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Why Should Consumers Choose Your Bank? Distinctiveness in the New World of Retail Banking

For years, Novantas has challenged banks with the question: Why should someone choose your bank? For such an obvious and simple question, it has a way of creating silence in a room of bankers as they consider what makes their institution unique at a time when branches are becoming less important.

New customer research from Novantas reveals that the answer may be surprising.

While most bankers might assume that a sophisticated online or mobile-banking platform ranks high on the list of what makes an institution distinct to potential customers, our research shows those features came in dead last among seven attributes that a prospective customer may assess.

Instead, the more than 3,000 consumers who were surveyed by Novantas earlier this year indicate that banks are distinct when they excel at the basics. Of seven attributes a bank may provide, “serves all your banking needs,” “is a good value,” and “looks out for its customers” ranked as the three most important factors when selecting a primary bank.

Differentiating your brand from competitors and driving acquisition are two critical, yet increasingly difficult, challenges in the industry today as it undergoes a massive transformation. Novantas has been exploring this issue with banks across the U.S. and recently conducted research to help banks identify and activate opportunities to achieve distinctiveness.

The Stakes Have Changed
The Distinctiveness research serves as an extension of Novantas’ Shopper Research, which ultimately tells us which banks are winning in each market and provides a good understanding of why. What we have learned over the past several years is that convenience (actually, consumers’ perception of convenience) is the strongest predictor of bank consideration and purchase.

Banks that aren’t perceived as being convenient simply don’t even make it in consumers’ small list of considerations, according to our Shopper research. Indeed, the average consumer only considers two banks when seeking a relationship.

Our earlier Shopper research showed that consumers consider a bank’s digital capabilities to be part of that perceived convenience, indicating that such a platform is now table stakes in the battle for customers. Since convenience is a requirement for a bank to be considered, primary bank selection doesn’t hinge on a bank’s digital capabilities.

For banks, this means building even the best digital capabilities is not enough to achieve true distinctiveness.

Developing a Compelling Brand Position
With convenience and digital capabilities off the table in determining what makes a bank distinct, banks must look elsewhere to identify opportunities for competitive differentiation. Novantas’ annual Shopper survey measures consumers’ associations of seven brand attributes — key criteria for selecting a primary bank. We call these our Distinctiveness Attributes:

  1. Makes it easy to manage your finances
  2. Friendly and helpful
  3. Helps you plan for your future
  4. Is a good value
  5. Leading online/mobile banking
  6. Looks out for customers
  7. Serves all your banking needs

We believe a bank’s ability to stake out a compelling brand position based on one or more of these will help solidify its place in the consideration set and ultimately contribute to purchase rates. However, while having a competitive, market-level view of performance across these attributes can be valuable, banks need to prioritize and activate the attributes that will separate them from the competition.

The latest survey reaffirmed our views about the three attributes that ranked highest on the list.

For example, we correctly assumed the “serves all your banking needs” attribute would be driven by perceptions of a bank offering a full suite of banking, lending and investment services.

Our analysis also showed, however, that serving all banking needs also means a bank must understand the needs of its customers. By doing so, a bank can make personalized product and service suggestions to connect the dots between the money a customer holds within the institution and the financial planning programs a customer may engage with through an employer or other institutions.

Similarly, in the case of “Is a good value,” the survey results confirmed our belief that price would emerge as a key driver. And the notion of value exchange, defined in our research as a bank that “goes above and beyond to deliver on its promises to customers” also played a role. Therefore, a bank’s opportunity to be distinct by being a good value has as much to do with its service model and how it communicates with customers about pricing, as it does with price itself.

As expected, national banks are most likely to be perceived as winners in the category of “serves all your banking needs.” But direct banks challenge them in the “is a good value,” and “looks out for its customers” categories.

As for regional banks, they consistently get stuck in the middle or lag on association with the seven attributes. Those lackluster rankings indicate they either lack a distinct brand position or haven’t sufficiently marketed the distinct brand position they’ve developed. As a result, consumers don’t give those banks credit for being distinct.

Other attributes on the list can also ultimately help make banks distinct even if their customers don’t know it yet. For example, our analysis shows that consumers consider few, if any, banks as delivering on “helps you plan for your future.”

It is clear that some banks are closer to staking out a distinct position than others. Several banks already have one, but haven’t done enough from a marketing perspective to get credit for it from the consumer. Many banks don’t know where to start.

And, of course, a bank needn’t focus on just the most important attributes. Differentiation can be successful in any area that is staked out by the bank as long it appeals to the target audience and it is well-executed.

In each case, the path to distinctiveness requires alignment across all members of the organization. Internally, teams must be able to grasp the differentiated strategy itself, understand how customers and prospects should experience it, and know the role of every individual in the bank to deliver on the promise. Externally, banks must commit to building, dramatizing and communicating the points of difference with the marketplace.

It is a shared responsibility that relies on every individual within the institution — from the personal banker in the branch to the marketing department in headquarters.

It is up to the consumers to decide if a bank is truly distinctive. But they can’t begin to make that decision until banks give them something to consider.

Matthew Sharp
VP of Market Research, Chicago

For more information, contact Novantas Marketing

+1 (212) 953-4444

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