Gripes over banks create a gap for new entrants to sector
South Africans have a growing appetite for innovation, but they aren’t satisfied with what’s on offer. In the last year, for example, more than 400,000 SA consumers took to social media to complain about their banks. About 7.3% of these consumers expressed some intent to close their accounts, equating to more than 30,000 potential instances of customers looking for a new financial home — and that’s only people who publicly volunteer this information online.
This is good news for new entrants, who will welcome want-away consumers with open arms, “dynamic interest rates” and “innovative functionality”. As consumer expectations rise and new digitally focused entrants aggressively compete for market share, incumbents will need to make significant improvements and get to the bottom of why they’re fallen short. Looking at social media conversation may be a good place to start.
Digital is playing an increasingly important role in banking, and with new digitally focused entrants launching in the coming months, it’s worth considering what customers are saying about the established banks’ digital offerings.
The new entrants, TymeBank, Bank Zero and Discovery, will enjoy the advantage of entering the market without the legacy plumbing of the incumbents. Branch free, they are likely to be focused on digital products and services.
The four digital conversation themes BrandsEye tracked over the past year on social media — digital safety and security, online banking, banking apps and business or tech innovation — comprised 24% of online chatter about banks, suggesting that digital is a critical component of SA consumers’ banking experience and expectations.
FNB, with a net sentiment of +42.6%, was the best-performing bank in digital conversation, largely driven by innovations around its app and biometrics.
Standard Bank (-72.7%) had the lowest net sentiment for digital conversation. This was driven by disruption to its online banking services.
Nedbank’s announcements around its innovation hurt the bank's net sentiment. Consumers responded negatively to news that Nedbank’s robotics developments could lead to 3,000 job cuts at the bank, an important communication lesson for competitors that will probably also be looking to automate processes.
More than 40% of conversation about the digital topics focused on the business or tech innovation theme. Discussions around the app comprised 29%, while only 13.4% of consumers spoke about online banking. This suggests that app experience and functionality is a high priority for consumers, supporting Bank Zero’s app-only approach. Digital safety comprised 17.4% of overall digital conversation. What should concern banks is that the overall net negative sentiment towards all digital conversation stood at -40%.
In 2018, making payments remained the primary conversation theme about banking apps, despite showing a slight decrease from 2017. Other functions saw increases, suggesting that consumers in SA are gradually engaging with secondary app functions that are not directly related to making or receiving payments. The digital maturity of the SA consumer is good news for new entrants that, like Discovery, offer app-based paperless Fica and customisable interfaces, including budgeting tools and spend tracking.
Of all digital conversation themes, consumers were most negative about digital safety, a finding that may worry both new entrants and incumbents. For new entrants, their focus on digital-only transacting means they could face some degree of scepticism from consumers who feel they lack the established credibility of traditional names. For incumbents investing heavily in innovation, they’ll need to improve the reputation of digital services if they’re to compete with new entrants.
Although negative consumer feedback is synonymous with social media, across conversation about digital, the very negative sentiment of -40% suggests banks need to up their game. According to Boston Consulting Group’s 2017 global retail banking report, if banks want to make “further progress in digitising for value” they’ll need to focus on personalisation and continuous delivery. Banks that offer personalised products that reflect and understand their customers’ needs and context will have better rates of retention and acquisition.
Continuous delivery is key for SA banks. BrandsEye observed that when online services or apps went down, it triggered an immediate dip in sentiment on social media, a challenge faced by Standard Bank in particular. Boston Consulting Group's report makes an important note on this: while once considered exciting new advantages, digital products, like mobile apps, are now considered basic essentials. South Africans on social media confirmed this and when service proved unreliable quickly threatened to find a new bank.
The scale of unhappy SA banking customers does not just represent an opportunity for new entrants to aggressively compete for market share but for incumbents to improve too. The new entrants are going to raise consumer expectations, and according to social media, consumers are asking for the types of consumer-driven personalised products the new banks will be offering.
PwC’s future of banking report suggests that to compete with the new digital offerings banks will need to prioritise both “digital transformation and data mining”. Social media is just one of many valuable data streams banks have at their fingertips. With much work to do to improve their public sentiment scores, consumers would hope the established banks are listening.
• Ray is chief marketing officer at BrandsEye.