Thanks to a recent article in Customer Relationship Management magazine entitled, “Report Suggests Retail Banks Need an Overhaul.”
According to research conducted by PricewaterhouseCoopers US (PWC) shifts in consumer spending, saving and borrowing are likely to depress revenue growth for many U.S. banks, increase operating costs and squeeze profit margins.
Banks need to reevaluate the role of branches; incorporate mobile banking, payments and social media; and break down the organizational, operational and technology barriers that have prevented them from growing organically.
After many years of talking about cross-selling and customer relationship management, banks are still unable to identify who their best customers are, let alone identify appropriate products, pricing, servicing and channel for them.
It’s also difficult to attract new customers. Ninety-two percent of U.S. households already have checking or savings accounts. As such, banks have limited opportunities to attract customers who don’t use financial services.
Moreover, those who already have accounts are not likely to leave due to the perceived and real hassle of doing so when you consider the need to change direct deposit and EFT relationships with employers and service providers.
More than 40% of Americans have been customers with their primary financial institution for more than 10 years and consumers hold an average of 3.3 products at those institutions.
To address these challenges and the opportunities available. banks must meet more or their customers’ needs throughout their lifetime. This means adopting a more customer-centric focus and to better understand and anticipate customer needs and preferences.
PWC identifies three strategies for ding so:
- Breakdown product silos and restructure incentives
- Understand customer needs, preferences and behavioral drivers
- Deliver a consistently high-quality customer experience
These strategies will enable banks to move beyond merely pushing products to better anticipate customer needs and proactively offer the most relevant products and services.
Sixty percent of customers say online banking has become the most valuable engagement component in the past two years ranking it higher in value than a bank’s trustworthiness (table stakes with FDIC backing) and even return on their money in the bank.
Customers want banks to incorporate social and human aspects of customer service, such as more personalized service and tailored advice, into online banking.
Additionally, tech-savvy customers are using smartphones for everything but mobile banking due to security concerns. As such, banks need to address these concerns around mobile banking and give customers what they want.
What is your bank or financial institution doing to become more customer focused?