kpmg 2010 banking survey report brochure

7/31/2019 KPMG 2010 Banking Survey Report Brochure

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04Banking

2010 Banking

Industry

Preserving Customer Confidence

and Trust in a Rapidly Changing Industry June 2010

Customer

SatisfactionSurvey


2/16

Foreword 2

Scope and Methodology 3

12

Conclusion 14

The Customer's Perspective 5

Redefining Customer Value

Banking SurveyContents

The views and opinions expressed in this survey report are those of the survey respondents and do not necessarilyrepresent the views and opinions of KPMG Professional Services. Unless otherwise stated in this publication, we have not sought toestablish the reliability of the information obtained from sources outside of KPMG. We therefore cannot provide any assurances orguarantees that the survey findings represent an accurate view of the banking industry. There may be material differences between thefindings of the survey and the actual state of the industry. No one should act upon the survey results or other information contained inthis publication without appropriate professional advice after a thorough examination of the particular situation.

KPMG accepts no liability or responsibility from the reliance of any party on the contents of this publication.

2010 KPMG Professional Services, a partnership registered in Nigeria and a member firm of the KPMG network of independent

member firms affiliated with KPMG International Cooperative (KPMG International), a Swiss entity. All rights reserved. Printed in Nigeria.


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Foreword

1"The customers perception is your reality

- Kate Zabriskie

2010 KPMG Professional Services, a partnership registered in Nigeria and a member firm of the KPMG network of

independent member firms affiliated with KPMG International Cooperative (KPMG International), a Swiss entity.

All rights reserved. Printed in Nigeria.

Banking Survey Issue 4

The Nigerian banking industry is in a period of rapid and increasing change which

has been sparked off on the one hand by the recent banking industry reforms

instituted by the Central Bank of Nigeria (CBN), and on the other hand by external

global/ macro-economic pressures; an outcome of the world-wide financial crises.

The regulatory - led reforms in the Nigerian banking industry have been aimed at

upgrading the current practice and standard of banking within the country. The

changes have included the adoption of a common year-end regime for Nigerian

Banks, implementation of tenure limits for CEOs and non-executive directors, and

the industry wide audit of all banks to verify and validate their financial health. It isenvisaged that a more robust and healthy financial system will emerge after the

implementation of these reforms.

While Banks struggle with these changes and try to unearth solutions that will

ensure continued relevance and ultimately preserve shareholder value, it will be

interesting to learn how these changes may have affected the unintended victims -

the Customers.

In this year's survey, we attempt to delve into the psyche of bank customers as we

seek answers to such queries as: Is 'financial stability' still a critical basis for

establishing and maintaining banking relationships? Has the recent industry

turmoil/shake-up affected perceived service delivery to customers? How confident

and trusting are customers in their banks?

We again expanded the range of respondents across all customer segments andlocations to ascertain the impact of these changes on customer trust, banking

decisions and satisfaction levels. Overall, we surveyed about 8,000, 1,100 and 400

retail, SME and commercial/corporate respondents respectively across nine (9)

locations nationwide.

Results of this year's survey present a mix of surprises as well as some expected

developments. While some dominant players from previous years maintain

dominance of key segments and sectors, we see the emergence of new leaders in

other market segments. In addition, while the overall customer satisfaction (CS)

level for the corporate banking segment grew marginally, a decline was witnessed

in the CS level for the retail and SME segments.

Do these changes suggest a possible lack of consistency in addressing customer

needs or are they reflective of the effort required by banks to effectively capture

and deliver value to customers?

This year's survey attempts to provide answers to these questions and more.

Happy reading

Adebisi Lamikanra

Partner, Business Performance Services


4/16

The scope of this year's survey was consistent with that of the previous (2009)

edition, covering the retail, small and medium-scale enterprises (SMEs) and the

commercial/corporate banking customer segments. Overall, the survey covered

about 9,500 respondents, broken down as follows: 8,000 retail customers, 1,100

SME customers and 400 commercial/corporate customers.

In determining the respondent sampling and survey locations for the retail and

SME segments, the following factors were considered: concentration of

commercial activity, density of bank branches and the potential number of bank

customers at the locations.

On the basis of the above, the following nine (9) locations across the country were

targeted as follows: Aba, Abuja, Benin, Ibadan, Kaduna, Kano, Lagos, Onitsha and

Port-Harcourt. In each of these locations, effort was made to ensure that

retail/SME respondents were randomly selected from high density/traffic areas

such as shopping malls, markets, university campuses, residential areas, state and

federal secretariat complexes, business offices, etc.

For the corporate/commercial segment, respondent selection was driven by the

need to ensure the inclusion of the leading companies in each of the major

business sectors. Sampling was based on KPMG's internal database of formal

business establishments as well as the most recent copy of the Top 500

Companies in Nigeria (Goldstar Publications).

2Scope and

Methodology

Like prior years, feedback from the corporate/commercial respondents was

solicited from key personnel managing the organisation's banking relationships.

Others

3%

Self-

30%

Employed

Student

19%

Civil/Public Servant

17%

Private Sector

Employee

31%

Figure 1:

Occupational Category

Retail Respondent Demographics - Analysis by

Figure 2:

Establishment Type

SME Respondent Demographics - Analysis by

Limited LiabilityCompany

29.6%Sole Proprietorship

59.3%

Others

0.5%

Limited LiabilityPartnership

5.9%

Non-GovernmentalOrganization

4.7%

Figure 3: Corporate/Commercial Respondent Demographics:

Analysis by Turnover

Less than N250m

24%N1b-

29%

N5b

N250m-

23%

N1b

N5b-

9%

N10b

Greater than N10b

15%

10

6

7

0

10

20

30

40

50

60

Others

Agriculture

Embassies/Multilaterals/Foundations/NGOs

Educational Institutions

Engineering

Conglomerates

Food, Beverage and Tobacco

Healthcare and Pharmaceuticals

Media and Publishing

Airlines and Hospitality

Real Estate and Construction

Service

Logistics and Automobiles

Non-Bank Financial Services Institutions

ICT and Telecoms

Manufacturing

Oil and Gas

Frequency Ratings

Figure 4: Corporate Respondent Demographics: Analysis by Industry




9

10

15

17

19

19

22

22

22

33

37

38

50

56


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Banking Survey Issue 4

These individuals were excluded in the retail banking survey so as not to introduce

a bias to the survey results.

The overall methodology adopted in calculating the customer satisfaction index

(CSI) remains the same as with the previous editions of the survey and is as

depicted in the diagram below.




Overall Score CSI

Perceived Value

Ratings -Satisfaction (S)& Importance (I)

S I (S x I )/ I

Customer Service Factors

Customer CareMeasures interaction of bank staff

with customers

Product/Service OfferingMeasures product range &

appropriateness to customers needs

Transaction Methods & SystemsMeasures customer support processes/

systems & turnaround time

ConvenienceMeasures accessibility & quality of service

from delivery channels

PricingMeasures fees, charges and rates on product

WeightedScore

Figure 5: Methodology for Computing Customer Satisfaction Index CSI

Page four


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Page six

The banking industry in Nigeria has been faced with several changes over the last

twelve months. On the one hand, market pressures have resulted in the capital

market crash leading to huge exposure to margin loans and also the exposure to

the downstream oil and gas sector. On the other hand, recent regulator-led

reforms are pushing banks to refocus their business on banking and its critical

enablers - governance, risk management, and reporting.

This section analyses customer responses/views in the light of the industry

changes over the past year. How confident are the customers in their banks (may

be reflected in CSI ratings)? What factors are guiding customers in maintainingbanking relationships? Has the recent shake-up in the industry affected customers'

perception of service delivery?

Although all banks were rated during the survey, not all the banks were ranked

eventually, because the survey targeted a minimum sample size of respondents

for each of the 24 banks. Banks excluded from the retail and corporate/

commercial analysis numbered two (2) and three (3) banks respectively. These

exclusions were necessary to avoid drawing inferences that may not be

representative of the actual customer experience in such banks.

GTBank Sets a 3- Year Record in Retail Bankingrd

For the 3 consecutive year, GTBank clinched the top position. With a CSI of 77.21,

GTBank out performed all the other banks to maintain its position as the leading

retail bank. Following closely behind and maintaining last year's position is Zenithrd

Bank with a CSI rating of 75.81. Access Bank moved up two positions, coming 3

with a CSI rating of 74.85..

3

Customer Satisfaction Index (%)

70 74 76 78

Stanbic-IBTC

Bank PHB

Oceanic Bank

Fidelity Bank

FCMB

Intercontinental Bank

Diamond Bank

Access Bank

Zenith Bank

GTBank

71.91

Figure 7: Top 10 Most Customer Focused Banks-Retail

GTBank Maintains Dominance

in Retail Banking

The Customer'sPerspective

Figure 6: Most Customer Focused Bankby Location: Retail

Access BankPort Harcourt

Fidelity BankOnitsha

GT BankLagos

Zenith BankKano

Zenith BankKaduna

Intercontinental BankIbadan

GT BankBenin

Zenith BankAbuja

GT BankAba

BankLocation




72


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Page sixBanking Survey Issue 4

Service Delivery Channel Champions

In evaluating the customer satisfaction level with banks' service delivery channels

for the retail segment, three key channels were assessed namely: ATM, Branch

Skye Bank which featured in last year's top ten most customer focused banks did

not make the list this year, and Bank PHB, which exited from the top ten last year

re-emerged within the top ten.

In addition, the positioning of the other top-ten players changed in comparisonth

with last year's performance. Stanbic IBTC dropped six places from the 4 positionth

in 2009 to the 10 position this year, while Fidelity Bank moved up two notches

th thfrom the 9 position (last year) to the 7 position (this year).

Overall, this year's survey result shows a general decline in aggregate customer

satisfaction levels from 75.88 (in 2009) to 71.91 this year. Though GTBank is

leading the pack, it's overall CSI dropped by 6.35 from the 2009 position. The same

with Zenith Bank and Access Bank with a CSI decline of 4.64 and 3.39

respectively.

What is however most instructive, and contrary to general expectations within the

industry, is the continued feature of some banks impacted by the Central Bank's

recent banking audits. Whilst Intercontinental Bank and Oceanic Bank are not newrd th

to the top ten ranking (ranking 3 and 7 respectively in 2009), their continued

presence in the top ten in spite of poor audit reports (and negative press) may be

reflective of the efforts of the management team at managing customer service

and maintaining public confidence, as well as pronouncements by the CentralBank of Nigeria regarding customer interest protection/safeguards, in these banks.

Analysis of customer comments shows that while financial stability remains a key

consideration for transacting businesses with banks, and regardless of concerns

on the banks financial position, customers continue to maintain a relationship with

these banks, and value the robustness of their product and service suite, as well

as the proximity of their branches.

Industry Service Leaders

In line with our usual practice, retail customers assessed satisfaction levels with

their banks along f ive key service areas. The positioning of the banks varied across

the five customer service areas. GTBank came tops in all the customer service

areas except product/service offering where Access Bank led the pack.

PricingIntercontinental

BankZenith BankGT BankConvenienceStanbic-IBTCTransaction Methods

& SystemsZenith BankProduct/Service

OfferingZenith BankDiamond BankGT BankCustomer Care

321RankingCustomer Service

Areas (Retail)

GT Bank

GT Bank

Access Bank

Zenith Bank

EquItorial TrustBank

Sterling Bank

GT Bank

GTBank Maintains its Dominance

across Major Service Areas




Figure 8: Ranking of Bank Performance by Customer Service Areas - Retail


8/16

Banking Survey Issue 4Page seven

GTBank also leads the way in the Corporate Banking Segment

For the first time in the history of this survey, Zenith Bank's leadership in the

corporate banking segment was challenged. GTBank emerged the most customer

focused bank with a CSI of 80.08.

ndZenith Bank took the 2 position with a CSI of 78.26, while FCMB (displacing Skye

rd rdBank from last year's 3 position and moving up four notches) took the 3 position

with a CSI rating of 77.26. Citibank and Bank PHB showed major improvements inth

their performance this year with Citibank climbing 5 places to claim the 4 position

and Bank PHB emerging among the top ten for the first time.

The industry wide CSI grew marginally at 33% (against 21% in 2009) of Nigerian

banks having a CSI of 75 and above. This may imply improving levels of customer

satisfaction within the corporate segment and suggests that more banks may be

focusing on customer satisfaction as a key differentiating factor.

and Internet Banking. The assessment covered the proximity, accessibility,

availability and quality of service delivery by these channels amongst other factors.

stGTBank led in channel performance, managing to clinch the 1 position in ATM

Banking with a CSI rating of 79.57 and Internet Banking with a CSI score of 74.59.

Zenith Bank came tops in Branch banking with a CSI of 81.56.

Figure 9: Ranking of Bank Performance by Service Delivery Channels - Retail

2010 SME Focused Banks

About 1,100 SME banking customers were sampled across the nine (9) locations.

Unlike the prior year where there were no market leaders, GTBank and Zenith Bank

have emerged as the clear leaders in this industry segment.

Figure 10: Ranking of Bank Performance by Customer Service Areas - SME

Internet BankingZenith BankBranch

GTBankATM321 RankingChannels (Retail) 3

GTBank

GT Bank Intercontinental Bank

Zenith Bank Diamond Bank

Zenith Bank Intercontinental Bank

Zenith BankPricingConvenienceTransaction Methods

& SystemsProduct/Service

OfferingCustomer Care

321Ranking

Customer Service

Areas (SME)

Zenith BankSkye BankGT Bank

Intercontinental

BankZenith BankGT Bank

Diamond BankGT BankZenith Bank

Diamond BankGT BankZenith Bank

Diamond BankZenith BankGT Bank




GTBank beats Zenithto emerge as Most Customer

Focused Bank in Corporate

Industry leaders begin to

emerge in the SME segment


9/16

Banking Survey Issue 4 Page eight

72 74 76 78 80 82

Customer Satisfaction Index (%)

First Bank

Bank PHB

Diamond Bank

Access Bank


Skye Bank

FCMB

Citibank

Zenith Bank

GTBank

75.18

GTBank and Zenith dominate in all Customer Service Areas for Corporate

Customers

GTBank was the leading bank in the rankings across the five customer service

areas. The bank achieved the 1 position in the areas of customer care (84.08),

convenience (82.55), transaction methods & systems (86.51), products & service

offering (75.48) and pricing (72.69). Zenith Bank also demonstrated a good showing

as it took the position in four key areas including customer care (82.16),

convenience (81.57), transaction methods & systems (84.29) and products &

service offering (74.07). Sterling Bank clinched the position for pricing.

st

nd2

nd2

Figure 12: Ranking of Bank Performance by Customer Service Areas - Corporate

Reasons for Maintaining Banking Relationships

This year's survey reveals that the predominant rationale for customers maintaining

banking relationship with their respective banks remains unchanged. In the

corporate segment, "Financial Stability" still flags as the most important reason for

maintaining relationship with banks while "Excellent Customer Service" retains its

position as the most important reason for retail customers.

Ranking21 3

Customer Service Areas

(Corporate)

Pricing

Convenience

Transaction Methods &

Systems

Product/Service

Offering

Customer Care

Fidelity BankSterling BankGT Bank

Zenith Bank

Zenith Bank

Zenith Bank

Zenith Bank

GT Bank

GT Bank

GT Bank

GT Bank

Skye Bank

Access Bank

Sterling Bank

Citibank




Figure 11: Top 10 Most Customer Focused Banks - Corporate

Financial Stability and Excellent

customer Service as key reasons

for maintaining banking relations

in corporate and retail segments,respectively.


10/16


11/16




Fidelity Bank

Zenith BankDiamond Bank

Bank PHB

Skye Bank

First Bank


Oceanic Bank

UBA

GTBank

1600

56

67

69

73

79

81

142

169

187

190

40 90 140 190 240

Figure 18: Top 10 Rated Banks: Corporate

Figure 16: Top 10 Rated Banks: Retail Figure 17: Top 10 Rated Banks: SME

55

78

92

93

132

190

210

50 70 90 110 130 150 170 190 210 230

Rating Frequency

Eco Bank

Bank PHB

Diamond Bank

Skye Bank

First Bank

Oceanic Bank

UBA

GTBank

Zenith Bank


GTBank

Zenith Bank

First Bank

UBA

Diamond Bank


Oceanic Bank

Access Bank

Ecobank

Skye Bank

GTBank and Zenith Bank

emerge as the most

frequently rated banks

658

661

997

1016

1443

200 400 600 800 1000 1200 1400

Rating Frequency

359

521565

1076

1361 197

183

177

Rating Frequency


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13/16

The Key to Sustaining Customer Confidence

Redefining customer value is going beyond planning, to delivering good customer

satisfaction levels across all the customer segments. It involves assessing

customers' perceived values and their relative importance and determining how

best a bank should position itself to deliver services that match customers'

perceived value in order to gain a competitive edge. To redefine customer value, a

bank needs to:

Profile Customers:

Identify Value Elements:

Spot High Value Customers:

Develop Delivery Strategies:

Conclusion

Careful profiling and need analysis of the banks customers'

base will reveal certain customer idiosyncrasies, behavioural patterns or life style

choices, which may prove invaluable towards the development of specific

products and services as well as target marketing.

Good market insight and a clear understanding of

customers' value elements will enable a bank to define the value elements

which will be the basis of the offering to each customer or market segment.

Understanding the needs of customer will assist

the bank to rethink its assessment of the most profitable customer segments. A

balanced view of the customer needs, attraction and retention cost, valueelements and satisfaction drivers will reveal the most valuable customer

segments and set direction for formulating strategies for specific customers or

customer segments.

Strategies will need to be defined in detail to

deliver higher satisfaction levels on the identified value elements and customer

needs. Value elements may vary significantly across locations and the bank

should be mindful of these often marked differences when developing products

and new ways of providing customer service.

As the Nigerian economy slowly recovers from the effects of the economic

downturn, customer attitudes and behaviours will continue to change thus implying

shifting needs and values. Banks that rely on old customer service delivery models

and assumptions may suddenly realise that they are competing in a market that has

evolved beyond their reach. On the other hand, banks that continuously realign their

business strategies in line with the emerging customer needs may not only retain

their existing customers, but also gain unique competitive advantages in the

industry.

Redefining Customer

Value in a rapidlychanging world:




4

Today, banks that will win must

be able to continuously reassess

and redefine what constitutes

value to their customers and

deliver each and every time.


14/16


15/16


16/16

The keyto success

MovingCustomers

to Centre Stage

market wants as opposed

to what they can produce.

The results of our 2010

Customer Satisfaction

Survey confirm again that

service delivery is the

most important factor that

customers look for to build

a lasting relationship with

any bank. Customer

service is critical to

building competitive

advantage in the industry,

achieving lasting

profitability in an up market

and retaining market share

in a down economy.

Service Delivery -

a competitive

advantage.The changing nature of the

customer and the impact

of an unpredictable

business environment

converge to produce a

platform of constant

change that banks need to

be aware of, monitor and

respond to with dynamic

marketing strategies.

It is now more important

for banks to focus on

product innovation as they

increase their customer

centricity, and reposition

their services to deliver

what they believe the

2010 KPMG Professional Services, a partnership registered in Nigeria and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative

(KPMG International), a Swiss entity. All rights reserved. Printed in Nigeria.

kpmg 2010 banking survey report brochure

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