Could a Bank that Helps its Customers Save Money Win Substantial New Business in This Market?
November 03, 2008 at 1:36 PM
While many banks are continuing to experience significant earnings and growth challenges as a result of the current environment, some banks claim to be winning new business – and their third quarter earnings results support this. In markets where institutions have failed (Wamu; Indymac and fifteen other bank failures since January), competitors have won new clients and grown deposits and loans. For most banks, however, growth in new customers and balances has been flat or negative in recent months. And yet, I talk with bankers every day who think there should be an opportunity in this market for conservative and well-run traditional banks to build new client relationships. If that is true, and I believe it is, what needs to happen to get consumers and small businesses to move?
Here’s a new idea: reduce or eliminate fees. Consumers are extremely anxious about the economy and their jobs, and many have lost great sums of money in the stock market. How have banks responded? Bankrate.com’s 2008 survey shows a record high year for fees assessed in a variety of categories, including ATM and bounced check fees. In many cases these fees make sense from an individual account profitability standpoint. But what about the client relationship overall? Why not, instead of raising fees, reduce or eliminate many of them and provide guidance to clients on how they can avoid other charges, earn more interest, renegotiate loans, etc.? Why not give clients the information and tools they need to better understand how they can save money? There is a tremendous opportunity to put the customer first and help them weather the current economic situation by helping them improve their savings habits and reduce expenses. If banks don’t step up to this challenge, someone else will.
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