WRBR flags up customers' fragile bank loyalty

With a sample size of 16,000 retail banking customers and covering 32 markets, the World Retail Banking Report is impressive.

With a sample size of 16,000 retail banking customers and covering 32 markets, the World Retail Banking Report – the latest is the 12th such annual report published by Capgemini and EFMA – is one of the most impressive surveys of its type. Douglas Blakey writes

The WRBR report finds that for the second year in a row, customer satisfaction levels have fallen.

It goes on to say that stagnating global customer experience levels combined with an alarming increase in customers willing to leave their banks, points to weakening bank-customer relationships and the increased possibility of disintermediation by non-bank competitors such as brand-name retailers, FinTech firms, crowd-funding websites, peer-to-peer lenders, Internet/mobile service providers, and Apple NFC-based payment systems.

Fair enough and fairly uncontroversial.

So it argues that retail banks must make investments to improve customer experience, especially with middle and back offices, which have historically been ignored and are essential to providing engaging digital services through faster processing times and reduction in errors.

Where the report does raise eyebrows, at least on this desk, is its reference to the number of customers who said they were likely to leave their primary bank in the next six months.

If the report is to be believed – and as stated above – it is a respected report with a deservedly high reputation – account switching will rise into double digits in every region except Western Europe.

According to the WRBR data, customers’ likelihood to leave their banks increased anywhere from nearly 4 percentage points (pp) to over 12pp last year depending on region.

That does seem a tad on the high side. Even more incredible, is the finding that globally, less than 50% Gen Y customers are likely to continue with their primary bank in the next six months.

We have been here before with account switching forecasts. Some frankly, incredibly optimistic and outlandish forecasts were made about switching rates in the UK in the run up to the launch of the seven-day switching initiative.

In the end – and apologies for the ‘told you so’ tone – the Payments Council did a sterling job and the banks have administered seven day switching with impressive efficiency.

Actual number switching: in the 12-month period from 1 April 2014 to 31 March 2015 there were 1.14 million switches, up from 1.06 million switches in the same time period one year before.

So an increase of 7%.

The WRBR report is essential reading and warmly recommended. Forgive me if I remain sceptical in the extreme as regards the section of the report relating to prospective account switching.