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The competition for market share in the banking industry is fierce.

The typical customer is inundated with an array of offers from a variety of financial institutions, from the traditional retail bank to online lenders, payment providers and mobile-only banks. So it’s no wonder that rising numbers of consumers are increasing comfortable having relationships with several banks.

Just look at the statistics. More than one-quarter of customers have accounts with more than one bank, while one-third have purchased a financial product from a provider that was not their primary bank in the past year.

That financial promiscuity is not abating, and promises some potentially catastrophic financial ramifications for those banks that can’t adapt. Blame it on the global financial crisis, new technology and the staggering number of customers who view a bank as a place to hold their money and process automated bill payments, rather than a trusted financial advisor. But by 2020, roughly one-third of the retail banking industry’s market share could be up for grabs, according to data from Accenture Research.

It’s not a trend that sits well with traditional retail bankers laboring to woo new customers, maintain their existing ones and forge the powerful bonds that has consumers eagerly trying new products and services. But the new reality is that financial monogamy is as obsolete as a rotary phone.

Just remember the first rule: To become a customer’s primary financial institution you don’t need to be the only one, just the favorite one.

Even that is no small challenge.

Banks need to offer the right products and services, and have employees on hand -- at bank branches or online -- trained to recognize these opportunities and coached to make the appropriate recommendation.

But nifty products alone are not enough to win the necessary level of consumer affection. You need patience. Earning the de facto designation as a customer’s go-to bank offers rich rewards, but it can also be a long process. As temping as it may be to bank on your long-standing customers, don’t. Data collected from Informa Research Services SEA Score, which measures member and customer engagement, show there is almost no correlation between a customer’s intention to stay with their current financial institution and whether they would use that same bank’s other financial products and services.

Such a mindset means bank executives need to better understand their customers’ wants and needs and the size of their wallet, which can vary depending on wealth and age. Baby Boomers have earned piles of money. Yet the banking industry’s future growth relies on the Millennial generation, as they are the ones that will buy new homes, save for their children’s college educations, borrow money to start new businesses, and open retirement accounts.

Unfortunately, the tools banks most often used to gauge customer satisfaction and loyalty offer little real information into why customers stay with a bank (or leave) and how deep their loyalty goes. And more than eight out of every 10 customers regard their relationship with their bank as transactional, creating a huge hurdle towards developing those deeper customer relationships. In short, traditional measurement tools are missing out on the real relationship opportunities to make customers think differently about how they interact with their banks.

No one ever said courtship was easy. But it’s harder to make customers engage with you exclusively if you’re not willing to put in the work.

 

For more information on Informa Research Services' customer engagement and loyalty research and The SEA Score™ program, contact us at 800.848.0218 or email info@informars.com.

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