Focus is key to future-proof banking. What can Goliath learn from David?
Banks today are facing regulatory uncertainty and fierce competition. But doesn’t this also offer an opportunity to differentiate? Yes, it’s true that from a cost, risk and capital perspective banks have to remain focused. But that doesn’t mean there isn’t an exciting future in banking: There is an opportunity to offer something truly unique to specific customer groups.
This unique proposition could be to insource payments from other institutions or corner the Islamic retail market. But being more in tune with what customers really want and need, and understand how these needs are changing is the way forward in the banking market.
It sounds straightforward. But it isn’t, largely due to the size and complexity of many banks today. Yet, several market newcomers have used specialization to create a lucrative niche for themselves. Metro Bank and Triodos are prime examples of where David has beaten Goliath. But why shouldn’t larger banks take the same approach?
Three ingredients in David’s success
There are three ingredients in David’s success: customer focus; the right mix of channels; and a clear view of how to you reach your target audience. For example generation Y loves to use the digital communication channels such as Twitter. And there are banks currently using Twitter as a way of staying in touch with customers, potential customers and the general public. Driving the conversations on these channels improves a bank’s reputation.
Increasingly, we are seeing banks competing with their own shared initiatives in the drive to increase transaction volumes and achieve economies of scale. This blurs the lines of customer and competitor. Are you always clear about what to offer and to whom? It’s worth thinking about.
Managing the ecosystem of customers, suppliers and partners is effectively the way to future proof banking. A future-focused bank – with strong leadership in place and a sound game plan – can rebuild faith in its business and capitalise on the fruitful opportunities offered by today and tomorrow’s market. So why wait?
