Singapore banks lose up to 40 per cent of new product sales to competitors
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The latest survey by management consulting firm Bain & Company found that Singapore retail banks lose up to 40 per cent of new product sales to competitors that are better at digital marketing, sales and service.
In its seventh annual report on consumer banking behaviours, the consultancy said such “hidden defection” of consumers – purchasing a new banking product from a competing bank or financial technology firm – could get worse.
“There are a lot of customers who frankly consider themselves prisoners in their own banks. They don’t switch their primary bank because it’s too much hassle to do so. But they’re going to go elsewhere for any new needs,” said Ms Chew Seow-Chien, partner and head of Bain’s Financial Services practice in Southeast Asia.
The survey polled more than 137,000 consumers in 21 countries, including Singapore.
The Singaporean customers polled indicated that they would buy new banking products from a competitor rather than their primary bank up to 40 percent of the time.
About 30 per cent of them said they would switch their primary bank if it were easy to do so, the research showed.
Bain noted that fintechs and technology companies are siphoning off customers seeking high-value products and services, such as credit cards, loans, insurance and investments.
In its research, the consultancy found that deposits made up about 50 per cent of purchases from primary banks in Singapore over the last 12 months, versus just 22 per cent at competing banks.
Meanwhile, insurance were the most purchased product at competing banks – 31 per cent of purchases – followed closely by credit cards.
As younger, more plugged-in generations learn how to bank, their purchases of banking products through digital channels, especially online, will rise – making it important for banks to improve their digital offerings, simplify products lines and streamline user experiences.
“By now, the digital disruption in banking should come as no surprise, and most banks clearly understand the importance of digital migration,” said Ms Chew.
“The bigger challenge lies in how to organise the transition and instill the necessary changes, both at the frontline and in the back office, to improve how consumers do their banking.”
Questions & Answers
Q.What specifically causes Singapore retail banks to lose new product sales to competitors?
What specifically causes Singapore retail banks to lose new product sales to competitors?
Singapore retail banks lose sales because competitors are better at digital marketing, sales, and service. This allows other firms to attract customers looking for new banking products.
Q.Which types of banking products are customers in Singapore most likely to purchase from competing banks?
Which types of banking products are customers in Singapore most likely to purchase from competing banks?
Customers in Singapore are most likely to buy insurance products from competing banks, accounting for 31 per cent of purchases. Credit cards are the next most frequently purchased product from competitors.
Q.What proportion of customers would change their primary bank if the process was less complicated?
What proportion of customers would change their primary bank if the process was less complicated?
The research showed that approximately 30 per cent of customers would switch their primary bank if it were easier to do so. This indicates a significant number of 'prisoner' customers.
Q.What advice has Bain & Company given to banks to address this issue of customers going elsewhere?
What advice has Bain & Company given to banks to address this issue of customers going elsewhere?
Bain & Company suggests banks improve their digital offerings, simplify product lines, and streamline user experiences. They also highlight the challenge of organising the digital transition across the bank.