Customer relationship management in the new retail banking world

I recently bumped into an old family friend; my parent’s bank manager. He recalled fond memories of golf days, dinners and drinks back in the 1980s. Back then local bank managers having close relationships with their customers was a normal thing.

The link drove customer loyalty, increased service satisfaction and opened up cross-selling opportunities for the bank.

In the intervening period, branch closures across the UK together with a shift towards first customer call centres and then a further move towards online and mobile banking have eroded this local link.  A potential service gap has emerged, creating fruitful conditions for competitors to sneak in and steal customers away. 

In this new retail banking environment it is key for retail banks to rediscover the art of customer relationship management and adapt it to a virtual and hyper-competitive world.

Thankfully, technology and rapid advancements in data analytics provide the perfect platform for this to occur. Analysing the vast quantities of customer data that banks hold enables industry players to gain an in-depth understanding of individual customers and groups. 

This in turn permits the creation of bespoke banking services and solutions, which can pre-empt or aid personal finance decisions. A prime example is challenger bank Monzo.

In this new retail banking environment it is key for retail banks to rediscover the art of customer relationship management and adapt it to a virtual and hyper-competitive world.

They already provide customers with a breakdown of their spending and plan to take this one step further by identifying where customers may be overpaying, for example on utilities, sourcing a better rate and automating the process of switching. An increased emphasis on data analytics requires a rethink of occupational models, leading to the creation of centres of excellence for data analytics located where the talent and knowledge is.

In addition to harnessing technology and data analytics, retail banks must not overlook the power of the physical connection.  At heart we are social animals – something not lost on our family friend.  Certain financial decisions have emotional ties that data analytics can only go so far to uncover. Trust and security also important considerations. 

In light of this there remains a place for face-to-face advice particularly in higher margin, more complex financial and investment products. In response, streamlined branch networks are being reinvented as hybrid branches, customer-experience centres, coworking space and innovation labs.

CYBG is doing exactly this, rolling out space that has all you would expect from a branch but also incorporating space where customers can experience new technologies, listen to talks from company executives and share ideas. 

For those that do not have branch networks, the office could be the perfect place to build those physical connections. The workplace can help shape and embody the brand experience; be an events space to present customers with new services and solutions or connect the bank to local communities; act as an innovation/customer-experience centre and often under-used space, such a foyers, could be turned into branch facilities.

In addition to harnessing technology and data analytics, retail banks must not overlook the power of the physical connection.

Locating in an urban mixed-use area will mean your customers are on your doorstop. Natwest partnered with RocketSpace to strengthen the banks links with the technology sector.

Over the past three years, the bank has been helping new businesses, including many tech start-ups, through the Entrepreneurial Spark powered by NatWest programme, which has supported a total of 1,736 companies, raised £151m of investment and created 3,152 jobs.

Outside of the UK, RBC partnered with WeWork to create an inspiring, collaborative space where WeWork members and RBC clients can meet with RBC professionals to get financial advice. 

Retail banking is more than just a utility, it is also a relationship business. Those that successfully combine technology, data analytics and physical connection to create a sense of community and customer-loyalty will ultimately be the winners.

In some senses this is a return to old values but supplemented and empowered by data and technology.