2012 Banking Industry Customer Satisfaction Survey

(1)

ISSUE SIX

2012 Banking Industry

Customer Satisfaction

Survey

May 2012

kpmg.com

(2)

About this Survey

How You Should Read and Interpret this Survey Report and its Findings

In reading this report, you should bear the following factors in mind: 1. This is a perception study

• This survey focuses on the perceived quality of customer service delivery by the banks from the customer’s per-spective across the Retail, Corporate/Commercial and SME segments).

• This survey does not represent the opinion of KPMG on the skills, capabilities or performance of any of the banks covered.

• KPMG conducts the survey, but ﬁ ndings represent the opinions of the customers of the banks. • KPMG is responsible for deﬁ ning the survey questionnaire administered to the respondents.

This survey does not seek to establish anything as absolute fact (as perceptions are by deﬁ nition subjective), but to report on the feelings and broader perceptions of customers with respect to services provided by their banks. The rankings are solely based on the feedback received from the survey.

2. Perception is never balanced or fair, but the study always has a representative sample size.

• Banks rated in the survey vary by size, service offerings and customer proﬁ le. Respondents in the survey are asked to rate their banks on a selection of key criteria across ﬁ ve factors detailed below.

• The minimum number of respondents required for each bank in the survey guarantees that the bank ratings reﬂ ect the opinion of a representative customer group and not the opinions of individuals.

C

o

nv

e

n

i

e

n

c

e C

u

st

om

er

C

a

re

P

r

o

d

u

c

t

s

/

S

er

v

i

ce

s

Tr

a

n

s

a

c

ti

o

n

s

M

e

t

h

o

d

s

Methodology

The Customer Satisfaction Index (CSI) used to rate the banks is composed of ﬁ ve key factors - Convenience, Product/Service Offering, Transaction Methods and Systems, Pricing and Customer Care.

• Convenience measures accessibility & quality of service from delivery channels. • Customer Care measures interaction of

the bank and its staff with customers. • Transaction Methods & Systems

measures customer support processes/ systems including turnaround time. • Pricing measures fees, charges and rates

on products and the perceived value. • Product/Service Offering measures

product range & appropriateness to the customer’s needs.

S x I



I

S= Satisfaction I = Importance

Pricing

CSI =

(3)

Contents

Foreword

Survey

Highlights

4

Detailed

Findings

6

Through the Eyes of the Customer

16

Takeaways

27

(4)

(5)

Banking Industry Customer Satisfaction Survey 2012 | 6

Foreword

I am pleased to present the 2012 edition of our annual Banking Industry Customer Satisfaction Survey. A number of changes were introduced this year to broaden the scope of the survey and further enrich the quality of responses across the retail, SME, and commercial/corporate segments. Over 10,000 retail banking customers and more than 2,000 SMEs and large corporate organisations in Nigeria responded to questions on their preferences, levels of satisfaction and expectations from their banks.

Since our ﬁ rst survey in 2007, we have witnessed a marked evolution of the customer. This year’s survey reveals an overall increase in satisfaction levels of retail and SME customer segments – albeit still below the pre-ﬁ nancial crisis levels – while overall satisfaction fell in the corporate segment. With the evolv-ing bankevolv-ing landscape - largely driven by regulation - still very much a subject of national discourse; about half of retail customers still cite Financial Stability as the prime reason for maintaining their banking relationships.

As technology continues to redefi ne how customers interact with each other and their fi nancial services providers, we have broadened the scope of the survey to bet-ter understand customer preferences and attitudes towards traditional and albet-ternate channels. Our survey confi rmed the ATM as the fastest growing channel; more than half of customers visit an ATM on a weekly basis. However, the level of adoption of other alternate channels is still relatively low.

At KPMG, we believe these alternate channels will all gain traction as they offer exciting and promising opportunities for both banks and their customers. However, there is a need for banks, the industry regulator and other key stakeholders to address customer concerns identiﬁ ed in this report and in some cases review the delivery approach to optimise these channels. We also expect the branch to continue to remain a key channel but anticipate the distinctions between branch and alternate channels to continue to thin thus creating oppor-tunities for banks and ﬁ nancial services providers in general to deliver seamless multichannel experiences to their customers.

Our survey also demonstrates that customers are increasingly sensitive to service quality and as customer conﬁ dence in the industry increases, the likelihood of switching is expected to increase. Hence, the time is now for banks to go beyond customer service to building customer loyalty and advocacy.

I hope you ﬁ nd the survey results helpful and welcome feedback or suggestions for next year’s survey.

Bisi Lamikanra

Partner & Head

(6)

4 | Banking Industry Customer Satisfaction Survey 2012

Survey Highlights

Mixed Results

The survey results revealed increased satisfaction in the retail and SME segments driven largely by satisfaction with service delivery through channels and customer care. On the other hand, overall CSI fell in the corporate segment; a signiﬁ cant number of corporate customers expressed displeasure with the ability of banks to meet their needs.

Maintaining Relationships

Across all segments, Financial Stability remains the most important factor customers consider in choosing to main-tain a banking relationship. However, of note is that in the retail segment, customers are more likely to switch banks because of Service Quality not Financial Stability.

(7)

Adoption of Alternate Channels

Remains Low

While majority of our respondents had used at least one alternate channel, overall adoption remains low except for ATMs. Speciﬁ cally, only 7% of respondents use internet banking; POS - 6%; telephone banking - 5%; mobile pay-ments - 2%; compared to ATM - 82% and branch - 97%.

Strong Call for Industry

Specialisation

Nine-in-ten corporate respondents highlighted customer relationship managers’ knowledge of their industry and ability to provide alternatives as being very important to them. However, there was consistent feedback from re-spondents that banks could perform better in this area. Strong knowldege of the customer’s business ranked as the highest service expectation of corporate respond-ents. Indeed, 66% of those organisations who said they would not increase transactions with their banks were not satisﬁ ed with the ability of their relationship managers to present them with useful advice.

(8)

Over the past ﬁ ve years, we have witnessed many initiatives by

banks to engage better with customers and our ﬁ ndings suggest that

customers are responding to some of these initiatives evidenced by

the 3-percentage point increase in the banking industry's overall

cus-tomer satisfaction recorded this year in the retail segment.

(9)

Top 10 Most Customer Focused Banks (Retail)

Top 10 Most Customer Focused Banks (SME)

Retail and SME banking customers responding to new initiatives

GTBank emerged as the most customer focused bank with a CSI rating of 77.9 in this segment, while last year’s leader Ze-nith Bank, came in second with a rating of 77.6. Both banks showed signiﬁ cant improvements in overall customer satis-faction levels by an increase of three and two percentage points respectively from last year’s ratings.

This year’s survey also reveals some ﬁ rst-time entrants in the top ten – Stand-ard Chartered Bank and Sterling Bank secured the sixth and ninth positions respectively. The gap amongst the top ten has also narrowed from six to four percentage points highlighting increased competition.

In the SME segment, GTB also led the pack with Zenith Bank coming a close second followed by Standard Chartered

Bank, Stanbic IBTC and Access Bank respectively. Overall CSI for this segment increased by nearly ﬁ ve percentage points from last year, driven largely by respond-ents’ satisfaction levels with service delivery through channels and customer care. However, about four-in-ten SMEs still indicate difﬁ culty in accessing short-term credit from banks.

FIVE YEAR SNIPPET

• In the retail segment, GTBank has maintained the top position since 2008, except in 2011 when Zenith held the top spot. Other banks that have featured consistently in the top ten are Diamond, Access, and Stanbic IBTC.

• In the corporate segment, Zenith emerged in ﬁ rst place in 2008 and 2009 while GTBank has maintained ﬁ rst place since 2010. Other banks that have featured in the top ten every year since 2008 are First Bank and Diamond Bank.

GTBank Zenith Stanbic IBTC Diamond Fidelity FCMB Standard Chartered FirstBank Sterling Access Industry Average GTBank Zenith Standard Chartered Stanbic IBTC Access FCMB FirstBank Diamond Sterling Ecobank Industry Average 77.9 77.7 73.1 73.3 73.9 74.4 74.8 75.0 75.7 76.1 79.1 74.5 74.9 78.4 78.3 78.2 76.0 75.7 75.7 75.1 79.0 75.0 77.0 73.0 71.0 72.0 74.0 76.0 78.0 72.0 73.0 74.0 75.0 76.0 77.0 78.0 79.0 80.0 70.0

(10)

(11)

In the very competitive banking landscape, differentiation is difﬁ cult to

achieve on many fronts. However, banks that will be successful in the

corporate market will need to leverage the latest technologies to deliver

practical, convenient and seamless alternatives.

“

Banks ﬁ nd corporate organizations hard to please

Overall CSI in the corporate segment this year fell by nearly six percentage points to 68.7 refl ecting dissatisfaction in the levels of service delivery from a signifi -cant number of commercial/corporate or-ganizations surveyed. From the different interviews we conducted, the message is clear: corporate customers expect banks to provide higher levels of reliable service and support their businesses throughout their entire value chains. About half of all corporate respondents were either dissatisfi ed or indifferent about their banks’ ability to support their business needs. When probed further, respondents expressed concern about their relationship managers’ understand-ing of their industry highlightunderstand-ing the need

for deep industry specialization within banks.

While banks may face regulatory constraints that affect their degree of ﬂ exibility in interacting with corporate clients, customers expect their banks to demonstrate innovation that anticipates evolving regulation and their business needs. Respondents would like to see more ufriendly internet banking ser-vices and seamless transaction process-ing across channels. Corporate custom-ers also appear increasingly unwilling to conduct transaction-type activities from the branch.

CSI Ratings per Industry (Commercial/ Corporate)

Building, Construction & Real Estate

Food Beverage & Tobacco

Services Conglomerates

Manufacturing

Oil & Gas Agriculture

Non-Bank Financial Services

Transport & Logistics Hospitality

Maritime

Healthcare Aviation

Educational Institutions

Media, Advertising & Publishing

ICT Industry Average 71.0 70.9 71.0 70.8 70.3 70.0 69.9 68.9 68.9 68.9 68.5 68.8 68.2 67.6 66.6 62.8 72.0 60.0 64.0 68.0 GTBank Zenith FirstBank Sterling Diamond Skye UBA Stanbic IBTC Access StanChart 72.5 Industry Average 71.3 70.2 67.8 67.8 68.2 68.3 68.3 68.4 68.6 60.0 65.0 70.0 75.0 80.0

Top 10 Most Customer Focused

Banks (Commercial/ Corporate)

(12)

In recent times, regulatory changes have been at the forefront of the Nigerian ﬁ nancial services industry with initiatives such as the cashless society drive. These initiatives have directly impacted the relationships of banks with their cus-tomers. Some respondents expressed dissatisfaction at the approach taken by some banks to migrate them to alternate channels such as the introduction of withdrawal charges prior to the com-mencement of the CBN initiative. Our ﬁ ndings reveal yet again that Finan-cial Stability (27%) remains the lead-ing factor for most retail customers in maintaining their relationships with their banks followed by Excellent Customer Service (23%) and the bank’s Image and Reputation (18%). About one in ten retail customers also noted Proximity of Alter-nate Delivery Channels as a key factor. Feedback from retail customers also sug-gests some measure of anxiety in light of recent regulatory interventions. Hence, banks will need to continue to reassure customers and ensure they

remain informed; while some banks also need to go further to rebuild trust with their customers. Our ﬁ ndings also reveal that customers perceive the bank’s image as a more important factor in the banking relationship than pricing of bank products. In the same vein, SMEs and corporate organisations also ranked Financial

Stabil-ity as the primary reason for maintaining their banking relationships. The main reason corporate customers continued their banking relationship was based on Excellent Customer Service in 2008, however it has been Financial Stability from 2009.

Since the onset of the last fi nancial crisis, customer confi dence has been waning around the world and Nigerian banks are not exempt from this trend. As the dust settles from the recent industry shake-up, many customers can be forgiven for remaining cautious about their fi nances and banking relationships. Some of the customers surveyed are in the process of seeking or have already sought to diversify perceived risks in the banking sector by opening an account with an additional bank or switching to another bank entirely. Here are a few suggestions on how banks can regain the trust of their customers.

Financial Stability Customer Service Image & Reputation Proximity of Branches Access to Other Channels

Top Reasons for Maintaining Banking Relationships

Financial Stability Customer Service Image & Reputation Proximity of Branches Relationship with Bank Rep. Bank’s Support of Business Financial Stability Customer Service Image & Reputation Bank’s Support of Business Relationship with Bank Rep.

Reasonable Charges 27% 23% 18% 12% 9% 26% 18% 11% 5% 19% 5% 29% 10% 10% 6% 23% 5%

Retail SME Commercial/

Corporate

Financial stability

remains key

RELATIONSHIP ISSUES

Increase transparency

Banks have long been associated with hidden charges and complex products. However, customers expect banks to deal more transparently especially in the areas of pricing and fees - with no surprises. Only then will banks be seen to be acting in the best interest of their customers.

Renew your customer value proposition

Some of the recent changes in the indus-try - mergers, acquisitions and regula-tory interventions - have reshaped the identity of some banks in the mind of the customer. It is imperative for banks to refresh their value propositions to pro-vide clarity in the minds of customers.

Cultivate a customer-focused culture A culture that prioritises the customer will do more to gain trust than one which only advances proﬁ tability targets. Right from recruitment, banks must ensure that their people have a strong desire to deliver great service. Further invest-ments must also be made in the form of training and work exposure to empower staff to deliver ﬁ rst-class customer service.

(13)

(14)

Branching out

Ensuring that customers have ease of

ac-cess and readily available channels to use is an integral step towards guaranteeing the convenience of delivery channels for the customer. With customers getting used to shorter turnaround times and the immediacy offered by technology devices, they are also demanding similar levels of speed and convenience from banks.

Increasingly, channels must provide full functionality and maintain high levels of reliability and availability to meet custom-er expectations. Customcustom-ers want to be able to process near- instant transactions from their mobile devices and comput-ers from the comfort of their homes or workplaces.

As they migrate to these self-service channels such as ATM, internet and mobile--, banks are also presented with the opportunity to leverage technology to deliver efﬁ cient and more personal-ized services.

CONVENIENCE

Top Three Banks by CSI Rating - Convenience

Rank

Retail

Zenith Standard Chartered GTBank

GTBank Zenith Zenith

Diamond GTBank FirstBank

SME

Commercial/

Corporate

1

2

3

(15)

Retail banking respondents rated Zenith Bank highest in the area of convenience followed by GTBank and Diamond Bank with CSI ratings of 79.0, 77.5 and 76.3 respectively. Zenith and GTBank main-tained their positions from last year but Diamond Bank replaced Fidelity Bank in third position.

Nonetheless, it is apparent that more progress is required in the ease of ac-cess to alternate channels. Satisfaction levels with mobile banking, internet banking, and call centre services were rated comparatively low – in the high 50s and low 60s - whereas satisfaction with ATMs was over 80%.

The convenience CSI in the SME seg-ment was slightly higher than retail as Standard Chartered Bank moved into ﬁ rst place with a rating of 80.1 – an 8-per-centage point increase from last year.

The satisfaction levels for the availability of channels were generally higher for SME in comparison with retail, except for the POS which had 60% satisfaction. Some of the issues highlighted with the POS include frequent network unreli-ability/ downtime causing challenges in completing transactions for merchants and customers.

FIVE YEAR SNIPPET

• Convenience reached its lowest point this year in the corporate segment in a reﬂ ection of higher expectations from respondents. In the retail segment, convenience has declined from its peak in 2009.

• For the ﬁ rst time, the industry average for convenience was the lowest of all the ﬁ ve CSI factors in the corporate segment.

• In the corporate segment, Zenith Bank has emerged in ﬁ rst position in three of the last ﬁ ve years.

Top Three Banks by CSI Rating - Channels (Retail)

Rank

Branch

ATM

Internet

Contact

Centre

Banking

Mobile

Zenith Zenith Stanbic IBTC

Stanbic IBTC Standard Chartered Standard Chartered Diamond GTBank ETB Zenith GTBank

FirstBank Sterling Diamond GTBank

1

2

3

In the corporate segment, only three-in-ten customers were very satisﬁ ed with the quality and availability of internet banking and contact centre provided by their banks.

(16)

Alternate channels: yes, but

what do they mean?

Q. How often do you use the following channels? All Age Groups

Channel Usage

Branch ATM POS Internet Banking Mobile Banking1 Contact Centre Mobile Payments2 100% 80% 60% 40% 20% 0%

Weekly At least once every 2 weeks Once a month Rarely Never

Only 7% of respondents

use internet banking;

POS - 6%; telephone

banking - 5%; and mobile

payments - 2%.

1_{Mobile banking allows customers to use their applications on mobile phones as another channel for their banking}

services such as deposits, withdrawals, account transfer, bill payment, and balance inquiry.

2_{Mobile payments involve the use of mobile phones toinitiate and conﬁ rm payments between two parties.} It’s no longer news: the ATM has been

the fastest growing channel in Nigeria in recent years, a reﬂ ection of the ubiquity of ATMs in many cities. Almost eight-in-ten customers surveyed use the ATM and nearly two thirds of these people visit an ATM on a weekly basis. It should come as no surprise that cash withdraw-als and balance enquiry are the most common transactions customers would like to perform via the ATM.

However, despite the proliferation of new channels in recent years, our ﬁ ndings show that adoption of other alternate channels is still low. Only 7% of respond-ents use internet banking, POS (6%), telephone banking (5%) and mobile pay-ments (2%). Although, customers would like to use some of these alternate channels for transactions such as bill pay-ments and getting ﬁ nancial advice, the uptake is not as high as expected and some still remain oblivious of the value proposition that these channels provide.

Banks cannot afford to take for granted customer awareness of channels avail-able to them. For instance, of all retail respondents surveyed, only 33% of private sector employees and 15% of students use internet banking. Banks still need to continue to communicate and reassure their customers of the available services and beneﬁ ts associ-ated with the use of these channels. Banks must also seek to address the concerns or reasons for scepticism on the part of customers such as concerns about the level of security provided on online banking platforms.

The signiﬁ cant adoption of the ATM suggests that the potential of the other emerging channels such as internet banking and mobile payments can be realized.

(17)

Coupled with the rise of ATM usage, there has been a decline not just in the usage of branches but also in the preference of the branch for carrying out transaction-type activities like withdraw-als. Less than half of respondents identi-ﬁ ed the branch as a preferred method for cash withdrawal.

In line with trends in other mature markets, people aged under-30 account

for about 45 percent of internet banking users while people aged 55 and over account for only 3 percent of all mobile banking users. As expected, the most common mobile banking activities are balance enquiry and funds transfer. Contrary to the belief that older people tend to visit the branch more often, our survey revealed that a similar number of people above 55 that visit the branch

also use the ATM several times a week. Across the different locations, the survey reveals that Lagos and Kaduna customers (9%) use internet banking more than any other location. Lagos and Abuja custom-ers reported the highest use of telephone banking (7%) while nine out of ten custom-ers in Ibadan use the ATM – the highest for any location.

The opportunity for banks in the area of alternate channels is widely acknowledged: Nigeria has a large unbanked population and widespread mobile phone penetration across income groups. Understandably there are socio-eco-nomic realities for banks to contend with, however, the survey results suggest that banks are failing to sufﬁ ciently leverage the potential offered by these channels to drive satisfaction, convenience and the cost-to-serve.

Deepen customer segmentation A broad roll-out of alternate channels is not a guarantee for reducing costs and driving operational effi ciency. As a matter of fact, many banks in mature economies are yet to fully realize the benefi ts. We suggest that by looking through the eyes of the customer to understand their needs and preferences, banks can effectively defi ne unique customer segments and appropriate value propositions beyond the traditional classifi cations. There is also need to invest in IT-driven business intel-ligence to harness customer information to aid understanding of customer behavior and expectations.

Deliver clear messages

In communicating the value proposition of various channels available to custom-ers, banks must be careful to ensure that the relevance, beneﬁ ts, security and most importantly how-to-use information are targeted at different customer

demograph-ics. Generic and irrelevant communication does little to drive customer value and increases costs instead. Communica-tion efforts must take into account how different customer segments respond to information.

Target seamless multichannel integration

As demonstrated in the survey results,

many customers already use multiple channels hence banks need to integrate these channels to deliver seamless channel experiences for customers. For in-stance, there are opportunities to integrate contact centres with internet banking such that customers experiencing difﬁ culties can get immediate solutions. Delivering seamless customer experience will also require a paradigm shift from ‘silo-based’ approach to customer management to an enterprise approach. It will require signiﬁ -cant investments in IT but also provide op-portunities for cross-selling and deepening customer relationships.

Reconceptualise the branch model As more transaction-type activities are migrated to other self-service channels, we expect the role of the branch to evolve. Currently, most banking distribution mod-els are designed around the branch but as more channels emerge, the branch will become one of many other channels. This represents an opportunity for branches to reconceptualise their branch models - from layout design to stafﬁ ng – to ensure optimization and improved delivery of customer experience.

However, branch optimization needs to start with an articulated customer strategy and customer segmentation that is insight-ful and pragmatic. This would require a full dimensioning of customer, channel and product proﬁ tability – challenging the ﬁ nancial management and cost allocation practices of banks today.

Optimising the alternate channel opportunity

Weekly Usage of Banking Channels by Persons Aged Under 30

ATM

Branch

Internet Banking

Mobile Banking

POS

65%

29%

3%

2%

1%

(18)

Through the

eyes of the

customer

If your bank’s social media strategy is not built around the customer experience, then there is a good chance that it is go-ing to fail.

That is because – more than any other banking channel – social media is all about the customer experience.

However, taking a customer centric view is not going to be easy for most banks. In part, that is because banking commu-nications have traditionally been either one-way (advertising, direct mail, state-ments, etc) or one-on-one (customer service, branch banking, telephone bank-ing, etc). As a result, many banks may be unprepared for the changes that must occur to make social media strategies succeed.

Walking in the customer’s

shoes

Let’s take a look at how an average cus-tomer might view interactions with their bank over social media. First, they proba-bly only want to deal with one ‘company’

proﬁ le rather than multiple divisions. For banks, this means developing a ‘single view’ of the customer so that frontline social media employees are able to serve customer needs efﬁ ciently across the various divisions and businesses. Customers will expect their banks to be responsive to their needs over social media. Given the immediacy of social media tools like Twitter, customers have come to expect that their social interac-tions will elicit an immediate (or at the very least, rapid) response. This has two implications for banks: frontline staff will need to be empowered to make immediate decisions; and information will need to be available in real-time for employees to properly address cus-tomer concerns.

Building relationships based

on trust

Most importantly, however, is that customers will expect their banks to be more transparent in all of their interac-tions over social media.

This not only means providing customers with more information, it also requires the bank to be open to criticism – even encour-age it – in order to provide a better custom-er expcustom-erience. This will call for something of a culture shift within the bank that must start at the top and permeate down to the frontline staff.

Building a community

They will also expect to gain some unique value from engaging with their bank over social media. In some cases, this may simply be a better customer experience or faster response time. But it may also offer banks an opportunity to differentiate

Banks all over the world are playing catch-up on the

ever-evolv-ing social media front where many customers are savvy. How

can Nigerian banks leverage this platform successfully?

“More than any other

banking channel, social

media is all about the

customer experience.”

(19)

themselves.

Banks may consider the ‘gameiﬁ cation’ of ﬁ nancial services (for example, a tool that allows customers to play with different investment scenarios), or even incentivization (say, providing a better rate to customers who apply through social channels).

More active social network users may also welcome a ‘community’ aspect to the bank’s offerings. In fact, this may pro-vide one of the biggest opportunities for banks: experience in the telecommunica-tions industry shows that peer-to-peer customer support can generate not only signiﬁ cant cost savings for companies, but also provide faster (and sometimes more personal) issue resolution. What’s more, those customers that pro-vide peer support are more likely to be advocates of the bank and may be har-nessed as net promoters in the future. But banks will also need to remember that customers can be ﬁ ckle. New

chan-nels and services will certainly emerge to enhance (or even replace) existing networks, even as customer expecta-tions become more sophisticated. Clearly, taking a customer-centric view of social media is going to be a long-term strategy.

“Customers will expect

their banks to be more

transparent in all of

their interactions over

social media.”

Marty Carroll

marty.carroll@kpmg.co.uk

(20)

Using the Transactions, Methods, and Systems (TMS) component of the CSI, we assessed customer satisfaction with quality of information provided and turnaround time of transactions at banks. Retail respondents ranked Zenith Bank highest ahead of other banks.

Overall, retail respondents expressed highest levels of satisfaction for transac-tion, methods and systems in a nod to numerous efforts by banks to address waiting times in banking halls. Progress needs to continue, however, as typical is-sues such as long queues, diffi cult-to-un-derstand information and lack of prompt feedback from bank staff still remain. In the corporate segment, GTBank secured fi rst place with a rating of 78.5 followed by Zenith and First Bank. For the fourth year in a row, the CSI for TMS has the highest industry average at 74.0, although the average has been on a decline since 2010 when it was 80.5. Satisfaction with information provided on bank statements and advice slips remained unchanged from last year – nearly nine-in-ten respondents for both years were satisfi ed with the accuracy and completeness of those documents.

Faster please!

TRANSACTIONS, METHODS & SYSTEMS

FIVE YEAR SNIPPET

Top Three Banks by CSI Rating - Transactions Methods & Systems

Retail SME Commercial/

Corporate

• Customer satisfaction with timeliness of transaction processing across all segments has increased signiﬁ cantly over the last ﬁ ve years.

• Since 2009, the Transactions, Methods and Systems (TMS) factor has recorded the highest industry average rating (in the corporate segment) out of the ﬁ ve components annually.

• Over the last ﬁ ve years, Zenith and GTBank have achieved a place in the top three every year in both segments.

Q. How satisﬁ ed are you with the timeliness of transactions? A. Very Satisﬁ ed

Satisfaction with transaction processing

26% 44% 26% 40% 37% 37% 2011 2012

Rank

Retail

Zenith GTBank GTBank

GTBank Zenith Zenith

Stanbic IBTC Stanbic IBTC FirstBank

SME

Commercial/

Corporate

1

2

3

(21)

In recent years, banks have made sig-niﬁ cant strides in the area of customer care. In this period, customer care has evolved from the single service desk in the bank branch to full contact centres with tens or hundreds of staff answer-ing phone calls and resolvanswer-ing diverse queries. Much of it remains reactive; to meet customer expectations and deliver a compelling customer experience, banks need to be proactive in this area. As customers interface with staff and different touch points, banks need to be able to identify the key moments of truth for their customers. For instance, by identifying the different stages of a customer’s visit to the branch, a bank can ensure it adequately engages the customer at each stage (including queu-ing) such that the customer leaves with a positive experience at each point. By proactively anticipating customer needs and offering suitable alternatives, banks can also deliver fulﬁ lling experiences to customers.

There is also a need to invest in equip-ping staff with the right tools and knowledge to communicate clearly and demonstrate sufﬁ cient knowledge of the bank’s offerings or the customer’s situation/ business. Indeed, nine-in-ten

Zenith Bank and GTBank demonstrated strong performance in the retail segment with CSI ratings above 80 – the only ratings above 80 in this year’s survey in any retail CSI category. There has been a general increase in customer care satisfaction this year. For example, more than 80% of retail customers are satisﬁ ed with staff knowl-edge and understanding of the bank’s products and services.

For the SME segment, GTBank emerged in fi rst place followed by Stanbic and Zenith respectively. The customer care service area received the highest industry average amongst the fi ve components of the CSI. Moreover, more than half of SME custom-ers were very satisfi ed with staff friendli-ness.

In the corporate segment, Zenith main-tained fi rst place from last year with a two-percentage point increase. Although the customer care CSI increased from last year, there was a noticeable decrease in certain areas of satisfaction. For instance, respondents were less satisfi ed with the bank’s ability to proactively provide services to meet the company’s changing needs. This year, 73% of respondents were satisfi ed compared to last year’s 81%.

Making it a strategic priority

CUSTOMER CARE

FIVE YEAR SNIPPET

Top Three Banks by CSI Rating - Customer Care

• Satisfaction with response to enquiries was at its highest this year for the retail segment.

• Nearly all respondents over the last ﬁ ve years have indicated the very strong importance of the ability of banks to proactively provide services that meet changing business needs, yet this element has consistently recorded the lowest satisfaction level each year.

Rank

Retail

GTBank GTBank Zenith

Standard

Chartered StanbicIBTC GTBank

Zenith Zenith FirstBank

SME

Commercial/

Corporate

1

2

3

Don’t sit like a lame duck, ask how

you can help our business!

“

- Senior representative of

“

a leading ICT company

corporate respondents highlighted cus-tomer care issues such as their relation-ship managers’ knowledge of their indus-try and ability to provide alternatives was very important to them.

66% of those organisations who said they would not increase transactions with their banks were not satisﬁ ed with the ability of their relationship managers to present them with useful advice. Over seven-in-ten (75%) of the same organiza-tions said their banks did not sufﬁ ciently update them on market trends.

In the retail segment, 83% of retail re-spondents who were planning to switch banks said they were not very satisﬁ ed with handling of enquiries and com-plaints by their banks.

(22)

Delivering the product difference

PRODUCTS & SERVICES

What is required to achieve improved product and service offering is strong product management. A key element of product management is to manage the products offered through customer segmentation.

Tailoring services and products to the needs of a speciﬁ c type of customer, instead of a generic offering for a broad category of customers will give custom-ers a better impression of the bank’s ability to understand their needs. As customers consolidate payment rela-tionships and embrace electronic forms of payments, banks become exposed to greater competition from non-bank ﬁ nancial services providers with the consequent impact on margins. Mobile solutions, for instance, are bound to allow new entrants capture part of the payment value chain.

Indeed, of the retail respondents who stated they would not recommend their bank to others, 46% expressed dis-satisfaction or indifference towards the bank’s ability to provide products and services that meet their needs. Particu-larly, customers in all three segments cited product and service suitability as very important to them ahead of other questions asked in this area.

Moreover, product and service offerings can be further improved through the provision of value added services that respond to customer needs, particu-larly that of convenience. Such services

include those that utilize electronic alternatives to reduce the extensive use of paper trails to complete transac-tions and even shorten the completion timeframe. Of those who expressed dissatisfaction/indifference towards the convenience of products and services, 60% of corporate customers felt that there was little innovation to anticipate their changing needs.

In the retail segment, the CSI ratings for the top three banks were higher than last year; the top two banks recorded a six-percentage-point increase. When asked for their level of satisfaction on mortgage facilities, only 5% of re-spondents provided responses perhaps reﬂ ecting the underdevelopment of the mortgage industry in Nigeria. More than seven out of ten respondents expressed some degree of satisfaction with funds transfer services provided.

Within the SME segment, GTBank received a rating of 79.4 to emerge in

fi rst place, followed by Stanbic which had a rating of 78.2, and Zenith rounding up third position with 77.5. Only 29% of respond-ents were very satisfi ed with the loan prod-ucts available to them. This is an increase from last year, where 23% of respondents were very satisfi ed.

In the corporate segment, GTBank came in fi rst place for the third year in a row with a rating of 71.6. Zenith and First Bank had ratings of 70.3 and 69.7 respectively. With respect to the facilities provided by banks, corporate respondents showed the least amount of satisfaction for short and long term credit with only 21% and 19% of re-spondents respectively claiming to be very satisfi ed with the loan facilities they had received. This is a sharp decline from last year where 36% of respondents were very satisfi ed with short term credit and 34% were very satisfi ed with long term credit.

It is no longer simply a question of the different products offered by the bank, but also a question of

the suitability of the product being offered. Is it relevant to the customer’s needs? Is it readily

acces-sible and/or has adequate guidance been given to explain the use of the product or service?

Top Three Banks by CSI Rating - Products & Services

FIVE YEAR SNIPPET

• The industry average for product and service offering CSI (retail) climaxed at 75.2 in 2009, however, it plummeted by 12 percentage points the following year. Since then it has been on the rise, reaching 73.2 in this year’s survey.

• In the corporate segment, this year’s CSI for product and service offering has been the lowest obtained over the last ﬁ ve years at 67.7.

Rank

Retail

GTBank GTBank GTBank

Zenith Fidelity Zenith FirstBank Stanbic IBTC Zenith

SME

Commercial/

Corporate

1

2

3

(23)

Delivering targeted enhanced banking services

There is a great opportunity for Nigerian banks to

de-liver compelling experiences to corporate customers by adequately supporting their businesses throughout their ﬁ nancial supply value chain.

Currently, the approach to product development is usually reactive and product-centric as opposed to customer-focused. Banks must strive to understand the underly-ing processes behind a customer’s physical (movement of goods) and fi nancial supply value chain, understand pain-points and issues faced in addressing their fi nancial service needs and as such develop or provide enhanced automated banking products/ solutions that is integrated with the customer’s fi nancial value chain. This is key to delivering value and generating signifi cant income. In addition, few banks perform extensive customer and/ or industry segmentation to determine the appropriate mix of capabilities to drive revenue expansion and tailor offer-ings to such specifi c industries.

In other markets, many banks are re-adapting their busi-ness models such that commercial products are aligned

along customer processes (B2C, B2B, C2B, C2C, etc) rather than by instruments such as cards or cash. Hence, payment solutions are strategically designed to compre-hensively address the ﬁ nancial service needs of all stake-holders in the economy hence ensuring maximal ﬁ nancial inclusion of not just customers but transactions.

Corporate customers are interested in improving visibility of net cash/ liquidity position rather than just payments and are demanding more efﬁ cient treasury management to optimize working capital and eventually, measurable value for shareholders.

(24)

(25)

Getting pricing right

PRICING

While many customers are choosing to stay with their banks based on the bank’s perceived ﬁ nancial stability and service quality, in the end, charges and rates can still be hard to swallow if they are perceived as uncompetitive.

Admittedly, effective pricing in fi nancial services can be diffi cult to achieve. With pressures to deliver shareholder value amidst a tight regulatory environment, banks often have few options with re-spect to interest rates, fees and charges. Risk-based and cost-based approaches to pricing appear to offer minimal differenti-ation since they are now common place. However, by adopting a customer-focused approach - one that leverages technology to develop and implement a pricing model mapped to customer data, buying patterns and risk, banks can achieve a balance between profi tablity and customer value. It will also provide the opportunity to ensure that loyal cus-tomers are adequately rewarded through incentives and rightly-priced products. Although many respondents will prefer to see lower rates and charges from banks, less than 20% of SMEs and corporates expressed outright dissatisfaction with their banks in this area perhaps refl ecting an awareness of the little differentiation amongst banks in the area of pricing. Instead, customers expect banks to match fees with value provided in the form of fl exibility, transparency, timely advice and proactive communication.

In the retail segment, GTBank retains number one position from last year with an improved CSI of 71.2 while Stanbic IBTC and FCMB came in second and third respectively. 67% of retail re-spondents are generally satisﬁ ed with the cost of maintaining accounts with the banks, while 54% are satisﬁ ed with the interest rates offered on deposits and investment products.

Customers in the SME segment were

Q. How satisﬁ ed are you with the cost of maintaining banks accounts with your banks?

Satisfaction with Pricing

SMEs Corporates

Dissatisﬁ ed Satisﬁ ed

FIVE YEAR SNIPPET

• Over the past ﬁ ve years, pricing has generally been the customer service area with the lowest rating in the retail segment compared to the other four CSI components.

• For the ﬁ rst time, pricing did not have the lowest CSI rating in the corporate segment

• Fidelity and GTBank were the only two banks to rank amongst the top three for three times in the past ﬁ ve years.

slightly more satisﬁ ed than retail regard-ing account maintenance costs - 69% of respondents expressed satisfaction. Six-in-ten SME respondents also expressed satis-faction with interest rates offered.

With respect to pricing for corporate customers, Keystone emerged as in ﬁ rst place. Importantly, overall pricing CSI in this segment declined by nearly ﬁ ve per-centage points from last year.

Top Three Banks by CSI Rating - Pricing

Rank

Retail

GTBank GTBank Keystone

FCMB FCMB Union Stanbic IBTC Stanbic IBTC Zenith

SME

Commercial/

Corporate

1

2

3

11% 20%

(26)

Q. Would you recommend your bank to others?

Customer Advocacy

Absolutely Will Often Will Sometimes Will Absolutely Will Not No Response

54% 12% _12% _25% 10% _9% 17% 7% _5% 5% 17% _17% 5% 57% 48%

Retail SME Commercial/

Corporate

What’s driving loyalty?

LOYALTY

The local banking industry has experi-enced an extensive and ongoing shift in conﬁ dence which has generally impacted loyalty. Greater customer awareness also means that customers are demanding higher levels of personalised services. While most customers expressed willing-ness to continue with their banks, we found that about half of those who would like to change their banks have remained primarily because of their perception of the bank’s stability. As customer conﬁ -dence in the banking industry begins to

rise, there is likely to be an increase in customer switching rates and the as-sociated costs of acquiring and retaining customers.

Research shows that up to 90% of customers do not complain when they experience a dissatisfi er hence by tackling only the 10% of dissatisfi ed who complain—common practice in the fi nancial services industry— banks are

exposed to signiﬁ cant attrition risk1_.

The impact of loyalty goes beyond the

size of the customer base; customers with strong loyalty can help business growth through referrals, recommendations and increased business. A signiﬁ cant number of customers use social media on a fairly regular basis and this readily gives them a platform to voice their discontent or other-wise to an audience far beyond the reach of any bank’s PR.

Hence, the time is now for banks to invest in moving existing customers along the loyalty curve into the ‘zone of affection’ where they become advocates for the

1_{Operations Council, Corporate Executive Board}

My bank’s management team needs to work diligently

and assure customers of their loyalty, train their staff to

be exceptional, only then can they win my conﬁ dence.

(27)

Q. What is your primary reason for changing (or planning to change) your bank ?

Customer Switching

Service Quality

Financial Stability Interest Rates & Fees Turnaround Time for Requests and Enquiries

Proximity of Branches

Others

Innovative Products & Services

Access to Credit 10.5% 8.9% 8.3% 6.5% 5.0% 0.3% 10.8% 49.6% bank. Building customer loyalty and

advocacy will require commitment and discipline from the highest levels of the bank – it cannot be approached as a one-time project but rather as an ongoing one that prioritizes improving customer experiences at all touch points.

For retail customers seeking to switch banks, the survey reveals service quality to be the overwhelming reason – about ﬁ ve-in-ten customers cited this factor. Other reasons for wanting to switch were turnaround time (11%) and

inter-est rates (11%). Only 3% of corporate respondents expressed intentions to change their banks within the next 3 months – about half cited poor service quality as the primary reason. The low switching rate amongst corporates can be attributed to these organisations holding multiple banking relationships and high costs associated with switching banks.

Generally, customers who have spent between two to ﬁ ve years with their banks are more likely to answer that

their banks recognize their loyalty. On the other hand, just over half of customers (52%) with more than 20 years of bank-ing relationships feel their banks recog-nize their loyalty.

(28)

Service Expectations

Understanding the key service areas

where customers would like to see im-mediate improvements is an integral part of fulﬁ lling customer’s needs. Knowing the areas that can be remedied to offer customers a better banking experience is key to increasing their satisfaction and loyalty.

As seen throughout the survey, custom-ers are expecting banks to deliver faster transaction processing. When asked how their bank could improve its services, many retail respondents identiﬁ ed “reduction in wait times for transaction processing and requests” as a primary area of improvement. This has remained unchanged as the primary improvement area since 2010. Of note as well, “friend-ly, polite and proactive staff” appears as one of the top three improvement areas for banks.

The main areas of improvement noted by the SME segment aligns with those of retail customers. “Competitive inter-est rates, fees and charges,” is also one of the top three expectations of SMEs. As discussed earlier, corporate organi-zations expect banks to demonstrate stronger knowledge of their businesses. Organisations that expressed dis-satisfaction with their banks’ ability to partner with them effectively were more likely to suggest improved relation-ship management and deeper industry knowledge as ways banks can strength-en their services.

Majority of retail and

SME customers want

to spend less time

pro-cessing transactions.

Knowledge of the

customer’s business

in the corporate sector

remains a key issue.

Q. How can your bank improve its services?

(29)

1

2

3

Takeaways

Deepen knowledge of

the customer’s business

Optimise alternate channels

to reduce wait times

Leverage technology to

provide innovative solutions

across customer value chains

(30)

Demographics

Retail Respondents

SME Respondents

Commercial/ Corporate Respondents

Employment Status Income (Monthly) Age Gender

Number of Employees

Annual Turnover Sector

Number of Employees

Annual Turnover Sector

Male Under 30 Less than 10 Less than 300 Below N1m Less than N250m Below N20,000 Public 41-55 51 - 100 500 – 1,000 500 – 1,000 Greater than N10bn N5m - N50m N1bn - N5bn N101,000 - N250,000 Self-Employed Greater than N500,000 Retired Above 55 101 - 250 1,000 – 2,000 N50m - N250m N5bn - N10bn N251,000 - N500,000 Student Others 31 - 40 10 - 50 300 – 500 N1m - N5m N250m - N1bn N20,000 - N100,000 Private Female 46% 41% 59% 4% 1% 14% 5% 20% 54% 19% 21% 21% 24% 24% 31% 60% 23% 6% 6% 16% 7% 21% 40% 18% 28% 23% 9% 11% 28% 23% 3% 3% 2% 2% 35%

Building, Construction & Real Estate

Building, Construction & Real Estate Manufacturing

Oil & Gas

Commerce & Trade 34% 13% 12% 8% 7% 6% 5% 5% 3% 2% 2% 2% 2% 20% 10% 10% 10% 9% 7% 5% 5% 5% 4% 4% 3% 3% 3% 2% 2% 1%

Food Beverage & Tobacco Services

Services Manufacturing

Oil & Gas

Non-Bank Financial Services Agriculture

Others Hospitality Transport & Logistics Healthcare

Educational Institutions Media, Advertising & Publishing

Media, Advertising & Publishing Transport and Logistics Food, Beverage & Tobacco Healthcare Hospitality Aviation Conglomerates Education Agriculture Maritime ICT ICT n = 1,705 n = 405 n = 10,577

(31)

Banking Industry Customer Satisfaction Survey 2012 | 29 Lagos Ibadan Ilorin Kano Kaduna Abuja Port Harcourt Aba Onitsha Benin

Survey Locations

Acknowledgements

We would like to thank the following people for their invaluable contribution to this survey:

All survey respondents, Communications and Marketing Research Group (CMRG), Marty Carroll (KPMG in the UK), KPMG Nigeria partners and staff.

The KPMG project team: Wale Abioye, Atinuke Esan, Valerie Nwandu and Oyindamola Jaiyesimi.

Majority of the surveys were conducted in person across ten major cities in Nigeria, targeting a mini-mum number of respondents for a representative sampling across the 24 banks. Recently merged banks were measured as separate entities.

(32)

For further information about this publication and our services, please contact:

kpmg.com/ng

The views and opinions expressed herein are those of the survey respondents and do not necessarily represent the views and opinions of KPMG. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.

© 2012 KPMG Advisory Services, a Nigerian partnership, member firm of the KPMG network of independent firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.

Any trademarks or service marks identified in this document are the property of their respective owner(s).

The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International.

Designed in Nigeria. Publication name: Banking Industry Customer Satisfaction Survey Issue number: 6 Publication date: May 2012

Contact us

Bisi Lamikanra Partner and Head

Management Consulting T: +234 704 527 6005 E: bisi.lamikanra@ng.kpmg.com Ngozi Chidozie Management Consulting T: +234 704 527 6024 E: ngozi.chidozie@ng.kpmg.com Bode Abifarin Management Consulting T: +234 704 527 6485 E: bode.abifarin@ng.kpmg.com Marie-Therese Phido

Marketing, Knowledge & Communications

T: +234 704 527 6012