By ACHIM GRIESEL and DR. SEAN PAYANT
In the digital age, financial institutions find themselves sitting on a goldmine of data—a treasure trove with the potential to revolutionize the way they operate. From understanding consumer spending habits to predicting financial needs, institutions want to leverage that data to drive success in an ever-evolving industry.
Before delving into the multiple ways financial institutions can use data to their advantage, it's crucial to establish clear objectives and outcomes rather than utilizing data without a clear purpose. And, when it comes to growth, financial institutions typically focus on a few key goals.
1. Growing the Number of Primary Financial Institution Relationships
In today’s environment, most banks want to grow core relationships—and along with those, low- or no-cost core deposits. For solid proof, look at recent offers from large institutions and the sheer amount of marketing around these offers, all to lure new core relationships. Chase offers up to $900 to open a checking and savings account. Other large national banks are offering anywhere from $500 to $3,000 to earn a variety of relationships.
The ultimate measure of success for any bank’s growth strategy is its ability to establish new primary financial institution relationships. Our answer: Challenge yourself. If you do not currently have an always-on strategic approach to growing core relationships, adopting an always-on strategy should help you increase your new core relationships by 50 percent to 150 percent.
2. Increasing Relational Intensity
Increasing relational intensity is about cross-serving, not cross-selling. To foster growth, banks must attract new consumers and deepen those relationships, while also deepening relationships with existing consumers and businesses. The key to success is increasing relational intensity over time, with an incremental increase in product and service utilization. Based on client data, earning six or more product and/or service relationships per household is realistic, even while executing a core relationship growth strategy.
3. Growing Your Team
Behind every successful bank is a dedicated team. Data can help identify human performance metrics that matter and provide a framework for measuring coaching effectiveness. Your focus should be on coaching high-value activities like service behaviors, sales presentations, product knowledge, etc. It's not just about coaching—it's about data-driven coaching, measurement and accountability.
4. Growing Consumer and Business Advocates
Word-of-mouth referrals have always been a powerful growth tool for banks. A customer’s desire to refer others to their bank is driven by exceptional service, with approximately 18 percent of openings stemming from referrals. In today’s digitized banking world, service has two key components: (1) technology that allows people to use your digital channels with the least friction possible; and (2) the service your team members provide.
Aligning Marketing and Execution
Once you determine your goals and identify key performance targets, you must drive growth. Overall success hinges on aligning successful marketing strategies with effective execution strategies.
a. Have Better Retail and Business Products
For marketing to be as effective as possible, it must be paired with compelling retail and business products. In the absence of good products, the choice will come down to access and locations.
b. Implement Intelligent Policies and Processes
For your marketing to achieve your growth goals, your policies and processes must not become roadblocks. Have you tried to open an account online with your organization? Have you recently visited one of your own branches to open an account or add a service? To be able to compete with high-incentive offers from large banks, you must outperform them. Your service must be better, and your policies must be friendlier.
Once you’ve set your goals, evaluated your policies and processes and implemented an ongoing training and coaching plan, it’s time to market.
a. Target Effectively
Identifying the right audience is critical in marketing. Before we determine which marketing channels will be most effective or what an omni-channel mix should look like, we help banks use data modeling to discover the right audience. Effective targeting begins with learning from your existing data. It’s also important to look at further data to help refine your target audience. For example, when it comes to core relationship growth, we have found that drive pattern and trip frequency concluded from GPS-based device metrics within your branch footprint can be powerful predictors for high-probability prospects.
b. Use the Right Marketing Channels
The right marketing channel is the one that’s in front of your prospective customer. That starts with (1) traditional marketing, using your branch locations as effective messaging tools and highly targeting the prospective customer through one-on-one print solutions. This is then supported by (2): opt-in emails such as USPS Informed Delivery, and (3) digital marketing tactics that allow for the highest level of targeting.
c. Understand the Right Frequency
What is the right frequency? Today, when large FIs market at least every six weeks, your frequency must be higher if you want to hold your results at the same level. This not only applies to traditional marketing but digital marketing as well.
The modern banking landscape is defined by data-driven strategies. To achieve sustainable growth, banks must harness the power of data. By aligning marketing efforts with intelligent processes, employee training and data-driven decision-making, financial institutions can drive growth and success in the competitive world of banking, thus positioning themselves at the forefront of the data-driven revolution.
Achim Griesel (402/323-3793) is president and Dr. Sean Payant (402/323-3614) is chief strategy officer at Haberfeld, a data-driven consulting firm specializing in core relationships and profitability growth for community financial institutions.
