Magazine article CRM Magazine

Report Suggests Retail Banks Need an Overhaul: Changing Consumers' Habits Requires Financial Institutions to Sharpen Their Focus on Service

Magazine article CRM Magazine

Report Suggests Retail Banks Need an Overhaul: Changing Consumers' Habits Requires Financial Institutions to Sharpen Their Focus on Service

Article excerpt

Shifts in consumer spending, saving, and borrowing are likely to depress revenue growth for many U.S. banks, increase operating costs, and squeeze profit margins, according to surveys conducted by PricewaterhouseCoopers US (PwC).

PwC's research suggests that retail banks are on the verge of an overhaul, as they adjust growth strategies and business models, including re-evaluating the role of branches; incorporating mobile banking, payments, and social media; and breaking down the organizational, operational, and technology barriers that have prevented them from growing organically.

"After years of talking about cross-selling and customer relationship management, many banks still operate in product silos and are not based on customer needs," John Garvey, partner and leader of PwC's banking and financial services advisory practices, said in the report. "They still cannot identify who their best customers are, let alone identify appropriate products, pricing, servicing, and channels for them."

Banks also face the challenge of using social media to better target their customers and mobile technology to respond to their needs faster and more effectively.

Another challenge for banks is trying to grow organically amid the rising costs of attracting new customers. Given that 92 percent of U.S. households already have checking or savings accounts, banks have limited opportunities to attract customers who don't use any financial services.

Moreover, those who already have accounts are not likely to leave. A recent PwC retail banking survey found that more than 40 percent of Americans have been customers with their primary financial institution for more than 10 years, and consumers hold an average of 3.3 products at those institutions.

To address these challenges and capitalize on the opportunities available, banks must meet more of their customers' financial needs throughout their lifetimes. Doing so means banks would have to adopt a more customer-centric focus to better understand and anticipate their customers' needs and preferences.

[ILLUSTRATION OMITTED]

Adopting such a customer-centric focus is difficult for some retail banks because they are organized primarily around business lines, with products housed in silos. …

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.