Monday, July 26, 2010

Responding to the Self-Directed Bank Customer

According to a soon to be published Accenture survey of senior banking executives from major banks across the world, there has been a significant power shift between banks and their customers that has resulted a lowering of customer profitability levels. The research entitled, Customer 2012: Time for a New Contract Between Banks and Their Customers?, found that nearly half of the executives have seen their average customer profitability decline by 5-15 percent since the beginning of the financial crisis.

According to Noel Gordon, global managing director of Accenture's banking practice and co-author of the research, “Consumers have emerged more confident in making financial decisions for themselves, more skeptical of their bank brands, more price-conscious and more willing to move away from institutions that provide poor service.
For the banks, traditional profit-recovery strategies – rate and fee increases, conventional cross-selling and organic growth – will not readily fix the problem because broader customer expectations and service demands have risen in the wake of the financial crisis.”

The vast majority of bank executives surveyed (83 percent) reported increased demand for “direct” services – online, telephone, and mobile – since the financial crisis, and nearly two-thirds (63 percent) believe that meeting those demands will be a major challenge for their companies in the next three years. What is interesting about the research is that nearly half of the bankers also cited that customers want more personalized services.

These traditionally conflicting customer desires of alternative channel access and increased personalization can only be addressed through the collection and application of enhanced customer insight including data from third parties, payment behavior, channel use tracking, customer preferences and survey data integrated across all lines of business and available to front-line employees. This insight needs to drive more sophisticated segmentation and intelligent interactions with the goal to 'pull customers' as opposed to 'pushing product'.

Accenture believes there are six strategies banks can use to foster stronger relationships:
  • Identify and understand customer behaviors and trends to continually evolve marketing and distribution strategy.
  • Provide interactive, targeted customer service while decreasing costs.
  • Leverage IT to provide personalized interactions.
  • Apply retailization tactics to foster experience-based loyalty.
  • Use transformative efficiency to reduce unit cost for customers, partners and suppliers.
  • Support the rapid evolution of business and operating models.
With decreased loyalty, increased price sensitivity and online capabilities that make switching financial providers easier than ever, only banks that can fully leverage customer data and enhanced analytics to deliver needs-based solutions will be in a position to reverse recent customer profitability declines.

How is your bank positioning itself to respond to the self-directed customer? What strategies are you using to capture and use transactional, behavioral and social insights? Are your marketing communication strategies changing? I would love to hear from you.


  1. Jim,

    I'm curious how much of the Accenture study findings align with the concepts and principals in Bank 2.0 by Brett King. All of this research is supporting my thoughts that banks need to see their Internet sites as fully functional branches. There shouldn't be a difference in the service offerings between a brick and mortar branch and an electronic branch. It may be easier in some cases to give account holders that personalized one-to-one "pull" marketing in electronic branches.

  2. I am currently doing some ad hoc research to determine where some of the large banks place their internet banking divisions. Is it considered a 'branch' thereby positioned as a delivery channel or is it positioned as a 'product' like online banking. In addition, it is interesting how few banks take a customer to a landing page within their internet banking environment as a way to respond to marketing communication. Instead, most still drive the customer either to a URL or to the main site itself which is inefficient and ineffective.