Data and analytics can serve as valuable tools to reveal patterns, trends and associations related to human behavior and interactions—particularly for the banking industry. Financial services leaders can uncover the hidden consumer perspectives to accurately shape an organization’s growth strategies for the year ahead, and even beyond. Over the past year the BAI Banking Outlook research program analyzed the latest trends and issues facing financial services leaders—including employee engagement, talent management trends, marketing and customer acquisition activity, and how customer retention and cross-selling initiatives are related. Understanding these insights will provide an important foundation for success in 2019. Here’s what we’ve found.
Employee engagement and talent management
Unemployment sits at an all-time low. Additionally, the financial services industry is experiencing a contracting talent pool. Prospects perceive that a banking career isn’t as prestigious as it once was. Various factors have caused this attitude, such as the perception of the industry as old fashioned or lacking modern attributes. For millennials, witnessing the most recent financial crisis has impacted the industry’s credibility as well.
But leaders have many ways to dispel these perceptions. They need to understand how their bank compares to competitors as they work to attract new talent and assess current employee engagement and job satisfaction. For example, comparisons in areas such as compensation, benefits, professional development and career growth opportunities, will help leaders better understand how to attract talent. Research may also identify improvement areas in banks’ salary structures, as well as other perks and benefits that will appeal to target candidates and retain current employees.
With existing employees, the BAI Banking Outlook research on talent management found that more than 65 percent of bankers indicated that a higher salary would be an attractive reason to change their workplace. In addition, BAI identified that an organization’s total benefits package (beyond healthcare and vacation) played an important role in employee engagement and retention. To remain competitive, leaders should conduct internal surveys and use other feedback options to determine how employees perceive their current benefits—and which they consider most valuable. This internal evaluation will help identify whether adjustments would benefit engagement and retention, both crucial given today’s job market.
Lack of career advancement opportunities represents another major reason employees would consider leaving their bank. BAI research found that if employees don’t see clear growth opportunities, they’re more likely to question their long-term future at the organization. More than half of bank employees remain unaware of internal leadership development initiatives, even if their organizations in fact have such programs. Financial service leaders need to address this misalignment to help employees see a clear path of upward mobility.
Marketing and customer acquisition
As with attracting and retaining talent, financial services leaders should use comparative analytics related to marketing and customer acquisition to assess their position in the market. New customer acquisition stands as one of the most important aspects for bank growth, especially in a rising rate environment. Yet this challenges most leaders, especially in a declining deposit growth market. With a finite number of prospective customers, new acquisition will likely come from another bank’s customer base.
Once again, perception matters. BAI Banking Outlook research also found the majority of customers felt that if their primary bank provided better in-branch, online and mobile banking experiences, their overall view of banking would improve. Leaders should identify how their bank compares to others in these categories—and then identify opportunities, whether this entails enhanced digital channels to meet consumer expectations, marketing your bank’s superior experience, or both.
Customer retention and cross-selling
Besides monitoring the needs and wants of potential customers, and how effectively other financial service organizations meet those demands, leaders can apply metric-driven studies to evaluate industry-wide customer retention trends and the impact of cross-selling activities. Key research areas include an emphasis on customer experience—evaluating the various channels used to open a new account such as mobile or in-branch—and which activities impact customer loyalty metrics, such as Net Promoter Scores (NPS).
Analytics such as these can also provide valuable insights into how different generations shop for new accounts and how satisfied they are with their experiences. Leaders should also leverage research to shed light on how the actual process of opening new accounts impacts customer loyalty across generations, then identify strategic areas of improvement for technology and support staff training. Knowing how consumers feel about the banking journey, leaders can make more informed decisions on how to enhance and communicate product and service offerings. Improving the customer experience will help drive deeper engagement with valued customers.
Industry research is one of the most powerful drivers of change within a financial service organization. Without accurate comparisons to other financial services organizations, leaders risk developing a narrow view of issues and opportunities. Instead, leaders must apply quality analytics and insights to assess industry transformation; labor market impact on staff; what potential customers want in a bank; and how to satisfy current customers.
These industry insights can drive the innovation and transformation needed to compete. Working to stay ahead of the curve by leveraging analytics to drive business decisions has its sure rewards. As much as any future can be certain, 2019 will belong to banks that use rich data to make smart business decisions.
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Karl Dahlgren is managing director of research at BAI.