FREEDyourMind

Online Banking in the UK

We've been studying satisfaction with online banking in the U.S. since 2003, and this year we did our first study of customer satisfaction with online banking in the UK. For this study, we did more than 1000 customer surveys of customers of the top 5 consumer-oriented retail banks in the UK: RBS, Lloyds, Barclays, HSBC, and Santander. 

Despite 2+years of tumult in the global banking industry, customer satisfaction with online banking in the UK is fairly high, and customers are very satisfied with the top five banks (on aggregate they score 80 – generally considered the threshold for excellence on the study’s 100-point scale). Within the top five banks, the range of scores varied from 77 at the lower end to 82 at the high end indicating close competition between the top banks.

This surprised me--how can satisfaction be so high when so many banks and financial markets are in trouble? I think the answer lies in the online channel. Banking websites still have an amazing ability to connect with and satisfy customers even  faith is not high overall. Customers are able to have a satisfying and fulfilling online banking experience despite what's going on in the markets. This is great news for banks, because it means there is a channel that works and works well.

We can't compare satisfaction year-over-year in the UK (yet), but we can compare between UK and U.S. In other industries we study, there are much larger gaps in satisfaction between the U.S. and UK markets, but in online banking, it's only 3 points (this is comparing top 5 UK banks to an aggregate of satisfaction with all U.S. banks).

 

Another way to get some context around the number is to compare online industries. The next chart shows how satisfaction with online banking compares to satisfaction with online retail, both in the UK. You can see there is quite a gap, and where satisfaction is higher, financial returns are higher.

 

 Other key findings:

• Adoption of mobile banking is slow. Of survey respondents with a mobile phone, only 15% are aware of mobile banking apps or mobile sites for their bank (by my count, only 2 of the top 5 banks in the UK even havean m.mobile site--Barclays and HSBC--and even those do not appear to have apps. The other three (Santander, RBS, Lloyds) don't have either. Whatever the reason, only 10% of respondents are using their mobile phone to bank.
• UK customers prefer to hear from their bank through the post. When asked their preference for communications from their bank, 42% said they prefer post, 38% prefer email, 11% prefer the website, three% want text messages or mobile alerts, and only five% said they don’t want any communications at all.
• UK customers are not inclined to get social with their banks.When asked if they would like to friend, follow, or like their bank on social media sites like Facebook, 97% said no.
• There is a clear relationship between satisfaction and frequency of website usage. Customers who access their banking website roughly once a month report satisfaction of 71, while customers who access their banking website more than once a day report satisfaction of 89. 
• UK customers prefer the website to other channels by a huge margin. When asked which channel they are most satisfied with, 70% said the website (17% said the branch, 10% said the cashpoint, two percent said the call centre, and one percent said mobile banking).

Feel free to use these infographics or leave questions in the comments.

Customer Satisfaction with Online Banking Rebounds

Customer satisfaction with online banking has regained it's previous high of 83 on our study's 100-point scale. We do this study once a year and have been since 2003. Today is the release of our 2011ForeSee Results Online Banking Study.

The full study is available for free download on our website, and read the press release with highlights here.

Credit unions have traditionally been the category of bank that has the highest customer satisfaction, but large banks had a huge increase this year and overtook credit unions.

 
The categories of banks included in the study were:

• Banks ranked 1-5 in size: 1) Bank of America 2) Wells Fargo 3) Chase 4) Citi 5) PNC.
• Banks ranked 6-10 in size: 6) US Bank 7) TD Bank 8) Suntrust 9) BB&T 10) Regions Bank
• Other large banks (such as HSBC, Fifth Third, Capital One, ING, and other national and large regional banks not in the top 10)
• Community banks (smaller local institutions)
• Credit unions

We also found that customers are reporting a huge preference for online banking, which means it continues to be a critical customer touch point. When survey respondents were asked which channel they were most satisfied with, 55% selected the online channel while 28% chose the branch, 13% chose the ATM, and only 2% chose call center and mobile banking.

If you want to know why large banks overtook credit unions this year for the first time, you can look at the elements of satisfaction measured in the research, including things like navigation, the ease of executing online transactions, privacy, and the look and feel of the website, among others. Large banks scored highest in all but one of these elements, which is why they also have the highest overall satisfaction. Credit unions still do very well in most of these areas as well.

As usual, it is the biggest banks that do the worst in terms of customer satisfaction, which is a bit surprising considering the resources they can spend on improving the customer experience. And it's not true across the board--these are just averages. There may be individual banks in the top 5 that do better than credit unions or large banks, and vice versa. An individual bank can't really manage customer satisfaction based on aggregates like these, but we share them in order to show industry trends and how they change over time.

Watch this space for more data in the next week or two about online banking, social media, and mobile banking.

It's True: Satisfaction with Online Financial Services is Up

Incredibly, customer satisfaction with online banking is up. Customer satisfaction with online investment services is up. Customer satisfaction with online credit cards is up.

What's going on?

Every year, we partner with Forbes.com to do a survey of people who visit online financial services websites. This year, despite the economy and the near-daily bad news, customers are more satisfied than ever with the three online industries we surveyed.

On our study's 100-point scale, satisfaction with online banking is up to 83, making it one of the very few service industries to pass the threshold of 80, generally considered an excellent score. Online credit cards is also up, to a score of 80 and even online investing (which was hammered in the February ACSI report) is up to 78 as the markets have started to settle.

I wish I could tell you there was some magic bullet or miracle app that has saved the day, but the truth is, it's basic blocking and tackling. Each of the three industries improved in basic online elements that directly impacted satisfaction. This should be good news for banks, credit card companies and investment firms. You don't need to reinvent the wheel during an economic crisis.

Even better news: your website can have a huge impact on overall operations and could be a huge corporate advantage when times are tough. Highly satisfied online customers are significantly more likely than less satisfied customers to purchase more services, open more accounts, use the website as a primary channel, and recommend both the company and the website. Therefore, improving the online experience leads to increased revenue (because customers purchase additional services and recommend their friends and colleagues to do the same), as well as cost savings (because these customers use the website as their first source for information and transactions rather than more costly alternative channels).

Read the whole report for more details on the findings.

A lot of interesting things came out of the study though. First of all, only 1/5 of online bankers remembers seeing communication about their bank's financial stability on the website. That either means it wasn't there or that they didn't see it. Either way, it is absolutely essential that banks, given what we know about the ability of the web to build loyalty, use their websites to reassure and inform customers and prospective customers.

Second of all, only 13% of online bankers with mobile phones use them to access their bank's website, and only 3% of online bankers overall use mobile apps. Those that do tend to be more satisfied.

So what do you think--are you surprised that online satisfaction increased for an industry in so much turmoil?

Impact of Financial Crisis on Corporate Websites

The turmoil in the financial markets has resulted in the highest volume of traffic for brokerage websites in three years.

Heather Hopkins of Hitwise adds that US internet visits to Stocks and Shares websites have increased 85% since August.

Wow.

So what are these companies doing, if anything, online to address the questions their customers may have?

Bear Stearns' home page seems to be in some denial about the magnitude of what has happened to the company in the last couple of weeks. They do not make it easy for panicky customers to get their questions answered.  Most of their individual pages link to JP Morgan Chase.

Looking at the JP Morgan Chase website, you wouldn't have any clue there even was a financial crisis in this country! Business as usual over there.

Washington Mutual customers are directed to a fairly straightfoward explanation of what will be different now thay they're with Chase that seems to emphasize stability, lack of change and increased access to resources. Nice job by Chase on this one, especially given all they're dealing with.

What Metrics Do the Best of the Best Use?

Just saw this post from Ron Shevlin's blog last week... Ron does a report called the Hallmarks of High-Performing Integrated Marketers in Retail Financial Services which looks at which business practices and marketing strategies distinguish the high-performers from the rest of the pack.

From Ron's post:

"High-performers are more likely to measure the lift in customer satisfaction and average customer spend than other financial services firms. And less likely to measure likelihood to refer the brand and brand awareness . . .

The findings from the survey shows that high-performing firms put their emphasis on measuring the metrics that matter — those that measure and drive bottom-line performance. The under-performers can continue to look at NPS and brand awareness at their own risk."

In fact, according to the data in the post, customer satisfaction was the most commonly used metric for the highest performing firms, other than sales and average customer spend.

Of course, it can't go without saying that c-sat has to be measured with a time-tested methodology.

It's funny, the two most common statements I hear about measuring customer sat are in direct opposition to one another: "customer satisfaction is a proven predictor of financial success and ROI" and "customer satisfaction has no proven connection to financial success."

Both are true! Customer sat measures with a proven, time-tested, accurate, precise, reliable methodology have been proven in numerous academic articles to be leading indicators of financial success, loyalty, recommends, ROI, and even stock prices.

Customer sat measures which are based on a handful of questions, a haphazard methodology, or a marketing fad have no relationship to success, because they aren't accurate or predictive in nature.

So it's a challenge, from where I sit, to make the distinction for people. Saying "customer satisfaction predicts financial success" is like saying "food is healthy." Well, broccoli is healthy. Twinkies are not (but they do taste good). Both are considered food. And sometimes it's not as easy to tell the difference between predictive customer sat methodologies and cheap imitations.

So just ask. Ask for proof. Ask for academic citations. Ask for case studies. The proof is in the pudding, and if you put your vendor to the test, they should relish the chance to knock your socks off.

Online Banking Outperforms Other Financial Services Industries

Our latest research with Forbes.com shows that online banking is vastly outperforming other online financial services industries. Banks scores an 82 on the ACSI's 100-point scale (up 12% or 9 points from the 2003 score of 73), while investing and credit card websites were both at 75. The online banks are clearly setting a high bar. A score of 82 makes online banking the bright spot in the industry overall (offline banking scored a 78 when measured by the ACSI in late 2007).

Most notably, we found that highly satisfied online banking customers are 31 percent more likely to buy additional services from the bank and 54 percent more likely to recommend the bank to others.

You can read more about the study in BusinessWeek or download the full report here.

ACSI E-Commerce Results

It’s that time of year again: time for the University of Michigan's American Customer Satisfaction Index (ACSI) report on e-commerce. The e-commerce report includes the e-retail, online travel, and online brokerage industries.

You can download the full report here, but a few things I found most interesting:

• Amazon has the second highest score in the entire ACSI (which includes 200+ companies), behind only Heinz. That is a stunning achievement for a retailer with such a broad mission.
• Online travel aggregators like Expedia, Travelocity, and Orbitz continue to slip and are having significant trouble differentiating themselves from each other.
• Online brokerage does better than expected, given the slowing economy (which usually results in lower satisfaction with any kind of investing). Customer satisfaction with Fidelity.com rises 5%, while Charles Schwab.com and TDAmeritrade.com also report increased satisfaction.
• Of all the sectors measured by the ACSI this quarter, e-commerce was the only one to increase. All other sectors saw customer satisfaction scores fall, and the overall ACSI score for the whole economy fell this quarter. I attribute this to the fact that competition is so fierce in the online world that companies HAVE to excel in order to survive. The best competitive differentiator is customer satisfaction. Still, it’s remarkable that the e-commerce sector now outperforms all other service sectors measured by the ACSI, online and offline.

You can read more in the Detroit Free Press and Network World.

 

The Killer App for Financial Services

We are always searching for that killer app, and usually come up short. The killer app is the catalyst that brings us to critical mass. For the PC it was word processing and spreadsheets. For the internet it was email.

Most industries look and look and don’t find anything close. Well in financial services there is as close to a killer app opportunity as I have seen in a while. Online Bill Payment. Yes, Online Bill Payment.

In a recent study that we did in partnership with Forbes.com, we saw some very interesting insights for online banking. You can get the full report at:
http://www.foreseeresults.com/Form_OnlineBanking_2007.html

Here are some of the highlights:

• Satisfaction with online banking maintained a slight edge over satisfaction with the overall banking experience.
• Providing an online experience that meets the needs of the customers (satisfaction) results in significantly higher likelihood for those customers to purchase more services from the bank and recommend the bank to others.
• Security is a concern for those not using online banking, but is of little concern to those that are using online banking.

So, why does online bill payment come close to being that killer app?

• Customers using online bill payment are significantly more satisfied than those online banking customers that do not pay their bills online with their bank. They are also significantly more likely to buy additional services (31%).
• And the more bills they pay online, the more satisfied they are and the more likely they will purchase additional services and recommend the bank to others.

So what are banks supposed to do?

Maybe it is time to dust off those online bill payment marketing programs. Also, focus on making the online bill payment an easy and efficient one. And make sure that both your online banking and online bill payment is meeting the needs of your customers. Online bill payment is a great tool to help your bottom line — if done right!

  Comments

1.    
         Ron Shevlin      
          
         April 30th, 2007      |       1:56 pm      
      

   I’m really not following your logic here. “Killer app”, as you described it at the beginning, referred to the app that drove major adoption of a platform. WP and spreadsheets drove major adoption of PCs, and email drove major adoption of the Internet.

   So what is online bill payment driving major adoption of? online banking? I know a million people who will disagree with you, if that’s your contention.

   It seems to me you’re not talking about “adoption” as much as highlighting the connection between satisfaction and use of online bill payment. And as any good statistician knows (hell, even us bad ones know it), correlation does not mean causality.

   It’s just as possible that the most satisfied customers decide to go ahead and go thru the pain of setting up online bill payment with their preferred bank as it is that paying bills online CAUSES a customer to be satisfied.

        
2.    
         Larry Freed      
          
         May 1st, 2007      |       4:29 am      
      

   The use of online bill payment will result in increased satisfaction by the online banking customers. The more bills the pay the more they are satisfied. Higher satisfaction results in better behavior, such as likelihood to buy additional products.

   The beauty of the American Customer Satisfaction Index is not only do we get a score upon which to measure, we also get what we call an impact. The impact tells us the causation between the drivers of satisfaction, satisfaction and future behavior of our users.

   The argument of causation vs. correlation is a good one, and one that most measurement methodologies don’t address. Fortunately for us, the American Customer Satisfaction Index technology answers that question for us.
   -Larry