retail banks fail to make the most of sales opportunities, says new booz allen global study
63% prefer purchasing current accounts in branches, affluent customers leading trend towards online
On average retail banks are failing to achieve excellence in sales channels – call centers and mobile sales force score lowest. GCC banks performed below the global average score across all channels.
Booz Allen Hamilton’s index reveals the performance levels of 100 banks across 17 countries globally, including 12 leading banks in 3 GCC countries: UAE, KSA, and Kuwait
Hong Kong has the best performing retail banks, followed by Switzerland and the United States.
Banks should provide a differentiated service for affluent customers and capitalise on key growth channels such as online and mobile sales forces
Dubai, 03 December 2007 – A new Booz Allen study “Striving for growth: Best practices in retail banking sales and service channels” has revealed that the majority of banks are failing to fully meet customer needs and maximize sales channel performance. The comprehensive study, which used customer research and mystery shopping to assess 100 banks across 17 countries (including 12 banks in the GCC), looked at what customers want from their banks, how banks are performing and best practices to drive profitable growth. Based on the findings of this research, the Booz Allen Revenue Enhancement (BRE) Index was developed, taking into account performance across branches, call centers, online, mobile sales forces and a multi-channel index.
Consumers prefer purchasing in branches, but affluent customers are leading a trend towards online
Despite technological advances, globally customers still prefer banking in branches – 63% choose to use a branch for purchasing current and savings account products and 54% choose their branch to purchase mortgages. The preferences of GCC customers are almost identical to the global average. However, branch importance is in relative decline. For purchasing less complex products, such as credit cards, globally over half would now use an alternative channel with 21% purchasing online and 16% by telephone. The situation is inverted in the GCC where 18% of customers prefer purchasing by telephone compared to only 11% who preferred purchasing online. Globally, online channel usage is rising and is preferred over phone, particularly for simple products and transactions; however, this is taking place at a slower pace in the GCC. The trend away from the branch is being led by affluent consumers, who tend to be time poor and are 30% more likely to prefer using online services.
“The branch is declining in importance, but banks are failing to capitalize on the enormous potential of key growth channels such as online and mobile sales forces, because the performance of these channels does not meet customer needs and expectations,” said London based Booz Allen vice president Alan Gemes.
Retail banks are performing best in branches and online, but call centers and mobile sales forces do not meet key requirements. Across all channels there is a significant difference between the performance of the best banks, which show near excellent service, and the rest of the pack. The top performing GCC banks achieved the highest scores at near the global average, across most channels; whereas, the remaining banks had a wide performance variation across the various channels. The study found that the need for differentiated offerings for affluent customers was a common theme across all channels. This is particularly important for the GCC where differentiation is limited to branches.
Banks still need to get the basics right in branches – Privacy, staff knowledgeable about products, query resolution and waiting times are the most important criteria for customers in branches. This is particularly relevant for GCC banks whose branch performance – with very few exceptions - scored, on average, 20% less than the global average.
“For many customers in the GCC, the branch is the first point of contact, yet many banks fail to get the basics right. Branches are characterized by long queues, poor parking facilities, and low levels of customer service” said Beirut based Booz Allen vice president Peter Vayanos
Whilst these requirements seem basic, banks still need to work on their consistent delivery. The study found that 39% of banks scored low on ensuring that their welcome desk is always available and helpful.
Best practice shows banks should focus on:
• Investing in the customer first point of contact by consistent use of a manned welcome desk or hotel style concierge, open plan layout with advisers ready for customers in addition to private areas (e.g., Bank of America, NBK).
• Developing appointment processes whereby you can make appointments in advance (e.g., Raiffeisen Switzerland), and get confirmation by text message.
• Attractive branches designed to suggest stylish hotel lobbies (e.g., ABN Amro Hong Kong) with interactive information materials using TV screens and computer terminals (e.g., HSBC Hong Kong).
• Segmented offerings for the mass affluent with a sense of exclusivity with increased privacy and dedicated staff and floors (e.g., Citibank UAE, NBK, NCB, Samba).
Call center performance is low – The most important consumer requirement is the opportunity to speak to a person. The study found that 48% of banks scored low on time spent waiting to speak to a specialist adviser and 43% scored low on agents demonstrating a good level of knowledge from the customer information available. The performance of GCC banks vary by country, with KSA banks achieving the lowest score as a result of having the longest waiting time - even for affluent customers who have dedicated call center numbers - and the limited knowledge of agents beyond basic products. UAE banks scored the highest in the region, but the score is below the global average.
Best practice shows banks should focus on:
• Minimizing hand-offs, with logical menu systems and a quick option to speak to a human being (Raiffeisen Switzerland).
• Increasing product knowledge specialists by training all staff to deal with general queries and in one specialist area, with incentives to encourage staff to resolve queries in one call.
• Improving access, particularly for the mass affluent, by assigning customers to an adviser they can call direct (Credit Suisse), 24hr access and instant connection (Bank of China plus other Chinese banks).
Improve segmented offerings to take advantage of online growth – Security is the main concern for online customers and globally banks are performing well, including GCC banks, but the channel needs to develop to take advantage of the mass affluent market. The survey found that 72% of banks scored low on their segmented online facilities for mass affluent customers. In the GCC, we observed limited or no segmented online offerings.
Best practice shows banks should focus on:
• Increasing levels of security to keep in line with customer expectations, including virtual keyboards, random number generators and complex password systems (HSBC China).
• Providing dedicated websites adapted for mass affluent customers (Citibank Korea).
• Tailoring web site layout to individual use (Citibank China), with quick access to regularly used areas and offering tailored product alerts and best rates available (Bankinter, Spain).
• Providing live online and technical support to enable customers to submit queries and get confirmation of transactions by text or email (Bankinter, Spain).
Better mobile sales forces to drive forward an expanding channel – Globally few banks offer mobile sales force services and those that do have poor service levels. Most GCC banks do not have a mobile sales force. Advisers are often unable to meet the key customer priority to resolve the query in one meeting and 45% scored low on the option to see the same adviser again. Best practice shows banks should focus on:
• Providing clear and differentiated offerings for mass affluent customers (HBOS and Citibank, UK), with dedicated account managers who join visits (Bradesco, Brazil).
• Developing sophisticated appointment systems with both generalists and product specialists and the ability to meet at convenient time (NAB, Australia).
• Giving advisers the ability to complete requests–connectivity and empowerment are key. Advisers should have access to customer knowledge prior to meetings (Bradesco, Brazil) and be quick to upload customer data (HBOS, UK).
Multi-channel performance is limited – Consumers choose channels on a holistic basis and, for some products, expect to be able to move across certain channels without having to repeat themselves. Although most banks achieve a consistent look and feel across channels, overall performance in this area is weak with even best in class failing to achieve excellence. This is a similar situation in the GCC. Best practice shows banks should focus on:
• Providing a broad range of channels, including innovative channels, e.g. web-chats, Skype (ABN Amro, Netherlands).
• Offering an integrated service across channels, for example, email confirmation of call center transactions and customer information available to advisers in all channels (HBOS, UK).
Some banks show best practice, but none are top in all channels – best performers across the 17 countries in the study are HSBC Hong Kong, Raiffeisen in Switzerland and UBS in Switzerland
There is a very wide variation in performance at bank level, but the best retail banks are HSBC in Hong Kong, Switzerland’s Raiffeisen and UBS in Switzerland. HSBC Hong Kong tops the tables for best branches and best mobile sales teams, while Citibank UK provides the best call centers. Two banks in Korea, Woori Bank and Citibank, feature in the top three banks for the online channel, while the UK’s HBOS offers the best multi-channel experience.
Globally, Hong Kong is the strongest country overall, followed by Switzerland and the United States
Hong Kong has the best performing retail banks, leading in three out of five channels: branches, call centers and mobile sales force. Hong Kong branches have developed advanced segmented offerings with high availability of specialist advisers and branches designed to suggest stylish hotel lobbies with interactive TV walls. Their call centers have instant connection to a human being and short waiting times, whilst their mobile sales advisers are available to meet anywhere at short notice. Switzerland came in second place, with strong performance in branches and in call centers, where typically one agent will handle a query from start to end. The United States came third in the rankings and scored as the second highest country in terms of branch performance, largely due to innovative retail strategies focussed on attracting customers into the branch such as convenient opening hours, retail-like promotions and an emphasis on customer service. In other areas, Korea leads the field by a considerable margin in terms of online performance with high security levels and the UK scores well on multi-channel performance.
In the GCC, the UAE achieved the highest score, followed by Kuwait and Saudi Arabia
UAE banks scored the highest on Booz Allen’s Revenue Enhancement Index, leading in branches, call centers, and multi-channel integration. Branches are relatively new or refurbished, and have segments sections with specialists that are almost always available to meet customers. UAE banks had the least performance variation among each other compared to banks in other GCC countries. Kuwaiti banks scored second, even though NBK’s branches and call center performance stand out by a wide margin against its peers, with new branch models that have a clear layout, product displays, and well trained agents. Saudi Arabia scored third; yet, branches received high scores for their dedicated sections for mass affluent customers in most branches.
Going forward retail banks need to:
• Provide dedicated channels (website, call center, mobile sales forces and specialist areas in branches) for affluent customers.
• Reduce waiting times in branches through the use of welcome desks (concierge concept) and the option of making appointments in advance.
• Efficient call center menus and staffing that enable customers to quickly reach people who can resolve their queries.
• Enable customers to tailor websites, supported by strong security measures (e.g. random number generators).
• Offer mobile sales advisers who can complete transactions at the meeting, for selected customer groups.
• Enhance the ability to commence a transaction on one channel and complete it on another.
Methodology
Booz Allen’s 2007 Revenue Enhancement Study set out to test the role of sales channels in revenue generation, taking as its starting point the fact that, across the globe, retail banks’ drive to improve efficiency through cost reduction has been offset by a decline in revenue generation.
The study took a two-fold approach:
1. MORI Ipsos, the independent consumer research company, was tasked with undertaking interviews with banking customers in Europe, North America, Asia, Latin America and the Middle East. Research covered 17 countries and assessed consumer preferences for each distribution channel and overall satisfaction levels.
2. In addition, Booz Allen carried out an extensive mystery shopping exercise at 100 banks, focusing on the consumer experience. This included a shopping and servicing questionnaire in a number of branches for each bank, plus internet assessment, telephone calls to call centers and shopping with mobile sales forces.
Based on the findings of this research, Booz Allen defined five individual channel indices to measure banks’ performance; branch, call centers, online, mobile sales force as well as a multi-channel index. Once weighted by consumer importance, this formed the Booz Allen Revenue Enhancement Index Score, which was used to rank banks’ performance across the main channels.
The 17 countries included in the study are: Austria, Australia, Brazil, Canada, China, Germany, Hong Kong, Korea, Kuwait, Netherlands, Saudi Arabia, Spain, Switzerland, Thailand, United Arab Emirates, United Kingdom and United States.
About Booz Allen Hamilton
Booz Allen Hamilton has been at the forefront of management consulting for businesses and governments for more than 90 years. Providing consulting services in strategy, operations, organisation and change, and information technology, Booz Allen is the one firm that helps clients solve their toughest problems, working by their side to help them achieve their missions. Booz Allen is committed to delivering results that endure. With 19,000 employees on six continents, the firm generates annual sales of $4 billion.
To learn more about the firm, visit the Booz Allen Web site at www.boozallen.com. To learn more about the best ideas in business, visit www.strategy-business.com, the Web site for strategy+business, a quarterly journal sponsored by Booz Allen.
