The Banking Olympics : the winners are?

In the Olympics, after years of training and dedication it seems that in the eyes of the media and the public, it all comes down to winning or losing.

An individual may have achieved an outstanding personal best and even won silver or bronze (why else would anyone swim against Michael Phelps?) but this seems to be viewed almost as a consolation prize.  This week, the Sun newspaper even ran a front page which stopped little short of demanding a gold medal from the British team!

It seems that the nation expects and “we did our best” just doesn’t cut it – with no appreciation of the individual athlete’s personal hopes, aspirations and disappointments.

However in banking, customers have perhaps heard too many excuses for what we have to concede can be genuinely poor performance, when perhaps we did not ‘do our best’.

Current Rankings

So, what of the banking Olympics – who are the contenders and what makes a bank a winner? How do we measure banking success – at the end of the financial year, are the winning banks to be considered those whose financial race has been won and the gold medals presented to the shareholders?

Or should we be setting aside shareholder value and the bonus debacle as measures of success? The general public (and I trust, the regulators) believe a key measure of a bank’s success is measured by customer satisfaction.

How do the major banks succeed by that measure? A number of studies can provide broad indicators, including JD Powers retail banking satisfaction survey and Which? whose members rated 28 banks and building societies for customer satisfaction across current accounts, mortgages, savings accounts and credit cards, with none of the biggest high street banks featuring in the top 15.

Looking across the two surveys, both published in Autumn 2011 before the recent banking trials and tribulations, they are consistent in terms of the overall ‘winner’ – First Direct.

The Co-operative bank came second in both surveys which bodes well for the enlarged bank post purchase of the Lloyds branches. The other high street banks Lloyds/Halifax, RBS/NatWest, Barclays and HSBC bump together in the middle of the pack – very much of the school report “must apply themselves and do better”.

It will be interesting to see what changes are put in place by those further down the ‘field’ to address their customers’ concerns and regain trust.

Why is customer satisfaction important?

Well, it should be obvious – all banks want a greater share of wallet and satisfied customers will have a greater propensity not only for repeat purchases, but as advocates.

The recent Ernst & Young Global Consumer Banking Survey 2012  sub-titled “The customer takes control” tells banks that to be positioned for success they must increase their focus on their most important stakeholders – their customers. As overall customer confidence continues to fall especially in the mature economies, customers are becoming less loyal and increasing the number of banks they use. Sensitivity to fees and charges, with an apparent lack of transparency is the leading driver of attrition, cited by over 50% of customers.

As the Ernst & Young survey shows, the rise of social media means that customer advocacy – digital word of mouth – is gaining power. The use of social media as a source of banking information by 44% of customers is amplifying customer’s voices. Alongside social media, customers are listening to each other more than the banks’ advisers and 65% use financial comparison sites to find the best deals.

So in the Banking Olympics of 2016, the winners will be those banks whose customers are winners as well. Who do you see as the top five in four years time?