“People don’t need banks; they need banking.”
When Nonfiction Research conducted research on the financial lives of Americans in 2018, one of the most startling reveals came from an interview with a convicted bank robber. He said he chose to rob banks not because he had to, but in part because he was angry because banks withheld information from their customers about how to be better with money. While bank brands are not courting bank robbers, this does reveal a poignant insight that we don’t see banks as being on our side. Even before this economic downturn in 2008, banks lacked trust, and today many also lack relevancy.
The notion that a bank brand is a uniform type is false. The category is rich in diversity, approach and customers. But let’s take one category that is transforming before our eyes at a rapid pace – consumer banks. Never has a category been so disrupted by new players, picking off bits and pieces of the core services as specialties.
After 2008, applications for banking licenses went to zero. With the emergence of new technologies, inventive partnership structures and just plain old business creativity, you can assemble a full set of banking services under one roof without having to build anything other than the brand. A collection of product domain experts, either known or white labelled can now deliver the brand experience to a customer. That is not an easy thing to manage.
The “branch,” which was the ultimate expression of a consumer bank, is now an issue of great discussion. If I can do all of my banking online, then what is the purpose of the branch. Some say, it is extinct while others like Chase are planning to build more.
The delta between banks and customers will continue to grow in our new socially-distant normal. So, how in the midst of a pandemic with soaring unemployment rates and record high levels of anxiety, do banks design their brand around customer retention?
At Landor & FITCH, we spend a lot of time talking about relevant differentiation. Currently, the broad bank category looks a lot like a sea of sameness and fast followers. Standing out in this sea requires brands to understand why they exist, what purpose they serve, and what role your brand plays in the life of your customer. Staying relevant in this rapidly changing world is no simple task either.
Here are 4 ways bank brands can follow the principle of relevant differentiation to strengthen customer retention:
- THE POWER IN BEING HUMAN
A deep understanding of the people behind the audiences your brand engages with is the cornerstone of relevant differentiation. It allows you to act with empathy and make meaningful connections. Behind every customer, every employee, every investor, is a real human being. Being customer-centric means really listening to these stakeholders as one human listens to another.
- SEEK A HIGHER BUT AUTHENTIC PURPOSE
For a long time, “community presence” was the gold standard for banks. Now presence comes with greater responsibility. This is true for all brands today, but for banks especially, having a purpose that allows you to contribute to the greater good is paramount. It’s critical that your purpose is relevant to your business and customers is necessary to be effective or you may just be seen as virtue signaling.
- EMPOWER FINANCIAL FLUENCY & CONFIDENCE
Many customers not only lack confidence in banks, they also lack it in themselves. Create opportunities for your brand to engage and educate customers proactively. Come out from behind the curtain and give customers the tools and knowledge they need to take control of their financial destinies. Your trust in them will be mirrored back in their trust in you to guide them through the questions, challenges and milestones that will come up in their financial lives.
- CREATE THE BRANCH OF THE FUTURE TODAY
If we can do all of our banking online, what is the purpose of going to a bank? Digital innovation is ensuring transactional tasks no longer warrant an in-person visit, making a trip to the bank a matter of “I want” versus “I need.” Evolve your offer to align with how customers intuitively think about finances and the value your institution as a brand can add to their lives–it’s all connected.
In our work to redefine the role of bank brands in customers’ lives, we should recognize that we have an invaluable opportunity to redefine the financial industry at large. As society faces off against this global pandemic, financial institutions and banks in particular have a huge opportunity to overcome stigmas that have been crippling the industry over the last decade. This is the time for banks to take a leadership role. We must step up, act with integrity, embody humanity and, above all, lead.
Tagged under Bank Performance, The Economy, Financial Research, Feature, Financial Trends, Lines of Business, Retail Banking, People, Performance, Customers, Branch Technology/ATMs, Feature3, Community Banking,