Banking in 2012

The banking industry has been faced with many challenges in the last few years, including unprecedented technological advances and new customer habits and attitudes. This combination of factors is creating a revolution in the way banks do business. At Shea, we have been following this with great interest. Through observation, research and discussions with industry leaders, clients and their customers, we have found that the overarching conclusion is that banks need to provide a better EXPERIENCE for customers.

These days, only 20% of Americans think of going to the physical facility to do their banking, according to a survey by the American Banking Association. Customer attitudes reflect a lack of trust and because consumers don’t think banks are working in their best interest, they are open to sourcing products and services elsewhere. The current landscape also allows more competition from non-bank players, peer-to-peer networks, and credit unions. Many customers, especially Gen Y customers, have almost exclusively turned to the internet to manage their money, but as their financial lives become more complicated (car and home loans), they want face to face time with advisers they can trust.

These behaviors and attitude shifts certainly cause issues for banks, but they also present opportunities. With the fickle public more willing than ever to change their banking habits, the institutions that have the right tools and messages to lure them will win the new business.

Today’s customers:

• Are not satisfied and don’t think banks are acting in their best interest
• Want respect and trust
• Are seeking VALUE
• Are fickle, flexible and prone to flight
• Want the ability to choose products without complication
• Want their bank to be super-responsive and flawless in execution
• Want access to the latest technology with multiple access points
• Are open to sourcing products elsewhere

Banks need to consider:

• Get back to basic services, but also consider taking business and operating models in new innovative directions.
• Look at size and shape strategies: what’s the right scale, reach and size?
• Provide an online and branch experience that is focused and unparalleled
• Keep things simple, from messages to service packages
• Scale back complexity of operations
• Be more specialized with a focus on customers’ individual needs
• Focus on core strengths and specialties
• Have greater transparency
• Keep up and respond with technology/cloud computing/smart phones
• Pay closer attention to environmental/social concerns of customers
• Look at customer-focused and community-centered product initiatives
• Focus on long term relationships with high-quality customers by creating attractive business models over longer time frames