GCC banks losing hundreds of millions of dollars a year due to poor customer service

Whilst GCC-based banks have been growing both assets and profits at double-digit rates recently, the gap between the quality of their customer service and customer expectations still leaves much to be desired.

Challenges such as too few skilled resources, lack of product transparency, limited responsiveness and follow up on customer requests, as well as poor multichannel offerings - especially online and with phone banking - are resulting in customers who are more likely to move banks.

A recent survey in Dubai found that half of all UAE nationals consider their customer service experience neutral or negative; that figure was 90% or higher for Western expatriates. This compares with the US market where only 24% of consumers are negative or neutral about customer service, and 76% are satisfied.

"GCC banking executives would do well to remember that a happy customer increases a bank's profits,"

explains Dr. Dirk Buchta, Managing Director, A.T. Kearney Middle East.

"Banks in America generate an additional $1bn in deposits if they can make just 5% of their customers highly satisfied. These clients make larger deposits and recommend the bank and its services to friends and family. A.T. Kearney has found that a 5% increase in customer retention increases product profitability by 20% to 80%," he added.

Dr. Buchta suggests that with increasing retail competition across the GCC, most notably in Saudi Arabia where a number of banks such as Inma Bank, BankMuscat and the National Bank of Bahrain have or are being granted retail licenses by the Saudi Arabian Monetary Agency, customer service will become an ever more important differentiator in the GCC market.

As Dr. Alexander von Pock, Manager of the Financial Institutions Group of A.T. Kearney and co-author of the study, points out:

"Satisfaction in the branch, on the phone, and online can and does have a direct impact on revenues. Put it this way, a midsized GCC bank with world-class customer service could increase profits anywhere from $50m to $150m a year."

To increase customer service and profitability, GCC banks should look to proven, pioneering customer services practices that match their marketing promises with practical action. By identifying the most critical issues for customers and taking corrective steps, banks can build confidence amongst their clients and assure them that they are the bank's most important asset.

"In leading banks, staff members are trained never to say no, customers are always treated with a smile, and branch managers have a high level of autonomy as each branch is encouraged to act as a store retailer. Branches are measured on cross-selling customer service levels, and revenues per employee. As customer-savvy foreign entrants enter the market post-WTO compliance GCC-based banks need to shape up. First movers have an extraordinary opportunity to gain market share, and those that don't will find they'll be sidelined very quickly. The bank that truly excels in customer service will be number one," concluded Dr. von Pock.