2011 Banking Innovation Study
18
2011 Banking Innovation Study South Africa This report is solely for the use of client personnel. No part of it may be circulated, quoted, or reproduced for distribution outside the client organization without prior written approval from Innovation Agency. This material was produced by Innovation Agency based on client interaction; it is not a complete record of the discussion.
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This study investigates a number of aspects surrounding the level of innovation being achieved by organisations, as perceived from a localised end-user perspective. The study also looks at the level of customer satisfaction with their bank; whether they use other banks and what would entice a customer to switch from one bank to another. The market research conducted highlights which banks are perceived to be the most innovative in the industry. Further analysis delves into why this is so, and how this perception about the banks has changed since the 2007 study.
Transcript of 2011 Banking Innovation Study
2011 Banking Innovation Study
South Africa
This report is solely for the use of client personnel. No part of it may be circulated, quoted, or reproduced for
distribution outside the client organization without prior written approval from Innovation Agency. This material was
produced by Innovation Agency based on client interaction; it is not a complete record of the discussion.
About the Banking Innovation Study
2011 Banking Innovation Study Results
Trends 2007 - 2011
About the Banking Innovation Study
Purpose of the Innovation Study
Research methodology
Survey questions
Respondent demographics
Page 4
Purpose of the Innovation Study
In the highly competitive market that organisations in South Africa find themselves, ameans of differentiation is of paramount importance. Innovation is seen as one of theprimary drivers in achieving this differentiation.
This study investigates a number of aspects surrounding the level of innovation beingachieved by organisations, as perceived from a localised end-user perspective. Thestudy also looks at the level of customer satisfaction with their bank; whether they useother banks and what would entice a customer to switch from one bank to another.The market research conducted highlights which banks are perceived to be the mostinnovative in the industry. Further analysis delves into why this is so, and how thisperception about the banks has changed since the 2007 study.
The study also serves to create a greater awareness around the concern that banksneed to be responsive to customers’ emotional needs. The core purpose underpinningthis initiative is a strategy for managing the information acquired and turning it intoinsights that empower customers in new ways.
Page 5
Research methodology
This report provides insight on the study conducted during 2010 and 2011. This is anadministered survey conducted during various programs and workshops offered byInnovationAgency.
The survey was administered in a controlled manner. Survey questions were designedto be opened-ended in nature, and served to gauge individual perceptions around thelevel of innovation achieved by institutions from an end-user perspective.Respondents were not given information and/ or definitions of the survey questions.
Data collected was grouped and analysed and keywords created as a means tographically represent the results of study. The 2011 Innovation Study consisted of638 respondees.
Page 6
Innovation Study questionnaire
The study questionnaire consisted of the following questions:
•Which bank is the most innovative?
•Why did you rate the bank as the most innovative?
•What lessons can be learnt from innovative banks?
•Have you switched banks in the last 12 – 18 months?
•Why did you switch banks?
•Why have you not switched banks?
Key thoughts
Page 7
Respondent demographics
• Study respondents represented a widespread of individuals, from various backgrounds
Female44%
Male56%
Gender split
African19%
Asian15%
Coloured
9%
White57%
Ethnic classification
0%
5%
10%
15%
20%
25%
30%
20 - 24 25 - 29 30 - 34 35 - 39 40 - 44 45 - 49 50 - 54 55 - 59
Age distribution
0%
5%
10%
15%
20%
25%
Income distribution
2011 Banking Innovation Study Results
Most innovative bank
Reason for rating a bank innovative
Lessons from innovative banks
Switched banks in the last 12 – 18 months
Reason for switching banks
Reason for not switching banks
Key thoughts
Page 9
Most innovative bank
• FNB has consistently been recognised as the leader in innovation
• Despite the dominance of the Big 4, customers are increasingly becoming aware of what banks outside the Big 4 have to offer
• Capitec ranked 2nd in this category, ahead of Standard Bank, ABSA and Nedbank, by individuals outside of its targets market
FNB perceived as most innovative because of
• Product range display an innovative flair
• The have entered the market with the
most solutions
• Leaders in cellphone banking in SA
• They have created products for the larger
population
• They eat and live innovation
• You can do anything through their electronic
channels
0% 5% 10% 15% 20% 25% 30% 35% 40%
SA Home Loans
Post Bank
RMB
None of them
Nedbank
Investec
ABSA
Standard Bank
Capitec
FNB
Key thoughts
Page 10
Reason for rating a bank innovative
• Banks are rated as innovative due to the following reasons:
• Products
• Technology
• The meaning of customer service looks to be changing from the traditional personal banker model, to one where customers are looking for tailor-made products that are accessible through technology at any given time • Banks are loved for their products and their technology. This is a clear
indication that the customer interface is where innovation is most appreciated and recognized
• Great customer service and pricing are not high on the list of reasons for being considered innovative
0% 2% 4% 6% 8% 10% 12%
Changed way banking is done
Different from rest
Adapt to changes
Growth of business
Internet banking
Bank charges
Banking easier/ simple
Targeted market
Innovative culture
First to market
Processes
Marketing
Customer service
Technology
Client solutions
Products
Key thoughts
Page 11
Lessons from innovative banks
• “Its about understanding me and making it easier for me to interact with you…”
• In an market dominated by the Big 4, customers may be signaling a yearning for greater differentiation through innovation
• The prominence of “Client Centricity” is another indicator that the customer interface is where innovation is most appreciated and recognized
• The products and technology that make it easier for customers to interact with their bank are clearly important
0% 2% 4% 6% 8% 10% 12% 14% 16% 18%
Forward lookingCommunication
Continuously improveBanking fees
Product innovationBusiness modelTime to marketKeep it simple
Open to new ideasGrowing the business
Risk managementProcesses
Marketing strategiesChallenge the status quo
Understanding market needsTechnology improvements
Customer serviceEncourage innovation
Individualised solutions
Key thoughts
Page 12
Switched banks in the last 12 – 18 months
• Despite some strong criticism, people are still unlikely to switch banks
• Despite some vehement criticism only a small percentage of people have actually switched banks in the past few months. This indicates that there is still a degree of loyalty or perhaps that it is just too difficult and inconvenient to switch
Yes9%
No91%
Key thoughts
Page 13
Reason for switching banks
• Despite the high percentage of people hating banks because of their service, it is still not enough to make them switch
• Consumers have become price conscious as a results of the financial crisis, despite the increase in the overall spending by consumers
• The results also imply that customers would rather stay with the bank they know despite the bad service levels, than switch to an unknown bank
• Service levels looks to be the top factor that customers find to be important when considering to switch banks
0% 5% 10% 15% 20% 25% 30% 35% 40%
Needs weren't met
They weren't serious
Made errors
Declined product
Needed the change
Was dissatisfied
Better offering
Products
Employed by the bank
Banking fees
Service levels
Key thoughts
Page 14
Reason for not switching banks
• Many customers may find it a difficult process to switch banks
• Customers may also find the banks offerings too ubiquitous and see no value to be derived from other banks
• 25% of the respondees were happy or satisfied with their bank
• The bulk of the reasons, however, speak to a level of dissatisfaction with the banks in general
0% 5% 10% 15% 20% 25% 30%
Disruptive to change
Risky
Too expensive to switch
Debt commitment
Banking fees
Products
No time to switch
Loyal
Looking to swicth
All the same
No reason to change
Employed by the bank
Service levels
Too much effort
Satisfied with bank
Trends 2007 – 2011
Most innovative bank
Reason for rating a bank innovative
Key thoughts
Page 16
Most innovative bank
• Despite the market dominance of the Big 4, Capitec continues to receive recognition, even outside its target market
• Customers may be looking for differentiation, that they may not be receiving from the Big 4
• FNB continues to hold the lead position in this category and looks to be headed for 2007 levels
• Capitec has made strides by taking second position ahead of Standard Bank, Nedbank and ABSA
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
2007 2008 2009 2010 2011
FNB
Capitec
Standard Bank
ABSA
Investec
Nedbank
Other
RMB
Key thoughts
Page 17
Reason for rating a bank innovative
• The sharp fall in technology may be an indication of the increase in familiarity customers are beginning to have towards the available technology
• The results may be a sign of the customer wishing for more self-service capabilities, that are tailored for their particular needs
• Technology has made a big slide from the preceding years in this category
• Although in the top 10 reasons, customer service still rakes relatively low in this category, when compared to 2007 and 2008 levels
0%
5%
10%
15%
20%
25%
30%
35%
40%
2007 2008 2009 2010 2011
Products
Customer intimacy
Technology improvements
Customer service
Marketing
Processes
About UsWe live in a socially aware society whereinvolvement across a collective workforcecommunity is used to drive innovation. SocialBased Innovation approaches pave the way toa more networked and integrated means ofmanaging innovation. We are driving thisevolution forward.
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