LAS VEGAS, Nov. 14 /PRNewswire/ -- Financial services institutions
acknowledge the importance of organic growth to attract and retain
customers in theory, but are finding it difficult to implement processes
and strategies to foster such growth, this according to a report released
today by PA Consulting Group at the BAI Retail Delivery Conference in Las
"Recognizing the importance of organic growth and the challenges banks
have had in achieving it, we surveyed banks in a range of sizes to
understand both current practices, best practices and areas for
improvement," said David Wagstaff, a senior consultant in PA Consulting
Group's Financial Services Practice. "The study seeks to understand both
how institutions currently acquire customers including tools used and where
banks place emphasis."
In a survey of 42 financial services institutions in the US and Canada
with an average size of about $30 billion in assets, PA found that while
98% of respondents stated that organic growth is a top-five strategic
priority, 49% claim that they have not been successful or have found
moderate success in filling the gaps between setting goals and executing.
The research found that while financial institutions are struggling to
develop best practices to foster organic growth, they do recognize that the
customer experience is paramount in the development of strong, long-term
relationships. Respondents placed a heavy emphasis on service quality (94%)
and customer satisfaction (85%) as important growth factors. When asked how
they seek to ensure quality and customer satisfaction, 61% cite setting and
reaching customer satisfaction targets, 27% have set targets for employee
satisfaction, and 55% find surveys as an valuable tool to acquire important
information directly from their customers.
Ironically, while a majority claim to value customer surveys as a means
to gather intelligence on their client base, more than half of those
surveyed do not collect any information from customers when they close
their accounts. This may be a key factor in why banks tend to struggle to
grow organically as understanding why customers leave will help financial
institutions gear strategies to attract and retain more customers,
including re-gaining lost consumers.
The report also uncovered a correlation between the size of a financial
institution, in assets, and the likelihood that it will adopt analytic
tools such as customer segmentation and predictive models to achieve
profitable growth. While less that 50% of all of the banks surveyed
currently use customer segmentation and predictive modeling, the number of
respondents who use predictive modeling jumps from less than 10% for banks
with less than $1 billion in assets, to approximately 35% of banks with
between $1 billion and $5 billion in assets, to 43% of banks with greater
than $5 billion in assets. Furthermore, every bank surveyed that has more
than $200 billion in assets reported using both predictive models and
customer segmentation as a strategy for achieving profitable growth.
According to Wagstaff, "Over the past years banks have aggressively
sought to expand by acquiring other institutions and by growing branches.
Increasingly, banks are finding challenges with both of these strategies.
Acquisitions, while still popular, often do not produce long term
shareholder value. For example, as the number of banks in the U.S. has
decreased, the number of branches has increased from 54,000 in 1994 to over
69,000 in 2006. This increase in the number of branches has meant more
bankers chasing existing customers and thereby increasing the expense of
"Given these challenges, smart strategies such as using technologies
like predictive analytics seem to be rising in importance."
Note: Attendees of the BAI Retail Delivery Conference can visit PA
Consulting Group at booth #2515 for a presentation of the survey findings
and analysis on Wednesday, November 14.
About PA Consulting Group
At PA Consulting Group, we transform the performance of organisations,
providing clients with innovative solutions, a highly responsive approach,
and delivery of hard results. We are an independent, employee-owned, global
firm of 3,000 talented individuals, operating from offices across the
world, in Europe, North America, Latin America, Asia and Oceania. We have
deep expertise across key industries and government, and a unique breadth
of skills from strategy to IT to HR to applied technology.
SOURCE PA Consulting Group