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Is First Direct’s service ranking success a glitch or trend?

15th Apr 2013
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UK bank First Direct has overcome scrutiny, scandal and a perceived lack of consumer trust in financial services to take third place in the latest customer satisfaction rankings.

The Institute of Customer Service surveyed over 26,000 consumers for its annual UKCSI report, which ranked the online and telephone bank behind ASOS and John Lewis.

According to the findings, First Direct has delivered consistent upward performance, rising from 22nd place overall in the first half of 2011. The Co-operative Bank also moved up from 67th position to 11th, overtaking Nationwide (currently 22nd) and HSBC (74th in the latest results).

Chief executive of the Institute of Customer Service (ICS), Jo Causon, said: “Despite the liquidity, regulatory and trust issues financial institutions are facing, First Direct and The Co-operative bank have demonstrated that it is possible to deliver consistent improvement in satisfaction levels.”

And according to recent figures, the banking sector seems to be experiencing an unexpected wave of positive consumer sentiment. TD Banks’ survey of over 1,500 consumers found a correlation between customer service standards in banking and a positive economic outlook as 60% of consumers happy with their bank claim they have low or zero financial stress.

Earlier research from the Direct Marketing Association (DMA) revealed that consumers rate the service they receive from their main bank highly with the top 14 retail banks scoring an average of 7.8 out of 10 for satisfaction.

However, the ICS study also showed that overall banks are lagging behind other sectors in delivering great customer service. Whilst the general trend is that banks are improving their relationships with customer, rising from 76.3 out of 100 to 78 in 2013, the sector still consistently ranks in eighth place behind food retail, automotive, and leisure.

“Despite these successes [First Direct and The Co-operative Bank], the satisfaction gap between the best and worst performers is considerable. If they are to consistently raise standards, banks must look to top performers, both in and beyond the banking sector, as examples of best practice, and identify how they can adapt to changes in the sector to improve the experience they offer their customers,” said Causon.

There is hope for the industry, though, with banks showing an improvement in problem solving (rising 2.6 points to 77.1 in 2013), timeliness (rising 3.7 to 77.3) and quality and efficiency (rising 2.4 to 77.7).

The ICS also revealed a clear correlation between service performance and customer recommendation in the retail banking sector with an increase of one point to a bank’s Index score equating to an additional 1.6% of customers recommending the institution. 

More than half (51%) of First Direct customers were shown to have recommended their bank whereas at the lowest-end of the scale, Tesco (70.3), can count on only 17% of its customers as to be advocates.

Jo Causon said: “The evidence suggests that despite the regulatory and reputation issues surrounding the banking industry, consumers are highly influenced by the experiences they personally receive when they interact with banks.

“Customers grant loyalty and advocacy to providers that deliver excellent service. Those banks that genuinely create a banking experience that is easy, jargon free and transparent are more likely to attract and retain customers, which will ultimately have a positive effect on their bottom line.”

Earlier research has provided some insight into why some banks are failing to offer superior customer service. Ovum recently reported that European banks, fearful of data security issues, are reluctant to sell their products and service over the social channel – missing out on increased sales and better customer service as a result.

The DMA also advised in its Financial Services tracking study that banks’ marketers are failing to capitalise on financial product cross-selling opportunities with existing customers.

Do you think the banking industry is improving customer service or are First Direct and The Co-operative simply a glitch in the satisfaction rankings? 

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