Innovation, Insight and Impact in Banking
Financial Services | Thinking Big
Moving Beyond Words to Action to Drive Distinctive Market Experiences
Nothing Remains Quite the Same
Recently, a bank executive was sharing the litany of challenges his leadership team faced. He cited more compliance with more stringent capital and liquidity regulations imposed after the 2008 recession. Demands to grow deposits and profitability. Disruptive threats from fintech firms. Regional competition for talent and brand awareness.
When asked about his strategies to respond, he called out “better service” as the intended strategy to grow share of wallet and demand deposits, loan portfolios and brand preference.
He’s got it right – at one level. Banks and financial service firms must deliver good service. They need C&I and CRE teams which can write and close loans on time. They need friendly branch managers and tellers in convenient locations who know customers by their name and their needs. Their treasury and wealth management services and insurance products must be customizable to client need.
All of these service components are important. But good service alone will not create competitive separation. Today, every financial service provider claims to have responsive staff, convenient locations, customized products and cool, new digital tools. For that reason, in the whitewater rapids of changing consumer expectations and attitudes, the platitude about “good service” is not enough to keep your brand above the competitive waters.
Insight, Innovation and Impact
At BVK, we help banks and financial service clients shift their growth strategies from a reliance on often overlapping and easily copied marketing claims of better service to core business competencies that create unassailable long-term competitive advantage. Embodied in this approach is an emphasis on Insights, Innovation and Impact that can a basis for market differentiation and profitable business growth.
Insight About Customers
Understanding customers better than the competitors is a core business competency enabling banks to see and serve needs others do not or will not address.
Building this competency requires shifting marketing away from “order-takers” selling excess capacity, to proactive decision support experts who inform strategy decisions and resource allocations based on what matters most to customers.
Innovation in the Operating Model
There is a strangle-hold on innovation in many banks. It is a product of federal and state regulations which provide guardrails around how banks do what they do. It is risk management rules and ratios that drive credit and operating policies. And, it is a product of well-worn industry routines that have long served as a brake on innovation.
To break free from this strangle-hold on innovation, financial service organizations must build a culture that is obsessed with innovation and willing to tackle attitudes, beliefs and behaviors that impede positive change. Critically, banks must develop operating models where staff no longer “work alone, together” within business verticals but instead collaborate across high volume episodes of service.
Impact on the Market
“Great” service is a pre-requisite to good business, but it is often easily matched and therefore not a source of long-term competitive advantage. “Superior” service can be a source of competitive advantage but requires a meaningful degree of separation from competitor performance. The focus of superior service is not simply to be better than competitors, but to make their offerings obsolete to the point that they do not even enter in the consumer consideration set.
The intensity of effort and focus required to operate at this level can be difficult to sustain across a broad set of lines. BVK can help banks prioritize lines and evaluate building a focused factory with superior service around a particular product niche (C&I, CRE, home mortgages, treasury services) with competencies or capacity others cannot or are unwilling to match.
Kevin Steltz and Mike Eaton lead brand and business strategy planning and operational alignment for BVK clients in the financial services sector. For more information about our approach please respond to Kevin or Michael.