Why it's hard to differentiate leaders from the laggards in the financial services space

Financial services brands lack competitive differentiation, making it difficult to distinguish the leaders from the laggards. The narrowing gap also denotes that individual brands may face difficultly in standing out in their ability to deliver great customer experiences. 

This is according to Forrester's Singapore Customer Experience Index (CX Index) annual study. The study was conducted across the banking, investment and home and auto insurance industries. It revealed how Singaporean customers feel about their experience with their financial service providers. 

For starters, the banking industry is stuck in the "okay" CX score category for five years in a row. The multichannel banking industry average CX score of 61.3 shows no change from the previous year. 

Don't miss: What are some ways to build loyalty for your brand through CX? 

Moreover, there has been no statistically meaningful movement observed since 2022, coinciding with the end of the pandemic and the boon of digital banking. Theoretically, this should have created a window of opportunity for banks to make significant CX improvements but didn’t, according to Forrester. 

Meanwhile, the auto and home insurance industry's CX score dipped again but is still "okay". According to Forrester, Singapore-based auto and home insurance providers are steadily losing ground in CX quality since 2021 with the latest year-on-year dip bringing the industry average score down to 60.8 on Forrester's 100-point scale. 

This is less than a point shy from the “Poor” CX score category, added Forrester. 

"This disappointing trend follows a period marked by the increased financial pressures felt by customers due to rising costs (affecting their price sensitivity) on one hand, and the substantial spike in claims in 2023 due to higher motor and home incident rates (affecting insurers’ margins), on the other," said principal analyst Tom Mouhsian. 

Similar to the banking industry, the investment service providers also delivered "okay" CX. Singaporean customers who use investment services gave the industry an average score of 63.0. 

In addition, the study found that retail investment services suffer from similar issues and challenges as traditional banking services.  

The top scorers

Despite the meek industry-level CX results, HSBC and Singlife stood out by capturing the highest scores in their respective industries. 

HSBC had the highest CX Index scores in both the banking (65.4) and investment industry (66.1) and received top ratings in metrics related to customer loyalty, satisfaction, forgiveness and brand alignment with customer values, said the study. Customers rated it as "excellent". 

Singlife, on the other hand, outpaced its peers in the auto and home insurance industry with the CX score of 62.9. It also led the field in customer forgiveness and brand alignment metrics. 

Interestingly, hybrid experiences gained higher customer ratings than either digital or physical-only interactions. 

Specifically, customers found hybrid experiences significantly easier, more effective, and more emotionally positive across all three sectors: banking, auto and home insurance, and investment.

Digital-only CX had a slight advantage over physical-only CX, although both failed to rise above 50%, in terms of the number of customers who agreed that experiences there were either easy, effective, or emotionally positive, said Forrester. 

To improve their customer experience, financial services brands must focus on the drivers that have the greatest impact on their CX quality, said Forrester in a statement seen by MARKETING-INTERACTIVE.

For banks, these drivers include resolving problems quickly and providing easy-to-use mobile banking apps. In contrast, CX quality in the auto and home insurance sector is driven by factors such as making it easier to get an appointment with an agent and being more transparent about policy costs, added the statement. 

“Despite their continued efforts to improve customer service and invest in digital experiences, financial services brands in Singapore are still struggling to raise their CX quality and differentiate from their competitors,” said Dane Anderson, SVP of international research and product at Forrester.

“The silver lining is that these brands are aware that they need to prioritize their customers’ needs to drive business growth. When companies invest in improving their CX quality, they receive many competitive benefits, including higher customer loyalty, retention, share of wallet, and brand devotion," added Anderson. 

Related articles:   
Singlife is showing you your ideal life with a new AI-driven web campaign
Singlife says “Caaaan!” to financial goals in lighthearted film with Pierre Png  
HSBC spotlights Asian singers and bread in new wealth campaign