Retail banking growth is getting harder and harder to come by. Banks’ growth rates around the globe continue to hover in the single digits—from +7.0 percent in India to +1.2 percent in France and Italy1.
Three challenges are keeping growth in banking so elusive: the 40 percent of consumers globally with high expectations for personalized, digital service who are keen to shop around (we call them Nomads); banks’ inability to use digital technologies to improve operations and deliver the hyper-relevant experience similar to that which consumers value from retail and other platforms like PayPal, WhatsApp, Apple, Uber, Best Buy, Amazon, and Airbnb; and new regulations that are opening up banking and ushering in API-driven, platform-based disruption. It’s a tough environment that compels banking leaders to ask, “How and from where can we achieve sustainable growth amidst so many low-growth factors?”
Igniting growth is possible for those banks willing to make the bold move to Banking as a Living Business, a concept we introduced and described in our 2017 Banking as a Living Business report. It means truly understanding and meeting the imperative for customer hyper-relevance and empowering the bank to win at the point where customers and prospects evaluate their buying options.
Based on our analyses, banks that become Living Businesses can look to double their digital sales, revenue growth and customer acquisition, and lower their distribution and marketing costs by 30 percent. Aside from creating a compelling customer experience, a Living Business operates in ways that multiply three growth drivers: the number of business interactions with customers and prospects; the number of those contacts converted to sales through the right hyper-relevant interactions, on the right channel, at the right time, with the right tone; and the unit sale value determined through a dynamic, customer-focused pricing strategy.
How Banking as a Living Business influences these three drivers to maximize growth is where things get most interesting. Within the model, the Trusted Financial Service Advisor sits at the center of a growth-inducing banking universe. It is surrounded by “ecosystem gateways” that the bank orchestrates itself or those owned by others in which the bank participates.
In part two of this blog series on Maximizing Revenue Growth in Retail Banking, we will look more closely at how Banking as a Living Business operates these three business components—advisor, bank-orchestrated ecosystem and ecosystems of others. I’ll highlight how they work together to make good on every interaction to engage with existing and new customers and increase sales.
Until then, I invite you to read our latest report in our Banking as a Living Business series, Maximizing Revenue Growth in Retail Banking.
1 Based on our analysis of Capital IQ 2014 to 2017 operating income growth data of 100 global banks