Customer satisfaction is up in the financial services industry, but…

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It’s a question that every retail bank in the UK worries about: how satisfied are our customers? It’s one that has recently been answered by the UK Institute of Customer Service (ICS) in its bi-annual Customer Satisfaction Index. The July – December 2016 report found that banks and building societies have improved their overall level of customer satisfaction compared with the previous two reports, with an overall score of 79.5 points (out of a maximum of 100). Hats off to Nationwide and First Direct, which both appeared in the ‘top ten list of organisations for customer satisfaction’.

This ‘state of the nation’ report surveys a representative sample of 10,000 customers in the UK to glean insight into how 13 key industries compare to one another for customer satisfaction, based on factors, such as the speed of their complaints handling. It’s good news for the financial services industry as customers are happier with the service offered by their banks than their insurance, utility and telcos providers.

When considering the last decade in banking – from the lows of the financial crash, to the highs of digital transformation – it’s encouraging to see that customer satisfaction levels are relatively high (for the time being). But customer service is just one part of the picture when it comes to customers forming perceptions of their banks. How can banks improve their relationship with customers – and ultimately increase loyalty?

Becoming a bigger part of customers’ lives

Frequency of interaction is high in banking; the British Business Association reported that customers logged on to their banking apps 11 million times in 2015.  There is huge potential for banks to capitalise on this and move from being a functional service to a meaningful part of a consumer’s life.

Research also shows that customers who interact more frequently via multiple channels, and buy additional products or services from their bank, are more engaged and less likely to switch providers. While frequency of interaction is important, so too is quality. Providing a service outside of a bank’s traditional remit – such as credit score improvement service and fitness offers – helps a bank to become intrinsic to a person’s life and extend their influence to become a valued, integral part of their customers’ lives.

The power of the customer marketer

With so much choice available, and switching banks now relatively hassle-free, customers have the freedom to pick and choose between providers, accounts and services. This increased competition is making it more challenging than ever for banks to keep their customers loyal. But before reaching the point of loyalty, banks must first build a relationship with their customers founded on satisfaction and trust. This, in turn, will lead to deeper engagement which brings with it many benefits; engaged customers are more likely to stay with a brand, spend more and recommend to family and friends. And banks shouldn’t underestimate the power of peer group and family recommendations when it comes to deciding where to bank. Money matters are extremely sensitive and personal so it makes sense that consumers look to their closest relationships for advice.

Brand advocacy is not something that any marketing department can buy, but is the most significant in terms of customer value because it can only come from a customer who is completely immersed in the relationship. I believe if banks can become a larger part of their customers’ lives, supporting them not just with financial affairs but other areas of their lives, this will lead to enhanced engagement.

Why should customer engagement matter for banks? 

Customer engagement should matter as engaged customers are more likely to stay with a brand for longer, spend more and recommend to family and friends. This means that financial services providers must nurture relationships with their existing customer base, and look to extend their influence in their customers’ lives to build engagement. This is what ultimately drives business growth so should be a key driver in any business’ marketing strategy.

The ICS report showed promising signs of improving customer satisfaction levels in an industry haunted by the recession and high-profile data hacking scandals. Customer service is, of course, crucial to keeping customers happy, but, more than this, banks that engage with their customers, and nurture their relationships to the point of advocacy, are more likely to achieve long-term loyalty.