DataEQ’s seventh annual South African Banking Sentiment Index, which was released at the end of 2022, analysed over four million social media posts about the South African banking industry’s biggest players to get a sense of how the general public feels about the industry. And, for the first time, the results are positive. DataEQ’s analysis suggests that South African consumers had a better experience with their banks than they did with local retailers, insurers and telcos.
According to Thabo Mofokeng, a senior banking analyst at DataEQ, positive customer experience is one of the main drivers of customer sentiment around the industry. As such, it’s essential for banks of all sizes to focus on providing their customers with a good experience in 2023. The tough economic climate that South African consumers need to navigate at the moment means that they are more price-sensitive than ever before and won't hesitate to cross-compare banks if they feel they’re not receiving an adequate level of service.
I think the banks that that will win in 2023, and beyond, are the ones that keep it simple.
Chris Wood, Network International
For both private and business clients, delivering a better customer experience has a lot to do with simplicity, says Chris Wood, regional MD, Southern Africa and PALOPS, Network International. This may seem counterintuitive, but it’s not always about giving customers more. “Banking customers are looking for things that don't complicate their lives. They don’t want to have to download multiple apps to get a fully digital experience or to enjoy the benefits of your rewards programme. I think the banks that will win in 2023 and beyond are the ones that keep it simple, the ones that communicate clearly and seamlessly with their customer base and take the time to listen to what their customers want.”
While digital gives banks the chance to reach more people and serve customers in new and unique ways, it can sometimes mean that the relationship between the customer and the bank is one step further removed, he continues, pointing out that a move to digital shouldn’t be synonymous with moving further away from your customer.
Beware the banking mullet
DataEQ’s research revealed that consumers are becoming less understanding when it comes to issues such as downtime and system outages. Today, providing a reliable and stable digital offering is non-negotiable. As banks go digital, many of them focus all their energy on the front-end without paying enough attention to what’s happening behind the scenes. But the truth is it's about what happens behind the app that makes a bank digital – the service offered via tech, not the experience itself. It’s about building a digital capability, not just an app precariously balanced on top of outdated and clunky infrastructure and technology.“It’s business in the front – with a slick app or digital service that provides an amazing user experience – and things get a bit messy in the back,” says Wood.
“In this scenario, the stuff that happens in the background, the things that users don’t see, is archaic, outdated and run on legacy technology.” This problem is not exclusive to banks. As technology improves and as the industry evolves, it’s not uncommon for systems and operations to morph into these very complicated, heavy back-office structures. “I think sometimes organisations, not just banks, ignore this mullet structure because it's a bit of an ‘if it ain’t broke, don't fix it’ kind of thing. But this can cause big issues downstream and can become a big problem when things do inevitably fall apart.”
For many years now, the regulatory environment has made it quite difficult to get into financial services, says Wood. With changes in legislation, we’re definitely going to see a shift in the industry as new players move from sort of dipping their toes into the banking industry pool to actually just diving in. And let’s not forget that you don’t have to do everything yourself. Retailers, telcos and others that might not have specific banking industry expertise can easily outsource certain financial functions to partners with the necessary experience and industry knowledge. “This sheds new light on the importance of partnering and opens up the playing field for a more diverse banking industry.”
Mofokeng agrees. In many instances, these ‘brand banks’ can offer cheaper and more simplified banking solutions to consumers, he adds, noting that this increase in choice puts pressure on incumbent banks to provide better and more cost-effective offerings and to rethink traditional banking models.
These partnerships are likely to shape the banking space in the future, essentially transforming banks into a one-stop shop.
Thabo Mofokeng, DataEQ
As part of reassessing more conventional approaches to banking, Mofokeng says that rewards programmes were widely discussed among South African consumers in 2022. This is a great example of how banks can partner with players from other industries to provide additional value to their customers. “In my opinion, these partnerships are likely to shape the banking space in the future, essentially transforming banks into a one-stop shop,” he says. But as banks make these programmes more comprehensive, it’s important that they also keep them simple enough for customers to understand so that they can derive real value from them. This is true for all aspects of modern banking. It’s important for banks to innovate and evolve, but also to go back to basics so that they can deliver the products and services that customers want and need.
* This feature was first published in the March edition of ITWeb's Brainstorm magazine.
* Article first published on brainstorm.itweb.co.za
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