Data & Analytics

10:44 AM
Connect Directly
Facebook
Twitter
Google+
RSS
E-Mail
50%
50%

New Bank Customers are Hard to Find: Report

Mobile is also found to have a loyalty "halo effect," as mobile users report much higher loyalty toward their primary financial institution than non-users.

Most banks are missing prime opportunities to deepen their existing customer relationships and are ceding new product sales to competitors, says a new survey from Consulting group Bain & Company. This comes at a time when existing customer relationships are increasingly more important, as Bain reports the world is getting "banked out," as only less than one percent of those surveyed were new to banking in the last year.

The firm's “2013 Customer Loyalty in Banking Report,” the fourth annual such report, found that around half of banking customers in developed countries and 84 percent in the developing world purchased a new bank product over the past year. However, one-third of those products, on average, were purchased from a bank other than the customer’s primary bank. The report surveyed nearly 200,000 consumers in 27 countries.

According to Bain, the main factors in whether a customer purchases a new product from their primary financial institutions are the customers loyalty to their bank, and the bank's ability to actively sell new products as opposed to waiting for customers to seek out products. The firm says one-third of financial products in the U.S. were purchased by customers that did not plan to buy a particular product, but they received an offer and then decided to purchase it.

“The ‘easy growth’ is over for banks, as increased competition worldwide is forcing banks to fight over too few new customers,” said Gerard du Toit, a partner in Bain’s Global Financial Services Practice in Boston and lead author of the report, in a statement. “But there is a surprisingly large upside with existing customers to increase win rates on new product sales.”

One easy way to develop "sticky" customers, Bain found, is making targeted investments in mobile technology. Mobile was found to deliver a loyalty “halo effect” according to the report -- frequent mobile banking users in all countries give much higher loyalty scores than non-users.

[See Also: Majority Of Customers Feel Undervalued By Banks]

Bryan Yurcan is associate editor for Bank Systems and Technology. He has worked in various editorial capacities for newspapers and magazines for the past 8 years. After beginning his career as a municipal and courts reporter for daily newspapers in upstate New York, Bryan has ... View Full Bio

Comment  | 
Print  | 
More Insights
Comments
Newest First  |  Oldest First  |  Threaded View
Becca L
50%
50%
Becca L,
User Rank: Author
11/26/2013 | 12:13:49 AM
re: New Bank Customers are Hard to Find: Report
"You've been pre-approved!" ha, what a hoot if that's the culprit behind the statistic.
Becca L
50%
50%
Becca L,
User Rank: Author
11/26/2013 | 12:12:10 AM
re: New Bank Customers are Hard to Find: Report
I completely agree! It's like those punch cards - buy 5 lattes and get the next coffee free. I keep those things in my wallet when there's barely any room for my metrocard. If a bank could offer me similar services, tailored to my spending habits, I'm sure I would jump onboard
Byurcan
50%
50%
Byurcan,
User Rank: Author
11/19/2013 | 5:02:28 PM
re: New Bank Customers are Hard to Find: Report
they didn't specify, but it would be interesting to find out.
Nathan Golia
50%
50%
Nathan Golia,
User Rank: Author
11/19/2013 | 4:39:25 PM
re: New Bank Customers are Hard to Find: Report
"One-third of financial products in the U.S. were purchased by customers
that did not plan to buy a particular product, but they received an
offer and then decided to purchase it." Hopefully these are items like life insurance and savings accounts and not more credit cards/loans...
Greg MacSweeney
50%
50%
Greg MacSweeney,
User Rank: Author
11/19/2013 | 12:53:46 PM
re: New Bank Customers are Hard to Find: Report
Getting the right offer, to the right customer, at the right time, when they are in the right place is challenging for any company, and especially for financial services organizations. Large retailers can look at millions of transactions each day to help decipher the perfect targeted marketing opportunity. Banks, if they are lucky, interact with their customers one or two times a week. Collectively, a bank has millions of transactions as well, but unlike retail transactions where a customer engages the retailer to purchase a product, not all banking transactions are "purchase" decisions and many of them are automated...meaning there is no customer 'touch' for the transaction.
Byurcan
50%
50%
Byurcan,
User Rank: Author
11/18/2013 | 11:50:48 PM
re: New Bank Customers are Hard to Find: Report
Very true, the problem is that many banks don't combine analytics with marketing programs, probably why so many now are investing in big data solutions.
Yaldez4FSI
50%
50%
Yaldez4FSI,
User Rank: Apprentice
11/18/2013 | 8:46:22 PM
re: New Bank Customers are Hard to Find: Report
Targeted offers. To create these banks need to combine analytics with marketing software, so as to "find" and "execute" the right offers to the right client.

Building on-going loyalty is more complex as it involves much more. But at the core of it is creating, deepening a relationship between the customer and the bank.
Zarna Patel
50%
50%
Zarna Patel,
User Rank: Apprentice
11/18/2013 | 7:46:58 PM
re: New Bank Customers are Hard to Find: Report
I use to never drink starbucks... until they started sending me coupons and rewards! Customer loyalty is all about the rewards and I'm not surprised to see that it is the same with banking customers.
Register for Bank Systems & Technology Newsletters
White Papers
Current Issue
Bank Systems & Technology - August 2014
Modern core systems are emerging as the foundations of effective channel integration and customer engagement initiatives.
Slideshows
Video
Bank Systems & Technology Radio
Archived Audio Interviews
New IT Models for New Financial Services Challenges