Date
29 March 2017
Retail banks should differentiate themselves by understanding the needs of their existing and potential customers. Photo: AFP
Retail banks should differentiate themselves by understanding the needs of their existing and potential customers. Photo: AFP

How retail banks can win the loyalty of Chinese middle class

As an international financial center, Hong Kong has been a crucial market for different industries.

Banking and finance ranks as the most competitive industry in Hong Kong, particularly retail banks, which offer a wide variety of loyalty and reward programs, such as traveling miles, cash rewards, coupons and more to lure and retain customers.

According to the latest figures from the Hong Kong Monetary Authority, there are 18.9 million credit cards in circulation in Hong Kong as of first quarter of this year, averaging three per person, while the total transaction value of card spend reached HK$152.4 billion.

A study conducted by the Collinson Group, involving 4,400 affluent middle-class consumers (within the top 10-15 percent income bracket) around the world, reveals the changing attitudes and expectations of this group towards banks.

Affluent middle-class consumers expect greater recognition and rewards in exchange for their loyalty: China (82 percent), India (79 percent) and Singapore (66 percent).

In China, 86 percent of the consumers in this group who feel loyal to a brand are prepared to recommend the brand to their friends and family, 84 percent would be willing to purchase more products from the brand owner in the future and 72 percent would choose the brand even if it is more expensive.

The survey also revealed that 53 percent of Chinese consumers are not interested in existing standardized and transactional loyalty programs that mainly rely on traditional points-based rewards; they do not see the value and find the rules too complex.

Amid increasing competition in the sector, creating more engaging rewards which encourage redemption and active involvement can be a powerful tool in improving satisfaction, retention and achieving repeat business.

As for the Singapore market, the research shows that of all the countries surveyed, Singaporean consumers are the least satisfied with the service they receive from their banks and are also the least likely to switch providers because they feel there is little to differentiate banking offers and rewards.

This presents an opportunity for those retail banks that invest in recognizing and rewarding customer loyalty.

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 China, services such as home emergency cover, gadget and travel insurance are sought directly from providers rather than from a bank.

However, when a customer does buy additional products through their bank, they are more loyal, with over half (54 percent) of these customers globally less willing to switch providers.

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.

Under such keen competition, retail banks should differentiate themselves by understanding the needs of their existing and potential customers, as well as providing more personalized services and reward programs to win their hearts and loyalty.

– Contact us at [email protected]

CG

Director of Market Development, APAC, Collinson Group

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