New research points to poor customer experience at ABSA, Standard Bank and Nedbank

By Julia Ahlfeldt | CCXP @JuliaAhlfeldt

2018 will be a big year for South African banks. Three new players have received banking licenses and are preparing to launch next year – and there are whispers of others joining in too. Change in the banking sector has been a long time coming, and customers are hungry for a better banking experience.

For years, the same issues have aggrieved customers: High fees, long queues and unpleasant service experiences are the biggest pain points.

High fees, long queues and unpleasant service experiences are the biggest pain points.

But switching banks is a hassle, which leaves many disgruntled customers simply putting up with it, rather than enduring the inconvenience of moving elsewhere. It’s not like there’s a long list of alternatives to choose from, anyway. Yes, Capitec has been a breath of fresh air for consumers – in fact it’s now SA’s 2^nd biggest bank, after Standard Bank – but it’s not a solution for everyone. It is unrealistic to expect that one bank can be all things to all people. If you need a comprehensive banking solution with integrated wealth management, for example, Capitec’s offering may be too limited.

So which bank do you switch to when it feels like there are no better options?

Is poor CX inherent in banking?

Most of us have accepted poor customer experience as “normal” for the banking industry and it’s something we feel powerless to change. But sentiment towards banks in other countries shows us it doesn’t have to be this way.

The Net Promoter Score (NPS) is an index ranging from -100 to 100 that measures how willing customers would be to recommend a company’s products or services to others. This is widely used to gauge customers’ overall opinions toward a company. In the U.S., the average NPS for banks is 26 (with the highest score at 56 and the lowest score at -8).

By comparison, SA’s banking sector scored a paltry -10 on average. Three of South Africa’s biggest banking brands are highly unlikely to be recommended by their customers: Nedbank -25, Standard Bank -26, and Absa -28. These scores are according to the 2017 Brandseye Banking Sentiment Index.

Three of South Africa’s biggest banking brands are highly unlikely to be recommended by their customers.

Consumers control brand reputations

Absa, Standard Bank, and Nedbank may struggle to retain customers when new options become available. It will be difficult – if not impossible – for them to repair their reputations and fend off customer attrition, given that consumers, not companies, control brand reputations.

Consumer opinions are built over time, and these are founded on personal experiences – and the experiences of friends and family. Over the years, these three banks have dug themselves into a deep hole of negative opinion that is impossible to change overnight. No new product or clever advertising campaign will be able to undo years of negative experiences. In fact, research shows that consumers are more likely to remember negative experiences than positive ones – and they’re also more likely to tell others about it. 

The three new banks, on the other hand, will be starting off on a clean slate.

The net experience effect 

What most SA banks have not yet realised is that their customers’ experiences genuinely matter. To demonstrate this, I developed a new customer experience metric called the ‘Net Experience Effect’ (NEE). To obtain a brand’s NEE score, we analyse its Net Promoter Score (NPS) for non-customers compared to customers. Non-customers’ NPS will be based on their impression of the brand, developed over time, through feedback from friends and family, advertisements, what they’ve seen in the news etc. The NPS scores for customers will be based on those same factors, as well as their actual experiences and interactions with the brand over time. By comparing the two, we see whether the brand has been able to build loyalty by delivering positive customer experiences.

Currently Absa, Standard Bank, and Nedbank are failing on all customer experience elements, and it’s going to catch up with them sooner than they realise. The only way they may be able to turn around their fates will be to radically improve the way they treat customers, so they aren’t continually sending upset customers into the online and offline conversations about their brand.

The only way they may be able to turn around their fates will be to radically improve the way they treat customers.

 Getting the basics right

The essential elements of customer experience (CX) that influence long-term customer retention in all industries, including banking, are: ease of product and touchpoints use, resolution of issues, delivering on brand promises, and perceived value offered. Collaborating with the Opinion Mining company, Brandseye, we evaluated the sentiment of social media mentions pertaining to the 5 major retail banking brands, against the key elements of customer experience. ABSA, Standard Bank, Nedbank, and even FNB, fared poorly. Consumer sentiment was negative towards nearly all aspects of their customer experiences, with issues such as long branch queues, agent’s inability to resolve simple queries, misleading advertising and buggy apps among the pain points.

As newcomers enter the market, all banks will need to focus on getting the basics right. This is the age of the customer, and it’s becoming unacceptable to charge high fees if a brand cannot deliver on its promise.

The new banks will be building their offerings to capitalise on the entrenched failings in our current banking system, and they’ll understand that customer experience is their most important differentiator. This is good news for consumers, and a wake-up call to the banks that are lagging behind.

• Julia Ahlfeldt is a Certified Customer Experience Professional (CCXP). She consults to blue-chips and multi-nationals and advises them how to retain relevance and increase profits by transitioning from inwardly focused silos to being dynamic and customer-centric. She has worked with Virgin Active, Momentum, ABSA, American Express (USA), Ross Stores (USA) and JP Morgan Chase (USA), among others.

This article was originally published in Business Day.