Why aren’t customers asking banks for advice about their money problems? Once upon a time a concern like saving for retirement or financing a new small business would have been the natural dominion of a bank manager. Today, not only are bank customers more likely to ask their family and friends for advice on these subjects, but they are looking for alternative services to fill the void.
Millennials, who are poised to overtake boomers as the dominant market demographic in a few short years, have a poor opinion of big banks. As they have families, open businesses, buy homes, and plan for retirement, banks will find it challenging to convince this skeptical demographic that they have good advice to offer. At the same time, our study of the stealth attrition of banking customers indicates that a key reason customers would pay more and visit the branch more often is for financial advice, seminars, and small business services. So, customers want advice, but they are not asking for it – what are banks doing wrong?
Banks already offer retirement savings, small business loans, investment portfolios, car loans, and mortgages. We think, however, that the model is focused on a sales model, rather than a customer-centric, advice-driven model. Here is what we think customers really want when they say they are seeking financial advice:
Small business financial services
Small business owners are often flying by the seat of their pants when it comes to financial planning, tax reporting, payment systems, accounting, and bookkeeping. Many do most of the work themselves at sites like compareyourbusinesscosts.co.uk/ to save money. View more – Noa singapore at cfoacc.com. Many small business owners would be happy to pay a reasonable fee to access financial planners, accountants, and bookkeepers who specialize in small businesses, or to take part in coaching sessions, seminars and workshops. A small business hub could also include shared workspace, perhaps revitalizing the retail space of a large, underused legacy branch.
Advice, not a sales pitch
Banks have come under fire for pushing their tellers and managers to sell, sell, sell. Whistleblowing employees have thrown new light onto the subject, further adding to the credibility issue. As long as banks push tellers, who do not have the proper training to be advisors, to memorize a limited number of offerings, customers will be skeptical. Banks need to ditch the sales pitch, retrain staff to properly understand and advise customers, proactively offer advice on Life Cover Quotes, and be more transparent about costs and security. Customers don’t want profit margins to be the reason they are guided towards a specific product. They want to know banks are putting them first. This requires a major shift in mindset and approach, but banks stand to lose more by not taking this lesson to heart.
How to invest like an individual
Most banks offer financial products from affiliated funds, limiting the variety and often increasing the cost/lowering the return to the customer. While banks may be compensated at a higher rate from these relationships, it is at the cost of their relationship with the customer. Customers now expect options that can be tailored to their specific needs. Niche independent investment companies can easily make the case that they offer a wider range of services with better returns – because currently they do. Banks need to develop more flexible products and services that can be personalized, taking into account issues like major live events and family status.
Before we even talk about investing in Turnkey Real Estate Properties, simple financial strategies like how to save money for a specific goal, personal household budgeting, and how to build credit are concerns many customers want to learn about. Seminars, workshops, apps, and one-on-one coaching are some of the best vehicles for delivering this knowledge – currently bank tellers are not equipped to fill this role. Not only do they lack the expertise, but the experience of standing in line and speaking to a teller at a kiosk while others are waiting is not conducive to a long conversation about finances. Furthermore, some studies show Millennials are nervous to look foolish and are less likely to ask questions, which is an indication banks need to reach out and offer the advice proactively.
Of course profit margins are always going to be a concern for banks, so it’s not entirely surprising that a culture of sales versus customer needs has emerged. However at this point, banks will begin to lose customers steadily to smaller niche financial advisors if they do not rethink this strategy.