A survey of more than 23,000 financial consumers across seven key European markets* released today by Forrester Research, Inc. (Nasdaq: FORR) reveals a disconnect between banking customers¿ satisfaction levels and the extent to which they trust their banks. As a result, while few European consumers plan to change banks, they do not necessarily plan to grow the relationship beyond a current account, limiting the banks¿ revenue potential. To turn the tide, Forrester believes that banks will need to focus on what it calls customer advocacy: Creating the perception among customers that the bank does what¿s right for them, not just what¿s right for the bottom line.
Cliff Condon, Principal Analyst, Financial Services at Forrester states: ¿While 64% of European consumers say that they are satisfied with their main bank, and only 5% plan to switch banks in the next 12 months, only 24% would consider their primary bank for the purchase of their next savings account. We believe that customer satisfaction measures don¿t expose the underlying problem in client relationships ¿ most consumers do not feel emotionally engaged with their bank. For banks to build the emotional attachments necessary to drive product cross-sales and client loyalty, firms need a new strategy for building customer relationships.¿
Untrusting Consumers Take Greater Control Of Their Finances
Branch closures, fee increases, mis-selling, and industry consolidation during previous years appear to have impacted consumers ¿ only one-third of the survey respondents say that they trust financial institutions to treat them fairly. And less than half of consumers trust the recommendations and advice they receive from their main bank ¿ making it difficult for firms to differentiate their increasingly commoditized products by adding financial advice. Marketing campaigns won¿t change perceptions: Only one-fifth believe that the information contained in promotional materials will help them make better financial decisions.
In addition, consumers have taken greater control of their financial health, further impacting their banking relationships. Today, 55% of European consumers say that they shop around for financial products rather than simply turning to their primary bank. Sixty-five percent research financial information themselves, rather than handing the work over to a financial advisor. A primary source of information is family and friends ¿ 25% of consumers say that they turned to their social network for information about their latest purchase. Consumers do work with financial advisors and agents ¿ 27% of consumers included a conversation with an advisor as part of their research ¿ but they¿re just one of the sources consumers use.
European Banks Score Low On Customer Advocacy
To determine if European banks are customer advocates, Forrester asked the 23,095 survey respondents how much they agreed with the statement, ¿My main bank does what¿s best for me, not just what¿s best for its profits.¿ The results were revealing: On average, only 24% of European consumers believe that their main bank does what¿s right for them, not just what¿s best for its bottom line. Despite 64% of European consumers claiming satisfaction with their bank, more than 75% believe that their bank doesn¿t act in their best interest.
Forrester also states that customer-owned firms score best. Without stock analysts and shareholders to please, these firms can focus on superior service. Condon comments: ¿Forrester evaluated the scores across Europe and identified the top 10 banks in terms of customer advocacy. The UK¿s Nationwide Building Society scored highest, making it Europe¿s top customer advocacy bank. Of the top 10 firms, six are customer-owned institutions like Nationwide. But strong customer advocacy is not the exclusive domain of co-operative banks and building societies ¿ commercial firms like Citibank in Germany also score well, as do Internet banks like the UK¿s first direct.¿
The research mentioned in this release, Building Stronger Customer Relationships””, is available to Forrester WholeView 2¿ clients.