell the difference
between success and failure. Insights about what works often come from frontline employees and analysis of
real customer behavior. At one Australian bank, for instance, a branch greeter charged with convincing customers
to use self-service solutions realized that asking “Do you know how to do that yourself?” made customers defensive
and thus fell fl at. The more positive tone in “May I show you how to skip the line?” was much more effective.
These sorts of insights happen regularly in every bank’s branch, but this bank had a process to quickly identify
and spread the insight throughout the bank, so the entire system could benefi t.
The chapters that follow explore the 2014 survey data on customer loyalty, how the right omnichannel approach
in a mobile world earns loyalty and what the untapped opportunity is in capturing new purchases of banking
products. These insights can inform the migration of transactional activities to digital channels, in order to
reduce costly and avoidable volumes entering the branch. That will allow the branch network to become leaner
and more oriented toward higher-value sales and service activities. Done right, the Digical journey can combine
higher productivity with the ultimate touchstone: strong customer advocacy.
Figure 2: Focus on the experiences that matter most to customers
0
50
100
150
5,000
10,000
75 80 85 90%
Remotedeposit capture
Dealing withmatters for deceased
relative
Freq
uenc
y of
use
(Ave
rage
mon
thly
vis
its, i
ndex
ed)
Priorityexperiences
Emotional importance(Percentage of detractors + percentage of promoters)
Everyday transactions
Check balance
Pay bills Resolve a complex problem
Account unexpectedly blocked
Withdraw cash
Source: Bain & Company disguised case example
1.Global loyalty trends
• Customer loyalty as measured by NPS improved in 2014 from the previous year, as leading banks inten-sifi ed their efforts to earn loyalty and many banks continued their recovery after the fi nancial crisis.
• What matters most to an individual bank is how it performs relative to its peer group. Within national markets, NPS varied widely from bank to bank. In Germany, for instance, top-performer DKB had an NPS that was 74 percentage points higher than the worst performer and 55 percentage points above the country average. Sparda-Banken, a credit union, had a score 12 percentage points lower than DKB.
• Large traditional banks made meaningful improve- ments in NPS relative to their direct or smaller competitors in 2014. Several big banks, such as Santander and Barclays in the UK and JPMorgan Chase in the US, have shown sustained progress over the past few years.
• Several factors account for the progress of these banks, with digital innovation being one factor. Previous surveys have shown that using mobile banking contributed to higher loyalty scores. This year, we found that promoters of a bank, who score a 9 or 10 on a zero-to-10 NPS scale, were more likely to use mobile apps than were detractors, who score 6 or less on the same scale.
• Digital usage now accounts for the majority of banking interactions in virtually every country, with Australia, France, the US, Canada and Germany leading the digital share of all interactions. The sharpest growth came in mobile usage, which for the fi rst time reached about 30% of all interactions in most countries. Mobile remains a relatively small share of digital interactions only in Germany, Portugal, Mexico and Japan.
Customer loyalty in retail banking: Global edition 2014 | Bain & Company, Inc.
Page 8
Figure 3: In most markets, there is a large gap between leaders and laggards
Canada
Primary banks’ Net Promoter Scores relative to loyalty leader, which is indexed to zero, 2014
Mexico
US: Northeast
US: Midwest
US: South
US: West
Am
eric
as
RBC, TD Canada Trust President's Choice Financial
Banorte Santander, HSBC
PNC Bank, TD Bank, Chase Bank
Huntington
USAA Chase Bank, Regions Bank
USAA Union Bank, Bank of the West, Citibank
−100% −80 −60 −40 –20 0
Australia
China
Hong Kong
India
Indonesia
Japan
Malaysia
Singapore
South Korea
Asi
a-Pa
cific
China Construction Bank, Bank of Communications, China Merchants Bank
Citibank
Maybank, Public Bank, CIMB
Citibank
Shinhan Bank
HDFC, Bank of Baroda
BCA
Shinsei Bank
ING Direct Bendigo Bank
Belgium
France
Germany
Italy
Poland
Spain
UK
Euro
pe
Sparda-Banken
Banca Mediolanum
Bankinter
Highest traditional bank Highest direct bank
Lowest bankAverage
Argenta Spaarbank
La Banque Postale
DKB
ING Direct, Fineco
ING Bank
first direct Nationwide
Notes: Country averages include all banks; highest and lowest banks include only banks where n≥200 for the Americas and Europe and n≥100 for Asia-Pacific; excludes markets with insufficient number of banks; traditional banks include large building societies or credit unions.Source: Bain/Research Now NPS surveys, 2014
Customer loyalty in retail banking: Global edition 2014 | Bain & Company, Inc.
Page 9
Figure 4: In many countries, large branch big banks have been closing the loyalty gap with direct banks
US Canada Australia
Germany UK Italy
–20
0
20
40
60
80%
Directbanks
Regionalbanks
Nationalbanks
–20
0
20
40
60
80%
Big Fivebanks
Directbanks
2011 ‘12 ‘13 ‘14
–20
0
20
40
60
80%
Regional/smaller banks
Directbanks
2012 ‘13 ‘14
Big Four banks
Large branchbanks
Directbanks
‘14
0
–20
20
40
60
80%
Creditunions
2012 ‘13
–20
0
20
40
60
80%
Buildingsocieties
Directbanks
2012 ‘13 ‘14
Large branchbanks
–20
0
20
40
60
80%
US Canada Australia
Direct banks
2013 ‘14
Internationalbanks
Largeregional banks
Nationalbanks
2009 ‘10 ‘11 ‘12 ‘13 ‘14
Source: Bain/Research Now NPS surveys, 2009–2014
Net Promoter Score
2.Channel behavior and its infl uence on loyalty
• Mobile applications have arrived at the stage of mass appeal. Almost every country showed a huge increase in the share of respondents using mobile apps, with an average 19 percentage point rise globally. Indonesia and China led in usage.
• Online usage showed declines or was fl at every-where except in Indonesia, Mexico and Japan—an average 3 percentage point decline worldwide.
• Growth in mobile has not just cut into online usage; it also coincided with declines in branch, ATM and phone usage. In the US the share of respondents using these channels dropped by 5, 3 and 5 per-centage points, respectively, since 2012.
• Respondents under age 35 were more likely than older customers to bank via mobile devices. But the share of customers age 65 and older who use mobile is a substantial 30%—and mobile usage rose sharply among all age groups.
• Roughly 60% of customers used a combination of digital and physical channels. These omnichannel customers gave their primary bank an NPS that was 16 percentage points higher than the NPS of custom-ers using only digital channels and 22 points higher than the NPS of those using only physical channels. They also own more products through their primary bank than those who use only digital or only physi-cal channels: 1.0 and 1.3 products, respectively.
• For product research and consideration, US respon-dents most frequently turned to their bank’s web-site, highlighting the importance of a well-designed, intuitive site. Next, respondents turned to bank employees. Other sources—such as direct mail or, for credit cards, another website—had a prominent infl uence for individual products. Mobile has yet to be effectively tapped for selling.
Customer loyalty in retail banking: Global edition 2014 | Bain & Company, Inc.
Page 12
0
20
40
60
80%
Indo
nesi
a
77
Chi
na
73
Thai
land
64
Indi
a
59
Sing
apor
e
58
Pola
nd
58
Mal
aysi
a
54
Hon
g Ko
ng
49
Aus
tralia
47
Mex
ico
45
Spai
n
44
US
43
Italy
42
UK
41
Braz
il
39
Can
ada
34
Portu
gal
31
Fran
ce
30
Belg
ium
27
Ger
man
y
21
Japa
n
19
Percentage of respondents who used mobile banking apps in last quarter
Note: 2013 data was excluded where data was not available or not comparable to 2014 data.Sources: Bain/Research Now NPS surveys, 2014; Bain/Research Now and Bain/GMI NPS surveys, 2013
2014 Developing country 2014 Developed country 2013
Figure 5: Digital channels accounted for the majority of all interactions in most countries
0
20
40
60
80
100%
Aus
tralia US
Fran
ce
Ger
man
y
Can
ada
Belg
ium
Braz
il
UK
Spai
n
Pola
nd
Chi
na
Thai
land
Sing
apor
e
Indo
nesi
a
Portu
gal
Mal
aysi
a
Hon
g Ko
ng
Italy
Indi
a
Mex
ico
Japa
n
Percentage of total interactions in last quarter, 2014
Mobile (smartphone/tablet) Online ATM Phone Branch
Source: Bain/Research Now NPS surveys, 2014
Figure 6: Customers’ use of mobile banking applications surged by 19 percentage points worldwide
Customer loyalty in retail banking: Global edition 2014 | Bain & Company, Inc.
Page 13
Figure 7: In most countries, the use of online tools for routine transactions declined
0
20
40
60
80
100%
81 79 77 76 74 74 73 71 70 69 6661 59
52
Chi
na
Indo
nesi
a
Aus
tralia
Can
ada
Indi
a
Belg
ium
Ger
man
y
Sing
apor
e
Hon
g Ko
ng UK
Italy US
Portu
gal
Fran
ce
Spai
n
Thai
land
Braz
il
Mal
aysi
a
Mex
ico
Japa
n
Pola
nd
52
Percentage of respondents who used online tools (via computer, not mobile) for routine transactions in last quarter
Note: 2013 data was excluded where data was not available or not comparable to 2014 data.Sources: Bain/Research Now NPS surveys, 2014; Bain/Research Now and Bain/GMI NPS surveys, 2013
88
78 7776
68 67
2014 Developing country 2014 Developed country 2013
Figure 8: Branch visits continued their slow decline
0
20
40
60
80
100%
82 80 77 75
66 64 63 60 59 58 57 55 54 5349 47 44
Chi
na
Indo
nesi
a
Mex
ico
Braz
il
Indi
a
US
Italy
Spai
n
Can
ada
UK
Sout
h Ko
rea
Mal
aysi
a
Thai
land
Portu
gal
Hon
g Ko
ng
Aus
tralia
Fran
ce
Sing
apor
e
Belg
ium
Pola
nd
Japa
n
Ger
man
y
Percentage of respondents who used branches for routine transactions in last quarter
Note: 2013 data was excluded where data was not available or not comparable to 2014 data.Sources: Bain/Research Now NPS surveys, 2014; Bain/Research Now and Bain/GMI NPS surveys, 2013
79
68
60
33 33
2014 Developing country 2014 Developed country 2013
Customer loyalty in retail banking: Global edition 2014 | Bain & Company, Inc.
Page 14
Figure 9: Mobile’s rise came at the expense of online, ATM and branch usage
Canada IndiaSpain
0
20
40
60
80
100%
+15
–11
–3
0
–1
Change(% points)
Change(% points)
Change(% points)
0
20
40
60
80
100%
+8
–3
–3
–1
–1
0
20
40
60
80
100%
2013 2014 2013 2014 2013 2014
+12
–4
–4
–1
–2
Mobile Online ATM Phone Branch
Sources: Bain/Research Now NPS surveys, 2014; Bain/Research Now and Bain/GMI NPS surveys, 2013
Total interactions in last quarter
Figure 10: With the rise of mobile, even online usage has started to decline
0
20
40
60
80
100%
Percentage of respondents using channel in US
Phone
Mobile
2012 2013 2014
Online–5–3
20
–5
2012–2014change
(% points)
Branch
Note: Online and branch include transactions, sales and service.Source: Bain/Research Now US NPS surveys, 2012–2014
Customer loyalty in retail banking: Global edition 2014 | Bain & Company, Inc.
Page 15
Figure 11 : Mobile has overtaken online in most markets
5
15
25
35
45
55%
5 15 25
2013
35 45 55%
UK
Australia
US
Online interactions as a percentage of total interactions
Mobile interactions as a percentage of total interactions
Spain
France
Italy
Belgium
Hong Kong
China
Singapore
IndonesiaJapan India CanadaMexico
Mobile exceeds online
Online exceeds mobile
2014
Note: Country excluded where 2013 data was not available or not comparable to 2014 data.Source: 2014 Bain/Research Now NPS surveys; 2013 Bain/Research Now and Bain/GMI NPS surveys
Figure 12: Customers who are promoters of their bank were far more likely than detractors to use mobile banking apps
US
Poland
Canada
Belgium
UK
Hong Kong
Spain
SingaporeAustralia
Mexico
Respondents using mobile banking apps as a percentage of total respondents, 2014
3543
3139
4148
4050
4050
45
60
40
59
39
51
26 30
5162
Detractor Promoter
Note: Includes traditional bank respondents only.Source: Bain/Research Now NPS surveys, 2014
Customer loyalty in retail banking: Global edition 2014 | Bain & Company, Inc.
Page 16
Figure 13: Most customers used both digital and physical channels
Figure 14: Omnichannel customers are more loyal and more engaged
Traditional banks' Net Promoter Scores in US, 2014
11 10
Low
22
Medium
27
High
31
Branch-only
Digital-only
2.4 2.6 3.0 3.2 3.2
0
10
20
30
40%
Average number of products owned
Omnichannel users gave higher Net Promoter Scores and held more products at their primary bank
They are more engaged, especially through digital channels
OmnichannelLow Medium High
Branch-only
Digital-only
Omnichannel
Note: Branch-only, omnichannel and digital-only include respondents who interact via ATM and phone. Source: Bain/Research Now US NPS surveys, 2014
0
20
40
60
80
9
24
13
26
68
Average number of interactions in last quarter, traditional bank respondentsin US, 2014
Mobile Online ATM Phone Branch
Number of digital interactionsNumber of digital interactions
0
20
40
60
80
100%
Chi
na
Indo
nesi
a
Indi
a
Braz
il
Italy
Mex
ico
Can
ada
US
Spai
n
Thai
land
Mal
aysi
a
UK
Aus
tralia
Hon
g Ko
ng
Fran
ce
Pola
nd
Belg
ium
Sing
apor
e
Portu
gal
Ger
man
y
Japa
n
Percentage of traditional bank respondents, 2014
Branch-only users Digital-only users Omnichannel users
Note: Branch only, omnichannel and digital only include respondents who interact via ATM and phone. Source: Bain/Research Now NPS surveys, 2014
Customer loyalty in retail banking: Global edition 2014 | Bain & Company, Inc.
Page 17
Figure 15: The omnichannel difference applies across all countries
–20
–10
0
10
20
Mexico
–7 –9
4
Brazil–16
–8
5
Canada
–8
–17
5
US
–9 –11
7
Percentage point difference in Net Promoter Scores relative to traditional banks' average, 2014
1.2 0.6 1.3 0.7Increase in productownership frombranch-only users toomnichannel users
Increase in productownership frombranch-only users toomnichannel users
Increase in productownership frombranch-only users toomnichannel users
–20
–10
0
10
20
–21
1 0
–28
–11
4 6
–6–9
6
–14
–7
6
–16
–10
7
–21
–8
8
–19
–13
12
–13
–5
20
Indonesia India China
–45 –34
Australia Singapore Hong Kong Malaysia Thailand Japan
2.3 1.9 2.7 1.1 1.5 2.7 1.5 1.5 0.7
Americas
Asia-Pacific
Europe
–20
–10
0
10
20
–9
–2
3
–12
–6
5
–8 –7
5
–22
–5
5
–16
–9
6
–8–6
7
–7 –6
9
–6–10
9
France Spain UK Poland Italy Belgium Germany Portugal
0.8 1.2 1.0 0.6 1.2 1.2 0.8 0.9
Branch-only users Digital-only users Omnichannel users
Note: Branch only, omnichannel and digital only include respondents who interact via ATM and phone. Source: Bain/Research Now NPS surveys, 2014
Customer loyalty in retail banking: Global edition 2014 | Bain & Company, Inc.
Page 18
0 20 40 60%
20
25
13
28
25
25
30
28
38
30
40
0 20 40 60%
18
18
19
21
27
31
31
44
45
39
56
0 20 40 60%
Bank's tablet app 15
Bank'ssmartphone app 15
Nonaffiliatedfinancial adviser 23
Phone call withbank 15
TV, radio, printadvertising or media
19
Email from bank 19
Friend or family 28
Nonaffiliatedwebsite 23
Mail from a bank 28
Employee at a bank branch 40
Bank's website 40
Percentage of purchasers using sources for research and decisions, 2014
0 20 40 60%
23
26
29
45
32
29
42
32
32
39
45
0 20 40 60%
18
20
21
25
26
26
32
33
37
37
47
SavingsCredit card (primary)
Home mortgages Weighted averageChecking
Human Digital Other
Note: Average is weighted by product purchases.Source: 2014 Bain/Research Now survey of product purchasers
Figure 16: Customers used both digital and human sources when researching and making purchases in the US
Customer loyalty in retail banking: Global edition 2014 | Bain & Company, Inc.
Page 19
Figure 17: The human touch remains important for loyalty when people are looking to buy new products
0
10
20
30
40
50%
Friend orfamily
member
Employeeat a bankbranch
Bank'swebsite
TV, radio,print
advertisingor media
Emailfrom bank
Non-affiliatedwebsite
Mail frombank
Bank'smobileapp
Phone callwith bank
Bank'stablet app
Non-affiliated
bankadviser
Respondents' Net Promoter Scores, by source used for product research and purchase decisions in the US, 2014
Source: 2014 Bain/Research Now survey of product purchasers
Human Digital Other
4440
37 36 35 33 33 32
2623
19
Figure 18: A virtuous circle of more channels, greater loyalty, more money
Average numberof products owned
Number ofinteractions
–20
–10
0
10
20%
–13
–1
6
Branch-only users
Low Medium High
2.3 2.8 3.2
–20
–10
0
10
20%
–8
0
6
Digital-only users
Low Medium High
2.3 2.6 2.9
–20
–10
0
10
20%
9
15
19
Omnichannel users
Net Promoter Scores of traditional bank respondents in Germany, 2014
Low Medium High
3.2 3.6 3.7
Note: Branch-only, omnichannel and digital-only users include respondents who interact via ATM and phone.Source: Bain/Research Now Germany NPS survey, 2014
3.Product purchasing and ownershiptrends
• Globally, more than one-third of respondents bought fi nancial products from a provider that was not their primary bank. That behavior was most pervasive in Asia, where a growing share of consumers are buying fi nancial products for the fi rst time, and least common in Western Europe. These hidden defectors bought high-value prod-ucts in many cases, especially credit cards, loans, investments and insurance.
• Loyalty has a strong effect on additional product purchases at the primary bank. Promoters were more likely to buy from their bank than were detrac-tors. This held true across almost every product in every country.
• The specific product effect varies by country because of regulatory and market structure differ-ences. In the UK, the promoter uplift was strongest for pension products and weakest for checking accounts. In Germany, the greatest uplift came in instant-access accounts and life insurance. In the US and Japan, by contrast, auto loans had the greatest uplift.
• In retail banking, Bain estimates the lifetime value of a promoter is worth 2 to 2.5 times that of a detractor, depending on the national market, type of bank and wealth of the customer. That multiple stems largely from promoters’ tendency to buy more products from their bank, combined with their stay-ing longer and recommending the bank to others.
• Banks have more latitude to infl uence customers’ purchases than they might realize. About one-third of respondents said that they were not planning to apply for a credit card but, upon receiving an offer, decided to accept the card. Product offers had a lower but still signifi cant role in checking and mortgage products.
Customer loyalty in retail banking: Global edition 2014 | Bain & Company, Inc.
Page 22
Figure 19: Hidden defection exists everywhere, especially in developing markets
Figure 20: Hidden defectors often bought high-value products, such as lending, investments and insurance
0
20
40
60
80
100%
Potu
gal
Thai
land
Japa
n
Pola
nd
Hon
g Ko
ng
Italy
Spai
n
Mex
ico
Aus
tralia
Indi
a
Sout
h Ko
rea
Can
ada
Mal
aysi
a
Fran
ce
Sing
apor
e
Ger
man
y
US
Chi
na UK
Belg
ium
Braz
il
Indo
nesi
a
Percentage of products purchased at a bank other than primary bank, 2014
Source: Bain/Research Now NPS surveys, 2014
Deposit Credit card Loans Investment Insurance Other
Developing country Developed country
0
10
20
30
40
50
60
70%
Developed country average: 28%
Mal
aysi
a
68
Chi
na
63
Hon
g Ko
ng
53
Thai
land
51
Sing
apor
e
48
Indi
a
Indo
nesi
a
Sout
h Ko
rea
40
UK
37
Mex
ico
32
Braz
il
28
Spai
n
28
US
Pola
nd
Japa
n
Can
ada
Ger
man
y
Aus
tralia
19
Fran
ce
17
Portu
gal
17
Italy
17
Belg
ium
17
Percentage of respondents who purchased at a bank other than their primary bank, 2014
Developing country average: 47%
4644
2725 24 23 23
Source: Bain/Research Now NPS surveys, 2014
Customer loyalty in retail banking: Global edition 2014 | Bain & Company, Inc.
Page 23
Figure 21: Customers who are promoters were far more likely than detractors to buy their next product from their primary bank
82 9074
83
49
70
44 48 48
84
44
74
5370
587253
6550
76
Checking account
Term deposit
Savings account
Personal loan
Credit card (secondary)
Investment management
Home loan
Investment property loanSmall business account
Credit card (primary)
Purchases made at primary bank as a percentage of all purchases in that category in Australia, 2014
Detractor Promoter
Source: Bain/Research Now Australia NPS survey, 2014
Figure 22 : Banks have leeway to infl uence product purchases, especially in credit cards
0
20
40
60
80
100%
Percentage of purchasers of financial products in the US, 2014
Home mortgage Checking Savings account Credit card (primary)
I was looking to buy it
Received an offer and decided
to get it
Source: 2014 Bain/Research Now survey of product purchasers
Customer loyalty in retail banking: Global edition 2014 | Bain & Company, Inc.
Page 24
Further reading
• “Winning operating models that convert strategy to results,” Marcia Blenko, Eric Garton, Ludovica Mottura
and Oliver Wright, Bain Brief, December 2014.
• “Rebooting IT: Why fi nancial institutions need a new technology model,” Mike Baxter, Steve Berez and Vishy
Padmanabhan, Bain Brief, September 2014.
• “Building the retail bank of the future,” Mike Baxter and Dirk Vater, Bain Brief, June 2014.
• “Digital-Physical mashups,” Darrell Rigby, Harvard Business Review, September 2014.
Appendix: Methodology
Bain & Company partnered with Research Now, the online global market research organization, to survey consumer
panels in Australia, Belgium, Brazil, Canada, China, France, Germany, Hong Kong, India, Indonesia, Italy, Japan,
Malaysia, Mexico, Poland, Portugal, Singapore, South Korea, Spain, Thailand, the UK and the US. The survey’s
purpose was to gauge customers’ loyalty to their principal bank and the underlying reasons customers hold the views
they do. Conducted between July and November 2014, the survey polled 82,914 consumers of national branch net-
work banks, regional banks, private banks, direct banks, community banks and credit unions in these countries.
Additionally, in Brazil, we also conducted face-to-face interviews with roughly 1,200 customers. In the Americas and
Europe, for the individual bank analysis, we included only those banks for which we received at least 200 valid responses.
In Asia, we included banks with at least 100 responses. In many instances, sample sizes exceeded these thresholds.
Survey questionsRespondents were fi rst asked to identify their primary bank, after which they were asked the following questions to
assess their loyalty to that institution:
• On a scale of zero to 10, where zero represents “not at all likely” and 10 represents “extremely likely,” how
likely are you to recommend your primary bank to a friend or relative?
• Tell us why you gave your primary bank the score you did.
We asked what major products respondents hold with their primary bank and with other banks, and which of these
products were purchased in the past year. We also asked which channels they use to do their banking. The remaining
questions elicited demographic profi le information: household income, investable assets and region of residence.
We followed up with 602 US respondents to ask more detailed questions about their purchase of specifi c products,
including the methods they used to research their purchases and the channel they used to purchase the product.
On the question of statistical signifi cance, the results of our data analysis are robust both for the measurement of
bank NPS by country and for respondent NPS for each demographic category. For the Americas and Europe, the
NPS measured for each bank in the country and US regional rankings is statistically significant to an 80%
confi dence level, with a two-tailed test of the confi dence interval ranging from ±2.6% (n=1,189) to ±6.5% (n=200).
In Asia, where sample sizes were smaller, confi dence intervals are wider, with a maximum of ±9.5%.
Countries classifi ed as developed are based on the World Bank’s high-income category; the developing countries
are based on the World Bank’s middle- and low-income categories.
Acknowledgments
This report was prepared by Gerard du Toit and Maureen Burns, partners in Bain’s Financial Services practice,
and a team led by Christy de Gooyer, a practice area director, and Shilpi Goel, a project leader. Team members
are Alejandro Gonzalez, Devyani Gupta, Alexandra Reuter, Ricardo Sherwell and Abheek Talukdar. The authors
thank Bain partners in each of the countries covered in the report for their valuable input and John Campbell for
his editorial support.
Key contacts in Bain’s Global Financial Services practice
Global: Philippe De Backer in Dubai (philippe.debacker@bain.com) Edmund Lin in Singapore (edmund.lin@bain.com)
Americas: Mike Baxter in New York (mike.baxter@bain.com)
Europe, Middle East and Africa: Henrik Naujoks in Düsseldorf (henrik.naujoks@bain.com)
Asia-Pacifi c: Gary Turner in Sydney (gary.turner@bain.com)
NPS® is a registered trademark of Bain & Company, Inc., Fred Reichheld and Satmetrix Systems, Inc.Net Promoter ScoreSM is a trademark of Bain & Company, Inc., Fred Reichheld and Satmetrix Systems, Inc.
For more information, visit www.bain.com
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