Banks got a cold shower from the SOM Institute’s April 2014 report on Swedish residents’ confidence in important social functions during 2013.
As a group, banks in Sweden lost significant customer confidence between 2013 and 2012—a full 9 points on the confidence index. This indicates that Sweden’s residents have even less confidence in the European Parliament, European Commission, municipal boards, and the political parties. The trend is nearly as dismal in other Nordic countries.
By comparison, Sweden’s residents have significantly more confidence in the media, police, and medical care. According to Lennart Weibull, professor of mass media research and one of the leading scientists behind the SOM report, residents’ confidence in banks has been diminishing since the late 1990s.
"Previously, people had equal confidence in banks and in the medical care system,” says Weibull. “They probably saw banks more as institutions than as companies. On the back of the banking crises, they first started to realize that banks are commercial operations just like any other company. To hold their heads above water during the waves of crises, banks began to compensate by boosting lending rates and introducing more service fees, which further decreased confidence.”
The SOM Institute’s report follows the trend set by the Swedish Quality Index during the autumn of 2013, when it was noted that customer satisfaction in the banking sector was falling at an alarming rate. While the public also reacts negatively to banks’ big profits, the drop in customer satisfaction is mainly due to unsatisfactory service (according to the Swedish Quality Index).
Svenska Dagbladet, a Swedish national daily, reported that “banks get harsh criticism from customers who feel forced into various technical services—which they then experienced as not working" (7 October 2013, “Banks’ customer confidence extremely low”).
According to Johan Parmler, CEO of the Swedish Quality Index, the banking sector tries to control how customers should be and not the other way around: "The banks seem to have more of a producer perspective than a customer perspective. Customers feel that the banks are not interested in solving customers’ problems.”
Of the other Nordic countries, Denmark leads the pack and has a problem with customer confidence on par with Sweden’s problem. Finland and Norway aren’t so far behind and also experience declining customer confidence.
Cognizant promotes a completely different approach to banking services development. And banks worldwide are investigating a Cognizant project called “You are the future of banking”. This project gathered proposals for services from ordinary bank customers—practical services based on customer needs—and not based on banks' efficiency demands.
Cognizant’s social, mobile, analytics, and cloud (SMAC) model of how IT creates value for organizations is ideal for banks that want to customize their operations based on customers’ needs—to thus generate greater customer satisfaction.
“We’re now seeing more and more banks starting to use sophisticated analysis tools to better understand their customers,” says Prasad Chintamaneni, senior vice president and head of Global Markets Banking and Financial Services Practice at Cognizant. “Social networking and cloud solutions also change the way banks interact with their customers, which everyone in the sector is aware of. The problem for many banks in smaller regions, such as the Nordic region, is mainly to gain access to the expertise needed to orchestrate and implement these solutions.”