DUBAI: GCC banks are losing hundreds of millions of dollar in potential revenue due to poor customer services, according to a study. Although GCC-based banks have been growing at double-digit rates in both assets and profits, the gap between the quality of customer service and customer expectations remains wide, revealed a report by A.T. Kearney.
Problems such as too few skilled resources, lack of product transparency, limited responsiveness and follow-up on customer requests, as well as poor multi-channel offerings — particularly online and phone banking — are resulting in customers who are likely to change banks, it said.
The survey in Dubai found that half of all UAE nationals consider their customer service experience neutral or negative; that figure was 90 percent or higher for Western expatriates. This compares with the US market where only 24 percent of consumers are negative or neutral about customer service, and 76 percent are satisfied.
“GCC banking executives would do well to remember that a happy customer increases a bank’s profits,” said A.T. Kearney Middle East Managing Director Dirk Buchta.
“Banks in America generate an additional $1 billion in deposits if they can make just 5 percent of their customers highly satisfied. These clients make larger deposits and recommend the bank and its services to friends and family. A.T. Kearney has found that a five percent increase in customer retention increases product profitability by 20 percent,” he added. Buchta said that with increasing retail competition across the GCC, most notably in Saudi Arabia where a number of banks such as Inma Bank, BankMuscat and the National Bank of Bahrain have or are being granted retail licenses by the Saudi Arabian Monetary Agency, customer service will become an increasingly more important differentiator in the market. “Satisfaction in the branch, on the phone, and online can and does have a direct impact on revenues. Put it this way, a midsized GCC bank with world-class customer service could increase profits anywhere from $50 million to $150 million a year,” said Alexander von Pock, A.T. Kearney’s manager for the financial institutions and co-author of the study.
“In leading banks, staff members are trained never to say no; customers are always treated with a smile, and branch managers have a high level of autonomy as each branch is encouraged to act as a store retailer. Branches are measured on cross-selling customer service levels, and revenues per employee,” said von Pock.
“As customer-savvy foreign entrants enter the market post-WTO compliance GCC-based banks need to shape up,” he said.
