Understanding declining customer service ratings at a major South African commercial bank.

Abstract

In recent years, the four major South African commercial banks (ABSA, Standard, First National Bank and Nedbank) have been measuring customer satisfaction and loyalty through market research, the results of which reflect their customers’ perception of service delivery by these banks. Standard Bank has shown steadily declining service levels since 2004 as perceived by its customers in the feedback to the monthly customer service surveys. Standard Bank, Personal and Business Banking in KwaZulu-Natal is the case study of this research. The Bank in KwaZulu-Natal implemented structural, technological and process changes during the period 2004 to 2006. Customers expressed dissatisfaction with the installation of centralised contact centres and retail credit centres during their visits to the bank. Customer dissatisfaction was evident in the customer comments in the monthly customer survey. This provided strong motivation to the Standard Bank’s Central Customer Service Support Unit that customers still preferred the personal touch rather than the speed and efficiency that technology and new structures and processes promised to deliver. Senior Executives at the bank were measured on sales and service performance in their areas of responsibility. The customer service component comprised a weighting of 45% of the overall performance scorecard. There was a growing concern that the bank needed to regain customer confidence and as a result, repositioned itself as a bank that focuses on meeting customer needs balanced with a need to be profitable. Enhancing customer loyalty has become a popular topic for managers, consultants and academics. The arguments in support of loyalty are simple to understand. Loyal customers are reported to have higher customer retention rates, commit a higher share of their category spending to the firm, and are more likely to recommend others to become customers of the firm (Keiningham, Cooil, Aksoy, Andreassen & Weiner 2007). The Standard Bank subsequently adopted the strategic operating model with customer centricity as the core theme in August 2006. The operating model is underscored by the strategic C@Ps (Compass Aligned Performance System) that aligns the Bank’s performance with its strategic objectives. To monitor their performance and guide improvement efforts with regard to customer loyalty, managers frequently rely on customer feedback systems. This feedback is typically obtained through customer surveys that contain measures of satisfaction, repurchase intention, and word-of-mouth intention (Keiningham et., al 2007). Customer feedback survey ratings at this bank indicate a downward trend since 2003. This study will focus on customer service ratings in KwaZulu-Natal branches during the period 2004 to 2007, total customer accounts in the bank’s books in KwaZulu-Natal, the ATM availability statistics and attempt to link these changes to the declining service ratings. Customer satisfaction is strongly influenced by customer expectations. The gap between perceived quality and expected quality, called “expectancy disconfirmation is a strong predictor of customer satisfaction (Keiningham et., al 2007). Customer responses in the monthly feedback surveys indicate dissatisfaction with service delivery in some areas of the bank. This study will further investigate the competence of the two core customer delivery channels, the Automated Teller Network and the Branch Network in delivering to customer expectations. The research will be conducted by analysis of secondary data available on the customer service ratings for the period 2004 to 2007. ATM uptime data has been made available from the bank’s ATM reports for the period 2004 to date. To assess whether the declining customer service ratings have contributed negatively to retention of customer accounts, secondary data available from the bank’s database will be analysed and the findings presented in this study. The knowledge and competence level of staff in the bank will be analysed by the results from questionnaires sent to a population of branch and support staff in the bank. This research was conducted through the use of questionnaires handed out to a cross-section of the bank’s population in 6 randomly selected branches in urban KwaZulu-Natal. When conducting research for the purpose of this study, quantitative and qualitative methods were used. From the research it was noted that the performance of the ATM delivery channel could have contributed to declining service levels. This was evident in the ATM availability information from 2004 to date. The research has provided a base for a weak positive correlation between the performance of the ATM and the Customer Evaluation of Branch (CEBS) ratings. Although the ATM performance shows levels above 96%, it is evident that customers are experiencing variations in the service provided at ATM’s in the province. Analysis of secondary data available in the bank’s database, shows that accounts opened during the period 2004 to 2007 were significantly higher that the total number of accounts closed. From the total accounts on hand at the end of each month for the period under review, it is clear that the total accounts are on the increase year on year. It is easy to conclude from the analysis of available data that declining service levels have not contributed to a loss of customer accounts, however, the scope of the research does not allow for investigation into the value of accounts closed and opened. From the analysis of responses to the questionnaires, it is noted that there is a moderate correlation between the knowledge and competence of staff and the creation of value for customers. Good customer service cannot be predicted by trained and knowledgeable staff alone. Employees need to develop a sense of ownership of delivery to customers. This should be facilitated by line managers and supervisors. The bank is fortunate in that it has numerous improvement interventions at its disposal, including a structured framework in which staff can develop and enhance customer service skills and their performance managed accordingly. This will ensure that individual employees are motivated to be a critical link in the chain that delivers quality and creates customer value.