Picture this scene: A well-dressed individual storms into a bank branch, making a beeline for the branch manager’s office. The customer is clearly not happy. Recognizing the individual as one of his key clients and with a creeping feeling that something is amiss, the relationship manager tries to intercept him, but fails.
In the branch manager’s office, the customer opens a large tote bag stuffed to the brim with papers and drops stacks of crumpled mailed advertisements on his desk. Through the glass, the bank’s other employees wince as they realize that their company’s logo dotting each piece of paper they see and figure out what has happened. The client is furious that all of their discussions about how well they know him as a client didn’t stick— the bank’s haphazard marketing approach overshadowed their efforts to deliver a customized set of product and service recommendations to match his investment, savings and financing needs.
How could the bank spend so much time to learn about a customer’s unique needs and then flood his mailbox with random offers and pitches that were likely to be wildly off the mark?
For many consumers, this story isn’t too far from their reality. If a technology company can tell you what you want to buy based on your past searches, why do today’s banks have so much trouble figuring out which products you might be interested in?
Part of technology companies’ success has been through “smart” cross-selling, using technology to identify additional products that might interest their consumers. In retail financial services, though, such cross-selling mechanisms have yet to be implemented effectively. According to a 2013 survey from the Deloitte Center for Financial Services, only 19 percent of retail bank consumers hold three or more products in addition to a checking account with their primary bank, compared to 49 percent who have three or more products with other financial institutions. This gap in “share of wallet” leaves much to be desired. However, enhanced cross-selling efforts may help rectify that by achieving growth with new and existing consumers.
Much like leading technology companies, the modern bank has access to an immense amount of consumer data. The challenge, however, comes in linking that knowledge to increased share of wallet, which is a difficult and expensive exercise for banks. Instead, data-driven insights, including historical activity, relationships with other consumers on social networks, and understanding buyer motivations should fuel an analytics engine that allows a bank’s marketing and sales organization to take prescriptive actions to attain higher share of wallet.
In developing this engine banks should consider including three calculated actions: First, banks should integrate data sources between retail and wealth organizations; then they should incentivize employees to cross-sell; and finally, they should effectively drive change through the external marketing department.
1. The primary obstacle some banks face is a disparate series of data sources across retail and wealth management divisions, thereby limiting the power of analytics. If data sources were converged, a bank’s wealth management group could more easily mine for retail clients that maintain +$100,000 in a savings account, schedule annual transfers +$25,000 out of a savings account, and have numerous relationships with senior executives on social media sites. This client base has already established a sense of loyalty with the bank and, as such, should be easier to sell new or additional products to than a consumer with no ties to the bank. Moreover, particular saving or spending behavior within an individual’s accounts could help inform targeted sales campaigns for certain services, including targeting, consumers with large deposits and frequent transfers for discussions about broader wealth services.
2. In addition to unlinked data sources, uncoordinated sales incentive programs may also beleaguer banks’ cross-selling efforts. According to the Harvard Business Review, U.S. companies spend more than $800 billion on sales incentive programs each year — three times more than they spend on advertising. Despite that high expenditure, though, another recent Deloitte Consulting LLP survey found that only 48% of sales executives are satisfied with their sales force’s performance. This points to a need for drastic cross-industry improvement, and banks are no exception.
In the current environment, many retail bankers may have no incentive to recommend wealth management services and vice versa. In fact, bankers and financial advisors might even be penalized when assets are transferred to other divisions of the bank. This divide cannot continue; the sales process should be the driving force behind a series of seamless handoffs between retail bank personnel, wealth management advisors, and the consumer.
3. Once data sources and sales approaches are harmonized, marketing departments should determine the optimal means of attracting the right mix of consumers. However, this process has been made more difficult as consumers frequently change the media through which they interact and seek advice. For instance, over five million high-net-worth investors use social media to make financial decisions. By foregoing uncoordinated paper advertisements and investing in more dynamic marketing strategies like social media, the modern bank may be able to engage new and existing consumers and drive real-time insights for both bankers and advisors to leverage.
Effectively addressing each of these issues is likely to enable financial institutions to gain a deeper understanding of their consumer base and build an internal engine to implement consumer insights. By using a data-driven, harmonized, and modernized sales approach, banks may be able to determine what the consumer wants to purchase and how he or she wants to purchase it. The process sounds fairly straightforward, but, for many financial institutions, it involves a high degree of change to fundamental business operations.
Changing the way an organization engages its clients will naturally surface some far broader strategic questions as well: What is the right retail bank branch of the future for our clients? Will we continue our investment in financial advisers at branches that are seldom visited, or will we reinvent the sales force in some new way? What technology platforms will best support our new model for consumer engagement?
All are relevant questions and all will need to be answered. However, all should be well-informed by the insights gathered through the strategic change. For those who get it right, the benefits will likely far outweigh any pain associated with the change. For those who get it wrong—or, worse, fail to address it—pain will likely continue.
Robert A. Dicks is principal and the national leader of Deloitte Consulting LLP’s financial services human capital practice. Harry Datwani is a senior manager and a leader in Deloitte Consulting LLP’s sales force effectiveness practice.