Banks Revenue Challenges

At the Smarter Way we are normally focusing on the lack of true customer centricity by companies in general, discussing, analysing the importance of knowing customers and prospects, in order to improve loyalty and the return from customers. And presenting tools to clients to deliver them.

We still see, in various meetings and events around the world, a focus on products first and later on channels, concerning how to deploy seamlessly across the various channels and in an effective way.

But very little about the customers. And unfortunately, the main efforts towards customers are limited to creating empathy, with very little towards the identification of customers problems, issues, dreams and to building the respective solutions. Yes, we do have technology today to do it, but very few companies use it. Meaning very few companies invest in knowing its customers and building solutions based on such.

Today more than ever, if big banks want to continue delivering their current results, they now need to start what we mentioned above. And the urgency in doing the above is due to the current challenges to generating value.

Many banks across the world, and mainly in developing countries, have an important share of its revenues based on fees, charges on day to day transactions, payments, account opening and bureaucratic procedures, that nowadays are challenged by new entrants with a much smaller cost base and by new rules and legislations imposed by local regulators, extinguishing fees or reducing the price of them.

On top of that there is the challenge on float revenues and treasury arbitration due to the downward trend of interest base rate across the globe, exacerbated by the stimulus after Covid-19, with rates very low or negative.

Traditional banks can’t control all of these challenges to avoid losing sustainable revenues. Some may think that they can buy the new digital competitors or partner with others to mitigate revenue loss. But there’s a feeding frenzy on banks’ revenue streams starting and just too many to buy or partner with. They’re just postponing irretrievable revenue loss.

But they can protect and rebuild revenue streams based upon the competitive advantage they currently have: customer data. Using such data to create knowledge and build solutions that are perceived by customers as added value ones and replacing the traditional streams of revenues.