Retaining New Customers: Lessons Learned
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As financial institutions increase their focus on retail banking, customer acquisition and retention are becoming increasingly important. Earlier this year, the feature article of On Payments addressed the customer onboarding process: why it's important, what impact it has on retention, and what the potential opportunities are. In this issue, we share some of our findings — our 'lessons learned' — from the work we've done in this area with a variety of financial institutions over the last year.
To sign up for an online subscription to On Payments, please click here.
Retaining New Customers:
Lessons Learned
Financial institutions have rediscovered the value of the retail franchise. As corporate, investment, and mortgage banking generate wild swings in earnings, banks are increasingly attracted to the strength and predictability of consumer and small business banking. This focus on retail banking is the driving force behind many current developments within the industry:
Branch expansion. Despite the growth of alternative delivery channels, the branch reigns supreme in attracting new customer accounts. To support their push for new retail customers, banks are aggressively adding new branches. At the end of last year, there were 79,914 branches in the U.S. In Chicago alone, a number of financial institutions plan to open as many as 400 new branches by 2005.
Mergers. A primary goal behind the many recent bank mergers is the desire to expand the consumer franchise. These mergers are not so much about cost reduction — buy a bank with an overlapping branch network, close branches and eliminate expense — as they are about extending reach and driving growth.
Customer acquisition. The new common refrain is customer acquisition through the DDA. New customers bring new deposits, and new deposits help fund loan growth. New DDAs also generate non-interest income, and can serve as the entrée for fuller, more profitable relationships.
For retail banks, the key is not the number of new customers attracted so much as the number of customers that join and stay (i.e., net new customers).
This issue of On Payments discusses the critical role that retention strategies play in keeping the new accounts a bank has worked so hard to attract. Based on our work with several financial institutions, this article outlines some of the key learnings that banks can employ to ensure their new account desk is as productive as possible.
To read the full article (PDF), please click here.
ATM & Debit Forum
Mark your calendars — Thomson's ATM & Debit Forum is taking place October 3-5 in Baltimore, MD. The conference lineup features executives and experts from across the ATM and debit industries who will share their insights and best practices. Tony Hayes is chairing the conference, and Jessica Ip will be presenting findings from our 2004 ATM Deployer Study.
As an industry first, the conference is starting with back-to-back presentations by each of the six leading payments networks in the U.S. The conference's keynote speakers will be Ken Kavanagh, head of debit and prepaid cards at Bank of America, Ron Congemi, President of STAR, Brian Kett, President of Triton, and Sue Webb, payment strategist at JP Morgan Chase.
Recipients of On Payments are entitled to a special $100 conference discount. On the registration page, enter DVCT under 'Discount Code'.
What's Your EFT Network Strategy?
In the run up to the conference, we are conducting a short poll on EFT networks — factors
influencing network selection, opinions on future interchange rates, etc.
To participate and share your opinions, please click
here. All participants
will receive a copy of the results.
Upcoming Conferences
On August 17, Georgia Credit Union Affiliates will be hosting their annual EFT Council, which will focus on the changing EFT network environment and address the impact that recent trends will have on credit unions. Joel Stanton will be on hand to give the keynote address to credit union attendees from across the state, and will present an in-depth analysis of the options and issues facing credit unions in today's changing EFT world.
The American Bankers' Association and Forward Financial are hosting their annual Bank Card Conference in Orlando on September 19-21. Leaders of the industry's foremost card issuers will discuss issues spanning consumer credit cards, debit cards, commercial cards and merchant acquiring. On Tuesday, September 21, Tony Hayes and Kevin Sullivan from Chase Card Services will discuss ways of using customer preference data to build segmentation-based strategies to succeed in today's market.
Payments Insights will be taking place in Wakefield, MA from September 26-28, hosted by the New England ACH Association. Payments Insights brings together payments professionals from financial institutions, government agencies and companies to network with their peers and to learn about the latest payment applications. On Monday, September 27, Ed Bachelder will be giving a presentation entitled "Paper or Plastic?" addressing the industry's ongoing migration to electronic payments.
The Other Side of the Pond
The U.S. and U.K. are two countries divided by a common language. The same could be said for ATMs. While the functionality of ATMs in the U.S. and U.K. is similar, the market dynamics shaping the ATM industries in both countries are significantly different.
Did you know, for example, that the U.S. has one ATM for every 790 people — compared to the U.K., which only has one per every 1,200? They have us beat in terms of density though — the U.K. has one ATM every 5 square kilometers; the U.S. has one for every 25.
For more fun facts and comparisons, please click here.
In the News
Various sources have recently published major articles on payments, discussing everything from the history of the ATM to are there too many ATMs, from the rise of debit to ways to address the debit lawsuit settlement. Please reference the links below to read a few examples:
MSNBC.com, "Are there too many ATMs?" (July 28)
Fortune Magazine, "The Money Machines" (July 26)
Wall Street Journal, "Paper Losses: As Cash Fades, America Becomes a Plastic Nation" (July 23)
Banking Strategies, "Delayed Gratification" (July/August)