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28 March 2024

Banks face customer exodus over services

Published
By Sam Smith

After two years of perpetually and painstakingly paying off her Dh50,000 loan from an international bank in the UAE, Jessica Martin last month excitedly went to her bank to get a clearance letter.

Only to find out that she had about Dh1,200 worth of late payment penalties.

“It was ridiculous,” she said. “I receive my salary every 27th of the month and I pay my loan installments every 28th, effectively one week earlier than my cut-off date.”

“I called the call centre, but all I get were promises that they will get back to me, which they never did,” she said. “When I went to their branch, I was passed on from one customer service representative to another. ”

Another frustrated customer is Manosh Kumar who has been going back and forth to another bank to clarify some unexplained charges in his credit card.

“No matter how much I work out the maths, it just doesn’t sum up accurately,” he said. “I tried to call the customer service toll free number but they were just talking gibberish.”

“No wonder banks incurred massive losses during the financial crisis.” he said. “It’s either they have indeed become too big to think of the little ones like us or they simply just forgot what customer service is.”

Martin and Kumar are mulling the same solution – finish their liabilities with their respective banks and leave them as soon as possible. And they are just two of the many customers who are planning to switch banks.

Not that it’s a surprise to experts.

According to Ethos Consultancy’s 6th Annual Bank Benchmarking Index, most banks fail to respond to a customer enquiry in a timely manner. And in most times, they also fail to contact the prospective customer.

“Even when contacted, the quality of service failed to meet expectations,” the survey says.

The study says more than half of the callers did not get a response with 48 hours or two working days. This can be attributed directly to the quality of service as more than half of the caller's contact details were not even taken by the call centre agent.

Because of this, together with a list of other reasons, up to 20 per cent of bank customers in the UAE are considering changing banks and about 40 per cent are poised to cancel credit cards following widespread dissatisfaction and grievances, a survey by Cashy and YouGov indicates.

A monitoring of web conversations also pointed out to the fact that customers want to be cared for on- and off-line.

Customer care top concern

Social media conversations on the banking sector placed customer care as the top concern, while fees and charges came in at number four, Michalis A. Michael, managing director of digital marketing research company, DigitalMR Ltd.

“Customer service tips the scale for consumers, more so than fees,” he said. “This is a vital clue for banks as they consider new strategies. The cost advantage, the cheapest offering or even free usage does not lead to leadership in the cards market anymore.”

Interestingly, the brood of dissatisfaction is not only prevalent in the UAE but in the whole GCC, as well. According to Ernst & Young’s Retail banking in the GCC report, customers in the region feel their banking interactions are becoming more tedious and tiresome.

Despite the increase in electronic transactions, about 45 per cent of GCC respondents consider personal attention to be highly important to them but only 7 per cent are receiving such personal attention from their banks.

The 26-page report stressed that customers are not happy; so dissatisfied that 35 per cent have recently switched or plan to switch banks.

And doing so is not difficult. The UAE for one, has 1,751 bank accounts per 1,000 adults, according to World Bank. And with a population of just under 5 million, the UAE has 52 banks with nearly 1,000 branches.

Quite alarming is the finding that more than twice as many GCC respondents plan on leaving their bank versus their Asian (12 per cent) and European counterparts (11 per cent).

Actual attrition rates were highest in the UAE (13 per cent) while Saudi Arabian customers are most likely to attrite in the future (28 per cent).

The results were consistent across the GCC, apart from Bahrain and Qatar, where an extremely high 83 per cent of customers have no intention of changing their main banks.

Ernst & Young points out that the single most important reason for switching banks was related to service (45 per cent) and transaction speed (24 per cent).

Compared to developed countries, the region’s banking customer is relatively less loyal. Only 45 per cent of GCC relationships exceed five years compared to 70 per cent in Europe and 64 per cent in Asia Pacific.

The need for “friendly and more caring staff” has been named as the top concern.

The report says in some cases, customers did not feel well treated or cared about, especially during an unpleasant experience.

For example respondents who either switched or planned on switching banks were far more likely to have been rejected for a loan and not provided an explanation why their loan was declined.

“This is especially concerning since 30 per cent of respondents selected service quality as an area requiring improvements with their primary bank,” the report said.