As banks and fintech providers compete to out-innovate each other at every turn—with similar upgrades and incentives to win the same customers—financial institutions can be tempted to add products. For banks, it’s like keeping up with the Joneses.
While bright, shiny new services may grab attention, the real key to growing revenue is to define and execute an intelligent organizational strategy. This requires taking stock of your customers and market—and offering products that honor the needs of both.
Financial institutions that want to gain market share, grow their customer base and generate revenue can benefit from taking a step back to evaluate their product suite to make sure they offer what customers want.
These best practices can help your financial institution through this process.
Define your strategy
Before reengineering products, define your financial institution's overall strategy and determine what kind of player you want to be in a sea of options. Find your identity and know your customer. Don’t try to copy Apple or even that big bank down the street if you’re finding success as a community bank.
Understand your customers
Before you roll out new products, learn to understand the needs of your current customer base, as well as those customers you want to attract. In general, the digital lifestyles of consumers shape their preferences and this extends to expectations for financial services. That said, avoid painting with too broad a brush when you design services. While similarities link customer segments, key differences also matter, particularly across generations.
Knowing each customer segment’s needs will help you propose the right products. Specialized tools and analytics can help your organization gather the data you need to evaluate the results and make informed choices to ensure that you're offering the product mix that works best for your customers. These insights can also underpin effective promotion campaigns and bolster cross-sales by facilitating targeted product recommendations.
Tailoring products to meet the needs of different customer segments made a meaningful impact for Springs Valley Bank & Trust, based in West Baden, Indiana. The bank serves two distinct geographic markets shaken by consolidated industries and fickle employment opportunities. As a result, it faced challenges in reorganizing its account rewards program to create products and rewards that appealed across customer segments. In particular, the products needed to be user friendly and provide benefits to the bank.
A product portfolio update led to several benefits, including deposit growth and increased debit card usage.
Know your competition
Investing in competitive market research will help you determine market potential. Do you know the size of the opportunity that exists for certain products in your area? Do you know which competitors offer similar products and how to gain the competitive edge? Product packages structured differently than your competitors can give your bank an advantage.
This was the case for Paris, Kentucky-based Kentucky Bank. The bank leveraged the knowledge of product portfolio optimization experts to redesign its product suites and create customized accounts unique to its market. The result: a product mix that better satisfied customer needs, built bank revenue and drew positive reviews.
When you research and analyze the competition’s product offerings and pricing structures, it will inform decisions on your own products, services, fees and overall value proposition. With so much information available to everyone, everywhere, it becomes hard to present customer offerings in a truly original way.
Leverage this information by researching what works (and what doesn’t) for other financial institutions. Think outside the box and outside your region. Consider expert partners who work daily with financial institutions nationwide. You can leverage their eyes, ears and experiences to your benefit.
Remember: It’s important to stay connected, informed and one step ahead of the market to gain that critical edge. Competitive analysis and other analytic tools can help your financial institution attract and retain customers.
Putting it all together: Product portfolios, proven success
Product portfolio optimization can result in increased efficiency, a higher return on investment and increased revenue growth. A well-edited, current set of solutions will attract new customers and strengthen ties with existing ones. Don’t overlook the power of the right product mix as a component of the overall customer relationship. After all, it’s what your customers want, the competition lacks and creative banks deliver.
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Victoria Lubnik is a solutions strategist, advisory services at Fiserv. Prior to her current role, Victoria led an advisory services group within Fiserv specializing in revenue and growth initiatives.