How to Become an Indispensable Partner in Uncertain Times

This year challenged banks and compelled them to prioritize survival. Economic volatility, deposit flight and heightened customer anxiety have become the norm, but in the face of these challenges is a unique opportunity for banks to not only weather the storm but emerge as indispensable partners to their customers and communities and position themselves for long-term growth.

Many banks have distanced themselves from loan-centric relationships and tightened lending standards while doing their best to increase deposits. But this defensive approach has inadvertently driven community bank customers in need of personal loans toward more receptive competitors — bigger banks or fintechs — eager to fill the growing void in the market, resulting in lost market share.

How can banks regain the lost market share and turn into long-term partners?

1. Deliver personalized offers.
Banks should avoid a one-size-fits-all approach and, instead, present personalized offers that are unique to the financial situations and life stages of customers. This helps customers feel valued and understood. For instance, as student loans resume, younger customers may seek guidance to avoid falling behind on payments, while older customers might benefit from advice on maximizing their savings.

User experience and data play pivotal roles in creating these targeted engagements. Banks have more than enough data at their fingertips to anticipate the needs of their existing customers and unlock a great number of opportunities to help in these uncertain times. Leverage internal and external data to acknowledge these customer milestones, tailor communication efforts and make relevant recommendations to create long-lasting, trusting relationships that help the bank become top of wallet.

2. Provide products that customers want and need.
In the last year, banks have prioritized deposit solutions to offset shrinking margins. But it is no longer sufficient for banks to merely market products for profit; they must offer what customers truly want and need. It’s crucial that banks view lending and deposit growth as two sides of the same coin to engage customers effectively.

By leveraging the data at hand, banks can present their credit-worthy customers with a digital menu of products and services instantly available through their online banking portal. Empowered to weigh a broad range of attractive options, customers can select what they want — rather than receive a single product offered to tens of thousands of prospects in hopes that they are in the market.

Offering personalized rates and services removes the mystery and chance of failure from financial transactions. It increases conversion rates and customer satisfaction, while facilitating growth and scalability. Much like what consumers experience with Amazon.com, this approach allows the consumer seat to choose what is best suited for their lifestyle — rather than making assumptions and placing each in buckets.

3. Prioritize existing relationships.
The most valuable asset of a bank is its existing customer base. They also require less marketing efforts, which frees up bank resources, time and expense. Hubspot found that new customer acquisition costs have increased by almost 50% in the past five years. In fact, data shows that the cost of acquiring a new customer is about five times higher than maintaining an existing relationship.

Deepening connections and increasing engagement with existing customers can lead to all types of opportunities. For example, customers who only have a loan at an institution might be interested in opening a checking or savings account. But before the institution can provide tailored offerings that go beyond that initial loan transaction, they must understand the customer’s journey, needs and preferences.

Additionally, loyal customers act as mini marketers by referring others to their trusted institution, increasing revenue without the bank having to invest in advertising. According to Temkin Group, 77% of customers would recommend a brand to a friend after a single positive experience.

In the face of liquidity challenges, banks must put their customers first and adopt a strategic approach to lending and deposit growth. By intertwining the two sides of the coin, leveraging user experience and data and maximizing the existing customer base, banks can navigate today’s challenges, find new opportunities and position themselves for future success.