Jim S Miller

Thoughts on the Client Experience and Banking

Community Banks Can Thrive: Current Trends Offer Opportunities for Institutions That Can Adapt

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Despite 18 months of economic turmoil, community banks are positioned to thrive in 2010 and 2011. Research by Prime Performance experts shows that success will depend on three factors.

  1. Bankers must understand new post-recession consumer trends—and the attitudes driving them.
  2. Banks need to adjust products, services and promotions to these new realities.
  3. Institutions must build trust with customers and reinforce it at every opportunity.

For organizations that adapt to these realities, opportunities abound. Prime Performance researchers are not alone in believing this.

“In any recession, consumers focus closer to home. They become more local and less global in outlook. So these are times of opportunity for the thousands of conservatively-run community banks that have never held any exotic financial instruments and continue to assess accurately the risk profile of each local customer seeking a loan,” says John Quelch, marketing expert, author and Harvard Business School professor.

To profit from this situation, community bankers must grasp the big consumer trends affecting the financial services industry. This year, clients are starting to:

  • Deal with institutions they trust. A sense of safety comes from trust. Trust is about transparency, ethical behavior, candor and prudence. These traditional banking values are making a powerful comeback.
  • Seek safety. Quelch expresses it well: “Financial brands today must address the most basic of consumer concerns: Will my money be safe with this company?”
  • Save. Americans love to shop. But, their freespending days are done. The New York Times reports that credit problems, battered portfolios and job losses are forcing spenders to become savers.
  • Simplify. Complexity and excess are out. It’s back to basics. This is a long-term trend, according to consumer trend spotters Paul Flatters and Michael Wilmott. As they note:  “Downturns are stressful and typically increase people’s desire for simplicity. Even prior to the recession, many consumers were feeling overwhelmed by the profusion of choices and 24/7 connectivity and were starting to simplify.”
  • Find the best deal. Brand loyalty will take second place to the good deal and the products and services that address clients’ real needs and concerns, say Flatters and Wilmott. This applies equally to supermarkets, retailers and banks.

So, how should community banks use these trends to attract and to keep customers? Consider taking these steps:

  • Emphasize safety. Use advertising, in-house displays, publications and public appearances to explain how you are protecting depositor funds. Train your frontline personnel so they can explain clearly the safeguards your bank employs. Promote evidence of your institution’s soundness.
  • Empathize. Listen to your customers’ concerns. Solve their problems. Reassure. Take time to engage on a personal level. Again, Quelch is on point: “When consumers are uncertain, they need to have their hands held. They need to feel that the brands they use identify with their predicament.”
  • Simplify procedures. Ensure that processes, forms and explanations are simple and straightforward. Customers want to save, and they need loans. So, make it easy for them to do business with you.
  • Build loyalty. Never has this been tougher, yet never has this been more important. Customer loyalty comes through competitive offerings, genuine warmth and honest concern. Adopt a superior customer service model. Follow it every day for every single person who deals with your bank.
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Written by Jim S Miller

July 19, 2010 at 12:02 pm

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