Cutting costs may seem like the logical, easy choice for bank executives looking to make this year’s profit targets or get a bit closer, but it can come with its own costs in the form of lower revenue, weaker service and frustrated customers.
CEOs who want to maintain customer satisfaction and superior service while meeting profit goals do have another option: deepening customer relationships. In fact, in today’s ultra-competitive, commoditized industry environment, it may be essential.
Insights from Ignite’s IQ Analytics data show that engaging with customers with the goal of discovering their needs will result in an average of about 150% increase in revenue generating product adoption. The cost of increasing product adoption with current customers is significantly less than the cost of obtaining new customers, and it also results in increased customer retention.
In addition, banks that are fully engaged with customers through digital channels are 4 times more likely to deepen relationships. Bankers, buoyed by advanced technology, enjoy new opportunities to make their institutions trusted partners in customers’ financial lives, a role that has become even more important as businesses and individuals navigate the coronavirus pandemic.
A combination of personal service, online and mobile banking platforms and analytical software provide the tools to enhance and build those relationships.
In acting as a caring and vital resource, banks can lead existing customers to expand their business with the institution by helping them understand and better manage their daily finances and long-term goals. Bankers will find customers signing up for savings accounts, home equity loans or enhanced checking, among other products.
The small business owner with two checking accounts – one commercial, one personal or two commercial– may develop stronger ties while turning to the bank for advice, perhaps opening a brokerage or trust account or taking on a mortgage or business loan.
The Gen Z college graduate just starting working life may scroll through financial advice on the bank’s mobile app, developing confidence in the institution’s expertise and, along with it, a sense of brand loyalty.
Offering personal, one-on-one service is important, especially for customers who feel most comfortable picking up the phone or going into the branch to work with the bank. Financial technology, however, has emerged as an effective component in banks’ customer relationships.
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On a relatively simple yet effective level, bank websites and apps can provide straightforward, consumer-friendly financial education, enlightening customers while engendering trust and familiarity. According to research from BAI, of consumers have used “digital banking applications more since the start of the pandemic. Furthermore, 87% of consumers plan on maintaining their increased usage after the end of the pandemic.” Interactive offerings help guide consumers in their financial lives.
Easy processes for setting up new accounts online can prove particularly rewarding, allowing customers to expand their banking relationship in minutes from the comfort of home rather than sitting in a bank lobby filling out paperwork. In the coronavirus era, it’s hard to overstate the appeal of this option.
Incorporating an artificial intelligence element into relationship management can bring another level of value both to customers and financial institutions. A study from the McKinsey Global Institute estimated that AI could boost bank revenue by as much as 5.2 percent a year.
Data analytics can help banks discover the best services for each client, allowing representatives to guide customers to the optimal services for their individual needs. As McKinsey reports, analytical tools enable banks to boost revenue throughout the customer life cycle, guiding institutions through different income-boosting strategies.
Federal Reserve Bank officials have noted that algorithms can help predict product selection based on customers’ finances, spending styles and habits, with chat bots often performing this work. Importantly, one Fed official noted
AI can help banks lower costs by producing strong performance less expensively.
That, ultimately, is the goal for bank executives seeking to achieve profits while maintaining top-tier service and customer satisfaction.
Ignite Sales is the leader in digital customer engagement, using artificial intelligence for engaging analytics to facilitate growth, deeper product penetration and increase satisfaction levels of bankers and customers.
