Deepening relationships in a digital world

Author: Susann Bessert, UK Head of Client Insights EMEA  

In late 2015, RFi Group held a series of global breakfasts to present the latest Global Retail Banking Cross-sell Report. This report was a continuation of RFi Group’s inaugural Cross-sell Report released in 2013. The study was comprised of responses from 40,000 retail consumers analysed across 21 markets: Australia, Brazil, Canada, China, Egypt, France, Hong Kong, India, Indonesia, Malaysia, Mexico, New Zealand, Peru, Singapore, South Korea, Taiwan, Thailand, UAE, UK, USA and Vietnam. As with the 2013 study, the Global Retail Banking Cross-sell Report in 2015 examined and evaluated the financial institutions in each market that are winning when it comes to cross-sell.

Globally, the average consumer holds 7.4 financial products, excluding investments, with any institution, of which an average of 2.8 are held with their main banking institution. Overall, retail banking consumers in emerging Asian markets hold considerably more products with any institution, on average: 13.7 in Taiwan, 10.9 in Hong Kong and 10.5 in Singapore, while consumers in Egypt, a market with one of the lowest proportion of banked consumers, only have 2.6 products. However, it is the Brazilian and French consumers that hold the highest number of products with 4.5 at their main financial institution. These figures suggest stronger cross-sell ratios in these markets.

What drives cross-sell? And how can financial institutions make the most of their customers? The report identifies a key segment for cross-sell; the highly digitally engaged segment. These banking customers are defined as those using their mobile or a mobile app(s) for banking at least once a week. Despite being younger, mostly under the age of 35, than their less digital counterparts, the highly digitally engaged segment is generally more affluent and also holds a higher number of products, including investments. These products are held both with their main bank (4.4 products), as well as across any banking relationships (12.1 products). Hence, they are much more engaged with their finances and are ultimately more likely to form their own opinions around finances. This in turn may help explain the higher Net Promoter Score observed in this group – an NPS of 21 compared to 5 across all less digitally engaged segments. According to RFi Group data, digital engagement is highest in emerging markets like Brazil and Indonesia, with 44% and 42% respectively, using their mobile or mobile app(s) for banking at least once a week. This compares to only 3% of retail banking consumers in Egypt who are highly digitally engaged – the next nearest market being the UAE at 14%.

The stronger engagement coupled with the increased likelihood of these consumers to form their own opinions appears to also impact on switching. Highly digitally engaged consumers are more likely to switch their main bank and to have done so in the past. Younger consumers, those under the age of 35, are generally more likely to be very digitally engaged and are more likely to switch due to issues around lending and deposits, in addition to internet and mobile banking. Moreover, consumers in the 25 to 34 year old segment have the greatest need for financial products; having recently graduated or started their first job, they are forced to embrace their new stage in life in a financial sense. There is a distinct product uptake of credit cards, investments and home and car loans. While this suggests that keeping these customers happy and engaged is a challenge, it also highlights the acquisition opportunity that exists for financial institutions looking to target these key customers.

Whilst each player in the contemporary banking market is aiming to lead the next move on the digital front, some players do better than others. Consumer demand for digital capabilities is increasing at an ever faster pace. These customers not only look for security, but also ease of use and compatibility. Financial institutions that are able to provide their customers with a good digital experience are likely to be repaid with a more highly engaged customer base and more opportunities for cross-sell as a consequence. The highly digitally engaged segment, especially the youngest consumers, represents a key opportunity for financial institutions globally. Their needs should be a top priority as it is essential to capture them early on to create long lasting and profitable banking relationships. The right digital solution can increase interaction and overall experience to help gain a higher product share of this market.