FIS recently published their second annual Performance Against Consumer Expectations (PACE) Index – a global research study looking at consumer banking. The PACE Index measures performance gaps based on 18 service expectations, including reliability, leading-edge products, and aspirations, and provides insight as to how well a financial institution is meeting customer needs. The focus and themes of the study is a real indicator of the future of banking – the shift towards customer-centricity.
As financial institutions hone in on more customer-centric offerings, the insights from the FIS study provide a glimpse of what banks should consider when it comes to strengthening the relationships they have with their customers, and vice versa.
What is the PACE Index?
PACE Index scores are determined by how consumers score the 18 service expectations compared to how they score their primary financial institution. The insights from the study aim to help financial institutions find more opportunities to become and remain a top choice for consumers when it comes to financial services.
The study surveyed more than 10,000 banking consumers from 10 countries, including Australia, Brazil, Germany, India, Philippines, Poland, Switzerland, UK, and the US.
The 2016 Global PACE Index average was 79 (100 is the ideal), with Germany and the United States scoring the highest. The scores help each country understand how they fare against customer expectations. The FIS study puts the customer at the center and tries to bridge the gap between what customers expect from their banks and what they’re currently experiencing. By looking at the results of the study, financial institutions can gain a better understanding of what customers really want in order to provide them with better products and services, and to develop deeper, lasting relationships.
Technology and Banking: Three key findings
The findings from the PACE Index study provide a few key takeaways for financial institutions to keep in mind:
#1: Utilizing new technology in the financial industry
The study found that many consumers sought a more simple and user-friendly way to interact with financial products and services. Millennials, in particular, scored being digitally connected as more important than reliability and transparency, and were four times more likely to use a mobile app from their primary financial institution to manage their finances.
In a video summarizing what consumers looked for in their banks, one millennial explained how ideal it would be if banks could make product and service recommendations based on what they know about a particular customer, similar to Netflix’s program recommendations.
With technology so prevalent, customers expect the same efficiency and simplicity from the banks as they do from other applications used as part of their daily lives. As technology continues to disrupt how we go about our day-to-day activities, financial institutions should take note of the advances being made in other industries in order to see the ways that technology could be applied to the financial industry.
#2: One size does not fit all
The Netflix comment also brings up the topic of personalized service and product recommendations. Banks can no longer put out generic products for customers to choose from. Customers today expect products and solutions to be tailored to their specific needs. When it comes to banking in particular, understanding a customer in order to offer them the right products is crucial in developing and maintaining deeper customer relationships. At Zafin, we call this relationship banking.
#3: Customers want to be helped
Another important finding of the study was that customers in all 10 countries agreed that they wanted guidance and support from their financial institutions in achieving their financial goals; yet, more than 70% of people had no financial advisor. This is an opportunity for banks to develop better relationships with customers. People are no longer using financial institutions for the sole purpose of transactions. Instead they expect their banks to understand their needs as a customer, provide personalized service, help them to become more financially responsible, and more importantly, support them in achieving their financial goals.
The study also found that many people expected a life event in the near future to affect their finances, yet almost a quarter of those surveyed said they would turn elsewhere other than their primary financial institution to help support them through that particular event. Banks should understand that while customers want help and advice, they are also open to looking outside of their primary financial institution to get it.
Banks can no longer afford to get comfortable sitting back and waiting for customers to go to them. Taken together, the findings of the PACE Index point to the opportunity banks have to evaluate their current relationships with customers and be more proactive in providing the support and services that customers want.
This article was written by Kathleen Lagunsad, Marketing Coordinator at Zafin. You can reach her at Kathleen.Lagunsad@zafin.com