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Thirty percent of banking customers transact with more than one bank with 2.4% of churn expected among primary bank customers within one year, according to a study by IBM. Private sector banks fare slightly better in customer penetration due to a larger portfolio of account offerings and their ability to leverage process capabilities to unlock higher revenue opportunities.
The study shows that 87% of customers have only one account with their primary bank and only 58% of their investments lie with them. This provides potential business opportunities for other banks to take advantage of the remaining 42% of customer investments with the help of analytics backed personalization.
This clearly indicates the growing need of banks in understanding the nuances of investment behavior and preferences of their customers.
Major industry gaps which need to be addressed along with technology adoption
1. Need of enhancing Customer Experience: 50% of customers acquire information about banks through word-of-mouth and 2.4% of churn is expected among primary bank customers within one year. Technology can help provide continuous enhancement/support for front end process automation tools through analytics solutions and intuitive digital channels.
2. Evolution of Omni-Channel Distribution: The prime reasons for customer dissatisfaction are unsatisfactory branch experience (63.6% of respondents), problem resolution (55.3%) and channel experience (41%). Uniform experience across channels is a prime factor to increase satisfaction levels.
3. Driving account/ customer penetration through Cross Selling: The survey reveals that there is a huge gap between the numbers of monthly transactions (81%) v/s wallet share (58%). It’s important for banks to understand the customers’ selection criteria in the context of their savings and investments, customizing services accordingly.
4. Developing Social media platforms: Nearly 26%of customers use social media for banking related activities, 25 - 35% of these same customers use it as an information ‘exchange’ and 61% use social media as an information source. With technology in place, banks can leverage analytics to identify new revenue sources from customer interactions and information captured through conversations and online discussions.
5. Channel Adoption – Primary and Alternative Channels: The survey reveals that the adoption of internet banking (22.1%), mobile apps (13.6%) and credit cards (24.1%) is still low; less than 45% of customers prefer ATMs due to safer use and error free transactions. Through technology adoption, banks can even further improve security/ errors through intelligent and secure ATMs,
6. Personalization and Loyalty Programs: According to the survey 72% of customers are ready to update their personal information at-least once every 6 months and 67% of customers mention that their bank has not made efforts to personalize their services. With better CRM/ POS/ web solutions integrated with cross-channel customer data sources, banks can offer better advisory service and loyalty programs.
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