When people think about big banks what is the first thing that comes to mind? It might be they have the best product selection, robust online banking services, convenient ATM/branch locations, the most competitive interest rates or any number of other appealing product and service items.
On the other hand it might be a mistrust of big bank practices, higher fees or the lack of a personal relationship with their customers. All of these things would be plausible but it is the second list that has big banks adopting new ways of becoming more customer-centric.
Many of the largest banks are responding to the public outcry about bank bailouts, overdraft and debit card fees and other negative headline grabbing stories about the financial sector by looking at ways to better develop customer intimacy.
If you consider the daily headlines, being the biggest isn’t necessarily the best. However, being the biggest does provide opportunities for new growth within an existing, deep customer base. The benefits of this are many. Perhaps most important are a large pool of customers you already know and tons of internal data that can be used to assess additional products to offer and the risk of offering them.
Smaller banks often have the advantage in regular interactions with their customers where they learn about their families, hobbies, life events, etc. That’s not always possible or even realistic with larger financial institutions.
Knowing when the kids are going off to college or a customer’s home mortgage interest rate is really high provide openings to discuss student loans or refinancing. Since they can’t get to know every customer on such a personal level, how are big banks creating more customer intimacy? Through the application of intelligence. That intelligence is based on data and makes it possible for large banks to know their customers much like a small bank does.
I recently had an experience at my local bank branch that exemplifies the benefits of a personal relationship. I deposited an unusually large check during the process of financing a new home while selling another. This transaction prompted them to have the bank manager greet me and inquire whether all my banking needs were being met.
This trigger within the bank’s system recognized me as a high-value customer and gave them an opportunity to ensure I was a happy customer and explore whether there were other accounts that I might benefit from through a personal interaction. Even though they didn’t try to sell me anything in that moment, it was a step toward deepening my relationship with the bank. Everyone likes to feel valued and important and that was clearly the intent of the bank manager’s engagement with me.
Larger institutions must replace the manual trigger for the bank manager’s “interview” in this example with technology. The intelligence is available to figure out the most relevant products customers are most likely to accept.
A combination of a bank’s business rules, logic and data acts as a proxy to the more personal Q&A that smaller banks thrive on. Putting the right rules together to implement the business logic that will determine which products to present is really powerful for developing customer intimacy. Making the right offer will drive acceptance rates, profitability and customer loyalty.
There are massive volumes of data housed within banks. Managing that data can be a challenge, but having the tools to do so is extremely valuable for discovering trends and revealing valuable insight about customers.
Instead of mass customization of offers and a push for external growth, banks can make tailored offers to their current customers based on what they learn through their own data. There’s less risk in that and huge opportunity for strengthening the customer relationship.
Eric Lindeen is marketing director for Zoot Enterprises.
