3 Statistics that Prove Banks Have a Problem

By: Clarabridge Team

February 2, 2017

Tags:
banking
Banks
cx
Finance
Clarabridge Analytics
Customer Experience
Customer Journey
Banking
Customer Feedback Management
Customer Journey Mapping

Banks encounter many of the same problems as other enterprises— customer retention and loyalty, revenue growth, etc. However, Clarabridge research has uncovered specific problems that financial institutions face in today’s business environment.

These problems all point to the same solution – the need to understand exactly what customers are thinking and feeling about your brand. This lets you better serve account holders, address regulatory requirements, and ultimately, keep customers coming back. So, what exactly are banks facing today?

22% of customers think banks are all the same

Banks provide a certain set of services that can be hard for customers to differentiate. While that’s not exactly great news, it gets even worse: not only do customers find financial institutions to be about the same, they also give them uniformly low sentiment scores, a result that holds true for both US and UK banks.

83% of customers find it easy to switch to a different banking provider

About 17% of customers are only keeping their current provider because they think it is too difficult to switch to a different provider, and even that low percentage is rapidly declining.

The majority of customers realize that it is no longer a big chore to make a change. In most cases they can even switch online – they don’t have to visit a branch of their old bank or their new one in order to switch. In fact, easy switching has become a competitive differentiator, with many banks publishing step-by-step instructions on their websites, offering downloadable “switch kits,” and advertising that they make it easy to join them.

 

US and European banks paid $65 Billion in fines in 2014

Banking regulations are now tighter than ever. The Wall Street Journal reports that in 2014, US and European banks paid nearly $65 billion in penalties and fines. This record-breaking number was an increase of about 40% over 2013, which was the previous high.

Some of these penalties are directly tied to poor customer experience. In the US, for example, the Consumer Financial Protection Bureau (CFPB) collects consumer stories to help identify problems that they need to investigate, giving the banks only 15 days to respond to the customer and the CFPB for most cases. The CFPB seeks restitution for customers and levies penalties against offending organization.

If you are really listening and understanding customer sentiment, your customers’ feedback will not only prevent fines, but identify areas for improvement as well.

 

How to overcome these challenges

Despite providing a critical service to consumers, banks are not always regarded highly. Customers see little difference between banks and find it easy to switch providers.  Banks are also held responsible for poor complaints handling and lack of transparency.

That’s why banks must monitor, analyze, and manage the customer experience. Understanding exactly what customers are thinking and how they are feeling about your financial brand helps to better serve account holders and address regulatory requirements at the same time.

Customer experience is a competitive differentiator. 41% of customers who opened a new account in 2014 did so because of the customer experience. Through our research and our experience working with our many banking customers, Clarabridge has identified key best practices that have proven successful in raising customer satisfaction levels for financial organizations.

To learn more about these strategies, read our eBook CX for Banks.