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.
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