2012 Consumer Survey - EY Japan · Global Consumer Banking Survey 2012 Results - The customer takes control 10 Customers are taking control. What are the implications for banks? y

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Global Consumer Banking Survey 2012 The customer takes control

August 2012

Key messages

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► This is Ernst & Young‘s latest survey of retail banking customers around the world.

► It builds on our previous global consumer survey in 2011 and our European survey in 2010, and examines the views of more than 28,560

banking customers in 35 countries, gathered in March 2012.

► The survey places particular emphasis on answering the following questions:

► How likely are customers to change banks, and if so, why?

► Is customer behavior towards their banks changing, and if so, how?

► How are customers using different channels, and what do they expect from them?

► What is driving customers‘ satisfaction, and what improvements do they want to see?

► What steps can banks take to enhance customer loyalty and advocacy?

Ernst & Young‘s Global Consumer Banking Survey 2012 The customer takes control

1 Global Consumer Banking Survey 2012 Results - The customer takes control

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Customers are taking control

► They are changing banks.

► They prefer turning to other sources other than their bank for financial advice and to find the best deals.

► They want to play an active role in tailoring their products and services.

► They want better value and improved service.

► They want to be able to choose between different products, channels, and service levels.

Essentially, survey results are telling us that customers are taking control of their banking relationships.

Global Consumer Banking Survey 2012 Results - The customer takes control 2

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Customers are increasingly likely to use other banks …


Attrition

% of customers planning to change bank

Why customers are changing banks

Top reasons for attrition.

% of customers

Multi-banking

% of customers with one versus multiple banking

relationships

7%

12%

2011 2012

+70%

41% 31%

38%

37%

21% 32%

2011 2012

1 bank

2 banks

3 or more

banks

50% High fees or charges

31% Poor branch experience

30% Poor rates on accounts

26% Lack of personalized contact/service

► Customers are becoming less loyal.

The proportion of customers planning to

change banks has increased from 7% to

12% since 2011.

► Multi-banking is on the rise globally.

Only one-third of customers have a single

banking relationship.

► Sensitivity to fees and charges is the

leading driver of attrition.

Survey results

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…and non-banking providers are gaining ground


► As expected, the majority of customers

turn to a bank when making product

choices about checking accounts, savings

and credit cards .

► Customers are increasingly likely to

choose a non-banking institution for

non-core products such as car loans,

retirement and insurance products.

Provider preferences

% of customers who use their main bank versus other providers for the following products

73%

72%

36%

21%

60%

27%

35%

28%

27%

19%

28%

19%

17%

32%

17%

25%

18%

22%

7%

8%

18%

26%

11%

22%

23%

27%

38%

Checking/current account

Savings

Personal loan

Car loan

Credit card

Mortgage

Investments

Retirement

Insurance products

Main bank Another bank Non-bank

Survey results

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Customer advocacy and word of mouth is gaining power


Sources customers turn to for advice

Top sources valued by customers to keep them informed on banking products

Interacting with the bank via social networks

% of customers who use social networking to perform the following banking

activities

43%

55%

57%

60%

65%

71%

Competitor advertising

Online network/communities

Media reports

Financial advisor

Financial comparison sites

Friends, family and colleagues

17%

29%

32%

33%

44%

Share great banking-related offers

Share your budget and spending patterns

Comment on the level of service

Access their account¹

Learn about products and services

► Customers prefer turning to other sources than their bank for

financial advice and to find the best deals.

► Comparison websites, relatively unknown five years ago, are

now a major source of influence

► The use of social media as a source of banking information is

amplifying customers‘ voices, giving them greater power as

advocates or critics

* In emerging markets - China in particular - many customers are accessing their accounts

via social networking sites whereas this is uncommon in mature markets

Survey results

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Customers want to play an active role in tailoring their products and services


Tailored offerings

% of customers who say their bank adapts the

products and services to meet their needs

Update frequency

How often customers would be prepared to update

their information for their bank

Personal information

% of customers willing to provide their bank more

personal information

44% When circumstances change

26% Every six months

24% Every year

6% Only at the beginning of the

banking relationship

44%

19%

37%

Yes No Not Sure

► The majority of customers do not feel

that products and services are

customized to meet their needs. Only

44% of customers feel they are provided

tailored offerings.

► Customers are embracing the benefits

that come from providing personal

information. 70% of customers are willing

to provide more information in order to

receive more personalized service.

► Moreover, a significant proportion of

customers are willing to actively maintain

their personal information with their bank.

► In return, they expect to receive tangible

improvements in the suitability of products

and services they are offered.

Survey results

30%

No

70%

Yes

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They want the flexibility to shape the relationship, contacting their bank whenever and however they choose


Channel preferences

Preferred channel for different types of products, services and activities

Advice on products and services by age group

71%

25%

42%

13%

13%

47%

27%

62%

Complex transactions

Simple transactions

Advice on products and services

Access to account information

Internet Branch

33%

36%

44%

58%

29%

29%

27%

21%

18-24

25-34

35-54

55 and over

Internet Branch

► Across all age groups, customers prefer online channels for simple

transactions, but also demand high quality personal service for

more complex transactions and advice.

► Interestingly, when seeking advice on banking products and

services people aged below 25 only marginally prefer using a

branch instead of the internet (33% versus 29%).

► Banks need to let customers personalize their distribution

choices, with different cost and accessibility options.

Survey results

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Customers want better value, improved access and less frustration …


Actions that would increase customer satisfaction

% of customers listing the answer option as high priority

Triggers of customer frustration

Areas with the highest dissatisfaction

% of customers being unsatisfied or very unsatisfied

3%

3%

3%

3%

4%

4%

4%

4%

6%

7%

8%

8%

9%

12%

22%

Moving your account

Adding Bill Payees

Change of your account details

Appeal against credit refusal

Mortgage application

Refinance application

Current account opening or closing

Call Centre experience

Complaint handling

Fraud or lost/stolen card

Payments

Dealing with a life changing event

Access to a branch

Online banking/ mobile banking

Changes to fees and charges structure

Transparency of fees

Contact bank to deal with an issue or ask for advice

Products and services that meet requirements

► Not surprisingly, customers want lower fees and charges.

► Customers want to see improvements in current online

and mobile banking experiences.

► Despite the increasing attention in the past few years, 1/3

of customers globally are dissatisfied or very dissatisfied

with the transparency of fees.

► Contacting the bank is a frustrating experience to over

20% of customers globally.

Survey results

33%

22%

21%

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… and they believe that their loyalty should be rewarded


Loyalty program enrolment

% of customers enrolled in a bank loyalty program

Customers’ perspective on loyalty

What customers value most from a loyalty program

► Customers strongly believe that loyalty to a bank should be

rewarded. 70% of them would switch their primary bank if

rewarded with lower fees or higher rates on deposits for product

holding.

► Most customers want bank loyalty programs to offer tangible

financial rewards. However, preferences vary suggesting that

flexible rewards programs would be compelling.

► Globally, only 1 in 4

customers are enrolled in a

loyalty program

► However, enrollment rates

have increased notably since

last year‘s survey

% of customers who agree

or strongly agree

…that loyalty should be

rewarded with lower fees or

higher rates on deposits

…that loyalty should be

rewarded with better service

% who would

switch to a bank

that offered it

If you actively use three or

more products with a bank…

70%

60%

91%

86%

33%

23%

11%

9%

7%

5%

Cash back on credit/ debit cards

Price reductions on bank products and services

Gifts

Premium services from the bank?

Price reductions for partnerships (cinema, retailer …)

Airmiles/hotel points

18%

27%

2011 2012

+50%

Survey results

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As customers are taking control, banks should adapt and embrace the shifting balance of power


Customers are taking control. What

are the implications for banks?

► Ernst &Young believes that there will be increasing presence

of differentiated banking models that serve specific

customer needs, such as low cost or high accessibility.

► However, for large full-service banks, choosing where and

how to compete is a complex challenge. They need to

deliver personalized products and services to a broad

customer base, while lowering costs and generating

sustainable profitability.

► There is no simple solution, but looking across the industry

Ernst & Young believes that the future winners are the banks

that are able to successfully grow sustained and profitable

customer relationships.

Embrace the shifting balance of

power

► Give customers flexibility to choose. Make pricing and

service promises transparent, offer segmented levels of

service and seamless ‗omni-channel‘ distribution

► Help customers shape their experience. Encourage

customer self-service, shift marketing from ‗push‘ to ‗pull‘, and

develop flexible loyalty programs

► Shape the business model around customer needs. Make

low cost digital channels customers‘ preferred choice,

prioritize investments on critical customer interactions, and

use innovative technology to deliver the retail bank of the

future.

What it means for banks

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Give customers more flexibility


► Pricing is critical to customer satisfaction, and customers want to be able to choose

between different costs, service and levels of functionality.

► Transparency over pricing and service promises is vital if banks are to deliver something

customers value.

► It is also critical for banks to rebalance fee structures to achieve the clarity and

sustainability demanded by regulators and investors.

1 Make pricing and

service promises

transparent

► Customers should have the option to buy into certain products and services, and the

ability to earn upgrades through loyalty, whether in terms of longevity, share of wallet or

the value they generate.

2 Offer segmented

levels of customer

service

► Customers care more about convenience than about channels.

► Banks need to look beyond multi-channel towards a fully integrated banking experience

that melds the advantage of physical branches and in-person interactions with the

information-rich digital channels.

► Marketing offers are customer-segment specific, not channel specific, and allows

customers to purchase a product in one channel that they had researched or seen

promoted via another channel.

3 Move from multi-

channel to omni-

channel

distribution


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Help customers to shape their experience


► To regain influence over customers‘ decisions and their own revenue streams, banks

need to improve the way they provide information and advice.

► They need to target self-directed customers, encouraging greater self-service.

► Examples include financial planning tools, demonstrations of ―how people like you are

investing‘‖or ranges of product and pricing bundles.

4 Encourage

customer self-

service

► The growing importance of word of mouth and the waning power of direct selling have

implications for banks‘ marketing strategies, which needs to shift from ‗push‘ to ‗pull‘.

► Banks should aim to recruit their satisfied customers as advocates and online affinity

groups as marketers by letting them select and shape the marketing they receive.

5 Shift marketing

from “push” to

“pull”

► Banks need to capitalize on customers‘ growing

enrollment in loyalty programs

► Most customers want financial rewards. These are

costly, but offer huge potential benefits in loyalty and

advocacy.

► Banks should tailor programs for affinity groups, and

let customers choose rewards depending on customer

preferences, and the size and share of wallet they

give the bank.

6 Develop flexible

loyalty programs Example of SmarterBank

SmarterBank is an online US bank

targeting student communities. It has

a loyalty program specifically

designed to help customers repay

their student loans. The

‘SmarterBucks’ rewards program

uses rewards for debit card use to

pay down student loan balances.

Family members can also directly

contribute loan payments.


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Shape business models around customer needs


► Banks should encourage customers to use digital channels whenever possible.

► Banks should understand which services customers want to handle through branches,

and encourage – not force - other transactions to move to digital channels, if necessary

by using price incentives.

7 Make low-cost

digital channels

customers’

preferred choice

► The use of cutting edge technology is vital to all of the other implications we identify.

► This includes breaking down silos, creating omni-channel distribution, developing

innovative rewards for loyalty and giving customers the ability to personalize their

products and services.

► Technology can also help to maintain intimacy as customers move towards digital

banking and greater self-service. To achieve this, banks will need to partner with

technology innovators.

8 Prioritize

investment on

critical customer

interactions

9 Use innovative

technology to

deliver the retail

bank of the future

► Customers identify a number of bank

interactions as being particularly important.

► Banks focusing operational improvements on

these areas will optimize the resulting impact

on attrition, dormancy and loyalty. They will

also achieve a benefit in terms of their costs

to serve.

► Banks recognize the importance of

operational investment, but they will need to

carefully target their limited capital spending

budgets for maximum effect on customer

satisfaction.

Based on research conducted in 2011, Ernst &

Young identified ten critical customer

interactions:

► Changes to fees and charging structures

► Account switching

► Account opening or closing

► Life events (e.g., marriage)

► Change-of-account details

► Complaint handling

► First time into the debt collection process

► Lost or stolen card

► Setting up a payment

► Buying a new product


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Appendix

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How has customer confidence changed towards the banking industry?

Overall customer confidence in banking continues to fall, with 40% of customers losing trust in the industry over the past year and only 22%

gaining confidence.

How has your confidence towards the banking industry changed over the past 12

months? ► Mature economies remain the most impacted by financial

crisis, with trust levels still low. While the US and Australia

saw a slight recovery in confidence since last year, Europe

suffered a dip. Many institutions are struggling to rebuild

reputations that have been severely damaged by the

financial crisis.

► Since last year, confidence levels fell in all European

countries - particularly in those heavily impacted by the

financial crisis (Greece, Spain, Italy and Belgium). This was

mainly due to the ongoing macroeconomic situation/

Eurozone crisis and continued dissatisfaction with the

bonus culture of banks in light of government intervention.

► Canada and Japan have experienced the least change in

customer confidence levels since 2011.

► Emerging economies (specially India), Latin America and

Asia Pacific (specially Indonesia & Malaysia) have either

witnessed an increase in customer confidence levels or no

impact at all, chiefly in Latin America.

► Trust levels in the banking industry have improved in all

Latin American countries, specially in Panama and Peru,

where approximately 60% of customers say their

confidence has increased. More personalized, innovative

service offerings is key reasons, in addition to clarity

communication on banks offering.

► There has been a slight decrease in trust levels in Brazil

where more than half of respondents are dissatisfied with

the quality of the service and advice offered.

44

%

40

% 5

9%

23

%

51

%

27

%

52

%

24

%

28

%

12

% 3

0%

27

%

33

%

38

%

13

%

22

%

5%

33

%

9%

14

%

9%

41

%

36

%

72

%

31

%

4%

26

% 31

%

43

%

38

%

36

%

44

%

40

%

59

%

39

%

35

%

36

%

16

%

39

%

69

%

41

%

31

%

World

11

World

12

EU

countr

ies

Non E

U

countr

ies

US

Canada

Austr

alia

Lat A

m

Bra

zil

India

Chin

a

Japan

Rest A

sia

South

A

fric

a

Decrease Increase No impact


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Customers are more likely to use other banks

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How have attrition levels risen in the past year?

Attrition rates are up in several major markets. There is a significant increase in the number of customers planning to change their bank.

Have you ever changed your main banking provider? 2011 2012

36% 34% 39% 37% 38% 45%

38% 45%

33% 33% 40%

29% 13% 17%

27% 31% 24%

13%

34% 39%

7% 12% 7% 9% 5% 5%

5% 5%

9% 16% 7% 20%

11% 19%

13%

23%

4%

3%

10% 13%

57% 54% 54% 54% 57% 50%

57% 50%

58% 51% 53% 51%

76% 64% 60%

46%

72% 84%

56% 48%

World

11

World

12

EU

11

EU

12

US

11

US

12

Canada

11

Canada

12

Lat A

m

11

Lat A

m

12

Bra

zil

11

Bra

zil

12

India

11

India

12

Chin

a

11

Chin

a

12

Japan

11

Japan

12

South

Afr

ica

11

South

Afr

ica

12

Yes No, but I am planning to change No

► Globally, more than a half of customers who changed their main bank, did so in last 5 years.

► The number of customers planning to change banks has grown comparatively since 2011 from 7% in 2011 to 12% in 2012.. This

proportion is significantly higher in China, India and several Latin American countries.

► Attrition rates have grown in several key markets, mainly driven by high fees. In both the US and Canada the number of respondents who

have changed their main bank has increased. On the contrary, Japanese, Singaporean and Indians banks seem to have the lowest

attrition rates.

► The main driver of attrition is the dissatisfaction with high fees, cited by 50% of respondents. The figure rises even higher in many mature

countries. Poor branch experience and poor interest rates are other leading drivers of attrition.


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What are the key drivers of attrition?


Customers are becoming increasingly sensitive to high fees or charges. Pricing is the single most important driver of attrition followed by a

poor branch experience.

What are the main reasons for attrition?

50

% 5

7%

45

%

57

%

54

% 59

%

49

% 53

%

37

%

41

%

25

%

52

%

70

%

30

%

29

%

30

% 35

%

35

%

45

%

29

%

27

%

27

%

21

%

15

%

36

%

48

%

26

%

22

%

24

%

21

%

25

%

27

%

40

%

40

%

32

%

26

%

4%

26

%

39

%

24

%

22

%

24

%

23

%

26

%

29

%

26

% 3

2%

25

%

24

%

7%

27

%

36

%

21

%

19

% 2

5%

18

%

21

%

25

%

23

%

19

%

20

%

24

%

7%

27

% 3

3%

21

%

16

%

24

% 29

%

24

%

21

%

23

%

23

%

20

%

29

%

19

%

26

%

19

%

31

%

32

%

31

%

30

%

38

%

34

%

37

%

39

%

32

%

23

%

5%

29

%

48

%

18

%

13

%

21

%

18

%

18

% 23

%

26

%

27

%

26

%

13

%

4%

25

% 3

2%

21

%

19

%

19

%

16

%

17

%

20

% 25

%

21

% 2

7%

26

%

7%

28

% 3

4%

19

%

20

%

21

%

11

%

22

%

16

%

23

%

22

%

19

%

16

%

4%

21

%

31

%

16

%

15

%

16

%

14

%

11

%

14

%

21

%

21

%

21

%

15

%

6%

25

%

18

%

World EU countries

Non EU countries

US Canada Australia Lat Am Brazil India China Japan Rest Pac South Africa

High fees or charges Poor rates on accounts Lack of personalized contact / service A specific service failing Poor range of products and services Proximity of branches Poor branch experience Poor customer call centre experience Poor internet / mobile banking experience Poor Financial Advisor‘s competencies Poor Brand image / reputation

► 50% of the customers who changed their main bank did so due to high fees or rates.

► Poor branch experience is also a key global driver of attrition.

► Poor rates on accounts is an important factor in mature economies (US, Canada, Australia and Europe)

► Lack of personalized contact or service is a key factor in emerging economies (Lat Am, Brazil, India)

Ref: 1258083

Is multi-banking on the rise?


Globally, multi-banking is growing rapidly. Customers are increasingly active in their search for the best rates, products and services.

31% 40%

20%

42% 45% 44% 34% 36%

17% 6% 6% 12%

39%

37%

40%

42%

35% 39% 38%

45% 43%

45%

26% 24%

37%

45%

20%

15%

25%

15% 12% 14% 16% 16%

25%

33% 29%

29%

12% 12% 5%

13% 8% 4% 4% 5% 5% 13%

35% 41% 22%

4%

World

EU

countr

ies

Non E

U

countr

ies

US

Canada

Austr

alia

Bra

zil

Lat A

m

India

Chin

a

Japan

Rest A

sia

-P

acific

So

uth

Afr

ica

1 2 3 More than 3

41%

31%

46%

43%

51%

42%

48%

45%

34%

36%

34%

34%

12%

17%

4%

6%

7%

6%

44%

39%

38%

37%

38%

38%

33%

35%

37%

39%

46%

43%

47%

45%

46%

45%

23%

26%

25%

24%

43%

45%

14%

20%

12%

14%

12%

15%

11%

12%

15%

16%

14%

16%

29%

25%

42%

33%

38%

29%

11%

12%

7%

12%

4%

5%

4%

8%

4%

4%

5%

5%

5%

5%

13%

13%

31%

35%

30%

41%

2%

4%

Wo

rld

11

Wo

rld

12

Eu

1

1

Eu

1

2

US

1

1

US

1

2

Ca

1

1

Ca

1

2

La

t A

m

11

L

at A

m

12

Br

11

B

r 1

2

In

11

In

1

2

Ch

1

1

Ch

1

2

Ja

1

1

Ja

1

2

SA

1

1

SA

1

2

1 2 3 More than 3

How many banks do you bank with? – World

How many banks do you bank with? Evolution 2011-2012

► Multi-banking is increasing as customers search more

actively for the best rates and products.

► Customers have an increasing desire to maximize the value

of their banking relationships

► Although customer dynamics vary between different

markets, there are underlying consistent trends:

► Multi-banking is clearly on the increase in mature

markets such as US, Australia, EU countries, and

Latin America.

► The number of customers with only one banking

relationship has fallen in these countries, whilst the

proportion with three or more has grown.

► China, India, Turkey, Russia, Japan, and Asia

Pacific countries traditionally have tended to bank

with multiple providers. This often reflects the desire

to diversify deposits and reduce exposure to the

risk of bank failure.

► Consolidation among domestic banks is the major

factor reducing multi-banking in markets like Spain.

Ref: 1258083

What is driving multi-banking?


24%

21%

16%

20%

16%

17%

12%

21%

43%

24%

38%

42%

17%

34%

32%

33%

33%

35%

38%

27%

31%

47%

37%

22%

41%

29%

34%

26%

40%

21%

26%

28%

29%

30%

48%

47%

38%

43%

24%

16%

14%

26%

10%

14%

9%

19%

21%

21%

18%

5%

17%

21%

33%

30%

26%

32%

31%

31%

37%

34%

28%

47%

30%

34%

26%

World EU countries

Non EU countries

US Canada Australia LatAm Brazil India China Japan Rest Asia South Africa

To spread your deposits in case of bank failure To ensure the best rates/fees for each product To ensure the best product/service in each category

Trying another bank before switching all services History – always used different providers for different things

► Globally, the growth in multi-banking is being driven by a desire to obtain the best rates and to receive the best product or service.

Customers have an increasing desire to maximize the value of their banking relationships.

► In mature economies, customers choose more than one bank to obtain the best rates for each product and the best product / service in

each category.

► Specifically in India, Japan and Asia Pacific, a large proportion of customers are banking with multiple institutions in order to spread their

deposits in case of bank failure.

If you bank with more than one bank, why is this?

Customers are now more willing than ever to shop around for the best rates and the best products and services.

Ref: 1258083

What are customers buying from secondary financial providers?


Customers remain wary of non-financial providers, but the potential threat from new entrants offering better rates, more personalized

products and services, stronger technology or better rewards is very real.

Which organization do you use for the following products and services?

73%

72%

36%

21%

60%

27%

35%

28%

27%

15%

22%

14%

12%

24%

13%

13%

10%

12%

3%

4%

3%

2%

7%

2%

4%

2%

3%

1%

2%

2%

3%

1%

2%

8%

6%

7%

7%

8%

18%

26%

11%

22%

23%

27%

38%

Checking/current account

Savings Personal loan Car loan Credit card Mortgage Investments Retirement Insurance products

Main bank Another local bank Another foreign bank Financial advisor Non-bank

► As expected, the majority of customers turn to a bank when making product choices about checking /current accounts, savings and credit

cards.

► Customers are increasingly likely to choose a non-banking institution for non-core products such as car loans car loans, retirement and

insurance products.

► For insurance and retirement products, customers even prefer non-bank providers over their main bank.

Ref: 1258083

44

%

43

%

41

% 46

% 52

% 57

%

41

%

42

%

42

%

44

%

18

%

52

%

60

%

42

%

42

%

40

%

43

% 49

%

60

%

44

%

48

%

39

% 44

%

31

%

39

%

69

%

37

%

34

%

35

%

38

%

39

% 4

6%

32

%

42

%

38

%

50

%

24

%

48

% 53

%

32

%

26

%

35

%

22

%

30

%

31

% 3

9%

36

%

40

% 45

%

19

%

40

%

44

%

23

%

19

% 25

%

19

%

23

%

27

%

25

% 3

2%

36

%

35

%

14

%

29

%

43

%

30

%

25

%

36

%

21

% 26

%

35

%

36

%

35

%

39

%

32

%

20

%

34

%

46

%

25

%

22

%

25

%

21

% 2

8%

25

%

27

%

30

%

30

%

41

%

7%

34

%

37

%

28

%

21

%

38

%

16

%

20

% 2

7%

36

%

38

%

40

% 45

%

19

%

36

%

45

%

35

%

30

%

40

%

31

%

31

%

41

%

33

%

41

% 47

%

44

%

17

%

46

%

43

%

World EU countries

Non EU countries

US Canada Australia Lat Am Brazil India China Japan Rest Asia-Pacific

South Africa

The provider has better rates on their accounts The provider has lower fees on their accounts The provider‘s products are a better match for your needs The provider has a more personalized service which meets your needs better The provider offers a more innovative approach than traditional banks The provider has a service offering that is easy to understand The provider has an attractive loyalty/rewards scheme The provider offers better technology to meet your banking needs The provider has a brand you trust

Why are customers using non-financial providers?


Which has convinced/would convince you to choose a non-financial banking provider for some or all of your banking service and products?

► Economic factors are most likely to draw customers to non-financial institutions, implying that firms able to offer better rates or lower fees

than incumbent banks could gain market share.

► Worldwide, there are also other important factors that would encourage customers to use non-financial entrants:

► A better product offering and more personalized service

► A trusted brand

► Better technology to meet customers‘ needs (particularly in emerging economies)

► Attractive loyalty programs

► Innovative approaches to banking offered by non-financial companies, such as technology/internet/media or retail companies is becoming

an important force of change, specifically in emerging markets like India, China and South Africa.

Non-financial providers and new entrants are competing with better rates, more personalized products and services, better technology

and/or attractive loyalty programs.

Ref: 1258083

Customer advocacy is gaining power

Ref: 1258083

60%

54%

66%

40%

57%

41%

67%

63%

77%

74%

36%

75%

72%

65%

64%

71%

38%

48%

50%

71%

70%

73%

76%

52%

77%

71%

57%

51%

55%

35%

40%

40%

72%

69%

67%

62%

42%

73%

65%

43%

36%

45%

26%

36%

36%

56%

62%

60%

47%

33%

53%

59%

55%

47%

62%

37%

44%

41%

67%

62%

69%

68%

29%

72%

63%

71%

66%

76%

63%

67%

63%

72%

77%

82%

84%

59%

81%

76%

World EU countries

Non EU countries

US Canada Australia Lat Am Brazil India China Japan Rest Asia South Africa

Financial Advisor Financial comparison websites Media reports Competitor advertising On line personal network / Trusted communities Face-to-face discussion with friends/family/ colleagues/ ?

Where do customers look for advice?

The majority of customers rely on personal peer groups for banking information. In addition, financial comparison websites are increasing in

importance as customers seek to find best deals.

What sources do you value to keep yourself informed on banking products with your main bank?

► Globally, the majority of customers rely on personal peer groups for banking information. Online word-of-mouth is also increasingly powerful.

► 71% of customers prefer a face-to-face discussion with family, friends or colleagues as the main source to keep them informed. Customers place the

greatest value on information and advice that comes from sources they personally know and trust. However, customers behavior varies per region:

► In emerging economies customers are more likely to keep themselves informed through on-line personal, network/ trusted communities, as

well as use media reports.

► Mature economies, especially the US, and Japan have lower rates of customers using ―in face-to-face discussion‖ compared to the global

average.

► Financial comparison websites, relatively unknown 5 years ago are used by 65% of customers, eclipsing financial advisors and enabling customers to

take control of their own research and decision-making. These websites are playing a crucial role in customers‘ growing desire to seek the best deals.

► Comparison websites have achieved great popularity across regions as diverse as the EU, Latin America and Asia Pacific, although they are relatively

less popular in some mature markets such as US, Canada and Australia.


Ref: 1258083

How do customers interact with their bank via social networking sites?


Social networks are increasingly important sources of information, and magnify banking customers ability to act as influential advocates or

critics.

Do you use social networking sites in relation to you banking activities to...

► In relation to their banking activities, 44% of customers use social networking sites to source information on banking products and

services, followed by commenting on the level of service they have receive and sharing great banking-related offers.

► Countries across the globe follow this trend, but social networking sites are more commonly used in emerging economies. China provides

one of the most notable examples of this trend. 81% of Chinese customers use social networks to find more about banking products, 73%

to access their accounts and 70% to comment on service received.

► In mature economies, the use of social networking is rather low, particularly in US as well as in Japan.

44%

31%

67%

13%

21%

20%

57%

57%

61%

81%

18%

64%

44%

33%

24%

50%

10%

16%

18%

38%

43%

45%

73%

21%

46%

25%

17%

10%

19%

5%

7%

7%

15%

23%

31%

46%

11%

27%

8%

29%

16%

41%

8%

12%

10%

35%

44%

50%

68%

8%

46%

27%

32%

20%

44%

12%

16%

16%

42%

47%

53%

70%

10%

42%

45%

World EU countries

Non EU countries


Find out more about their products and services Access your account Share your budget and spending patterns Share great banking-related offers Comment on the level of service you've received

Ref: 1258083

Customers want greater personalization and flexibility

Ref: 1258083

Do banks tailor their offerings to meet customers‘ needs?

Customers in emerging economies are more likely than customers in developed economies to say that their banks adapts its products and

services to their financial needs as they change.

Does your bank adapt the products and services it offers you as your financial needs change?

44% 39% 38% 41%

50%

39%

51% 55%

61% 60%

13%

43% 43%

19% 25% 22% 17%

15%

20%

15%

19% 14%

6%

41%

18%

31%

37% 36% 40% 42%

35% 41%

34% 26% 25%

34%

46% 39%

26%

World EU countries

Non EU countries


Yes No Not sure

► In India, China and Brazil a larger proportion of customers feel that product and services are customized to meet their financial needs,

compared to the global average.

► On the contrary, customers in Japan, Europe, US, Asia and South Africa feel that customization is low.


Ref: 1258083

Would customers be willing to provide more personal information in return for better customization of products?


Customers want personalized products and services, and most would be happy to give more personal information to their bank in exchange

for a more tailored service offering.

Would you be willing to provide your bank with more information about yourself, and/or your family, if it helped your bank to recommend a more appropriate

account or deliver a better service for you and your family?

70% 70% 65% 68% 73% 72% 73% 81% 86% 72%

47%

73% 90%

30% 30% 35% 32% 27% 28% 27% 19% 14% 28%

53%

27%

10%

World EU countries

Non EU countries


Yes No

► Customers value personal service. This is evident from the fact that globally, 70% of customers are willing to provide their bank with more

information if this leads to greater personalization or better service.

► The majority of customers in every country surveyed – with the notable exception of Japan – would be happy to disclose personal

information in this way. Levels are particularly high in emerging economies, with customers in South Africa, India, and Brazil among the

most willing to provide more personal information to their banks.

Ref: 1258083

How often are customers willing to update their information?


Globally, customers’ preference is to update their information at their own pace as and when circumstances change.

How often would you be prepared to update the information for your bank?

26%

22%

26%

20%

23%

39%

44% 46%

20% 20% 21%

35%

24%

25%

28%

31%

24%

21%

23%

26%

24%

18%

20%

23%

44%

48%

42%

46%

50%

35%

30%

24%

43%

52%

49%

41%

6% 5%

4% 3% 3% 5%

3% 4%

13%

10% 10%

1%

World Europe USA Canada Australia LatAm Brazil India China Japan Rest Pac. South Africa

Verify it‘s correct every six months Verify it‘s correct every year Update at my discretion when circumstances changed Only provide at the beginning of the banking relationship

► Just over a quarter of customers would be willing to provide their bank with personal information twice a year, and a similar number would

be willing to do so annually.

► This far outweighs the minority who are only happy to provide personal information at the start of their banking relationship. Customers in

a number of European, North American and Asia-Pacific markets would prefer to provide updates at their own discretion.

Ref: 1258083

How do customers use different banking channels?


Internet banking is preferred for simple transactions and accessing account information. While complex transactions and advice are still

preferably dealt with at branches.

What is your preferred method of dealing with your bank for different types of products, services and activities?

13%

4% 4% 5%

62%

2%

10%

Branch visit Call centre Mobile app Email Internet Postal mail ATM

25%

2% 3% 3%

47%

4%

16%


42%

12%

3%

11%

27%

3% 2%


71%

5% 2% 4%

13%

2% 3%


Simple transactions

Accessing account information Advice on products and services

Complex transactions

Ref: 1258083

Customer Satisfaction

Ref: 1258083

How satisfied are customers? And what are they frustrated about?

Customer satisfaction with internet and branch banking is high.

Poor mobile banking and call center experiences, as well as a lack of transparency of fees are the main triggers of customer frustration.

Thinking about the different aspects of your banking relationship, how satisfied are you with your bank at the moment? (Very satisfied & Satisfied)

80

%

81

%

79

% 9

0%

87

%

87

%

76

%

68

%

82

%

77

%

71

%

83

%

74

%

77

%

78

%

79

% 87

%

85

%

84

%

71

%

72

% 79

%

81

%

44

%

81

%

76

%

60

%

54

% 6

4%

62

%

60

%

60

%

60

%

62

%

63

%

66

%

36

%

72

%

55

%

81

%

84

%

81

%

83

%

86

%

83

%

72

%

72

% 79

% 9

0%

58

%

83

%

86

%

78

%

82

%

76

%

91

%

89

%

85

%

68

%

64

%

79

%

73

%

72

% 80

%

70

%

58

%

55

%

69

%

39

%

42

% 49

%

51

% 6

1%

71

%

66

%

49

%

73

%

68

%

71

%

75

%

71

%

71

%

78

%

78

%

64

%

67

% 7

6%

70

%

42

%

71

%

69

%

67

%

68

%

63

%

82

%

75

%

71

%

65

%

49

%

78

%

57

%

64

%

69

%

52

%

53

%

52

%

54

%

52

%

52

%

54

%

49

%

52

%

70

%

54

%

30

%

60

%

53

%

World EU countries

Non EU countries

US Canada Australia LatAm Brazil India China Japan Rest Asia

South Africa

Branch experience Products / services to meet requirements Call center experience

Internet site experience Contacting your bank to deal with an issue or ask for advice Mobile banking services

Quality of advice Transparency of fees Complaints management

► Globally, 87% of customers are satisfied or very satisfied with their main bank.

► Customer satisfaction is strong for internet banking and branch banking. It is lower for call centers and mobile banking (58% satisfied), but

these figures are distorted in some markets by the number of customers who do not use these channels. It is also notable that customer

satisfaction has improved significantly since 2011 for call centers (from 50% in 2011 to 60% in 2012) and mobile banking (from 44% in

2011 to 58% in 2011).

► Transparency of fees has low satisfaction rates, specially in emerging economies.

► Low satisfaction for complaints management is due to a high percentage of respondents answering not applicable.


Ref: 1258083

Which of the banking activities would you most like your bank to improve/make easier to increase your satisfaction with the service they provide? World

3%

3%

3%

3%

4%

4%

4%

4%

6%

7%

8%

8%

9%

12%

22%

Moving your account

Adding Bill Payees

Change of your account details

Appeal against credit refusal

Mortgage application

Refinance application

Current account opening or closing

Call Centre experience

Complaint handling

Fraud or lost/stolen card

Payments

Dealing with a life changing event

Access to a branch

Online banking/ mobile banking

Changes to fees and charges structure

How to improve customer satisfaction?


► Not surprisingly, pricing is the single most important driver of customer satisfaction.

► Improving online and mobile banking is the second most important driver for increasing customer satisfaction, cited by 12% of

respondents worldwide.

► Customers are yet to accept mobile banking as a trusted distribution channel. Banks need to focus on improving availability and service

quality of this channel. Globally, 67% of customers would use mobile banking if they felt confident about its security.

► Other priorities include improving basic customer interactions such as dealing with a life-changing events or handling the loss or theft of a

bank card.

Pricing and service quality remain critical to customer satisfaction. Besides clearer fee structures and better interest rates, customers want

to see improvements in digital banking.

Ref: 1258083

Do you agree with the following statements?

Customer attitudes on what services banks should provide


22

%

14

%

22

%

11

%

14

%

16

%

28

%

29

%

46

%

41

%

15

%

26

%

20

%

60

%

56

%

60

%

39

% 4

6%

47

%

60

%

52

%

72

% 7

8%

65

% 7

2%

71

%

27

%

16

%

28

%

15

% 20

% 2

7%

34

%

43

% 5

0%

48

%

12

%

34

%

24

%

94

%

92

%

94

%

96

%

97

%

95

%

95

%

93

%

91

% 96

%

90

% 94

%

97

%

86

%

80

%

89

%

83

%

81

%

83

%

92

%

87

%

86

%

95

%

76

%

91

%

92

%

91

%

89

%

91

%

91

%

95

%

94

%

92

%

91

%

85

%

95

%

81

%

91

%

92

%

67

%

56

%

77

%

38

%

42

%

45

%

77

%

78

% 82

%

93

%

69

%

85

%

87

%

64

%

54

%

77

%

35

% 40

%

41

%

75

%

70

% 7

7%

93

%

67

%

78

% 8

4%

65

%

58

%

75

%

42

% 48

%

56

%

70

%

70

%

69

%

92

%

52

%

71

%

73

%

World EU countries Non EU countries

USA Canada Australia LatAm Brazil India China Japan Rest Pac. South Africa

You would pay extra to speak to a relationship manager

If it was cheaper you would accept restrictions with how you could communicate with your current/checking account

You would be prepared to pay a separate fee to access a call centre that was not off-shored

Banks should have staff available to help in branches

If you actively use three or more products with a bank, that loyalty should be rewarded with better service

If you actively use three or more products with a bank, that loyalty should be rewarded with lower fees or higher rates on deposits

You would use your mobile phone/device for (more) banking activities if the bank could demonstrate it was secure

You would use your mobile phone/device to make payments in a shop if the bank could guarantee security

You would use a non-traditional banking provider to make payments, such as a mobile wallet capability

Ref: 1258083

For the statements that you agreed or strongly agreed with, would you switch your primary banking relationship to a bank that offered them? (Switch)

What factors would encourage customers to switch banks?


Rewards for loyalty will boost retention and attract new customers.

45

%

35

% 4

2%

38

%

31

%

27

%

46

% 51

%

56

%

55

%

27

%

47

%

41

%

56

%

53

%

51

%

37

%

46

%

48

%

61

%

55

%

57

%

67

%

45

%

63

%

62

%

43

%

32

%

40

%

33

%

25

%

39

%

43

%

48

%

49

%

52

%

24

%

49

%

35

%

55

%

47

%

51

%

46

%

44

% 50

%

66

%

60

%

63

%

64

%

35

%

64

%

61

%

60

%

51

% 57

%

45

%

46

%

50

%

72

%

62

%

62

%

73

%

44

%

72

%

65

% 70

%

66

%

70

%

60

%

64

%

65

%

77

%

70

%

64

%

77

%

58

%

78

%

76

%

58

%

46

% 5

4%

39

%

41

%

45

%

65

%

56

% 62

%

73

%

41

%

68

%

63

%

58

%

48

%

53

%

36

%

40

%

44

%

65

%

57

%

58

%

71

%

41

%

66

%

65

%

54

%

44

% 49

%

33

%

37

%

41

%

63

%

56

%

58

%

73

%

38

%

62

%

61

%

World EU countries Non EU countries

USA Canada Australia LatAm Brazil India China Japan Rest Asia South Africa

You would pay extra to speak to a relationship manager If it was cheaper you would accept restrictions with how you could communicate with your current/checking account You would be prepared to pay a separate fee to access a call centre that was not off-shored Banks should have staff available to help in branches If you actively use three or more products with a bank, that loyalty should be rewarded with better service If you actively use three or more products with a bank, that loyalty should be rewarded with lower fees or higher rates on deposits You would use your mobile phone/device for banking activities if the bank could demonstrate it was secure You would use your mobile phone/device to make payments in a shop if the bank could guarantee security You would use a non-traditional banking provider to make payments, such as a mobile wallet capability

► Customers across all regions identify tangible rewards for loyalty as a leading factor that would persuade them to switch their bank.

Ref: 1258083

Customers want to be rewarded

Ref: 1258083

27% 23% 23% 30% 35%

26% 18%

35% 48%

36%

15%

35% 45%

73% 77% 77% 70% 65%

74% 82%

65% 52%

64%

85%

65% 55%

World EU countries

Non EU countries


Yes No

Do loyalty schemes work for banking?


► Most customers expect bank loyalty

programs to offer tangible financial

rewards, typically cash back offers on

credit or debit cards and price reduction on

products and services. In Indonesia and

Vietnam gifts are preferred, but this is a

rare exception.

► Enrollment in loyalty programs is growing

rapidly, especially in emerging markets.

► Globally, 27% of customers have

enrolled in a bank loyalty program, but

this varies between countries.

► Enrollment rates are high in emerging

markets particularly in India and South

Africa.

► The rate of enrollment has picked up

rapidly since 2011, specially in Asia

Pacific, China and US which have

nearly doubled.

► In contrast, enrollment rates in some

European countries are low by global

standards. Also, Latin American and

Japanese customers are less engaged

in loyalty programs.

Have you enrolled with a bank loyalty/rewards program?

Rewards for loyalty will boost retention and new customer acquisition.

Have you enrolled with a bank loyalty/rewards program?

Evolution 2011-2012

18%

27%

21%

21%

14%

30%

19%

35%

18%

18%

24%

35%

26%

48%

16%

36%

16%

15%

27%

45%

16%

31%

82%

73%

79%

79%

86%

70%

81%

65%

82%

82%

76%

65%

74%

52%

84%

64%

84%

85%

73%

55%

84%

69%

World

11

12 Europe

11

12 US 11

12

Canada 11

12

LatAm 11

12

Brazil 11

12

India 11

12

China 11

12

Japan 11

12

SA 11

12

Asia Pac 11

12

Yes No

Ref: 1258083

What do you or would you value the most from a loyalty program?

How do customers want to be rewarded?


Most customers want bank loyalty programs to offer tangible financial rewards. However, preferences vary, suggesting that flexible reward

programs would be compelling.

11%

11%

13%

5%

3%

6%

9%

12%

13%

15%

8%

17%

4%

9%

6%

15%

4%

3%

3%

12%

14%

17%

11%

12%

9%

5%

5%

4%

3%

5%

18%

8%

8%

10%

3%

3%

3%

5%

4%

33%

28%

32%

57%

42%

37%

23%

21%

36%

44%

20%

37%

52%

23%

29%

21%

10%

19%

20%

31%

30%

13%

18%

32%

13%

23%

7%

7%

8%

3%

4%

5%

8%

7%

7%

7%

2%

9%

8%

12%

15%

8%

16%

11%

21%

9%

6%

11%

2%

23%

10%

4%

World EU countries

Non EU countries

US Canada Australia LatAm Brazil India China Japan Rest Asia

South Africa

Gifts Premium services from the bank?

Airmiles / hotel points Cash back on credit/ debit cards

Price reductions on bank products and services Price reductions for partnerships (cinema, retailer…)

Nothing, I don‘t pay any attention to loyalty/rewards programs in banks

Ref: 1258083

Survey Demographics

Ref: 1258083

► In total, 28,560 participants were surveyed in March 2012 using an internet questionnaire.

► The breakdown of the participants by country is as below:

► 11,501 Europeans (500 Belgium; 500 Czech Republic; 1,000 France; 1,000 Germany; 500 Greece; 500 Hungary, 1,000 Italy; 500

Netherlands; 1,001 Nordics; 500 Poland; 500 Portugal; 1,000 Russia; 1,000 Spain; 1000 Turkey; 1,000 UK)

► 3,529 Latin Americans (500 Argentina; 504 Chile; 500 Colombia; 1,023 Mexico; 500 Panama; 502 Peru)

► 1,019 Brazilians

► 2,002 US

► 1,000 Canadians

► 1,000 Indians

► 1,002 Japanese

► 500 South Africans

► 2,004 Chinese

► 1,000 Australians

► 4,003 Asian Pacific (1,001 Indonesia; 500 Vietnam; 502 Hong Kong; 500 Malaysia; 500 Singapore; 1,000 South Korea)

Methodology


Ref: 1258083

Demographics


The survey covered participants of all ages, within varied income brackets and from a variety of professions.

Gender Age Population (place of residence)

50% 50%

Male Female

15%

36%

49%

< 2,000 2,000 to 100,000 > 100,000

Occupation Annual income Asset

0.14

0.27

0.38

0.14

0.06

0.01

0%

15%

30%

45%

18-24 25-34 35-54 55-64 65-74 75 or older

1%

12% 12% 8%

35%

10% 13%

9%

0%

10%

20%

30%

40%

50%

60%

Fa

rmer

Self-

em

plo

yed

Executive

Inte

rmedia

ry

pro

fessio

n

Em

plo

yee

Unem

plo

yed

Retire

d

Stu

dent

17%

27% 24%

13%

5%

14%

0%

10%

20%

30%

40%

50%

60%

Less than

€10 0

00

€10 0

01 t

o

€25 0

00

€25 0

01 t

o

€50 0

00

€50 0

01 t

o

€100 0

00

More

than

€100 0

01

Pre

fer

not

to s

ay

40%

12% 10% 7%

3% 2%

26%

0%

10%

20%

30%

40%

50%

60%

Less than

€50 0

00

€50 0

01 t

o

€100 0

00

€100 0

01 t

o

€250 0

00

€250 0

01 t

o

€500 0

00

€500 0

01 t

o

€1 0

00 0

00

More

than

€1 0

00 0

00

Pre

fer

not

to s

ay

Ref: 1258083

Country aggregations – Countries were grouped based to behavioral criteria and geographic proximity


US

Canada

Latin America

Brazil

► Argentina

► Chile

► Colombia

► Mexico

► Panama

► Peru

EU countries

India

South Africa

Non EU countries

► Belgium

► Czech Republic

► France

► Germany

► Greece

► Hungary

► Italy

► Netherlands

► Nordics

► Poland

► Portugal

► Spain

► UK

► Turkey

► Russia

China

Japan

Australia

Rest of Asia-Pacific

► Hong Kong

► Indonesia

► Malaysia

► Singapore

► South Korea

► Vietnam

2012

US

Canada

Latin America

Brazil

► Argentina

► Chile

► Colombia

► Mexico

► Panama

► Peru

► Venezuela

Europe

India

South Africa

► Belgium

► France

► Germany

► Hungary

► Italy

► Netherlands

► Nordics

► Poland

► Spain

► UK

China

Japan

2011

Am

eri

ca

s

EM

EIA

A

sia

-Pa

cif

ic

Ref: 1258083

Ernst & Young

Assurance | Tax | Transactions | Advisory

About Ernst & Young

Ernst & Young is a global leader in assurance, tax, transaction and advisory services. Worldwide, our 152,000 people are united by our shared values and an unwavering

commitment to quality. We make a difference by helping our people, our clients and our wider communities achieve their potential Ernst & Young refers to the global

organization of member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by

guarantee, does not provide services to clients.

For more information about our organization, please visit www.ey.com.

About Ernst & Young’s Banking & Capital Markets Center

In today‘s globally competitive and highly regulated environment, managing risk effectively while satisfying an array of divergent stakeholders is a key goal of banks and

securities firms. Ernst & Young‘s Global Banking & Capital Markets Center brings together a worldwide team of professionals to help you achieve your potential — a team

with deep technical experience in providing assurance, tax, transaction and advisory services. The Center works to anticipate market trends, identify the implications and

develop points of view on relevant industry issues. Ultimately it enables us to help you meet your goals and compete more effectively. It‘s how Ernst & Young makes a

difference.

© 2012 EYGM Limited.

All Rights Reserved.

www.ey.com/globalconsumerbankingsurvey


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2012 Consumer Survey - EY Japan · Global Consumer Banking Survey 2012 Results - The customer takes control 10 Customers are taking control. What are the implications for banks? y