MANILA, Philippines – Local banks should start preparing for the ASEAN 2015 integration to be able to compete with their counterparts in the region, results of a recent survey by Sungard, one of the world’s leading software and technology services companies, noted.
“There is a strong potential that local banks may compete with other banks in the region but they have to be prepared for it,” Sungard vice president of product management for retail banking business Dean Young said.
Young said it would be best for local banks to jumpstart efforts to improve their customer relations.
Though there have been indications based on Sungard’s latest survey that Filipino depositors have strong ties and are loyal to their primary banks, there is still a possibility that depositors may tap other banks if they are performing better than the existing local banks.
Although the Philippine economy has moved up 30 spots in the latest Ease of Doing Business 2014 Report released by the World Bank and International Finance Corp., new consumer research undertaken by Sungard has found that banks in some of the world’s fastest-growing emerging markets are still struggling to meet evolving customer expectations.
In the Philippines, Sungard said banks have yet to leverage customer demand for an improved, integrated customer multichannel experience.
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“This is negatively impacting the customer experience and driving a trend towards multiple banking relationships, which could affect future profitability and agile growth,” the survey said.
“Despite the fact that banks in emerging markets enjoy a high level of consumer trust, this research illustrates that they are not capitalizing on this. Consequently, more consumers are pursuing multiple banking relationships which can result in erosion of primary bank profitability and growth. Banks must invest in enhancing their multi-channel propositions to empower staff to serve customers more effectively and drive greater revenue from existing relationships and prospective customers,” Young said.
“Banks in the Philippines enjoy a positive reputation on customer service and personalization. However, the competitiveness of each bank is a driver for consumers to hold more than one banking relationship,” he added.
“This is an opportunity for banks in the region. In order to use channels as differentiators, banks in the Philippines need to focus on building capabilities to deliver the right products through the right channels, and to deliver a consistent multi-channel experience to customers,” he said.
This finding is consistent with other markets that took part in the research, which surveyed more than 1,000 consumers in 10 countries across the Middle East and South East Asia, about current attitudes and expectations of the consumer banking relationship.
Among the key findings of the research revealed that trust is high but consumer perception is modest at best, impacting loyalty.
While over 75 percent of respondents in emerging markets in the Middle East and South East Asia trust their bank, less than half of respondents felt their bank understands their needs well.
This is evident in the increasing trend towards multiple banking relationships, driven partly by growing demand for service personalization.
Banks are not seen as the primary financial advisor. Consumers in South East Asia and the Middle East are almost twice as likely to turn to family for help in personal financial decision making.
Some 37 percent of respondents claim to have little or no financial knowledge, presenting an opportunity for banks to educate and advise their customers more to deliver an improved client service and drive agile growth for their business.
The survey also showed that banks are ignoring customer demand for an improved, integrated multichannel experience.
“About 95 percent of respondents in emerging markets in South East Asia and the Middle East still regularly visit the branch. When asked to select one or more reasons for doing so, 58 percent said they went primarily to get help and advice. Avoiding security concerns with digital channels was another key concern, with 36 percent of respondents flagging it. Face-to-face interaction was also important to 35 percent of respondents. Despite such high usage, the branch was ranked as a top three improvement area, with resolution of complaints cited as the worst part of branch service,” it said.
Dissatisfaction with digital channels is also high. When asked to name one or more areas they would like to see their banks improve, 55 percent highlighted online banking and 45 percent mobile banking services. This is another area of opportunity for banks, as 47 percent of respondents are currently not using mobile banking and could be targets for this increasingly popular banking feature. One in two respondents expects the bank to deliver a better mobile experience in the future.
