retail banking

Over the years, branch usage and face-to-face transactions have decreased in frequency at financial institutions.  Alternate banking channels have become more convenient, familiar, and rich in features.  Consumers are turning to ATMs, Kiosks, Mobile, and Online to conduct transactions that in the past they may have gone to a branch for.  A study conducted by FMSI found a 45% decrease in average monthly branch transactions between 1992 and 2013, and this trend has been accelerating since 2007.  This ultimately leads to fewer personalized touch points for interacting with customers, and increases the risk of customers viewing their financial institution as more of a commodity, and less of a comprehensive source for their financial needs.  As a result, it is becoming increasingly important for retail banking institutions to take a consultative approach with customers and members.  This is an opportunity for financial institutions to differentiate themselves from competitors by providing a unique, personalized service and establishing their organization as a full-service, primary financial institution.

Emphasizing the importance of branch and live representative phone transactions, and taking a consultative approach with customers has many advantages.

  • Increase share-of-wallet and revenue.  Financial service representatives should be trained to learn about customers, ask the right questions, and identify appropriate cross-selling opportunities.  A financial institution establishing itself as the customer’s primary institution will help grow overall operating revenue as customers use more of that institution’s products.
  • Establish competitive advantages.  At the present time, financial institutions may find that developing a relationship with customers through a consultative approach is a unique selling proposition in their market.  Delivering a personalized experience to help customers find the products that best suit their needs and providing them with financial consultation will help an institution position itself ahead of the competition in the customer’s eyes.
  • Increase customer retention and loyalty. Developing a relationship with customers, and being the place customers turn for all financial services will ultimately improve customer retention.  The most critical phases in establishing customer relationships typically occur either in-person or over the phone.  A Gallup study found that customers prefer interacting in person at a branch for opening an account, applying for a loan, or seeking financial advice.  The study also found when reporting a problem, or inquiring about a fee, customers prefer to use a branch or interact with a live person over the phone.  Taking the time to coach customers with opening an account, or solving a problem will certainly have a long lasting influence on customer loyalty.

Market research is a tool that can be utilized by financial institutions to understand customer needs and identify areas of opportunity.  Customer and market area insights make it easier to effectively consult with customers and tailor products and services to their needs.

  • Identify the needs of customers, as well as the needs of the primary market area.  An image and awareness study conducted with the general public will provide insight on the market’s awareness of financial institutions, and perception of service offerings.  It can also further examine products and services individuals are using, and identify the needs of the market.   Another option is a customer satisfaction study, conducted among customers to provide insight into customer needs, and satisfaction with the services offered.
  • Identify competitive offerings in market. Competitive assessment studies identify competing financial institutions, along with details of the products and services they offer.  This allows financial institutions to adjust their messages, offerings, and customer experience to ensure they maintain their position in the market place and are able to exceed competitive offerings and services by tailoring the customer experience.
  • Mystery shopping studies.  Financial institutions conduct mystery shops as either ongoing studies, or in waves throughout the year.  Keeping an eye on the customer experience helps institutions measure the effectiveness of employee training.  Mystery shopping can also identify opportunities through understanding the true customer experience.  Mystery shoppers will report on how personalized their experience was, and if their experience aligns with the approach representatives are expected to deliver.

Market research can assist financial institutions with offering a consultative approach and improving customer engagement.  Focusing on the consultative approach will help banks and credit unions build life-long relationships with customers and remain relevant and top-of-mind when customers need financial products and services.  If you would like to learn more about conducting market research studies for banks and credit unions, please contact Sandy Baker, Sr. Director of Business Development & Corporate Strategy at 1-866-567-5422 or by e-mail at