2013 kpmg nigeria banking industry customer satisfaction survey final

ISSUE SEVEN

2013 Banking Industry Customer Satisfaction

Survey

NIGERIA

June 2013

kpmg.com/ng

About this surveyIn reading this report, you should bear the following factors in mind:

1. This is a perception study

• This survey focuses on the perceived quality of customer service delivery by the banks from the customer’s per-spective across the Retail, Corporate/Commercial and Small & Medium Sized Enterprises (SME) segments.

• This survey does not represent the opinion of KPMG on the skills, capabilities or performance of any of the banks covered.

• KPMG is responsible for defining the survey questionnaire administered to the respondents.

• KPMG conducts the survey, but findings represent the opinions of the customers of the banks.

This survey does not seek to establish anything as an absolute fact, but to report on the feelings and broader perceptions of customers with respect to services provided by their banks. The rankings are solely based on the customers’ feedback received from the survey.

2. Perception is neither balanced nor fair, but the study always has a representative sample size

Perceptions are by definition subjective; as a result, they are neither balanced nor fair. Also, banks rated in the survey vary by size, service offerings and customer profile. However, the minimum number of respondents required for each bank in the survey guarantees that the result reflects the opinion of a representative customer group in each segment.

2 | Banking Industry Customer Satisfaction Survey 2013

Customer Satisfaction Index (CSI)

Customer Service Factors

Convenience

Convenience Customer Care

Transactions, Methods &Systems

Products &Services

Pricing

Measures accessibility and quality of service from delivery channels

Measures interaction of bank staff with customers

Measures customer support processes/ systems & turnaround time

Measures customers’ perception on fees, charges and rates on products

Measures product range and appropriateness to customers’ needs

Customer Care

Transactions, Methods & Systems

Pricing

Products & Services

© 2013 KPMG Advisory Services, a Nigerian partnership, member firm of the KPMG network of independent firms affiliated with KPMG International Cooperative (‘’KPMG International’’), a Swiss entity. All rights reserved.

Banking Industry Customer Satisfaction Survey Methodology

The Customer Satisfaction Index (CSI) was used in this survey to determine customer satisfaction. CSI is simply a weighted score that assigns

importance ratings of service measures to the satisfaction ratings of those measures as provided by customers on the service delivery of their banks.

Respondents in the survey were asked to rate their banks on the following customer service factors discussed in more detail below:

CSI Formula(S x I)

SI

Contents


Foreword 4 Detailed findings 6

Outsourcing the frontline 12

Eating the data elephant 14

The future of banking 20

Testing the waters of ‘crowdsourcing’ 28

Demographics 34


Foreword

These are exciting and challenging times in the Nigerian banking industry. After a very profitable year for the industry, banks are already having to contend with a lower yield environment and pressures on fee income. Inevitably, the attention will return to the customer as banks look to grow earnings. Already, customers are redefining the agenda – for the first time in five years, excellent customer service has replaced financial stability as the primary reason for maintaining banking relationships in the retail and corporate segments.

In the face of evolving customer behaviour and expectations, it has become impera-tive for banks to listen and understand the voice of the customer as input in shaping their strategies. In this, KPMG’s seventh annual Banking Industry Customer Satisfac-tion Survey, we share our findings from more than 14,000 retail, over 3,000 SME and 400 corporate/commercial banking customers. We have again expanded the scope of the survey to cover more customers and increased locations from 10 to 18 (the ad-ditional locations: Akure, Asaba, Calabar, Enugu, Makurdi, Minna, Nnewi and Yola). We also introduced a survey to understand the perceptions of young professionals – a distinct and important demographic group – on how they intend to interact with their banks in the future. I am sure you will find the results very interesting and insightful.

In the broader survey, our findings reveal that efforts at promoting alternate chan-nels are yielding positive results. We have seen a two-fold increase in adoption of almost all the alternate channels and a further increase in ATM usage. After a slow start, mobile payments appears to be gaining some momentum and should ultimately transform the payments landscape in the country. However, amidst the proliferation of channel options, customers want banks to remember that convenience should remain a key focus - cash availability at ATMs was the most important issue for retail customers in 14 of the 18 locations covered.

Over the last year, we have also seen an increase in the number of retail banking customers that are either planning to or have recently switched banks as well as the prevalence of customers with multi-bank relationships. In the corporate segment, the feedback for banks is consistent with what we have heard over the last few years – knowledge of their business is extremely important and a key driver of satisfaction. With a proper understanding of the client’s business, banks can achieve the level of product offering/suitability that most businesses desire.

I would like to thank all the survey respondents for their invaluable time and insights. I hope the findings and additional commentary are valuable and constructive. For us at KPMG, we again hope this annual publication puts the customer at the heart of the agenda for all banks.

Bisi LamikanraPartner & HeadManagement Consulting


Banking Industry Customer Satisfaction Survey 2013 | 5Banking Industry Customer Satisfaction Survey 2013 | 5



Detailed findings

Customer expectations continue to increase in the retail seg-ment…

This year, there was a marginal decline in overall CSI within this segment as cus-tomers expectations continue to increase especially in the area of convenience. 93% of retail customers rated qual-ity of service at the ATM as their most important service measure. Also, the gap between satisfaction and expectation on

this element increased from 16 to 18 per-centage points. Staff attitude and queues in the banking halls were also key areas of concern.

Zenith Bank emerged as the most cus-tomer focused bank this year, with last year’s leader, GTBank coming second. Stanbic IBTC maintained the third posi-tion for the third consecutive year.


Banking Industry Customer Satisfaction Survey 2013 | 7

Top 10 Most Customer Focused Banks

SME issues remain the same...

While overall satisfaction levels among SME banking customers remained unchanged from last year, traditional issues such as limited access to loans remained. Fewer SMEs (53% compared to 63% in 2012) expressed satisfaction with the ease of getting credit from their banks.

GTBank and Zenith retained their posi-tions as the most customer focused banks for the SME segment, albeit with lower overall customer satisfaction rat-ings from last year. This year, Stanbic IBTC moved up a spot to third place.

Slight increase in Corporate satisfaction...

Overall, the CSI for Corporates im-proved by two percentage points from last year, driven largely by customers’

increased satisfaction with pricing of bank products. However, with an overall satisfaction rating of 69.1 against cus-tomer expectation of 92.1, it is clear that customers expect banks to do a lot more to bridge this gap.

This year, 93% of organisations ranked ability of banks to provide a full range of financial services as important in com-parison with 83% last year. Increasingly important to customers however, is the need for bespoke products and services tailor-made to meet specific require-ments.

Zenith and First Bank, each moved up one spot, attaining the first and second positions respectively, while Citibank emerged in third place.

Zenith

GTBank

77.4 78.0 74.1

76.6 77.1 73.0

75.0 76.3 72.9

74.8 75.8 72.3

72.9 74.6 72.1

72.7 74.3 70.9

72.0 74.1 69.9

71.4 73.9 69.8

70.8 73.7 69.7

70.5 72.6 69.5

Stanbic IBTC

Diamond

Standard Chartered

FCMB

First Bank

Fidelity

Sterling

Skye

GTBank

Zenith

Stanbic IBTC

Diamond

First Bank

Sterling

FCMB

Skye

Fidelity

Ecobank

Zenith

First Bank

Citibank

GTBank

Diamond

Fidelity

Stanbic IBTC

UBA

Skye

FCMB

Retail SME Corporate/ Commercial



Changing prioritiesRELATIONSHIP ISSUES


Excellent customer service now top of the agenda

As the dust from the financial crisis set-tles and fears about safety of customers’ deposits take the back seat, custom-ers are now putting service quality at the front of their banking relationship agenda. For the first time in five years, excellent customer service replaced financial stability as the principal reason for maintaining banking relationships for retail and corporate customers. This is perhaps a nod from customers to regulatory efforts aimed at stabilizing the banking industry in recent years.

In the very competitive banking land-scape, differentiation is difficult to achieve on many fronts. However, it is clear that the quality of service delivery experience is a differentiating factor and

service promises must be aligned to customer goals and objectives.

In the retail space, 35% of customers cited excellent customer service as a major reason for continued banking relationships – a 12-percentage point increase from last year. When asked for their second most important reason, financial stability was the next priority as this remains crucial.

For SMEs, financial stability selected by 31% of customers was closely followed by excellent customer service which was chosen by 30% of customers as the top reasons for maintaining banking relation-ships.

‘For the first time in five years, excellent customer service replaced financial stability as the principal rea-son for maintaining banking relationships for retail and corporate customers.

‘Top Five Reasons for Maintaining Banking Relationships

Excellent customer service



35%

31%

29% 27% 8% 7% 6%

26%

30%

11%

11%

10%

10%

10%

4%

Financial stability

Financial stability

Financial stability

Image and reputation


Bank’s support of business

Employer requirements

Proximity of branches



Pricing

Efficiency of credit processing

Retail

SME

Corporate/ Commercial


Say my name!CUSTOMER CARE


Managing customer experience can be quite a daunting challenge especially as customers have diverse needs that can often be at different ends of the same spectrum. In times past, branch staff had a more personal relationship with cus-tomers, sometimes even knowing cus-tomers by name, but today, with millions of customers, this will pose a significant challenge. Nevertheless, today’s custom-ers are looking for personalised service and attention thus making the bank’s frontline staff critical to shaping the cus-tomer’s experience with the bank.

Indeed, nearly all customers across the retail and SME segments rated staff attitude and efficiency in handling complaints and enquiries as the most important customer care issues. This highlights the importance of getting the right calibre of staff, especially for customer-facing roles. Banks need to continue to empower frontline staff with training in relationship management and other requisite technical capabilities to enhance the quality of service delivery.

We have observed the trend of using ‘meeters and greeters’ to help improve the customer journey within the branch, but this largely remains inconsistent even within the same branch or bank. In some other markets, a few banks and service providers are beginning to introduce holographic virtual greeters as a means of engaging customers.

With renewed focus on enforcing know-your-customer (KYC) requirements, banks now, more than ever, have access to immense customer data and as such can therefore leverage this data through detailed analytics to build a strategy and create new value for customers. By having a better view of customer data, banks can equip frontline staff with infor-mation to meet service objectives and improve the ability to cross-sell.

In the corporate segment, the good news is that seven-in-ten customers – similar to last year – expressed satisfac-tion with the level of proactive commu-nication from their banks. But as banks will quickly acknowledge, this does not necessarily translate to more business.

Last year, corporate customers reported a strong need for industry specialisa-tion within banks and in the intervening period, it is clear that some banks have started responding by creating special-ist teams with a mix of financial and industry-specific skills. Whilst the strong gap between expectation and delivery remains, we note an increase of five percentage points to 39% of corporate/ commercial customers who said they were very satisfied with the industry knowledge demonstrated by their bank representatives.

The overall customer care CSI in the corporate segment increased marginally from last year with Zenith Bank emerg-ing in first place for the fourth time in five years, while First Bank and Citibank came second and third respectively.

‘In times past, branch staff had a more personal relationship with cus-tomers, sometimes even knowing customers by name, but today, with millions of customers, this will pose a significant challenge.

‘

Top Three Banks by CSI Rating - Customer Care

1. Zenith2. First Bank3. GTBank

1. GTBank2. Zenith3. Stanbic IBTC

1. Zenith2. GTBank3. Standard

Chartered

Retail

Corporate

SME

In the retail segment, the overall custom-er care ratings decreased marginally as satisfaction levels for all customer care elements declined compared to last year. For instance, this year, 79% of custom-ers were satisfied with the level of staff knowledge and understanding of the bank’s products and services compared to last year’s 88%. Zenith moved up two places to take the lead with a rating of 80.2, while GTBank and Standard Char-tered came second and third with 79.5 and 78.6 respectively.



Globally, organisations are increasingly embracing outsourcing strategies as a key lever to transform the way they deliver their services. Though reducing operating costs is clearly a top driver for outsourcing; organisations are not pursuing this goal unilaterally, as improv-ing process performance and supporting business growth are among other impor-tant objectives. To this end, outsourcing has typically focused on the back office and support functions.

Over the last few years, however, there has been a push towards increased outsourcing of frontline functions within

the Nigerian Banking Industry. A growing number of the frontline functions out-sourced, typically referred to as “contract roles” include bulk cash counting, tellers, customer services, direct sales and the call centre have direct interaction with existing customers and may even be the first point of contact for prospective customers.

‘The typical customer usu-ally has no clue about the bank’s operating model, or the fact the staff serving him may be an outsourced staff. Hence an unsatisfac-tory experience with this category of staff is viewed as an indictment and direct reflection of the bank since they are “bank staff”.

‘

Impact on service quality and perspectives on getting it right

Tokunboh [email protected]

Tokunboh is a Senior Manager in the Management Consulting practice of KPMG in Nigeria.


VIEWPOINT

Outsourcing the frontline


The biggest risk in outsourcing is poor service delivery

A significant drawback to outsourcing the frontline function is poor service quality, evidenced to a large extent by declining customer satisfaction levels attributable to circumstances such as the limited knowledge of employees’ of the bank’s products and services, unfriendly/ reac-tive demeanour of employees and also the inability to promptly resolve custom-ers’ complaints.

The typical customer usually has no clue about the bank’s operating model, or the fact the staff serving him may be an out-sourced staff. Hence an unsatisfactory experience with this category of staff is viewed as an indictment and direct re-flection of the bank since they are “bank staff”. This more often than not crystal-lizes as a negative perception which may hamper customers’ loyalty and result in customers switching in pursuit of better service.

Getting it rightWhen companies manage their outsourc-ing relationships effectively and structure them for success from the onset, all stakeholders win. At the end of the day – “when services are outsourced, it’s all about people”.

A few essential ingredients to get the best from frontline outsourcing include:

• Develop an effective outsourcing strategy aligned to the organisa-tion’s strategic objectives to provide clarity on needs/ drivers and priori-ties vis-à-vis the envisioned future state and aligned expectations. The importance of this step cannot be overemphasized and provides answers to the “5Ws” (why, when, what, who and how) whilst ultimate-ly driving execution.

• Understand your in-house opera-tions as an outsourced frontline process is only as effective as the in-house operation it replicates. When an outsourced employee “handles your mess for less,” cost savings are limited to those created by simple labour arbitrage.

• Partner with the contract staff provider to select contract staff with the right attitude. Create the understanding that the best foun-dation for excellent service is your frontline and work with third party vendors to determine the most ap-propriate selection process which should include behavioural based skills assessments or psychometric testing. It is generally easier to teach people the job than it is to change their attitudes.

• Promote integration between outsourced and full-time employees ensuring that resentments and con-flicts are addressed and resolved. Contract staff should be treated with respect and not as second class citizens to maintain team spirit as well as a positive and inclusive work-ing environment. The key objective is winning over the hearts and minds


of these classes of employees hence all forms of discrimination should be avoided.

• Employ a scorecard based meas-urement scheme and use incen-tives aligned to strategic objectives that convert expectations into critical success factors and key perfor-mance indicators (KPIs) that can be measured and incentivized. In addi-tion, contract staff who demonstrate the organisation’s core values and desired behaviours must have these values tracked or monitored and should form part of the staff’s overall performance measurement.

• Spend money to make money as there is always an investment in time and training, which can be sig-nificant. There may even be capital outlays due to a conscious effort to insource certain aspects of the contract employee lifecycle which are crucial to overall objectives. For instance, contract staff should be in-cluded in select bank-wide trainings to provide well-rounded understand-ing of the banks’ business, its vision, product/ services and goals.


VIEWPOINT



Eating thedata elephantTo succeed in today’s marketplace, retail banks must focus on extracting sig-nificantly more value from their data assets. Harvesting existing data sources – both internal and external – must be an immediate priority if banks want to stave off the disruptive threat posed by new entrants into the market and ensure that value is not unnecessarily lost. The real competitive advantage will go to those players who are able to successfully combine data from all available sources to develop a better understanding of customer needs and, as a result, serve them more effectively.

Neel [email protected]

Neel is a Director in the Management Consulting practice of KPMG in the UK.



Right across the retail banking industry, there is a strong belief that more must be done to extract value from internal customer data assets. As one participant noted, “we are missing opportunities by not consolidating all the different nuggets of customer insight that we have, from customer risk through to digital customer behaviour.”

It seems clear that a growing number of customer analytics teams now recognise the need to work more closely with the business and IT to develop processes where the capture of customer data is embedded upfront and not as an after-thought. “We need to give customer data the right priority and to think about data capture upfront before we get to the analytics,” opined another inter-viewee.

But when it comes to harvesting value from external sources, many banks seem to feel that they must get their internal data under control before they start to look externally. So while most already in-corporate data from the more traditional external sources such as Mosaic (which provides consumer classification infor-mation) or – on the cards side – bureau data, benchmarking data and credit data, there is a tangible reluctance to utilise a broader set of external sources such as social media or attitudinal/behavioural data.

In some cases, this is a result of a belief that the internal data they already have is of a better quality than most external alternatives. “It’s just a matter of exploit-ing it,” suggested one participant.

Others, however, note three main chal-lenges that seem to be dampening their interest in the emerging external data sources: • The ability to link external data to

individual customers; • Potential data privacy concerns and

reputational impacts of tapping into customers’ external data; and

• The lack of clarity into which pieces of external data are going to add the greatest value.

OPINION With almost every bank suggesting that more could be done to capture value from existing internal data, I believe that bank executives and customer insight and analytics leaders must now focus on ensuring that they are able to extract the maximum value from their existing assets.

I am the first to admit that this will likely be a challenging task. In most cases, banks are saddled with complex systems that simply are not capable of deliver-ing a ‘single customer view’ across all products and locations.

An overall lack of funding and resources for customer insight and analytics is also slowing progress in this space. Many within the insights and analytics space suggest that the function is only a mod-erate strategic priority for their banks. As one participant I spoke with said, “whilst it is articulated as being strategically im-portant, it is challenging to get resources and funding. Due to the industry climate, the appetite to spend money is even lower.”

Another challenge is the lack of aware-ness of the value that customer insight and analytics can provide to the busi-ness. The simple truth is that retail banks’ DNA focuses on product sales, and – as a result – many see data analytics purely as a means to an end rather than rec-ognising the value of achieving a richer understanding of the customers them-selves. “Banks are not primarily data providers so they don’t think about the inherent commercial value of the data they possess,” added another participant.

In the face of these challenges, I would argue that banks must change tack and prioritise their investment in customer insight and analytics to fully exploit the powerful data they already own. This will require a change in mindset throughout the organisation with customer data and analytics promoted up the agenda to become an enterprise-wide strategic priority. This means that customer insight and analytics teams will have to become much better at demonstrating the value they add to the business while also developing a highly-honed understanding of the business itself. But it will also re-

quire executives and business leaders to become greater champions of analytics and work to instil an increased sense of analytical literacy across the organisation.

The risk of not doing so is clear. Retail banks will quickly become susceptible to data literate new entrants coming into the market who understand how to mine data for its commercial value and use that insight to erode away the customer base of traditional banks.

While mastering their available internal data is certainly a critical first step for customer insight and analytics teams, it seems clear that banks that do not also incorporate external sources of data will start to fall behind their competitors in the long-run. Already, a small minority of the participants that I spoke with noted that leveraging external data to supple-ment their analysis was a priority for their organisation and these banks seem to be poised to grab the competitive advan-tage.

So while it may be natural for banks to focus on mastering the data they control, the world is moving at an uncompro-mising pace and new data sources are emerging continuously. I believe that it is critical, therefore, for banks to integrate all customer data they can secure – whether internal or external – in order to outperform their competitors and ward off new, more nimble, market entrants.

Google, for example, is reported to have received a banking licence in the Nether-lands more than 6 years ago and – with the launch of the Google Wallet – the company now has the ability to aggre-gate search, email and financial trans-actional data to build an unprecedented view of consumer behaviour. Moven is another new-model competitor that will use greater insight into individual money management preferences to tailor cus-tomer experiences to each individual.

The reality is that, in the digital banking model of the future, data is the most important asset. Banks that are able to combine their internal and external data to create value will find themselves well placed to thrive in this new world. I fear that those that are unable or unwilling do so at their own peril.


A case for continued branch excellence

CONVENIENCE


With the exception of cash withdraw-als and balance enquiry - which many customers prefer to perform via the ATM – the branch remains a prominent chan-nel for other activities and is thus key to customer satisfaction. The results show a gradual shift in the role of the branch from a transactional channel to a sales channel as more than 90% of customers would like to seek financial advice and take out new products at the branch. This is in spite of an increasing reluctance to stay on long queues – about half of retail customers from this year’s survey are not satisfied with the length of queues at bank branches.

The desire for continued branch interac-tions may be explained in part by the fact that overall satisfaction with all electronic channels still trails the branch experience by a huge margin. As such, amidst the push to migrate customers to alternate

channels, there must be corresponding investments to provide a consistent, high-quality experience across all chan-nels. Such investments also offer banks the opportunity to take advantage of the digital channels for marketing and deep-ening of customer insights.

‘More than 90% of customers would like to seek financial ad-vice and take out new products at the branch.

‘Q. What is your preferred channel for carrying out the following?

Channel Preference

1%1% 2%2%

3%2%2% 3%

8%93%4% 84% 95%

Making complaints

Bills payment

Buying financial products

75%

8%

2% 1% 2%1% 3%3% 3%

85% 91%

37%

5% 4%25% 55%

Cash withdrawal

Funds transfer

Getting financial advice

Balance enquiry

Branch

ATM

Internet

Social Media

Contact Centre

Mobile

Branch

ATM

Internet

Social Media

Contact Centre

Mobile

POS

1. Zenith2. Citibank3. GTBank

1. Zenith2. GTBank3. Diamond

1. Zenith2. GTBank3. Diamond

Retail

Corporate

SME

Top Three Banks by CSI Rating - Convenience



Increasing adoption of alternate channels

As banks explore more avenues of engaging their customers, we believe they should continue current efforts to promote the use of alternate channels as our findings reveal these are yielding positive results. Across the industry, we have seen a variety of approaches aimed at encouraging customers to use other channels including the use of incentives such as cash back on POS usage.

When compared to last year’s results, more customers are using alternate channels for their banking transactions. 13% of retail customers surveyed use internet banking (up from 7%), POS 15% (up from 6%), mobile payments 6% (up from 2%), contact centre 12%(up from 5%) and mobile banking 10% (up from 6%). The ATM remains the most utilised

alternate channel with nine-in-ten cus-tomers using it within the last year.

Customers of different age groups also demonstrate varying channel usage patterns. Majority of customers (70%) above 60 still prefer to visit a branch to enquire about their balance compared to only 30% of customers under 30. On a weekly basis, a slightly higher number of older customers visit the branch than the ATM (34% compared to 23%).

Amidst the proliferation of these chan-nels, we note a year-on-year decline in overall satisfaction with the internet banking and ATM channels. Custom-ers still want improved online security and more user-friendly internet banking platforms as well as reduction in cash dispense errors at ATMs. As penetration deepens, it is imperative for banks to remember that customers are primar-

ily looking for convenience and service quality beyond mere availability of these channels.

Overall, we have also seen a two-fold in-crease in the number of people using at least one other channel in addition to the branch and ATM, a sign that customers are continually looking for convenience across a variety of channels.

In May 2013, the Central Bank of Nigeria reported that the value of daily electronic funds transfer had reached the N80 billion mark. A study by RBR has also forecast the Nigerian ATM market to overtake Saudi Arabia in 2017, to become the third largest market in the Middle East & Africa region1.


Alternate Channel Usage - 2013 vs. 2012

2013 10% 13% 15% 12% 6%

6% 7% 6% 5% 2%2012

Mobile banking

Internet banking

POS Contactcentre

Mobile payments

1 RBR (2012) Global ATM Market and Forecasts to 2017.


Q. How often do you interact with your banks through the following channels?

Channel Usage - All Age Groups

Branch

ATM

POS

Internet Banking

Mobile Banking

Contact Centre

Mobile Payments

Weekly At least once every 2 weeks Once a month Rarely Never No response


Leveraging online channels

Not surprisingly, people aged under-30 account for 50% of all internet banking users but only 15% of them ever use internet banking. With an estimated 12.5 million total active internet subscriber population1, adoption of internet banking at 15% suggests there is still untapped potential for this channel as has been witnessed in other markets. Online retail-ing in the country was estimated at over N77.5bn in 20122 and is expected to grow further with increasing internet penetra-tion.

Online banking presents banks with the opportunity to deepen relationships with younger customers. Four-in-ten internet banking users indicated a weekly usage of the channel. Loyalty amongst very satisfied internet banking customers is also high, with seven-in-ten saying they will absolutely recommend their banks to other customers. When the same people were asked about their branch experi-ence, less than three-in-ten expressed similar levels of satisfaction.

Social media (i.e. Facebook, Twitter etc) is also gaining ground as a means of customer interaction. However, only 9% of customers interact with their banks using these platforms against 70% of users who use it for other personal purposes. Currently, only a few banks in the country have fully embraced social media but much of it still remains at the level of informa-tion dissemination. However, we note the success of GTBank surpassing the one-million fan mark on Facebook in early 2013. With younger customers increasingly using social media as a pri-mary filter that informs their purchasing decisions, banks can no longer afford to ignore this medium.

In the corporate segment, eight-in-ten organisations expressed satisfaction with the quality and availability of their bank’s internet banking platform – an eight percentage point increase from last year.

‘Online banking presents banks with the opportunity to deepen relationships with younger customers.

‘

Social Media Usage by Persons Aged Under 30

11%71%

I use social media for personal purposes

I interact with my bank through social media

56%

32%

5%

4%

3% 8%

9%

4%

8%

3%

3%

13%

14% 3%

11%

12%

11%

11%

12%

2%

2%

2%

1%

1%

1%

1%

2%

1%

2%

1%

1%

5% 76%

83%

73%

79%

77%

82%

9%

30%

8%

19%

12%

2%

2%

1 NCC, January 20132 BusinessDay, January 2013



For most customers, an ideal scenario would be one where they did not have to queue to get business done. With significantly higher usage of ATMs and charges associated with over-the-counter transactions, queues are no longer restricted to banking halls but are now common place at ATMs. After ‘queues in branches’, ‘queues at ATMs’ was another painpoint cited by customers interviewed during the survey. More than any other driver of convenience, nearly all (95%) re-tail customers indicated cash availability and uptime at ATMs as being of critical importance.

Clearly, banks are aware of the ongo-ing issue of crowding at branches; in recent years, we have seen banks issue service promises guaranteeing specific turnaround times for varying transactions but these promises have not yielded the much expected results.

Tackling queues at bank branches must involve different approaches which may vary from branch layout redesign, deploying more ATMs or assigning more resources to branches as required or as one customer suggested - Nigerian banks may want to consider serving cold fresh juice to waiting customers!

The transaction methods and sys-tems service area received the high-est industry average amongst the five components of the CSI in the corporate segment. Specifically, 43% of organisa-tions (compared to last year’s 35%) were very satisfied with quality and clarity of information received from their banks although, customers generally felt that more work was required in the area of account statements reconciliation and SMS/ email notifications on transactions.

A future without queuesTRANSACTIONS, METHODS & SYSTEMS

Top Three Banks by CSI Rating - Transactions, Methods & Systems

Citibank led with a rating of 79.0 – a seven-percentage point increase from last year. Zenith and First Bank came second and third place respectively with ratings of 78.9 and 76.9.

In the retail segment, Zenith emerged in first place while Stanbic IBTC led in the SME segment.


1. Citibank2. Zenith3. First Bank

1. Stanbic IBTC2. GTBank3. Zenith

1. Zenith2. GTBank3. Stanbic IBTC

Retail

Corporate

SME



The future of banking Young professionals: a wakeup call for retail banking

As young professionals become a key demographic driving the bottom line of retail banks, banks are going to have to rethink the way they at-tract and retain this class of customers or risk being left behind.



Think of customer demographics as a pipeline of sorts - as people are moving into retirement at one end, a new cohort of young men and women is entering at the other, to embark on what (for most of them) will be a 40 to 50 year experi-ence as workers, consumers, savers, borrowers and investors. This idea lends itself to two key points:

• Young professionals today will be significant drivers of retail banking revenues tomorrow.

• Understanding what this group wants will differentiate the winners from the losers in the race for the retail banking space.

In this context, KPMG set out to survey Nigerian young professionals between the ages of 18 to 30. We see this group as interesting as they are a good indica-tion of banking customers of the future.

Research was conducted to gain insight on the role of the branch, specific prod-ucts and services, social media and what a “great” bank would look like in the future.

“I don’t ever want to have a need to go to the bank. This is the 21st century. I should be able to meet all my banking needs online or on my phone – from opening an account to signing up for internet banking. - Survey respondent

“

Many young professionals tend to select their primary banks, either at the onset as a student or youth corps member or because of the bank’s perceived popular-ity. Specifically, from this survey, 30% of respondents commenced their banking relationships as students or as corps members, whereas 18% chose their bank because of its image and reputa-tion. Targeting the young professionals at an earlier stage during their time at university, service years, or through a strong brand presence may be an impor-tant way for banks to attract this group of customers.

However, once banks have acquired this category of customers, sustaining these banking relationships is the next critical step. Presently, 18% of respondents indicate that they remain with their bank because of the internet banking service; 11% cite excellent customer service; and 9% cite image and reputation as their reason, 16% admit that they are not aware of a bank that is significantly better than their current bank. Although a bank’s popularity is a crucial factor for selection, it is of minimal importance in determining whether customers stay with the bank.

Yet the majority of young professionals tend to maintain at least two to three bank accounts, with 79% of them aged 18 - 24 falling within this category. Given that young professionals tend to have more than one account, it will be impor-tant for banks to position themselves as the primary transaction account.

Regarding the use of credit products, less than ten percent of young profes-sionals currently use credit facilities. 21%, 20%, and 35% of respondents in-dicated their potential need for personal loans, car loans, and mortgages respec-tively over the next 10 years. For person-al loans, 73% did not select a response, while for both mortgages and car loans, 79% did not select a response suggest-ing that young professionals may either not be interested or may not be aware of particular products available to them.

Why young professionals maintain bank accounts



The role of banking channels

The service quality of alternate channels will be important for engaging this cus-tomer category now and in the future. Branch based banking is simply too time consuming for young professionals, who would prefer a more expedient way to fulfil their banking transactions.

44% of respondents ranked internet banking as the most important way for them to interact with their banks in the future, whereas only 1% of respondents selected the branch. Five-in-ten respond-ents said they could not see themselves ever using a branch going forward. Other ways young professionals would like

their banks to interact with them include e-mails (20%) and applications on smart phones and tablet devices (15%).

The common factor behind these re-sponses is convenience. Young profes-sionals would like to interact with their bank from work, from home, and/ or on the go. They do not want to plan their day around the tedious task of carrying out banking activities in a banking hall. Hence, they will be more interested in the quality of the bank’s digital capabili-ties, than the bank’s ability to fulfil all banking activities at the branch.

“I want a bank that really knows me: my transaction trends, from which it can decipher my preferences and market more solutions to me, even if it is not a banking solution. A concert, a chance to watch sports live, a chance to listen to a favour-ite musician live, etc. - Survey respondent

“

Top Five Reasons for Choosing and Maintaining Banking Relationships (Young professionals Under 30)

Q. What will be your most preferred mode of interaction with your bank in the future?

Email

Smartphone appsInternet

banking

VideoConferencing

Phone calls

Onlinechat

Others

Started with student/ NYSC account

Why I chose my bank Why I still maintain my current banking relationship

Internet banking service


I’m not aware of a bank that is significantly better

Employer requirements



Service is really not bad enough to compel me to change

Internet banking service


30%16%

18%

11%

11%

9%

18%

12%

9%

8%

44% 20% 15% 7% 5% 5% 4%



“I expect the bank of the future to be more like a retail outlet than a typical bank branch; with smoother and simplified processes as well as strong data privacy practices. - Survey respondent

“

The role of social media

Social media tends to be considered as a good way to interact with young profes-sionals. However, given various options of ways to interact with their bank, only 0.4% of respondents selected social media as their preferred option. Yet when probed further on whether they would like their bank to contact them via social media, 41% of respondents said yes, while 36% said no.

Clearly, young professionals prefer to contact their bank utilizing such tools as internet banking or e-mails; however, they would not be completely adverse to their bank contacting them through social media. Their preferred social media interaction would include getting updates on new products, advertise-ments, promotions and other general information.

Q. Would you like your bank to interact with you via social media?

Q. Do you think you will need financial planning advice in the future?

41%

36%

23%

YesNoNot sure

Financial planning

Financial planning through the use of personal finance advisers has yet to take a strong foothold in Nigeria. The results from this survey suggest that young professionals are no exception as only 12% of respondents currently have a financial planner. Of those who do not have a financial planner, 45% expressed the need for one now and six-in-ten of these respondents believe they will need a financial adviser in one to two years.

The majority of young professionals sur-veyed (71%) indicated that they would

like to get financial advice from a trained financial planner, while 16% of them would like to receive financial advice through materials provided by banks via their websites.

Yet, since this customer category is growing at a rapid pace and has a keen interest in performing banking activities online, an online personal financial man-agement (PFM) platform may in fact be the suitable tool to meet their needs.

PFM tools can provide customers with

solutions to track expenses with analysis on customers’ spending, automated cat-egorization of expenses, and advanced budgeting capabilities. Such a platform may lead to deepening of customers’ relationships with their bank, particularly if the platform is user-friendly. Financial advice offered must also be transparent and in the customer’s interest.

66%62%

57%

23% 23%28%

9%

2%7%7% 7%9%

18 - 24

Ages

25 - 2728 - 30

Yes, in 10 years

Yes, in 5 years

Yes, in 1 - 2 years

No, never



The bank of the future

While the advent of more sophisticated technologies have increased customer convenience in conducting transactions, customers have become even more demanding, as they expect better quality at lower costs.

When asked what a great bank would look like in the future, responses from young professionals included the desire for more transparency in banking interac-tions as well as improved security on online services.

• 25% of the respondents feel that a ‘great’ bank will be one that will act responsibly and honestly.

• 20% stated that a ‘great’ bank in the future will provide smoother and simplified processes for online services.

• 19% stated that a ‘great’ bank of the future will have highly secure online banking.

The young professionals of today will be a significant revenue driver for retail banking in the future. Their priorities and preferences are distinctive – and will require careful consideration by banks as they shape their business models for the future. Listening and taking action will be important; the great bank of tomorrow will need to rethink its strategy today.


Open innovationPRODUCTS AND SERVICES

In an environment where it is difficult to differentiate on the basis of price, the ability to deliver quality products be-comes crucial. Nearly all corporate/com-mercial customers indicated that quality of a bank’s e-payments capabilities and product suitability were of critical impor-tance. This is not surprising as the CBN’s cashless policy continues to shape the payments landscape. 77% of this group of customers affirmed their satisfac-tion with the quality of internet banking solutions provided by their banks. When asked for one innovation they would like to see over the next 12 months, online and epayments solutions was the leading response.

There was a slight increase, from last year, in the number of customers report-ing they were very satisfied with the suitability of banking products to their needs (36% vs. 31%). However, when matched with customers’ expectations, there is still room for improvement with customers still demanding greater specialisation and industry depth from banks. Perhaps, banks should begin to consider inviting customers to form part of the product development process as the concept of crowdsourcing is already recording some success in consumer retailing and IT. If approached and struc-tured properly, similar successes may be achieved in banking.

A difficult area for customers across all segments is ease of getting credit facili-ties. Only 14% and 19% of retail and SME customers respectively were very satisfied with ease of getting loans. The satisfaction level for access to long-term credit is also low amongst corporate cus-tomers as only 19% were very satisfied with this area.

In the retail and SME segments, there was a marginal decline in overall CSI rat-ings in this area with GTBank leading in both segments. Zenith Bank maintained second position in the retail segment while Stanbic IBTC moved a spot up to come third place. Stanbic IBTC also came in second position in the SME seg-ment while Skye bank came third for the first time since 2009.

‘With customers still demanding greater specialisation and industry depth from banks, perhaps banks should begin to consider inviting customers to form part of product development.

‘

Top Three Banks by CSI Rating - Products and Services

1. Zenith2. Citibank3. First Bank

1. GTBank2. Stanbic IBTC3. Skye

1. GTBank2. Zenith3. Stanbic IBTC

Retail

Corporate

SME

Overall CSI ratings increased in the corpo-rate segment by three percentage points from last year’s ratings driven by higher satisfaction levels (74% compared to 61% in 2012) with the breadth of financial products and services provided. Zenith Bank, Citibank and First Bank occupied the top three positions respectively.



Q. In what areas would you like your bank to improve on its product and service offerings?



Testing the waters of ‘crowdsourcing’

Innovation-minded financial services companies are testing the waters of ‘crowdsourcing,’ to better understand their customers’ deepest wants and needs. This new twist on market re-search – which meshes online collabora-tion tools with social media – could help organisations polish their brands, launch tailored products and transform their processes.

To differentiate themselves from compet-itors old and new, and bolster customer loyalty, financial services companies around the world are rethinking their brands, products, and delivery models. To do so, a number of leading providers are exploring the emerging research tech-nique of crowdsourcing, to improve the quality of their market intelligence, and tap into the ‘voice of their customer.’

A recent phenomenon, crowdsourcing applies social media tactics – like online polling or discussion groups – making it possible to engage in an ongoing dia-logue with targeted customers, employ-ees and other key stakeholders to gather

deeper, and potentially innovative, mar-ket insights and ideas. This helps an or-ganisation develop or fine-tune products, programs or processes. In its simplest form, crowdsourcing updates the classic focus group for the digital era; enabling marketers and innovation leaders to collaborate with online communities of hundreds or hundreds of thousands.

Unlike those very visible, open social me-dia campaigns often seen on Facebook, a crowdsourcing program enables you to build a closed, controlled community, in which you might invite your most valued customers, opinion leaders or influenc-ers, – also known as ‘prosumers’ – to register and take part in a single or ongo-ing conversation.

The benefits of crowdsourcing can include:• Increasing the capacity and breadth

of your market research, while re-ducing cost and time to market;

• Combining qualitative and quantita-tive data, with quicker turn-around and analysis;


Jeff [email protected]

Matt [email protected]

Jeff is a financial services Principal Advisor in the Management Consulting practice of KPMG in the UK.

Matt leads KPMG’s crowdsourcing offering, Crowd Connection.

‘Although consumer product retailers and manufacturers were among the fastest to embrace crowdsourcing, the financial sec-tor is eagerly testing the waters and creating ‘managed commu-nities’ to gather fresh market intelligence.

‘

VIEWPOINT


• Obtaining deeper customer insights, to tackle organisational challenges, resolve service gaps, or discover new revenue opportunities;

• Lowering the risks of product de-velopment, by involving your most valued stakeholders; and

• Increasing customer loyalty, through collaboration and regular conversa-tion.

Although consumer product retailers and manufacturers were among the fastest to embrace crowdsourcing, the financial sector is eagerly testing the waters and creating ‘managed communi-ties’ to gather fresh market intelligence. Among them, a Singapore bank applied crowdsourcing to involve its generation Y clients in new branch design, a German insurance company invited clients to cre-ate and evaluate insurance options, while an Australian bank encourages custom-ers to post, vote on and discuss new product ideas.

There are also opportunities to use crowdsourcing to engage corporate and commercial banking clients, or to help financial firms comply with new regula-tions that demand greater public consul-tation and community engagement.

Since KPMG formed an alliance with Chaordix Inc., we have combined Chaor-dix’s Crowd Intelligence™ methodology with KPMG’s subject matter expertise to consult clients on crowdsourcing strate-gies to address key business challenges. In this time, we have observed a variety of best practices that contribute to pro-ject success:• Ensure executive sponsorship for

any crowdsourcing initiative;• Carefully design program set-up and

management; ideally embedded in an organisation’s existing business functions (e.g. customer insights, marketing, sales, operations and hu-man resources);

• Clearly define purpose, goals, par-ticipants, incentives, promotion and management of any crowdsourcing program;



• Keep it simple in the early stages, and accept the likely hits and misses on the path to achieving ROI; and

• Follow-through, by delivering actions or implementing solutions, to show commitment, and build credibility, with your fledgling crowdsourcing community.

By pursuing crowdsourcing as the natural evolution of traditional market research, innovation-minded financial services companies can tap into their customers’ deepest insights, and put them at the heart of critical brand building, product design and process improvement strate-gies.

30 | Banking Industry Customer Satisfaction Survey 201330 | Banking Industry Customer Satisfaction Survey 2013




Cost-to-serve: a core imperative?PRICING

As in previous years, pricing appears not to be a game changer for most retail cus-tomers – only 3% maintain their banking relationships because of pricing. About 61%of retail customers are satisfied with the cost of maintaining accounts with their banks and only 12% of those plan-ning to switch banks will do so because of pricing.

In contrast, about half of SMEs and cor-porate customers are either dissatisfied or indifferent about charges on loans and rates on investment products. In fact, 53% of corporate customers that will switch banks will do so because of inter-est rates and fees. Care must be taken not to view pricing only in the context of interest rates and fees when dealing with corporate or commercial organisa-tions – only 10% were dissatisfied with the cost of maintaining accounts. Rather, pricing for this group of customers re-lates more to the perceived value derived from the banking relationship.

With the gradual removal and reduction of some service and transaction related charges, the discussion on getting the cost-to-serve right will become even more significant for banks and busi-nesses as banks look to sustain growth in the face of increasing pressures on the top line.

Although, the industry made significant improvements in cost efficiency that helped boost profitability positions last year, this may not suffice over the long term. A view of the cost-to-serve can fa-cilitate effective pricing decisions through an understanding of the costs required to deliver products and services vis-à-vis the relative importance of these to differ-ent customer categories.

Retail customers would like more clar-ity and proactive communication from their banks about imminent changes in rates and charges, this is imperative given the recent alterations in service charges across the industry. Indeed, 10% of retail customers indicated they are likely to be more satisfied if their banks offered more competitive rates and charges.

Q. How satisfied are you with the cost of maintaining banks accounts with your banks? Satisfaction with Pricing

SME

In the retail segment, GTBank retains num-ber one position for the third consecutive year, while Standard Chartered and Stanbic IBTC came in second and third respec-tively. GTBank also emerged in first place in the SME segment while First Bank led in the corporate segment.

Top Three Banks by CSI Rating - Pricing

1. First Bank2. Diamond3. Citibank

1. GTBank2. Unity3. Standard

Chartered

1. GTBank2. Standard

Chartered3. Stanbic

IBTC

Retail

Corporate

SME

41% 44%

28% 22%

17%

17%

21%10%

SatisfiedVery satisfied

IndifferentDissatisfied

Corporate/ Commercial


Our findings reveal that customers are increasingly willing to shop around for banking services that meet their needs – about 10% of retail customers expressed willingness to switch banks within the next 1-3months – a fairly significant number considering that over 40% of respondents already hold more than one bank account. We expect that competi-tion for loyalty amongst banks will be the next battlefield.

Younger customers (under-30) are particularly less loyal, they are twice more likely to change banks compared to customers above 60. This presents a big opportunity for banks looking to capture this segment provided they can deliver

on innovative, technology-driven products and services with underlying conveni-ence.

While attrition may appear low in the corporate segment, many corporate customers have main-bank relationships even where they have as many as eight bank accounts. Loyalty in this context would mean choosing to increase the volume of business done with one bank at the expense of another or increasing the number of products and services held.

Keeping with last year, service quality remains the leading reason for retail customers planning to switch banks

‘Younger customers (un-der-30) are particularly less loyal, they are twice more likely to change banks com-pared to customers above 60.

‘

LOYALTY

More customers looking elsewhere



whereas more than half of corporate customers who indicated their plans to switch banks will do so because of interest rates and fees.

Frontline staff have a strong role to play in delivering service quality. Earlier, we highlighted the critical value of branch interactions in influencing the overall customer experience. Amongst retail customers, we found a strong relation-ship between loyalty and satisfaction with the bank’s staff attitude. Thus, banks need to continue to train and enable their staff to identify and meet customers’ needs and aspirations. The approach to this must be strategic and embedded within the bank’s culture otherwise there will be little perceived value.

Significantly, loyal customers have the potential to become a bank’s biggest brand ambassadors with consequent impact in reducing its costs of sale and increasing its share of the customer’s wallet.


Q. Would you recommend your bank to others?

Q. What is the primary reason for changing or planning to change your bank? (Retail)

51% 59% 49%21% 23% 28%18% 11% 15%8% 5% 4%2% 2% 4%

Absolutely will

Retail SME Corporate

Absolutely will Absolutely will

Often will Often will Often will

Sometimes will Sometimes will Sometimes will

Absolutely will not Absolutely will not Absolutely will not

No response No response No response

51%

Service quality

Turnaround time for requests and enquiries


Interest rates and fees

Financial stability

Innovative products and services

13%13%

12% 6%5%


Demographics

Retail Respondents

Commercial/ Corporate Respondents

Gender

Income (Monthly)

Annual Turnover

Annual Turnover

Number of employees

Number of employees

Occupation

Age

Below N50,000

Below N1 million

N500million - 1 billion

Less than 10

Less than 300

Self-employed

N101,000 - N250,000

N5 - 10 million

N2 - 5 billion

51 -100

501 -1,000

Student

Greater than N1 million

N250 - 500 million

Retired

N251,000 - N500,000

N10 - 50 million

N5 - 10 billion

100 - 250

1,001 - 2,000

Public sector employee

N501,000 - N1 million

N50 - 250 million

Above N10 billion Above 2,000

Unemployed

N50,000 - N100,000

N1 - 5 million

N1 - 2 billion

10 - 50

300 - 500

Private sector employee


SME Respondents

n = 14, 424

n = 3, 035

n = 425

Male 56%

50%

34%

45%

42%

33%

34%

21%

14%

19%

6%

15%

12%

33%

15%

5%

14%

2%

Female 44%


Below 3031 - 4041 - 60Above 60

24%3%

3%1%

3%

3%1%

1% 2%

23%

23%

21%

58%

56%

35%

18%

13%

5%

5%8%


Survey Locations

Acknowledgements

Retired

We would like to thank all respondents who took part in the research, par-ticularly those who participated in in-depth interviews and provided impor-

tant insights and contributions.

We are also grateful to Communications and Marketing Research Group (CMRG), KPMG Nigeria partners and staff as well as Daniel Knoll,

Gaelan Bloomfield, Neel Arya, Jeff Poole, Matt Sevenoaks and Tokunboh Osinowo for sharing their insights.

The KPMG project team: Bode Abifarin, Torera Banjo, Wale Abioye, Funso Ero-Phillips, Tinuke Esan and Olaseni Shoyoola.

The survey was conducted between January and March 2013. Majority of the interviews were con-ducted in person across eighteen major cities in Ni-geria, targeting a minimum number of respondents for a representative sampling across the 20 banks.

Kano

Kaduna

Abuja

Onitsha

Aba

Ilorin

Ibadan

LagosBenin

Port Harcourt

Enugu

Makurdi

Minna

Akure

Yola

Calabar

Asaba Nnewi



For further information about this publication and our services, please contact:

kpmg.com/ng

The views and opinions expressed herein are those of the survey respondents and do not necessarily represent the views and opinions of KPMG.

The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.

© 2013 KPMG Advisory Services, a Nigerian partnership, member firm of the KPMG network of independent firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.

Any trademarks or service marks identified in this document are the property of their respective owner(s).

The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International.

Designed in Nigeria. Publication name: Banking Industry Customer Satisfaction Survey Issue number: 7 Publication date: June 2013

Contact us

Bisi LamikanraPartner and HeadManagement ConsultingT: +234 704 527 6005 E: [email protected]

Ngozi ChidozieManagement ConsultingT: +234 704 527 6024E: [email protected]

Bode AbifarinManagement ConsultingT: +234 704 527 6485E: [email protected]

Marie-Therese PhidoMarketing, Knowledge & CommunicationsT: +234 704 527 6012E: [email protected]

2013 kpmg nigeria banking industry customer satisfaction survey final

Documents

customer profile

opinion of kpmg

survey questionnaire

kpmg advisory services

representative customer

satisfaction ratings

quality of service

service offerings