Useful to U.S. financial institutions as a mirror to their own strategic plans, a study covering 15 emerging countries in Asia, Middle East, and European markets highlights the growing focus on omnichannel adoption.
SunGard project indicates that regulatory requirements; greater competition from challenger banks; soaring customer expectations; and technological developments such as big data will see banks increasingly turn to technology-driven solutions to survive, thrive, and remain competitive in this industry.
“This research clearly shows that eroding customer trust can cause long-term challenges for retail banks in emerging markets,” says Chinmaya Joshi, principal solution consultant, SunGard’s retail banking business. “However, it also represents an opportunity for banks to realign their core offerings and redefine how they interact with the customer.”
Trends in emerging nations
SunGard’s report was completed in partnership with Retail Banker International. More than 1,500 customers were surveyed in 15 countries. Key insights include:
• Trust and loyalty directly influence risk of defection to a competitor bank.
Reducing the risk of customer defection remains a significant challenge. Ninety percent of respondents have more than one banking relationship. One-third—32%—citing lack of trust in a single institution as their reason, while 40% do so to spread risk across multiple institutions.
Faced with growing competition from new entrants, banks across the emerging regions should address trust and loyalty issues, particularly in South East Asia where digital banking has high adoption rates and lower switching barriers.
• A customer-centric view is essential in developing deeper customer relationships.
A lack of personalized services is fueling multibank relationships according to 38% of customers. Additionally, 79% of respondents are prepared to use social media such as Google (42%), Facebook (39%), and Twitter (34%) to voice a complaint, in comparison to a bank’s own internet banking channel (41%).
This suggests banks should focus on building a customer-centric model, incorporating multiple data sources such as social media, to obtain a 360-degree view of the customer. This will allow banks to make the mindset shift from meeting customer needs to proactively anticipating them, and consequently developing highly personalized product and segment strategies.
• Pressing need for an omnichannel strategy built around personalized services.
Customers across emerging markets indicate high levels of readiness for change. Twenty-five percent of respondents do not have a consistent experience every time they interact with their bank, with this figure even higher in the Middle East.
An effective omnichannel strategy can help ensure a more personal customer experience across all devices and channels used by the customer. Forward-thinking banks will increasingly use digital platforms, SunGard suggests, to deliver day-to-day transactional banking services enabling branches to be refocused on advice, sales, and personal service which are more suited to face-to-face interaction.
• Drive deeper customer intelligence by leveraging big data.
Sixty-four percent of respondents are willing to share additional information with their bank in order to receive more customized products. Banks therefore need analytical capabilities to turn big data into greater customer intelligence.
This will enable the creation of more accurate and powerful customer acquisition strategies, targeted marketing opportunities, more effective risk management, and ultimately help deliver better customer experience management, according to SunGard’s analysis.
• Banks not regarded as technology innovators.
Only a quarter of respondents strongly agreed that their bank is a technology innovator. SunGard says this ought to be a major concern, particularly as doing nothing in the face of growing competition from challenger banks is not a viable option.
Newer banks, unburdened by legacy systems, are well positioned to exploit big data and cloud computing to deliver a more agile and flexible customer experience, thus earning greater customer loyalty and building a foundation for future growth.
Joshi adds, “While technology is an important enabler, it will require a shift in investment from the front-office to the back-office to assist the transition to an omnichannel strategy that is capable of leveraging big data and delivering a more engaging and complete customer experience. We believe this will be vital in reducing customer attrition, increasing sustainable growth opportunities, and driving higher levels of profitability.”
Download SunGard’s Bank Readiness Report 2015 [Registration required]