“Winning banks are changing the rules of banking to respond effectively to the explosion of customer segments. “
In an effort to rebound from last year’s financial downturns, banks are scrambling to revamp the banking business and focus on the crown jewel of the financial services industry – retail banking. Why? It offers attractive returns, low risk, and a source of liquidity that is more valuable than ever in today’s environment.
However, retail banking faces severe challenges. In today’s financial standpoint, it is no longer about retailing of any bank product and service but ensuring customer’s satisfaction. In the Asian banking industry’s changing scenario, consumer is king and banking services serve as the support for their basic daily needs, requirements, and creation of future dreams, and the like through their Housing, Education, Retirement, Personal Loan and Advances as well as manifold customized and personalized services.
Gone are the days when bankers were in the position to choose and accept customers to their banks. With the expansion of the banking business, these so-called high profile bankers are now rising at the bottom of the pyramid with the promise of best interest rates, lower loan amortizations and freebies for opening accounts. One potential depositor counts – thus – deserving best service.
Senior executive banker and head of retail banking group of Sterling Bank of Asia Dwight Lawrence T. Leyco explains that retail banking has been retooled to accommodate the rapidly changing requirements of the individual’s banking needs. “Bank branches have evolved slowly over the past decade. At Sterling Bank, we shed the stuffy corporate image for a friendlier face to which customers can relate. We adapted a more comfortable waiting area – by having coffee-nooks in all our branches – and make sure we have coffee for everyone.” Considering that all banking institutions offer almost the same products and services to its clientele, Sterling Bank sets apart through service excellence – though claimed by many, the kind of service that Sterling Bank provides goes beyond what is expected. Imagine a bank offering simple yet heartwarming conveniences like serving free-flowing gourmet coffee for all clients. Leyco added that a deeper understanding of the customer has become more significant than ever. “Traditionally, banks have relied on differentiation in product and service offerings as the means to attract and retain customers. However, this approach is easily replicated by competitors and often fails to directly address customer needs.”
Banking needs and options to choose
According to Leyco, the bank is giving more than lip-service to the concept of customer focus and integrated delivery across channels. The major challenge for Sterling Bank is to respond effectively to the blast of customer segments – the twenty-something yuppies, the start-up entrepreneurs, the retirees who are putting up nest eggs, young couples who are eyeing their first car or home, and the overseas workers who are planning stable exit plans.
“These segments have different needs with a wide range of behaviors and attitudes toward retail financial services. Yes, we have developed individualized service approaches catered towards each segment; but the priority of the bank is to give the customers an option to choose. We ask them what they want, how they want and plan their services accordingly – that’s the best way to meet customer expectations.”
Hyperdifferentiation for SMEs
Apart from individual depositors, retail banking pays attention to the needs of small-to-medium enterprises which will not only help them but will also result in the growth of their business. “To gain our customers’ trust, we go beyond lending and redefine the offer to include some form of advisory service,” said Leyco. Traditional retail bankers fall into two categories: lender or deposit gatherer.
Rather than placing Sterling Bank out in the market as lenders without lending authority, Leyco explains that the bank not only provides access to loans. It also focuses on other areas of critical importance to customers, areas in which they can make a difference. “We make it our business to know our customers’ business. Depending on the needs, this could include cash management, investments, and trade finance, including foreign exchange. At the same time, we team up with other bank units or institutions to provide those capabilities that are important to our clients.” With this approach, he further explains that most customers already value their friendly relationship with their local bank officers and personnel, who they see as a source of help and good advice.
All the channels, all the time.
Like any other bank in Asia, Sterling Bank offers a wide array of banking services such as Deposit Services, Consumer and Business Loans, Cash Management, Shop ‘N Pay Cards, Treasury Products and Trust Banking. The critical standpoint of the bank however, is to give the client the authority to select what is most suitable for him. “Presenting the options to the customers make them feel valued, and this is what customers demand today,” said Leyco.
On the other hand, product innovation also plays an incremental development in retail banking. Being a banker for 23 years, Leyco has seen the evolution of banking services. “Winning banks will take the opportunity to develop innovative new products and services geared at utilizing the disruption in the marketplace. For instance, Sterling Bank has been operational for only 3 years. Yet, it has already put up 23 branches nationwide. The numbers are not significant compared to other banks. However, our innovative products compensate for the limitations of our branches”. Leyco further explains that their Shop N Pay Visa Debit Card allows funds to be accessed in over 29 million Visa accepting merchants around the world and over 1,700 Bancnet POS merchants domestically. The card may also be used for ATM withdrawals, and online banking thru Bancnetonline. “With this banking service, you can withdraw cash anytime anywhere. Furthermore, in the Philippines, we are the first to be issued with the EMV technology by Visa.”
Another channel strategy of the bank is the inter-operational of its branches. If you are a check holder, you can encash your money in any branch using the “Online Imaging Facility” and your deposits can be reflected real time. “In retail banking, consumer channels have been revolutionized in recent years by technology. For instance, internet, both in terms of online and mobile banking, are gaining popularity because of its convenience.”
In this fiercely competitive and rapidly changing environment of retail banking, technology is inevitable. Today, banking operations are centralized. For example, all banks provide online account access so that the client can manage it better. There are certain instances, though, when the client may have to visit his home branch.
It is true that retail banking is now managing issues like competition and globalization, convergence and innovation. It cannot be done overnight but what is more important now is managing the customers and their needs. Retaining them is critical for the bank to improve the numbers. Time is running out fast – retaining and deepening customer relationships is very crucial.
Leyco further expounds the importance of service excellence in this crowded banking industry. “Service excellence will never cease to be attractive. The bank’s growth will be based on its intent to create a brand of excellence since the start of its inception.”
[published at Manila Standard Today, May 2010]