Consumers are not flocking to e-banking and online financial services, despite companies having invested $billions in new systems. The financial services industry needs to educate consumers on the benefits of using their online services, says a new report from Deloitte Consulting.
According to Julian Badcock of Deloitte, two-thirds of consumers still do not think on-line services are important in their relationship with their bank. Of those who did, only 22% used them.
“They certainly don’t rate the Internet as a key factor in measuring satisfaction with their banking service; indeed, 30% of consumers didn’t even know if their bank provided on-line services,” said Badcock.
The customer is very conservative in adopting new technologies. A responsive and personalised service is clearly what really matters.
The report, “Myth vs Reality in Financial Services – What your Customers Really Want”, shows that the notion of personal service is still very important. Consumers say the new distribution channels lack the personal touch they used to get at the local branch. Nearly two-thirds of UK consumers said the most important factors were a responsive service and being treated as a valued customer .
“The major financial services organisations are now caught in a classic cost trap,” said John Reeve of Deloitte. “Customers still see a personalised service as fundamental in their relationship with their financial services provider. However, this comes at a price which neither customers or the service provider are prepared to pay. Personal service is now just too expensive to provide for the vast majority of account holders. The new remote channels have, in the eyes of the consumer, yet to become acceptable substitutes for visiting the branch. As the report reveals, some 50% of consumers still place a high importance on convenient branches.”
“The traditional financial services companies have managed to retain the customer advantage in the short-term, with 90% of customers showing no interest in obtaining financial services from new entrants such as Virgin,” said Badcock.
“The traditionals no longer feel as threatened by the new entrants. Their major concern is save money from the new technologies they have invested in. And they still have to convince the customer,” he concluded.
The financial services industry needs to invest in customer education, improve service and, perhaps most importantly, create a feeling amongst their customers of being valued. Otherwise customers will vote with their feet and move to those service providers who can deliver on this.