80% of bank customers would consider switching; poor service number one frustration according to Fujitsu Consulting survey
In a survey of more than 26,000 retail bank customers, launched today by Fujitsu Consulting, 80 per cent of respondents said they would consider switching financial service providers. In the report, entitled ‘Toxic servicing: eroding profitability in the financial services sector’, poor servicing (31 per cent) ranked as the number one frustration among financial services customers, three times greater than the next biggest frustration, which is complex terms and conditions (10 per cent).
Martin North, managing consulting director, Fujitsu Australia and New Zealand said, “Contrary to what many financial services businesses assume, price is not the primary driver of customer churn. Our research shows that, in reality, poor service is the number one ‘toxic’ issue driving customer churn in the financial services industry. Despite significant inertia, customers who are exposed to toxic servicing are highly likely to switch providers.”
Examples of toxic servicing include being passed around in a call centre, having the phone put down on them, poor product knowledge amongst branch staff and hidden fees and charges.
As a result of these issues, 80 per cent of survey respondents said they would consider switching banks. While 26 per cent said they would switch to find a better rate, 23 per cent are looking for better service, followed by a better product (19 per cent), more loyalty rewards (17 per cent) and if banks made it easier to switch (six per cent).
“With increased pressure on profitability, banks have been powering up their sales channels to grow market share. However, as a result, the cost of attracting new customers in Australia has jumped by more than two-thirds over the past five years, now totaling between $500 and $800 per customer acquisition. This compares with just $100 to cross-sell to an existing customer,” said Martin North.
“With customer churn at an all time high (averaging 25 per cent per annum), banks must focus on retaining customers, particularly the most profitable ones. Financial services providers must deal with ‘toxic servicing’ issues as a matter of urgency,” said Martin North.
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