'Alarming' findings for banks, with just one scoring well in sentiment index
Financial institutions: ignore your customers on social media at your peril
There are many ways to rate a bank’s performance, but when it comes to sentiment expressed in social media posts, newcomer Discovery Bank is at the bottom of the pile.
Data technology business BrandsEye’s latest SA Banking Sentiment Index - based on 500,000 social media posts by consumers between September 2019 and August 2020 - ranked African Bank first and Discovery Bank last in terms of conduct.
Only African Bank scored a positive ranking of 2.6% in BrandsEye’s report released on Monday morning, with the rest scoring various degrees of negative, from Capitec Bank at -4.7% to Absa at -17.6%, FNB at -19.7% and Discovery Bank with -22.3%.
More than 90% of those posts had to do with TCF (treating customers fairly) issues, as outlined in the Financial Sector Conduct Authority's (FSCA) recently published Banking Conduct Standard.
“This should be alarming for the industry, which is missing out on considerable volumes of important customer interactions and are therefore unlikely to have been reporting on them for regulatory purposes,” BrandsEye said.
“As such, they risk facing heavy fines from the regulator as well as the significant reputational risks that such sanction would generate.”
With more customers seeking help via their bank’s digital channels, banks struggled to keep up with the demand for support on social media, BrandsEye said.
An alarming 47.3% of priority customer conversations on social media went unanswered by the banks.
Among them was a tweet by James Preston in late July: “I cannot tell you how much I have HATED Discovery Bank since they left the the FNB ecosystem. EVERYTHING about their service has been HORRENDOUS. I cannot overstate EVERYTHING enough. Please. Do not sign up for Discovery Bank. It is a nightmare of tragic proportions.”
Also denting sentiment towards the bank was a ruling by the Advertising Regulatory Board (ARB) in December 2019 which concluded the bank had created a misleading impression that consumers could get a free iPhone by switching to the bank.
Its adverts claimed “Get the new iPhone on us. Upgrade to Discovery Bank”, but that was “not quite accurate”, the ARB found.
"The iPhone is not 'on' Discovery Bank, it is 'on' the consumer's credit card," it said.
“The iPhone offer requires signing up with Discovery Bank, and activating Discovery's Vitality Active Rewards. You can then buy the iPhone on your credit card and, if you hit certain Vitality goals, you receive a refund on it.”
Those conditions were notably absent on some in-store advertising at iStores, the ARB said.
Responding, Discovery said nobody would believe its advert implied that someone would get a free iPhone just for becoming a Discovery Bank client, and that it was not relevant that one of the conditions of the offer was that customers must first pay for the iPhone.
The regulator did not agree.
While Discovery Bank’s customers were the least likely to receive a reply from their bank on Twitter, only replying to about one out of every 19 "priority interactions”, BrandsEye said, Nedbank and African Bank were rated as the two most responsive banks on social media. However, Nedbank’s sentiment declined by 32.9 percentage points to a six-year low.
Many of the negative posts in mid-2020 related to the banks’ Covid-19 relief offerings.
Driving the negative sentiment was the fact that increased reliance by customers on digital channels meant any system downtime had a far greater impact on customer frustration than in previous years, BrandsEye said.
Getting it right more than its competitors, Africa Bank received almost four times as many purchase inquiries from prospective customers, relative to the industry average.
“More than half of these requests came as a result of the bank’s successful advertising, in particular of loans offering small sums for the purposes of tiding [consumers] over during tough times,” BrandsEye said.
On the other hand, Discovery Bank customers reported having to communicate with multiple contacts at the bank to receive a response and waiting long periods for help.
“This led to the bank having the worst response rate to social media queries, suggesting it lacks the requisite capacity to serve its clients,” BrandsEye said.
“As a result, Discovery Bank had the highest share of cancellation threats as a share of its priority conversation: 76.7% of customers who threatened to leave the bank cited its slow turnaround time.”
Discovery Group CEO Adrian Gore recently said Discovery Bank planned to nearly triple its customers in the next five years as it intensifies its drive to attract clients from the "big four" and other financial institutions. The bank currently has about 270,000 customers and about 500,000 accounts. Its strategy is based on the group's Vitality model, rewarding customers for good financial habits.
Commenting on the findings, BrandsEye CEO Nic Ray said: “In 2020, the banks faced an immense challenge in meeting the growing social customer service demands of consumers.
“Covid-19 has accelerated this preference for digital interactions and banks will now need to ensure they are equipped to rapidly identify and respond to these queries.
"Our findings show banks which are not able to meet service expectations yield high rates of cancellation threats.”
Capitec has held the first or second position in BrandsEye’s Index since 2015, driven by the bank’s affordability. However, for the first time in six years, the bank experienced a negative Net Sentiment because of its app’s unreliability.
Caroline Da Silva, the FSCA’s divisional executive of regulatory policy, told BrandsEye the industry should pay close attention to digital complaints.
“Monitoring social media will help banks identify the root causes of complaints and ensure their customers do not have repeat issues in future,” she said.
“This will, in turn, improve overall conduct and help them deliver fair outcomes for their customers.”