Silver lining? Consumer confidence in banks improves along with economic recovery
Recent studies suggest that banks in the UK are rebuilding their reputation among consumers and investments in mobile and digital are at least in part responsible –though trust remains fragile and other studies highlight concerns over pricing and transparency.
Customer satisfaction across all sectors in the UK has flat-lined over the past six months, but some that regularly attract scrutiny – including banking – have shown signs of improvement, according to the latest UK Customer Satisfaction Index from The Institute of Customer Service.
This is echoed by another report UK, from member-based advisory company CEB, that says consumers are more confident in the banking industry than at any other time in the last three years.
CEB says “a robust 36% (net) of UK consumers are satisfied with the products and services offered by providers”, more than double the global average of 17%.
For the first time since the report began in 2011, UK consumers are also feeling positive about their own personal finances, putting more money into savings and paying off debt as a result of improving economic conditions.
Beyond personal financial well-being, Brits’ improving picture of banks appears to be driven by banks’ investments in digital and mobile channels. Smartphones and tablets are becoming the fastest-growing channels for personal banking, reducing the need for physical branches and causing banks to pour the lion’s share of new investments into new technologies.
Peter Aykens, managing director at CEB, said: “Consumer financial sentiment in the UK showed a number of positive findings, indicating the average person may finally be feeling the recovery in their lives and wallets. In addition to feelings about personal finances, the harder-hit lower income and middle-aged consumers have also made clear gains.”
Yet despite banks’ positive “digital turn” and consumers’ product satisfaction, most people remain wary about the motivations and values of the banking industry as a whole. A net -44% of people have “little or no confidence” in the ability of the banks to keep their promises, while a net -51% said they did not believe that banks care about their customers.
“Despite the positive direction of consumer sentiment, banks are still very vulnerable,” said Aykens. “It appears UK customers are willing to forgo brand affinity for the sake of convenient offerings in their dealings with bank and non-bank providers. While technology has benefited traditional financial institutions in their product development, it could also prove to be a double-edged sword as emerging financial technology firms with cleaner reputations and easy-to-use products increasingly enter the market.”
In the ICS’s UK Customer Satisfaction Index First Direct tops the index for the first time, overtaking Amazon and John Lewis as the UK’s number one for customer service. TSB (37th) also showed impressive growth, reaching the top 50 for the first time.
According to the ICS the banks and building societies sector is successfully rebuilding its reputation – climbing into the top four for the first time since January 2009, and the only sector from the top six to improve.
Jo Causon, chief of The Institute of Customer Service, said: “Customer satisfaction may have stabilised for the first time in two years, but there is still more to do. The index uncovers a number of consistently high performing organisations, but with increasing customer expectations and competition there is no room for complacency. The results show a polarisation of performance, with some organisations succeeding through a sustained focus on service whilst others struggle to adapt and compete’’.
In a climate of rising customer expectations, organisations’ ability to deal efficiently with problems and complaints is also under the spotlight. Of those customers with a complaint, the latest data shows that 41.3% had to escalate the issue – the highest proportion since January 2012. It is also clear from the data that an increasing number of customers are requesting compensation in light of a problem – 31.7% seeking financial redress, up from 26.8% a year ago.
Causon said: “UK plc must do more to address rising customer expectations. Organisations that ignore consumers will find it difficult to compete with those that already have a long-term culture of customer service. The longer we wait the more difficult it will be to implement.”
The study also reveals that satisfaction levels vary by age, with those aged 25-34 the least content with the service they receive. Data also indicates gender and regional differences, suggesting that UK organisations need to adopt a variety of approaches if they are to boost customer satisfaction.