Even as many of the challenges of the financial crisis have subsided, new challenges for retail bankers have emerged-lower deposit growth, increased attrition, and intensified shopping by consumers. So as bankers turn their attention from the management of capital, credit, and costs to future growth, what lessons can be learned from J.D Power and Associates' most recent look at why customers switch banks and how they select new ones?
It is clear that the blunt instruments of advertising spend and branch presence are effective in driving customer choice. In addition, banks with the highest acquisition rates, are more likely to use promotional offers such as gift cards.
The question is whether the ads, branches, and today's version of the "free toaster" provides a defensible competitive advantage over the long term.
Our research suggests several keys to driving sustainable growth:
- Fully leverage the branch network. Build awareness, maintain the branches in good condition and ensure the hours are competitive.
- Focus the branch staff on mission-critical new account interactions. Train, coach, and practice assessing needs and offering the most appropriate products.
- "Having products that meet my needs" is a theme that runs through customer decisions to shop, consider, and select. Make sure the product set offered is competitive, but more importantly, simple-easy for both the customers buying and the employees selling to understand.
- Make best use of advertising. A focus on specific products and promotional offers carry the most weight in driving purchase decisions.
- Build a good reputation one transaction at a time by eliminating problems, seamlessly resolving ones that do occur, and providing superior personal interactions, particularly at critical moments of truth.
While investments in advertising, promotional offers, and new branches can drive short-term acquisition, other tactics are necessary for banks to develop and maintain a competitive advantage over the long term.