Forrester’s 2023 Singapore Banking CX Index: Overall CX Quality Declines

Forrester’s 2023 Singapore Banking CX Index: Faced With Economic Headwinds, Overall CX Quality Declines
Citibank reclaims the top spot due to its laser focus on delivering emotionally positive experiences

Forrester’s (Nasdaq: FORR) 2023 Singapore Banking Customer Experience Index (CX Index™) reveals an overall decline in CX quality amongst multichannel banks, resulting in mixed results and a reshuffle of the rankings. According to this year’s CX Index rankings, Citibank and DBS Bank improved their CX scores; Standard Chartered, OCBC Bank, and United Overseas Bank (UOB) saw their scores decline; and HSBC appeared on the CX Index for the first time. Citibank regained the lead in the CX Index rankings after improving its CX performance by investing heavily in a voice-of-the-customer program to infuse customer feedback into its service design, employee training, and targeted CX improvements.

Sharp rises in inflation and living costs are making it harder for Singaporean banks to deliver quality CX that meets the needs and expectations of their customers and earn their loyalty. In addition, the banking industry suffers from a lack of differentiation, with just a 5.7-point (on a 100-point scale) gap separating the leader and the last-placed bank, indicating that the state of CX in Singapore’s banking sector has reached a stalemate, with customers rating it as “poor” or just “OK.” Finally, the quality of physical CX (58.5 points) was rated the lowest, compared to digital-only CX (61.0 points) and hybrid CX (63.1 points).

“There is a common misconception in banking that customers universally prefer digital experiences and are ready to abandon physical channels,” said Dane Anderson, SVP of international research and product at Forrester. “While investing in digital experiences was a necessity during COVID-19, by overpivoting to focus on digital channels, banks in Singapore risk losing service capacity and neglecting the service quality in physical channels like call centers and branches. This may result in disappointment and frustration, the two emotions that harm customer loyalty the most.”

Forrester’s CX Index surveys show that how an experience makes customers feel has a bigger influence on their loyalty to a brand than the effectiveness or ease of those experiences. Among customers of Singapore’s banking industry who felt happy and valued, 79% and 76%, respectively, say they will stay with their bank; 72% and 71% will pay more for products; and 67% and 69% will advocate for the brand.

Based on a survey of more than 1,800 customers in Singapore, Forrester’s Singapore Banking CX Index benchmarks the customer experience quality of six multichannel banking brands to determine how they perceive their experiences and how CX drives their loyalty.

This year’s Singapore Customer Experience Index (CX Index™) study reveals several important findings:

CX quality among Singapore’s banks slightly dipped. The overall quality of banking experiences has slightly dropped since 2022, with the industry-average CX score sliding from 62.0 to 61.3 points on our 100-point scale. Brand-level CX scores were distributed across the “Poor” and “OK” categories. Our analysis also showed that negative CX perceptions outnumbered positive ones, as 49% of banking customers rated their experiences as poor or very poor, compared to 36% who rated their experiences as good or excellent.
CX quality among Singapore’s auto and home insurers remained flat. Compared to last year, the industry-average CX score for home and auto insurance companies nudged up by a single decimal point, to 61.9. The brand-level CX scores were concentrated in the “OK” category. But the individual-level (customer) CX scores showed a notable gap between negative and positive CX perceptions, with 50% of insurance customers rating their experiences as poor or very poor compared to 35% who rated their experiences as good or excellent.
Citibank and AIG topped the CX rankings in their respective industries. The two American brands captured the lead position in our CX rankings this year, with Citibank (CX score of 64.5) and AIG (CX score of 64.2) outmatching their peers in their respective industries. While both firms enjoy a relatively small statistical advantage over their peers (i.e., a 0.7–1.7 point advantage over the second-ranked brand), both firms attributed their ongoing success in large part to significant investments they made last year in voice-of-the-customer (VoC) programs and customer engagement that helped to inform their CX improvement initiatives.
Hybrid CX outperformed both digital-only and physical-only CX. Hybrid experiences (i.e., when customers choose to interact with their providers using both digital and physical channels) were more positively rated than exclusively digital or physical experiences in both the banking and auto and home insurance sectors. In insurance, for example, hybrid CX received a score of 65.8 points, compared to 59.4 points for digital and 59.9 points for physical CX. In banking, hybrid CX received a score of 63.1 points, compared to 61 points for digital and 58.5 points for physical CX.
Emotions outweigh ease and effectiveness in relation to loyalty. The way customers feel after interacting with their bank or insurer is much more impactful to their sense of loyalty to a brand than either the ease or the effectiveness of the underlying interactions. As our data showed, customers who feel positive after their experience are substantially more inclined to remain as a customer of a brand (i.e., retention), to purchase additional products from that brand (i.e., enrichment), and to refer friends or family members to that brand (i.e., advocacy).

Download the Planning Guide 2024: Customer Experience report for research-driven insight on the areas Forrester has identified for investing, divesting, and experimenting when budgeting for 2024.