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Customer loyalty in retail banking: Global edition 2014 | Bain & Company, Inc.
Contents
Going Digical . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . pg. 1
1.
2.
3.
Page i
Page ii
Customer loyalty in retail banking: Global edition 2014 | Bain & Company, Inc.
Going Digical
Banking customers now handle more of their banking interactions, on average, via smartphones and tablets than
through any other channel, this years report showsand the mobile channel has become a key element in the bid
to earn customer loyalty. Increased loyalty, in turn, pays off for a bank with customers buying more products and
making more referrals, which allow the bank to capture more than its fair share of new sales.
Mobile does not stand alone, however; it must be integrated with other channels like branches and contact centers
to deliver seamless and simple customer experiences. Most banks realize that they need to reimagine their endto-end customer experiences across all channels to make the most of the new mobile capabilities. But they have
been struggling to integrate channels across the numerous departments of their large, complex organizations.
Still, many of the largest banks worldwide have made progress in closing the loyalty gap with the loyalty leaders,
which often are smaller, more focused and nimble banks.
JPMorgan Chase, for instance, has gained in almost every region of the US; Royal Bank of Canada made strides
during the year; and all four big banks in Australia improved their scores signicantly. The banks that have begun
to pull ahead will likely accelerate their progress as they further sharpen their focus on earning loyalty. Those that
dont pick up the pace risk falling further behind.
This years report, based on Bains survey of roughly 83,000 consumers in 22 countries, explores how people
do their banking and how banks are adapting their distribution and service channels to address customer needs
and improve the economics of the business. The research occurred online in July through November 2014, through
market research rm Research Now.
Page 1
Customer loyalty in retail banking: Global edition 2014 | Bain & Company, Inc.
Page 2
Customer loyalty in retail banking: Global edition 2014 | Bain & Company, Inc.
Kabbage, which has developed an underwriting process to instantly lend up to $100,000, stand to capture a
greater share of banks more protable lines of business.
Some banks, such as JPMorgan Chase and USAA in the US, Nationwide in the UK and Hang Seng in Hong Kong,
have begun to address defection through different combinations of earning strong loyalty, elding strong
products and improving sales capabilities. But for all banks, digital technology increasingly is critical for effective
selling. When US consumers researched or considered a new nancial product like a mortgage, they typically
used at least four or five sources of information, with the most frequently used source being their banks
website and the least used being mobile apps. Deploying mobile apps to make it easy for customers to connect to the right bank resources and employees during their shopping process, and preapproving them for the best
offer, could substantially raise the odds of winning the sale.
Page 3
Customer loyalty in retail banking: Global edition 2014 | Bain & Company, Inc.
Journey mapping and benchmarking against banking competitors and best-in-class rms in other industries provide
a data-driven audit to identify gaps in capabilities and appeal. It should be easy and intuitive for customers to
navigate a website or a mobile app, and the presentation should feel empathetic and not clinical.
Benchmarking must be complemented by a design process that will allow a bank to stand out from the crowd.
We have found that an effective mechanism to bring key customer moments to life is a storyboard created with
the help of artists and writers. Storyboards, when combined with engaging real customers to cocreate digital tools
through rapid prototyping and hands-on testing, lead to a clear view of the next horizon for each customer journey.
Build
Design principles
Use
Design process
Page 4
Customer loyalty in retail banking: Global edition 2014 | Bain & Company, Inc.
Check balance
Frequency of use
(Average monthly visits, indexed)
10,000
Priority
experiences
Everyday transactions
5,000
Pay bills
150
Resolve a
complex
problem
Withdraw cash
Remote
deposit capture
100
Account unexpectedly
blocked
50
Dealing with
matters for
deceased
relative
0
75
80
85
90%
Emotional importance
(Percentage of detractors + percentage of promoters)
Page 5
1.
Global loyalty trends
Customer loyalty in retail banking: Global edition 2014 | Bain & Company, Inc.
Figure 3: In most markets, there is a large gap between leaders and laggards
Primary banks Net Promoter Scores relative to loyalty leader, which is indexed to zero, 2014
100%
80
60
40
Americas
Canada
Mexico
US: Northeast
US: Midwest
Huntington
Chase Bank, Regions Bank
US: South
Bendigo Bank
ING Direct
China Construction Bank, Bank of
Communications, China Merchants Bank
Australia
China
Hong Kong
Citibank
India
Indonesia
BCA
Japan
Shinsei Bank
Malaysia
Singapore
Citibank
South Korea
Shinhan Bank
Belgium
Argenta Spaarbank
La Banque Postale
France
Sparda-Banken
DKB
Germany
Europe
USAA
US: West
Asia-Pacific
20
Banca Mediolanum
Italy
Poland
ING Bank
Spain
Bankinter
Nationwide
UK
Lowest bank
Average
first direct
Notes: Country averages include all banks; highest and lowest banks include only banks where n200 for the Americas and Europe and n100 for Asia-Pacific; excludes markets
with insufficient number of banks; traditional banks include large building societies or credit unions.
Source: Bain/Research Now NPS surveys, 2014
Page 8
Customer loyalty in retail banking: Global edition 2014 | Bain & Company, Inc.
Figure 4: In many countries, large branch big banks have been closing the loyalty gap with direct
banks
Net Promoter Score
US
Canada
80%
Australia
80%
80%
60
60
Direct
banks
60
Direct
banks
40
40
40
Regional
banks
20
Big Five
banks
20
National
banks
0
20
20
20
10
11
12
13
14
2011
Germany
12
13
14
Direct
banks
40
Big Four
banks
13
14
Italy
80%
60
2012
UK
80%
Regional/
smaller
banks
20
2009
Direct
banks
80%
Direct
banks
60
40
60
Direct
banks
40
Building
societies
20
20
20
International
banks
Credit
unions
0
Large branch
banks
20
2012
Large branch
banks
20
13
14
2012
National
banks
Large
regional
banks
20
13
Page 9
14
2013
14
2.
Online usage showed declines or was at everywhere except in Indonesia, Mexico and Japan
an average 3 percentage point decline worldwide.
Growth in mobile has not just cut into online usage;
it also coincided with declines in branch, ATM and
phone usage. In the US the share of respondents
using these channels dropped by 5, 3 and 5 percentage points, respectively, since 2012.
Respondents under age 35 were more likely than
older customers to bank via mobile devices. But the
share of customers age 65 and older who use
mobile is a substantial 30%and mobile usage
rose sharply among all age groups.
Roughly 60% of customers used a combination of
digital and physical channels. These omnichannel
customers gave their primary bank an NPS that was
16 percentage points higher than the NPS of customers using only digital channels and 22 points higher
than the NPS of those using only physical channels.
They also own more products through their primary
bank than those who use only digital or only physical channels: 1.0 and 1.3 products, respectively.
For product research and consideration, US respondents most frequently turned to their banks website, highlighting the importance of a welldesigned, intuitive site. Next, respondents turned
to bank employees. Other sourcessuch as direct
mail or, for credit cards, another websitehad a
prominent inuence for individual products. Mobile
has yet to be effectively tapped for selling.
Customer loyalty in retail banking: Global edition 2014 | Bain & Company, Inc.
Figure 5: Digital channels accounted for the majority of all interactions in most countries
Percentage of total interactions in last quarter, 2014
100%
80
60
40
20
Online
Mobile (smartphone/tablet)
ATM
Phone
Japan
Mexico
India
Italy
Hong Kong
Malaysia
Portugal
Indonesia
Singapore
Thailand
China
Poland
Spain
UK
Brazil
Belgium
Canada
Germany
France
US
Australia
Branch
Figure 6: Customers use of mobile banking applications surged by 19 percentage points worldwide
Percentage of respondents who used mobile banking apps in last quarter
80%
77
73
64
59
60
58
58
54
49
47
45
44
43
42
40
41
39
34
31
30
27
21
20
19
Note: 2013 data was excluded where data was not available or not comparable to 2014 data.
Sources: Bain/Research Now NPS surveys, 2014; Bain/Research Now and Bain/GMI NPS surveys, 2013
Page 12
2013
Japan
Germany
Belgium
France
Portugal
Canada
Brazil
UK
Italy
US
Spain
Mexico
Australia
Hong Kong
Malaysia
Poland
Singapore
India
Thailand
China
Indonesia
Customer loyalty in retail banking: Global edition 2014 | Bain & Company, Inc.
Figure 7: In most countries, the use of online tools for routine transactions declined
Percentage of respondents who used online tools (via computer, not mobile) for routine transactions in last quarter
100%
88
81
80
79
78
77
77
76
76
74
74
73
71
70
69
68
67
66
60
61
59
52
52
40
Japan
Poland
33
33
Germany
Mexico
Malaysia
Brazil
Thailand
Spain
France
Portugal
Japan
US
Italy
UK
Hong Kong
Singapore
Germany
Belgium
India
Canada
Australia
Indonesia
China
20
2013
Note: 2013 data was excluded where data was not available or not comparable to 2014 data.
Sources: Bain/Research Now NPS surveys, 2014; Bain/Research Now and Bain/GMI NPS surveys, 2013
80
82
80
79
77
75
68
66
64
60
63
60
60
59
58
57
55
54
53
49
47
44
40
20
Note: 2013 data was excluded where data was not available or not comparable to 2014 data.
Sources: Bain/Research Now NPS surveys, 2014; Bain/Research Now and Bain/GMI NPS surveys, 2013
Page 13
2013
Poland
Belgium
Singapore
France
Australia
Hong Kong
Portugal
Thailand
Malaysia
South Korea
UK
Canada
Spain
Italy
US
India
Brazil
Mexico
Indonesia
China
Customer loyalty in retail banking: Global edition 2014 | Bain & Company, Inc.
Figure 9: Mobiles rise came at the expense of online, ATM and branch usage
Total interactions in last quarter
Canada
Spain
Change
(% points)
100%
India
Change
(% points)
100%
0
80
100%
1
80
60
60
11
40
40
20
40
20
2014
Mobile
2013
Online
+12
0
2014
ATM
Phone
20
+8
+15
2013
80
3
60
Change
(% points)
2013
2014
Branch
Sources: Bain/Research Now NPS surveys, 2014; Bain/Research Now and Bain/GMI NPS surveys, 2013
Figure 10: With the rise of mobile, even online usage has started to decline
Percentage of respondents using channel in US
100%
20122014
change
(% points)
80
Online
Branch
3
5
Mobile
20
Phone
60
40
20
0
2012
2013
2014
Page 14
Customer loyalty in retail banking: Global edition 2014 | Bain & Company, Inc.
45
France
US
China
35
UK
Spain
Singapore
Italy
Hong Kong
25
15
Mexico
Japan India
Indonesia
Canada
5
5
15
25
35
Online interactions as a percentage of total interactions
2013
Belgium
45
55%
2014
Note: Country excluded where 2013 data was not available or not comparable to 2014 data.
Source: 2014 Bain/Research Now NPS surveys; 2013 Bain/Research Now and Bain/GMI NPS surveys
Figure 12:
Customers who are promoters of their bank were far more likely than detractors to use mobile
banking apps
Respondents using mobile banking apps as a percentage of total respondents, 2014
US
Canada
Mexico
UK
Spain
50
43
35
31
Poland
40
39
48
41
Belgium
Australia
Hong Kong
62
40
39
30
Detractor
Promoter
Page 15
Singapore
60
59
51
51
26
50
40
45
Customer loyalty in retail banking: Global edition 2014 | Bain & Company, Inc.
Figure 13: Most customers used both digital and physical channels
Percentage of traditional bank respondents, 2014
100%
80
60
40
Branch-only users
Digital-only users
Japan
Germany
Portugal
Singapore
Belgium
Poland
France
Hong Kong
Australia
UK
Malaysia
Thailand
Spain
US
Canada
Mexico
Italy
Brazil
India
China
Indonesia
20
Omnichannel users
Note: Branch only, omnichannel and digital only include respondents who interact via ATM and phone.
Source: Bain/Research Now NPS surveys, 2014
Figure 14: Omnichannel customers are more loyal and more engaged
Omnichannel users gave higher Net Promoter Scores and
held more products at their primary bank
80
68
31
30
27
60
22
20
10
40
11
20
13
Branchonly
Average
number of
products
owned
26
24
10
Digitalonly
Low
Omnichannel
Medium
Branchonly
High
Digitalonly
2.4
2.6
3.0
3.2
Low
Omnichannel
Medium
High
3.2
Mobile
Note: Branch-only, omnichannel and digital-only include respondents who interact via ATM and phone.
Source: Bain/Research Now US NPS surveys, 2014
Page 16
Online
ATM
Phone
Branch
Customer loyalty in retail banking: Global edition 2014 | Bain & Company, Inc.
4
0
10
20
16
Increase in product
ownership from
branch-only users to
omnichannel users
Mexico
Brazil
17
Canada
1.2
0.6
1.3
11
US
0.7
Asia-Pacific
20
20
12
10
4
1 0
10
11
Indonesia
India
China
Australia
2.3
1.9
2.7
1.1
13
13
16
10
45 34
28
21
14
20
Increase in product
ownership from
branch-only users to
omnichannel users
2.7
21
19
Malaysia
Thailand
Japan
1.5
1.5
0.7
Europe
20
10
3
0
2
10
6
9
7 6
12
6
10
16
20
Increase in product
ownership from
branch-only users to
omnichannel users
8 7
22
France
Spain
UK
Poland
Italy
Belgium
Germany
Portugal
0.8
1.2
1.0
0.6
1.2
1.2
0.8
0.9
Branch-only users
Digital-only users
Note: Branch only, omnichannel and digital only include respondents who interact via ATM and phone.
Source: Bain/Research Now NPS surveys, 2014
Page 17
Omnichannel users
Customer loyalty in retail banking: Global edition 2014 | Bain & Company, Inc.
Figure 16: Customers used both digital and human sources when researching and making purchases in the US
Credit card
(primary)
Checking
Savings
Home mortgages
Weighted average
Bank's website
40
Employee at a
bank branch
40
40
30
23
Friend or family
28
19
25
19
25
15
Nonaffiliated
financial adviser
Bank's
smartphone app
15
15
20
20
32
33
42
20
Human
Page 18
26
25
45
29
21
26
18
60%
26
32
18
40
32
29
19
20
60%
44
37
37
21
25
40
32
27
13
23
45
31
28
47
39
31
30
28
45
39
38
28
Nonaffiliated
website
56
20
23
40
Digital
60%
Other
20
18
40
60%
20
40
60%
Customer loyalty in retail banking: Global edition 2014 | Bain & Company, Inc.
Figure 17: The human touch remains important for loyalty when people are looking to buy new products
Respondents' Net Promoter Scores, by source used for product research and purchase decisions in the US, 2014
50%
44
40
40
37
36
35
33
33
32
30
26
23
19
20
10
0
Friend or
family
member
Employee
at a bank
branch
Bank's
website
TV, radio,
print
advertising
or media
Email
from bank
Human
Bank's
mobile
app
Mail from
bank
Nonaffiliated
website
Digital
Phone call
with bank
Bank's
tablet app
Nonaffiliated
bank
adviser
Other
Figure 18:
Branch-only users
20%
Omnichannel users
19
20%
20%
15
10
10
10
10
10
10
13
20
20
20
Number of
interactions
Low
Medium
High
Low
Medium
High
Low
Medium
High
Average number
of products owned
2.3
2.8
3.2
2.3
2.6
2.9
3.2
3.6
3.7
Note: Branch-only, omnichannel and digital-only users include respondents who interact via ATM and phone.
Source: Bain/Research Now Germany NPS survey, 2014
Page 19
3.
Product purchasing
and ownership
trends
Customer loyalty in retail banking: Global edition 2014 | Bain & Company, Inc.
68
63
60
44
40
40
Developing
country
average: 47%
37
32
30
28
28
27
25
24
23
Developed
country
average: 28%
23
20
19
17
17
17
Italy
46
Portugal
48
France
51
Australia
53
50
17
10
Developing country
Belgium
Germany
Canada
Japan
Poland
US
Spain
Brazil
Mexico
UK
South Korea
Indonesia
India
Singapore
Thailand
Hong Kong
Malaysia
China
Developed country
Figure 20:
Hidden defectors often bought high-value products, such as lending, investments and insurance
80
60
40
20
Deposit
Credit card
Loans
Page 22
Investment
Insurance
Other
Indonesia
Brazil
Belgium
UK
China
US
Germany
Singapore
France
Malaysia
Canada
South Korea
India
Australia
Mexico
Spain
Italy
Hong Kong
Poland
Japan
Thailand
Potugal
Customer loyalty in retail banking: Global edition 2014 | Bain & Company, Inc.
Figure 21: Customers who are promoters were far more likely than detractors to buy their next product
from their primary bank
Purchases made at primary bank as a percentage of all purchases in that category in Australia, 2014
Checking account
82
Savings account
90
74
83
84
70
49
Term deposit
Personal loan
76
44
65
74
70
53
58
Detractor
48
48
Investment management
72
53
50
Home loan
44
Promoter
Figure 22:
Received an offer
and decided
to get it
80
60
40
I was looking
to buy it
20
0
Home mortgage
Checking
Savings account
Page 23
Customer loyalty in retail banking: Global edition 2014 | Bain & Company, Inc.
Further reading
Winning operating models that convert strategy to results, Marcia Blenko, Eric Garton, Ludovica Mottura
and Oliver Wright, Bain Brief, December 2014.
Rebooting IT: Why nancial institutions need a new technology model, Mike Baxter, Steve Berez and Vishy
Padmanabhan, Bain Brief, September 2014.
Building the retail bank of the future, Mike Baxter and Dirk Vater, Bain Brief, June 2014.
Appendix: Methodology
Bain & Company partnered with Research Now, the online global market research organization, to survey consumer
panels in Australia, Belgium, Brazil, Canada, China, France, Germany, Hong Kong, India, Indonesia, Italy, Japan,
Malaysia, Mexico, Poland, Portugal, Singapore, South Korea, Spain, Thailand, the UK and the US. The surveys
purpose was to gauge customers loyalty to their principal bank and the underlying reasons customers hold the views
they do. Conducted between July and November 2014, the survey polled 82,914 consumers of national branch network banks, regional banks, private banks, direct banks, community banks and credit unions in these countries.
Additionally, in Brazil, we also conducted face-to-face interviews with roughly 1,200 customers. In the Americas and
Europe, for the individual bank analysis, we included only those banks for which we received at least 200 valid responses.
In Asia, we included banks with at least 100 responses. In many instances, sample sizes exceeded these thresholds.
Survey questions
Respondents were rst asked to identify their primary bank, after which they were asked the following questions to
assess their loyalty to that institution:
On a scale of zero to 10, where zero represents not at all likely and 10 represents extremely likely, how
likely are you to recommend your primary bank to a friend or relative?
Tell us why you gave your primary bank the score you did.
We asked what major products respondents hold with their primary bank and with other banks, and which of these
products were purchased in the past year. We also asked which channels they use to do their banking. The remaining
questions elicited demographic prole information: household income, investable assets and region of residence.
We followed up with 602 US respondents to ask more detailed questions about their purchase of specic products,
including the methods they used to research their purchases and the channel they used to purchase the product.
On the question of statistical signicance, the results of our data analysis are robust both for the measurement of
bank NPS by country and for respondent NPS for each demographic category. For the Americas and Europe, the
Page 24
NPS measured for each bank in the country and US regional rankings is statistically significant to an 80%
condence level, with a two-tailed test of the condence interval ranging from 2.6% (n=1,189) to 6.5% (n=200).
In Asia, where sample sizes were smaller, condence intervals are wider, with a maximum of 9.5%.
Countries classied as developed are based on the World Banks high-income category; the developing countries
are based on the World Banks middle- and low-income categories.
Acknowledgments
This report was prepared by Gerard du Toit and Maureen Burns, partners in Bains Financial Services practice,
and a team led by Christy de Gooyer, a practice area director, and Shilpi Goel, a project leader. Team members
are Alejandro Gonzalez, Devyani Gupta, Alexandra Reuter, Ricardo Sherwell and Abheek Talukdar. The authors
thank Bain partners in each of the countries covered in the report for their valuable input and John Campbell for
his editorial support.
Americas:
Europe, Middle
East and Africa:
Asia-Pacic:
NPS is a registered trademark of Bain & Company, Inc., Fred Reichheld and Satmetrix Systems, Inc.
Net Promoter ScoreSM is a trademark of Bain & Company, Inc., Fred Reichheld and Satmetrix Systems, Inc.
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