Retail banking (or consumer banking) accounts are a large part of any bank’s portfolio. While corporate accounts come and go with the ebb and flow of today’s market, consumer accounts can be relied upon to provide stability for a bank through the ups and downs of an ever-changing economy.
BAI claims that “For most banks, their retail franchise is the most valuable part of the company.”
For this reason, it is no wonder that there is so much competition for consumer banking customers. Only the most savvy of institutions are able to compete to keep retail clientele loyal to their brands. So how does a bank or lending institution stand out among the noise and attract these valuable accounts?
As with any industry, customer acquisition relies heavily on marketing. Therefore, it would be useful for banks and lenders to pay attention to current marketing trends. Jim Marous, co-publisher of The Financial Brand, has pointed out that retail banking “consumers are becoming accustomed to instant communication, one click service and real-time contextuality.”
This points us to highly calibrated customer experience models. MarketsandMarkets, an independent analysis firm in the CX space has predicted that the customer experience industry will grow from 4 billion in 2014 to 8 billion in 2020. Why is that? Maybe it’s because engaged customers are profitable customers.
According to a Rosetta Consulting study, engaged customers spend 200% more each year than non-engaged customers. A Gallup analysis found that engaged customers are more profitable and loyal in both good and bad economic times. Engagement starts and ends with customer experience.
If marketing is still the key to winning and keeping customers, and today’s marketing trends are pointing to customer experience as the essential tool of leverage against competitors, then how can an institution fuse the two in an effort to acquire and keep valuable retail consumers?
Use an Omnichannel Approach
Alison Wilkes, a general manager for the banking division of EMEA claims that “Utilizing intelligent strategies to integrate disparate digital and physical channels into a single, seamless experience has to be a priority.” In order to provide the proper products and services, banks will need to up their game and analyze how their customer base uses the channels and options they create.
Most banks still use a product-based marketing model. While that may have worked in the past, institutions are now finding themselves in a much more crowded space. Financial tech startups are sprouting up left and right with the same or better products. If an institution tries to anchor its marketing message through its product line, it can be easy to assume that the institution will come up short because Fintech startups, with lower overhead and operating costs, can provide the same solutions with lower user fees.
Because of this, institutions will need to pivot their focus to providing a customer experience that stands out enough to keep retail customers from looking for alternatives.
In a recent article for Avoka, a digital customer acquisition firm, Senior Director of Marketing Marina Antestenis says that “Delivering the omni-channel banking experience that customers seek enables organizations to attract new customers, increase the loyalty, satisfaction, and retention rates of existing customers, and generate more revenue.” Customers are like snowflakes in that no two are identical. By using an omni-channel customer experience, it becomes more plausible for that experience to match up with each customer’s individual needs and preferences.
Step Up to the Tech
From 2014 to 2015, physical visits to banks went down 30%. And as that number is growing, more and more as mobile and digital banking solutions continue to develop. Ten years ago, who would have thought that you could transfer funds using a wristwatch?
In marketing terms “high potential segments” refers to the demographic of banking customers that give an institution the most potential to make a profit. CEB Global has reported that for the high potential segment of customers aged 18-29, there is a clear shift towards a preference in using digital transactions.
Institutions that do not offer turnkey digital services will have a difficult time bringing in new millennial customers. Beyond that, they may also lose other demographic segments as baby boomers and other age groups become more comfortable with making transactions using their device of choice instead of taking time out of their day to stand in line at a branch. Bank of America conducted a study not long ago that showed that 52% of baby boomers are using mobile check deposits and 23% of seniors who own a smartphone or tablet have used the device for mobile banking.
The Right Recipe
It might be easy to assume when reading these reports and quotes from banking experts that the retail banking marketplace just wants to push buttons on their smartphones or tablets to take care of their transactions. According to statistics however, there might be more to the story.
Our friends at Gallup have found “To open or close an account, apply for a loan, or seek financial advice, about three out of four customers prefer interacting in person at a branch.”
When it comes to big decisions, retail banking customers feel as though they deserve a human touch, and rightly so. The Boston Consulting Group’s most recent benchmarking shows that the top-quartile institutions are gaining advantage by blending digital innovation and technology with a human touch. Customers also like the convenience of having digital or mobile alternatives when making day-to-day transactions.
It would seem that if a banking institution wants to put together a good acquisition and retention marketing model, the best idea would be to keep the customer experience in mind. And to do that, the model should include the ability for the customer to have access to convenient digital tools as well as having the ability to have a real-time one on one interaction with a live representative that can serve their needs.