The Bank Executive’s Agenda: Differentiating Their Bank in a “Me-Too” Marketplace
In a complex, highly competitive marketplace, bank leaders and managers who make it a priority to create a culture that is built around understanding what the customer needs and values—and the mindset necessary to deliver on it—will have the advantage.
Part 1 in a new blog series
By Donna Horrigan
Leaders at top-performing banks know that being able to win new customers and retain profitable relationships is essential to growing market share and increasing shareholder value. But as the industry continues to go through massive disruption, customer expectations are changing, and that makes the growth equation even more complicated.
Many senior leaders are finding that more and more of their time and attention is being diverted to staying current on the latest technology and dealing with regulatory changes and implications. Although these issues are important, this all-consuming focus is taking energy and focus away from what may matter most— differentiating their bank in an environment where technology has evened out the playing field and it’s never been easier for customers to jump ship when the next flashy offer comes their way.
The Rise of Technology in Banking: A Double-Edged Sword
Technology represents the biggest sea change in banking in the last decade. But technology isn’t a differentiator anymore; it’s the price of entry. What’s more, banks are finding that client loyalty is harder to come by when technology takes conversations out of the relationship. Technology can’t replace a skilled banker having a meaningful dialogue with the customer to uncover what really matters most to them in solving their financial concerns.
Let’s take a closer look at some of the trends that have emerged as technology use has increased:
Trend 1: Increased technology use has not translated into increased wallet share.
Despite all of these new resources bankers have on tap to support client needs, share of wallet remains at 2.1 out of 7 per household—unchanged over the last few decades. Technology simply can’t build the kind of relationships that result in broader use of a bank’s products and services. The question is, are bankers prepared to do it? The PwC Retail Banking 2020 Report found that 61% of bankers consider a customer-centric model to be very important, but less than 20% are very prepared for it.
To make it even more difficult for bankers, Edelman found that an average of 58% of customers believe their banks don’t have their best interest at heart, and, even worse, 42% believe banks take advantage of them.
Bottom line: Using technology to analyze buying patterns will never replace needs uncovered in conversations with bankers who are highly skilled at solving customers’ financial concerns.
Trend 2: Increased technology use has decreased customers’ loyalty to a specific bank.
As bankers struggle to meet a broader range of lifecycle needs, Accenture found that 27% of consumers are out shopping for better deals, and 31% find that it’s not too much of a hassle to switch. The true differentiator that can counteract the switching is the one thing every banker can control: the customer experience.
In fact, the human factor is what bank customers crave. According to the Accenture study, among the top measures for success from the customer’s perspective are bank trustworthiness, banker skills and higher quality of services with an ease of doing business. Banks and bank leaders clearly aren’t doing enough in these areas: Eighty percent of banking customers with negative experiences say they leave because they don’t trust the bank to solve their problems.
Bottom line: Customer loyalty is decreasing, and the core drivers of customer satisfaction are not being met.
Capitalizing on Missed Opportunities: 2 Strategic Steps Bank Leaders Should Take
Banks are struggling to move clients from basic core products to more complex financial products that could increase bank profitability. Technology is only one piece of the solution. It’s not helping banks build loyalty, strengthen customer relationships and create a brand that their customers trust and believe in. For that, we still need people.
As a bank leader, here are two important strategic steps for driving growth in today’s complex environment:
- Focus on value across the board. Develop your strategy around maximizing the value that your bankers deliver to customers—and recognize what that really entails. Employee satisfaction, loyalty and productivity directly impact the level of value banks deliver. When senior leaders are able to keep both client and employee needs in balance, more value is created, which will ultimately support the bank’s ability to increase shareholder value.
- Commit to a mindset shift. Focusing on value starts with a wholesale mindset shift about what the customer experience means across the bank. Bank leaders must continually communicate the importance of delivering meaningful value from the customers’ perspective. And because it takes collaboration from all areas of the bank to deliver differentiating customer experiences, internal bank partnerships have to evolve as well. People need to be able to share what they’ve uncovered about customer needs and recognize when and how to bring others in to cement the relationship.
Shifting Culture to Drive Growth
In a complex, highly competitive marketplace, bank leaders and managers who make it a priority to create a culture that is built around understanding what the customer needs and values—and the mindset necessary to deliver on it—will have the advantage. The ultimate multiplier for bank growth is when all of the bank’s divisions and departments work with shared purpose in support of their customers’ financial success.