Bain: Digital consumers turning backs on primary banks
Banks around the world have upped their game and improved their apps and websites – a welcome digital transformation ahead of the pandemic, especially as branch visits dropped and consumers required digital solutions.
However, it is not all good news for these ‘traditional’ banks, as many of their customers have been ‘defecting’ to competitors – both traditional and digital disruptors.
According to Bain’s NPS® 2020 survey of about 56,000 consumers in 11 countries, 25% to 51% of all banking product purchases, depending on the country surveyed, go to banks that aren’t the respondent’s primary bank.
Although those primary banks may still handle deposits and checking account, those customers are shopping around for high-margin products like loans, credit cards and investments.
What causes customers to defect to another bank?
Bain’s extensive survey suggests there is no single reason why these customers defect, although affordability, convenience, and a better digital experience are all cited. Younger customers in particular put a greater emphasis on digital tools, convenience, branding and security.
The UK, which has one of the most competitive markets, has the highest defection rate of the countries surveyed. As consumer-friendly regulation takes hold in more countries, competition in those markets could also intensify. Banks in fragmented markets (including the US and Germany) need to act now to avoid losing business from banking defectors.
The good news for those banks from the survey is that of those 29% who defected having received an offer from a competitor, 78% said they would buy from their primary bank if they made a ‘compelling or equivalent’ offer. This percentage was even higher for savvy younger customers less aligned to brand loyalties.
Customers tend to stick with primary banks for their core needs but many banks do not properly leverage that relationship by delivering more value through personalised products. Providing a seamless digital experience and good value products in a tailored fashion will help retain those customers and improve sales.
SAS: Improving the British Army’s decision making with data
SAS’ long-standing relationship with the British Army is built on mutual respect and grounded by a reciprocal understanding of each others’ capabilities, strengths, and weaknesses. Roderick Crawford, VP and Country GM for SAS UKI, states that the company’s thorough grasp of the defence sector makes it an ideal partner for the Army as it undergoes its own digital transformation.
“Major General Jon Cole told us that he wanted to enable better, faster decision-making in order to improve operational efficiency,” he explains. Therefore, SAS’ task was to help the British Army realise the “significant potential” of data through the use of artificial intelligence (AI) to automate tasks and conduct complex analysis.
In 2020, the Army invested in the SAS ‘Viya platform’ as an overture to embarking on its new digital roadmap. The goal was to deliver a new way of working that enabled agility, flexibility, faster deployment, and reduced risk and cost: “SAS put a commercial framework in place to free the Army of limits in terms of their access to our tech capabilities.”
Doing so was important not just in terms of facilitating faster innovation but also, in Crawford’s words, to “connect the unconnected.” This means structuring data in a simultaneously secure and accessible manner for all skill levels, from analysts to data engineers and military commanders. The result is that analytics and decision-making that drives innovation and increases collaboration.
Crawford also highlights the importance of the SAS platform’s open nature, “General Cole was very clear that the Army wanted a way to work with other data and analytics tools such as Python. We allow them to do that, but with improved governance and faster delivery capabilities.”
SAS realises that collaboration is at the heart of a strong partnership and has been closely developing a long-term roadmap with the Army. “Although we're separate organisations, we come together to work effectively as one,” says Crawford. “Companies usually find it very easy to partner with SAS because we're a very open, honest, and people-based business by nature.”
With digital technology itself changing with great regularity, it’s safe to imagine that SAS’ own relationship with the Army will become even closer and more diverse. As SAS assists it in enhancing its operational readiness and providing its commanders with a secure view of key data points, Crawford is certain that the company will have a continually valuable role to play.
“As warfare moves into what we might call ‘the grey-zone’, the need to understand, decide, and act on complex information streams and diverse sources has never been more important. AI, computer vision and natural language processing are technologies that we hope to exploit over the next three to five years in conjunction with the Army.”
Fundamentally, data analytics is a tool for gaining valuable insights and expediting the delivery of outcomes. The goal of the two parties’ partnership, concludes Crawford, will be to reach the point where both access to data and decision-making can be performed qualitatively and in real-time.
“SAS is absolutely delighted to have this relationship with the British Army, and across the MOD. It’s a great privilege to be part of the armed forces covenant.”