As banks push their customers into self-service digital channels to cut costs, they are finding the shift comes at a price – reduced trust from consumers. That’s a key takeaway in a new report from Accenture.

And the COVID-19 fuelled shift to digitalisation has only accelerated matters according to Accenture’s 2020 Global Banking Consumer Study.

While one-quarter (23 per cent) of consumers globally believe that banks are best placed to provide them with products and services outside of their core areas of expertise, that’s uncomfortably close to the rating consumers gave the major tech companies – 16 per cent.

Social media and neobanks also rated a creditable 12 and 11 per cent respectively, not bad since modern banking had a 1000 year head start in building brand equity.

The study is based on a survey of more than 47,000 consumers globally, including more than 2,000 in Australia and it reveals that without a strong emotional connection with their bank, consumers are more likely to view banking services as a commodity, with price being the ultimate competitive differentiator. 

Specifically, nearly four in 10 consumers (37  per cent) ranked value for money as a top three-factor, making it one of the most important considerations when choosing a bank — an increase of over 10 per cent compared to 2018 figures. 

The report notes that while banks have long been encouraging consumers to use digital channels for transactional banking activity, there was no way to predict how aggressively that trend would accelerate as a result of COVID-19. 

While banks often view broader digital adoption as a way to lower costs and provide services 24/7, the rapid pivot of digital services has threatened the vital human element from banking, further eroding consumer trust. In Australia, less than one-third (29 per cent) of surveyed consumers trust banks “a lot” to look after their long-term financial well-being, compared with 43 per cent two years ago. 

Alex Trott, the head of Accenture’s Banking practice across Australia and New Zealand

According to Alex Trott, the head of Accenture’s Banking practice across Australia and New Zealand, “Australian banks have made progress rebuilding consumer trust since the Royal Commission into banking misconduct. But these efforts are facing another major test, as the rapid and abrupt shift to digital banking interaction during the pandemic is threatening the relationship and trust banks have worked to rebuild.” 

“While banks have viewed broader digital adoption as a way to lower costs and remain accessible, Australian banks face a crucial juncture heading into 2021 as consumers will seek more empathy and assistance as Government COVID support is withdrawn. Banks who can balance their commercial needs with human connection to their customers will be better off.” 

When asked how much they trust their bank to look after their data, fewer than four in 10 (37 per cent) globally said “a lot,” a 14 percentage-point drop from just two years ago. Yet while overall trust might be eroding, the report found that more than half (64 per cent) of Australian consumers believe that when providing advice, their bank has their best interest in mind “always” or “most of the time,” and 72 per cent believe that the advice is smart, personalised and well-informed. 

The report suggests that banks need to evaluate how consumer behaviour has been affected by the pandemic and determine which behaviour shifts are permanent – noting, for instance, the growing popularity of video calls. 

Prior to COVID-19, only 15 per cent of consumers globally had spoken to a bank advisor via video call, but nearly half (46 per cent) said they would be willing to do so when branches reopen. 35 per cent said they would prefer video calls to face-to-face meetings, this is compared to 30 per cent in Australia. However, banks need to understand how different channels affect consumer trust. For instance, when receiving advice on products and offerings, only 28 per cent of consumers said they would trust a human advisor “a lot” delivering advice over a video call, compared with 36 per cent and 48 per cent who said they would trust a human advisor “a lot” delivering advice by phone or in person in a branch, respectively.

 “Digitisation has removed ‘humanity’ from certain banking interactions where consumers are comfortable doing by themselves. These are fine, but the human element is still critical when customers need that support and current operating models just aren’t built to maintain and deepen these relationships.” 

“More Australians want that in-person interaction with bank advisors, compared to the global average, and it’s critical for banks to rethink injecting humanity back into banking experiences, to attract and retain customers whilst balancing cost to serve. It is interesting to note though, that Australians’ appetite for video banking adoption (30 per cent) was a standout from our Australia findings, given the general lower digital enthusiasm within the population, ” Trott said

Switching slows

The report found that bank-switching behaviours, once a real-time indicator of increased competition or unhappy customers, have changed over the past two years. Primary account switching activity has decreased significantly, with just 4 per cent of Australian consumers saying they switched their primary bank account in the past 12 months, compared with 9 per cent two years ago. 

Noting that these low numbers can be attributed to the natural slump in neobank adoption after the initial surge, coupled with incumbent banks improving their digital capabilities, the report suggests that they could also provide a false sense of security for incumbents. Measuring switching has become more complex as consumers supplement their primary bank account with additional accounts that serve specific purposes – resulting in multi-banked customers. 

“Now more than ever, the Australian consumer/bank relationship is becoming even more fragmented, as consumers’ switching behaviour has turned into an erosion of share of wallet. Consumers can easily open and place their money across various accounts to achieve specific financial goals, without necessarily switching from their main provider. Banks trying to stand out at this juncture, need to think ahead about assistance programmes they can offer, especially as government support is wound back.” 

Long term problem

Accenture has been warning about the potential downsides of self servicer banking for years. In a 2016 report, the company cautioned, “Bank executives are wondering where the pay-off is. They’ve invested a lot in self-service technologies. But the cost savings and customer enthusiasm that self-service solutions were supposed to deliver haven’t materialized. Unfortunately, for many banks, those benefits never will. ”

At the time Accenture said that a small group of banking leaders, however, was enjoying a different experience. “Like their peers, they are investing in self-service technologies. Unlike their peers, they are achieving their cost savings goals and strengthening relationships with customers. The difference? Their strategies are built around customer value. And their tactics are focused on customer adoption.”

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