In an increasingly competitive retail banking market, nearly three quarters (72%) of affluent middle class consumers in the United Arab Emirates do not see the value in bank reward programmes, don’t find the benefits interesting and don’t feel they can accumulate sufficient points to redeem rewards. A large proportion (58%) only have a basic main bank account with no fees but also no added benefits and 60% have credit cards that lack benefits such as cashback or air miles. This highlights an opportunity for banks and card providers in the region to differentiate themselves and offer additional services such as insurance, assistance and travel benefits.
The study of 4,400 affluent middle class consumers (within the top 10-15% income bracket), in the United Arab Emirates, Brazil, China, India, Italy, Singapore, the UK and USA, reveals the changing attitudes and expectations of this group towards banks. It has found that whilst customers in the UAE are more satisfied with their banks than the other countries surveyed, they don’t feel rewarded or recognised for their loyalty and look elsewhere for additional financial services. Nearly two thirds of customers in the UAE (63%) feel more loyal to brands that provide access to rewards and 63% feel more loyal to companies which offer more personalised offers and communications.
As a result, retail banks and credit card providers in the UAE are missing out on the opportunity to create powerful advocates and attract repeat business from loyal customers. Affluent middle class consumers in the UAE who feel loyal to a brand are prepared to recommend a bank or credit card provider to their friends and family (67%), 64% would be willing to purchase more products from them and 52% will pay a premium to use a service, even if it is more expensive.
Banks are losing their position as a ‘one-stop shop’ for financial services, with savvy consumers choosing a range of financial service providers. Customers are increasingly looking elsewhere for additional services. For example in the UK, the preference is to regularly compare the options for services such as insurance, find the best deal and then purchase direct. In contrast in the USA and Singapore, these services are sought via credit card. However when a customer does buy additional products through their bank, they are more loyal, with over half (54%) of these customers globally less willing to switch provider. This highlights a dual benefit of offering more premium services such as insurance and assistance which will increase revenue as well as enhance customer loyalty.
Mark Roper, Commercial Director, Collinson Group says, “Whilst the majority of customers in the UAE are satisfied with their banks, the emergence of alternative providers of financial services and the number of customers on more basic bank and credit card services, highlights the opportunity to retain and grow a portfolio of services with those within the top 10-15% of income. Customers see their accounts as a necessity but don’t feel they offer additional value or reward.”
“Our research found that not being rewarded for loyalty is the biggest frustration for consumers, as cited by two thirds of respondents globally, ahead of poor interest rates and charging unnecessary fees,” says Roper. “Many banks offer standardised, transactional loyalty programmes which rely on traditional points-based rewards. Less than half of affluent middle class consumers are currently members of bank loyalty initiatives and this group are more likely to be members of supermarket, airline, credit card and hotel loyalty programmes ahead of banks, where these programmes offer greater value and appeal.”
Roper continues, “With increased competition in the sector, encouraging the most valuable customers to become active members of loyalty programmes can be a powerful tool in improving satisfaction, retention and achieving repeat business.”
Personalised and consistent communications regardless of how customers choose to interact with a bank is also important for the affluent middle class. The study has found that customer engagement improves by a third amongst individuals who ‘feel known’ by their bank and a further third for those who say they receive a consistent multichannel service – whether in person, by phone or via digital channels.
Collinson Group research has previously highlighted how today’s affluent consumers place a higher priority on family, altruism and enriching experiences ahead of short-term satisfaction and this is reflected in their expectations of banks. Nearly two-thirds in the UAE (58%) expect their banks to be ethical.
“Banks need to act now to protect their current revenue. Middle class mass affluent consumers are increasingly mobile and expect more from their banks” says Roper. “Transparent, ethical behaviour is important and financial services organisations also need to demonstrate the value of their loyalty programmes to encourage active participation. Personalised, aspirational and more lifestyle orientated benefits and rewards, which are more accessible to earn and redeem will enable banking brands to differentiate themselves and attract and retain the most affluent consumers.”
Mark Roper, Commercial Director, Collinson Group will be delivering a keynote presentation at the Middle East Banking Innovation Summit in Dubai on the 14th September at 15:00. The presentation will explore the themes outlined above and will cover:
Delivering the Future of Loyalty in Financial Services
•The challenges of changing market dynamics and consumer demands in delivering loyalty and commercial results
•Understanding the prized “mass affluent” consumer and their attitudes to loyalty
•Proven strategies for creating more engaged, loyal and profitable customers today and tomorrow