Today's market conditions are coming to a head and forcing retail financial service providers – such as banks, card issuers, and wealth managers – to ask themselves whether they are truly solving for the customer.
The sustained high-rate environment, inflation and impending supervisory guidance are driving net interest margin pressure, constricting fee revenue, and eroding credit performance. While the largest banks benefited from the "flight to safety" following this year’s bank failures, the industry finds itself increasingly competing with merchants and tech companies that are playing by different rules.
As bottom-line pressures mount and "innovation for innovation's sake" becomes a mantra of the past, banks are being asked to invest in their digital capabilities more strategically than ever. Finally, customers are setting higher "ethical" and social standards for institutions, while loyalty continues to decline in today's product-saturated world.
Key industry questions from top leaders this quarter
For many, truly being "customer centric" while still balancing the needs of shareholders, employees, and regulators may feel like chasing an ever-moving goal post. As the industry adapts to meet the demands of this evolving landscape, here are 10 questions we've heard from our clients this quarter.
1. Relationship growth in a time of interest rate hikes
How can we grow enduring, primary, sticky relationships in a time of market turmoil and high rates?
How can we ensure our value propositions are specific enough for our customers’ needs, while remaining attractive enough to drive broad acquisition?
2. Turbo-charging financial advisor recruiting
What is the best way to turbo-charge financial advisor recruiting and retention effectiveness?
How can we assess the long-term value of a new team of advisors?
3. Connected commerce
How can I engage my customers and keep them within my digital footprint through offerings in shopping, dining, and travel?
Can I assemble a connected commerce ecosystem without the budget of a GSIB?
Should I prioritize the channel or the product first?
4. End to end credit optimization
How can we optimize our end-to-end credit processes, from prospecting to funding?
What infrastructure, process improvements, technology or analytics can we use to improve customer experience, efficiency, and credit performance?
5. Debit Issuer Interchange regulatory changes
What are the implications of the Fed's proposed updates to the regulated debit issuer interchange standards?
What are the specific actions that issuers, merchants and processors should take?
6. Partnership ecosystem
Given the numerous partnerships required to facilitate our business, what is our overall ecosystem strategy?
How can we drive both efficiency in our partnerships and identify methods to be more strategic?
7. Deposit pricing and growth
How should I price my deposits to stem attrition, protect NIM, and deliver value to rate sensitive customers?
How can I gain sufficient knowledge about my customers to accurately characterize my deposits and be able to act with precision?
8. Tech modernization and digital journey
How should I strategize technology investments over the next 3-5 years?
What areas should I prioritize and which trade-offs are worthwhile (e.g., front-end channels vs. more foundational work, efficiency vs. more forward-looking technology)?
9. Preparing for the quickly evolving regulatory landscape
How can we adapt to the rapidly evolving regulatory landscape?
How can we not only prepare for increased scrutiny (around fee practices, CRA modernization, CFPB 1071, etc.) but also strategically utilize these changes to create a competitive advantage?
10. Bank mergers and acquisitions (M&A)
How can banks contemplating M&A increase their odds of success?
For acquirers, how can we prepare our balance sheet, identify the right targets, and ensure a smooth integration?
For potential target banks, how can we position ourselves well amongst the pack?