In an increasingly competitive retail banking market, affluent middle class consumers in Asia expect greater recognition and reward for their loyalty according to new research by the Collinson Group. This expectation is particularly high in China (82%), India (79%) and Singapore (66%). These consumers seek more personalised communications with less than half of consumers in Singapore feeling they receive a high level of personal service and only 35% of consumers feeling that their bank knows and understands them.
The Collinson Group study of 4,400 affluent middle class consumers (within the top 10-15% income bracket) in Singapore, China, India, Brazil, Italy, the United Arab Emirates, the UK and USA, reveals the changing attitudes and expectations of this group towards banks. The research shows that whilst Singaporean consumers are the least satisfied with the service they receive from their banks of all the countries surveyed, they are also the least likely to switch providers, because they feel there is little to differentiate banks. This presents an opportunity for those retail banks which invest in recognising and rewarding customer loyalty.
Chris Rogers, Director of Market Development, Collinson Group says, “Consumers in Singapore have an average of 2.2 bank accounts and these accounts have little offers that distinguish them. Coupled with giro and other payments that the banks set in order for an account to be switched, it becomes unattractive for consumers to change their service provider unless they see real differentiation or value. Some banks like Standard Chartered, which has invested in its 360O Reward programme, really stand out for offering more flexible, personalised rewards and are likely to win over the affluent middle class.“
Banks are losing their position as a ‘one-stop shop’ for financial services, with savvy consumers choosing a range of financial service providers. Customers are increasingly looking elsewhere for additional services. For example in Singapore, services such as insurance are sought via a credit card rather than a main bank account. In contrast in the UK, the preference is to regularly compare the options for services such as insurance, find the best deal and then purchase direct. However when a customer does buy additional products through their bank, they are more loyal, with over half (54%) of these customers globally less willing to switch provider. This highlights a dual benefit of offering more premium services such as insurance and assistance, which will increase revenue as well as enhance customer loyalty.
“Our research found that not being rewarded for loyalty is the biggest frustration for Singaporean consumers, ahead of poor interest rates and charging unnecessary fees,” says Rogers. “Many banks offer standardised, transactional loyalty programmes which rely on traditional points-based rewards. Less than half of affluent middle class consumers are currently members of bank loyalty initiatives and this group are more likely to be members of supermarket, airline, credit card and hotel loyalty programmes ahead of banks, where these programmes offer greater value and appeal.
Rogers continues, “With increased competition in the sector, encouraging the most valuable customers to become active members of loyalty programmes can be a powerful tool in improving satisfaction, retention and achieving repeat business. Affluent middle class consumers in Singapore who feel loyal to a brand are prepared to recommend a banking brand to their friends and family (63%) and the same proportion would be willing to purchase more products from them.”
Personalised and consistent communications regardless of how customers choose to interact with a bank are also expected by affluent middle class. The study has found that customer engagement improves by a third amongst individuals who ‘feel known’ by their bank and a further third for those who say they receive a consistent multichannel service – whether in person, by phone or via digital channels. This is particularly important in Singapore, where consumers are digitally savvy and offering a seamless and customised digital experience can also really distinguish banking brands and encourage customers to switch provider.
Collinson Group research has previously highlighted how today’s affluent consumers place a higher priority on family, altruism and enriching experiences ahead of short-term satisfaction and this is reflected in their expectations of banks. Nearly two-thirds of Singaporeans (63%) expect their banks to be ethical and this figure increases to 81% in China.
“Middle class mass affluent consumers are increasingly mobile and expect more from their banks” says Rogers. “Transparent, ethical behaviour is increasingly important and financial services organisations also need to demonstrate the value of their loyalty programmes to encourage active participation. More dynamic, aspirational and contemporary rewards and seamless digital services will enable banking brands to differentiate themselves, particularly amongst younger, more affluent consumers.”
