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UK Insights

First Direct and Nationwide the UK’s leading retail banks for customer experience

Amy Cashman

co-CEO, Insights division, UK & Ireland

Economy 02.12.2019 / 13:00

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Established retail banks that ignore the signs of what great customer experience looks like, do so at their own peril.

First Directand Nationwide top the UK’s first retail banking customer experience (CX) index published today. Kantar’s CX+ report, which surveyed almost 8,700 retail banking customers, is the only sector-specific index that measures the gap between the promise banks make to their customers and the actual brand experience they receive.

The report shows how banks can narrow that gap in order to achieve greater levels of satisfaction, loyalty and profitability. With CX+ scores of 134 and 119 respectively (100 being the average score), the two leading banks have a significant lead over the other eight banks in the ranking. Barclays (100) is positioned in third, followed by The Co-Operative Bank (97) in fourth and HSBC (97) in fifth place.

Over the last 10 years the UK’s retail banks have sought to recover from the 2008 crash against a background of reputational and trust issues, huge technological advances, new competition from challenger banks and government regulation to open up the sector. The importance of delivering a strong customer experience that aligns with a clear brand promise has never been more important.

Customer experience and brand strategy can no longer sit in organisational silos. The magic happens only when brand promise and customer experience come together. It’s no longer enough for banks to simply provide a good product or service; customers want and expect a great experience with it, and the better the experience the more value a brand can command. As Kantar’s report shows, in many ways the importance of experience now dwarfs everything else.

With challenger banks and out-of-category brands, such as Amazon, re-defining what great experience looks like, established banks ignore the signs at their peril. Many traditional banks say that they want people to be better off but our CX+ leaders and disruptive fintechs are winning the battle for attention because they are taking purposeful action to ensure they consistently do things that aim to improve customers’ lives and allow them to feel more in control of their finances.

 

2019 Kantar CX+ Ranking – Top 10 UK Retail Banks

Rank 2019

Retail Bank

CX Performance

Experience

 Gap

CX+ Score

1

First Direct

129

9 *(Capped at 5)

134

2

Nationwide

116

3

119

3

Barclays

102

-2

100

4

The Co-Operative Bank

96

1

97

5

HSBC

94

3

97

6

Royal Bank of Scotland (RBS)

95

1

96

= 7

Halifax

97

-3

94

= 7

Lloyds

97

-3

94

9

NatWest

92

0

92

10

TSB Bank

93

-3

90

Alongside the ranking, key trends identified in this year’s report include:

  • Younger consumers have different expectations from their banks: Established retail banks must keep up with the tidal wave of technology advances in order to attract and retain younger generations of new customers. Millennials and Centennials bring with them demanding expectations for mobile-first products from banks that can also offer exceptional customer service.
  • Customer centricity will disrupt the market: CX+ leaders in this index achieve this through offering better customer experience, while a second generation of fintechs are using technology to do the same.
  • Customers and employees should be at the heart of any CX strategy: Customers expect more than banking products. They want empathetic advice and support. Employees must be empowered to deliver this, allowing banks to demonstrate clear differentiation.
  • Omnichannel is imperative for retail banks wishing to deliver a seamless cross-channel customer experience: The future will be mobile first but not mobile only. Maintaining a human connection across all touchpoints will remain important to all generations.
  • Growing brands are innovative brands: Across industries, and around the world, growing brands are innovating to create exceptional experiences by reframing how they see their business. For example, rather than thinking of their innovation challenge as creating new products or services, their starting point for innovation is how they can help people secure their families’ future.

Tim Pritchard, Managing Director of Customer Experience at Kantar, added: “Brands need to accept that what has sustained them in the past, is unlikely to keep them growing in the future. Barriers to entry are falling all the time and those that aren’t disruptors themselves will be disrupted. The imperative for brands is as simple and as difficult as one clarifying idea – put the customer first by focusing on the customer experience. This is after all what makes or breaks a brand.”

Source : Kantar

Editor's Notes

A copy of the Kantar CX+ 2019 Index report can be downloaded here.

*First Direct Experience Gap- Gap capped at +5. Kantar’s analysis demonstrates that a +5 gap is the point where the missed opportunity for the brand to attract new customers (as its marketing is under-promising) exceeds the positive effect of delighting current customers through exceeding their expectations.

Fintechs on the rise

Kantar’s CX+ retail banks ranking this year explored customer experience across channels and therefore, the ranking is focused on the more established, omnichannel players in the UK banking sector. However, there are several parallels between the success factors of Kantar’s omnichannel CX+ leaders, First Direct and Nationwide, and the fintechs, such as Monzo and Revolut, as described within the report.

Background facts and figures

● Over a third (38%) of consumers expect their bank to go beyond providing traditional banking products, and expect empathetic advice and support, this rises to almost half (49%) with Millennials

● 75% of UK Millennials would rather prioritise experiences over possessions in their personal lives

● CX+ shows that brand preference is 3.5x higher if a brand acts truly customer centric

● Banks that deliver consistently great service and exceed expectations create ‘delighted’ customers that are over 3x more likely to provide higher recommendations and twice as likely to show brand loyalty

● A survey by Kantar in July 2019 revealed that 23% of people in the UK claimed to have taken out a second account in the last three years, rising to 47% of 25-34 year olds. Millennials now hold almost two accounts each on average, meaning that many of them will hold 3 or even 4 different accounts

● A twelve-year longitudinal analysis of BrandZTM data by Kantar/WPP found that brands high in Experience Capital outperformed the market by up to 188 percent, while brands with low Experience Capital declined in value

CX+ methodology

Kantar surveyed a nationally representative sample of 8,687 retail banking customers in the UK. Respondents were asked about their experiences with the bank(s) they use, and about their perceptions of banks they are considering but not currently using.

To calculate the CX+ index score for each brand, and determine its position in the ranking, Kantar combined two core components:

  1. The mean CX Performance score across five key success factors; clear brand purpose, empowered employees, empowered customers, lasting memories and exceptional delivery.
  2. The Experience Gap defined as the gap between the brand promise and the actual customer experience delivery.

By comparing the experience of current users with the perceptions and expectations of ‘considerers’, Kantar can identify the size of the ‘experience gap’. This allows it to evaluate where potential over-delivery (a positive gap) and under-delivery (a negative gap) would arise, what causes this gap, and what associated risk or opportunity this gap represents.

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