For a long time banks felt they didn’t need a local relationship with YOU their customer because rates were the most important factor for competition. (Image credit: Ron Shevlin)
This mindset forever changed customer interaction. Branches became a cost, and cost is ruthlessly attacked. This created a concerted effort to push customers out of the branch, reduce the overall number of branches and have customers self serve more. This was all OK until 2008 when…
Customer Loyalty Fell Off A Cliff!
The ideal bank customer became one who never interacts, gets into a lot of debt and never changes bank. A pattern of behavior we the consumers have been very good at complying with!
The Race to the Bottom with Rates is Over
Switching bank will become simpler. Banks now face a consumer who doesn’t trust them and will find it easier than ever to change their banking relationship.
Customer Trust is the Key to Increasing Customer Sales and Customer Retention
The marketing departments now understand customers want a bank that they can trust. Marketing videos from 3 of the UK Big 4 are about helping customers achieve their ambitions #1, #2, #3, spotting the trend? Only HSBC are still harping on about how global they are, and Santander about rates.
What Does the Marketing Department Get That the Board Doesn’t?
In 2008 customers view of banks changed from good stewards of money and would not sell you something that was bad for your financial health.
So whilst, banks have begun to return to profitability through their investment bank (making the same mistakes as before), the war for the retail customer is only just starting.
How can banks protect their core and grow ROE in retail banking?
BY REALLY Knowing Their Customer
Know Your Customer or “KYC” is the single biggest misnomer in the corporate world, let alone banking…
“KYC check” is a term used in banking for proving a customer is who they say they are. KYC or “Know your customer” could be so much more. In the 1950s the branch manager knew their customer, was a good steward of their finances and trust was at all time high. Is there a 2013 equivalent?
What if banks knew their customers like Burberry knows theirs?
Wealth Management banks have for a long time built deep and personal relationships with their customers. How can using and properly implementing these techniques and technologies benefit retail banks ROE? Customer Relationship Management (CRM) may have the answer for scaling out the Wealth Management practices.
Banks Must Rationalise the CRM Estate
Most banks will have 3 maybe even 5 or more CRM tools for different uses, in different parts of the business. There is no one CRM with a single view of the customer base. It takes incredible discipline (and investment) to move away from CRMs that may have individual strengths to see the long game of a single customer view, but the benefits are huge and they key area of competition for the next decade…
Imagine if your bank:
- Spotted when you were likely to get into financial trouble in 2/3 months and offer support to ensure utility bills still get paid?
- Acted as a conscience (for customers who want that) when you are in a shopping center? (Meniga have some excellent and playful examples)
- Used to help you achieve your life’s ambitions (like the adverts claim).
- Increase Sales: Incentivise customers to move more products to your bank through debt / savings offsetting (similar to how corporate banking works today)
- Reduce Churn: Build sticky personal relationships by being trustworthy and helping customers improve their net worth
- Reduce Cost: Having one view of a customer, and a trail of their history / likes / dislikes and profile and treating them as an individual through digital channels. Leveraging branches as an outpost for financial planning / advice.