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UK banks still in the doghouse as customer confidence falls

Jo Causon, CEO, Institute of Customer Service
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Jo Causon, CEO, Institute of Customer Service

Customer satisfaction with the British banking sector continues to plunge, data from the UK Customer Satisfaction Index shows.

Research produced by the Institute of Customer Service for the yearly index looked at 30,000 individual customer experiences. Half of the 14 banking organisations included in UKCSI scored below the all-sector average, the figures showed. The data was revealed on the the second anniversary of the government-backed Current Account Switch Service.

As customer satisfaction is integral to building trust and reputation, banks need to focus on rebuilding consumer confidence, ICS says. However, industry analysts interviewed by The Middle East in Europe point out that the juggernaut of regulatory punishment of errant banks in Britain has yet to stop and every now and then the main regulatory watchdog, the Financial Conduct Authority, continues to exact hefty fines from ‘star offenders’ in the troubled financial sector, including taxpayer-funded banks that now want to move to England if Scotland votes for independence from the UK.

UKCSI piechart. Source: UK ICS
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UKCSI piechart. Source: UK ICS

With trust in the spotlight and current account switching up 19% from 2013, customer service in the banking and building society sector has continued to fall, UKCSI scores show.

Banks and building societies finished seventh out of 13 in the overall index with a score of 77.7. Although marginally outperforming the Insurance sector in 2014, it fell by 0.4 points compared to the all-sector fall of 0.8 and is now 1.4 points ahead of the all-sector average of 76.3.

Queries raised by The Middle East in Europe for comparable customer data from other EU members were not immediately available. The data is relevant to both investors and private individuals from the Middle East and North Africa region as well as MENA communities resident in Europe, but very little data from elsewhere in Europe comes up in English.

In Britain, the consistent leaders in the sector, first direct (86.3), Nationwide (83.5) and the Co-operative Bank, were joined at the top of the index by Tesco Bank (82.7), which increased its score by 6.3 points, the second most improved organisation in the UK.

While these organisations were amongst the best performing across all industries, half of the 14 banking organisations included in UKCSI scored below the all sector average, with only four organisations improving their score by more than one point and three reporting a fall in their score by more than one point.

As one of the most consistent performers, first direct has been ranked first for all but one UKCSI.  Nationwide has delivered sustained improvement in customer satisfaction improving its score by 7.1 points since July 2009 the third largest rise of any organisation during the period. While short-term improvements are an encouraging indicator of business performance, to consistently deliver this level of excellence demonstrates organisations are highly focused on the customer.

The sector performed well for professionalism of staff and problem solving, demonstrating the positive role of high street branches and accessible frontline staff that consistently deliver good service. Expectations were exceeded for 17 per cent of banking customers, while expectations were not met for 12 per cent.

Customers of banks and building societies are least likely to use social media to highlight complaints. The proportion of people using this channel of communication has trebled from 0.4 to 1.9 per cent since 2013, but is the lowest of all sectors.

“The banking and building society sector is amongst the most diverse in terms of performance,”  said Jo Causon, chief executive officer of the Institute of Customer Service (pictured above). “There are examples of long-term excellence, as in the cases of Nationwide and First Direct. Yet there are many organisations that are underperforming, putting the sector in the bottom half of the index.

“The increased loyalty and trust that good customer service brings is essential to a banking sector where account switching is becoming easier and more frequent. Nevertheless many banking organisations perform below the all sector average offering further scope for improved business performance through customer service.”

Causon added, “With consumers more likely than ever to recommend on the basis of a good experience and share poor customer experiences with friends and colleagues, it is a critical time for the sector to make improvements in this area.”

The UKCSI includes over 40,000 responses from more than 9,000 customers.   During the interviews, ICS said, customers gave insight into 197 of the UK’s leading brands across 13 different sectors. Of those, Banking ranked in seventh  place, with a drop of 0.4 points between January and July 2014. The Banking & Building Societies sector included more than 3,000 customer responses.

The Institute of Customer Service is the professional body in Britain for customer service delivering tangible benefit to organisations and individuals so that our customers can improve their customers’ experience and their own business performance. The Institute is a membership body with a community of more than 400 organisational members – from the private, public and third sectors – and over 5,000 individual memberships.

UKCSI (UK Customer Satisfaction Index) is the national measure of customer satisfaction. It is based on an online survey of consumers, geographically and demographically representative of the UK population. The UKCSI began in January 2008 and is published twice a year, normally January and July. The Index covers 13 sectors – 11 in the private sector as well as local and national public services. Sector reports giving a detailed breakdown of scores by sector and organisation are available.

Customers are asked to rate organisations on customer priorities that they have identified as important. Priorities are grouped in terms of professionalism; quality and efficiency; ease of doing business; problem solving and timeliness. Each priority is given a weighted score. The weighted satisfaction scores are used to produce the index.

Customers score their responses for each measure on a 1-to-10 scale. Overall scores for each sector are mean averages of all responses. The overall UKCSI score for each organisation is the average of all of its customers’ satisfaction scores, weighted for each question grouping.

The July 2014 UKCSI includes 40,842 unique responses. 9,522 customers have been surveyed. Customers are geographically and demographically representative of the UK population and participate in the survey through an online panel. Customers are asked to provide a score for organisations based on their most recent transaction.
A total of 197 individual organisations received a UKCSI rating. Only organisations that exceed a minimum sample size are scored in the 13 sector reports. In addition, scores are given for 16 generic providers including “your local NHS / Hospital”, “your local Council”, “your local restaurant” etc.

Author: Editor

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