Should Banks be Happy with a Silver Medal?

This is Part One of a Three-Part Blog Series

To put it mildly, banking is not out of the woods yet.  That sentiment comes from a recent Gallup poll, covered in an article by Michael Sauter and Thomas Frohlich at 24/7 Wall St. highlighting the “10 Most Hated Industries in America”.  Most listed are not surprising – U.S. Congress and used-car dealers oddly didn’t make the list.  The banking industry, however, has the dubious distinction of being ranked the second-most hated industry.  The order is as follows:

10.   Advertising and PR

9.   Movie

8.   TV and Radio

7.   Legal

6.   Gas & Electric Utilities

5.   Pharmaceutical

4.   Real Estate

3.  Health Care

2.  Banking

1.  Oil & Gas

I don’t think the banking industry has any reason to be crowing, “We’re Number 2!”  With gas hovering around $4 a gallon at my pump and healthcare reform stirring so much controversy, it’s easy to see why those industries are drawing ire.  But let’s face it: bankers certainly aren’t doing themselves any favors with a recent “epidemic” of extremely high profile controversies – including LIBOR, questionable Iran transactions and the London Whale.  One can only wonder when the next shoe will fall.

This finding comes on the heels of another Gallup survey released in late June that showed consumer confidence in U.S. banks had reached an all time low – dipping below the previous low recorded in 2009 due to the financial crisis.

American opinions on banks are both complex and varied.  In its 2011 Retail Banking Satisfaction Survey, J.D. Power reported that only 43% of customers bought new products from their existing financial institutionmeaning more than half went elsewhere.  In addition, 8.7% actually switched financial institutions - a sharp 14% increase over the prior year.

While this data appears to be quite bleak, I’d argue there may be a silver lining – but only for progressive organizations.  Success in this climate requires that banks focus on existing customers to retain and expand their wallet share.  Competitive pricing, innovative products and exceptional service naturally all play key roles here.  However, I will contend that multi-channel Next-Best-Action (N-B-A) marketing capabilities are THE missing link for many organizations.

This spring, BAI, in conjunction with Pegasystems, conducted a survey polling more than 200 retail banking executives on customer experience – defined as both sales and service interactions.  The responses highlight some key challenges and opportunities that banking organizations are experiencing in today’s marketplace.  When asked to identify their biggest sales/marketing challenge, the number one response, ahead of a customer 360-degreeview, was the ability to personalize offers/messages for customers.

N-B-A marketing is about interacting with your customers during “Moments of Truth” in their channel of preference with your bank.  That means having crucial decision management technology to go beyond the traditional product approach of campaigns and segmentation.  Banks must shift their focus to the customer, break down silos and deliver a 1:1 business case – and banks know this is a problem, based on our survey results.  The key components to successfully delivering N-B-A marketing are analytics, a central decision engine and real-time execution. 

Stay tuned. I’ll touch more on each of these components in Parts Two and Three…