CMO Council Study Shows Bank Customers Weary of Fees With No Additional Service But Open to Upgrading Services; Consumers Say They Want Help with Financial Education, Wealth Management and Delivering
PALO ALTO, Calif. (Oct. 10, 2011) – A tighter economy is forcing consumers to become more educated about their finances and banks have the opportunity to mentor and help with more personalized counseling and convenient services, reports the Chief Marketing Officer (CMO) Council.
The new study – “What’s Critical in the Global Bank Vertical” -- included a poll of more than 1,200 consumers and a comprehensive survey of 120-plus bank marketers. Sponsored by Ricoh, the CMO Council study reveals consumers are willing to learn more about relevant products, services, and offerings, but are more interested in information that will help their own bottom line and provide advice about managing their own personal finances more effectively. Consumers are also growing increasingly cynical about higher fees without better service.
Consumers say they are still struggling to make ends meet and are most concerned about paying bills on time. And while many customers feel that even through the worst of the recession, their relationships with their banks remained the same (32 percent), 20 percent of respondents admit they have had to avoid collections calls. New services have been helpful in managing finances, as services like online bill payment, online account management, paperless statements, and email or mobile account alerts are the most valued tools. But some of the new "cool tools" - including mobile or remote deposit, mobile banking apps, and person-to-person payments - are not at the top of the to-do list this year.
Churn and change may be the hallmarks of the next 12 months, even though 36 percent of customers have been with their banks longer than 10 years. Nearly one-third of respondents categorized themselves as "concerned" or "on the fence" about their banking relationships. And judging from customers who have changed banks in the last year, the shift will be made because they are seeking out more options or services (32 percent), lower rates (27 percent), or no surcharges or fees (25 percent).
"Banks have been enjoying a level of loyalty among consumers that is unprecedented in other markets, as customers have stuck with their financial institutions for decades with limited churn or defection," said Donovan Neale-May, Executive Director of the CMO Council. "But as customers are struggling to make ends meet, they are scrutinizing every bill, statement, and new offer for ways to save, potential errors in billing, and explanations for the growing list of fees they are paying each month. Banks must be quick to address these points of pain before customers consolidate accounts and take advantage of competitors with better rates or rewards."
Marketers are busy talking up services and programs, primarily in the form of new digital engagements that make banking easier, but are not as focused on delivering more educational or timely informative content. In fact, only 13 percent of marketers feel that educating customers and providing relevant and easily digestible content are key engagement priorities in the coming months, while only one in four marketers believes the delivery of programs that assist customers in managing their personal finances will impact marketing operations.
Despite an invitation to connect, bank marketers are struggling to realize any real returns on retention marketing campaigns thanks to siloed customer data and a lack of actionable insights. While 36 percent of the 126 senior marketers surveyed are embracing data analytics to better segment customers, 37 percent admit they have a cache of data that has not been effectively leveraged in retention or activation campaigns.
"Consumers are telling banks they need help in managing their personal finances and expect their most trusted, long-term partner to provide it, free of charge. But all too often, the investments being made to engage with these brand loyalists are missing the mark and doing little to address any real points of pain," said Lee Gallagher, Director, Precision Marketing and Enablement at Ricoh. "What we have seen across multiple studies, including an in-depth look at the state of banking in Australia, is that consumers will act with their wallets and make the hard decision to defect, even after decades of loyalty. Now is not the time for any bank marketer to assume that churn is not an issue."
Customers are also concerned about their banks' ability to secure their private and critical data, as 20 percent of respondents identify data loss or a security breach as a primary concern with their banks. Yet only 22 percent of customers are opting into fraud-protection programs being offered as value-added services.
"Customers are saying that they are willing to pay for premium service and are actively opting in for additional products that help enhance their personal finance outlook, but any blind faith or no-matter-what loyalty in a bank is going away. Customers expect their money and their private and personal data to be secure...and they are asking for help to secure their own financial health. The real question is how prepared bank marketers are to deliver on this content call," concluded Neale-May.
About the CMO Council
The Chief Marketing Officer (CMO) Council is dedicated to high-level knowledge exchange, thought leadership, and personal relationship building among senior corporate marketing leaders and brand decision-makers across a wide range of global industries. The CMO Council's 6,000 members control more than $300 billion in aggregated annual marketing expenditures and run complex, distributed marketing and sales operations worldwide. In total, the CMO Council and its strategic interest communities include more than 20,000 global executives in 110 countries covering multiple industries, segments, and markets. Regional chapters and advisory boards are active in the Americas, Europe, Asia Pacific, Middle East, and Africa. The CMO Council's strategic interest groups include the Coalition to Leverage and Optimize Sales Effectiveness (CLOSE), LoyaltyLeaders.org, Marketing Supply Chain Institute, Customer Experience Board, Market Sense-Ability Center, Digital Marketing Performance Institute, GeoBranding Center, and the Forum to Advance the Mobile Experience (FAME). More information on the CMO Council is available at www.cmocouncil.org.
About Ricoh Production Print Solutions (RPPS)
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