CHICAGO, IL--(Marketwire -03/27/12)- Most U.S. consumers are generally satisfied with their primary financial institution and would recommend it to someone else, but those same institutions still have room for improvement, according to a recently completed BAI Research study. When it comes to additional products and services to fit their needs, customers are open to their primary bank proactively approaching them. Yet, they perceive banks as slow to do so. These new findings on consumer attitudes and preferences are particularly relevant now as banks and other financial services companies pursue strategies to attract, retain and grow customer relationships in a challenging environment marked by a sluggish economic recovery, increased regulation, and slow revenue growth and margin expansion. Sponsored by Cognizant and SAS, The New Dynamics of Consumer Banking Relationships reveals vital trends in how consumers interact with their primary financial institution and the products and services they value most.
Key Findings on the Current Consumer Landscape
The study, conducted on a nationally representative sample of 3,200 U.S. consumer households, identified five core segments representing the consumer landscape -- Marginalized Middles, Disengaged Skeptics, Satisfied Traditionalists, Struggling Techies and Sophisticated Opportunists. Closely aligning channel, pricing, sales, and service configuration according to these segments allows financial institutions to improve marketing efforts and align investment to the customers most receptive to specific products, services and incentive offers. Additional research findings revealed the following consumer trends and preferences.
- While attitudes and preferences varied across segments, consumers are generally satisfied with their primary financial institution, but there is room for improvement
- Consumers are eager for financial institutions to approach them with additional products and services to address their needs, particularly when it comes to investing and financial management
- Vital differentiators among segments extend far beyond assets, income and age to include consumers' views on factors from satisfaction with their primary financial institution to their own personal financial situation and the regulatory environment
- Robust segmentation models identify consumer segments most receptive to additional products and services, incentives and other cross-sell efforts, helping to increase wallet share for greater loan and investment portfolio growth
"These findings are critical as financial institutions shape their strategic priorities to focus on building stronger relationships with customers," says Debbie Bianucci, president and CEO of BAI. "While consumer satisfaction with their primary bank overall came in at a strong 62%, far fewer respondents, 39%, agreed that their primary financial institution proactively suggests financial products. This is clearly an opportunity for the industry to pursue as they seek to expand customer relationships."
New, More Robust Segmentation Models
The five segments profiled in the study can provide direction to help banks more precisely target value propositions. "Many financial institutions typically tend to market to the 'mass market' customer with generic value propositions," says Vin Malhotra, Consulting Partner, Banking & Financial Services, of Cognizant Technology Solutions. "But, hidden within the broad customer base are often distinct segments with extremely different preferences. By understanding the nuances and differences across segments, financial institutions can more closely address individual customer needs, leading to deeper relationships and greater share of wallet. The challenge for most financial institutions is to transform their legacy technology platforms and operating models into driving segmented and relationship-based customer contact models. The end results of such efforts can materially improve customer satisfaction, increase retention, streamline sales and fulfillment while driving top line growth."
"The research findings also indicate that segmentation models created as recently as one or two years ago will most likely need to be replaced based on more robust segment profiles and new market realities. "With analytically driven, granular segmentation," says David Wallace, Financial Services Global Industry Marketing Manager at SAS®, "a financial institution can identify customer segments that are most likely to respond to specific campaigns or marketing actions. This approach along with other predictive modeling and optimization capabilities can help make the most of each individual customer communication, which maximizes the economic outcomes within the financial institution's resource and budget constraints."
About the Research
The BAI Research study, The New Dynamics of Consumer Banking Relationships, was sponsored by Cognizant and SAS to help bank executives and industry-watchers gain a better understanding of what consumers value in their banking relationships. A comprehensive survey was conducted among a nationally representative sample of 3,200 consumer households to obtain detailed intelligence on a range of personal financial and bank consumer behaviors, attitudes, beliefs and preferences. Respondents were between the ages of 21 and 74 with an annual household income of at least $25,000. Respondents completed the survey online.
BAI is the financial services industry's partner for breakthrough information and intelligence needed to innovate and stay relevant in an evolving marketplace. For more than 85 years, BAI has focused on advancing the industry by offering unbiased education and research. BAI's offerings are as diverse as the industry, and include premier events such as BAI Retail Delivery Conference & Expo, groundbreaking research and performance metrics, professional learning and development programs, and in-depth editorial coverage through BAI Banking Strategies.
For more information, go to www.BAI.org. Follow us on Twitter @BAI_Info.
Cognizant (NASDAQ: CTSH - News) is a leading provider of information technology, consulting, and business process outsourcing services, dedicated to helping the world's leading companies build stronger businesses. Headquartered in Teaneck, New Jersey (U.S.), Cognizant combines a passion for client satisfaction, technology innovation, deep industry and business process expertise, and a global, collaborative workforce that embodies the future of work. With over 50 delivery centers worldwide and approximately 137,700 employees as of December 31, 2011, Cognizant is a member of the NASDAQ-100, the S&P 500, the Forbes Global 2000, and the Fortune 500 and is ranked among the top performing and fastest growing companies in the world. Visit us online at www.cognizant.com or follow us on Twitter: Cognizant.
SAS is the leader in business analytics software and services, and the largest independent vendor in the business intelligence market. Through innovative solutions, SAS helps customers at more than 55,000 sites improve performance and deliver value by making better decisions faster. Since 1976 SAS has been giving customers around the world THE POWER TO KNOW®. Learn more and discover our white papers and webinars: sas.com/banks.
- Cognizant Technology Solutions