Distribution: Segment & Channel Strategy

Knowing the emerging customer channel preferences will be critical to Banks evolving their distribution networks. Banks put a lot of care into finding a value proposition and associated segments when considering product and marketing strategies. Banks focus on finding which segments to serve and building product and market value propositions; they have succeeded in informing the design of the distribution network with proper targeting. Novantas assists clients in solving this dilemma.

The distribution network represents 60% or more of a bank’s operating expense. Customer preferences for distribution used to be simple and centered on the branch, but recent Novantas research indicates that they are changing rapidly and consumers are now choosing alternatives. The trajectory of this change varies by segment, along with the mix of preferences today. Many banks have not sufficiently considered this changing demand, and others are reacting to signals that may not be relevant to them. The distribution network is often assembled based factors unrelated to demand, ranging from familiarity of the management and field team to one-size fits all evaluation techniques and tools.

Today, Banks are making decisions about the distribution network: building branches, investing in new online capabilities, and developing innovative mobile technologies. These decisions will determine who wins with customers over the coming years. Understanding evolving customer segment preferences and channel behavior will be critical to making the right investments today and in the future. Banks can build the distribution network around the set of customer segments that matter to them. Novantas distribution analytics and services are founded on understanding customer segments; banks can be confident that Novantas creates distribution strategies grounded in these insights.

Novantas invests heavily in primary research to understand how customers consume the bank across channels, and has developed a proprietary channel preferences segmentation as well. These same proprietary frameworks and instruments can be used to explore specific questions with clients on a partnership basis.

Segment insights give banks the confidence to make investment decisions in a dynamic environment. Novantas helps banks:

• Understand the marketplace from the customers’ point of view: how they consume the bank and prefer to interact
• Develop differentiated segment strategies; identifying the segments most attractive to the bank, and those most likely to be attracted to a value proposition
• Translate top-of-the house segment strategies to actionable decisions impacting the distribution network
• Assess customer and market opportunities through a segment specific lens
• Account for the segment opportunity as banks optimize current network assets and resources