Bank customers are loyal, but mostly out of habit

Three quarters of consumers have not switched bank in the last 6 years,
according to DMA research into engagement with financial service providers

Most customers are loyal to their bank out of habit more than for any other reason, with three quarters (75%) of consumers saying they have not switched providers in the last 6 years, with 40% having never changed their bank at all. According to research released today by the DMA and partners Acxiom, Relay 42 and Organic, one of the main reason for this brand loyalty was simply that 62% of customers have simply had no issues or problems with their bank.

The research highlights that while three-quarters (76%) of customers use online banking and one in five (22%) now use mobile banking too, nearly half (45%) still like to visit their local bank brand to deal with their finances face-to-face. The survey, conducted as part of the DMA’s Customer Engagement research campaign, asked 1,000 consumers about their attitudes towards financial service providers and found an opportunity for businesses to empower their customers by offering convenient, tailored experiences.

Rachel Aldighieri, MD at the DMA, said: “Financial service companies must focus on creating seamless, flexible and intuitive experiences for consumers, across all the touchpoints now available to them. Technology, particularly the growth of mobile, has afforded consumers greater awareness over their finances than ever before. This offers banks and other providers an opportunity to give customers a greater sense of informed control. To do this, companies will have to gain better understanding of their customers’ habits, goals and ambitions in order to offer a truly personalised, relevant experience.”

Customers hungry for better experiences

Relevant offers and rewards can help a brand build stronger ties with its customers, and this is still true in the financial services sector. While a quarter (27%) of customers reported receiving some form of reward, and wanting to continue to do so, an additional 44% said would like to receive these in the future, as they aren’t currently on offer.

When asked about new services banks could offer, 59% of consumers said they are interested in a service that would automatically notify them of the best rates on savings accounts. In addition, over a third (36%) are interested in a service that delivers alerts regarding account activity via a social or chat messenger service. Virtual assistants could provide an opportunity for banks to humanise the digital experience too, and 35% of consumers said they’re interested in a service that gives access to a personal virtual assistant to help with banking tasks.

Jed Mole, European marketing director at Acxiom, commented: “Even with this confirmed switching inertia, like most businesses, banks and other financial services businesses still need to win new customers. The younger generation, in particular, expect and are more likely to respond to smart, relevant and actionable offers and messages, and these days, this can only be enabled by data. Banking marketers need to make the brand come alive to make one service distinct from a competitor, and can’t just rely on a customer’s experience of providing a current account service that works – clearly this is not enough of a trigger to move from one provider to another.”

Tomas Salfischberger, CEO at Relay42, added: “At first glance the headline figures from this research might lull retail banks into believing they have a strong customer base, that they can rely on to remain loyal. However, marketers know that the rise of the challenger banks prove the established players cannot take anything for granted. With digital technology creeping into every aspect of our lives consumers will come to expect similar services from their banks. Loyalty will have to be earned, as regulators make it ever easier for customers to switch. That will depend on convenience and personalisation, so banks better start moving quickly to make sure they have a clear, integrated view of their customers’ interactions across all their products and services. Without this understanding the challenger banks, who are not burden with the same complex legacy systems, will quickly show how their digital expertise and responsiveness will be a more attractive proposition for consumers.”

According to James Moffat, CEO at Organic: “Banking is an industry dealing with an image problem. Since the financial fallout of 2008 the sector has become something of a pariah in the eyes of the British public. Yet people are still remarkably loyal to their bank, but is this simply a result of the customers’ day-to-day experience being merely ‘acceptable’? And is that a long-term strategy for any business? Those that succeed will be the organisations that take the time to understand what the customer wants and adding value to their offering. The winners will be those that can differentiate themselves from the pack and innovate in the future.”

To read more about the DMA's Customer Engagement research into the Financial Services sector, including the full report, visit: http://dma.org.uk/article/talking-the-consumers-language-financial-services