Back in May 2018 we published our UK Financial Services Customer Survey. In it we identified four key actions for financial services institutions to take to “reintroduce the human touch into customer relationships”. So how does this translate to commercial banking?
Commercial banks need to be better prepared to address the challenge of maintaining a relevant, sustainable and value-generating relationship management model.
At the moment, commercial banks are facing an unprecedented level of change which is challenging traditional models and cultures. The regulatory landscape is generating new competition (with the RBS Remedies Package set to shake this up further) and the industry structure is shifting thanks to a multitude of new entrants in the market (challengers, platform players, fintechs etc.) Added to this, we know customers are becoming more demanding, more digitally savvy and more diverse in their needs.
All of this got me thinking about what large, established commercial banks need to do to stay relevant in a world being disrupted by seismic shifts in the customer and industry landscape.
As I see it, there are four key areas that commercial banks need to focus on:
- Understand what your customers want/need and when they want it
- The key to success is making sure your individual customers feel understood—they need to know you’ll be there when they need you (before they’ve even asked for help, in fact) and you’ll stand back when they don’t.
- At a basic level, this means using data-driven insights to prompt proactive and hyper-relevant conversations and offering the right product/service at the right time. Once you’ve understood customers’ needs, you need to be able to deliver solutions better and more quickly than they can find anywhere else in the market.
- Being able to offer practical advice and support to your customers to help them overcome everyday challenges beyond traditional banking services (website/app development support, accounting services, HR solutions etc.) is also important. This will not only generate new revenue streams from existing customers, but also improve retention and enhance your external brand for potential switchers.
- Explore platform partnership opportunities and invest wisely in innovation
- Rather than seeing fintechs and platform players as competitors, consider how collaborations and partnerships can help you achieve your goals more rapidly and at a lower cost.
- Choose your target segment(s) carefully (using data-driven insights to do so) and spend time truly understanding your unique challenges and goals. Then work with your customers and platform partners to co-create a solution, rather than developing a product or service behind closed doors, only to find the end result doesn’t meet customer needs.
- Ensure your investment strategies are agile and flexible enough to respond to a rapidly changing market landscape and customer demand.
- Execute scalable and relevant solutions and use what you have to your advantage
- Launching a multitude of new digital proofs of concept can be expensive and impractical, especially for a bank already battling a high cost to serve and legacy architecture challenges. Make sure scalability and integration have been tested and proven before embarking on projects.
- Unlike the newer competition, you are starting with a well-established, loyal customer base. Use the data and the insights you have spent many years collecting to help develop “hyper-relevant” offerings for customers.
- The relationship manager’s personal touch is a key asset in differentiating you from other players in the market, so invest in their training and equip them with the tools and insights they need to deliver best-in-class service to those who want it.
- Bring your people and enterprise with you
- Having a five to 10-year strategic vision is important, but having a five to 10-year delivery plan won’t work—your enterprise and people need to be agile and able/willing to respond rapidly to change.
- Have a clear understanding of the skills in your organisation and make plans to address the gap between where you are today and where you need to be. The future requires digital-savviness and technology acumen at all levels.
- Ensure your talent strategy (recruitment, learning, performance management) and cultural agendas align to your “North Star” goal and employees at all levels are ambassadors of the change you are trying to drive.
If commercial banks can address these four points, they’ll be better prepared to address the challenge of maintaining a relevant, sustainable and value-generating relationship management model as they navigate the months ahead to win in the digital economy.
My thanks to Bex Bentley for sharing her expertise on this topic. Please contact me if you have any questions.