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If I need banking services nearby, how many providers are there?

There’s a lot!!! For example, in the US, there are more than 15,000 Financial Institutions; about 7,800 banks and 7600 credit unions. In a typical metropolitan setting, a depositor will have more than 50 banking providers competing to capture the deposit. Needless to say, just keeping the money safe isn’t going to be enough to win the business. At the end of the day, whoever consistently offers the best experience for the customer will win.

Competition is intense, with 28 Banks competing in a typical geographic area

Source: Optirate | Retail Banking is more competitive than most believe, 2011

And if we add direct banks into the mix...

Not only do consumers have lots of nearby banks offering financial services, they also have access to “direct banks” (aka “branchless”) ... and they are capturing the customers’ attention and their business.

Share of New and Lost Primary Bank Relationships

Source: TNS | Direct Banks and the Future of Retail Banking, 2012

Customer Experience & ROI

Despite an increased focus on customer experience initiatives by banks of all sizes, new research has found that not all of these efforts may be resulting in revenue growth ... Part of the problem is a lack of association by banks between customer experience initiatives and a tangible ROI.

The important question is which activities lead to revenue growth.

By evaluating activities being implemented at growth and non-growth banks, the research found that there were four fundamental customer experience practices that could be directly tied to revenue growth at financial institutions.

The practices that were found to be most correlated with financial performance:

The two most important differentiators are that growth banks have invested in technology that helps to close the loop between customers who report a problem, indicate a need or recognize an employee who performs well. Growth banks and credit unions also have a set of criteria they follow when prioritizing, funding and resourcing customer-aligned initiatives.

CX PRACTICES OF GROWTH VS. NON-GROWTH BANKS

There are four foundational customer experience practices that differentiate Growth Banks from their Non-Growth competitors.

 

Source: Bank Marketing Strategy | All Bank Customer Experience Initiatives are Not Created Equal, juny 2013

 

"The fastest growing financial services institutions are retailers, grocery store chains and automotive companies. They have adopted the omnichannel (approach) more aggressively than the banking industry" Ralph Silva

Competition in the financial services is heating up

It’s getting rather crowded in the FS space. “Banks are no longer just competing with each other, they are also at war with a growing number of retailers and innovative start-ups that employ social media tactics to offer soughtafter services.

In the retail world, a customer can order an item online and pick it up in the store. They can go into a store and ask for a particular item to be delivered to their home (or in the store). This type of service is no longer just multichannel or cross-channel; it is omnichannel – a seamless and integrated experience for consumers without restrictions. It is exactly this type of offering that is lacking among banks. Indeed, there is little choice for banks but to change their strategy.

Source: The Banker | Social Banking in the Omnichannel Era

The threat of disintermediation is real

From a financial services institution’s perspective, disintermediation is a major risk in the current wave of transformation. Disintermediation happens when the current industry offering (and revenue model) becomes obsolete by failing to adapt to new technology enabled value propositions (think of Polaroid).

Source: Cisco | Winning Strategies for Financial Services Players in the Age of Mobile and Social Payments, february 2013

For banks, CX is a top priority

"Improving the customer experience was the foundation of almost all of the responses I received around 2014 strategic priorities. Whether we are talking about branch reconfiguration, mobile banking applications, back office operations, etc. banking industry leaders believe an improved customer experience is the key to growth", Jim Marous

Sources: Bank Marketing Strategy | Banking Leaders Discuss 2013 Strategic Planning Activities, july 2013

Ver también: Gartner | Gartner Says Customer Experience Enters Top 10 CIO Priorities for 2012, april 2012