Banks Need to Become Financial Advisers, Not Product Pushers

Jim Dellavilla  |  Chief Client Officer

September 16, 2016


Ever noticed that most banks don’t talk to customers proactively? Banks have a history of communicating reactively. They’ll send out notices about financial issues or the occasional upsell offer … but they rarely attempt to communicate with customers on the issues that matter most to customers.

Providing educational information before customers need it creates a great deal of trust: It shows that you have your customers’ best interests at heart. And because information is more accessible than ever, banks need to adapt … now. Other industries use content marketing to position themselves as trusted experts … so why don’t banks?

At Catalyst, we recently conducted research on what checking account customers were thinking, doing and feeling as they contemplated opening a new checking account. Over and over, we heard the refrain: “My bank never talks to me.”

This is a serious oversight. Let’s dissect the reasons why.

First of all, let’s be honest. Checking accounts are parity products. You can give them cool names or up the ante for switching, but the fact remains: In the eyes of the customer, there’s very little difference between products. The #1 reason why people open a checking account is because they’ve moved and their bank doesn’t have a branch nearby. (The number two reason is because they feel unappreciated by their current bank.) So how can banks compete in this environment?

Creating value through education is one way. Investment companies and brokerage houses are eating your lunch in this arena. To stay competitive, banks need to transform their communications … they need to communicate with customers regularly and in different ways. They need to educate customers on the whys and the hows of their finances, not just the whats. Banks need to become trusted financial education advisers. Consumers are begging for knowledge in areas they’re not expert in – investments, HELOCs, loans, etc. — not product info, but advice.

  1. HELOCs – tell them why they should get a HELOC, who should apply for them, and suggest the best ways to use the funds to their advantage.
  2. Retirement – banks are missing a serious opportunity here, given our aging population. People are not prepared for retirement and they crave education about it. Talk to them about the differences between qualified and nonqualified retirement plans. Educate them about annuities and when they should be considered. You sell these products; why aren’t you showing people when to use them?
  3. Investments – younger audiences may not recognize the finer points of smart investing, such as avoiding front-loaded funds or brokerage accounts that charge high commission rates. They may not understand the implications of the underlying investments in a mutual fund. You will build trust and loyalty by teaching them what’s important and what to watch out for in their specific situation.
  4. Loans – college websites often steer students and parents toward government-sponsored loan programs that may or may not offer rates as good as yours. If you have competitive student loan products, why not start educating students and parents about the best time to take out a student loan … before they actually need one?
  5. Mortgages – should customers consider a fixed or variable rate? Why? Would a reverse mortgage be their best option and, if so, when?

Proactive communication with your customers through education and nurturing will earn you a consumer’s trust, gratitude, loyalty, and more business. If you are looking to differentiate yourself from the competition … become the resource that educates and informs customers proactively. Do it. No excuses.

Jim Dellavilla |  Chief Client Officer
As CCO, Jim directs strategy for all of Catalyst’s accounts. This Siena College grad has spent time on both sides of the fence – on the client side at Chase Manhattan Bank and on the agency side as a manager/director of all client relationship teams at Sigma Marketing.

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