If 27.1% of consumers do not intend to buy another product from their bank, then how can community banks and credit unions compete?
According to the 2015 World Retail Banking Report (WRBR) by Capgemini & EFMA, wallet share for financial institutions has been negatively impacted due to declining levels of customer service and an increasing number of non-bank providers of banking products. The report states, “Perhaps the most foreboding finding of our 2015 survey was the large decrease across the globe in the likelihood of customer buying another product from their primary bank.”
An alarming finding in North America - 27.1% of customers surveyed said they were NOT likely purchase another product from their primary bank. This is up from 5.7% in 2014.
If customers do not intend to buy from their primary bank, then who are they turning to for their financial needs? There are plenty of alternatives out there including other banks, credit unions, financial service companies, and an increasing number of non-bank providers like brand-name retailers, crowd-funding web sites, peer-to-peer lenders, and internet/mobile service providers.
What are customers’ reasons for NOT choosing their primary bank?
- Better product options. Gone are the days when customers relied on their primary institution as a “one-stop-shop.” Today customers will go anywhere (online, to other banks, to retailers) to find the best deals and strongest products to meet their needs. Once they find those best-in-class products, they’re using the latest tools and technologies to aggregate, track, and improve upon their portfolios of accounts.
- Better experience.The report notes that non-bank providers tend to provide a better customer experience, especially through online channels.
How can community-based banks and credit unions win back their share?
1. Improve and promote the digital experience for your customers.
Your customers use the internet and mobile tools to do their homework, track accounts, research products, and stay informed. Why not help them to do that on your financial institution’s website and via online tools & mobile apps?
The WRBR indicates that a looming challenge for financial institution marketers will be to convince customers that the levels of service on internet and mobile channels are as good as what they receive at your branches.This means that your online and mobile presence (including resources, apps, and tools) must be intuitive and make customers’ tasks, research, and transactional routines easier and more efficient.
Moreover, if your promotions and claims of a “great digital experience” don’t match what your bank actually provides, then customers will see through the hype and look elsewhere.
Since most community banks and credit unions don’t have the internal capabilities to improve their digital channels, they should seek vendors whose innovative products help their institution rise above those with standard bank offerings.
2. Improve service and offerings at your branches.
While the WRBR highlighted customers’ digital experience, the report also noted that the in-person experience still matters immensely. Over 53% of the customers surveyed said they would prefer to use an institution’s branch to apply for products (even simple ones like new deposit accounts or credit cards). Slightly fewer (51.7%) said they turn to the branch first for an advice-based product like a mortgage or other loan.
Your customers still want to visit your branches and interact directly with your team, so make sure their branch experience reinforces your institution’s desire to truly help improve their lives. At your branches, give customers information, self-serve stations, and immediate access to your staff of experts.
When you provide that person-to-person interaction - where your customer feels heard, understood, and taken care of – your financial institution will win hearts and stand out from impersonal online options.
Read more about wallet share: How does engagement affect wallet share?
Larky is a mobile platform that helps community banks and credit unions delight their customers with rewards and perks.