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Retail banking sector

Winning in the German Retail Banking Battleground with Customer Experience

Modern consumers expect exceptional services and frictionless buying experiences irrespective of how big or small the product that they intend to purchase. When it comes to the retail banking sector, digital disruptors and fintech firms often succeed in delivering an enhanced customer experience (CX) when compared to incumbent banking companies. Although the importance and prominence of retail banking companies will not die down anytime in the near future, customer expectations from banking is not the same anymore. As a result, incumbent banks are increasingly reevaluating themselves on how they perceive customer experience and what needs to be done to meet the changing customer expectations.

Giving customers a supportive, hassle-free, omnichannel experience is a must for banks in today’s changing environment. Request a free proposal to know how our solutions can help you achieve this.

German retail banking companies overview

The German retail banking sector faced a rough ride during the financial crisis. While some banks almost drove off the road, others managed to stay on track, allowing them to overtake their competitors. However, the road ahead remains unclear for German retail banking companies. Innovative trends are shaping new traffic patterns, putting additional pressure on all types of banks, even those that are in decent shape today. The next five years will be crucial for the German retail banking sector to decide which turn to take to avoid a dead end. The German banking market has a unique three-pillar structure of private, savings, and cooperative banks. This distinguishes it substantially from banking sector companies elsewhere. German banking is also characterized by its strong dependency on net interest income, an extensive branch network, and a prudent risk profile. The long-term profitability is of German retail banking companies are low compared to global peer markets, and German banks have difficulty earning their cost of capital due to factors including high competition, low prices, and lack of focus on customer experience.

Trends shaping German retail banking sector

Retail banking sector

What are the common pitfalls that retail banking companies encounter in CX?

Most of the companies in the German retail banking sector have ample room for improvement when it comes to enhancing customer journeys by improving the overall customer experience. As customers are gradually changing their perception of an ideal banking experience, German banks must attempt to adapt. We have seen banks across the globe enthusiastically embrace the value of improving customer experience only to step into common pitfalls. Here are some ways to avoid missteps and set your customer experience strategy up for success.

Focusing on isolated touchpoints

Customer experience is often misunderstood as customer pain points that needs to be addressed. While these efforts are certainly vital to improve the overall customer experience, focusing only on these factors leads companies in the retail banking sector missing out on the root cause of these pinpoints. Furthermore, simplistic solutions that have been merely copies from competitors could sometimes prove to be misleading. Customers who rate single points of contact as satisfactory often tend to rate the whole journey as a negative experience. In such cases, these customers are less likely to become the engaged, valuable customers that banks strive for.

Customer experience is a powerful way of bringing tremendous value to a retail banking sector company’s business. Get in touch for more insights on how our solutions can help you enhance your CX and create a positive business impact.

Ignoring key customer journeys

Once banks in the German retail sector have realigned their thinking toward holistic customer journeys, the next step is to map their customer journeys and figure out which ones are most critical to business. This includes taking into consideration factors such as the areas of improvement, factors that could have an impact on brand image, and other value considerations. For improving critical journeys, banks should determine what degree of improvement will make the most economic sense and generate the most value. German Retail banking sector companies must arrive at a decision on how much needs to be invested to create that “wow” experience for customers and whether the effort is worth it, given the expected additional revenue.

Choosing right customer segments to prioritize

Direct banking companies often show the highest customer satisfaction levels when compared to big private banks. Corporative banks, and savings banks. This is because the latter has a more diverse customer base with a range of differing needs, making it harder to provide superior service across the board. This necessitates banks to identify their various customer groups and determine how important each is to the bank’s business. The value of a customer to a bank can vary based on the product or service being offered and can be measured by number of products, loyalty, credit, or future financial opportunity. Companies in the German retail banking sector need to understand the needs of each group in detail and target the segment with an exceptional and differentiated experience across the end-to-end customer journey.

Learn more about our solutions for companies in the retail banking sector.

retail banking

Category Scan: Retail Banking Market Updates and Future Trends

The retail banking industry is undergoing a wave of change. To lead the change, it is essential for retail banking companies to choose the right business strategy. Experts at Infiniti Research have engaged in discussions and surveys with top global banking leaders and several retail banking customers to gauge their opinion on the changing retail banking landscape and gain a better understanding on the upcoming trends in this sector. A fair majority of the prospects who engaged in this discussion agreed that technology is rapidly morphing from an expensive challenge into a potent enabler of better customer experience and effective operations. Despite this, attracting new customers is one of the biggest challenges facing retail banking companies today.

The article below scans the category for retail banking services in its entirety to help companies and customers in the sector to understand and stay abreast of the latest news, innovations, and market developments.

Retail Banking: Recent Innovations and Market Updates 2019

retail bankingPersonalization is the new normal

Personalization is gradually becoming a primary mechanism for retail banking companies to enhance their customer satisfaction as well as to increase their economic value. Customer retention is often seen to be higher at banks that understand customers’ financial needs and interact with them in ways that reflect their preferences. In an era of hyper-personalization and competitive pressure, retail banking customers expect meaningful insight and advice-on-demand from their retail banking partners apart from the speed and convenience of transactions.

Personalization is impossible unless you deep-dive into customer data and gain a clear understanding about your target customers. Request a free brochure to know how our customer intelligence solutions can help your business achieve this

More local markets may close for outsiders

Traditionally restricted markets including China, India, and Korea will be joined by others in the case of restricting market share for foreign institutions through local regulation and subtle preferences wherein domestic institutions are more favored. Consequently, the ability of emerging market financial institutions to penetrate markets outside of their home countries will become limited. This can only be avoided in case the regional and bilateral trade agreements concluded over the next five years drives select opportunities for certain institutions where financial services are included in the scope of the agreements.

Branch banking will undergo significant transformation

As technology enables every aspect of online retail banking, reducing the usage of hard cash, traditional branches are slowly losing their importance. Given their high-fixed cost, branches will need to become increasingly productive, or significantly less costly. Several retail banking companies have already begun cutting down on staffing, closing the most unproductive branches, and have started experimenting with new branch concepts. These trends are expected to accelerate as customer demands and expectations evolve. However, we do not expect branches to face a full shutdown, rather they may continue to function as centers for flagship information, advisory and engagement hubs, and provide smart kiosks that offer service, sales, cash, and video contact with a range of specialists. The branch size and costs will be reduced by introducing new models and migrating transactions to low-touch digital channels. Although the human touch will always be available, digital channels are expected to dominate the future of retail banking sector.

Finding it difficult to keep up with the rapid market changes? We’re here to help! Request a free proposal to know how we can help you stay abreast of the latest market trends and gain a first-mover advantage in the industry.

Cybersecurity will be paramount

Recent cases of high-profile data breaches have generated fear and uncertainty among retail banking customers, prompting retail banking companies to undertake strict measures to curb such incidents. As the regulation over cybersecurity is rising, banking companies will need to do more in terms of intervening and keep pace with the constantly growing and changing cyber threats. It is expected that by 2020 leading banks will have developed advanced cyber-security strategies that are more aligned with their business aims, risk-management protocols, and regulatory requirements. Since many banks lack the capabilities and resources to tackle these issues on their own, such companies will partner with third parties to leverage such strategies.             

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telecom industry

Customer Segmentation Study: How Infiniti Helped a Renowned Client in the Private Banking Sector Improve Customer Satisfaction Levels by 10%

During the financial crisis, the growth rate of the banking sector witnessed a narrow decline.

Over the last couple of years, the banking industry has started facing unprecedented challenges in terms of stringent government regulations and advent of disruptive models and technologies. Due to the presence of numerous private banking firms, the major companies in the industry have started focusing on developing new strategies for sustainable growth. Additionally, despite the weak economy, prominent companies in the private banking sector are also planning to reshape their organizational structure to improve their financial performance and ensure continuity in their service offerings.

Some of the factors that may curtail the growth of the private banking industry include:

  • Heightened customer expectations: In this service-driven economy, it becomes essential for the companies in the private banking industry to deliver the level of service that consumers are expecting. Moreover, as innovations keep piling, companies face pressures when it comes to improving their existing technical capabilities and service efficiency.
  • Increasing competition from financial technology companies: The rising competition from financial technology firms is disrupting the way traditional banks function. As a result, prominent fintech companies have been compelled to utilize advanced software techniques to provide financial services. It, therefore, becomes a necessity for companies in the private banking industry to adapt to the changes.

To address such challenges and understand the preferences of the customers, businesses are utilizing customer segmentation studies. In the case of the private banking sector, customer segmentation helps businesses divide potential customers into discrete groups based on their needs and the buying behavior. Customer segmentation also allows businesses to validate customers’ expectations for a specific service that is being offered.

The Business Challenge

  • The client- A renowned private banking firm

The client, a renowned private banking firm, wanted to define and target the best prospects and adequately allocate resources to meet the business requirements. With the help of Infiniti’s customer segmentation solution, the client wanted to gain relevant insights about their customers and identify the most and the least profitable customers. Moreover, the private banking firm wanted to profile the customers that are most likely to buy the products and services. The primary objective of the client was to deliver an omnichannel marketing solution to improve customer interaction and engagement.

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Our Journey

The customer segmentation experts at Infiniti carried out extensive research comprising interviews and discussions with prominent stakeholders in the banking industry. With the help of trade shows, company presentations, and industry forums, the experts also gained relevant insights into the current market drivers and trends.

The Solutions Benefit and the Business Impact

The customer segmentation solution offered by Infiniti helped the private banking firm to meet the relentless demands of the customers through targeted offerings. The private banking firm was able to understand the preferences of the customers better and accordingly allocate their marketing resources to gain the desired results. In addition, the solution also helped the client tailor offerings for the segments that are profitable and develop marketing strategies and pricing strategies to generate maximum value. The private banking firm was further able to measure the performance of each individual segment and adjust the segmentation strategy over time.


A must-read case study for strategy specialists and decision makers looking to develop an understanding of the private banking sector

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