2014 WORLD RETAIL BANKING REPORT3 Preface5 Chapter 1: Decline in Customer Experience Index (CEI) May Signal Changing Customer Expectations5 Introduction6 Customers Report Fewer Positive Experiences8 Positive Experiences Heavily Influence Profitable Customer Behaviors9 Positive Experience Rankings Maintain Consistency, by Country10 Decline in CEI May Reflect an Inflection Point in Customer Expectations13 Role of Digital Innovation Varies by Region14 Delivering the Basics Remains an Imperative15 Banks Must Balance Physical and Digital Channels17 Chapter 2: Social Media Becomes a More Powerful Force in Banking17 Introduction18 Social Media Banking Begins to Take Hold21 Information, Customer Service Drive Banks Current Social Media Efforts22 Banks Face Several Barriers to Broader Social Media Adoption23 Bank Initiatives on Social Media Vary Widely25 Defining Social Media s Role Is Imperative27 Shaping Social Media Requires Strategic Planning29 Conclusion30 Appendix32 Methodology33 About UsContents5Following a solid gain last year, the Customer Experience Index for retail banking declined in 2014.?The Customer Experience Index declined from 73.5 in 2013 to 72.9 in 2014, along with the percentage of customers with positive experience which witnessed a decrease from 41.6 in 2013 to 39.5 in 2014.?Customers in every region except Latin America reported lower levels of positive customer experience. ?More than one-quarter of the countries had a decrease of more than 10% in the share of customers with positive experiences, a major reversal from 2013.?North America continued to record the highest levels of positive customer experience, while the Asian markets of Hong Kong, Japan, and Singapore continued to have the lowest. With fewer positive experiences, customers are less likely to engage in behaviors that drive profitability.?Customers with positive experiences are three times more likely to stay with their bank than those who have negative experiences.?Customers with positive experiences are also three to five times more likely to refer others and purchase additional products.?Simply delivering neutral experiences is not sufficient, as they do not inspire nearly the same levels of loyalty, retention, and attraction as positive experiences.The downward trend in the CEI may indicate an inflection point in customer expectations caused by the growing influence of Generation Y (Gen Y).?Gen Y is considerably less likely to have positive experiences, compared to all the other age groups.?Gen Y is far more interested in using mobile banking compared to other age groups, placing additional importance on the development of this channel.?Advancing personal digital technology and non-bank competition are also having an impact on customer expectations and experiences.High levels of digital innovation do not guarantee high levels of positive experience.?While digital innovation may increase positive experiences in some regions, delivering on the basics, including fair pricing, broad product sets, and dependable service, is imperative.?Fees and prices are the number-one drivers that influence customers to choose a bank in most regions.Banks need to cater to the growing ranks of digital-savvy customers, while still supplying high-quality direct services.?Today s diverse customer base requires a balanced network of distribution channels that work together fluidly.?An omni-channel approach, supported by upgraded core systems and effective data mining, will be necessary to provide positive experiences consistently.CHAPTER 1Decline in CEI May Signal Changing Customer ExpectationsINTRODUCTION62014 World Retail Banking ReportCustomers Report Fewer Positive ExperiencesRetail banks around the world were less successful in providing positive experiences to their customers over the last year, possibly signaling lasting change in the type of service delivery customers are seeking from their banks. The Capgemini CEI declined in 2014, as lower scores in nearly two-thirds of the countries surveyed pulled down the global average by 0.6 percentage points to 72.9 (See Figure 1) . Every aspect of customer experience encompassing all types of products, channels, and lifecycle stagesdeclined, even as the importance of most of them increased. The lower average reverses an appreciable gain made in 2013, pointing to possible demographic, technological, and competitive trends that may have implications for the industrys ability to fulfill customer expectations going forward. This years findings are the result of four years of data gathering, in which Capgemini has annually measured the many variables that affect the experiences of retail banking customers as they interact with their providers. The resulting CEI reflects the sum total of all the positive, negative, and neutral experiences customers have as they perform basic transactions with their banks. By tracking the measure over time, the CEI offers ins