Brussels, 30 June 2010 – Today, Deloitte and Vlerick Leuven Ghent Management School presented the results of their study: “Winning Back Your Customers: Retail Banking Study 2010”. The study clearly reveals that Belgians continue to lose faith and trust in their banks. This is not only due to the latter’s poor performance. We found that there is more needed for restoring trust than their financial performance. According to the study, the Belgian banking industry urgently needs to rebuild real trust.

The Retail Banking Study is carried out on an annual basis by Deloitte and Vlerick Leuven Ghent Management School. While the 2009 study focused on distribution strategies and more specifically on  the future of branches, the 2010 study has focused on how banks can win back their customers by restoring trust in the financial services industry. The researchers looked at two dimensions of loyalty: trust and satisfaction. The results indicate a strong correlation between the two, and that they both have a major impact on customer loyalty. The survey is based on the responses of over 2,000 retail customers on their experiences with their primary and secondary banking institutions Patrick Callewaert, Partner Deloitte Belgium explains: “What makes this study unique is that we have information from retail customers in Belgium on different types of banks and on two different dimensions of loyalty: trust and satisfaction”.

Two Different Dimensions of Loyalty: Trust and Satisfaction

The Deloitte survey confirms that customers have a low level of trust in the banking industry and their bank; the Big Four and community banks score the lowest on all trust dimensions. Striking findings were:

• 1 out of every 3 customers does not trust banks in general, and only 12% of customers confirm that they definitely trust the banking industry;
• Less than 50% of the customers agree that their bank is acting in the interest of its customers.

Patrick Callewaert, Partner Deloitte Belgium comments: “Overall, there is still a perceived distrust between the public and the financial services industry. The public has experienced an imbalance, where the industry holds the lion’s share of the power and is able to make decisions in ways that have a tremendous impact on the banks’ stakeholders. More profound corrective actions are needed to reinforce the image of the financial industry and ensure that this perception of trust is not going to enforce negative behaviour soon."

The study also shows that customers are not satisfied with their banks: only 42% are very satisfied with the overall performance of their bank. Discount and direct banks perform better: 62% of these respondents are very satisfied with the overall performance of their bank. 

Some other key findings include:

• Highly committed customers use more products, offer more references and are much less likely to speak badly of their banks to other customers, but those customers represent only 16% of the market
• Customers of Big Four and Community Banks expressed lower satisfaction with regards to the comprehensibility of the products and services. This indicates a customers need for simplicity;
• Consumers do not perceive enough bank’s competitive advantage; only 18% of the Big Four and 24% of the Community Banks’ customers feel that there is an advantage in dealing with their bank rather than another.

Prof. dr. Kurt Verweire, Partner and Associate Professor in Strategic Management of the Vlerick Leuven Ghent Management School, indicates: “The fact that customers do not see their bank’s competitive advantage is alarming. In such a competitive industry where banks offer similar products, real differentiation becomes a competitive advantage. The top priority of the Big Four should be to improve customer perception on competitive prices, fees and interest rates, as they show the biggest gap on this attribute. In this instance, it is important to note that we are not suggesting that lowering prices is the way to go. Instead, banks should focus on improving the services attached to their product portfolio and thus create the feeling that the customer is getting value for money.”

What should Belgian banks do differently?

Given the future economic outlook, this study recommends that it is even more important for banks to:

• Reconfirm a singular market positioning and customer value proposition;  adapt their operating models to deliver the value proposition which is in line with their market positioning . The study clearly shows that the winners in the crisis are those banks that have a clear market positioning and that manage to deliver a consistent and clear customer value proposition.
• Enhance the innovation on sales approach to better integrate new channels, stay in contact with customer, and continue to focus on financial advisory services instead of product “pushing”. The survey points out that one important action for restoring customer trust and increasing customer satisfaction is to deliver better service, without losing the connection with the customers using more and more social media and mobile device.
• Adapt sales approach to different customer generations; by understanding the differences between generations X (age 32-44), Y (age 15-31) and baby boomers (age 45-64), and by developing specific actions to boost their loyalty. Today in most banks, the current service delivery model is devoted to the Silent Generation and baby boomers, the ones who visit the branches in person. But, younger customers are much more mobile and rely more heavily on on-line interactions. Banks, therefore, need to find a way to attract and retain prospective customers who will soon become the most attractive segment.

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About the research

This report is based on the results of a quantitative survey of 2,000 Belgian retail banking customers conducted in December 2009. The aim of this research is to measure customer trust, satisfaction and loyalty in the retail banking industry in Belgium and to obtain a better understanding of what customers expect from their banks.

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The banks have been classified into three different groups:

•  Big Four banks: the four major retail banks in the Belgian market
• Community banks: banks focusing on a specific customer segment or group
• Direct and discount banks: banks that offer financial services through direct channels mainly ; and banks that focuses on price (e.g. interest rate)

The study analyses how trust, satisfaction, and loyalty differ between different customer segments:

• Generations
• Silent Generation (age 65-75)
• Baby boomers (age 45-64)
• Generation X (age 32-44)
• Generation Y (age 15-31)

Social groups (we distinguished four groups using CIM classification based on profession and education of the head of household):

• Low
• Middle low
• Middle high
• High

The survey was conducted for Deloitte by TNS Dimarso.

About Vlerick Leuven Ghent Management School

Vlerick Leuven Ghent Management School has deep academic roots. Founded in 1953 by Professor Baron André Vlerick, the School has evolved into the leading business school in Belgium and one of the top business schools in Europe. The School benefits from the amassed knowledge of the two largest Belgian universities, Ghent University and the Catholic University of Leuven.

Vlerick focuses on management education and research in order to meet the needs of managers and entrepreneurs at different stages in their careers. The School offers an International MBA programme and numerous training programmes for company executives. Close connections with the international corporate world lead to practice-based research in co-operation with numerous companies and organisations. Thousands of Vlerick graduates are successfully operating at top managerial levels in manufacturing, services, consultancy, and the public sector in over 100 countries.

Vlerick is one of the few business schools to hold the three most important accreditations relating to the world of management education: EQUIS, AMBA and AACSB.

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