Personal touch breeds ‘e-loyalty’

Online offerings no longer give banks an advantage, a researcher says. reports.

Customers want more than just a good mobile app or efficient online banking if they are to remain loyal, banks are being told.

Henry Chung, an associate professor at Massey University’s business school, has conducted research that shows banks cannot rely on the strength of their technology platforms to create loyalty with their business customers.

Chung said mobile and online technologies had revolutionised banking, but no-one had studied whether they created the same brand loyalty that was achieved through face-to-face relationship building.

He and his colleagues collected data from 336 companies and compared their commitment with local and national-branded banks with their commitment to foreignbranded banks.

‘‘We analysed participants’ e-loyalty – their preference for interacting with their bank by using mobile and online platforms – and found that e-loyalty is a critical component of doing business because it offers advantages like 24/7 access and instant payments,’’ Chung said.

‘‘But we also found that the selfservice technologies widely used by banks have become fairly standardised so those services are now expected, rather than offering a significant competitive advantage to foreign banks.’’

Building strong in-person relationships also led to a rise in e-loyalty, which provided cost advantages for the banks.

‘‘It is easy to buy a standardised technology and all banks can do it, but the human part – personal relationships with customers – are difficult to be copied,’’ Chung said.

‘‘This part is how smaller and local banks can compete with major multinational banks.

‘‘A lot of customers do not like talking to the machines, though they provide certain convenience to their customers. Banks need to find a balance between their technologies – the hardware – and their human resource investment, the software.’’

Russell Jones, ASB’s executive general manager of retail banking, said customers were best served with a mix of in-person and technological components.

A good online offering, with a great process and seamless experience, would be augmented by inperson relationships, he said.

Mobile was the fastest-growing channel through which people engaged with the bank, and there was a pattern for most people to want to use self-service options most of the time.

Business customers were more likely to want face-to-face assistance and especially valued integrated systems, he said.

At ANZ, head of digital and transformation Liz Maguire said New Zealand was punching above its weight in terms of digital capabilities in the banking sector.

However, she said: ‘‘We find that lots of people, and surprisingly even our younger customers, still prefer to come into a branch or meet up with their relationship managers and talk through more complicated issues …

‘‘We also know that our customers who bank online with us are more loyal to us.

‘‘Digitally active customers are more than twice as likely to have three or more products with us, including a home loan,’’ Maguire said.

‘‘A digitally inactive customer, on the other hand, is more than twice as likely to leave the bank over a 12-month period.

‘‘It’s important to remember that people only feel comfortable using digital banking because they trust the organisation, and that trust is built on relationships.’’