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There is one question that all retail banks ask: How can we grow?

Dig beneath all the talk about profit margins, regulations, marketing campaigns and customer satisfaction surveys and the answer is in three words -- Service, Energize and Attract customers.

It’s not as elementary as it may sound. Now that the U.S. has emerged from the global financial crisis, retail banks face a whole new world. Mobile technology and shifting customer preferences, coupled with the coming of age of the Millennials, have ramped up competition like never before, and put billions of dollars in revenue and profit at stake.

The clock is ticking. Traditional retail banks have just a few years -- five at the most -- to react or risk spiraling into decline.

Roughly one-third of the industry’s market share could be up for grabs by 2020. Online-only players could steal as much as 15% of annual revenue.

This should send a shudder up the spine of any bank president. Adding to the challenge is the increasingly “what-can-you-do-for-me today” relationship American consumers -- especially the all-important Millennial generation -- have with their banks.

For any business, success depends on attracting and retaining clients. New customers offer new revenue sources, but that means nothing if you can’t keep them or worse, you alienate your existing customers. That makes it equally important to provide the right services, be it competitive rates, first-rate financial advice or an excellent mobile-banking app -- to keep current customers happy. Remember, an unhappy customer is another bank’s prospect.

But happy customers are not enough. They need to be energized.

Energized customers are loyal and profitable. In a world where 80% of consumers see their relationship with their bank as “transactional,” customers who forgive their bank’s shortcomings and eagerly try new products and services while shouting your praises to friends and family, are very valuable. They have formed a bond, regarding you as a trusted financial adviser, and not just a name on a credit card.

To build that sort of customer base, however, banks need to think about what customers want from a bank.

Banks need to offer the right products and services, and have employees trained to recognize opportunities to expand the role they play in a customer’s finances, and fight hard for that business. 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.

The trick is knowing how customers actually feel about your bank, why they trust you, and how deep those feeling go. That goes well beyond simple satisfaction to what makes them excited and makes them feel a part of something bigger.

 

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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