How Can Banks Enhance Pleasant Customer Care and Harness Mobile Banking to Retain Customers?
What customer retention strategies are needed?
In an increasingly competitive financial sector, customer retention is an all- important strategy for any financial service provider. Banks incur high costs to acquire customers and should therefore endeavor to retain those customers. Past research by FRIENDS Consult in Uganda, corroborated by findings elsewhere, reveals that it costs 3 to 5 times more to acquire and nurture a new customer up to completing a loan cycle than it takes to lend an existing customer. Accordingly, banks’ focus on customer retention should be at least as strong as on acquisition.
Increasing numbers of dormant accounts, under-consumed products and customer mobility suggests that banks need to do a lot more towards customer retention. How? Broadly, the list boils down to four major items: customer care, right products, channels and processes.
- Consistent customer delight through better-than-good care. For corporates clients, have relationship managers so knowledgeable that they can answer all the client’s questions and represent the client to management effectively. For high-net-worth individuals, a decongested banking environment guaranteeing optimum confidentiality and personal comfort. For mass-market or low net worth retail customers, personal attention in a language the customer understands, wherever they are served.
- Right products, targeting the right consumers, flexible enough to be highly responsive to customer needs. This requires that the products are developed and regularly reviewed with customer-survey input
- Right channels for both local and international transactions, reliable and easy to use, yet safe.
- Seamless, predictable processes with low turnaround time (TaT). This includes automation of all processes that can be automated and, internally, digitally tracking transactions to promptly detect and address process lags.
How do we de-bottleneck mobile banking to enhance customer delight?
In Uganda and other countries where mobile banking is now popular, banks should make sure their mobile banking platforms are:
- Open and operational at all times with minimal downtime.
- Priced for affordability and comfort of the customer.
- Able to generate bank statements and instant transaction alerts.
- Adequately personalized, where the customer feels they have control.
- Multi-lingual to embrace all customers
- Able to give the customer more knowledge on how the financial services and transactions work.
- Able to aid online purchases.
- Able to support payments to other bank and mobile money accounts.
Address customer challenges with mobile banking by fixing the following:
Unreliable networks/ systems, which negatively affect mobile banking transactions. Research show that reliability of a digital channel increases customer confidence and retention.
Lack of awareness of or trust in mobile banking services, which is a major barrier in adopting mobile banking. People who are not aware and knowledgeable of how to use the applications lack the confidence to use mobile banking services. While banks take the awareness and knowledge of mobile banking use for granted, masses of their customers suffer need in this area.
Lack of trust due to perceived security risks, resulting from perception and negative assumptions. Customers fear security threats, such as fraud, that they think is more likely in mobile banking. Sensitization is needed in this regard.
Cultural factors: In rural areas some men do not permit their wives to own mobile phones, thus presenting a clear gender barrier to mobile banking uptake. In some rural communities it is an unwritten norm that women do not own phones.
Digitalization is transforming the business landscape, and more so the financial sector. Advancements in banking technology are continuing to influence the future of financial services around the world while a significant majority of Uganda’s population is hardly digital-literate beyond the very basic. For effective financial inclusion of tomorrow, there has to be efforts at digital inclusion today.
Keren Obara and Joseph Sserunjogi – FRIENDS Consult Ltd