BAI Study: Having a Relationship with their Banking Institution Low on Consumers' Priority List
ORLANDO, Fla. - Banks that have a one-size-fits-all approach for relationship-building and consider relationship banking or service quality important features to hone have got their priorities wrong. According to the results of the study shared with attendees at the recent BAI Retail Delivery Conference & Expo, most banking customers say...
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ORLANDO, Fla. – Banks that have a one-size-fits-all approach for relationship-building and consider relationship banking or service quality important features to hone have got their priorities wrong. According to the results of the study shared with attendees at the recent BAI Retail Delivery Conference & Expo, most banking customers say having a relationship with their banking institution is low on their priority list. “The Frontline Experience” study, conducted by BAI in collaboration with Accenture, SAP, De La Rue and NewGround, is based on data collected from more than 3,700 banking customers on their views of relationship. That study shows 70% of banking customers are uninterested or even skeptical of relationship banking. BAI President/CEO Deborah Bianucci said the results of the study that are included in a report called “Give the Customers What They Want” is a wake up call for banking organizations who list relationship banking or service quality as their primary customer value proposition. Ninety percent of banks surveyed listed this as a goal. “But while banks tend to view relationship banking in the number of accounts a person has with the bank, a consumer views relationship banking in terms of trust and confidence that the institution is acting in the customer’s best interest,” said Bianucci. Trusting a bank as a financial advisor is the pinnacle of the consumer-bank relationship, said Bianucci, but it is virtually impossible to gain trust without improving a bank’s performance on the front lines. The BAI study determined that a hierarchy of steps need to be fulfilled by banks for their customers to advance to new levels of trust with their bank – from a transaction-based relationship, to a service-based relationship, to the top level of trust – advice-based relationship. BAI Research Senior Managing Director Paul McAdam told conferees, “If you get things wrong at the front line, you’ll never have a chance to become an advisor for your customers. Consumers who base their banking decisions on service and product offerings hold their banks to a high standard, not only for the best product offerings, but exceptional frontline service.” The study identified two consumer segments that make up nearly half of the adult population and have significant assets to invest, but who also have low interest in developing a relationship with a bank: * Service Seekers – this group which made up 29% of respondents, consider accessibility and perception of service quality at their branch to be most important. They tend to be the younger, but higher than average deposit balances. This group is willing to trade pricing options for attention and service. Loyalty and rewards-based programs are an attractive option for banks to improve the relationship receptivity of this group. * Product-Seeking Sophisticates – this group which comprised 19% of respondents, are highly skeptical of their banks and prefer to distribute their investments across best-of-breed providers. They tend to be middle-aged, predominantly male, with a high deposit balance and investable assets. They are very involved with their investments and don’t believe their banks are capable or knowledgeable about the investments best for their situation. To attract this group, the study says banks have an uphill challenge to earn trust at the lower tier before earning respect for their credibility and competency. Online tools and savvy financials are key to attracting these consumers. In addition to the Service Seekers and Product-Seeking Sophisticates, the study also identified three other consumer segments: Relationship Enthusiasts (22%), Confident Relationship Enthusiasts (9%) and Uninvolved Skeptics (21%). While the five segments identified by the study’s findings differ in their characteristics and have different criteria for what makes for a positive relationship with their bank, their do share their desire for competent, personable and trustworthy interactions with knowledgeable frontline staff. Ironically though, a quarter of frontline employees interviewed for the study indicated they felt they were not prepared to handle the demands of relationship banking and needed more training and support for this part of their job. -
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