How Banks Can Improve Customer Retention With Smarter Conversations

Bank CEOs—and, more frequently, bank CFOs—are beginning to take sales transformation seriously as branch closures reached an all-time high in 2018, and mergers and acquisitions continue to lead us toward an increasingly consolidated industry.

With just around 5,000 banks left in the United States, according to former Small Business Administrator Karen Mills, financial institutions are seeing new competition enter the fold from alternative lenders like OnDeck and tech giants like Amazon.

In fact, a recent Accenture study—which we’ve broken down for you here—shows that banking sectors worldwide are losing upwards of 60 percent of new revenue growth to firms that didn’t exist before 2005.

When we consider the fact that some 80 percent of bank customers said they’d be willing to switch their financial institutions for a better customer experience, it becomes clear how banks should go about addressing this problem. They need to focus on retention, and the best way to do so is by ensuring their bankers are having the kinds of smart conversations that foster better customer experiences, grow relationships, and establish trust.

Smart Conversations Require Knowledge, Transparency, and Convenience

Research from Ath Power Advisors shows that only about 40 percent of businesses are “highly satisfied” with their current banking relationship. Coincidentally, Accenture says bank customers are 59 percent more likely to switch banks today than they were just a decade ago.

During that decade, banking fundamentally changed as we knew it; alternative lenders and digital-first challenger banks appeared as substitutes to traditional institutions, online banking and digital lending became the expected norm, and foot traffic at branches slowed to a trickle. Boiled together, these developments have changed the way branches function, and bankers need to make adjustments if they want to provide a customer experience that matches modern expectations.

This starts with having smarter conversations—or the kinds of communications that help grow relationships and establish trust. To help define a “smart conversation” let’s take a look at their three core elements.

• Knowledge: Do you know which credit products your customers are eligible for? Do you know which of your business customers are applying for credit outside of your financial institution? Can you see what step of a loan application your customer is stuck on? When it comes to having knowledge about your customers, today’s bankers need to know far more than basic, personally identifiable information, and the account status displayed on the screen in front of them. Having a holistic view of a customer’s actions—both in the branch and online—can help bankers provide a consistent experience, that’s both fast and helpful. Further, advanced knowledge of customer’s interactions with the bank can help the financial institution tailor custom messaging that better resonates with its recipients.
  

• Transparency: When it comes to transparency, bankers need to focus on honest and clear communication. This means tailoring messaging and outreach to the specific customer’s needs and always providing them with offers that they’re eligible for. Many banks fail in this regard because they lack the technology that allows them to prequalify customers against their bank’s credit policies. Without this capability, financial institutions are left guessing which products are attainable for customers and end up overpromising in a way that leads to a breakdown of communication and trust.
  
• Convenience: Most banks today will claim the relationships they’ve formed with their customers are their key differentiator. However, if every bank claims this, how can it be true? Further, if this were the case, relationship banks wouldn’t be losing the majority of industry revenue growth to new firms. Relationships are important, but unless they’re also convenient, they won’t get banks very far today. Bankers can make conversations more convenient for customers by having them on the customer’s terms. This means providing omnichannel support—bankers should be able to reach their customers through email, on the phone, or in the branch. Further, bankers need to be able to provide just-in-time messaging, or marketing communications that are tailored to their customers and their unique needs, at that precise moment. This last part, in particular, has been known to help retain customers.

Smart Conversations Help Bankers Build Trust. Trust Leads to Retention

Relationships have always been a cornerstone of the banking industry. But, as the relationship between the customer and banker changes, so too must our approach to building them.

Naturally, this has to start with the types of interactions bankers are having with their customers. Smart conversations, ones that demonstrate knowledge, transparency, and convenience, are successful because at their core they are designed to provide an effortless experience—the most important factor in establishing customer loyalty, according to the Harvard Business Review.

At Numerated, our platform is designed to enable these kinds of smart conversations. Our advanced data science and purpose-built AI help bankers surface the right data about their customers, prequalifies customers against the bank’s credit policy, and helps facilitate convenient and customized outreach.

With Numerated, bankers can have the kinds of smart conversations that establish trust, grows relationships, and increases retention through better customer experiences.

To learn how Numerated can help your bank go beyond retention and start to grow once more, download our Eastern Bank Case Study today.