Increased competition and account switching demand new brand behaviours, says Aimia
London, 3 February 2014 – High street banks need to do more to build customer loyalty in the face of increased competition, with only 8% of UK bank customers saying they stick with their bank because they get rewarded for their loyalty, compared with over one in four (26%) supermarket customers who continue shopping at a certain supermarket due to loyalty rewards. These are among the findings in the latest Loyalty Lens research from Aimia, a global leader in loyalty.
The findings, based on research among 2,000 UK consumers, paint a stark picture of the challenge facing high street banks as competition in the sector intensifies. Poor customer targeting by banks continues to undermine the customer relationship, with only one in three bank customers saying the offers they receive are relevant to them, compared to nearly 60% of supermarket customers.
The news comes as industry data shows more people than ever before are choosing to switch banks. Figures released this month by The Payments Council show that current account switching is up by 17% since the launch of the Current Account Switch Service in October last year and was up by 54% in December*.
According to Aimia, their research should provide a wake-up call for high street banks as this year sees a raft of new entrants vying to win customers from the established providers.
Jan-Pieter Lips, President of Aimia, EMEA, said: “Both the Government and Opposition are championing more competition in retail banking, and newer entrants such as Metro Bank, Virgin Money and the Post Office are ramping up their presence. High street banks need to build a different kind of relationship with customers. As competition hots up and account switching becomes mainstream, the days of banks relying on apathy as a source of customer loyalty look numbered.”
The 8% who remain loyal to their bank because they get rewarded for doing so represent a slight increase on the previous quarter, where only 6% of bank customers recognised their bank for rewarding them. This increase indicates that recent reward initiatives launched by high street banks, including the Lloyds Bank Everyday Offers, may be starting to take effect.
In further good news for the banking sector, when asked which organisations they feel most comfortable with to handle their personal data, the majority of consumers (36%) ranked financial services providers top, with 25% choosing their employer and 24% choosing supermarkets.
Competition for current accounts looks set to intensify this year. Virgin Money continues to grow its presence, having opened over 1.7 million new current accounts since 2012, and the Post Office recently announced its ambition to make current accounts available in 2,000 branches by the end of this year, up from 100 branches today.
The Loyalty Lens research shows that supermarkets remain the most popular loyalty sector with 75% of the UK adult population now members of a supermarket loyalty scheme, up from 73% in the previous quarter. All but 15% of loyalty scheme members are in schemes with points-based rewards, challenging assertions made at the turn of the year by Waitrose and Asda that reward point schemes were being rendered ‘meaningless’.
*Figures on current account switching published on 16 January 2014 by The Payments Council
Aimia Inc. (“Aimia” or the “Corporation”) is a global leader in loyalty management. Employing more than 4,000 people in over 20 countries worldwide, Aimia offers clients, partners and members proven expertise in launching and managing coalition loyalty programs, delivering proprietary loyalty services, creating value through loyalty analytics and driving innovation in the emerging digital, mobile and social communications spaces.
Aimia owns and operates Aeroplan, Canada’s premier coalition loyalty program, Nectar, the United Kingdom’s largest coalition loyalty program, Nectar Italia and Smart Button a leading provider of SaaS loyalty solutions. In addition, Aimia owns stakes in Air Miles Middle East, Mexico’s leading coalition loyalty program Club Premier, Brazil’s Prismah Fidelidade, China Rewards – the first coalition loyalty program in China that enables members to earn and redeem a common currency, and i2c, a joint venture with Sainsbury’s offering insight and data analytics services in the UK to retailers and suppliers. Aimia also holds a minority position in Cardlytics, a US-based private company operating in card-linked marketing for electronic banking. Aimia is listed on the Toronto Stock Exchange (TSX: AIM). For more information, visit us at www.aimia.com.