Digitally astute consumers demand more from SA banks

South African consumers have a growing appetite for their banks’ digital innovations – but aren’t satisfied with what’s on offer. As consumer expectations rise and new digitally-focused entrants compete for market share, incumbents will need to make significant improvements and get to the bottom of why they’ve fallen short. Looking at social media conversation may be a good place to start.

To assess how SA consumers feel and what’s driving them to feel that way, the 2018 DataEQ SA Banking Index tracked more than 1.7 million consumer social media posts about Absa, Capitec, FNB, Nedbank and Standard Bank, from September 2017 to August 2018. To achieve a 95% confidence level, a statistically relevant sample of the total posts were distributed to DataEQ’s Crowd of local language speakers. Each post was coded and verified by multiple Crowd members, who assessed the sentiment in the post (positive, negative or neutral). The Crowd also assessed a sample of total conversation to identify the specific banking-related topics contained in individual posts.

The Findings

Digital is playing an increasingly important role in banking and with new digitally-focused entrants expected to launch in the coming months, the 2018 Index paid close attention to conversation about banks’ digital offerings. The expectant new entrants, TymeBank, Bank Zero and Discovery, will enjoy the advantage of entering the market without the legacy plumbing of the incumbents. Branch-free, they are likely to be focused on digital products and services. We analysed four digital themes over the reporting period, (i) digital safety and security, (ii) online banking, (iii) banking apps, and (iv) 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.

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%.

In 2018, making payments remained the primary conversation theme about banking apps, despite showing a slight decrease from 2017. Other functions saw increases, suggesting that SA consumers are gradually engaging with secondary app functions that are not directly related to making or receiving payments. The digital maturity of the SA consumer is good news for new entrants – Discovery, for example, are said to be integrating their bank with their other products and apps.

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

Always On, 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. According to Boston Consulting Group’s (BCG) 2017 Global Retail Banking Report, if banks want to make “further progress in digitising for value” they’ll need to focus on personalisation and continuous delivery. Banks that offer personalised products that reflect and understand their customers’ needs and context will have better rates of retention.

Continuous delivery is particularly key for SA banks. We observed that when online services or apps went down, it triggered an immediate dip in sentiment on social media. BCG’s report makes an important note on this: while once considered exciting new advantages, digital products, like mobile apps and online banking, are now considered basic essentials.

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

There are a lot of unhappy banking consumers in SA. In total, around 417 500 consumers expressed negative sentiment towards banks on social media in 2018. 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. Incumbents will need to focus on personalisation and continuous delivery. PWC’s Future of Banking Report suggests that to compete with the new digital competition, banks will need to prioritise both “digital transformation and data mining” – social media is just one of many valuable data streams banks have at their fingertips.

The measure of a bank’s convenience used to relate to the number of physical branches they had in a given area. BCG notes that this no longer the case. Instead, convenience is linked to “always on” innovative digital banking. 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.