Consumer confidence in Malaysia’s banking industry on a strong rise

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  • Trust in banks is underpinned by the quality of people’s personal banking experience
  • Competition is intensifying as customers consider using alternative providers
  • Key opportunities for banks to win and retain customers

Kuala Lumpur, 4 March 2014 – Confidence in Malaysia’s banking industry is on a significant rise, trust in individual banks is high and many customers in Malaysia are satisfied enough to recommend their main banking provider, finds EY’s 2014 global consumer banking survey on Malaysia.

Against a backdrop of improved sentiments globally and in the Asia-Pacific region, almost two-thirds of customers in Malaysia have indicated increased confidence in the banking industry in the past year and have expressed complete trust in their primary financial services providers (PFSP).

Chow Sang Hoe, Managing Partner of EY Malaysia’s Advisory Services, says, “Coinciding with the heightened confidence, our local retail banking customers have also expressed strong levels of advocacy for their PFSPs – higher than the global and Asia-Pacific respondents - and are likely to increase their business with their PFSPs.”

The study, Winning through customer experience, which surveyed over 32,000 banking customers in 43 countries,  shows banks are providing traditional banking services well but are viewed as falling short on important aspects of the customer experience, and are also increasingly vulnerable to competition from new providers of banking services.

Confidence and trust are building among bank customers

Globally, one-third of customers reported an increase in confidence in the banking industry compared to a year ago. This is a marked increase on the figures from the previous survey in June 2012, when just 22% reported an increase in optimism. Around the world, confidence is increasing most in India, where 77% of respondents expressed increased confidence, followed by Saudi Arabia (68%). In Asia-Pacific, Malaysia’s respondents recorded the highest levels of increased confidence at 61%.  

Most customers (93%) surveyed said that they trust their primary financial services provider; naming “the way I am treated” as the most important reason for having complete trust in their bank after “financial stability”.

“The survey finds customer experience to be a main driver of trust, and across the globe, customer experience is also the single most common reason that customers open and close accounts. Among many customers in Malaysia, the “convenience of having everything in one place” and branch office location are also strong motivations,” says Chow.

Customers are on the move

According to the report, 52% of customers have opened or closed at least one product in the past year and 40% plan to in the coming year. Twenty-two percent of those who plan to maintain their current relationships feel all companies are the same and 17% say it is just too difficult or time-consuming to change.

“Bank customers are not being actively retained; they simply remain with their current provider through inertia and are therefore vulnerable to competitors. Meanwhile, new types of financial services providers with new technologies and customized services are penetrating the global marketplace and cannot be ignored. In Malaysia, with almost half (45%) of respondents indicating that they have opened or closed accounts/services in the past year and 39% intending to do so in the coming year, there are indications that customers are actively exploring and pursuing options,”  says Chow.

Key opportunities to win and retain customers

Banks are poised for growth and well-positioned to continue the recent momentum in building customer confidence. It will be essential to preserve the competitive advantages that banks have in delivering those benefits which are fundamental to banking and highly valued, including protection of customer information and increasing convenience across channels.

“Financial institutions can win and retain customers by making banking simple and clear for customers, for example, through transparency of fees, simplicity of offers and communication, and delivery of an omni-channel experience. Customer engagement can also be increased by helping customers make the right financial decisions in a complex environment through more and better advice and through greater use of data and digital channels to empower them. Last but not least, solving a problem or addressing a complaint creates a critical customer interaction, which, if done well, can actually increase a customer’s business,” concludes Chow.

-Ends-

Taking a fresh approach to segmentation

The extensive survey examines 31 core elements of customers’ banking expectations and preferences. In the report, the 35,642 customers were grouped into consumer segments sharing behavioral characteristics, products, channel preference and reasons for trust – rather than only traditional age, geography or income metrics.

Each segment varies by size, assets and willingness to pay more for key benefits and is found in all markets across the world. This segmentation provides a fresh lens to help banks identify strategies that more effectively engage customers and invest resources for future growth

To download the full report, view the customer segmentation infographic, watch videos discussing the survey’s findings and explore data please visit Global consumer banking survey.

About EY

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This news release has been issued by Ernst & Young Advisory Services Sdn. Bhd., a member of the global EY organization.