Banks must use IT to help them better engagement with customers, who are increasingly keeping them at arm’s length as a result of a lack of trust and a preference for more transactional relationships.
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According to research from Accenture, the depth and quality of interactions between banks and their customers is declining.
The research revealed that customer activity using branch and online channels is falling while interaction on mobile platforms – involving quick, transactional interactions only – doubled. Accenture's survey of 4,000 UK current account holder found daily and weekly online banking activity has fallen since 2010, while branch activity declined 19% in 2010 and 15% in 2011.
“This year’s survey results underscored the banking industry’s central challenge to re-engage customers, as the ‘human element’ of the relationship diminishes,” said Peter Kirk, managing director of Accenture distribution and marketing services, UK.
“Banks’ success in rolling out efficient, user-friendly digital channels and its continuing consumer trust issues may be contributing to an increasingly arm’s length relationship between institutions and their customers, which impacts their opportunities to sell and build loyalty.”
Banks will not only face difficulties selling more to customers, but could lose customers as loyalty declines. The survey revealed 15% of consumers had switched banks in 2012, compared with 10% in 2010.
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This is likely to increase further as government rules – designed to make it easier for UK citizens to change bank accounts – comes into force later this year. UK regulation dictates that UK bank customers should be able to switch bank accounts in seven days by September.
“Banks can do more to engage with their customers in ways that strengthen their relationships. They should focus on the customer experience, so that across channels, customers receive a fast, efficient service,” said Kirk.
"Given the increased competition in the marketplace, established banks must reward loyalty. And they must personalise how they engage with customers digitally, using big data and analytics to tailor a multi-channel experience.”
UK banks are beginning to invest more in mobile banking to take them beyond being merely transactional services.
Banks in the UK have a long way to go to match the mobile banking experiences of consumers in Asia, for example, where customers often select a bank based on its mobile app.
Daniel Mayo, financial services analyst at Ovum, said banks need to add value through mobile.
“On the mobile side, banks have to offer value added services such as fraud validation where a bank will alert customers when they see any activity out of the ordinary," said Mayo.
"Customers will value this because they know the bank is looking after them.”
He said it is important banks enable their clients to customise mobile services to prevent them being seen as a marketing channel.