Building a Wireless Connection to Promote Customer Loyalty

by tom 14. November 2013 19:59

Increasing share of wallet hinges on increasing the perceived value of services for bank customers and credit unions members. Beyond providing a simple repository for their money, depositors are looking to financial institutions for assistance with money management, and mobile banking tools are a terrific way to engage with customers in a way that adds value and deepens the customer relationship.

In a recent blog post, bank marketing strategist Jim Marous wrote:

Beyond simple balance and transaction updates, alerts can provide the foundation for greater interaction with your customers, increasing engagement, lowering servicing costs and even providing potential revenue opportunities.

Mobile banks alerts have become an important component of money management. Smartphone-savvy consumers are relying on mobile alerts to provide instant feedback about their spending habits, alerting them to low balances and pending transactions. Customers expect banks to respond to them in real-time, just as they live the rest of their digital lives from moment to moment, which presents a new revenue opportunity for banks and credit unions.

As Jim notes, a Javelin Strategy and Research study indicates that only 34 percent of consumers currently receive bank alerts via email or text, and that number will only grow by about 4 percent through 2016. Javelin also indicatesFile:Android Smartphone with Money.jpg that text alerts are the fastest growing delivery channel, which shows consumers are looking for to supplement email with something more immediate. And more users are downloading mobile apps (about 50 percent) in addition to looking for push alerts. Clearly customers are looking for more from their mobile banking experience than alerts and balance verification.

Not surprisingly, the larger institutions are gaining more ground with mobile apps. Institutions like Bank of America and Chase are actively promoting mobile banking ,which helps instill greater consumer loyalty while promoting savings for the banks by reducing paper processes and branch visits. Community banks and credit unions are behind, and fewer offer the same level of mobile service or comprehensive mobile apps.

Which means there is more room for opportunity. Our research shows that a number of mobile alerts and services are valued by customers; that they want these services and are willing to pay for them. Identity theft alerts, for example, are in high demand with a growth potential of 70.8 percent. Low-balance alerts have a growth potential of 55.7 percent. Mobile photo bill pay could grow 48.8 percent. And mobile deposit services 46.0 percent. And each service is valued at an average of $3.30 and up, or when bundled in the right way, consumers indicate they are willing to pay $10 or more for these mobile services.

This is where the smaller institutions have an opportunity to compete more effectively. By offering the right mobile services in the right bundles, banks and credit unions can better serve their customers with tools that help them manage their money. At the same time, these services deepen the customer relationship and promote customer loyalty. And consumers are willing to pay for these services for added revenue.

Mobile banking services are growing in popularity and importance, and the institutions that figure out how to connect with customers with better mobile services are the ones who will be able to compete more effectively.

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Market Research | Mobile Banking | Banking Trends

Consumers Want High Touch, Not Just High Tech

by tom 19. September 2013 20:52

Most bankers assume that consumers want convenience above all else. The latest convenience services like mobile banking, reloadable debit cards, and online transactions – all services driven by technology – will appeal to the new generation of banking customers.

They’re right, but that’s not the whole story.

According to a new study by Simon Associates profiled in , consumers want advice as well as convenience, and the banks or credit unions that can provide quality customer service along with tech-powered convenience are the ones who will get their business:

Simon Associates recently conducted ethnographic research with both consumers and banking executives. We found that consumers don’t necessarily want high tech solutions in isolation; just as important, they want support, advice, and more knowledgeable people speaking to them than they currently experience in their banking interactions.

Meanwhile, our colleague Carmen Effron from C.F. Effron worked with bankers at various wealth management divisions. They all assumed that the “high tech” without the “touch” would work great.File:An Indian call center.jpg

Clearly there is a disconnect here. As banks and credit unions continue the pursuit for profit, they continue to automate processes and the human touch becomes farther removed from the process. When bank customers call customer service, for example, they have to go through multiple layers of electronic menus, punching in account numbers and security codes, before they can get to a real person. Granted, the electronic gatekeeper saves the cost of having service representatives answer every incoming call, but how many incoming calls get routed to a service rep anyway? And how much value would customers place on having a human answer the phone and ask, “How can I help you?”

At the end of the day, what customers really want is advice and help, along with convenience. As one of the individuals surveyed notes:

“I’m fed up with the inability of [bank] staff to answer questions, or the many times I have to tell them my name and account information all over again. Privacy is important, but perhaps it can be combined with someone who knows your name and appreciates your business.”

Banking is still a people-to-people business, and along with the technology, people still want to interact with people to solve their problems. Granted, emerging financial services like mobile deposit and identity theft protection are of value to consumers, but in the age of social media, the new generation of bank customers are used to interacting with real people, either by telephone or online. Those institutions that will acquire new customers will have to find a way to inject the personal touch back into convenience banking and put real service back into customers service.

M&A Could Spell Opportunity for Regional Bank Competitors

by tom 4. February 2011 14:54

0309-merger_full_600A recent article in American Banker magazine entitled, “Stealing customers. Poaching deposits. It's all on the table when M&A disrupts a marketplace,” offered some interesting statistics about the shift in deposits when a bank is acquired. We have seen a lot of M&A activity in the banking community as troubled institutions are being gobbled up by their healthier competitors, and the result has created some new opportunities for smaller, healthier, regional banks. As one source in the article states:

"When there's a strong local competitor like a WSFS and out-of-market large banks come in out of acquisition, those local banks I believe do stand to benefit and pick up customers that are either not wanting to bank with an out-of-state bank competitor or just experience some turmoil related to the integration effort," said Mary Beth Sullivan, a partner in the Capital Performance Group consulting firm. "It always has created opportunities," she said, "and it will continue to do that. But my sense is, the best opportunity is on the business banking side of the equation when that happens."

The article cites a number of examples where, following an acquisition, they acquired bank actually increased its deposits. For example, when New York Community Bancorp acquired AmTrust in Cleveland, the New York Community executives were conservatively estimating a loss of 15 percent of $8 billion in deposits would likely follow. Instead, AmTrust’s deposits grew by nearly $200 million in the first quarter. This could be because AmTrust kept its name and the fallout from the merger was fast, and AmTrust stopped its layoffs and started hiring right away. Hence a perceived turnaround for an established local brand.

An interesting observation about this example is that depositors tend to leave a struggling bank at the first sign of trouble. By the time AmTrust was acquired by New York Community, only the most loyal customers were still banking with AmTrust.

The article also tells a David-and-Goliath story of how FirstMerit Corporation of Akron was able to attract depositors from Cleveland competitor National City after the latter was acquired by PNC Financial Services Group. FirstMerit was a healthier bank with fewer problem home builder loans, and was able to attract depositors with new special offers, such as a new checking account with one free overdraft per year and free return of canceled checks. FirstMerit was able to increase its core deposits by $1.34 billion in the first year following National City’s acquisition, and it moved into number 7 in deposit market share as of June 2010.

“Ali Raza, an executive vice president at Speer & Associates, a financial services consulting firm in Atlanta, said he has seen acquisitions play out in two ways in his local market. ‘When a new bank comes in to town, there is some opportunity for consumers to look at a new alternative," he said. "At the same time, there is some defensive play and an opportunity created by a longtime hometown bank to assert itself as a player that has been there for a long time and differentiate itself, 'We know the market better than the newcomer' sort of thing.’”

Whether consumers switch banks or not is really a matter of convenience. If there are enough local branches and ATMs then they will consider an alternative when their bank goes through a transition. Offering innovative products and aggressive deposit rates to attract their attention helps as well.

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