We know that retail banks are facing a number of challenges. One of the most pressing is how to contain costs and ensure that profitability is ongoing and sustainable. It is not always easy to achieve this in the ‘age of the customer’, as clients are increasingly demanding better service at lower cost. A Cap Gemini study on global retail banking shows that only 50% of clients will stay with their bank over the next six months. This is a trend that banks should take steps to reverse.
It is becoming harder for banks to attract primary clients (those that deposit their salary at the bank and use that account to effect debit orders and payments). Clients are no longer loyal and do not use just one bank for all transactions – they multi-bank. Banks cannot afford to sit by idly while clients are actively searching for better service. They need to show clients precisely why they can meet all their banking needs, today and every day, or risk losing market share.
Is Your Client-Led Strategy Sustainable?
To improve performance, banks have to focus on improving customer experience, reducing costs and increasing efficiency, and of course increasing sales. But the problem is that sales volume alone cannot make the difference. It is one thing to chase sales, but quite another to create real value for clients. Let’s face it – clients who do not derive value from a bank’s products and services will not hesitate to complain or simply switch banks.
Banks therefore need to look at their strategies and consider whether they are really putting clients first. Banks may pay lip service to a client-led strategy, but if the actions it chooses to take every day do not support this, it will not be sustainable.
Sales consultants are potentially able to facilitate value in every interaction with a client. Yet they miss many such opportunities by failing to solve the problem that a client comes to the bank to solve. There should be a fundamental balance between value and volume, but the bank can only achieve this if it has the intention of prioritising customer value.
Relooking Company Culture
How a bank derives its strategy – whether product-led or client-led, depending upon how the bank wants to drive its business forward – is critical. It is important to associate key enablers with that strategy, so that the bank can drive it forward with the correct intention. Banks often use measurement to define this, but a bank can make the fundamental error of saying it is client-led while measuring volume only.
This is problematic because measurement actually drives behaviour within an organisation and this establishes company culture. If leadership focuses on how many accounts the bank opens every month, sales staff will focus on this to the exclusion of anything else, even if those accounts are not appropriate for a particular clients at a particular time.
3 Ways To Drive Value Creation In Your Bank
So how can you make sure you are creating value for your clients? The three steps below will help you to understand how to create value.
Understand the concept of efficient service. It is imperative that the bank helps sales consultants to change their mindset with regard to clients. There is a lot of focus on either sales or service mindsets, but not much realization that you cannot have one without the other. You need to understand the concept of efficient service before you can sell and extract value.
Realise that every client has a problem only you can solve. Value extraction is not about selling but about first understanding your client has come into the bank because he or she has a problem. Once you unpack what that problem is, you can help the client to find the best possible solution. Once you can do that, the opportunity to cross-sell increases, because you are selling to the right person in the right place at the right time – and at the right price.
Break the ‘hard selling’ habit. If a bank’s culture is all about selling, it is the culture itself that is problematic. It is imperative to break the habit of ‘hard selling’ in order to extract maximum benefit from transactions and give back to the client. By now, banks should have realised that even if you can persuade customers to open an account today, they will not be shy to close it tomorrow if the bank has read them wrong and does not understand their needs. You can only create value once the bank’s culture changes – and this can only happen once mindsets and behaviours change.
Making the required shift to a value creation mindset requires the examination of previous behaviours and ways of thinking at both a bank and a sales level. In order to equip banks to make the change sustainable, learning and development professionals need a fundamental realignment in terms of how to approach sales learning and sales leadership. Traditional sales and service training is not enough. Banks require an approach that targets leader behaviour, because leaders are the drivers of performance.