Every year CenterState takes a look at a variety of trends throughout the industry. One current focus is customer engagement, or how we can better interact with our retail and commercial banking customer to become more relevant to them. In preparation for the 3Q 2018 strategic planning cycle, we produced a report discussing each trend that serves to get our employees, board, and vendors thinking about these issues so they can further give us input. We thought you might find this report interesting, so we have summarized it and attached below.
In 2018 it will be harder than ever for banks to vie for customer’s attention. Banks that don’t take the time to stand out will find themselves being commoditized. Without creating a customer-centric brand, banks will continue to struggle to produce a return above their cost of capital.
Consider that for all of the last year, community banks returned 8.71% return on equity. For the second quarter of 2017, it was a little better at 9.25%, but still below an 11% cost of capital requirements that investors seek. That means that for the long-run it will be harder for banks to attract private and public capital to grow.
One of the best things a community bank can work on is focusing on creating greater scale and efficiency. At CenterState, moving loan processing online is a major initiative for us. Also on the list, is trying to get more intimate, more important to the customer. This is a longer-term project for us, but we feel if we can do this we can create a more valuable brand.
A brand that better supports the customer in their journey through life, whether it be managing paycheck to paycheck, creating a legacy to pass on the next generation, becoming governor or financing a business, can have a variety of positive effects for a bank. In addition to better pricing margins, banks with higher engagement scores get more referrals, have better cross-sell ratios, longer client retention and provide more feedback. In sum, their cumulative lifetime value is more than 30% greater than customers that just need you for a transaction.
This is why we feel that these 14 trends are critical to most banks.
From a list of some 55 trends that we track in banking and various industries around the world, we have narrowed the list down to 14 that we feel that are important to track next year, in one form or another, within a strategy. Some of these trends are complex (reworking our loan and deposit processes to save the customer time) while some are simple (more visuals in our marketing).
Here are the 14 Trends for 2018:
- Honing the customer experience vision
- Staging an experience
- Removing steps in all bank processes
- Being a catalyst for a unique banking experience
- Leveraging parents
- Visual marketing
- Supporting self-improvement
- Saving our customer’s time
- Spending our customer’s time
- Banking by voice
- Choosing the right customer
- Better understanding our customer
- Leveraging data to personalize our customer’s journey
- Formalizing the customer’s journey
Putting This Into Action
Not all of these will apply to your bank, and there are many others, but since we spent many hours putting together this research, we thought we would save you time by presenting some of our ideas. Hopefully, you are either in the process of many of these trends, and this will serve as validation, or you will be inspired to consider some of these trends and apply them to your bank.
We believe in a long-term, ten-year strategic planning horizon. These trends are not meant to be implemented in 2018, but the objective is to set some milestones and take steps to get better at each of these areas.
This report can be accessed with no further login information and if free for your review. To access, click HERE or paste the link below into your browser.
If you have questions, thoughts or recommendations, please do not hesitate to contact us.
Submitted by Chris Nichols on August 16, 2017