By Achim Griesel and Dr. Sean Payant
In the digital age, financial institutions find themselves sitting on a goldmine of data—a treasure trove with the potential to revolutionize the way they operate. From understanding consumer spending habits to predicting financial needs, institutions want to leverage that data to drive success in an ever-evolving industry.
Before delving into the multiple ways financial institutions can use data to their advantage, it’s crucial to first establish clear objectives and outcomes rather than utilizing data without a clear purpose. And, when it comes to growth, financial institutions typically focus on a few key goals.
1. Growing the Number of Primary Financial Institution (PFI) Relationships
In today’s environment, most FIs want to grow core relationships—and along with those, low- or no-cost core deposits. For solid proof, just look at recent offers from large institutions and the sheer amount of marketing around these offers, all to lure new core relationships. Chase offers up to $900 for opening a checking and savings account, and they market to prospects every other month. Other large national banks are right there with them, offering anywhere from $500 to $3,000 to earn a variety of relationships.
The ultimate measure of success for any FI’s growth strategy is its ability to establish new PFI relationships, but how do you ensure this success? Our answer: Challenge yourself. If you do not currently have an always-on strategic approach to growing core relationships, adopting an always-on strategy should help you increase your new core relationships by 50% to 150%.
2. Increasing Relational Intensity
Increasing relational intensity is about cross-serving, not cross-selling. To foster growth, FIs must attract NEW consumers and deepen those relationships while also deepening relationships with EXISTING consumers and businesses.
Cross-serving is about strategically recognizing opportunities for individuals and business owners to use additional products and services designed to make their lives better and their businesses more productive. FIs can employ data analytics to gauge the relational intensity of their customers: Are they using more services from the FI? Are they engaged in multiple financial transactions?
The key to success is increasing relational intensity over time, with an incremental increase in product and service utilization. Based on client data, earning six or more product and/or service relationships per household is realistic, even while executing a core relationship growth strategy. Examine your FI’s data. If you have a significantly higher level of relational intensity, your FI is probably not growing new core relationships effectively. If you have a lower level of relational intensity, your FI is probably not onboarding consumers and businesses appropriately. Your data will tell the story.
3. Growing Your Team
Behind every successful FI is a dedicated team. To maximize growth, it is imperative to optimize team performance through coaching. The challenge lies in understanding what truly makes a difference in growing and developing your team leaders and team members.
Data can help identify performance metrics that matter and provide a framework for measuring coaching effectiveness. Your focus should be on coaching high-value activities like service behaviors, sales presentations, product knowledge, etc. It’s not just about coaching; it’s about data-driven coaching, measurement, and accountability. Great performers want to work on great teams. If your team leaders do not regularly spend scheduled time each month with each team member, your organization is suffering because of it.
4, Growing Consumer and Business Advocates
Word-of-mouth referrals have always been a powerful growth tool for FIs. Higher Net Promoter Scores (NPS) often translate to satisfied consumers who are likely to refer their friends, family, and business associates. A customer’s desire to refer others to their FI is driven by exceptional service. In today’s digitized banking world, service has two key components: (1) Technology that allows people to use your digital channels with the least friction possible; and (2) The service your team members provide. The data shows that, at high-performing FIs, more than 20% of new relationships are related to the referral channel.
Aligning Marketing and Execution
Once you determine your goals and identify key performance targets, you must drive growth. Marketing plays a key role in driving growth, but you can’t rely on marketing alone. Overall success hinges on aligning successful marketing strategies with effective execution strategies.
a. Have Better Retail and Business Products
For marketing to be as effective as possible, it must be paired with compelling retail and business products. In the absence of good products, the choice will come down to access and locations, so your checking products must be better than those from larger FIs if you are going to compete effectively.
b. Implement Intelligent Policies and Processes
For your marketing to achieve your growth goals, your policies and processes must not become roadblocks. Collect and utilize data to evaluate your customer experience. Understanding the viewpoint of your current customers or next new customer is the best way to understand your FI’s customer experience.
Have you tried to open an account online with your organization? Have you recently visited one of your own branches to open an account or add a service? To be able to compete with high-incentive offers from large FIs, you must outperform them. Your service must be better, and your policies must be friendlier. Another great way to identify flawed policies or processes is to simply ask your team. Those who deal with consumers every day will know the answer… and if they trust you, they will tell you.
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Once you’ve set your goals, evaluated your policies and processes, and implemented an ongoing training and coaching plan, it’s time to market. This is where leveraging data becomes even more important.
a. Target Effectively
Identifying the right audience is critical in marketing. Before we determine which marketing channels will be most effective or what an omni-channel mix should look like, we help FIs use data modeling to discover the right audience. This is the right approach whether you’re trying to grow new core relationships or increase relational intensity with your existing portfolio.
Effective targeting begins with learning from your existing data. FIs have access to a wealth of information about their customers, and it can offer valuable insights into growing core relationships and increasing relational intensity.
It’s also important to look at further data to help refine your target audience. For example: When it comes to core relationship growth, we have found that drive pattern and trip frequency concluded from GPS-based device metrics within your branch footprint can be powerful predictors for high-probability prospects.
b. Use the Right Marketing Channels
The right marketing channel is the one that’s in front of your prospective customer. Therefore, the right answer is always omni-channel marketing. That starts with (1) Traditional marketing, utilizing your branch locations as effective messaging tools, and highly targeting the prospective customer through one-on-one print solutions. This is then supported by (2) Opt-in emails such as USPS Informed Delivery and (3) Digital marketing tactics that allow for the highest level of targeting. Our data regularly indicates that Search and IP-Targeting ads are the most effective in this area, but if other tactics suggest better results, being flexible is key.
c. Understand the Right Frequency
What is the right frequency? The answer: It depends. In 2021 or early 2022 when large FIs marketed quarterly, a frequency just above theirs—combined with the alignment of marketing and execution—would have provided exceptional results. Today, when those large FIs market at least every six weeks, your frequency must be higher still if you want to hold your results at the same level. This not only applies to traditional marketing but digital marketing as well, since large FIs have also increased their digital marketing budgets.
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The modern banking landscape is defined by data-driven strategies. To achieve sustainable growth, FIs must harness the power of data. Whether it’s expanding PFI relationships, increasing cross-sell opportunities, optimizing team performance, or boosting referrals, data is the catalyst for transformation.
Our clients see an impact from having better products, which in baseball terms might be considered a single. When combining better products with training on the execution side, that single becomes a double. Ultimately, this becomes a home run when marketing aligns with better products and execution.
By aligning marketing efforts with intelligent processes, employee training, and data-driven decision-making, FIs can drive growth and success in the competitive world of banking, thus positioning themselves at the forefront of the data-driven revolution.
Achim Griesel is President and Dr. Sean Payant is Chief Strategy Officer at Haberfeld, a data-driven consulting firm specializing in core relationships and profitability growth for community financial institutions. Achim can be reached at 402.323.3793 or achim@haberfeld.com. Sean can be reached at 402.323.3614 or sean@haberfeld.com.
