4 Ways To Become Consumers’ Primary Financial Institution

Many financial institutions still act like waiters — mere "order takers." But grabbing more of a consumer's business doesn't have to be hard. The right tech helps, but mostly it requires understanding customers and asking for their business — digitally and otherwise. Local banks and community credit unions take note: the big boys don't have their act together (yet). Now is the time to go get the business.

In today’s hyper-competitive banking market, sitting around waiting for more business to just walk through the front door will cripple any financial institution. But sales and marketing consultant Duane Sobecki, CEO of Focused Results, says this is precisely what he sees all the time.

“Banks and credit unions can’t get by any longer being order takers,” says Sobecki. “That will doom them to the status of secondary financial provider.”

Right now, the big banks are not as good at grabbing most of a consumer’s business as they could be. But that will change.

“Jamie Dimon is not stupid,” says Sobecki, referring to JPMorgan Chase’s CEO. “They know what needs to be done to get more business.”

Chase has great technology to help do that, adds Sobecki, but it’s hard for a giant bank to drive the message down to all levels of the business in all channels and locations.

“Banks and credit unions can’t get by any longer being order takers. That will doom them.”

Now is the time for smaller institutions to take steps to ensure they are the primary financial institution (PFI) for those that do business with them. Once someone chooses one of the big banks — Chase, Wells Fargo, Bank of America, et al — as their primary financial institution, it is tough to dislodge them.

In a virtual workshop he conducted, Sobecki outlined the following steps banks and credit unions should take to shift from an order-taking culture so that they can secure that much-coveted PFI status before their competitors.

Read More: 7 Common Sense Ways to Increase Bank Cross-Selling

1. Build an Advisory Environment

The most powerful two words a consumer can hear from a retail banker are, “I recommend…” According to Sobecki, this reflects an emphasis on an “advisory” rather than a “sales” approach.

“Banking representatives are not forcing a sale,” he explains. “They are making suggestions and letting the consumer decide. By doing that, they are positioning their bank or credit union as an institution helping people achieve their financial aspirations.

To be successful using this approach requires a combination of technology and service. The technology is used both to enhance customer access, such as online account opening and scheduling, and to support properly trained staff with the right data to inform their recommendations.

2. Switch to Universal Banker Model

The use of universal bankers is an essential step to becoming the primary financial institution for consumers. These employees can handle basic transactions if necessary, but mostly they open new accounts, take loan applications, deal with service questions or problems, and, importantly, make recommendations.

Universal advisors eliminate the consumer handoffs and runaround so typical of institutions with narrow and inflexible job descriptions, says Sobecki.

“The goal should be to have every retail banking interaction handled by one person 90-95% of the time.”

Retail bankers should view everything through the eyes of the consumer, Sobecki counsels. For example, imagine a frustrated consumer asking, “How many people do I have to talk with to open an account or take out a loan?”

The goal, says the consultant, should be to have every retail banking interaction handled by one person 90-95% of the time. Achieving this is a matter of having the right people in place with proper training, using up-to-date technology.

3. Create Profiles to Get More Wallet Share

To recommend products effectively and appropriately, frontline employees in retail banking must know the consumer as much as possible. Information can be gleaned from various sources: the account opening process, a loan application, previous transactions, and from online sources.

A robust account-opening system should capture as much data about a consumer as possible, including family status, birth date, address, email, cell number, current financials, preferred communication channels, institution where the consumer currently banks, and which products they use. The more information, the better, says Sobecki.

Capturing this information digitally is better and faster than having a person sit with a representative and be interviewed. Sobecki urges small banks and credit unions to check out the latest account-opening technology. It’s not that expensive, he says.

“People will tell you a great deal if you make it easy for them to simply click a box,” He says. In six to ten minutes, he adds, you’ve got a profile and have freed up your staff to handle other tasks.

“People will tell you a great deal if you make it easy for them to simply click a box.”

As an offshoot of this profiling, banks and credit unions can better align their products to meet lifecycle and generational preferences.

Baby Boomers, for example, are actually the demographic group wrestling the most with student loan debt — because they accumulated the debt on behalf of their children. Banks and credit unions should be asking, “What can we do to help Boomers with this debt?” Some possible answers: Help them analyze their personal balance sheet; offer a consolidation option; offer a better rate.

With Millennials and the generation following them — iGen or Gen Z — it’s critical to make it easy for them to establish a relationship, says Sobecki. Provide them with digital account opening, but also offer a digital scheduling option. Research shows that more than 80% of younger generations use scheduling apps when they are offered, Sobecki says.

Another key point with these two younger cohorts: Be sure to ask them, “Do you own a small business?”

About 25% will say “yes,” says Sobecki. Another 25% will say they are interested in owning a small business. It’s a great opportunity to get in early on the business side, he advises. Few banking providers, including the largest, do a good job at tapping the combined needs of consumers who also have business interests.

Case in point: Sobecki and his wife, Jennie, took out a home mortgage from a top five bank several years ago. Not once since then have they heard from the bank.

“I don’t think they even know about our business,” he says.

4. Get More From Existing Customers

To become a primary financial institution, you first have to make sure your existing customer base is getting what they need from your bank or credit union. The top products held by PFIs, according to Sobecki, are: checking, savings, credit card, insurance, mortgage, and IRAs.

Citing figures from various sources, Sobecki says consumers on average use 3.3 products at their PFI, so clearly there is room to expand this. He also says the average consumer uses 3.2 financial institutions overall with 8% using as many as ten.

All this puts the emphasis on getting more business from the consumers you already are serving, says Sobecki. Find out what products are they purchasing elsewhere and proactively work to capture some or all of that.

“There is so much opportunity to grow business, if you’re inquisitive,” Sobecki maintains. Here are five specific examples he cites:

1. Add more credit card accounts. When was the last time your bank or credit union made a balance-transfer offer? And are you paying attention to the ongoing shift from debit card to credit card use driven by security issues or generational preferences? Reach out to these “card switchers” with a better rate, loyalty points, or other offers. Do research to see what appeals to different segments.

2. Grab other consumer loans. When you close a loan, you know the person’s credit score and their financials. Make an offer for the other existing loans that were listed on the application.

3. Refinance existing mortgage loans. In your account-opening or loan-origination process, if you see that a person has a mortgage somewhere else, make an offer to refinance.

4. Reel in consumers’ other deposits. When was the last time you made an offer to capture a consumer’s deposits held elsewhere? “If you have articulated well your institution’s promise to help the consumer achieve their financial goals, and you have the products to do that, then make an offer for those funds,” Sobecki counsels.

5. Ask about small business. While not strictly a retail situation, the consultant urges banks and credit unions to look at what percentage of their business customers are loan only. He says the figure at one of his clients, a $2 billion bank, was 58% loan only. The bank has since lowered that number by training its lenders to talk with customers about business checking and other deposit products once they close the loan.

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