17 minute read 26 Apr 2019
Playing Smartphone Cafe

How retail banks must rethink their customer relationships

By Jan Bellens

EY Global Banking & Capital Markets Sector Leader

Passionate leader on innovation in financial services, especially in emerging markets. Global citizen. Keen traveler.

17 minute read 26 Apr 2019

Show resources

  • Global Consumer Banking Survey (pdf)

    Download 967 KB

Our Global Consumer Banking Survey of 55,000 consumers reveals that retail banks must adapt as their relevance with consumers wanes.

Our Global Consumer Banking Survey of 55,000 consumers in 32 countries reveals that traditional banks are under threat and their relevance with consumers is waning. Therefore, traditional banks need to rethink – and in some cases, even revolutionize – their approach to consumer relationships.

Bank dependence


40% of customers expressed decreased dependence on their bank as their primary financial services provider and used nonbank providers for financial services in the previous 12 months.

Nonbank use


20% of customers who have not yet used nonbank providers plan to in the near future.

The survey revealed four critical areas where banks must focus their investments and efforts to restore their central place in the lives of consumers:

  • Build customer trust
  • Enhance customer understanding
  • Rethink customer engagement and distribution
  • Innovate customer experience such as FinTechs
craftsman spirit level workshop
(Chapter breaker)

Chapter 1

Building customer trust

When trust is breached, the consequences can be severe.

Trust is essential in banking, because of its intensely personal nature and because it is a predictor of advocacy and future business. When trust is breached, the consequences can be severe.

Consumer trust in banking: good news, bad news

Our Global Consumer Banking Survey of more than 55,000 consumers presents both good and bad news in relation to trust:

  • Consumers have high levels of trust in traditional banks to do the basics (e.g., to keep money safe).
  • They also want to trust banks: 60% of global consumers agree that “banks have an important role to play in helping people achieve their life goals through their expertise.”
  • Consumers have lower levels of trust in traditional banks to fulfill “strategic” pledges (e.g., to provide unbiased advice).
  • New market entrants and FinTechs have achieved parity with traditional banks when it comes to trust.

Traditional banks have long considered trust to be a foundational strength, thanks to the visibility and familiarity of their brands and branches. But the survey results show that this competitive advantage is at risk. Therefore, banks must take action to restore trust.

Customer trust


Only 26% of customers have complete trust that banks will provide truly unbiased advice.

Six actions banks can — and should — take to preserve trust now

The erosion of trust is worrisome, even if it has not yet become a full-fledged crisis. To regain lost ground, banks must take strategic actions aligned to the distinct views of trust and its importance for the business.

  • Inspire a customer-centric culture by setting the right tone from the top and using the right incentives at every level of the organization. Long-lasting, trusted relationships will not be created through a series of trust projects. A set of clearly articulated and continually reinforced values and principles, as well as incentives that motivate and reward the right behaviors, is necessary in order to build customer-centric and trust-driven cultures.
  • Deliver transparency in product features and transaction fees. Only 32% of global consumers have complete trust that their primary financial services provider (31% for traditional banks) is providing full transparency about fees and charges. If customers do not feel the bank is being transparent about its fees, they are less likely to recommend the bank to others.
  • Proactively protect customer data as if it’s your own — and defend against cybersecurity threats. Nearly two-thirds, or 60%, of global consumers worry about the hacking of bank accounts or bank cards, and 59% worry about the amount of personal information that private and public sector organizations have about them. It is not simply a matter of establishing infrastructure, processes and procedures to prevent attacks or data breaches, but engaging with customers to create products and services that strike a balance between convenience and security.
  • Radically transform the front line’s ability to provide unbiased, high-quality advice. The front line shapes the customer experience — and banking customers are looking for better experiences. Currently, even those frontline associates who are empowered and given the incentives to do the right thing for customers likely lack the data, tools and technology to deliver truly exceptional service.
  • Master customer touch points by eliminating errors, streamlining service and driving operational excellence. Efficient processes and customer access to information will provide traditional banks more freedom and flexibility to redesign and optimize their branches to align with current and future consumer needs.
  • Expand into new territory to create an ecosystem of products and services, including nonfinancial services that customers want. The focus should not be on the transactional element of the relationship, but rather on serving as a trusted advisor through lifelong financial decisions. As banks focus on strengthening trust with customers, banks must also rethink their role in customers’ long-term financial journeys.

The geographic view

Customers’ trust in traditional banks changes based on geographic location. However, the numbers are still not ideal, even in the most trusted markets.

  • Complete trust in banks is highest in emerging economies in the Asia-Pacific region (54%) and lowest in Europe (36%) and mature Asia-Pacific economies (31%).
  • Japan (11%) and Ireland (21%) have the two lowest complete trust ratings for both basic trust drivers and relationship-building elements.
  • Banks have important roles to play in helping people achieve their life goals through their expertise across all types of financial products. This sentiment is highest among respondents in emerging markets — for example, India (81%) — and lower in the Netherlands (35%) and Sweden (47%).

How can your bank restore trust?

We believe it is possible to restore trust, but a considerable investment of resources and energy will be required. The payoff will be substantial in driving further business and preserving the status that traditional banks have historically held for consumers. Fundamentally, we believe there is a bright future ahead, especially for those organizations that seize the opportunity to strengthen trust with customers and cultivate trusted brands as a way to differentiate themselves from both new and existing competitors.

Designer laptop office desk
(Chapter breaker)

Chapter 2

Enhancing customer understanding

Many traditional banks overlook the opportunities that customer data offers.

More consumers are embracing digital, giving banks access to a wealth of valuable customer data. Yet many traditional banks overlook the opportunities that this data presents. The marketplace is changing drastically, and banks need to make use of this data to keep up. It’s a question of not only what they offer, but also how, when and in which delivery channels.

Consumer understanding in banking: how well do you really know your customers?

Our Global Consumer Banking Survey of more than 55,000 consumers highlights current gaps and opportunities:

Traditional segmentation – based on demographic factors such as age, financial parameters, profession, earning potential and geographic location – is inadequate for comprehensive customer understanding.

Deeper insights about behaviors, attitudes, life stages and lifestyle factors are necessary to gain nuanced understanding, to build actionable strategies.

“Digital savviness” and “financial savviness” -- knowledge and comfort level using online and mobile channels and banking products -- offer an alternative, insightful way of segmenting customers.
Our analysis of the survey results demonstrates four new segments:

Pros are confident self-managers of their finances who are fully comfortable in digital channels; pros may try nonbanks and digital providers that offer better digital experiences.

Digital stars also feel in control of their finances, but less so than pros and still value 24/7 access to service staff. They are the most receptive toward nonbanks.

Traditionalists feel the least confident with their finances and worry about data security and digital channels. Preferring banks with branches, they are loyal but less profitable than other segments.

Financial stars feel in control and comfortable self-managing their wealth. They are neutral to digital channels and alternative providers, while valuing the expertise and services of traditional banks.

Immediate actions to improve customer understanding

The rise in customer diversity and a deluge of digital data make it more difficult to develop appropriate micro-segmentation and valuable customer insights. To better understand today’s customers and combat the erosion of trust and relevance, banks should:

  • Orient an organizational mindset for a digital-first customer culture. An exceptional customer service culture involves communicating and embedding beliefs, values and behaviors to all staff to guide and mold interactions and decision-making regarding customers. A truly customer-centric culture starts with top-level leadership and requires an organization-wide commitment to applying knowledge from consumer data in all phases of operations.
  • Address potential “moments of truth” and provide avenues for dynamic customer feedback. Customer journey mapping is an effective first step to gaining broad-based and holistic views of how existing processes and experiences intersect with customer needs and preferences. Because pivotal moments can occur anywhere along the customer journey, banks must know which interactions matter most to which types of customers.
  • Adopt an agile use of big data analytics to sharpen their proposition and enhance customer values. More insightful, actionable segmentation is an essential step toward tailored value propositions for unique groups of customers. Banks need to dig deeper into their existing — but often underexploited — transactional and behavioral data sets to determine the right levels of personalization for each segment.

Ready to get to know your customers on a deeper level?

True customer understanding is no longer a nice-to-have agenda item, but a strategic and competitive necessity for banks seeking to boost short-term revenue and promote long-term growth. Customer understanding should be a living, breathing part of everyday business, with insights underpinning the full range of banking operations.

With deeper understanding, financial institutions can identify what customers need and want in their financial engagements, prioritize investments into customer experience enhancements, redesign outdated processes and create innovative, intuitive digital experiences.

woman headphones credit card online shopping
(Chapter breaker)

Chapter 3

Rethinking customer engagement

Engaged customers are more likely to view banks as trusted advisors and turn to them more often.

Customer engagement involves customer willingness to interact with banks and is arguably a prerequisite for customer advocacy. Engaged customers are likely to view banks as trusted advisors, share personal information and turn to banks more often for advice on financial matters.

Two key dimensions for achieving better customer engagement are:

  • Developing relevant and tailored content and propositions that add value for individual customers
  • Sharing them through the right mix of channels in a consistent, convenient and contextually appropriate manner

Findings from our Global Consumer Banking Survey suggest that consumers are ready to engage more deeply and meaningfully with banks – but only if institutions vastly improve by delivering the right content and propositions via high-quality experiences and optimizing the mix of channels to match diverse customer preferences.

Seven tips for quality customer engagement

Winning with engagement requires excelling on both strategic and operational dimensions, as well as connecting with customers on an emotional level.

1. Design customer journeys wit engagement in mind.
  • Determine what goes where to address customer needs at unique points in their journeys – think beyond the basic product-related content and about the wider context of what is the customer trying to achieve and what problems are banks trying to solve.
  • Model cross-channel workflows to optimize interactions along the life cycle.
2. Transform the branch network.
  • Whether branch reduction is on the cards or not, make branches better with more digital capabilities and a “remix” of kiosks, smart ATMs and micro branches.
  • Create destination branches, which will see reduced transaction volume and greater focus on relationship building and servicing.
  • Retrain and change staff metrics so that branch managers and teams’ performance can maximize and be measured on the basis of customer engagement.
3. Enhance the mobile channel.
  • Optimize mobile channels so that they deliver the services and performance that customers expect.
  • Provide access to services and products even while some may be limited in terms of consumer ability to complete certain transactions.
4. Build engagement by investing in analytics and digital marketing, real-time messaging and stronger content for customers.
  • Build better content. There are many ways to do this – for example by demystifying intimidating topics such as retirement planning and mortgages.
  • Be on your customers’ side to help them avoid overdraft fees or take advantage of timely opportunities. Deploy tools to prompt customers.
5. Make it your own.
  • There is no ‘one-size-fits-all’ solution — content needs to be developed in the context of a customer’s circumstances, understanding of financial products and their financial goals.
  • Provide insights that go beyond products and services.
6. Make the best use of the data you have or customers are willing to share.
  • Customers are willing to share data but be aware of concerns about the amount and safety of personal data available online.
7. Measure engagement via composite, cross-channel KPIs.
  • Evaluate performance of branches, staff and digital channels with a combination of new and traditional metrics.

Engagement is a two-way street

To drive customer engagement, banks must become more engaging in terms of their products and propositions, improve the use of channel mix making certain the right metrics and incentives are in place and increase transparency in how they use the data entrusted to them to better serve their customer needs. Content must be timely, targeted and meaningful to customers as people – not presented as part of obvious exercises in cross-selling and up-selling.

Couple VR glasses car dealership
(Chapter breaker)

Chapter 4

Innovating customer experience

Banks today compete primarily on customer experience, rather than price, product or scale.

Banks used to compete largely on price, product and scale of the branch network. But today, customer experience is the main competitive front. That means a new emphasis on simplicity and convenience of interactions across a variety of channels, responsiveness to consumer requests and a proactive approach to continual engagement with customers – all aimed at helping consumers increase their financial well-being.

Findings from our Global Consumer Banking Survey of more than 55,000 consumers provide insight into why banks are under such intense pressure to master the customer experience:

  1. Increasing commoditization: customers increasingly see traditional banks as all the same. Enhancing, personalizing and streamlining customer experiences will enable banks to differentiate themselves.
  2. New competition: FinTechs and other new market entrants have used superior experiences to capture significant market share in some markets. Traditional banks must fight back with better experiences or expect further erosion of their most profitable customers.

Thus, traditional banks must think and act like FinTechs – understanding and even emulating their approaches in key areas, including:

  • Radical simplification of the customer journey
  • Truly end-to-end customer engagement, with fully integrated and coherent channels
  • Simpler products that are easier to understand, rationalized product portfolios and more transparent pricing
  • Banking ubiquity, where core services are embedded within digital personal assistants (e.g., Apple’s Siri or Amazon’s Alexa) or via other platforms
  • Serving narrower segments of the market (e.g., teenagers, seniors, expatriates or frequent travelers)
  • Entirely new lines of business, partnerships and joint ventures that explore new product territories

Primary banking relationship


Our survey reports that 6% of global consumers have moved their primary relationship to new companies offering simpler technology and services than traditional banks.

What is customer experience?

Fundamentally, “customer experience” refers to the ways in which banks engage and interact with their customers:

Harvard Business Review: “The sum-totality of how customers engage with your company and brand, not just in a snapshot in time, but throughout the entire arc of being a customer”
Forrester: “How customers perceive their interactions with your company”

According to our survey results, traditional banks still “own” the primary financial services relationship for most consumers. But their relevance has begun to taper because of eroding trust, evolving customer expectations and the emergence of credible alternatives. That’s why customer experience matters.

The rise of FinTech

While the industry has long been aware of the threat of FinTech, consumer migration is accelerating and usage is high. The seemingly small and incremental gains new players have made in the last few years are now reaching a critical mass, largely because they have set new standards for innovation and customer experience.

Actions banks should take to innovate and enhance the customer experience

Banks can chart their course forward by thinking in terms of two tracks:

1. What needs to be done to provide better customer experiences

Transform customer journeys – better customer experiences begin with in-depth knowledge and understanding of why and how customers interact with the bank – the “customer journey.” Customer needs and expectations should drive the experience design at all steps.

Radically simplify product portfolios, product features and pricing – from the very first encounter, customers must understand the value banks provide and what different products and services cost. The first step is to make all offerings simple and transparent.

Broaden services and expand into new “territories” to create an ecosystem of value-adding services, including nonfinancial services – banks must find new ways to expand or extend the core banking value proposition into new areas beyond traditional product and transaction sets. The promising territories include tax support, education around retirement savings and special offerings for narrowly defined customer segments.

2. What needs to be done internally to enable those better experiences

Form partnerships to deliver a broader ecosystem of services and offerings – banks will be well served by forming partnerships and collaborating with FinTechs to expand the range of their offerings. There are risks to consider; simply providing a balance sheet but not owning the services or platform could lead to the erosion of customer relationships. But banks do not need to provide all products and services on their platform, and can rely on partners for the provision of parts of the product set.

Structure the organization, build the talent base and shape the culture to drive innovation – to design and deliver first-rate customer experiences, banks will need to transform their workforce, starting with how they attract, engage, develop and inspire their talent. Financial institutions that win in the market five years from now will look very different; that difference will be driven by people and teams as much as it is by technology and data.

Collaborate with FinTechs to deliver better outcomes for customers – for traditional banks, innovation can be accelerated through collaboration with FinTechs. Banks that have begun the process of collaborating with FinTechs have explored a number of approaches, including the creation of special focused teams and programs to drive innovation initiatives internally.

Winning through customer experience in a new world

The imperative to offer a great customer experience reflects the fundamentally new world in which banks operate. Whether banks can learn to act like FinTechs and master the many different manifestations of customer experience will play a major role in deciding how the next era of consumer banking plays out.

man ladder trimming tall hedge
(Chapter breaker)

Chapter 5

Bank Relevance Index

The BRI translates banks' consumer engagement levels into quantifiable measurements.

We developed the Bank Relevance Index (BRI) to translate banks’ current consumer engagement levels into quantifiable measurements. The BRI measures a range of current and future behaviors and attitudes to build a composite score based on two key attributes:

How customers bank now — the proportion of customers who consider traditional banks as their primary financial services provider and the current products they hold with such banks.

How customers want to bank in the future — customer trust in banks and the future products they would consider from a traditional bank.

The BRI is therefore a combination of both leading and lagging indicators of customers’ relationship with their bank. At the maximum BRI value of 100, consumers would hold all their financial products with banks, use them as their primary financial services providers, trust them fully and turn exclusively to banks for financial advice, new products and services. At the minimum BRI value of zero, customers would use solely nonbanks for all aspects of their financial lives.

Bank Relevance Index


The average Bank Relevance Index score is 75.1, based on 32 markets analyzed in our Global Consumer Banking Survey.

The average bank relevance score globally, based on 32 markets surveyed, is 75.1. So what happened to nearly 25% of bank relevance?

The four variables of bank relevance

1. Primary financial services provider defined as bank

The financial institutions that people consider to be their primary financial service provider is changing. This variable is likely to erode over time as more nontraditional banks appear on the radar, and reputation and legacy become less important.

Consumers in developed markets, including Denmark, Germany, Canada and the UK, are most likely to define a traditional bank as their primary provider of financial services.

2. Trust in banks

Traditional banks often consider trust as a foundational strength. The index reflects waning trust over a broad range of relationship elements including privacy, security, fee transparency and providing unbiased advice.

Trust for traditional banks is highest in China and India and lowest in Japan and Ireland.

3. Mix of products currently held at a bank

Consumers are turning to new providers to manage their finances and purchases. The impact of mobile banking and nontraditional banking providers are most evident in emerging markets.

Consumers in both the US and China hold fewer than the average share of the financial products with traditional providers, while consumers in Russia and France hold more.

4. Future product consideration

The index shows customers no longer consider banks to be the first or only option for managing their financial lives. For some products, such as mortgages and checking accounts, banks currently dominate; however, in some categories, including products where banks dominate today, the potential erosion of accounts may be dramatic.

Consideration for traditional banks is highest in Nordic countries, while the lowest scores come from both developed markets (US and UK) and developing markets (Africa, India and Latin America).


Our survey revealed four critical areas where banks must focus their investments and efforts to restore their central place in the lives of consumers: building trust, enhancing understanding, rethinking engagement and, finally, innovating.

About this article

By Jan Bellens

EY Global Banking & Capital Markets Sector Leader

Passionate leader on innovation in financial services, especially in emerging markets. Global citizen. Keen traveler.