The banking industry has had more downs than ups in recent years, especially since the 2008 global financial crisis. Therefore a rise in confidence in banks — 33% of the 32,000 interviewed say their confidence in banks has increased over the past twelve months according to an Ernst & Young survey — seems like a victory for the retail-banking world.
Yes, this jump in confidence (11 percentage points, or 50%, year on year) hints towards a global restoration of confidence. As the economies in many countries hit by the global meltdown pick up, customers seem to quickly forget the pains and struggles many have been through.
And banks have also made progress in one of their biggest goals: customer loyalty. When those who participated in the survey were asked how likely they were to recommend their primary financial services provider, or PFSP, 40% answered that they were “very likely.” Of those, 44% opened new accounts or services at their PFSP in the past 12 months and 9% say they intend to consolidate everything at their PFSP in the next year.
But that loyalty is less broad-based than it looks. Of those who said they plan to maintain current relationship (60% of customers do not have definite plans to open or close any accounts in the next year), 22% consider all financial services companies the same and 17% stated that it was too difficult or time-consuming to change. Not the ideal motivators of customer “loyalty”. As the report further states,
technology innovation has enabled different types of companies to provide banking services, particularly for transaction accounts, and banks may be on the verge of ceding their position as the primary provider. With online banking being the second-most common product at PFSPs, followed by other frequent-transaction products, the threat of another provider dominating these offerings and then becoming customers’ primary provider is one that cannot be ignored.
The global economic recovery is good news. But customers, bankers and policy-makers shouldn’t forget the problems that they’ve faced (or created) that easily. The need for continued improvement is much more serious than the gain in consumer confidence suggests.