Customer dissatisfaction and lesser reach among factors working against private players
Private sector banks are at a higher risk of losing customers than their public sector counterparts, chiefly due to unsatisfactory customer services.
This is also based on the fact that about 41 per cent of private bank customers transact with more than one bank, compared with 24 per cent at public sector banks, according to a study commissioned by IBM and conducted by the International Data Corporation (IDC). Merely offering various services, investment options and transaction channels will not attract or retain customers. These are just a hygiene factor for customers, the study, which will be released on Thursday, said.
“Many customers of private banks are sitting on the fence, which is a dangerous situation,” said Venkatramani Subramanian, Vice-President and Leader for Banking, Financial Services and Insurance (BFSI), at IBM India South Asia.
“Public sector banks have significant loyalty among a certain age group, and more importantly they have Government accounts. However, private sector bank accounts are held by youngsters,” Subramanian said. The survey, however, does not mention who the gainers would be in case of a churn.
“For the private sector banks, the relationship with customers is primarily a transaction relationship and there is a lot of under-penetration. They need to look at fundamental assessment of what customers want, where do they want and how do they want it.” The study — ‘Understanding the Indian Retail Banking Customer’ — is based on findings from more than 5,000 customers spanning 10 banks (five each from the public and private sectors) in the country.
According to the study, there is a great opportunity for the sector to deploy new age technologies which can help innovate, grow, connect and sustain customers.
Ensuring quality experience is critical for customer acquisition and retention.
Eighty six per cent of the 41 per cent customers of private banks possess accounts at PSU banks as well, and 2.4 per cent churn is expected among primary bank customers within one year, it said.
The banks will have to build an overall experience of services (in terms of ease of use, speed of transactions and accessibility, among others).
The prime reasons for customer dissatisfaction are unsatisfactory branch experience (63.6 per cent of respondents), problem resolution (55.3 per cent) and channel experience (41 per cent).
The survey reveals that the adoption of Internet banking (22.1 per cent), mobile applications (13.6 per cent) and credit cards (24.1 per cent) is still low. About 45 per cent of customers prefer ATMs due to safer use and error-free transactions.
It is important for banks to understand the customers’ selection criteria in the context of their savings and investments and customising services accordingly, the study says.
Nearly 26 per cent of customers use social media for banking-related activities, 25-35 per cent of these same customers use it as an information ‘exchange’ and 61 per cent use social media as an information source.
With technology in place, banks can leverage analytics to identify new revenue sources from customer interactions and information captured through conversations and online discussions.