Titled 'Banking Relationships: An Era of Change,' the survey was conducted by third-party research firm, Vantedge Group LLC, on behalf of S1 Enterprise, a division of S1 Corporation (NASDAQ:SONE) and a leading global provider of flexible, bank-centric solutions and payment services.
'Banking Relationship Score' Shows Relationships At Risk
The survey also establishes a new benchmark for tracking the strength of the relationship between banks and customers. The Banking Relationship Score (BRS) is a multi-dimensional measurement that combines three stated and emotional factors: trust in one's current bank; likelihood to continue with one's current bank; and likelihood to recommend one's current bank to others. The overall Banking Relationship Score for U.S. financial institutions came in at just over 55, well into the 'at risk' zone and 20 points below the target range of 75 or above which designates strong relationships. European financial institutions scored even lower, with a BRS below 28.
A proxy for the health of the overall banking relationship, BRS scores fall into one of three ranges developed by Vantedge Group based on analysis and benchmarking across a variety of industries:
- Strong Relationship = a score of 75 or higher
- Neutral Relationship = a score of 60 to 74
- At-Risk Relationship = a score below 60
"The severity of the downturn for financial institutions has clearly eroded key components of the banking relationship, while increasing the importance of emotional drivers like trust," said Read Ziegler, president and CEO of Vantedge Group. "By weighing the trust factor against the stated likelihood of consumers to stay with as well as recommend their bank, we can get a fresh new perspective on the health of the bank-customer relationship on a national level."
"Banking relationships are clearly at a crossroads," said Mark Moore, vice president of Marketing for S1 Enterprise. "But the more important question is what banks can do to combat these trends and rebuild relationships with their customers, both on the consumer and corporate sides of the business. The way in which banks interact with their customers matters today more than ever."
The results highlight the growing importance of banks building back trust and confidence through a greater focus on customer intimacy across all banking channels (online, mobile, branch/teller and call center). For example, when asked their preference for interacting with their banks, a majority of consumer respondents (41 percent) said 'in person at the branch,' followed by a more even split between a combination of in person and online (28 percent) and online only (23 percent).
The survey results suggest specific steps that banks can take to build stronger customer relationships. These include tailoring communications, services and the overall banking experience to individual customer segments across all delivery channels. This means banks will need to better harness data and analytics for deeper insight in order to provide advice about how customers can better manage their financial lives. "The research suggests banks should strive to create a culture of customer advocacy, one that promotes proactive service, honesty and greater transparency into a bank's financial health," added Moore.
Other top findings from the survey include:
- Overall, only 16 percent of U.S. consumers indicated they were feeling positive about an economic recovery within the next 12 months.
- While 70 percent of U.S. consumers say they're likely to stay with their current bank, only 50 percent would actually recommend their current bank to someone else. Another 25 percent say they'd be more likely to dissuade someone from becoming a customer.
- When broken down by demographic factors, the Bank Relationship Score model revealed that young, affluent males with less than three accounts with their primary bank represent the customer group at greatest risk for defecting.
- The survey of corporate banking customers found 'Trust' to be the number one factor in building valuable banking relationships (70 percent of corporate respondents). As the financial landscape continues to shift, 50 percent of corporate respondents noted that they intend to keep their banking relationships limited to a small group of less than five institutions (the smallest option available on the survey questionnaire).
- Only 41 percent of large corporations indicated they would be likely to recommend their financial institution to a friend or colleague, and only 46 percent noted that they are likely to continue a relationship with their bank.
