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Depository financial institutions have always had an eye towards retaining core deposits.
However, community banks and credit unions are realizing that deposits grow in direct
proportion to customer satisfaction—which is a delicate balance to strike.
In today’s hypercompetitive banking market, achieving this balance is taking new shape.
According to Forrester Research, only 50 percent of U.S. consumers enjoy working with
their present financial institution. Of those, most would gladly move their business to a
competitor if it meant a more enjoyable experience. Of the 190 banks Forrester
surveyed, nearly all felt “customer experience” is critical to their long-term success.
Knowing this, bankers struggle to differentiate their offerings, yet consumers have more
choices than ever. As customer relationships evolve, many financial institutions are
unsure how to best adapt their approach, eventually finding themselves outdistanced by
competitors.
To attract new customers and strengthen existing relationships, leading banks are
introducing innovations across the board in service delivery, technology, customer
retention programs and operational efficiency gains.
Today’s Challenges
The drive to gain and retain deposits is just one of several things compelling banks to
focus on customer service. With net interest margins around 17-year lows, community
banks have seen increased competition from large, national banks that can afford to
spend more to attract customers and can offer a wider variety of financial services.
Considering these issues, it is clear that banks must pursue new strategies to reach their
customers. This means creating a process-driven, organization-wide culture committed
to enhancing the customer experience.
Banking on Customer Care
One of the ways banks are shifting their strategies is in how they handle overdrafts.
Quality overdraft protection programs help financial institutions maintain balance between
enhanced customer service and revenue generation. Over the years, Pinnacle Financial
Strategies has proven that a consumer-oriented overdraft protection program focused on
customer retention is good for business, recently introducing ODP Next Generation. This managed customer service program is powered by Active Intelligence, Pinnacle’s
proprietary combination of smart tools, expert support and sustainable results, which provides the foundation for all Pinnacle products. When implemented with Pinnacle’s
Critical Success Factors, ODPNG helps financial institutions take care of customers,
minimize losses and maximize revenue.
Leading overdraft programs are fully automated to ensure protection for all enrolled
customers. Perhaps most importantly, they go beyond covering overdrafts to identify
consumers who may be using overdraft programs as a routine extension of income,
rather than as occasional oversight protection. Banks can work with these customers to
help them get back on track financially while encouraging fiscal responsibility. With
automation, full disclosure, personalized service and ongoing support, consumers feel
like they’re being treated fairly, which increases satisfaction, loyalty and retention. In
turn, banks can better balance customer service and increased revenue while curbing
potential abuse.
Fee-based services like overdraft programs, which provide customers with a valuable
service, are only half the battle. Bankers must also take time to decipher what is truly
important to a target in constant motion – the American consumer – and operate as
efficiently and cost-effectively as possible. Properly monitoring customers’ pulse
requires a trained and objective set of eyes.
Pinnacle’s PROS Mystery Shopping program gives financial institutions a greater picture
of their competitive landscape and an objective process for measuring the customer
experience. PROS experts can help bankers ask the right questions to gauge customer
perception of the institution’s performance, and capture the customer experience to
measure and enhance sales and service effectiveness, customer satisfaction and
retention.
Tomorrow’s Rewards
When bankers blend the appropriate tools, technology, expertise and customer support,
they can realize greater customer loyalty and retention, increasing deposits as a result.
Better banking begins with a resolute focus on revitalizing customer care – not a “build it
and they will come” philosophy. Understanding customers and offering them valuable
services that meet their needs are the keys to striking the balance between
strengthening customer relationships and growing revenue.
About The Author
Joe Gillen is CEO of Pinnacle Financial Strategies. Founded in 1997, Houston-based
Pinnacle has evolved into a bank consulting company. Pinnacle delivers practical, turnkey solutions that help financial institutions improve
customer service, productivity, performance and profits. Every solution – including ODP
Next Generation, Deposit Growth Checking, PROS Mystery Shopping, Construction Loan Manager and the Profit
Performance Group – is powered by Active Intelligence, Pinnacle’s proven combination
of smart tools, expert support and sustainable results. For more information, contact
Pinnacle Financial Strategies at 866.737.1235.
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