Winning Customers by Providing Something Unexpected

It’s a long-held truism in the banking industry that a checking account acts as an anchor, holding customers steady in the relationship. Increasingly, however, the checking account anchor is no longer sufficient since recent research conducted by Market Strategies International shows that less than 10% of customers consider their bank to be their only financial relationship. The research found that the vast majority of consumers hold a range of products, such as credit cards, mortgages and CDs, across several financial institutions.

Many people would attribute the weakening of customer relationships to the general distrust besetting financial services in the wake of the 2008-2009 financial crisis but there are other factors at play here. First, many consumers now hold several checking and savings accounts with different providers as they shop around for the best offer. While this behavior is not completely new, the financial crisis seems to have exacerbated the desire to switch banks.

Additionally, more brands and companies are offering financial services. Many consumers now have relationships with wealth managers and local supermarkets are now providing loans or credit cards while Internet payment providers like PayPal and even cell phone providers are getting involved in payment options.

So what can banks do to strengthen relationships and rise to the top of a consumer’s consideration for financial services?

More face-to-face contact. This seems counterintuitive because consumers are asking for more contact via several different channels, including virtual ones. However, according to a recent Cisco survey, 26% of consumers said they would leave their bank if personal attention and advice were eliminated from their branch. The survey also found that more frequent users of virtual channels visited branch locations more often.

Offer expanded or value-added services. According to the same Cisco report, 65% of consumers expressed interest in a bank that would provide an expanded portfolio of services. These included financial education, legal advice, accounting advice, tax assistance and insurance offerings. By providing these additional services, banks have the opportunity to bring existing and potential customers to a physical location and experience the face-to-face interaction that is valued.

Get location savvy. An expanded service portfolio or additional virtual channels may not be the right answer for all locations. By analyzing demographic, psychographic and socialgraphic data in specific locations, banks can make calculated decisions about where these types of services would build stronger relationships with customers. Not every branch location should offer specialty services.

Network planning decisions are more complex than 10 or 20 years ago because it’s not just about opening and closing branches anymore. Location-intelligent decisions need to measure the impact of specialty services and pay greater attention to branch format and design. Banks need to give the customers another reason to use the branches and it’s important to pick the right locations where the branch will benefit from providing an extra source of foot traffic.

Go the extra mile. With a well-rounded portfolio of services, banks can set themselves apart from competitors. But what’s that extra step banks can take to help build trust and strengthen relationships with customers? Offer something completely unexpected. While many institutions have experimented with coffee bars in the lobby or similar gimmicks, let’s think of something different that ties back to the principles of more face-to-face contact, value-add services and being location-savvy.

For example, a lot of self-employed or small business customers may not have appropriate space to hold a meeting, other than the local Starbucks or Panera Bread. Banks are often located in older and spacious buildings with unused lobby space. A great way to get customers in your door to interact with your bank is to allow them to use some of that common space for meetings. By offering up that space, banks reinforce a feeling of trust with customers. Such a strategy has already proven successful for community banks such as Vancouver, Canada-based Vancity Credit Union, which completely restructured and redesigned two of its 58 branches to become community hubs where people can gather, share ideas and values. This certainly provides more privacy and comfort than a coffee shop can offer.

There is no denying that the banking industry has been through some rough waters over the past few years and building trust in customers is a tough task. If a bank can do a few things to set itself apart from the competition, it will be able to rebuild trust and strengthen relationships with those customers and perhaps regain the status as their primary financial institution.

Mr.  Hopson is the managing director of the Industry Solutions group at Pitney Bowes Software, a division of Stamford, Conn.-based Pitney Bowes Inc. He can be reached at [email protected].