19th Jul 2016
Customer service in the retail banking sector has failed to improve over the past year, despite moves to increase competition and quality of service. This is according to the latest UK Customer Satisfaction Index (UKCSI) – released today by The Institute of Customer Service – which found that banking is the only sector of the economy that hasn’t improved its rating for customer satisfaction since July 2015.
The Index shows that banks and building societies have slipped down the sector rankings in the last year, dropping from fourth to seventh place. It lists just four banks in the top 50 organisations for customer satisfaction. Only two banks improved by more than two points from last year, with five banks receiving a lower score. first direct is the only bank that has consistently appeared in the top 50 of the organisational rankings since January 2011.
The UKCSI is the national measure of UK customer satisfaction. It rates customer satisfaction at a national, sector and organisational level across 13 sectors – individually rating many leading organisations. The Index has run every six months since January 2008 and involves interviews with 10,000 UK consumers.
Nationwide is the highest scoring bank in sixth place, closely followed by first direct in seventh. Other banks that make the top 50 are TSB in 25th place and the Cooperative Bank in 47th. Cooperative Bank is identified as one of the most improved organisations covered by the UKCSI, rising from 93rd place in July 2015.
10 per cent of customers said they have experienced a problem with their bank or building society in the past six months. The main reason, cited in 29 per cent of complaints, was staff competence, followed by the quality and reliability of service (reported in 25 per cent of cases) and staff attitude (reported in 21 per cent).
Nearly a quarter (23 per cent) of people who experienced a problem did not report it. ‘Not thinking their complaint would make a difference’ was by far the most common reason for not reporting, cited by 41 per cent of people. Of those who made a complaint to their bank, 17 per cent said it was dealt with immediately, but 30 per cent said they were still waiting for their issue to be resolved at the time the research was carried out.
This latest UKCSI should set alarm bells ringing for banks. With the Competition and Markets Authority (CMA) set to make switching easier, The Institute of Customer Service is issuing a warning that banks who fail to improve their customer service may quickly lose customers as a result.
The UKCSI reveals a correlation between banks’ customer service and net gains and losses in terms of customer accounts. The most recent data from the Current Account Switch Service covered the period between September and December 2015. When mapping this against the July 2015 UKCSI results, it is evident that banks whose average customer satisfaction was higher than the sector average were more successful in gaining accounts, with 20,000 new accounts on average. Banks with lower than average customer satisfaction suffered an average loss of 9,663 customer accounts over the same period. The latest UKCSI report serves as an indicator of banks’ future performance when it comes to account losses and gains.
Jo Causon, CEO of The Institute of Customer Service, said:
“It’s evident that the retail banking sector is resting on its laurels, safe in the knowledge that customers are unlikely to switch their accounts. Aside from public services, banking has the highest percentage of customers who have used the same service for more than 20 years, supporting the CMA’s assertion that the sector suffers from weak competitive pressures. I believe the lack of improvement in the customer service offered by banks and building societies is a direct symptom of this complacency.
“It is not all bad news for the sector, though. The latest UKCSI also reveals that 15 percent of respondents claim that, when a problem has arisen, the resolution was not ‘right first time’. Whilst still too high, this figure represents an improvement over the past six months (from 16 percent in January) and it is also lower than the pan-sector average (17 percent).
“The picture should be set to change, with the CMA due to release its final report into retail banking next month. Recommendations are expected to include proposals to make it easier for consumers to switch. Rather than view this as a problem, banks should see it as an opportunity. As switching becomes easier, those banks that are first to the table when it comes to delivering excellent customer service will reap the rewards by taking market share from competitors. The UKCSI highlights that investment in staff training and complaint handling are areas that could make a significant difference to banks’ customer service performance and, therefore, their bottom line.”
For more information, and to download the UKCSI executive summary, visit the UKCSI pages of our website. For the key findings, download our infographic on the relationships between customer satisfaction and bank switching (see below), or view the animation.
Notes to editors
For further information please contact:
Ellie Scott, Carole Cassidy or Rebecca Stevenson
E: [email protected]
T: 0207 010 0831 (Ellie Scott), 0207 010 855 (Carole Cassidy), 020 7010 0810 (Rebecca Stevenson)
About the UKCSI
UKCSI (UK Customer Satisfaction Index) is The Institute of Customer Service’s national measure of customer satisfaction. It provides insights into the state and direction of customer satisfaction at a national level, across 13 key sectors and for individual organisations. UKCSI was launched by The Institute of Customer Service in 2008. It provides a unique way of measuring the current customer satisfaction of UK customers, as well as trends over time. The full July 2016 report can be found at www.instituteofcustomerservice.com/ukcsi
About The Institute of Customer Service
The Institute of Customer Service is the professional body for customer service delivering tangible benefit to organisations and individuals so that our customers can improve their customers’ experience and their own business performance. The Institute is a membership body with a community of over 500 organisational members – from the private, public and third sectors – and over 4,000 individual memberships. For more information about the Institute of Customer Service go to www.instituteofcustomerservice.com