The primary advantage legacy banking organizations have is their breadth of customer relationships. Despite increased competition, banks and credit unions can still position themselves as the principal gatekeeper and facilitator of the overall financial service relationship.
Banking is one of the oldest, largest, and most important of our industries, with most adults having some form of relationship with one or several banking organizations. While transforming over time, the industry’s basic purpose has not changed. Banking’s role is to make loans and protect depositors’ money. Even if the future takes banks completely off the street corner, these needs must be served in some manner … by some entity.
But, traditional functions are being contested or commoditized, and emerging competitors are replicating banking functions better and at lower cost. How can traditional banking organizations retain the customer relationships they have built over time?
A very viable option is to reposition banks as the principal gatekeeper to their customers, creating an ever-evolving ecosystem of services and experiences provided internally and externally for the benefit of customers.This is the conclusion of a global banking and consumer study by the IBM Institute for Business Value entitled, Banking Redefined: Disruption, Transformation and the Next-Generation Bank. By retaining the foundations of a strong customer experience, today’s banks can be the best option for many consumers.
Even though non-traditional financial services providers may be getting the attention of consumers, banks and credit unions still remain trusted institutions for many banking customers. And while financial institutions can take some comfort in their unique relationships with customers and members, many will need to work harder to differentiate themselves from competitors. FIs should also be mindful that they are competing with a wide variety of firms — from both within and outside the industry — so they need to keep customer satisfaction top-of-mind to foster increased loyalty and build meaningful and lasting long-term relationships.
Overview by Ed O’Brien, Director, Banking Channels Advisory Service at Mercator Advisory Group
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