Clients no longer sticking to one bank

2012-09-02 12:58

Johannesburg – Loyalty has a price. If banks don’t play along, it’s good-bye.

Clients are increasingly taking control of their banking services and are less committed to a single bank. If they are to remain loyal, they want to be rewarded, according to an Ernst & Young (E&Y) study.

The audit firm questioned more than 28 000 bank clients in 35 countries and last week published its findings in the Global Consumer Banking Survey 2012 – The Customer Takes Control report.

In South Africa 39% of the clients said they had already switched banks, compared with 34% a year ago. Of these, 70% said high bank charges had been the main reason. Another 13% are intending to switch, compared with 10% a year ago.

Colin Daley, associate director of advisory services at E&Y, says an increasing number of clients use more than one bank to meet their financial needs.

E&Y says banks worldwide are experiencing challenges from all quarters, putting pressure on their profit margins and encouraging them to focus more on their clients.

“Unfortunately for banks, they are all too aware that many more clients are losing confidence in the industry than those remaining faithful.”

The number of South Africans who are clients of more than one bank has risen from 55% to 61%.

After China, South Africans have the greatest affinity for banks that reward their loyalty with either improved service (65%) or lower bank charges (76%).

According to E&Y, loyalty programmes are critical to a client’s choice of bank. For the banks, greater loyalty from their wealthier clients potentially carries more weight than the cost of financial rewards.

In South Africa the number of clients joining such programmes has doubled over the past year. Banks without such programmes lag the rest by far, says Daley.

Client advocacy is going from strength to strength and clients are listening more to other clients than to banks or financial advisers, he says.

This is a major factor in South Africa, where 76% put greater value on banking information from friends, family members or colleagues. This is considerably higher than the global average of 71%.

A total 45% of South Africans use social media to comment on banks – this is higher than the global average of 34%. For that reason, says Daley, it is critical for banks to develop a social media strategy.

While 22% of bank clients across the globe say that changes to bank charges and fee structures would make them happier, 63% of South Africans say that greater clarity and more communication regarding banking charges are required to satisfy them.

Daley says banks will have to adjust to the fact that clients are taking, and want to take, greater control; the banks will have to accept the shift in the power balance.

Clients should, for example, receive more flexible options and banks should help shape their experiences by encouraging more self-help services and developing adaptable loyalty programmes.

Banks will also have to design their business models around client requirements and become more client-focused, says Daley.

- Sake24

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  • henryian73 - 2012-09-02 13:53

    Moved from Standard and ABSA over to Capitec and Nedbank. Capitec now almost over two years and what a joy. best bank in SA now by far and far and far and far. Awesome!!!

      nketso.kgwadi - 2012-09-02 14:13

      Then I dare you to buy a car and house financed by capitec!! Thought so, and how r they best? By giving clients accounts with lower monthly and high transactional charges with less facilities to get ur money end up paying high prices to withdraw. Wow if that's for u then go for it.

      jan.vanrensburg.988 - 2012-09-02 15:16

      nketso.kgwadi "high transaction charges"??? You must be an employee of Standard Bank! Unless you personally bank with Capitec I suggest you not comment. Capitec BY FAR is the cheapest monthly and LOW transaction costs. Try withdrawing R3000 cash at Pick n Pay for R1 ! Same amount will cost you R36 at Standard Bank ATM using your Standard Bank card. I dare you to withdraw R3000 for R1 using your Standard Bank or ABSA or FNB card - Captitec charges R4.50 monthly management fees, withdrawals are probably maximum R8 at ATM's regardless of the amount even using other banks ATM's. Nketso i DARE you to open a Capitec account and stop being ripped off by others.

      larry.lachman.54 - 2012-09-02 17:39

      Capitec pays me 5.5% interest on my savings account with them. I get 10 times more interest than my total bank charges. As soon as Capitec offers business accounts, I will move from Standard Wank in a flash. Standard Bank charges me R15 for cheques deposited by my customers. Their excuse was that they are trying to get away from cheque deposits and want people to bank by EFt. When I asked them to rather charge more for the drawing of cheques (Checkbooks), they had no answer. Effing crooks.

      henryian73 - 2012-09-02 20:47

      Larry. i have already moved my 2 business accounts to Capitec and now also have my card that funtion as a credit card with them doing all my online shopping and retal cars through that. Capitec have helped me in more than one way and I have no regrets leaving ABSA and Standard. In fact heard from a very credible source that ABSA in big trouble and was adviced by a senior person at ABSA to tell people with money at ABSA to move it quickly because their problems bigger than what we all thought.

      rupesh.hari.7 - 2012-09-02 21:28

      Nketso, yes capitec doesn't have house and car finances, but there is nothing stopping you from getting a car or house financed through other banks, while holding a capitec bank account for your savings account. Guy, think about getting a credit card through virginmoney. NO MEMBERSHIP FEE. It costs very little rands to pay your monthly credit card bill from capitec to virginmoney. I have a personal interest here. I want to promote cheap/free banks and am on a personal mission to do this until all banks reduce their charges. I don't work for any banks.

      malcolm.james.macleod - 2012-09-03 09:10

      "yes capitec doesn't have house and car finances, but there is nothing stopping you from getting a car or house financed through other banks, while holding a capitec bank account for your savings account." Except that the "big four" engage in a highly questionable practice whereby if you don't pay your salary into an account with them they heavily penalize your home loan application - so in reality for most non-wealthy people this means you MUST bank with one of them in order to get a home loan. (Unless you go with sa homeloans who are then your only hope - however they don't do vacant land or building so you are out of luck if you want that..) It also means essentially no inter bank competition on home loans, I would love to know why this is allowed it seems highly questionable to me.

  • charlie.vanbergen - 2012-09-02 16:27

    Great to bank with Capitec, but do not use them to make a loan their hight rates really discourage making debt. Have been with Capitec for years now; save an avearage of R200 / month on banking cost. That's R7200 in 3 years. Not bad.

  • malcolm.james.macleod - 2012-09-02 18:50

    Problem is that all four of them are equally lousy - so switching doesn't really help.

  • andre.webster.10 - 2012-09-03 07:34

    Switched from ABSA to Capetic bank and I am extremely happy with Capitec knowing the money is still there. When i was with ABSA sometimes the money is gone because ABSA just deduct the money for "admin fees" and "transaction charge". They deducted between R200 to R400!!! Once I went to Spar and bought some food and i know there is R350 in ABSA bank and i went over to the till to pay and when i pay with my card it said insuffiecent fund and I went to check my account and there was R0 left. R350 been deducted for "admin fees"!! That was my last straw with ABSA. I left on that very month!

  • greg.quinn.353 - 2012-09-03 08:45

    At Nedbank now and never been happier. They have the best service and their call centre is jacked up! I've had to deal with Standard and FNB in the past few months as well for other dealings and the experience was nothing short of frustrating!!

  • jurgens.schoeman - 2012-09-10 12:51

    Here is some clarity on transaction from different banks. . . I am proudly Capitec.

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