AB+F Magazine - June 2021

Page 14


The keys to unlocking banking loyalty

Banks need to continue to step up for SMEs G

lobal small and medium sized businesses have faced a tough 12 months and are continuing to look to their banks to provide support in these uncertain times.

businesses satisfied with the level of support they received from their banks. The global average for satisfaction was 56 per cent for very satisfied and 25 per cent for satisfied.

“Looking at the different elements of business performance over the last 12 months we can see that things like sales have been affected strongly,” RFi Group research director and deputy general manager EMEA, Hubert Petka, told international attendees of RFi Group’s SMEs and Retail Banking: Navigating the Post COVID-19 Banking landscape webinar.

Where they were lacking was in terms of proactively contacting businesses to offer support, financial assistance and access to credit.

“41 per cent of SMEs across these markets are reporting [that] their sales and performance have decreased over the last 12 months,” he said citing RFi Group global research. SMEs also reported that the number of outstanding invoices they were owed rose by an average 13 per cent, while the number of outstanding invoices they had to pay rose by 11 per cent. In such a difficult environment, SMEs looked to their main bank for some level of support. In terms of what they most wanted, a reduction in fees and charges was the most popular – at 36 per cent – followed by a reduction in interest rates to reduce borrowing costs – at 30 per cent. “The other aspect, which is also quite important, is about access to financial assistance, so financial assistance being one of the key pain points,” Petka said. Another interesting support that SMEs wanted from their bank was assurance that the bank was stable and their money was secure – at 25 per cent.

TH E RIGHT SUPPORT And it seems that, for the most part, banks delivered on support to SMEs with around four in five


“And in terms of the support they expect from the banks. . it’s quite important banks deliver on those two expectations [financial assistance and access to credit] oer the next 12 months,” Petka said. “Because, as we saw from the information that we collected, despite the fact some sense of optimism is slowly returning, many businesses still expect [that] the next 12 months or so will be quite a critical year in terms of their future prospects.” “67 percent of businesses in the developed markets expect that it will take them at least a year to two to recover [and] return at their level prior to COVID-19.”

W H E R E TO F O R BA N K S? With SMEs saying they need more support when it comes to accessing credit, banks have a difficult path to tread with regards to providing access to credit, given the potential economic certainty and the ability of those SMEs to repay any loans. Petka said the key for banks will be making any processes around approval of loans as transparent as possible. “We know that in the current environment many businesses don't really feel supported by the banks and so how you behave as a bank in this environment it really determines what businesses think of you,” he said.


Banks need to be finding out as much as they can about existing customers in order to tailor product offerings and therefore increase loyalty.

“In terms of actionability in how you can start to think about picking up more of those product relationships, well it's about the main banking relationship. As you know, when you become the main bank you are far more likely to capture a higher proportion of that customer’s product holdings,” RFI Group general manager, Singapore, Amit Khan told attendees of the RFi Group Webinar: Unlocking Loyalty: Cross-Sell in 2021.

“It is going to be very competitive in that space. It’s worth thinking about what you’re doing to differentiate in investments,” Khan said.

n increase in digital engagement with products isn’t the only banking trend to come out of the pandemic. Globally, banking customers are also reducing the number of products they use, creating opportunities for financial institutions to cross sell and lock in loyalty to their brands.

Globally, on average, consumers hold four banking products and of those four products they hold 2.26 with their main bank, according to RFi Group data.

HOW TO BE COM E THE ‘M AIN BANK’ Banks that can anticipate and understand their customers’ needs, such as an increased need for credit in mid-life, are well placed to capitalise on cross selling opportunities as they arise, and increase customer loyalty. “So, to what extent are you picking up information about the customer and utilising that in order to drive cross-sell? Because, as we know, life stages play a critical role with regard to product holdings, not only at the main bank but in terms of overall product holdings,” Khan told attendees of the webinar. He cited Amazon as a good example of how personalisation can drive cross selling of products. “[Amazon] really understand your behaviour in order to recommend, in a personalised manner, what products you need to buy,” he said.

In other RFi Group research, customers were asked what banking products they were likely to take up in the next year. While 36 per cent said current account savings accounts (CASA), 33 per cent said investments, making it the second most likely product consumers will take up over the next 12 months.

DE E PE NING RE LATIONSHIPS RFi Group also asked customers what their biggest pain points were in their interactions with their main banks. The top three areas customers had issues with were - understands my needs, handles my complaints competently and is proactive. “This really speaks to leveraging of customer data. What are you doing with your CRM systems? What are you doing with a whole host of credit card transactional data that you have? All that information needs to feed into a more personalised and more proactive service,” Khan said. Currently, one of the biggest challengers to bank loyalty are the tech players or fintechs. But banks can differentiate their offerings by doing the things they can do (that fintechs can’t) well, such as leveraging their relationship management network, focusing on their higher touch service models and better use of CRM and customer data. “I think that's a critical point that's underutilized by most banks. Fintechs do better here but banks have more data for from a longer time period,” Khan said.