The Gallup organization offered some insights in March 2015 that still resonates as community banks and credit unions enter the New Year.
And while for the kids and their music, it may be “all about that bass,” for community and regional banks, the key to success is the customer experience, according to Beth Youra, a senior consultant for Gallup.
“Regional and community banks may seem stuck in an uncomfortable middle space, but have the potential to break out of it with a renewed focus on a holistic customer experience,” Youra writes. “Service and technology continue to be pressing issues for customers, but smaller banks must also ensure that they are meeting their customers at every stage in their lives.”
Youra says that these are “interesting and challenging times” for community bankers.
“While these banks haven’t taken as big a hit to their reputations that large national banks have in the past five years, many have been unable to slog themselves out of the “mushy middle”,
By way of example, Youra cites this poll data from Gallup:
- Regional and community banks may outperform the big boys when it comes to fully engaging customers, but they’re behind credit unions, direct and/or online banks.
- While business clients are important for community banks, Gallup research shows they are more likely to be actively disengaged than fully engaged with their community bank.
- While small businesses are more optimistic than they have been at any time since the Great Recession began, they are still unsure of their ability to get credit and are unlikely to be unsatisfied with the process if they do.
- Gallup polling also shows that at national banks, customers have an estimated 71 percent of their total financial products with their primary bank, compared to 66 percent at regional banks and 65 percent at community banks. When it comes to credit products, Gallup data shows that customers at national banks have 53 percent of credit products with their primary bank, compared to 32 percent at regional and community banks. Community banks are losing out, Gallup contends, on profitable mortgage loans and credit cards to larger competitors.
- Brands are muddled. “Customers do not differentiate between banks’ brand promises until they get down to the smallest of banks and credit unions,” Youra writes. “Regional and community banks don’t rate any higher than national banks at creating customer connections.”
Needless to say, if the Gallup data is accurate, community banks have a mountain to climb. Community banks are going to have to find ways to deal with the growing presence of national and regional banks in their communities.
“Community banks have always had an advantage over larger banks with higher quality service in their branches,” Sean Williams, a senior practice analyst with Gallup says. “As customers continue to migrate more and more business online, banks will need to build up their service offerings in online and mobile banking as well to compete with larger banks.”
However, Williams says that doesn’t mean community banks will have to make huge investments in technology or try to keep up with the Joneses to match them technologically.
“Community banks won’t gain or retain customer engagement by piling more features into their websites, for example, “Williams says.
“… Rather community banks should seek to understand what customers need to do their banking the way they want to do it and develop those features accordingly,” Williams adds. “A savvier, customer-centric development strategy, combined with an already-strong branch presence, would make community banks well-positioned to offer a compelling, differentiated and full-service channel experience that can compete very well with regional and national banks.”
In the same piece, Gallup Consultant Chris Magnani, offers this advice to community institutions: Simplify.
“With such a large percentage of customers disengaged (37 percent) or indifferent (46 percent) at the big financial institutions, smaller banks have an opportunity to attract and ‘wow’ new customers with superior service and similar products,” Magnani says. “Start by simplifying the user experience and make things like switching banks less of a hassle and more of a reality. As long as community banks make the investments in necessary new technologies, like mobile banking, they will be in a position to attract new customers.”
Clearly, as a new year dawns, the challenges are there. But so are the opportunities. Bankmarketingcenter.com is there to join your team and help your bank clear those hurdles and seize those opportunities.
