This post is part of Gallup's ongoing series on the shifting landscape for financial institutions. It provides insights into channel optimization, emerging customer behaviors and preferences, product penetration and relationship growth, engaging the most critical affluent and business customers, and reshaping banks' overall value proposition.
A common debate in Australia is that the "big four" banks -- Commonwealth Bank, National Australia Bank, Westpac, and ANZ -- have too much control over customers, using their large market share to charge excess fees for banking services. Recent media reports suggest that frustrated customers are seeking a change to Australia's "Four Pillars" system. Banking associations argue that making smaller banks accessible to customers will increase competition, thus lowering fees and interest rates. They believe these changes will lead customers to become more engaged with their banks.
However, an analysis based on Gallup's June 2012 Australia Banking Study -- which consisted of interviews with 3,300 banking customers -- reveals that providing competitive rates and charges is notone of the most important drivers of customer engagement. Gallup finds that a customer's experience -- including whether a bank handles problems effectively and is easy to do business with -- is most strongly related to customer engagement, though it is possible that engaged customers are simply more positive about their banking experience.
Factors relating to the cost of services are not strongly associated with customer engagement, according to the results of an in-depth analysis of the relative importance of 13 factors on customer engagement.
As banking leaders in Australia consider strategies to improve customer engagement, increase the number of products per customer, and achieve growth, it is easy for them to buy into the idea that lowering fees and charges will increase customers' engagement with their bank. However, banking leaders will discover that altering fees and charges is only part of engaging a customer with their bank.
Banks need to ensure that every customer-employee interaction is flawlessly executed to engage their customers. By making a genuine connection with customers, they may be more likely to recommend, remain with, and invest more of their money with their bank.
My advice to banking leaders in Australia is:
- Fully understand what drives emotional engagement for your customers;
- Define the right behaviours for front-line staff that will help them act on those drivers;
- Track, manage, and incentivise front-line staff to exhibit those behaviours consistently; and
- Select new hires for customer-facing roles who have the inherent talent to display those behaviours every day, for every customer.
To learn more about how to increase customer engagement and growth, visit the Financial Services area on this site.