Asia Pacific banks, including those in Hong Kong, are missing growth opportunities as their existing customers shop around for better deals from their competitors, according to new research from Ernst & Young.
Ernst & Young surveyed over 4,700 retail banking customers in Australia, Mainland China, Hong Kong, New Zealand and Singapore and found that customers are feeling unappreciated, unrecognised and under rewarded by their main provider.
The research found that many Asia Pacific customers have more than one product outside their main bank (47%). They are also increasingly shopping around for a better deal for new products rather than go to their main provider.
“Banks are focusing on attracting new customers to the detriment of their existing customer base. Customers who are loyal to their main provider are not being provided with the incentives to give them more business. Attracting new customers requires significant investment and effort - it makes sense for banks to redirect some of these investments towards existing customers to reward and promote their loyalty,” says Keith Pogson, Financial Services Managing Partner, Far East, Ernst & Young.
According to the research, customers with multiple products with their bank feel their loyalty is not appreciated or sufficiently recognized. While 62% of banking customers believe their bank is aware of their multiple product holdings, only 29% of these feel they are being rewarded for this loyalty.
Keith Pogson explains that banking customers are not incentivised to buy more products through loyalty programs that offer existing customers real savings on products, such as interest rate reductions on loans, or exclusive access to value-added services. "Banks need to create more compelling reasons for customers to hold more products with them. Customers want their main bank to recognize their loyalty and offer them timely and personalised products and services that aligned to their current and future needs, using their preferred communication channel,” he expounds.
The loyalty expectation gap is contributing to low advocacy scores across the region. One-third of banking customers would not recommend their main provider. However, despite their dissatisfaction, customers are currently being restrained by inertia and apathy, with very few planning to change their main bank.
“This is should be a wake-up call for banks, as there will come a point when the customers see that making the effort to switch providers is worthwhile. Clearly, this is a compelling reason for banks to better understand their existing customers and meet their needs, before they start shopping around,” notes Pogson.
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