2013 banking innovation study
DESCRIPTION
In the highly competitive market that banks 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 and developing a competitive advantage.TRANSCRIPT
2013 Banking Innovation StudySouth Africa
This report is solely for the use of client personnel. No part of it may be circulated, quoted, or
reproduced for distribution outside the client organization without prior written approval from
Innovation Agency. This material was produced by Innovation Agency based on client interaction;
it is not a complete record of the discussion.
Purpose of the Innovation Banking Study
In the highly competitive market that banks 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 and developing a competitive advantage.
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 motivate a
customer to switch from one bank to another. The study also reveals the view that customers have of
switching banks. 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 banks in new ways to
better understand their customers.
Research Methodology
This report is an administered survey conducted during various programs, interventions and
workshops offered by Innovation Agency throughout the year.
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, which was used to develop the keywords as a means to
graphically represent the results of the study. The 2013 Innovation Study consisted of 403
respondees.
Innovation study questionnaire
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?
Respondent demographics
Female44%
Male56%
Gender Split0%
5%
10%
15%
20%
25%
30%
35%
25 - 29 30 - 34 35 - 39 40 - 44 45 - 49 50 - 54
Age Distribution
0%
5%
10%
15%
20%
25%
150k -249k
250k -349k
350k -449k
450k -549k
550k -649k
650k -749k
750k -849k
850k -949k
950k -1,05m
1,05m -1,15m
Income Distribution
Coloured13%
Indian17%
Black28%
White42%
Population Group
2013 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
Most innovative bank
FNB was awarded the World’s Most
Innovative Bank in October 2012 by BAI-
Financial and the results of this study
mirror this view
There is a clear lead between 1st position
FNB and 2nd position Capitec ahead of
the rest of the Big 4 banks
Despite having the biggest retail market
share in terms of number of customers,
Absa was only rated fourth in this
category
FNB perceived as most innovative
because of:
They keep up with the changing
environment
They challenge the status quo
They think outside the box
They are very smart in the way they
do business
FNB are always first in offering
products, while others follow
They are leaders in banking
technology
They come to the market with
products that people value
0% 10% 20% 30% 40% 50% 60% 70%
Sanlam
Nedbank
Absa
Standard Bank
Capitec
FNB
Reason for rating a bank innovative
Banks are loved for their technology; this
is an indication that customers prefer to
access and perform various banking tasks
through digital channels
‘Innovative culture’ has overtaken
‘Products’ from the previous year’s study
The rise of mobile, ahead of internet
banking, is another indication of how
customers have grown accustomed to
mobile for banking purposes
Notably, ‘Customer service’ and ‘Rates
and fees’ were not high on the list as
reasons for rating a bank innovative
0% 2% 4% 6% 8% 10% 12% 14%
Rates and fees
Internet banking
Target market
Adapt to changes
Industry leaders
Mobile Banking
Operating model
Customer service
Company strategy
Customer centric
Time to market
Processes
Easy banking
Marketing
Products
Innovative culture
Technology
Lessons from innovative banks
‘Encourage innovation’ as a top lesson
may be an indicator of how customers are
indentifying innovation within the banks
The results also recognise that innovation,
as an approach, may be used to drive
improvements within organisations
Innovative culture’ is by far the top lesson
that respondees thought was the top
lesson to be learnt from the innovative
banks
0% 5% 10% 15% 20% 25%
R & D
Rates and fees
Target market
Industry leaders
Customer service
Company strategy
Products
Adapt to changes
Processes
Operating model
Marketing
Technology
Easy banking
Customer centric
Time to market
Innovative Culture
Switched banks in the last 12–18 months
Despite various marketing campaigns,
only a small percentage of respondees
had switched banks.
The small number of respondees may be
a reflection of how difficult the switching
process is
The percentage of customers who had
switched has also gone down from the
previous year’s study, which was at 11%
No90%
Yes10%
Reason for switching banks
The responses to this question always
referred to dealings with bank staff
members that resulted in ‘Poor customer
service’ via either branches or call centre
channels
‘Technology’ was the top reason given for
rating a bank innovative however,
‘Technology’ as a reason for switching
made up a small percentage of the
reasons for switching
It also interesting to note that the
respondees that were bank employees
switched because of staff benefits offered
‘Customer service’ and ‘Rates and fees’
were not rated highly when respondees
were asked to rate the most innovative
bank. In this category, however, they were
the top two reasons given
0% 5% 10% 15% 20% 25% 30% 35%
Better value/ options
Convenient
Easy banking
Internet banking
Multibanked
Relocated
Technology
Products
Employed by bank
Rates and fees
Poor customer service
Reason for not switching banks
The responses to this question may be
used to gauge to customer satisfaction
levels with their current bank
Interestingly, “Satisfied with bank’ is a far
more abstract response when compared
to the top reason given for rating a bank
innovative, which was because of their
‘Technology’
The results may also be a indication of
how cumbersome the process is when
trying to switch banks
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% 30% 35%
Convenient
Risky to switch
Multibanked
Loyalty
All the same
Good customer service
Rates and fees
Employed by bank
Too cumbersome
Satisfied with bank
Most innovative bank
The results may also indicate the distinct
perception they have of each of the
banks, based on the gaps between them
in ranking
From the 2007 study, FNB has
consistently been recognised as the most
innovative bank.
The gap between 1st and 2nd has also
widened when compared to pre-2011
levels.
Absa has had the biggest drop from its
peek in 20090%
10%
20%
30%
40%
50%
60%
70%
2007 2008 2009 2010 2011 2012 2013
FNB Capitec Absa Standard Bank Nedbank
Most innovative bank
In recent years, banks have been driving
customers to use more of their digital
channels for banking purposes; this may
be the reason ‘Technology’ has become
the top reason for rating a bank innovative
It is interesting to note that the reasons
given, over the years, have converged
and become less distinct
‘Marketing’ has also significantly dropped
from 2007 levels0%
5%
10%
15%
20%
25%
30%
35%
2007 2008 2009 2010 2011 2012 2013
Technology Products Innovative culture
Marketing Simplicity Processes
Contact Us
Physical Address:
South Africa, Johannesburg
222 Grosvenor RdBraynston, 2194
Telephone number:
(+) 27 11 783 0009
E-mail: [email protected]
We live in a socially aware society where involvement across a collective workforcecommunity is used to drive innovation. Social Based Innovation approaches pave theway to a more networked and integrated means of managing innovation. We aredriving this evolution forward.
United Kingdom, London
81 Oxford StreetLondon
E-mail: [email protected]
44 207 903 5410
Physical Address:
Telephone number: