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Looking Out for Customers' Financial Well-Being Is Table Stakes for Banks
Blog

Looking Out for Customers' Financial Well-Being Is Table Stakes for Banks

by Beth Youra

This post is part of Gallup's ongoing series on the shifting landscape for financial institutions. It provides insights into channel optimization, emerging customer behaviors and preferences, product penetration and relationship growth, engaging the most critical affluent and business customers, and reshaping banks' overall value proposition.

A colleague recently asked me why I always say that the most important aspect of the banking-customer relationship is demonstrating an interest in improving the customer's financial well-being. He made good points about this being difficult for banks to do and seeming more like an outcome metric than a starting point. While I could see where he was coming from, the more I thought about it, the more strongly I felt that financial well-being should be a cornerstone of every bank-customer relationship. Our research shows that 36% of customers feel that their bank is looking out for their financial well-being. That percentage should be higher for one major reason -- "demonstrating an interest in improving the customer's financial well-being" is strongly tied to customers' confidence and engagement with their primary bank and therefore to the bank's bottom line.

Confidence is the first building block of customer engagement. As we previously discussed, "demonstrating an interest in improving the customer's financial well-being" is the biggest driver of consumers' confidence in their banks. Customers who say their bank looks out for their financial well-being are also much more likely to be fully engaged with their bank, leading to better financial outcomes for their bank. In terms of more lucrative services, these customers have a 13% higher penetration in credit products and a 22% higher penetration in investment, insurance, or advisory products.


Customers who feel that their bank looks out for their financial well-being are also more likely to "strongly agree" that their bank is the only company they need to meet their financial needs and that they will use it for the rest of their lives.


So yes, looking out for customer's financial well-being can be a difficult, but not impossible, goal. But in terms of long-term growth of a bank's bottom line, it is also absolutely necessary.


Gallup https://news.gallup.com/opinion/gallup/176534/looking-customers-financial-table-stakes-banks.aspx
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