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CUSTOMER LOYALTY IN RETAIL BANKING:

GLOBAL EDITION 2014


Going DigicalSM: Customers love the
smart fusion of digital and physical assets

Copyright 2014 Bain & Company, Inc. All rights reserved.

Customer loyalty in retail banking: Global edition 2014 | Bain & Company, Inc.

Contents
Going Digical . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . pg. 1

1.

Global loyalty trends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . pg. 7

2.

Channel behavior and its inuence on loyalty . . . . . . . . . . . . . . . . . . . . . pg. 11

3.

Product purchasing and ownership trends . . . . . . . . . . . . . . . . . . . . . . . pg. 21

Page i

By the numbers: Mobility and the state of customer loyalty in banking

Customers conducted more than 50% of their banking


interactions through digital channels in 18 of 22 countries
surveyed.

Mobile is the most-used banking channel in 13 of


22 countries and accounts for around 30% of all
interactions worldwide.

The share of customers using mobile applications


rose by19 percentage points in the past year. Online
usage via computers dropped 3 percentage points.

More than half of customers used both digital and


physical channels such as branches and call centers.

These omnichannel customers gave their bank a


Net Promoter Score 16 percentage points higher
than customers using only digital channels and 22
points higher than those using only physical channels.

Customers use several channels to research and buy


new banking products. 47% of US customers consulted their banks website, and 37% got recommendations from bank employees.

Hidden defection of customers from their primary bank


is rampant: More than one-third bought a product
from a competitor during the past year.

Page ii

Customer loyalty in retail banking: Global edition 2014 | Bain & Company, Inc.

Going Digical
Banking customers now handle more of their banking interactions, on average, via smartphones and tablets than
through any other channel, this years report showsand the mobile channel has become a key element in the bid
to earn customer loyalty. Increased loyalty, in turn, pays off for a bank with customers buying more products and
making more referrals, which allow the bank to capture more than its fair share of new sales.
Mobile does not stand alone, however; it must be integrated with other channels like branches and contact centers
to deliver seamless and simple customer experiences. Most banks realize that they need to reimagine their endto-end customer experiences across all channels to make the most of the new mobile capabilities. But they have
been struggling to integrate channels across the numerous departments of their large, complex organizations.
Still, many of the largest banks worldwide have made progress in closing the loyalty gap with the loyalty leaders,
which often are smaller, more focused and nimble banks.
JPMorgan Chase, for instance, has gained in almost every region of the US; Royal Bank of Canada made strides
during the year; and all four big banks in Australia improved their scores signicantly. The banks that have begun
to pull ahead will likely accelerate their progress as they further sharpen their focus on earning loyalty. Those that
dont pick up the pace risk falling further behind.
This years report, based on Bains survey of roughly 83,000 consumers in 22 countries, explores how people
do their banking and how banks are adapting their distribution and service channels to address customer needs
and improve the economics of the business. The research occurred online in July through November 2014, through
market research rm Research Now.

The meteoric rise of mobile


Mobile has become the dominant means for consumers to interact with their banks. Customers completed more
interactions with their banks via smartphones or tablets than through any other channel in 13 of 22 countries we
surveyed. And the share of customers using a banks mobile app rose a striking 19 percentage points during
2014, with strong increases across all age groups in most markets.
Until recently, consumers layered digital onto other ways of interacting with their bankfor instance, using mobile
devices to check their balance more often while keeping their use of other channels the same. This year, the data
shows a meaningful decline in usage of not only branches and ATMs but even online via computers; the latter
dropped an average of 3 percentage points. (Its possible that our survey slightly overstates growth in mobile usage,
because the survey is conducted online and survey companies have been making questionnaires easier to answer
via mobile devices. But were condent the trends are valid.)
Mobile does not replace other channels but fundamentally changes how consumers use them. Most customers
in most markets (60% of respondents overall) used a combination of digital and physical channels to do their
bankingwhat we call omnichannel behavior. This is critical for effective service, marketing and selling,
because customers expect to be able to hop from one channel to another.

Page 1

Customer loyalty in retail banking: Global edition 2014 | Bain & Company, Inc.

A virtuous circle: More channels, greater loyalty, more money


Omnichannel customers gave their bank an NPS that is 16 percentage points higher, on average, than the score customers
who rely only on digital channels gave and 22 percentage points higher than the score given by those who use only physical
channels. And NPS was even higher for omnichannel customers who had more interactions.
The payoff is higher product ownership: Omnichannel customers held an average of 1.0 more product with their
primary bank than digital-only customers and 1.3 more than branch-only customers. While the data doesnt prove
a linear cause-and-effect relationship, it shows a virtuous circle of greater engagement across channels, greater
loyalty and increased product holdings.
For many years, interactions in person or via phone were critical for delighting or angering customers during
moments of truth, such as seeking advice. Now, leading banks are investing heavily in digital innovations designed
to become powerful wow factors in their own right. In Spain, NPS leader Bankinter has an early lead in infusing
its branches with useful digital technologies, such as biometric signatures for contracts, which save time, and
tablets that enable self-service.
Likewise, Citibank in the US has steadily improved its NPS over the past four years, in part by deploying practical
digital innovations. Examples include sending fraud alert texts to customers at the point of sale and deploying smart
ATMs that allow customers to open accounts or hold videoconferences with experts. Several Asian banks, meanwhile,
have pioneered personalization features. Shinhan in South Korea maintains a human touch through its use of
smart letters, delivered through a mobile app. These letters range from simple birthday greetings to coupons
providing higher interest rates.
Banks that pull ahead in loyalty by investing heavily in mobile to deliver a better experience will reap nancial
benets. Those banks that lag in effectively investing in the mobile advantage will miss reaping the nancial
benets and also fall further behind in their ability to invest.

The hidden defection problemand opportunity


Accelerating the development of mobile sales capabilities will help banks address a signicant but little-noticed
problem: the hidden defection of customers who go to another provider for additional products such as mortgages
and credit cards. Globally, more than one-third of customers bought a new banking product at a bank other than
their primary bank this year.
Imagine the uproar that would ensue if one-third of a banks customers were completely defecting each year. Yet
the defection highlighted here passes unnoticed because banks usually dont know their customers were
shopping in the rst place and seldom know that they lost the sale. Mobile banking has the potential to
either exacerbate or mitigate this problem.
Hidden defection could worsen as digital start-ups and specialist rms that are less encumbered by legacy systems
and regulations offer better, simpler solutions and make it easy for people to nd them. Banks that fail to respond
risk getting saddled with the bulk of low-margin accounts, while other rms siphon off high-margin products
like credit cards and mortgages. Young rms such as Betterment, which simplies the process of investing, or

Page 2

Customer loyalty in retail banking: Global edition 2014 | Bain & Company, Inc.

Kabbage, which has developed an underwriting process to instantly lend up to $100,000, stand to capture a
greater share of banks more protable lines of business.
Some banks, such as JPMorgan Chase and USAA in the US, Nationwide in the UK and Hang Seng in Hong Kong,
have begun to address defection through different combinations of earning strong loyalty, elding strong
products and improving sales capabilities. But for all banks, digital technology increasingly is critical for effective
selling. When US consumers researched or considered a new nancial product like a mortgage, they typically
used at least four or five sources of information, with the most frequently used source being their banks
website and the least used being mobile apps. Deploying mobile apps to make it easy for customers to connect to the right bank resources and employees during their shopping process, and preapproving them for the best
offer, could substantially raise the odds of winning the sale.

How is the hard part


Winning in a Digical world, by fusing the best of customer-friendly digital tools and processes with physical assets,
presents a challenge for banks, especially with their current operating model. Most banks operating models
are characterized by products and channels that operate in silos and by processes that require extensive signoff from
compliance, legal, nance, operations, marketing and other functions to make any change50 people who can
say no against just one who can say yes.
Banks will need to redesign their operating model, and they can take a cue from leading retailers. Macys, for example,
has integrated most of its online shopping with its physical facilities, turning virtually all of its stores into omnichannel
fulllment centers. Its iconic Herald Square store in New York is undergoing a $400 million remodeling that features
innovations such as interactive directories, digital signage, widespread use of radio-frequency identication (RFID)
tagging and a new mobile app to guide customers as they shop. Macys has evolved its operating model in order to
pursue this integration. The company now has a chief omnichannel ofcer, who reports directly to the CEO and
manages the development of strategies to closely integrate stores and online and mobile activities. He also has
responsibility for systems and technology, logistics and related operating functions.
Apple likewise recognized a need to change how it manages its online and physical stores. When Apple hired
Angela Ahrendts, the former Burberry chief executive, it gave her responsibility for both online and retail stores,
with a mission to make the customer experience seamless across channels.
Some leading banks are overcoming their organizational obstacles by taking a fresh design, build, use approach
to developing exceptional customer experiences. Notably, the approach enlists customers to create the experience
(see Figure 1). Heres how it works.

1. Design for the customers ideal experience.


Effective digital design focuses on the customers prioritiesbuy a home, provide for a daughters college education, manage cash and so on. Leading banks have found it useful to select the critical customer journeys by
ranking them according to frequency of use and emotional importance (see Figure 2). The next step is to
reimagine each journey from the customers perspective. Buying a home, for instance, should start at the moment
the customer considers house hunting and extend all the way through moving in.

Page 3

Customer loyalty in retail banking: Global edition 2014 | Bain & Company, Inc.

Journey mapping and benchmarking against banking competitors and best-in-class rms in other industries provide
a data-driven audit to identify gaps in capabilities and appeal. It should be easy and intuitive for customers to
navigate a website or a mobile app, and the presentation should feel empathetic and not clinical.
Benchmarking must be complemented by a design process that will allow a bank to stand out from the crowd.
We have found that an effective mechanism to bring key customer moments to life is a storyboard created with
the help of artists and writers. Storyboards, when combined with engaging real customers to cocreate digital tools
through rapid prototyping and hands-on testing, lead to a clear view of the next horizon for each customer journey.

2. Build with a modern development model.


Given the speed of digital innovation these days, banks cant afford to use the traditional waterfall IT development
approach, which relies on remote release dates and thus struggles to catch up as the marketplace changes. The
trend among leading organizations, such as Capital One Labs, is toward Agile delivery models. These deliver functionality in many bite-sized pieces.
Just installing Agile development teams is not enough. The entire ecosystem around the team needs to be
redesigned and should include a process to ensure that the team building a particular journey has a pre-allocated
budget, resources and approvals. The Agile model should also involve relevant compliance and legal staff on the
team from the start. It should maintain regular communications with a senior executive leading the relevant line
of business. And it can employ cloud-based development environments in order to reduce cycle times.

Figure 1: Guiding principles for digital innovations


What does your digital experience look like?

How do you develop your digital properties?


Map and prioritize experiences that matter
most to customers

Intuitive, simple and easy to use

Reimagine the key end-to-end experiences

Build

Design principles

Personalized to the customer,


reflects wants and needs

Has human touch and clear, jargon-free


language

Identify choke points and organize for


nimble development

Available anywhere, any time and on


any device

Adopt Agile development models

Engages customers and business partners

Use

Design process

Has everything the customer wants


Employ test and learn for continuous
improvement

Simplify processes and reinforce behaviors

Uses rapid prototyping to test ideas

Source: Bain & Company

Page 4

Customer loyalty in retail banking: Global edition 2014 | Bain & Company, Inc.

Figure 2: Focus on the experiences that matter most to customers

Check balance

Frequency of use
(Average monthly visits, indexed)

10,000

Priority
experiences
Everyday transactions

5,000
Pay bills

150

Resolve a
complex
problem

Withdraw cash
Remote
deposit capture

100

Account unexpectedly
blocked
50

Dealing with
matters for
deceased
relative

0
75

80

85

90%

Emotional importance
(Percentage of detractors + percentage of promoters)

Source: Bain & Company disguised case example

3. Use what really works with customers and employees.


In most bank trials, new approaches tend to succeed initially through small pilots in highly managed, carefully
selected situations. But they fail to deliver the expected results in a mass rollout with all its complexity and variation.
The more effective approach, which complements Agile development, is to test and learn more broadly, based
on fast loops of customer feedback.
The test-and-learn approach relies on behavioral psychology, in which slight nuances can spell the difference
between success and failure. Insights about what works often come from frontline employees and analysis of
real customer behavior. At one Australian bank, for instance, a branch greeter charged with convincing customers
to use self-service solutions realized that asking Do you know how to do that yourself? made customers defensive
and thus fell at. The more positive tone in May I show you how to skip the line? was much more effective.
These sorts of insights happen regularly in every banks branch, but this bank had a process to quickly identify
and spread the insight throughout the bank, so the entire system could benet.
The chapters that follow explore the 2014 survey data on customer loyalty, how the right omnichannel approach
in a mobile world earns loyalty and what the untapped opportunity is in capturing new purchases of banking
products. These insights can inform the migration of transactional activities to digital channels, in order to
reduce costly and avoidable volumes entering the branch. That will allow the branch network to become leaner
and more oriented toward higher-value sales and service activities. Done right, the Digical journey can combine
higher productivity with the ultimate touchstone: strong customer advocacy.

Page 5

1.
Global loyalty trends

Customer loyalty as measured by NPS improved in


2014 from the previous year, as leading banks intensied their efforts to earn loyalty and many banks
continued their recovery after the nancial crisis.
What matters most to an individual bank is how it
performs relative to its peer group. Within national
markets, NPS varied widely from bank to bank.
In Germany, for instance, top-performer DKB had
an NPS that was 74 percentage points higher
than the worst performer and 55 percentage points
above the country average. Sparda-Banken, a
credit union, had a score 12 percentage points
lower than DKB.
Large traditional banks made meaningful improvements in NPS relative to their direct or smaller
competitors in 2014. Several big banks, such as
Santander and Barclays in the UK and JPMorgan
Chase in the US, have shown sustained progress
over the past few years.
Several factors account for the progress of these
banks, with digital innovation being one factor.
Previous surveys have shown that using mobile
banking contributed to higher loyalty scores. This
year, we found that promoters of a bank, who
score a 9 or 10 on a zero-to-10 NPS scale, were
more likely to use mobile apps than were detractors,
who score 6 or less on the same scale.
Digital usage now accounts for the majority of
banking interactions in virtually every country, with
Australia, France, the US, Canada and Germany
leading the digital share of all interactions. The
sharpest growth came in mobile usage, which for
the rst time reached about 30% of all interactions
in most countries. Mobile remains a relatively small
share of digital interactions only in Germany,
Portugal, Mexico and Japan.

Customer loyalty in retail banking: Global edition 2014 | Bain & Company, Inc.

Figure 3: In most markets, there is a large gap between leaders and laggards
Primary banks Net Promoter Scores relative to loyalty leader, which is indexed to zero, 2014
100%

80

60

40

Americas

RBC, TD Canada Trust


President's Choice Financial

Canada
Mexico

Banorte Santander, HSBC

US: Northeast

PNC Bank, TD Bank, Chase Bank

US: Midwest

Huntington
Chase Bank, Regions Bank

US: South

Bendigo Bank
ING Direct
China Construction Bank, Bank of
Communications, China Merchants Bank

Australia
China
Hong Kong

Citibank

India

HDFC, Bank of Baroda

Indonesia

BCA

Japan

Shinsei Bank

Malaysia

Maybank, Public Bank, CIMB

Singapore

Citibank

South Korea

Shinhan Bank

Belgium

Argenta Spaarbank
La Banque Postale

France

Sparda-Banken
DKB

Germany
Europe

USAA

Union Bank, Bank of the West, Citibank


USAA

US: West

Asia-Pacific

20

Banca Mediolanum

Italy

ING Direct, Fineco

Poland

ING Bank

Spain

Bankinter
Nationwide

UK

Lowest bank
Average

first direct

Highest traditional bank


Highest direct bank

Notes: Country averages include all banks; highest and lowest banks include only banks where n200 for the Americas and Europe and n100 for Asia-Pacific; excludes markets
with insufficient number of banks; traditional banks include large building societies or credit unions.
Source: Bain/Research Now NPS surveys, 2014

Page 8

Customer loyalty in retail banking: Global edition 2014 | Bain & Company, Inc.

Figure 4: In many countries, large branch big banks have been closing the loyalty gap with direct
banks
Net Promoter Score
US

Canada

80%

Australia

80%

80%

60

60

Direct
banks
60

Direct
banks
40

40

40

Regional
banks

20

Big Five
banks

20

National
banks
0

20

20

20

10

11

12

13

14

2011

Germany

12

13

14

Direct
banks

40

Big Four
banks

13

14

Italy

80%

60

2012

UK

80%

Regional/
smaller
banks

20

2009

Direct
banks

80%

Direct
banks

60

40

60

Direct
banks

40
Building
societies

20

20

20

International
banks

Credit
unions
0

Large branch
banks

20
2012

Large branch
banks

20
13

14

2012

National
banks

Large
regional
banks

20
13

Source: Bain/Research Now NPS surveys, 20092014

Page 9

14

2013

14

2.

Mobile applications have arrived at the stage of


mass appeal. Almost every country showed a
huge increase in the share of respondents using
mobile apps, with an average 19 percentage point
rise globally. Indonesia and China led in usage.

Channel behavior and


its inuence on loyalty

Online usage showed declines or was at everywhere except in Indonesia, Mexico and Japan
an average 3 percentage point decline worldwide.
Growth in mobile has not just cut into online usage;
it also coincided with declines in branch, ATM and
phone usage. In the US the share of respondents
using these channels dropped by 5, 3 and 5 percentage points, respectively, since 2012.
Respondents under age 35 were more likely than
older customers to bank via mobile devices. But the
share of customers age 65 and older who use
mobile is a substantial 30%and mobile usage
rose sharply among all age groups.
Roughly 60% of customers used a combination of
digital and physical channels. These omnichannel
customers gave their primary bank an NPS that was
16 percentage points higher than the NPS of customers using only digital channels and 22 points higher
than the NPS of those using only physical channels.
They also own more products through their primary
bank than those who use only digital or only physical channels: 1.0 and 1.3 products, respectively.
For product research and consideration, US respondents most frequently turned to their banks website, highlighting the importance of a welldesigned, intuitive site. Next, respondents turned
to bank employees. Other sourcessuch as direct
mail or, for credit cards, another websitehad a
prominent inuence for individual products. Mobile
has yet to be effectively tapped for selling.

Customer loyalty in retail banking: Global edition 2014 | Bain & Company, Inc.

Figure 5: Digital channels accounted for the majority of all interactions in most countries
Percentage of total interactions in last quarter, 2014
100%

80

60

40

20

Online

Mobile (smartphone/tablet)

ATM

Phone

Japan

Mexico

India

Italy

Hong Kong

Malaysia

Portugal

Indonesia

Singapore

Thailand

China

Poland

Spain

UK

Brazil

Belgium

Canada

Germany

France

US

Australia

Branch

Source: Bain/Research Now NPS surveys, 2014

Figure 6: Customers use of mobile banking applications surged by 19 percentage points worldwide
Percentage of respondents who used mobile banking apps in last quarter
80%

77
73
64
59

60

58

58

54
49

47

45

44

43

42

40

41

39
34

31

30

27
21

20

19

2014 Developing country

2014 Developed country

Note: 2013 data was excluded where data was not available or not comparable to 2014 data.
Sources: Bain/Research Now NPS surveys, 2014; Bain/Research Now and Bain/GMI NPS surveys, 2013

Page 12

2013

Japan

Germany

Belgium

France

Portugal

Canada

Brazil

UK

Italy

US

Spain

Mexico

Australia

Hong Kong

Malaysia

Poland

Singapore

India

Thailand

China

Indonesia

Customer loyalty in retail banking: Global edition 2014 | Bain & Company, Inc.

Figure 7: In most countries, the use of online tools for routine transactions declined
Percentage of respondents who used online tools (via computer, not mobile) for routine transactions in last quarter
100%
88
81

80

79

78

77

77

76

76

74

74

73

71

70

69

68

67

66

60

61

59
52

52

40

Japan

Poland

33

33

Germany

Mexico

Malaysia

Brazil

Thailand

Spain

France

Portugal

2014 Developed country

Japan

2014 Developing country

US

Italy

UK

Hong Kong

Singapore

Germany

Belgium

India

Canada

Australia

Indonesia

China

20

2013

Note: 2013 data was excluded where data was not available or not comparable to 2014 data.
Sources: Bain/Research Now NPS surveys, 2014; Bain/Research Now and Bain/GMI NPS surveys, 2013

Figure 8: Branch visits continued their slow decline


Percentage of respondents who used branches for routine transactions in last quarter
100%

80

82

80

79

77

75
68

66

64

60

63

60

60

59

58

57

55

54

53

49

47

44

40

20

2014 Developing country

2014 Developed country

Note: 2013 data was excluded where data was not available or not comparable to 2014 data.
Sources: Bain/Research Now NPS surveys, 2014; Bain/Research Now and Bain/GMI NPS surveys, 2013

Page 13

2013

Poland

Belgium

Singapore

France

Australia

Hong Kong

Portugal

Thailand

Malaysia

South Korea

UK

Canada

Spain

Italy

US

India

Brazil

Mexico

Indonesia

China

Customer loyalty in retail banking: Global edition 2014 | Bain & Company, Inc.

Figure 9: Mobiles rise came at the expense of online, ATM and branch usage
Total interactions in last quarter
Canada

Spain
Change
(% points)

100%

India
Change
(% points)

100%

0
80

100%

1
80

60

60

11
40

40

20

40

20

2014
Mobile

2013
Online

+12
0

2014
ATM

Phone

20

+8

+15

2013

80
3

60

Change
(% points)

2013

2014

Branch

Sources: Bain/Research Now NPS surveys, 2014; Bain/Research Now and Bain/GMI NPS surveys, 2013

Figure 10: With the rise of mobile, even online usage has started to decline
Percentage of respondents using channel in US
100%

20122014
change
(% points)

80

Online
Branch

3
5

Mobile

20

Phone

60

40

20

0
2012

2013

2014

Note: Online and branch include transactions, sales and service.


Source: Bain/Research Now US NPS surveys, 20122014

Page 14

Customer loyalty in retail banking: Global edition 2014 | Bain & Company, Inc.

Figure 11: Mobile has overtaken online in most markets


Mobile interactions as a percentage of total interactions
55%
Mobile exceeds online

45

Online exceeds mobile


Australia

France
US

China

35

UK

Spain
Singapore
Italy
Hong Kong

25

15
Mexico

Japan India

Indonesia

Canada

5
5

15

25
35
Online interactions as a percentage of total interactions
2013

Belgium

45

55%

2014

Note: Country excluded where 2013 data was not available or not comparable to 2014 data.
Source: 2014 Bain/Research Now NPS surveys; 2013 Bain/Research Now and Bain/GMI NPS surveys

Figure 12:

Customers who are promoters of their bank were far more likely than detractors to use mobile

banking apps
Respondents using mobile banking apps as a percentage of total respondents, 2014
US

Canada

Mexico

UK

Spain
50

43

35

31

Poland

40

39
48

41

Belgium

Australia

Hong Kong

62
40

39
30

Detractor

Promoter

Note: Includes traditional bank respondents only.


Source: Bain/Research Now NPS surveys, 2014

Page 15

Singapore
60

59

51

51
26

50
40

45

Customer loyalty in retail banking: Global edition 2014 | Bain & Company, Inc.

Figure 13: Most customers used both digital and physical channels
Percentage of traditional bank respondents, 2014
100%

80

60

40

Branch-only users

Digital-only users

Japan

Germany

Portugal

Singapore

Belgium

Poland

France

Hong Kong

Australia

UK

Malaysia

Thailand

Spain

US

Canada

Mexico

Italy

Brazil

India

China

Indonesia

20

Omnichannel users

Note: Branch only, omnichannel and digital only include respondents who interact via ATM and phone.
Source: Bain/Research Now NPS surveys, 2014

Figure 14: Omnichannel customers are more loyal and more engaged
Omnichannel users gave higher Net Promoter Scores and
held more products at their primary bank

They are more engaged, especially through digital channels


Average number of interactions in last quarter, traditional bank respondents
in US, 2014

Traditional banks' Net Promoter Scores in US, 2014


40%

80
68

31

30

27

60

22
20
10

40

11

20

13

Branchonly
Average
number of
products
owned

26

24

10

Digitalonly

Low

Omnichannel
Medium

Branchonly

High

Digitalonly

Number of digital interactions

2.4

2.6

3.0

3.2

Low

Omnichannel
Medium

High

Number of digital interactions

3.2

Mobile

Note: Branch-only, omnichannel and digital-only include respondents who interact via ATM and phone.
Source: Bain/Research Now US NPS surveys, 2014

Page 16

Online

ATM

Phone

Branch

Customer loyalty in retail banking: Global edition 2014 | Bain & Company, Inc.

Figure 15: The omnichannel difference applies across all countries


Percentage point difference in Net Promoter Scores relative to traditional banks' average, 2014
Americas
20
10

4
0
10

20

16

Increase in product
ownership from
branch-only users to
omnichannel users

Mexico

Brazil

17
Canada

1.2

0.6

1.3

11
US
0.7

Asia-Pacific
20

20
12

10
4

1 0

10

11

Indonesia

India

China

Australia

2.3

1.9

2.7

1.1

13

13

16

Singapore Hong Kong


1.5

10

45 34

28

21

14

20

Increase in product
ownership from
branch-only users to
omnichannel users

2.7

21

19

Malaysia

Thailand

Japan

1.5

1.5

0.7

Europe
20
10
3

0
2
10

6
9

7 6

12

6
10

16

20

Increase in product
ownership from
branch-only users to
omnichannel users

8 7

22
France

Spain

UK

Poland

Italy

Belgium

Germany

Portugal

0.8

1.2

1.0

0.6

1.2

1.2

0.8

0.9

Branch-only users

Digital-only users

Note: Branch only, omnichannel and digital only include respondents who interact via ATM and phone.
Source: Bain/Research Now NPS surveys, 2014

Page 17

Omnichannel users

Customer loyalty in retail banking: Global edition 2014 | Bain & Company, Inc.

Figure 16: Customers used both digital and human sources when researching and making purchases in the US
Credit card
(primary)

Checking

Savings

Home mortgages

Weighted average

Percentage of purchasers using sources for research and decisions, 2014

Bank's website

40

Employee at a
bank branch

40

Mail from a bank

40

30

23

Friend or family

28

Email from bank

19

25

TV, radio, print


advertising or
media

19

25

Phone call with


bank

15

Nonaffiliated
financial adviser

Bank's
smartphone app

15

Bank's tablet app

15

20

20

32

33

42

20

Human

Note: Average is weighted by product purchases.


Source: 2014 Bain/Research Now survey of product purchasers

Page 18

26

25

45

29

21

26

18

60%

26

32

18

40

32

29

19

20

60%

44

37

37

21

25

40

32

27

13

23

45

31

28

47

39

31

30

28

45

39

38

28

Nonaffiliated
website

56

20

23

40

Digital

60%

Other

20

18

40

60%

20

40

60%

Customer loyalty in retail banking: Global edition 2014 | Bain & Company, Inc.

Figure 17: The human touch remains important for loyalty when people are looking to buy new products
Respondents' Net Promoter Scores, by source used for product research and purchase decisions in the US, 2014
50%
44
40

40

37

36

35

33

33

32

30
26

23
19

20

10

0
Friend or
family
member

Employee
at a bank
branch

Bank's
website

TV, radio,
print
advertising
or media

Email
from bank

Human

Bank's
mobile
app

Mail from
bank

Nonaffiliated
website

Digital

Phone call
with bank

Bank's
tablet app

Nonaffiliated
bank
adviser

Other

Source: 2014 Bain/Research Now survey of product purchasers

Figure 18:

A virtuous circle of more channels, greater loyalty, more money

Net Promoter Scores of traditional bank respondents in Germany, 2014


Digital-only users

Branch-only users
20%

Omnichannel users
19

20%

20%

15
10

10

10

10

10

10

13
20

20

20

Number of
interactions

Low

Medium

High

Low

Medium

High

Low

Medium

High

Average number
of products owned

2.3

2.8

3.2

2.3

2.6

2.9

3.2

3.6

3.7

Note: Branch-only, omnichannel and digital-only users include respondents who interact via ATM and phone.
Source: Bain/Research Now Germany NPS survey, 2014

Page 19

3.
Product purchasing
and ownership
trends

Globally, more than one-third of respondents


bought nancial products from a provider that
was not their primary bank. That behavior was
most pervasive in Asia, where a growing share
of consumers are buying nancial products for the
rst time, and least common in Western Europe.
These hidden defectors bought high-value products in many cases, especially credit cards, loans,
investments and insurance.
Loyalty has a strong effect on additional product
purchases at the primary bank. Promoters were
more likely to buy from their bank than were detractors. This held true across almost every product in
every country.
The specific product effect varies by country
because of regulatory and market structure differences. In the UK, the promoter uplift was strongest
for pension products and weakest for checking
accounts. In Germany, the greatest uplift came
in instant-access accounts and life insurance. In
the US and Japan, by contrast, auto loans had
the greatest uplift.
In retail banking, Bain estimates the lifetime value
of a promoter is worth 2 to 2.5 times that of a
detractor, depending on the national market, type
of bank and wealth of the customer. That multiple
stems largely from promoters tendency to buy more
products from their bank, combined with their staying longer and recommending the bank to others.
Banks have more latitude to inuence customers
purchases than they might realize. About one-third
of respondents said that they were not planning
to apply for a credit card but, upon receiving an
offer, decided to accept the card. Product offers
had a lower but still signicant role in checking
and mortgage products.

Customer loyalty in retail banking: Global edition 2014 | Bain & Company, Inc.

Figure 19: Hidden defection exists everywhere, especially in developing markets


Percentage of respondents who purchased at a bank other than their primary bank, 2014
70%

68
63

60

44

40

40

Developing
country
average: 47%
37
32

30

28

28

27

25

24

23

Developed
country
average: 28%

23

20

19

17

17

17

Italy

46

Portugal

48

France

51

Australia

53
50

17

10

Developing country

Belgium

Germany

Canada

Japan

Poland

US

Spain

Brazil

Mexico

UK

South Korea

Indonesia

India

Singapore

Thailand

Hong Kong

Malaysia

China

Developed country

Source: Bain/Research Now NPS surveys, 2014

Figure 20:

Hidden defectors often bought high-value products, such as lending, investments and insurance

Percentage of products purchased at a bank other than primary bank, 2014


100%

80

60

40

20

Deposit

Credit card

Loans

Source: Bain/Research Now NPS surveys, 2014

Page 22

Investment

Insurance

Other

Indonesia

Brazil

Belgium

UK

China

US

Germany

Singapore

France

Malaysia

Canada

South Korea

India

Australia

Mexico

Spain

Italy

Hong Kong

Poland

Japan

Thailand

Potugal

Customer loyalty in retail banking: Global edition 2014 | Bain & Company, Inc.

Figure 21: Customers who are promoters were far more likely than detractors to buy their next product
from their primary bank
Purchases made at primary bank as a percentage of all purchases in that category in Australia, 2014
Checking account
82

Savings account

90
74

Credit card (primary)

83

Credit card (secondary)

84

70
49

Term deposit

Personal loan

76

44

Small business account

65

Investment property loan

74

70
53

58

Detractor

48

48

Investment management

72

53

50

Home loan

44

Promoter

Source: Bain/Research Now Australia NPS survey, 2014

Figure 22:

Banks have leeway to inuence product purchases, especially in credit cards

Percentage of purchasers of financial products in the US, 2014


100%

Received an offer
and decided
to get it

80

60

40

I was looking
to buy it
20

0
Home mortgage

Checking

Savings account

Source: 2014 Bain/Research Now survey of product purchasers

Page 23

Credit card (primary)

Customer loyalty in retail banking: Global edition 2014 | Bain & Company, Inc.

Further reading

Winning operating models that convert strategy to results, Marcia Blenko, Eric Garton, Ludovica Mottura
and Oliver Wright, Bain Brief, December 2014.

Rebooting IT: Why nancial institutions need a new technology model, Mike Baxter, Steve Berez and Vishy
Padmanabhan, Bain Brief, September 2014.

Building the retail bank of the future, Mike Baxter and Dirk Vater, Bain Brief, June 2014.

Digital-Physical mashups, Darrell Rigby, Harvard Business Review, September 2014.

Appendix: Methodology
Bain & Company partnered with Research Now, the online global market research organization, to survey consumer
panels in Australia, Belgium, Brazil, Canada, China, France, Germany, Hong Kong, India, Indonesia, Italy, Japan,
Malaysia, Mexico, Poland, Portugal, Singapore, South Korea, Spain, Thailand, the UK and the US. The surveys
purpose was to gauge customers loyalty to their principal bank and the underlying reasons customers hold the views
they do. Conducted between July and November 2014, the survey polled 82,914 consumers of national branch network banks, regional banks, private banks, direct banks, community banks and credit unions in these countries.
Additionally, in Brazil, we also conducted face-to-face interviews with roughly 1,200 customers. In the Americas and
Europe, for the individual bank analysis, we included only those banks for which we received at least 200 valid responses.
In Asia, we included banks with at least 100 responses. In many instances, sample sizes exceeded these thresholds.
Survey questions
Respondents were rst asked to identify their primary bank, after which they were asked the following questions to
assess their loyalty to that institution:

On a scale of zero to 10, where zero represents not at all likely and 10 represents extremely likely, how
likely are you to recommend your primary bank to a friend or relative?

Tell us why you gave your primary bank the score you did.

We asked what major products respondents hold with their primary bank and with other banks, and which of these
products were purchased in the past year. We also asked which channels they use to do their banking. The remaining
questions elicited demographic prole information: household income, investable assets and region of residence.
We followed up with 602 US respondents to ask more detailed questions about their purchase of specic products,
including the methods they used to research their purchases and the channel they used to purchase the product.
On the question of statistical signicance, the results of our data analysis are robust both for the measurement of
bank NPS by country and for respondent NPS for each demographic category. For the Americas and Europe, the

Page 24

NPS measured for each bank in the country and US regional rankings is statistically significant to an 80%
condence level, with a two-tailed test of the condence interval ranging from 2.6% (n=1,189) to 6.5% (n=200).
In Asia, where sample sizes were smaller, condence intervals are wider, with a maximum of 9.5%.
Countries classied as developed are based on the World Banks high-income category; the developing countries
are based on the World Banks middle- and low-income categories.

Acknowledgments
This report was prepared by Gerard du Toit and Maureen Burns, partners in Bains Financial Services practice,
and a team led by Christy de Gooyer, a practice area director, and Shilpi Goel, a project leader. Team members
are Alejandro Gonzalez, Devyani Gupta, Alexandra Reuter, Ricardo Sherwell and Abheek Talukdar. The authors
thank Bain partners in each of the countries covered in the report for their valuable input and John Campbell for
his editorial support.

Key contacts in Bains Global Financial Services practice


Global:

Philippe De Backer in Dubai (philippe.debacker@bain.com)


Edmund Lin in Singapore (edmund.lin@bain.com)

Americas:

Mike Baxter in New York (mike.baxter@bain.com)

Europe, Middle
East and Africa:

Henrik Naujoks in Dsseldorf (henrik.naujoks@bain.com)

Asia-Pacic:

Gary Turner in Sydney (gary.turner@bain.com)

NPS is a registered trademark of Bain & Company, Inc., Fred Reichheld and Satmetrix Systems, Inc.
Net Promoter ScoreSM is a trademark of Bain & Company, Inc., Fred Reichheld and Satmetrix Systems, Inc.

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