A study by Kasasa® revealed that 71 percent of consumers consider credit card offerings when choosing what financial institution they choose for banking needs. The study’s findings buck the conventional wisdom that a potential bank customer might consider the overall banking experience followed and then look at what additional services they might offer.
Some of the offerings from banks that were the most important included ATM fees (87 percent) and digital banking capabilities (79 percent). However, one of the more interesting findings is that the physical bank presence is still important to 86 percent of customers polled. Only ATM fees had a higher result.
The 71 percent figure for credit cards was also strong because banking customers stated that it was imperative when choosing a financial institution. The conclusion is that the tail wags the dog to some extent, in the sense that good “one off" products can be the lead into a bigger relationship with the customer. This number, coupled with the fact that 87 percent also want their bank or credit union to serve more than one of their needs, underscore the conclusion.
“As the fight for deposits rises, it is crucial that community financial institutions understand what consumers look for when shopping for a bank or credit union,” said Gabe Krajicek, CEO of Kasasa. “The majority of consumers make decisions based on the products and services offered – with credit card offers, ATM fee refunds, physical branch locations, digital banking capabilities and P2P payments all ranking extremely high in importance. This means financial institutions must evaluate their existing offering and ensure they are meeting consumer demand. Otherwise, they will lose out to megabanks.”
The overall conclusion is food for thought for a community bank’s strategy to maintain and grow its customer base. For instance, larger banks have considered partnering rather than competing with lending companies such as Biz2Credit to offer small businesses with less than perfect credit scores short term loans in order to expand their overall services without taking on the loans directly. The overall package of benefits is important, but executives may also consider if there are single offerings that can really bring in the customers.
An example on the institutional side of banking is when a large US financial firm decides to go into another market where they have less name recognition. For instance, TIAA-Cref, who now leverage the name Nuveen after the acquisition of the Chicago based firm, first went into the European market focusing on Real Assets and Infrastructure. Once they built a customer base, they expanded into marketing more traditional European investment products such as fixed income and alternatives. In other words, they started with a single product to enter the market with and then expanded the relationship with the full suite of investment strategies that would be of interest to a European asset owner.