BAIN REPORT Evolving The Customer Experience in Banking PDF

EVOLVING THE CUSTOMER EXPERIENCE
IN BANKING
“Alexa, move my bank accounts to ...”
Acknowledgments
This report was prepared by Gerard du Toit and Maureen Burns, partners in Bain’s Financial Services practice,
and a team led by Christy de Gooyer, a practice area director, and David Phillips, a consultant. Team members are
Madhav Jalan, Lakshay Kataria, Sidhant Law, Akash Malhotra, Jocelyne Moyer, Pranav Singh and Lavanya Srivastava.
The authors thank Bain partners in each of the countries covered in the report for their valuable input and
John Campbell for his editorial support.
Research Now is a global leader in digital research data for better insights and business decisions. Founded in 1999,
the company was a pioneer in originating online data sampling. The company provides research data solutions
for its 3,700 market research, consulting, media and corporate clients through access to more than 11 million
deeply profiled business professionals and consumers. Research Now currently operates in more than 40 countries
around the globe, with locations in the Americas, Europe, the Middle East and Asia-Pacific. For more information,
please go to www.researchnow.com.
Net Promoter ®, Net Promoter System ®, Net Promoter Score ® and NPS ® are registered trademarks of
Bain & Company, Inc., Fred Reichheld and Satmetrix Systems, Inc.
Copyright © 2017 Bain & Company, Inc. All rights reserved.

Evolving the Customer Experience in Banking | Bain & Company, Inc.
Contents
“Alexa, move my bank accounts to…” . . . . . . . . . . . . . . . . . . . . . . . . . . . pg. 1
1. Consumers to technology firms: Bring on the financial products. . . . . . . . . . . pg. 9
2. Banks still lag in digital basics, especially with mobile . . . . . . . . . . . . . . . . pg. 15
3. AI-based consumer technologies go mainstream. . . . . . . . . . . . . . . . . . . . pg. 21
4. Different strokes for different customer episodes. . . . . . . . . . . . . . . . . . . . pg. 25
5. Hidden customer defection runs rampant, with banks

neglecting to ask for the sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . pg. 31
6. Movement on the loyalty leader boards. . . . . . . . . . . . . . . . . . . . . . . . . . pg. 37
Appendix: Methodology. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . pg. 40
Page i
Page ii
“Alexa, move my bank accounts to …”
Amazon’s acquisition of Whole Foods is an audacious plunge into grocery in the US. More quietly, the company
has also been moving into financial products, including Amazon Cash, which gives customers the ability to deposit
cash directly to their Amazon accounts from more than 10,000 retail locations throughout the US; and lending
more than $1 billion in the past year to small merchants selling through its online platform.
We already see the dynamic of technology firms moving into banking in Asia. In China, e-commerce giant Alibaba
has amassed the world’s largest money-market fund, issued $96 billion of loans in five years and grown Ant
Financial to a market capitalization roughly equivalent to the ninth-largest bank in the US. Alibaba also started
online bank MYbank, which approves loans instantly, using automated processes based on consumers’ financial
history with Alibaba. Japan’s main e-commerce giant, Rakuten, operates the country’s largest Internet bank and
third-largest credit card company by transaction value. Financial services now account for nearly 40% of
Rakuten’s revenue.
As these examples illustrate, it turns out that retail banking is being upended not by nimble fintech start-ups, but by
established tech firms. Many of the tech giants possess the ingredients of success: digital prowess, large customer
bases, organizations well versed in improving the customer experience, and ample leeway to extend their
corporate brands into banking.
Should banks worry? They do appear to be vulnerable to losing the special status they once enjoyed. Banks have
a strong reservoir of trust, to be sure. But consider that US and UK consumers ranked PayPal and Amazon
nearly as high as banks for trust with their money, in Bain & Company’s new survey of 133,171 banking customers
in 22 countries.
Many consumers are open to buying financial products from established tech firms (see Figure 1). The greatest
latent demand exists in countries where the bank branch experience is more time-consuming and cumbersome,
such as India and Mexico; there, 91% and 81% of respondents, respectively, expressed a willingness to run their
finances through major tech firms. By contrast, where banks have taken some of the pain out of banking by
digitalizing most routine transactions, as in the Netherlands, they have inoculated themselves to some extent
against the threat.
Demand for alternatives to traditional banks will only grow, as younger respondents in our survey showed the
greatest willingness to try these offerings. Moreover, more than one-quarter of US respondents would consider
using voice-controlled assistants for their everyday banking, and Amazon currently dominates the voice-enabled
speaker market with its Alexa assistant on the Echo device. Given that Amazon, Alibaba and others already sell
payment services, credit cards and loans, it’s plausible that they will offer a suite of retail banking services in the
near future.
The perils of digital lag
Banks have a stiff challenge with meeting customer expectations for digital tools. Consumers young and old
prefer using websites and mobile applications for their routine banking transactions, which tend to be the most
frequent interactions. In the UK, for example, consumers give an average Net Promoter Score® (a key metric of
Page 1
Figure 1
Among tech companies, consumers are most likely to trust PayPal

and Amazon with their money
By age, Americans willing to buy financial Which company would you trust most with your money?
products from tech companies “ ”
More trust Primary bank 1.7
73%
Banks in general 3.3
61%
PayPal 4.0
42% Amazon 4.3
Apple 5.1
Google 5.4
Microsoft 5.5
Facebook 7.4
Less trust Snapchat 8.3
18−34 35−54 55 or older Average ranking by US consumers
Note: Rankings on a scale of 1 to 9, with 1 indicating highest trust

Source: Bain/Research Now Customer Loyalty in Retail Banking Survey, 2017
loyalty) of 35 to their routine transactions done digitally, higher than the 20 points for transactions done through
employees at the branch or call center. People get annoyed when they’re forced by bank policies and processes to
use additional channels for everyday banking business.
Refining the website and mobile app to be convenient, multifunctional and easy to use with just a few taps or
strokes will be critical to earning customers’ advocacy and loyalty. Yet on these basic characteristics, banks’ mobile
apps and websites fall short in the view of many respondents. In the UK, only 45% of respondents said their
primary bank’s website lets them do everything they need, or is easy to use (see Figure 2).
Beyond the basics, banks have barely touched some technologies that have reached a tipping point in consumer
markets. A large group of respondents said they use voice assistants such as Siri, Alexa or Google Assistant on
their smartphones (one-quarter of all US respondents, for example, and an even higher share among young
adults) or Alexa or Google Home at home (almost one-fifth of US respondents).
Just as intriguing is the 5% to 6% share of respondents in Australia, the UK and the US already using voice
assistants for banking; between one-fifth and one-quarter are open to trying the technology for their banking in
the future. A few banks have made progress in this regard, including Santander in the UK and Capital One in the
US. Last year, Capital One launched functions using Alexa skills, which employ a chatbot that works with Alexa.
These chatbots have some constraints, including the need for explicit commands, such as “What’s my payoff
quote?” for an auto loan. But USAA recently introduced an Alexa offering that lets members speak conversationally.
Banks that master the digital basics will be able to further secure customers’ loyalty by quickly putting the new
Page 2
technologies to practical use in test-and-learn prototypes that can be improved in a few iterations and then
broadly rolled out. And banks should be sure to automate back-end processes behind the new technologies to
avoid adding complexity along with the new channels.
Beyond the loyalty benefits, there are also compelling cost reasons to accelerate development of digital channels
that can handle more routine transactions and move them out of expensive branches and call centers. Each
mobile interaction incurs a variable cost that’s a tiny fraction of the cost for a teller or call-agent interaction. As
interactions migrate to mobile, a bank needs fewer tellers and call-center agents. The five largest banks in Mexico,
for instance, could eliminate $500 million in costs if they reached the level of mobile and online banking usage
of their counterparts in the Netherlands. Dutch banks began to reconfigure their branch networks a decade ago,
as the country’s strong broadband infrastructure and shift to cashless commerce allowed consumers to adopt
mobile banking early on.
Banks in other countries have equally large opportunities to take out costs. In the US, for example, 40% of
respondents went to a branch teller at least once in the previous quarter to make a deposit, compared with 21%
using digital channels and 18% using automated teller machines (ATMs).
The lower costs and high customer advocacy for digital channels serving routine interactions create a virtuous
circle (see Figure 3). The more transactions that digital channels accommodate seamlessly, the more customers
will use them instead of the call center or branch. And the reduction in “bad” call and branch volumes allows banks
to reinvest more to further improve digital channels, while reserving their employees for the knottiest problems.
Figure 2
Many customers feel banks’ current digital channels fall short, even as
new technologies take hold
UK respondents who agree US respondents who agree
Lets me do all I need Is easy to use Use voice assistants Use voice assistants
on phone at home
only only
45%
of online customers and
44%
of online customers and
already already
25%
of mobile customers
34%
of mobile customers
27%
of customers
18%
of customers
Page 3
Figure 3
Strong digital tools create a virtuous circle of higher adoption and

digital-first habits, contributing to greater loyalty
Customer behavior with US banks
Start with In 87%/59% of

digital interactions, people
start with digital
Contributing
Adopt
95%/78% of people to a higher Net
reported using digital digital Promoter Score
76/37
Succeed When people try digital,

in digital they are successful
Data in red for digital leader 90%/87% of the time
Data in black for digital laggard
Note: Net Promoter Score® is a registered trademark of Bain & Company, Inc., Fred Reichheld and Satmetrix Systems, Inc.
Citibanamex has taken on the “bad” volume challenge, which is particularly vexing in Mexico. The bank reckoned
that its customers and employees were spending 5 billion minutes per year at branches, with the vast bulk of that
time on the customers’ end. This waste took a toll on the bank’s cost-to-income ratio and ultimately on profits, as
well as on both customer and employee advocacy. Through a combination of initiatives ranging from simplifying
online forms and printing formats, to migrating more transactions to ATMs, to reducing wait time at teller windows,
Citibanamex freed up 1 billion minutes, giving a major boost to customer satisfaction and employee advocacy.
Cost implications also show up in such nonroutine events as disputing fees. In the US, for instance, there’s a
significant gap between the leading and the lagging banks in the incidence of these dispute events. Laggards not
only suffer from having more detractors among customers, they also bear roughly twice the cost of resolving the
dispute as the leaders do. In some cases, this can exceed any differences in the revenues collected from the fees
themselves. It’s better to eliminate such events in the first place.
Organizing around customer episodes, not products
We have seen some banks handle these challenges by organizing in a new way, around how customers experience
the business. That’s a marked departure from the standard, internally oriented approach to organizing around
products and functions, such as the checking account or the risk-management function. As part of shifting to the
customer experience, a few pioneering banks have adopted as a key unit of management the “episode”—activities
Page 4
that customers perform when they have a task to complete or a need to fulfill (see Figure 4). Typical episodes
include “I want to pay a bill online,” or “I want to buy a home” or “I want to dispute a fee.”
Design and management of each episode occur through small, cross-functional teams that are responsible for
owning and improving an individual episode. Teams typically use Agile methods to arrive quickly at a minimum
viable product, gathering and baking feedback from customers into successive versions of the episode before
rolling it out broadly. One bank has managed to take Agile episode management to scale, with more than 250
active teams. The bank is realizing substantial gains as a result. For instance, one team generated an auto-finance
mobile prototype in one week, a project that previously would have taken at least six months.
Different episodes require a different blend of digital and human processes, tuned to the unique considerations
of each episode. High-stakes, emotional moments of truth, such as handling a complaint, demand outstanding
customer service, as our survey respondents strongly prefer working with employees to dispute a fee or resolve a
problem. Low-stakes, but frequent, episodes such as reviewing one’s account activity should be as fast and convenient
as possible through digital channels. Banks should work to reduce the frequency of bad episodes, and treat episodes
involving sales as an opportunity to reinforce the bank’s brand.
You have to ask for the sale
In fact, episodes that involve buying financial products represent huge untapped opportunities for banks, which
they can realize through more personalized selling.
Figure 4
Customer episodes for “Open an account” at one retail bank
Move and
Join and Pay for Own a Resolve
manage Borrow Invest
onboard money
things home an issue
Manage my profile
Open an account Get a credit card
and preferences
• Evaluate my options • Get ready to use my account

• Apply to open an account • Register for and receive digital access
• Receive approval or rejection • Receive and activate my debit card
Source: Bain & Company client
Page 5
Figure 5
Banks should consider more, and more targeted, marketing and

sales pitches
In Australia, more than one-third Only one-quarter were actively Half would have purchased from
of defectors said they bought from a researching when they decided their primary bank if the bank had
competitor bank because they received to buy the product. made an offer.
an offer or saw an advertisement.
The lesson: Ask for the sale.
Hidden defection—purchasing an additional banking product from a competing bank—takes place everywhere,
totaling 25% to 51% of additional products, depending on the country. Credit cards, loans, insurance and investments
are the most purchased categories at competitors, whereas the primary bank tends to keep a higher share of low-
value deposit accounts.
To stem the tide of hidden defections, our analysis of the survey data shows that banks should consider more, and
more targeted, marketing and sales pitches. In the US, for instance, 42% of defectors said they bought from a
competitor bank because they received an offer or saw an advertisement. Only one-fifth were actively researching
when they decided to buy the product. Just as striking, more than half would have purchased from their primary
bank if the bank had made an offer (see Figure 5).
The lesson: Ask for the sale. Banks have copious data on their customers’ risk profile and stage of life, which
allows them to present the right offer at the right time and place—before competitors step in and poach a willing
customer. Since more consumers tend to purchase credit cards, investments and other secondary products more
frequently through digital channels than they do when buying primary products, it follows that banks could ramp
up their digital marketing efforts.
•••
Banks’ efforts to build out websites and mobile apps have made for an intense competitive game within the sector.
An entry by Amazon or other tech firms into banking would take the competition into a different league.
Page 6
Consumers’ expectations keep rising as people grow accustomed to simple, convenient digital channels in other
parts of their lives. If banks don’t reorient their approach and radically accelerate their rate of progress, loyalty will
suffer, and they will watch technology firms poach more business. Meanwhile, their economics will erode as too
many routine transactions continue to flow through expensive branch and call-center networks.
Bank employees, used judiciously, will also figure in this competitive battle, as long as they are deployed to
resolve complicated problems or serve high-value customers who merit personalized attention. Banks that go a
step further to mobilize small teams around individual customer episodes stand to steadily earn greater advocacy
and loyalty, the best defense against incursions by technology firms.
Page 7
1.
• Customers are surprisingly amenable to trying
financial products offered by technology firms,
especially large, established firms. While some
consumers express willingness to try such products
from start-ups, there’s a 10- to 40-percentage-
point gap across countries between large firms
and start-ups.
Consumers to
technology firms: • Younger customers show the greatest willingness
to try such offerings, but a large share of older
Bring on the customers in all countries also are comfortable
with the idea. Credit cards get the highest expres-
financial products sion of interest, followed by a basic account.
• Interest in tech firms’ offerings is greatest in countries

where customers have long used nonbank payment
systems, such as India and China, or where it’s time-
consuming to use branches, as in Mexico. People
in these countries also have been underserved by
banks in terms of digital tools, compared with
leading countries such as the Netherlands.
• Among the major technology firms, PayPal and

Amazon rank nearly as high as banks for trust
with the money of US and UK consumers.
• Consumers in many developing countries give

higher loyalty scores to the digital tools they do
have, relative to channels where they interact
with employees. This may suggest pent-up demand
for digital where branches are crowded or offer
a poor experience. And where Net Promoter Scores
for mobile fall well below the scores for online,
as in Mexico and Germany, banks may want to add
more of a human touch to the mobile experience.
Figure 6
Many customers would consider buying financial products from

technology firms they already use
Percentage of respondents who would be open to a new financial offering from an established technology firm
100%
80
60
40
20
0
India Brazil Mexico Hong Kong Singapore Spain US South Korea Australia Netherlands Switzerland
China Malaysia Chile Argentina Poland Japan Germany UK Canada Belgium France
Figure 7
Customers are more open to buying from technology firms in countries

where banks underserve digitally
Percentage of respondents expecting to buy a financial product from an established technology firm
100%
India
China
Hong Brazil Mexico

Chile Kong
80 Singapore Malaysia
Argentina
Poland
60 Spain
Germany
UK Japan
US
South
Netherlands Korea Canada
40 Australia
France
Switzerland
Belgium
20
0 5 10 15 20 25%
Percentage of interactions occurring through branch or call-center staff
Page 10
Figure 8
Interest in technology firms’ financial products is highest among

young people
Percentage of respondents who would be open to trying a new financial offering from an established technology company
US China
100% 100% 90 88
80 73 80 74
60
61
60
40
42
40
20 20
0 0
18‒34 35‒54 55 or older 18‒34 35‒54 55 or older
Netherlands Mexico
100% 100%
87
80 80 79
60 57 60
61
40 40 40
25
20 20
0 0
18‒34 35‒54 55 or older 18‒34 35‒54 55 or older
Figure 9
Asian customers are actively using mobile payment apps from

technology firms
Percentage of respondents using a third-party payment app such as Average number of third-party payments per user in the past week
WeChat and Alipay in the past week
100% 10
91 9.1
80 8
66
6.3
60 56 6
40 4
34 3.6
2.7
20 2
0 0
China Hong Kong South Korea Malaysia China Hong Kong South Korea Malaysia
Page 11
Figure 10
Customers rank certain technology firms almost as high as traditional

banks for trustworthiness
Average user ranking on a scale of 1 to 9, with 1 indicating highest trust
US UK
More trust Primary bank 1.7 Primary bank 1.7
Banks in general 3.3 Banks in general 3.1
PayPal 4.0 PayPal 3.4
Amazon 4.3 Amazon 4.6
Apple 5.1 Apple 5.4
Google 5.4 Google 5.5
Microsoft 5.5 Microsoft 5.7
Facebook 7.4 Facebook 7.5
Less trust Snapchat 8.3 Snapchat 8.2
1 2 3 4 5 6 7 8 9 1 2 3 4 5 6 7 8 9
Figure 11
Half of US consumers would consider obtaining a credit card from

technology companies
Percentage of US respondents who would consider buying these products, if offered by their favorite technology company
60%
52
40
32
30
21
20
0
Credit card Bank account Investment Mortgage or home loan
Page 12
Figure 12
Customers in developing countries are more likely to favor digital purchasing

Purchase-channel Net Promoter Scores, indexed to human-channel score of zero
15 Digital favored over human channels Human favored over digital channels
10
Human channel 0
–5
–10
–15
India China Spain Singapore Mexico Germany Brazil Australia US UK Netherlands Canada
Share of purchases 42% 50% 31% 37% 14% 49% 28% 47% 42% 63% 57% 35%
made digitally
Mobile Online
Notes: Countries ordered by weighted average digital-channel Net Promoter Score, relative to human channel; mobile refers to interactions on smartphones and tablets; online
refers to desktop and laptop computer interactions
Page 13
2.
• Banks have been trying to migrate transaction
volumes out of the branch and call center to
digital channels over the past five years, but the
results of such efforts have leveled off as banks
picked off the easiest targets. Banks in Hong
Kong, China and India have made the greatest
progress in reducing the number of interactions
Banks still lag in digital requiring employees.
basics, especially
• Yet banks in most countries still have a long way
with mobile to go in this migration, compared with “self-
serve” leaders in the Netherlands, Poland and
Australia. In the US, for example, 40% of respon-
dents went to the branch teller at least once in the
past quarter to make a deposit, compared with
21% using digital channels and 18% using ATMs.
• Migration to digital proves well worth continued

efforts. Routine transactions that require bank
staff not only cost 20 times more than those done
online or through mobile, but consumers also
prefer to handle routine banking business digitally.
• Cost-reduction opportunities remain large and

well within reach. In Mexico, for instance, the
top five banks have an opportunity to take out
more than $500 million in cost from traditional
branch and phone channels, by performing at
the best domestic and international benchmarks.
• Even within markets, there’s a large gap between

the leader and laggard in the percentage of
deposits made digitally.
Figure 13
Many banks have made progress in moving interactions out of the branch…
Average number of interactions per respondent conducted through human channels in the past quarter
India
Mexico
Brazil
China
Spain
Hong Kong
Malaysia
France
Belgium
US
South Korea
Canada
UK
Germany
Poland
Singapore
Australia
Japan
Netherlands
12 9 6 3 0
2014 2017
Note: 2013 data shown for the Netherlands, which was not surveyed in 2014
Figure 14
…But in most countries, banks have far to go in shifting to digital channels

Average number of interactions per respondent in the past quarter
45
Heavy interaction Self-serve
40 Chile Poland
Netherlands
35 Belgium South Australia
Brazil Korea
France UK
India
30
Spain
Argentina
Interactions 25
conducted Mexico US Canada Germany
digitally 20
Hong Kong
China Switzerland Singapore
15 Malaysia
10 Japan
5
Branch and phone dependent Low interaction
0
9 8 7 6 5 4 3 2 1 0
Interactions conducted through human channels
Page 16
Figure 15
Many people continue to make deposits through tellers rather than

digital channels
Percentage of respondents who made deposits in the past quarter, by channel
100%
81
80
Digital
63
60
53
ATM
40
20 Branch
0
US UK Australia
Figure 16
Migrating routine interactions to digital channels earns higher loyalty and

reduces costs in the UK
UK respondents’ Net Promoter Scores for routine interactions, by channel UK banks’ approximate cost per interaction, by channel
3.00
40 £3
35
30
20
20
10
0.15
0 0
Human Digital Human Digital
Source: Bain/Research Now Customer Loyalty in Retail Banking Survey, 2017; Bain analysis
Page 17
Figure 17
Some banks have managed to accelerate the migration to digital

Percentage of US respondents who made deposits in the past quarter, Estimated average cost per US customer for a deposit transaction in the
by channel past quarter
100% $3
85
2.50
80 77
2
Digital
60
40 ATM 1.10
1
20
Branch
0 0
Leader Laggard Leader Laggard
(Bank of America) (Bank of America)
Source: Bain/Research Now Customer Loyalty in Retail Banking Survey, 2017; Bain analysis
Figure 18
Mexico’s largest banks could eliminate more than $500 million in cost
from branches and call centers
Estimated total addressable labor cost base, $ millions
Incremental change in cost base by meeting benchmark’s mix of

branch and call-center interactions
$800
619
600
400
−257
200
90
−272
0
Total for top five Domestic benchmark International benchmark Full potential
Mexican banks (Chile) (Netherlands)
Sources: Bain/Research Now Customer Loyalty in Retail Banking Survey, 2107; SNL Financial; Bain analysis
Page 18
Figure 19
Mobile channels have mainly reduced online interactions in the UK

Average interactions per UK respondent in the past quarter, by channel
50 Change in average
interactions per respondent,
2013–17
40 Branch –1.2
Phone –0.7
ATM –2.6
30
Online –5.3
20
10
Mobile 7.8
0
2013 14 15 16 17
Notes: Mobile refers to interactions on smartphones and tablets; online refers to desktop and laptop computer interactions
Sources: Bain/Research Now Customer Loyalty in Retail Banking Surveys, 2013–17
Page 19
3.
• Consumers used to convenient, high-functioning
digital tools in other areas of their lives, such as
retail purchases, want banks to deliver at an
equally high level—yet are often disappointed.
Fewer than half of UK respondents said their
bank’s website lets them do everything they
need, or is easy to use. The share is even lower
AI-based consumer for banks’ mobile apps.
technologies go
• Turning to newer technologies, a large share of
mainstream customers use voice assistants on their smart-
phones (one-quarter of US respondents) or at
home (almost one-fifth). Young adults are the
most active users of such voice assistants as
Amazon Echo/Alexa and Google Home.
• Some 5% to 6% of respondents in the US, UK and

Australia already use voice assistants for their
banking, and between one-fifth and one-quarter
are open to trying the technology for banking in
the future. Many banks have put the technology
in their innovation pipeline, but to date only a
few banks, such as Santander UK, Capital One
and USAA, actually use it in market.
• Consumers won’t embrace all new digital technol-

ogies, however. Use of both online chat and video-
conferencing, for instance, has tapered off over
the past two years. While many banks have pushed
those technologies, in part because they wanted
to reduce workloads in branches, the technologies
have not sparked broad consumer participation.
Figure 20
Many UK customers find their bank’s digital tools disappointing

Percentage of mentions of UK respondents who strongly agree
"Lets me do everything I need" "Easy to use"
50%
47 50% 49
46
43 44 42 43
40 40
36 35
30 30
25
24
20 20
16
10 10
0 0
18–35 35–54 55 or older 18–35 35–54 55 or older
Mobile Online
Notes: Mobile refers to interactions on smartphones and tablets; online refers to desktop and laptop computer interactions
Figure 21
Voice assistants are coming on strong in the US

Percentage of US respondents who reply “yes,” by age
“Do you regularly use a voice assistant on your “Do you have a voice assistant device at home
smartphone (e.g., Siri, Google Assistant, Bixby)?” (e.g., Amazon Echo/Alexa, Google Home)?”
40% 40%
37
30 30
26 Average 26
20 20 19 Average
17
12
10 10
0 0
18–34 35–54 55 or older 18–34 35–54 55 or older
Page 22
Figure 22
The share of customers using voice assistants for banking could grow sharply
Current and future use of voice assistants for banking
US UK Australia
30% 30% 30%

27
22
21
20 20 20
10 10 10
6 6
5
0 0 0
Currently using Open to using Currently using Open to using Currently using Open to using
in the future in the future in the future
Figure 23
Not all technologies catch fire with US customers

Average number of online chat and videoconferencing banking interactions per US respondent in the past quarter
0.4
0.3
0.2
0.1
0
2013 14 15 16 17
Sources: Bain/Research Now Customer Loyalty in Retail Banking Surveys, 2013–17
Page 23
4.
• Consumers encounter many episodes during their
banking, from routine bill payment to resolving a
stolen credit card, and different types of episodes
require different management strategies. Fee
disputes don’t occur often, but have high stakes
and thus a strong propensity to create detractors
among consumers. Bill payment and money with-
Different strokes for drawal, by contrast, might be less emotional, but
different customer occur frequently. Banks can earn greater loyalty
by reducing the volumes of unnecessary transac-
episodes tions, making routine interactions easy and con-
venient, and improving the service experience of
high-stakes episodes.
• When consumers make routine banking transac-

tions, they prefer digital channels to branch or
phone channels. Conversely, they give higher Net
Promoter Scores to employee channels for emotive
episodes like resolving a problem.
• All age groups have similar usage rates of digital

channels for their routine interactions. But younger
customers are much more likely to try digital
channels for sales, disputes and resolutions.
• For routine episodes, the great majority of cus-

tomers complete their business digitally. When
they fail to complete the episode digitally and
must switch to speaking with bank staff, they give
much lower loyalty scores for the episode than
when they succeed.
• There’s a different dynamic for emotive episodes.

Only half of respondents try digital first, and only
one-quarter succeed in handling the issue. When
they subsequently switch from mobile to an em-
ployee channel, Net Promoter Scores for the epi-
sode actually rise. When they switch from online,
those scores decline. Consumers have higher ex-
pectations for completing their business online
than through mobile.
• Top-performing banks have fewer disputes, resolve

those they do have faster and use digital channels
better. As a result, they spend much less on disputes.
Figure 24
An emotive episode affects loyalty more than a routine episode

US respondents
Create detractors Dispute fee Moments of truth

High
Apply for
Address mortgage
Resolve
declined
complaint
purchase
Potential to Check account activity Discuss Refinance/
annoy Deposit money unrecognized renew
Replace lost/
transactions mortgage
stolen card
Resolve login
Open checking
problem This bubble
Withdraw Transfer account
Pay bill size equals 50%
money money
Register for of respondents
Low online account completing the
Routine Create promoters episode
Low High
Potential to delight
Episodes: Routine Resolve Sale Dispute
Figure 25
US customers prefer digital channels for routine episodes, employee

channels for emotive episodes
Emotive
Routine
Resolve Sale Dispute
Average Net Promoter Scores for episode
Deposit Pay User ID or Unrecognized Open new Mortgage Resolve Dispute

money bill password problem transaction account application complaint fee
60
40
20
–20
Digital channels Human channels
Page 26
Figure 26
For emotive episodes, young customers in the US use digital channels

much more often than older customers
Emotive
Routine
Resolve Sale Dispute
Share of episodes that US customers started on digital channels, by age
80%
60
40
20
0
Under 25 55 or Under 25 55 or Under 25 55 or Under 25 55 or
older older older older
Note: “Withdraw money” was excluded from routine episodes because digital was not an option
Figure 27
Many routine and most emotive episodes in the US involve

human channels
Share of recent episodes, US repondents
100%
Started and finished with human channels
80
Started digital, finished human
60
40
Succeeded on self-serve
20
0
16,000 routine episodes 8,000 emotive episodes
Note: Self-serve includes digital and ATM; “withdraw money” excluded because the switching question was not asked for this episode
Page 27
Figure 28
US customers get annoyed when they have to switch from digital to

complete a routine interaction
Percentage of routine episodes, US respondents Net Promoter Scores for routine episodes that started digitally and
switched to human
100% 60 –14
50 –36
80
80
Started digital, 45
switched to
human 40
60 36
40 Succeeded
Succeeded on self-serve
20
Switched
to human
20 9
0 0
Mobile Online
Starting channel
Notes: Self-serve includes digital and ATM; “withdraw money” excluded as the switching question was not asked for this episode; mobile refers to interactions on smartphones
and tablets; online refers to desktop and laptop computer interactions
Figure 29
Customers often switch to a human channel for an emotive episode, and

are annoyed when they started online
Percentage of emotive episodes, US respondents Net Promoter Score for emotive episodes that started digitally,
US respondents
50 13
50% 40 38
40 13 –13
Switched to human 30
26
25
30
20 Switched
to human
20
13
Succeeded
Succeeded on self-serve 10
10
0 0
Mobile Online
Starting channel
Notes: Self-serve includes digital and ATM; mobile refers to interactions on smartphones and tablets; online refers to desktop and laptop computer interactions
Page 28
Figure 30
Leading US banks have mastered dispute resolution…

When they do have disputes,
Top US banks have fewer disputes overall They also use digital channels more
they get it right the first time
Disputes as a share of total episodes Percentage of dispute episodes not resolved Percentage of dispute episodes resolved
in first contact using digital
8% 30% 30% 29
7 26
6
5 20 20
10 10
2
7
4
0 0 0
Top three banks Bottom three banks Top three banks Bottom three banks Top three banks Bottom three banks
Figure 31
…As a result, leaders spend half as much as laggards to resolve disputes

US banks’ dispute-resolution cost, indexed
Incremental change in cost base by meeting top performer’s benchmarks
100
100
80
−22
60
−14
44
40 −20
20
0
Bottom performer Reduce dispute Improve first-contact Migrate to digital Top performer
volumes resolution
Sources: Bain/Research Now Customer Loyalty in Retail Banking Survey, 2017; Bain analysis
Page 29
5.
• Banks continue to lose many product purchases
to competitors. Across countries, 25% to 51%
of customers (in Brazil and the UK, respectively)
who bought a banking product in the past year
turned to a bank other than their primary one.
• Much of this defection occurs through digital

Hidden customer channels, particularly for credit cards. Digital
defection runs purchasing is most prevalent in the UK, the
Netherlands, Germany and Australia. It is least
rampant, with prevalent in Mexico, Chile and Malaysia.
banks neglecting to • Stemming this tide could be more straightforward
ask for the sale than banks realize: They have to ask for busi-
ness at the right moment. Only one-fifth of US
defectors were actively researching products
when they decided to buy. Half of US defectors
and one-third in Australia bought from a com-
petitor because they received an offer or saw
an advertisement.
• Even when consumers have bought from a com-

petitor, they still have ties to the primary bank.
At least half of defectors in multiple countries
would have purchased from their primary bank
if the bank had made an offer. These perceptions
leave primary banks with an opening to actively
pursue new business, as well as build the brand
in customers’ eyes.
Figure 32
Primary banks lose one-half to one-fourth of product purchases to

competing banks
Purchases from primary bank as a percentage of all purchases in the previous 12 months
100%
80
60
40
20
0
Brazil Argentina China Mexico Netherlands South Korea Germany Malaysia US
France India Australia Spain Canada Japan Hong Kong Singapore UK
Figure 33
In most countries, consumers are more likely to make digital purchases

from competing banks than from their primary bank
Percentage of respondents using a digital channel for their most recent purchase in the past 12 months, by type of bank
UK
Netherlands
Germany
Australia
US
China
France
Canada
India
Japan
Singapore
South Korea
Spain
Hong Kong
Brazil
Argentina
Malaysia
Mexico
0 20 40 60 80%
Primary bank Competing bank

Page 32
Figure 34
Credit cards are especially prone to digital purchases at competing banks

Percentage of most recent purchases that German respondents made digitally in the past 12 months, by type of bank
Credit cards
Deposits
Investments
Loans
0 20 40 60 80%
Primary bank Competing bank
Figure 35
Most customers were not actively researching a product when they

decided to buy
Percentage of "hidden defectors" who learned about a competitor's product through active research
50%
50
40
30
25
21
20
10
0
US Australia UK
Page 33
Figure 36
Many defectors were responding to competitors’ advertising or offers

Hidden defectors’ reasons for buying from a competitor
50%
42
40
36
Advertisement from
competing bank 31
30
20
Competing bank reached

10 out with offer
0
US Australia UK
Figure 37
Most defectors would be willing to buy more from their primary bank, if it
made a personalized offer
“If your primary bank had proactively reached out to you with a personalized offer for the identical product that you purchased at the competitor,
would you have purchased it at the primary bank instead?”
100%
No, I wouldn't have
purchased from my
primary bank
80
I don't know
60
40
Yes, I would have

purchased from my
20 primary bank
0
US Australia UK
Page 34
Page 35
6.
• Direct banks continue to lead in Net Promoter
Scores relative to national, regional or smaller
competitors in many countries.
• Some big banks have demonstrated sustained

progress over the past few years. In Mexico,
BBVA Bancomer moved up steadily in recent years
Movement on the to clinch the No. 2 position among traditional
loyalty leader boards banks last year and has continued to narrow
the loyalty gap, as it has gained market share.
The bank started its digital transformation rela-
tively early.
• For an individual bank, what matters is how it

performs against peers in its market. Using that
lens, Net Promoter Scores varied widely from
country to country. In-country differentials between
the loyalty leader and the laggard were largest in
Spain, Germany, the UK, and the Northeast and
Midwest regions of the US. The gaps were narrow-
est in the Netherlands, Mexico and South Korea.
• Only a few banks have held the top spot from

year to year, including USAA in the US and First
Direct in the UK.
Figure 38
In the Americas, there is a large gap between loyalty leaders and laggards
Primary banks’ Net Promoter Scores relative to loyalty leader, indexed to zero, 2017
Banco Macro,
Argentina
Banco Galicia
Brazil Itaú Unibanco

Royal Bank of Canada,
Canada Tangerine
TD Canada Trust
Chile BCI
Scotiabank, Santander,
Mexico
BBVA Bancomer
Huntington National Bank
US–Midwest USAA
TD Bank
US–Northeast USAA
USAA,
US–South
Frost Bank
Umpqua Bank,
US–West USAA
Union Bank
–100 –80 –60 –40 –20 0
Highest-rated traditional bank

Lowest-rated bank
Highest-rated direct bank
Figure 39
The same holds true in most Asia-Pacific markets…

Bendigo Bank
Australia ING Direct
China Bank of China
Hong Kong Citibank
India Citibank
Japan Shinsei Bank
Malaysia Maybank
Singapore Citibank
Shinhan Bank,
South Korea
Kookmin Bank
–100 –80 –60 –40 –20 0

Lowest-rated bank
Page 38
Figure 40
…And in Europe as well

Belgium Argenta Banque
Credit Mutuel
France ING Direct, Boursorama
Sparda-Bank
Germany DKB, ING DiBa
Netherlands Difference in scores too close to call
Bank Millennium,
Poland
ING Bank
BBVA,
Spain ING Direct
Bankinter
Switzerland Raiffeisen
Nationwide
UK First Direct
–125 –100 –75 –50 –25 0

Lowest-rated bank
Figure 41
BBVA Bancomer has steadily improved its customer loyalty position

Net Promoter Scores relative to the Mexican loyalty leader
2012 2013 2014 2015 2016 2017
Net Promoter Score of leader 54 56 51 50 54 53
No. 2 −7 −2 −4 −4 −4 −1 BBVA Bancomer
No. 3 −10 −7 −7 −8 −6 −2
No. 4 −11 −8 −7 −11 −6 −6
No. 5 −15 −14 −10 −13 −7 −6
No. 6 −21 −14 −19 −17 −13 −10
Source: Bain/Research Now Retail Banking NPS Surveys 2012–17
Page 39
Appendix: Methodology
Bain & Company partnered with Research Now, an online global market-research organization, to survey
consumer panels in Argentina, Australia, Belgium, Brazil, Canada, Chile, China, France, Germany, Hong Kong,
India, Japan, Malaysia, Mexico, the Netherlands, Poland, Singapore, South Korea, Spain, Switzerland, the UK
and the US. The survey’s purpose was to gauge customers’ loyalty to their principal bank and the underlying
reasons customers hold their views. Conducted from July to August 2017, the survey polled 133,171 respondent
consumers of national branch network banks, regional banks, private banks, direct banks, community banks and
credit unions in these countries.
For most individual bank analysis, we included only banks for which we received at least 200 valid responses. In
Argentina, Chile, India, Malaysia and Singapore, we included banks with at least 100 responses. In many
instances, sample sizes exceeded these thresholds.
Survey questions
Respondents were first asked to identify their primary bank, then were asked the following questions to assess
their loyalty to that institution:
• On a scale of zero to 10, where zero represents “not at all likely” and 10 represents “extremely likely,” how
likely are you to recommend your primary bank to a friend or relative?
• Tell us why you gave your primary bank the score you did.
Ratings of zero to 6 signify detractors, 7 and 8 signify passives, and 9 and 10 signify promoters. Net Promoter
Scores are calculated by subtracting the percentage of detractors from the percentage of promoters. A positive
score indicates advocacy and support, while a negative score shows the opposite.
We asked what major products respondents hold with their primary bank and with other banks, and which of
these products were purchased in the past year. We also asked respondents what their most recent purchase had
been, and the bank and channels they used to make this purchase. Further, we asked how often they interacted
through various channels to do their banking in the past three months. We also asked questions about respon-
dents’ attitudes toward using technology companies for financial products. The remaining questions elicited
demographic profile information: household income, investable assets and region of residence.
For statistical significance, the results of our data analysis are robust for the measurement of bank Net Promoter
Scores by country or US region. Where our threshold for the bank’s inclusion in the Net Promoter Score rankings
is a sample size of 200, the score measured for each bank is statistically significant to an 80% confidence level,
with a two-tailed test of the confidence interval ranging from plus or minus 2.6% for a sample size of 979, to plus
or minus 7.4% for a sample size of 200. In countries where sample sizes were smaller, confidence intervals are
wider, with a maximum of plus or minus 10%.
Page 40
Key contacts in Bain’s Global Financial Services practice
Global
Edmund Lin in Singapore ([email protected])
Americas
Mike Baxter in New York ([email protected])
Maureen Burns in Boston ([email protected])
Gerard du Toit in Boston ([email protected])
Asia-Pacific
Peter Stumbles in Sydney ([email protected])
Europe, Middle East and Africa

Henrik Naujoks in Zurich ([email protected])
Shared Ambition, True Results
Bain & Company is the management consulting firm that the world’s business leaders come to when
they want results.
Bain advises clients on strategy, operations, technology, organization, private equity and mergers and acquisitions. We develop
practical, customized insights that clients act on and transfer skills that make change stick. Founded in 1973, Bain has 55 offices
in 36 countries, and our deep expertise and client roster cross every industry and economic sector. Our clients have outperformed
the stock market 4 to 1.
What sets us apart
We believe a consulting firm should be more than an adviser. So we put ourselves in our clients’ shoes, selling outcomes, not
projects. We align our incentives with our clients’ by linking our fees to their results and collaborate to unlock the full potential
of their business. Our Results Delivery® process builds our clients’ capabilities, and our True North values mean we do the right
thing for our clients, people and communities—always.
For more information, visit www.bain.com

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EVOLVING THE CUSTOMER EXPERIENCE

Copyright © 2017 Bain & Company, Inc. All rights reserved.

“Alexa, move my bank accounts to…” . . . . . . . . . . . . . . . . . . . . . . . . . . . pg. 1

1. Consumers to technology firms: Bring on the financial products. . . . . . . . . . . pg. 9

2. Banks still lag in digital basics, especially with mobile . . . . . . . . . . . . . . . . pg. 15

3. AI-based consumer technologies go mainstream. . . . . . . . . . . . . . . . . . . . pg. 21

4. Different strokes for different customer episodes. . . . . . . . . . . . . . . . . . . . pg. 25

5. Hidden customer defection runs rampant, with banks

6. Movement on the loyalty leader boards. . . . . . . . . . . . . . . . . . . . . . . . . . pg. 37

Appendix: Methodology. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . pg. 40

“Alexa, move my bank accounts to …”

The perils of digital lag

Among tech companies, consumers are most likely to trust PayPal

42% Amazon 4.3

Note: Rankings on a scale of 1 to 9, with 1 indicating highest trust

Source: Bain/Research Now Customer Loyalty in Retail Banking Survey, 2017

Strong digital tools create a virtuous circle of higher adoption and

Start with In 87%/59% of

Succeed When people try digital,

Organizing around customer episodes, not products

You have to ask for the sale

Customer episodes for “Open an account” at one retail bank

• Evaluate my options • Get ready to use my account

Source: Bain & Company client

Banks should consider more, and more targeted, marketing and

The lesson: Ask for the sale.

Source: Bain/Research Now Customer Loyalty in Retail Banking Survey, 2017

• Interest in tech firms’ offerings is greatest in countries

• Among the major technology firms, PayPal and

• Consumers in many developing countries give

Many customers would consider buying financial products from

Source: Bain/Research Now Customer Loyalty in Retail Banking Survey, 2017

Customers are more open to buying from technology firms in countries

Hong Brazil Mexico

Percentage of interactions occurring through branch or call-center staff

Source: Bain/Research Now Customer Loyalty in Retail Banking Survey, 2017

Interest in technology firms’ financial products is highest among

Source: Bain/Research Now Customer Loyalty in Retail Banking Survey, 2017

Asian customers are actively using mobile payment apps from

Source: Bain/Research Now Customer Loyalty in Retail Banking Survey, 2017

Customers rank certain technology firms almost as high as traditional

More trust Primary bank 1.7 Primary bank 1.7

Banks in general 3.3 Banks in general 3.1

PayPal 4.0 PayPal 3.4

Amazon 4.3 Amazon 4.6

Apple 5.1 Apple 5.4

Google 5.4 Google 5.5

Microsoft 5.5 Microsoft 5.7

Facebook 7.4 Facebook 7.5

Less trust Snapchat 8.3 Snapchat 8.2

Source: Bain/Research Now Customer Loyalty in Retail Banking Survey, 2017

Half of US consumers would consider obtaining a credit card from

Source: Bain/Research Now Customer Loyalty in Retail Banking Survey, 2017

Customers in developing countries are more likely to favor digital purchasing

• Migration to digital proves well worth continued

• Cost-reduction opportunities remain large and

• Even within markets, there’s a large gap between

…But in most countries, banks have far to go in shifting to digital channels

Interactions conducted through human channels