Other parts of this series:
We recently revisited our financial services consumer research. The report is based on a survey of more than 47,000 consumers in 28 markets — including South Africa. We have retained the consumer personas from our previous study, with a focus on the shifts in their behaviours and mix during the course of a year of lockdown. It’s no surprise that globally the number of ‘traditionalists’ dropped by 8% due to the forced usage of digital channels, while the number of ‘pioneers’ increased by 6%.
The most surprising finding for me was the extent to which consumers’ trust in banks has eroded globally.
Two years ago, 43% of consumers trusted their banks ‘a lot’ to look after their financial wellbeing. That is already a low number. It is just over two people in five.
Now, just two years later, that number is 29%. Fewer than one person in three trusts their bank implicitly to look after their financial wellbeing.
What is interesting is that in South Africa, consumer trust in the banking sector avoided the dip that the rest of the world experienced.
This raised some questions for me.
What is the reason for the discrepancy between South Africa and the rest of the world? Is it something South African banks are doing differently from their counterparts elsewhere? Or are there other factors at play? And what is the opportunity for South African banking?
The answer to the first question is I don’t think our banking sector is doing anything radically different to cause South Africans to trust them more than customers in other parts trust their banks.
SA’s fragile economic climate, with its deteriorating growth trends, unemployment levels etc., coupled with the human and societal impact of the pandemic, caused anxiety and uncertainty amongst consumers and businesses.
Consider this against the backdrop of corruption and financial irregularities to which some local banks have succumbed. Clearly, this is not a time when people would think of switching banks for a better offer. Consumers are seeking stability and security for their hard-earned money – and who can provide this better than the well-established banks which have a history of trust in the country.
Let’s also give credit to the financial services institutions which were quick to respond to their customers’ needs. This while they were dealing with the needs of their own employees and partners, who were certainly not immune to the impact of the pandemic.
Banks showed great resilience and empathy in the various initiatives, including waived ATM fees, re-structuring of consumer debt and more. Banks have also started thinking of bringing the human touch into their digital engagements and building deeper and more lasting customer relationships.
If it is true that in South Africa, consumer trust in the banking sector has remained high because of the uncertainty of the pandemic, coupled with a strong positive response by the banks, then what will happen when the pandemic is behind us?
Humans by nature are curious, so they will explore, experiment and shift to new providers and solutions.
Once again, our research gives banks practical insights that can be leveraged to their advantage, especially in South Africa. When asked what people wanted in a neobank, the top three answers were:
- Value for money
- A simple, convenient website or app
- Clear and simple bank communications
The rising importance of price is partly a consequence of the sudden shift from relatively buoyant macroeconomic conditions to the economic stress and uncertainty associated with COVID-19. It is also due to the growing digitalization of the consumer banking experience, which causes customers to increasingly view banking as a commoditized service.
Our banking system can capitalise on the goodwill it enjoys among customers by accelerating these key priorities.
- Know your customers and their needs. Provide simple digital channels of engagement and solutions that meet their requirements.
- Understand which shifts in consumer behaviour and preference are temporary and which are here to stay.
- Create digital flexibility and agility to be responsive to the changing needs of customers.
- Strike the right balance between ‘human’ and ‘digital’ engagements by intentionally infusing the human element into digital interactions.
- Be sensitive to the need around ‘value for money’
Do you think the SA banking sector is doing enough to serve its customers? As always, I welcome feedback or your thoughts on this research.