Bain's annual Customer Loyalty in Retail Banking report surveyed 150,100 consumers in 14 countries. Specific country findings are detailed in these individual snapshots. Globally, the survey reveals a surge in mobile banking and tepid loyalty scores by affluent customers in many markets, with implications for how banks should redesign their channel strategies.
We surveyed 74,700 customers of several hundred banks, and we have included the 19 banks with a sufficient sample size. Here are the highlights.
Net Promoter scores for 2012. US customer loyalty scores rose significantly in 2012 in all classes of age, income, assets and region. Roughly 95% of the banks sampled achieved a higher NPS in 2012, with 49% of customers now categorized as promoters vs. just 21% who are detractors.
Several factors likely contributed to the higher scores. Now that we are several years past the financial crisis in the US, there are fewer bank-related scandals in the news, the economy is growing, albeit slowly, and banks have stepped up lending again. Besides those external factors, some banks have made progress in improving service, convenience and mobile application functionality, which customers appreciate. The surge in mobile usage to 32% of respondents from 21% in 2011 no doubt contributed to higher scores, as mobile tools have a strong positive effect on customer advocacy.
Sorting by bank models, the 2012 gains ranged from 9 percentage points for direct, community and national banks to 12 points for credit unions and 14 points for regional banks (see Figure 14.1). It's not surprising that regionals posted the greatest gains, as regionals are the second-lowest performers and many of them have focused on fixing the basics in order to improve their scores; that's easier than raising already high scores, which involves adding "wow" moments.
Loyalty leaders. Just as in 2011 and 2010, direct banks earn the highest loyalty scores on average, followed by credit unions, community, regional and national banks. Large banks are not doomed to low loyalty, however. Some regional banks earned strong customer NPS, including PNC, TD Bank and M&T Bank in the Northeast; PNC, BB&T and Regions in the South; Huntington and PNC in the Midwest; and Bank of the West on the West Coast (see Figure 14.2). Among the largest national banks, JPMorgan Chase and Citibank made slight gains relative to their peers.
Customer priorities. The good news is that customers not only say they are more willing to recommend their bank, they also report actually doing so more often. The number of recommendations increased in 2012 for all customers, but rose the most among promoters, to an average of 3.4, which helps bring in new customers (see Figure 14.3). For banks searching for growth and strapped for investment funds, this word-of-mouth marketing goes a long way to making loyalty pay off.
What accounts for the rise in referrals? A significant share of customers say service and convenience are improving (spurred in part by continued online and mobile usage gains, as described earlier); these factors increase their likelihood of recommending a bank. However, consumers continue to be disappointed by rates and fees, which exert a negative inﬂuence on likelihood to recommend (see Figure 14.4).
For every bank model, the ratio of positive to negative mentions improved in 2012. National and regional banks bear the brunt of customers' negative comments about rates and fees (see Figure 14.5). The reverse is true for direct banks, credit unions and community banks: Rates and fees are mentioned positively for a sizable share of their customers.
A note about loyalty scores worldwide
As banks review their Net Promoter scores, those with high scores may be tempted to compare across markets and declare themselves "best national bank" or "best credit union" globally. But that would be misleading. Click here to learn more.