U.S. is a Global Leader in Retail Bank Performance, Finds New Booz Allen Hamilton Consumer Study: North American customers have strong preference

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NEW YORK (BusinessWire EON) June 13, 2007 --     The study, "Striving for growth: Best practices in retail banking sales and service channels," reveals that the majority of banks worldwide are failing to meet many customer needs and get the best performance from sales channels such as call centers and websites. The comprehensive study, which used customer research and mystery shopping to assess 100 banks across 17 countries, looked at what customers want from their banks, how banks are performing, and best practices to drive profitable growth.

While retail banks have recently made strides in key customer service areas, such as simplified account opening processes and more robust online and phone access, the consumer survey findings show that banks are missing sales and relationship building opportunities, both in the U.S. and globally. In particular, most banks do not adequately provide differentiated service offerings for the mass affluent and other segments of the consumer market.

Globally, consumers prefer banking in branches, but more North American consumers are choosing alternative channels. Sixty-three percent of customers worldwide purchase savings account products through a branch, compared with only 46% of those in North America; 54% of global customers purchase mortgages in their branch, while only 35% of North American consumers do so. For less complex products, such as credit cards, over half of customers globally, and nearly three-fourths in North America, would shop either online or over the phone, with most preferring online shopping. Affluent consumers overall are 30% more likely to prefer using online services over other channels.

"The current banking sales approach is highly reactive and largely transactional. Banks need to sharpen their focus on specific segments of the consumer market, particularly the growing mass affluent market, where they can build relationships and cross-sell the products that clients need," said Paul Hyde, Booz Allen Vice President. "The best banks are providing dedicated staff and floors in their branches for affluent clients, along with separate call center facilities, and premier websites.

"In addition, many banks are missing an enormous opportunity to grow through the Internet and call centers, because the performance of these channels does not yet meet customer needs and expectations," Hyde noted.

U.S. Bank Performance in Key Categories

U.S. banks perform relatively well across all service channels: branches, internet, and call centers, as well as channel integration. Out of a representative sample of U.S. retail bank chains, the study revealed which banks ranked highest in each channel and identified best practices as well as performance gaps.

Bank branches need to provide better personalized service. U.S. bank branches compare well to global best practices but offer few segmented offerings and limited availability of specialists. High performers: Chase, HSBC

Lessons for U.S. Banks:

-- Provide segmented offerings for the mass affluent, with a sense of exclusivity including increased privacy, and dedicated staff and floors.

-- Consider innovations such as pre-populated forms for existing customers with basic information already on file.

"Consumers are largely taking care of their simpler transactions online and through call centers, and not at the branch," said Andrew Bodziak, Booz Allen Senior Associate. "Clients come to branches to purchase new products or with more complex issues around existing products. They have higher expectations from face-to-face transactions, requiring more sophisticated skill sets and service from branch personnel."

Call center performance is low. U.S. bank call centers overall got high marks for accessibility, efficient service and product knowledge, but lag in segmented service and in understanding client needs. High performers: Commerce Bank, Wachovia, Wells Fargo

Lessons for U.S. banks:

-- Customers expect improved availability, reduction in wait time, and increased ease of security verification over the phone.

-- Banks should consider improving access, particularly for the mass affluent, by matching up customers with an advisor they can call directly, as well as providing instant connections.

-- Call center representatives need to put more focus on understanding client needs and recommending products that offer the greatest benefits to the individual customer.

Online banking is growing quickly, especially for the wealthy. Online channels for U.S. banks perform relatively well across the board, particularly in the areas of accessibility and efficiency, although they fall short of global best practices in segmentation of offerings. High performers: Citibank, HSBC, Wachovia

Lessons for U.S. banks:

-- Improve segmentation of services to take advantage of online growth by adapting dedicated websites to affluent customers who need the speed on online banking.

-- Improve live online and technical support to enable customers to submit questions and get confirmation of transactions by text or email.

-- Tailor web site layout to individual use with quick access to regularly used areas and offer tailored product alerts.

U.S. banks show above-average performance in all areas of service integration, and are exceptional in allowing different channels to work together. High performers: Chase, HSBC, Wachovia

Lessons for U.S. banks:

-- Identify additional, innovative channels through which to provide products and services for clients.

-- Make products and services consistently available across channels. Allow consumers to start transactions on one channel and finish on another.

Methodology

Booz Allen's 2007 Revenue Enhancement Study examined the role of sales channels in revenue generation, recognizing that the drive to improve efficiency through cost reduction has been offset by a decline in revenue generation in retail banks across the globe.

The study took a two-fold approach:

1. MORI Ipsos, the independent consumer research company, interviewed banking customers in Europe, North America, Asia, Latin America and the Middle East. Research covered 17 countries and assessed consumer preferences for each distribution channel and overall satisfaction levels.

2. In addition, Booz Allen carried out an extensive mystery shopping exercise at 100 banks, focusing on the consumer experience. This included a shopping and servicing questionnaire in a number of branches for each bank, plus internet assessment, telephone calls to call centers and shopping with mobile sales forces.

Based on the findings of this research, Booz Allen defined five individual channel indices to measure banks' performance; branch, call centers, online, mobile sales force (outside North America) as well as a multi-channel index.

The 17 countries included in the study are: Austria, Australia, Brazil, Canada, China, Germany, Hong Kong, Korea, Kuwait, Netherlands, Saudi Arabia, Spain, Switzerland, Thailand, United Arab Emirates, United Kingdom and United States.

Note to editors: For a copy of the study, please contact Karen Guterl at Guterl_karen@bah.com; 212-551-6516.

About Booz Allen Hamilton

Booz Allen Hamilton has been at the forefront of management consulting for businesses and governments for more than 90 years. Providing consulting services in strategy, operations, organization and change, and information technology, Booz Allen is the one firm that helps clients solve their toughest problems, working by their side to help them achieve their missions. Booz Allen is committed to delivering results that endure.

With 19,000 employees on six continents, the firm generates annual sales of $4 billion. Booz Allen has been recognized as a consultant and an employer of choice. In 2007, for the third consecutive year, Fortune magazine named Booz Allen one of "The 100 Best Companies to Work For," and for the past eight years, Working Mother has ranked the firm among its "100 Best Companies for Working Mothers."

To learn more about the firm, visit the Booz Allen Web site at www.boozallen.com. To learn more about the best ideas in business, visit www.strategy-business.com, the Web site for strategy+business, a quarterly journal sponsored by Booz Allen.