Digital banks will have to step up their game to win over South Africans

South African consumers have a growing appetite for their banks’ digital innovations – but aren’t satisfied with what’s on offer.

This is according to the latest BrandsEye SA Banking Index which tracked more than 1.7 million consumer social media posts about Absa, Capitec, FNB, Nedbank and Standard Bank, from September 2017 to August 2018.

While the index focused on all aspects of these banks, it also paid close attention to the conversation surrounding their digital offerings and how they stack up to South Africa’s new banking entrants.

“The expectant new entrants, TymeBank, Bank Zero and Discovery, will enjoy the advantage of entering the market without the legacy plumbing of the incumbents,” it said.

“Branch-free, they are likely to be focused on digital products and services.”

Digital-only problems

BrandsEye focused on four digital themes over the reporting period:

  • Digital safety and security;
  • Online banking;
  • Banking apps;
  • Business or tech innovation.

Across all banks, these themes comprised 24% of topic conversation suggesting that these services are a critical part of the consumer’s banking experience, BrandsEye said.

“More than 40% of conversation about digital topics focussed on the business or tech innovation theme. Discussions around the app followed with 29%, while only 13.4% of consumers spoke about online banking.

“This suggests that app experience and functionality is a high priority for consumers. Digital safety comprised 17.4% of overall digital conversation.

“What should concern banks is that the overall net negative sentiment towards all digital conversation stood at -40%,” it said.

This may be cause for concern among the new banking entrants which are all based on some form of digital-only offering.

“Of all digital conversation themes, consumers are most negative about digital safety, a finding that will worry both new entrants and incumbents,” Brandseye said.

“For new entrants, their focus on digital-only means of transacting means they could face some degree of suspicion from consumers who may feel they lack the established credibility. For incumbents investing heavily in innovation, they’ll need to improve the reputation of digital services, if they’re to attract more users,” it said.

Always On and Personalised Services

Although negative consumer feedback is synonymous with social media, across conversation about digital, the net negative sentiment -40% suggests banks need to up their game.

Banks offering personalised products that reflect and understand their customers’ needs and context will have better rates of retention and acquisition, BrandsEye said.

“What consumers now demand is continuous and reliable service – this was confirmed by our analysis of social posts.

“Customers who couldn’t use their banking apps or log-in online quickly threatened to find a new, more reliable service provider.”

Opportunities for both established and new banks

The index showed that there are a lot of unhappy banking consumers in South Africa.

In total, around 417,500 consumers expressed negative sentiment towards banks on social media in 2018, BrandsEye said.

“An estimated 7.3% of these consumers showed intent to cancel, equating to more than 30,000 potential churn instances.

“Addressing them on social media to resolve their issues is a good place to start but for many, it will be too late.”

However, these numbers do not just represent an opportunity for new entrants to aggressively compete for market share, but for incumbents to improve too, it said.

It added that while the measure of a bank’s convenience used to relate to the number of physical branches they had in a given area, this is now no longer the case.

“Instead, convenience is linked to ‘always on’ innovative digital banking,” BrandsEye said.

“We found that consumers have little patience for tech that doesn’t work and nearly half of all digital-related conversation in the last year pertained to business or tech innovation.

“The demand is greater than ever for consumer-driven personalised banking. Consumers are asking for it. This time next year, we’ll be able to tell if the banks were listening.”

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Digital banks will have to step up their game to win over South Africans