CHICAGO (2/17/11)--Today's challenges--and consumer expectations--are transforming the way retail banks operate and serve customers. Credit unions can learn what they're up against by examining their competitors' strategies. A recent study examines what is impacting business and what strategies retail banks and lenders are using to keep their customers. "2010 Survey Results Top Retail Banking Communications Strategies" is a survey of 458 banking executives conducted by Variolii Corp., in partnership with American Banker
, Bank Technology News
and US Banker
. Retail bankers' greatest challenges aren't much different from credit unions'. An overwhelming 84% said that financial reform/legislation poses the greatest perceived challenge both now and for the next few years. That's more than double the next greatest challenges--increased delinquencies/defaults (39%) and tighter lending standards (38%). The fourth highest challenge, generating 29% of responses, was developing a competitive mobile/online banking strategy, and the fifth, with 26% was: increased/more sophisticated fraud activity. Garnering less than 20% of responses were reduced customer satisfaction/decreased bank brand loyalty; continued industry consolidation, harder to reach customers (due to increased mobile-only households and reduced landlines), other, and reduced spending/lower credit card volume. With this environment in mind, the survey looked at communications strategies employed by the banks. Roughly 77% of banks surveyed use traditional, high cost methods of communicating with customers most often. Direct mail/postcards and agent interaction on the phone, are used the most--68% and 64%, respectively. E-mail (56%) and the local branch (52%) are the next most popular strategies. Other findings:
* Thirty-one percent of survey respondents communicate with their customers over a mobile device. In fact 44% of institutions surveyed did not know whether their targeted customer contact was through landline or a mobile device. * Thirty-two percent said they capture customer preference data to determine whether they are using a mobile device, while 55% did not. When asked why the banks don't communicate with customers via their mobile number, 20% indicated they didn't have the appropriate technology; 15% did not have the numbers or sufficient mobile number coverage, and 13% cited legal/privacy/security concerns. * Of those who do use customer preference data in their communication strategies, 85% used the customers' preferred communication channel; 42% used preferred language; 46% used preferred time of day; and 41% used customer behavior. * Improving the customer experience is rated "important" to "very important" among 86% of survey respondents. Seventy-one percent said offering customers self-service options was important or very important. Self-service options offered included online banking (89%); IVR for balance, payments (57%); opt-in alerts for balance limits, overdrafts (49%) and mobile banking, (38%). Eighty-six percent predicted their self-service options will increase somewhat or substantially in the next few years. * Forty percent of respondents already are leveraging social media to communicate with customers in their strategies to attract younger customer segments. Social media included Facebook, used by 34%; Twitter, 22%; various social media, 13%; blogs, 9%; LinkedIn, 5%; and e-mail, 5%. Of those who are not using social media now, about 35% said they were planning to incorporate them in the future.
In spite of the changes, traditional methods remain in full force, said the study.