World Retail Banking Report 2015: alarming increase in customers willing to leave their banks

The competitive threat to banks is accelerating due to the bank’s inability to quickly adapt and innovate while burdened with legacy infrastructures and the introduction of agile and digitally-savvy non-traditional players and new entrants such as Apple Pay or crowdfunding sites, according to the latest 2015 edition of World Retail Banking Report.

For the second year in a row, improvement in global retail bank customer experience levels has stalled with a decline of less than 1% leaving banks challenged to drive top-line growth. The report find stagnating global customer experience levels combined with an alarming increase in customers willing to leave their banks.

The World Retail Banking Report 2015 by Capgemini and Efma finds customer experience levels are stagnating as non-bank players with their agile and innovative value propositions make it difficult for banks to keep up with rising expectations around personalized, engaging and seamless customer experiences. The report draws on one of the industry’s largest customer experience surveys including responses from over 16,000 customers across 32 countries as well as in-depth executive interviews.

The percentage of customers who said they were likely to leave their primary bank in the next six months rose into double-digits in every region (increased to over 15% in some regions), except Western Europe. Globally, less than 50% of Gen Y customers are likely to continue with their primary bank in the next six months. Reasons cited include an increase in non-bank competition, growth of start-up banks which offer attractive digital products, and the ease in logistically switching banks.

Banks also appear to have stalled in their ability to steer customers away from the branch toward lower-cost channels. Despite significant leaps to high rates of usage for both the internet and mobile channels, the impact on branch footfall was minimal. In fact, branch visits rose modestly in North America and Europe during 2014, while decreasing only slightly in Latin America and barely at all in Asia-Pacific.

Bank executives have not hesitated to invest in the front office, with almost 93% citing customer experience as the main driver behind such investments. However, underfunding in the middle and back offices has undermined these front-office investments, says the report, through slow processing times, errors, and exceptions that contribute greatly to reduced service in customer interactions.

The report says tha Banks still have work to do in transitioning customers from branches to digital channels. „Customers perceive the branch as offering better service than the internet for both complex and simple services.”

“Disenchanted customers, combined with the agility and innovative nature of non-bank competitors, is leaving the door wide open for capturing market-share,” says Jean Lassignardie, chief sales and marketing officer at Capgemini Global Financial Services. “Improving customer experience is the best strategy to deflect competition from non-bank players. While investments in improving front office customer experience have expanded banks’ offerings, middle and back office transformation has been plagued by under-investment and will be the key to resolving disjointed customer experiences and improving longer term loyalty rates.