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Have the right conversation with customers

What do people buy from banks? What do banks actually sell?

Have the right conversation with customers

There are two common ways to answer these questions.

• In one sense, you can respond in terms of actual products or services purchased—as in “checking accounts,” “CDs,” “Money Market Accounts,” or “Home Equity Lines of Credit.”

• Another way to answer is to speak of the perceived value. Expressed as, we offer… “the best service,” “the best rates,” “security,” or “convenience.”

Answering in either of those ways is valid. Banks do sell checking accounts and loans. And banks do attract clients through outstanding service experiences and/or rates.

But, does either address what consumers actually buy

Yes, you need to offer the right product and yes, a rate-sensitive consumer will choose to open an account with those offering the highest rates. These are the reasons the consumer elected to bank with you versus another company.

What they are not, however, are the reasons the consumer was looking to make a purchase.

Banking is not an impulse buy. There is a reason that the consumer opened the account, applied for the loan, or spoke to you about a trust.

Why they buy

Banks, especially community banks, face many challenges in attracting new households and in building deeper relationships with existing clients. Nowhere is this challenge more evident than in cross-selling.

In theory, it should be easier to convince existing clients to buy additional products and services.

For example, 60% of consumers have been with their primary bank for 10+ years, according to a study conducted by the Deloitte Center for Financial Services. Further, 75% state they are satisfied or very satisfied with their primary bank.

Why, then, are banks are experiencing historical low rates of products-per-household? 

The same Deloitte study found that:

Consumers are electing to bank with multiple financial institutions.

Only 19% of consumers have 3 or more products with their primary bank, while almost half (49%) have three or more spread across providers other than their primary bank

Consumers have choice.

Only 33% of consumers have a credit card with their primary bank and only 9% have a first mortgage with their primary bank.

The continued low-interest rate environment, the entrance of non-traditional competitors, and consumers’ access to information and ease of purchasing all contribute to difficulty in attracting new or deepening relationships with existing clients.

I’ll add another factor inhibiting a bank’s ability to grow, and this is self-inflicted; How they define what they sell.

Consumers seek to address a need

“People don’t buy a mortgage; they buy a home.”

Admittedly, that old chestnut sounds simplistic, and even a little trite.

But focusing on the underlying need and less on the tool (i.e. product or service) used to address that need potentially has profound implications for how you market.

Trying to think through every possible client need can seem overwhelming. After all, some will argue that seniors seemingly have much different needs than young professionals just entering the workforce. Young families’ needs differ from the requirements of professional couples with no kids.

Seems obvious.

Yet the truth is, the underlying fundamental needs for every consumer are the same—regardless of the life-stage or socio-economic station.

Three (nearly) universal needs

These needs are:

1. Access to the payments system.

Every consumer needs to buy things. All need access to the payments system. For the majority of consumers, a checking account along with a debit card is the most common choice.

This is slowly evolving as alternatives to traditional checking become more readily available and accepted. However, the fundamental need is not changing and banks are well positioned to continue to fulfill this need and the related “go with” services such as bill payment.

But, to remain relevant as payments change, banks need to think more broadly about what it is they are providing. Consider alternatives to traditional checking, for example, prepaid cards. Monitor the evolving payments landscape to identify opportunities for providing ready access to payments platforms through mobile banking.

2. Savings.

Again, every consumer in the U.S. needs to save. What varies, then? What they are saving for, how much they have available to save, and the timing for when they will need the savings.

Take the time to understand the answers to these questions and match the right savings vehicle with the needs of the client. Just because you have the best CD rates in town, doesn’t mean everyone wants or needs a CD.

3. Extending their purchasing power.

Ok, maybe it’s not 100% of consumers who have this need. But almost everyone will, at different points in their life.

Extending purchasing power is about credit—whether it is buying a home or a car; using the equity in their home to pay for home improvements; paying for college; or simply allowing them to purchase items using a credit card.

Market and sell based on need

Framing the question, what do people buy from a bank, in the context of fulfilling consumer needs, isn’t simply an academic exercise. It can offer insights and present opportunities with implications for how you market and sell.

1. Focus on the need, not on the product.

Change the conversation with the consumer. Place the emphasis on them and how you can help them fulfill their needs, and not on you and the products you offer.  

Tell stories of how you were able to assist people in similar situations achieve their goals. Use testimonials by clients who’ve helped purchase a home, save for college, or simply better manage their expenses. This can create an emotional connection between your products and services and their needs.

This is easier for the consumer to understand than the technical details of the product. This approach helps them visualize the outcome. The specific product you’re offering is a tool, a means, not the result.

2. Listen more, speak less.

To truly understand the needs of the communities or client segments you serve, listen. This is just as applicable to your marketing as it is to your sales process.

Conduct the research necessary to anticipate the needs and behaviors of your clients and use that knowledge to guide what channels and messaging you use to build awareness.

It’s not enough that the stories you craft resonate with the intended audience. The channel or channels you use to reach them must be what they use. You need to better target consumers.

If, for example, the demographics in your geographic markets skews towards younger families, highlight how you can help them buy a home or pay for college. Choose copy and images that reinforce your message, and choose a channel appropriate for this intended audience (not newspaper ads). [Editor’s Note: A helpful recent article on this is “How media works for Millennial Moms and their kids.”] LINK:

This knowledge also helps guide the actions of the sales force, but they also have the added benefit of actually engaging with the client and asking questions which serve to further clarify need. Training sales associates not only on the ability to ask questions and listen, but then on how to match what they heard to the solutions you offer, is critical.

Resist the temptation to offer products immediately, as in:

“I see you don’t have our credit card. Would you like to apply? It offers great rates!”

This is leading with product, masked as focusing on need. 

Take the time to inquire further (for example, if they pay off their card balance every month, rates are irrelevant) or infer from their behavior (large payments to a card issuer every month) to anticipate need.

3. Be pro-active.

That might seem to contradict listening more and speaking less. It isn’t.

Realize that not every consumer immediately recognizes that they have a need. Even more likely, consumers may feel the need to do something, but are unsure of what to ask or how to address.

Use your knowledge to anticipate and pro-actively offer solutions to fulfill expected needs. For example, there continues to be low utilization of 529 plans. I suspect that a significant part of this is a lack of awareness and understanding, not dissatisfaction with the product.

No product fits everyone, at every moment

While the client’s fundamental needs fit well into one of the three categories, the results they are seeking will vary. We all need different tools, sorry, I mean products, at different times to achieve our goals.

View your products as tools. Place your marketing and sales emphasis on anticipating needs and on how you are better at fulfilling those needs, not bragging about your wonderful products and expecting consumers to make the connection on how this helps them reach their objective.

Taking this approach will have implications beyond your marketing:

The wrong emphasis. Consider your current incentive program, is it solely based on the number of products sold? Do you run product-based sales campaigns (“It’s IRA Monday!”)? 

Truly accommodating customers. How about branch design? Does the design enable conversations between the branch staff and clients? Do you offer self-service options to those clients who truly only wish to transact?

Behaving like the cable company. Do you focus on selling product bundles, or do you allow clients to select only those products and services which are relevant to them?

The answers to these questions (and others) will help you identify how to have the right conversations with clients.

Although making this change will not be as simple as coordinating an IRA Monday campaign, the result will not only be stronger relationships with clients, but improved business, especially cross-sell, performance.

Brian Higgins

Brian Higgins is first vice-president–digital, payments & innovation for First Financial Bank, a $8.7 billion-assets community bank headquartered in Cincinnati serving Ohio, Indiana, and Kentucky. He is a frequent contributor to Since joining First Financial Bank in September 2012 Higgins has leveraged 20 years of financial services experience to bring a fresh perspective on the challenges faced by community banks. Previously Higgins worked for Vantiv Payment Solutions and Fidelity Investments, serving in a variety of roles in business leadership (Operations, Product, and Marketing) and strategic planning. Contact him at [email protected]
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