2012 Banking Innovation Study South Africa
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About the Banking Innovation Study 2012 Banking Innovation Study Results
Trends 2007 - 2012
About the Banking Innovation Study Purpose of the Innovation Study Research methodology Survey questions Respondent demographics
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Purpose of the Innovation Study
In the highly competitive market that organisations in South Africa find themselves, a means of differentiation is of paramount importance. Innovation is seen as one of the primary drivers in achieving this differentiation. This study investigates a number of aspects surrounding the level of innovation being achieved by organisations, as perceived from a localised end-user perspective. The study also looks at the level of customer satisfaction with their bank; whether they use other banks and what would entice a customer to switch from one bank to another. The market research conducted highlights which banks are perceived to be the most innovative in the industry. Further analysis delves into why this is so, and how this perception about the banks has changed since the 2007 study. The study also serves to create a greater awareness around the concern that banks need to be responsive to customers’ emotional needs. The core purpose underpinning this initiative is a strategy for managing the information acquired and turning it into insights that empower customers in new ways.
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Research methodology
This report provides insight on the study conducted during 2011 and 2012. This is an administered survey conducted during various programs and workshops offered by Innovation Agency. The survey was administered in a controlled manner. Survey questions were designed to be opened-ended in nature, and served to gauge individual perceptions around the level of innovation achieved by institutions from an end-user perspective. Respondents were not given information and/ or definitions of the survey questions. Data collected was grouped and analysed and keywords created as a means to graphically represent the results of study. The 2012 Innovation Study consisted of 388 respondees.
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Innovation Study questionnaire
The study questionnaire consisted of the following questions: • Which bank is the most innovative? • Why did you rate the bank as the most innovative? • What lessons can be learnt from innovative banks? • Have you switched banks in the last 12 – 18 months? • Why did you switch banks? • Why have you not switched banks?
Key thoughts
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Respondent demographics
• Study respondents represented a widespread of individuals, from various backgrounds
Asian 3% Australian
0%
Black 20% British
0%
Chinese 0%
Coloured 11%
European 0%
Indian 17%
Netherlands 0%
Polack 0%
Spanish 1%
White 48%
Population group
Female 42%
Male 58%
Gender split
0%
5%
10%
15%
20%
25%
30%
35%
20 - 24 25 - 29 30 - 34 35 - 39 40 - 44 45 - 49 50 - 54 55 - 59
Age distribution
0%
5%
10%
15%
20%
25%
Income distribution
2012 Banking Innovation Study Results Most innovative bank Reason for rating a bank innovative Lessons from innovative banks Switched banks in the last 12 – 18 months Reason for switching banks Reason for not switching banks
Key thoughts
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Most innovative bank
• FNB has consistently been recognised as the leader in innovation, with 50% of the ratings as the most innovative bank
• FNB has had many product and services launched, including the most recent smart phone banking application; the first of its kind from a South African bank
• Capitec, despite being a relatively new player, had the 2nd most ratings ahead of Standard Bank, Absa and Nedbank
FNB perceived as most innovative because of
• They bring innovation to the public quicker
• Has products tailored to meet customers’
wants and needs
• They make banking easier for clients and
a pleasure to do banking
• Advanced cellphone banking offering to tap
into new markets
• They cover all generations in their offering
• They always come up with interesting
marketing campaigns
0% 10% 20% 30% 40% 50% 60%
Foreign bank
RMB
Wesbank
Nedbank
Investec
Standard Bank
Absa
Capitec
FNB
Key thoughts
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Reason for rating a bank innovative
• Banks are rated as innovative due to the following reasons:
• Technology
• Products
• The results may be an indication that customers aren’t necessarily looking for tailored solutions but rather a means to do their everyday banking easier and when they want to and whenever they choose
• Banks are loved for their “Technology” and their “Products”. This is a clear indication that the customer interface is where innovation is most appreciated and recognized • Notably, bank “Fees and rates” were not high on the list of reasons for
banks being considered innovative
0% 2% 4% 6% 8% 10% 12% 14% 16%
Business model Leaders
Accessible Client solutions Mobile banking Fees and rates
Targeted market Customer centric Internet banking Time to market
Marketing Innovative culture
Banking easier & simple Customer service
Processes Products
Technology
Key thoughts
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Lessons from innovative banks
• The varied responses to this question may also suggest that customers look beyond the obvious product development when differentiating from different banks
• The top 5 reasons illustrate that customers feel that banks should be customer focused in order to be regarded as innovative
• The results may be an indication that customers are becoming familiar with innovation as a concept, enough so to use this as a means of differentiation between the different banks • Through the banks’ various offerings, banks are also looking at innovative
ways retain existing clients and also grow their customer base
0% 1% 2% 3% 4% 5% 6% 7% 8% 9% 10%
Products Business model
Company strategy People
Targeted market Understand market needs
Implementation cycle Flexibility/ adapt to changes
Lead Challenge the status quo
Individualised solutions Risk management
Time to market Marketing Processes
Customer service Keep it simple
Customer centricity Technology improvements
Encourage innovation
Key thoughts
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Switched banks in the last 12 – 18 months
• Despite some strong criticism, people are still unlikely to switch banks
• Despite some vehement criticism only a small percentage of people have actually switched banks in the past few months. This indicates that there is still a degree of loyalty or perhaps that it is just too difficult and inconvenient to switch
No 89%
Yes 11%
Key thoughts
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Reason for switching banks
• The results may indicate that it may be a combination of reasons that customers switch and not just a single one
• Consumers have become price conscious possibly as a results of the financial crisis
• The low numbers of respondees who have switched may also imply that customers would rather stay with the bank they know despite the bad service levels, than switch to an unknown bank
• “Customer service; Fees and rates” did not rank highly in the most innovative bank category. They were however, the top two rated reasons that respondees indicated for switched banks
0% 5% 10% 15% 20% 25%
Consolidate portfolio Less queues Made errors
Needed the change Needs weren't met
Not innovative Perception Processes Relocated
Technology Offered international banking
Internet banking Inflexible
Innovative No customer focus
Products Employed by bank
Fees and rates Customer service
Key thoughts
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Reason for not switching banks
• The 2nd highest reason given was that switching would be “too cumbersome” a process, suggesting that customers would switch if they thought it an easy process to do
• Customers may also find the banks’ offerings too ubiquitous and see no value to be derived by switching to another bank • The results of this question may be used to gauge customer satisfaction
levels with their bank • Over 20% of the respondees indicated to be either satisfied or happy with
their bank
0% 5% 10% 15% 20% 25%
Risky to switch Internet banking
Better value/ options Closed an account
Convenient Outstanding debt Time consuming
No benefit to switching Loyal
Planning on switching Fees and rates
No reason to Customer service
Employed by bank Too cumbersome
Satisfied with bank
Trends 2007 – 2012 Most innovative bank Reason for rating a bank innovative
Key thoughts
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Most innovative bank
• Despite the dominance of the Big Four banks in South Africa, Capitec continues to receive recognition in this category
• FNB continues to hold the lead position in this category and has surpassed the results from the 2007 study • Standard Bank has had the biggest drop since 2010 levels to see it ranked
3rd to below the 10% mark, ahead of Absa
0%
10%
20%
30%
40%
50%
60%
2007 2008 2009 2010 2011 2012
FNB
Capitec
Absa
Standard Bank
Investec
Nedbank
RMB
Key thoughts
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Reason for rating a bank innovative
• The trend from the reasons given also look to be converging from 2010 levels, where previously there were more clearer distinctions from the top and bottom reasons given for rating a bank innovative
• “Technology” as a reason for rating a bank innovative has regained top position once more ahead of “Products” • “Innovative culture” was previously insignificant a reason to mention. Many
respondees in the 2012 study, however, recognised innovation as one of the top reasons for rating a bank innovative
0%
5%
10%
15%
20%
25%
30%
35%
2007 2008 2009 2010 2011 2012
Technology
Products
Processes
Customer service
Simplicity
Innovative culture
About Us We live in a socially aware society where involvement across a collective workforce community is used to drive innovation. Social Based Innovation approaches pave the way to a more networked and integrated means of managing innovation. We are driving this evolution forward.
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