Identifying Customer Needs, Sans Small Talk

For such a seemingly trivial aspect of social gathering, small talk has provided significant economic value to banks over the years.

Transactions allowed bank staff to interact with customers and to learn about their lives, anticipate their needs, provide information or a listening ear, or to offer a well-timed referral to a personal banker or loan officer. Even when those conversations didn’t result in new business, they still cultivated a relationship and trust.

Consumers Stop Conversing
The pandemic hastened what was already a longtime trend: Consumers want a bank with a branch nearby, but most prefer not to visit that nearby branch unless they must.

In 2020, the cohort of customers who still preferred the branch received a new incentive to begin using their bank’s mobile app – safety. Branch sign-up lists and capacity caps only made using a branch that much more inconvenient. Although some customers have returned to visiting the branches, the pendulum shifted for many who are now acclimatized to digital banking.

Customers now also clearly prefer to do digital research on banking products, according to 600 banking customers polled by Total Expert.
They say they’re nearly twice as likely to search for a lender online versus contacting a lender directly. They are four times more likely to search online rather than ask a real estate agent for a referral for a mortgage lender. And they go to their financial institution’s website first when they have a new financial need.

Web activity, however, is not a two-way conversation. Unlike a teller who can ask follow-up questions, interpret customer responses and make referrals to a personal banker or mortgage loan officer, knowing what customers need depends on their activity: applying, initiating a chat, filling out a form or contacting a banker. Customers are increasingly “going dark” on small talk; where they do show interest, the bank must wait for them. Bank leaders should be wondering how to revive two-way, active conversations.

But where to start? Consumers can sense sales quotas in a branch. And they can’t be forced to fill out a form on a website any more than they can be forced to volunteer their financial needs. Banks must look to another way of conversing: data.

Data as Conversation Starter
Customers volunteer opportunities to serve them every day through their data. As account holders and borrowers, they provide significant information to their bank in exchange for financial services.

Understanding and using this data, though, has long seemed too intricate for local, community-focused banks. Advances in technology have changed that; using data to inform and to initiate customer engagement is far more attainable than ever before. Banks are moving back into active engagement because data allows them to intuit needs not vocalized by customers.

For example, every bank has an address for their retail depositors’ home. But when does that matter? It’s central to selling a home; when a customer’s home goes up for sale, the address is listed on a Multiple Listing Service (MLS), and it sends a signal to their bank. Customers selling a home often buy a new one, or they need to safely invest the proceeds of the sale. The MLS listing is the customer vocalizing a set of possible needs. Once a bank catches that signal, technology can allow staff to advise, interpret, engage or refer, depending on the bank’s strategy.

Even outside of mortgages, knowing a customer is selling a home can be both a revenue and relationship opportunity. The National Association of Home Builders found that customers are more than 2.5 times more likely to make large purchases within a year of buying a new home – items like appliances, furniture and home improvements – compared to consumers who did not. Would these customers appreciate savings through credit card rewards? Do they want to use their equity to buy appliances? Were they waiting until their new mortgage closed to purchase a commuter car? Even simple, widely available data points can become the basis for highly engaging and productive interactions between a bank and its customers.

Eighty-four percent of Americans report stress about their finances, according to a recent ValuePenguin survey; bank customers want help reaching their financial goals. Banks may not be able to stop the decline in small talk, but they can revive and even surpass it with new tools made for banking. There are so many more opportunities for banks to use their data to anticipate needs and to engage customers about their desired outcomes. The upside is lifelong loyalty within each customer relationship.