Uncommitted Banking Customers in Europe

More than four out of ten (41 per cent) bank customers in Great Britain are 'uncommitted' to their current account provider, according to the findings of research by Taylor Nelson Sofres published in the March edition of 'Financial Marketing' magazine.

The research suggests that whilst a fifth (21 per cent) of customers are 'entrenched' in their commitment to their banks, around 15 per cent emerge as 'convertible' with a further 26 per cent indicating that commitment to their main bank is 'shallow'. This suggests that more needs to be done by banks to improve customer commitment levels and consolidate their customer base.

The European Bank Health Barometer - which covers 12 countries - also reveals widescale differences between markets in the proportion of customers who are committed to their bank. The most committed customers are found in Finland and Sweden (78 per cent and 75 per cent 'committed' respectively), whilst the lowest levels of commitment are found among customers in Spain (48 per cent) and Italy (52 per cent).

These differences are likely to be due to the relatively small number of banks operating in Finland and Sweden compared with the fragmented markets in Spain and Italy where customers have greater choice. However, at the same time, large differences in levels of commitment can be found when comparisons between banks within these countries are made.

Dave Hannay, Director, Taylor Nelson Sofres Finance commented: 'Clearly, there will always be a proportion of customers with every bank whose commitment levels are so low that they can easily be targeted by competitor organisations as potential, new customers. However, there is also a significant proportion of seemingly loyal customers whom banks should be trying more actively to target to reduce the relatively high levels of 'churn' which currently exist in this sector. In the future, banks need to ensure that their customer product holding information is more effectively integrated with commitment data. This will enable them to make better-informed decisions on customer commitment and to focus their marketing activities accordingly.'

Dan Coatsworth, Editor of Financial Marketing, added 'The financial services industry must act now to establish what is undermining commitment if companies are to have any hope of securing long-term relationships. This is particularly true of institutions built out of mergers or acquisitions who are seeing inconsistent commitment levels across business units because of a lack of groupwide brand values.'

The results of the European Bank Health Barometer capture information on customer commitment rather than customer satisfaction, which is a more precise predictor of future behaviour. By identifying those customers most at risk of changing to a competitor organisation and acting on their needs, customer retention rates can be significantly improved.

The European Bank Health Barometer interviewed more than 23,000 adults (18+) with a current account in 12 markets during 2003.

All articles 2006-23 written and edited by Mel Crowther and/or Nick Thomas unless otherwise stated.

• Kantar TNS
• All news
• MrWeb info