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Marketing and Product Management

Mark Hendrix, a 30-year banking industry veteran who currently acts as an advisor for Peak Performance Consulting Group, was quoted in Advertising Age on the changes in Bank of America’s brand strategy leadership and the potential implications for bank brand strategy.

 

Like many traditional banking competitors, Bank of America is dealing with an increasing number of digital rivals as it tries to improve its customer-centric approach.  Hendrix noted “There is an awful lot of disruptive change that is occurring in the marketplace and there is a change in consumer expectation that all banks are having to grapple with.”

 

He further noted, “Customers don’t really care about banks — they’re more interested in what banks can accomplish.” And this is causing banks to re-think their brand strategy and brand promise.

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The following article, quoting Peak Performance Consulting Group’s President David Kerstein, appeared in S&P Global Market Intelligence on August 8

 

By  Kate Garber and Kellsy Panno

 

Some of the largest U.S. banks hope to entice their customers with real-time, P2P payment capabilities like those offered by PayPal Holdings Inc. and other fintech companies.

 

As member banks go live on the clearXchange network, a unified payments channel, customers will be able to send and receive money in real time. So far, Bank of America Corp.Capital One Financial Corp.JPMorgan Chase & Co.U.S. Bancorp and Wells Fargo & Co. have the real-time payments capability up and running. Fellow network owners PNC Financial Services Group Inc. and BB&T Corp. have yet to go live on the network. An Early Warning spokesperson said that while all members are in the process of integrating the capability, go-live dates vary by bank.

 

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Digital Payments are growing, and financial institutions have high expectations for adoption. But with usage rates stalled, is this the right time for community and regional banks to invest, or should other options be considered first?

 

We just finished an analysis of Mobile Wallets and P2P payments. Here’s a few key points, but read the full article for more detail.

 

There is wide belief among financial services executives that mobile wallets and P2P payments will shortly become basic table stakes, similar to mobile banking. According to the 2016 Debit Issuer Study, commissioned by PULSE, almost three quarters of financial institutions expect at least 15% of debit transactions will migrate to mobile in the next 5 years, and nearly half believe the migration will be in excess of 25%. They have invested accordingly: issuer adoption of mobile payments has surged and 65% of debit cards are now eligible to be loaded into mobile wallets, up from 30% in 2014.

 

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To be successful, Bank-at-Work programs must deliver effectively on three elements: partnership, value proposition and sales execution.

 

 

This article was originally published in BAI Banking Strategies on March 11, 2016

business woman in warehouse

 

It goes without saying that retail banking has many moving parts and Bank-at-Work programs are no exception. From target strategy to sales protocols and from results tracking to offer fulfillment, successful program implementation requires that banks maintain a comprehensive structure around their Bank-at-Work initiatives.

 

But within that program structure, three things stand out because without them you’ll just be spinning your wheels. They are: partnerships, value proposition and sales execution. The formula goes like this: partnerships get you in front of company decision makers; value proposition gets you in front of employees; and sales execution gets you incremental revenue. Sounds pretty simple, but the reality is very few programs actually focus on these key essentials, which is the root cause of why many retail Bank-at-Work initiatives run aground and get shelved.

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This article by Guenther Hartfeil, a Senior Consultant at Peak Performance Consulting Group, was originally published in BAI Banking Strategies on December 3. 2015.

 

Cross-selling can be effective if bankers put the right metrics in place, change behavior of sales staff, align incentives, re-focus on customer needs and eliminate policies that get in the way.

 

It’s common knowledge that it’s easier and cheaper to sell to existing customers than to attract new ones. However, according to studies at two major banking institutions, many cross-sell efforts result in little or no improvement in customer profitability.

 

There are two primary reasons for this. First, most banks do not have an effective way to accurately track “new-to-the-bank” funds. Typically, sales staff receives credit for new accounts opened and the bank projects value based on typical account balances.

 

But this does not account for the significant money churn between existing accounts. Analysis I conducted at one large financial institution showed that, depending on the deposit product type, between 25% and 79% of funds into newly opened accounts came from deposits already in the bank. For example, it’s pretty easy to switch account types, say, from one type of savings into another type of savings or one certificate of deposit (CD) term into another CD term, or open accounts for new family members by using existing account balances. Churn is less but still significant at 25% to 30% for brokerage accounts, non-auto direct loans or home equity credit.

 

Another reason that cross-selling may be ineffective is that projected balances or anticipated account activity may not materialize. New checking accounts usually start with a small balance and grow over time as the relationship builds, or as new customers wind down accounts at their previous financial institution. However, sales staff may inadvertently receive incentives to generate account volume, “widgets” rather than value because of product configuration, deficiencies in tracking capability, or both. For example, free checking – a product that many institutions have now discontinued – was so easy to sell that the overwhelming majority of new accounts opened at most banks was “free.” The number of accounts grew dramatically, but balances often did not follow.

 

Here are five strategies for making cross-selling more profitable:

 

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A modified version of this article was originally published in BAI Banking Strategies on November 13, 2015.

 

As the Millennial generation increases its economic clout, banks need to adapt strategies that enable them to profitably attract, serve and grow with these new customers.

 

It’s a simple fact: Millennials are your future customers. Already the largest group in the workforce, the leading edge is now in their 30’s and reaching an age when they have stable jobs, are forming families and buying homes. By 2020 they will have greater savings and investments than Baby Boomers. They are not just a customer category, but a massive segment that is driving change rapidly.

 

And Millennials are critical to your bank’s growth strategy. Approximately 10% of households switch banks annually – a rate that has been relatively stable for the past decade. But this propensity to switch varies widely by age group. Older customers are more likely to have long-established banking relationships and their average switching rate is only between 3% and 4%, usually as the result of a service or moving issue. On the other hand, younger customers switch at a rate of between 15% and 20% annually. They are most likely to be attracted to financial institutions that offer the technology and online services they prefer.

 

Banks need to take action or risk losing this segment to new entrants in the payment, consumer banking and business banking space. And there is cause for concern: we counted 38 different non-traditional competitors in the payments space alone, of which 10 were new in the last year.

 

Up to now, these competitors have been mostly nibbling around the edges, but the introduction of Apple Pay significantly heightened awareness of the threat. In our recent industry survey, one bank CEO told us: “The fear is that Apple Pay and Google Pay reduce, if not eliminate, the need for banks to provide the payment stream. How do we compete with that? …. Not sure what the solution is at this point. Once the consumer leaves or never comes in to the system, will they ever join again? Jury is out but I am not optimistic.”

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