A Customer-Centric Approach to Community Bank Growth
Community banks are uniquely positioned to manage their customer portfolio in a focused manner due to the very nature of their business. The market for community bank services is usually well defined with a majority of their customers coming from the area immediately surrounding the bank or branches. Community bank services also tend to appeal to a certain segment of the population. This population is not interested in all the services a national or regional bank offers and is typically seeking a more stable, personal banking relationship. Conversely, some national bank customers are not interested in the limited services offered by a community bank such as limited ATM locations. This very nature makes it possible for the community bank to outmaneuver the big banks by better targeting customers in their community.
Banks in general tend to be more product-centric than customer-centric. Their focus is on launching new products and services versus focusing on how they can better manage or serve their different customer segments. If you lined up the marketing collateral and websites from several community banks and removed the bank name from each, you would find that the messages are very similar across the board:
“…we are focused on the community…”
“…we put the customer first…”
“…we build solid relationships…”
The challenge then becomes how to get the message heard in a crowded marketplace offering commodity products.
Organizations that focus on satisfying the customer’s needs and superior customer experience will not only experience growth in their customer portfolio, but a customer-centered approach will also result in superior financial performance for the organization. This study only analyzes how information can be utilized to influence the organization’s contact strategy, but a complete customer-centric implementation also involves computing customer profitability and developing a behavior-based customer segmentation schema for managing the customer portfolio.
The whitepaper that resulted from this study, A Customer-Centric Approach to Community Bank Growth, was published in the Capco Journal of Financial Transformation in November 2007. It was one of 18 papers selected for this issue from the almost 200 submissions from academics and business thought leaders around the world.