EY Global Consumer Banking Survey 2016

Transcription

1 EY Global Consumer Banking Survey 2016 Bank of Results March 2017 Ref: EY Presented to the Central Bank of Consumer Protection Directorate in November All data and IP herein is proprietary to EY and not for onward use or sharing without explicit permission.

2 Contents Page Section 1 EY Consumer Banking Survey Overview 3 Section 2 Understand your customer 5 Section 3 Trust 13 Section 4 Engagement and Distribution 17 Section 5 Customer Experience and Innovation 22 Section 6 Banking Relevance Index 27 Section 7 Appendix & further Information 32 Page 2

3 EY Global Consumer Banking Survey 2016 Now in it s fourth year, the Global Consumer Banking Survey (GCBS) is EY s flagship piece of thought leadership for the retail banking industry. In the following slides, we detail the Bank of customer results and highlight some behavioural trends. Background The Irish context key findings The overall aim of the survey is to understand how relevant banks are to consumers currently and how banks can remain relevant in consumers lives. EY surveyed nearly 56,000 consumers in 32 countries. 1,030 respondents were from and 266 were Bank of customers. We have also introduced EY Bank Relevance Index (BRI). It measures a range of customer behaviours and attitudes to build a composite score assessing current and future relevance. Page 3

4 Staying relevant is a major challenge for retail banks in The FS marketplace and its customers behaviours and attitudes are changing rapidly, calling into question the relevance of the traditional bank. The results of the survey show there are four main drivers to staying relevant. Understand customers Trust Engagement and distribution Customer experience and innovation Understanding behaviours and attitudes based on financial and digital maturity allows banks to improve the customer experience and tailor their offerings Banks need to rethink how they view and group their customers, how to approach proposition development, and how they treat/service their customers Trust is often put forward by banks as one of the fundamental points of positive differentiation, but the dynamic is changing; new entrants are just as trustworthy and are going above and beyond on experience Banks need to keep doing what they have always done well, but there are other areas of focus that will improve customers trust and advocacy Customers are getting more discerning. They know what they want and know that there are many options for channels and providers Providing a seamless omni-channel experience where customers can easily access and purchase products has become a must-have rather than an aspiration Exceptional customer experience is the primary factor driving customers away from banks to nonbank competitors (e.g. FinTechs) Banks must innovate like (and with) FinTechs to deliver simple and high quality customer experiences, as well as creating new business models Banking Relevance Index Page 4

5 Section 2 Understand your customer Page 5

6 Your customers are slightly more optimistic regarding their financial position over the next 12 months, compared to the Irish average How confident are you in the stability of the banking industry in your country? Thinking ahead, in 12 months do you expect to be financially better off, worse off or about the same? 2% 52 21% 29% 48 47% Extremely confident Somewhat confident Confident Not at all confident How has your confidence towards the banking industry in your country changed over the past 12 months? Decreased 17% Significantly better off Somewhat better off About the same Somewhat worse off Significantly worse off Remained the same 58% Increased Increased 1% 19% Bank of Page 6

7 Financial maturity Not all financially savvy customers are digitally savvy, and not all digitally savvy customers are financially savvy New lens to look at banking customers Challenging the traditional view, that all customers are migrating to digital channels Savvy Financial stars The Pros Simple yet compelling matrix The maturity and savviness matrix creates a simple way to think about customers as the shift to digital accelerates Not savvy Less is more Digital stars Challenge assumptions Not savvy Savvy The matrix also directly challenges the assumed nexus between finance acumen and digital aptitude Digital maturity Definitions: Digitally savvy = those who strongly agree/agree with I prefer to manage as many aspects of my life via digital channels as possible Financially savvy = those who strongly disagree/disagree with I m confused about all of the different financial products/services available these days Page 7

8 Your customers are less financially and digitally savvy than the national average Overall Irish consumer savviness Bank of customer savviness Total Total 30% 26% 70% 74% Total 53% 47% 47% vs. 30% - Across all age categories respondents are typically more digitally savvy than they are financially savvy Total 58% 42% 42% vs. 26% - Across all age categories respondents are typically more digitally savvy than they are financially savvy Although Bank of customers lag behind the national average in terms of overall savviness, Irish consumers in general are more digitally savvy than the global average consumer. Page 8

9 Understanding the impact of digital and financial savviness on the average Bank of customer Your customers are less likely to use digital options and struggle with the rapid change in technology more than the Irish average They are also more confused about the different financial products available to them and therefore feel less in control of their finances I'm happy to share more personal information with financial services providers if that means they can anticipate my needs better I like to have someone sort out my finances for me I don't spend much time thinking about my finances I'm confused about all of the different financial products and services available these days If I'm planning to buy a new product or service I'll typically look on the Internet first I worry about the security of my personal data when dealing with companies online I prefer to manage as many aspects of my life via digital channels as possible I struggle to keep up with the rapid change in technology and digital device functionality I feel in control of my finances Bank of Bank of Page 9

10 Almost one third of your customers describe themselves as financially savvy while just under half are digitally savvy I'm confused about all of the different financial products and services available these days I prefer to manage as many aspects of my life on digital channels where possible Strongly 6 5 Disagree Disagree Financially savvy ((BOI customers 5% below national average) Digitally savvy ((BOI customers 5% below national average) 11 Strongly 9 Agree Agree 32 Neither/ nor Financially non-savvy 33 Neither/ nor 32 (BOI Digitally nonsavvy Agree customers 5% above national Disagree average) ((BOI customers Strongly 2% below 5 5 Strongly 5 7 Agree national Disagree average) Bank of Bank of 36 Page 10

11 Customers continue to embrace digital channels/ devices, and they expect this will increase in the next 12 months Select which of these you currently use or have used, and which ones you would consider in the future Which of the following devices do you regularly use whether at work or for personal use? Contactless payment with your bank card Cardless cash withdrawal from ATM Mobile phone payments None of these Smartphone Laptop Tablet Personal computer Smart TV (with internet) Games console (with internet) E-reader Current Usage Future Usage Bank of Page 11

12 Customers increasingly want to proactively manage their finances. Competition and Digital Innovation in the sector have accelerated this I m less reliant on established financial services companies and banks these days as there are more options to self-manage my finances I m excited about the emergence of new online only financial services providers that are competing with the traditional banks Customers that lack digital and financial savviness are also less likely to try new providers. Digital savviness increases openness to online more than financial savviness Dig non-savvy, Fin non-savvy Dig non-savvy, Fin savvy Dig savvy, Fin non-savvy Dig savvy, Fin savvy Less is More Financial Stars Digital Stars The Pros Dig non-savvy, Fin non-savvy Dig non-savvy, Fin savvy Dig savvy, Fin non-savvy Dig savvy, Fin savvy Less is More Financial Stars Digital Stars The Pros Bank of Bank of Page 12

13 Section 3 Trust Page 13

14 Trust amongst Bank of customers is lower than the national average ranks the 2 nd lowest country in complete trust ratings, with a score of 21%. Bank of scored 17%. Thinking about your Primary Financial Services Provider (PFSP), what is your level of trust with each of the following? Telling me if there is a better product for my needs/situation even if it means less money for them 8 13 Providing me with truly unbiased advice suited to my needs 9 16 Complete transparency about fees and charges Protecting my personal and financial information Using my personal information only for purposes I have explicitly authorised Protecting me against and/or helping me in the case of fraudulent activity on my account Keeping my money safe Bank of Page 14

15 46% of your customers believe there is little variation between financial services organisations in the country Statements to best describe your PFSP (%) Always has the best rates/lowest fees Is innovative and does things differently Interested in my long-term financial well-being Thinks of new ways to improve customers experience Has better digital/online products/services than its competitors Is always slow to adopt new technology Is a trusted advisor to me Will always be the first place I turn to for anything to do with my finances Understands the needs of customers like me Flexible Only delivers the basics and nothing more Products and services perfectly suit my needs Disconnected from their customers needs and wants Responsive Just like other financial services provider Accessible Bank of Page 15

16 Cyber security and data protection is a concern for your customers I worry about my accounts or bank cards getting hacked Strongly agree/agree (%) Other cyber security findings % Just 22% believe the bank will protect their personal financial information, compared to the Irish average of 28% (globally this is 43%) % 25% have complete trust that the bank will protect them against fraudulent activity, compared to an Irish average 33%. Strongly agree Agree Neither/ nor Disagree Strongly Disagree % Your customers are cautious only 2% strongly agree they would share more personal information if it means you can anticipate their needs better. Bank of Page 16

17 Section 4 Engagement & Distribution Page 17

18 Attitudes toward touchpoints with the bank are evolving - customers want to control and tailor their customer journey Digital should complement, not replace, human interaction I'd be happier if my bank had fewer branches and provided a better experience in them Customers believe technology has made it much easier to have products across multiple financial providers Strongly agree/agree (%) Banks are falling behind when it comes to providing easy-to-use digital solutions The only time I would need to speak to a person at my bank is if their online services are not good enough I would not hesitate to change my financial services provider if I found one with a much better online/digital offer/experience I don't trust financial organisations that don't have any branches at all I'm happy to research products and transact online, but to take up a new product or get advice I need to be able to visit a branch or call a real person It's important to be able to switch easily between different ways of interacting with a bank Dig non-savvy, Fin non-savvy Dig non-savvy, Fin savvy Dig savvy, Fin non-savvy Dig savvy, Fin savvy Less is More Financial Stars Digital Stars The Pros Bank of Page 18

19 Your consumers are less reliant on branches and call centres, however many don t trust banks without branches Compared to 12 months ago, which of the following methods do you use more often to interact with your financial providers? Rethinking distribution the defender role of the branch (%) Online banking 4 42 I don t trust financial organisations that don t have any branches at all Mobile banking ATMs I m happy to research products and transact online, but to take up a new product or get advice I need to be able to visit a branch or call a real person Webchat Visiting a branch/office I'd be happier if my bank had fewer branches and provided a better experience in them Calling a bank/call centre 37 3 It's important that I can speak to someone at my bank 24/7, over the phone or in person Less often More often Bank of Page 19

20 Customers have varied channel preferences depending on digital savviness and individual needs for personal interaction Frequency of channel usage vs. 12 months ago, by segment (%) Less is More Financial Stars Digital Stars The Pros Digitally non-savvy, Financially non-savvy Digitally non-savvy, Financially savvy Digitally savvy, Financially non-savvy Digitally savvy, Financially savvy Online banking Bank of Mobile banking Bank of ATMs Bank of Live webchat Bank of Visiting a branch/office Calling a bank/call centre Bank of Bank of Less often More often Page 20

21 Regardless of digital savviness, your consumers believe that for complex and important products like a mortgage, you need a traditional bank Read the following statements about industry trends, and rate your level of agreement (Strongly agree/ agree %) I would like my bank to provide better information on the tax implications of the products I invest in/hold with them It's ok to have some products with new types of financial services companies, but for complex and important products like a mortgage you need a traditional bank Banks have an important role to play in helping people achieve their life goals through expertise across all financial products One day in the future, there wont be a need for traditional banks at all I wish my employer could pay my salary straight to an online payment provider Financial products and services are all the same whichever company you buy them from I'm excited about the emergence of new online onlt financial services providers that are competing with the traditional banks New online-only companies offering financial products/services better understand what customers want than banks Bank of Page 21

22 Section 5 Customer Experience & Innovation Page 22

23 Your consumers are experimenting with both providers & products 55% of your customers have financial accounts, products or services with 3+ companies (banks, credit card companies (e.g. American Express), mobile payment solutions, etc.) How important are each of the following when deciding on whether to take up a financial service/product with a new type of financial services company? or more Bank of I need to be certain my personal and financial information is secure with them They must be controlled or regulated by a government authority A physical presence Bank of Good reviews from other users A great digital experience Offers something nobody else does Page 23

24 They are changing the way they view disruption and disruptors in financial services Customer sentiment towards future banking needs strongly agree/ agree (%) Have you used any online or mobile only, non-bank financial products or services in the past 12 months? I'm more cofortable than I used to be using fiancial services providers that are only online It's ok to have some products with new types of financial services companies, but for complex and important products like a mortgage you need a traditional bank Technology has made it much easier to have products across multiple financial providers Bank of Banks have an important role to play in helping people achieve their life goals through expertise across all financial products Yes, and I plan to continue using them in the future Yes, but I don't plan to continue using them in the future No, but I would consider using them in the future One of the hardest things about having accounts across different banks is getting a consolidated view of my finances No and I would not consider them in the future One day in the future, there wont be a need for traditional banks at all Bank of Page 24

25 4 out of the top 5 reasons for considering banking alternatives are experience or innovation related attributes What are the most important reasons for why you are or would consider using an online or mobile, non-bank provider compared with a traditional provider? How likely would you be to consider switching to or taking up financial products or services with each of the following types of companies? More attractive rates/fees Easy to set up an account Access to different products and services Better online experience and functionality Better quality of service More innovative products than available from a traditional bank I like to support new businesses/products/ideas Greater level of trust than with traditional institutions I like to try new products and services before anyone else has them A technology company A social media network An online retailer Bank of Bank of Page 25

26 Your customers feel less understood by new online-only companies, however some are open to taking up financial services from non-banks New online-only companies offering financial products/services better understand what customers want than banks Strongly agree/agree (%) How likely would you be to consider switching to or taking up a current account with non-banks (assuming they offered a suitable product)? Dig non-savvy, Fin non-savvy Dig non-savvy, Fin savvy Dig savvy, Fin non-savvy Dig savvy, Fin savvy Less is More Financial Stars Digital Stars The Pros Dig non-savvy, Fin non-savvy Dig non-savvy, Fin savvy Dig savvy, Fin non-savvy Dig savvy, Fin savvy Less is More Financial Stars Digital Stars The Pros Page 26

27 Section 6 Bank Relevance Index Page 27

28 Bank Relevance Index These components represent four essential variables that banks must navigate to build relevance or address mounting irrelevance. Bank definition (current relevance) Consumers have typically identified a traditional bank as their primary financial service provider (PFSP). However, this definition is eroding as non-traditional institutions appear to redefine financial interactions and reduce the importance of legacy branding and banking relationships. Current product mix (current relevance) Consumers are turning to new providers to manage their finances and purchases. Impact of mobile banking and non-traditional providers are most evident in emerging markets. Trust in banks (future relevance) While banks often consider trust as their foundational strength, our BRI reflects waning conviction over a broad range of relationship elements including privacy, security, fee transparency and provision of unbiased advice. Future product consideration (future relevance) Consumers no longer consider banks to be the first, or only option, for managing their financial lives. While banks might dominate for products such as mortgages and CASA, potential product erosion may be dramatic for other offerings. Page 28

29 s Bank Relevance Index Page 29

30 Bank Relevance Index Bank of results The Index provides insight into the current relevance of banks for different demographics. BRI by Age National Average: 75.1 Bank of Average: BRI by Income (USD) <25k 25K - 49K 50K - 99K 100K + Future product consideration Trust in main bank Current product mix Bank definition BRI by Education Page 30 Graduated secondary school Attended college/university Graduated college/university Obtained postgraduate degree or higher

31 The core banking products are most at risk for Bank of, however, less so than the Irish average Proportion of bank/non-bank providers for accounts/services held (%) Proportion of bank/non-bank providers considered for accounts/services (%) Insurance Products Current account Core Banking Products Pension Fund Investment Account Savings Account Personal Loan Car Loan Credit Card Mortgage Mortgage Credit Card Car Loan Personal Loan Investment Account Other Products Savings Account Pension Fund Current account Insurance Products Bank only Both bank and non-bank Non-bank only Bank only Both bank and non-bank Non-bank only Page 31

32 Section 7 Appendix & further information Page 32

33 Appendix: Glossary of terminology A Primary Financial Service Provider (PFSP) is the financial institution with which you hold your main financial services with. Types include but are not limited to A bank with branches (including credit union or building society) An internet/telephone-only bank without branches (including credit union or building society) Other financial services company (e.g. American Express, investment firm) Non-financial services company (e.g. telecommunications provider, supermarket chain) New company that offers different technology/services to traditional banks Traditional Bank original banks, the financial depository institutions first to offer checkable deposits. These invariably have the word "bank" in their names. The main services provided by retail banks in include the traditional intermediation functions (deposit taking and loan provision), money transmission services through retail payments systems, and, to a growing extent, other services such as providing stockbroking facilities and life assurance products. Non-Bank - an institution or company which provides some banking services but is not a bank, or does not have the legal status of a bank. Digitally savvy - Those who strongly agree/agree with 'I prefer to manage as many aspects of my life via digital channels as possible' Financially savvy - Those who strongly disagree/disagree with 'I'm confused about all off the different financial products/services available these days' Page 33

34 Appendix: Banking Relevance Index (BRI) Methodology Page 34

35 Further information The Relevance Challenge (2016) Publication Web link Customer trust: without it, you re just another bank (2016) Publication Web link Page 35

36 Contact Name: Colin Ryan Name: Niall Corrigan Role: FSO Advisory Partner Role: FSO Advisory Director Page 36

37 Disclaimer The customer data included in this report was collected between January and April 2016 by interviewing >55,000 consumers in 32 countries online. This data represents the views of the customers who were surveyed and does not represent the views of EY. It should not be provided to any third party without our prior written consent. Our report may not have considered issues relevant to any third parties, any use such third parties may choose to make of our report is entirely at their own risk and we shall have no responsibility whatsoever in relation to any such use. Page 37

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