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Steve Klinkerman
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Novantas and BAI Research Release Study on Deposit Strategy, Warn of Challenges Posed by Specialization
October 01, 2005
NEW YORK - Novantas LLC, leading provider of management consultancy and information services to the financial industries, today released a joint study with BAI Research that shows how the rise of specialization in the deposit business could provoke important changes for large-scale generalist financial institutions.
In "Specialization in the Deposit Business: Implications for Growth and Market Share," Novantas and BAI Research detailed how specialized competitors are making vast inroads in retail banking by reaching out to targeted customers in a more customized way, at both the high and low end of the market.
"Specialist competition has huge implications for 'Network Banks,' the large-scale branch banks that tend toward more uniform approaches that foster efficiency," said Rick Spitler, a Managing Director at Novantas. "Responding more specifically to major customer segments from a standardized branch banking platform will be difficult to achieve, yet the changes are rich with opportunities to improve customer satisfaction, retention, and relationship profitability."
Novantas and BAI Research said retail banking is heading into an era of transition from standardized, production-centered franchises to variegated, segment-centered franchises. They said this transition is made up of three important phases: 1) merchandising; 2) market management; and 3) distribution.
Network banks cannot afford to let segment-centered competitors siphon away customers whose patronage is vital to capacity utilization and growth, said Novantas and BAI Research. While production insights primarily enabled the consolidation of the U.S. banking industry, they said, customer insights will enable its transformation.
Novantas is the acknowledged leader in customer science and revenue strategy for the financial industries. The Firm specializes in applying advanced analytics and technologies to help clients make better decisions in marketing, product, pricing, customer management, and distribution.