5 Ways Commercial Banks Lose
When They Don't Innovate

Business as usual is no longer
sustainable for commercial banks.

Clients expect seamless, one-click service and are frustrated by cookie-cutter offerings. Forward-looking leaders know they must invest in innovation to deliver streamlined, personalized services while modernizing the internal culture.

But making those changes isn't easy. Outdated technology, cost pressures and regulatory complexity are all formidable obstacles that can derail the process.

What happens to banks that don't innovate?

They will become less relevant as they miss out on these opportunities:

Revenue
growth
Wider
margins
Retaining
top talent
More market
share
High-value
insights

#1 Revenue growth

Non-interest income is growing at commercial banks, while interest income is declining — so a core source of revenue is eroding.¹ Innovative technologies are available that can help banks protect and grow sales.

Use data analytics and insights for more effective sales processes
Develop digital channels to deliver personalized services
Free relationship managers (RMs) from administrative tasks so they can spend more time with clients

Increasingly, clients select banking partners based on the ease of doing business and on digital capabilities — which are closely linked.²

66%

Commercial bank execs who believe CX provides a potential competitive advantage

38%

Average increase in time that RMs spend on
non-client-facing activities³

#2 Wider margins

Limiting opportunity limits profits. Commercial banks that compete solely on rate are in a race to the bottom.

By offering more targeted services, banks can capture more new business and build better client relationships, while also maximizing profits.

Innovation is key. Data-driving insights can widen the window of opportunity, so banks can meet clients where they are, while also growing the relationship.

It's really hard to differentiate. Spreads are narrowing, structures have been loosened. So what can we bring to the client at this point in the cycle?⁴
— Commercial Banking Executive

#3 Retaining top talent

Today's RMs are mired in administrative drudgery and service work, forced to make do with inefficient technology. Keep top performers engaged and empower them to grow revenue with digital innovations that support client interactions — such as tools to create unique products tailored to clients’ needs.⁵

The most innovative banks invest in tools that also support sales processes — for example, better lead identification capabilities — so RMs can have a greater impact on the bottom line.⁶

4 OUT
OF 5

finance executives believe that when it comes to culture and talent, they are only somewhat or minimally equipped for the digital age.⁷

#4 More market share

Loyalty is softening among commercial banking clients. Clients and prospects are defecting to providers with the most streamlined user experiences, the fastest response times and the most relevant services. Commercial banks that can't keep up will continue to lose market share, not just to fintechs but also to more nimble competitors.

Recent decline in client satisfaction

Commercial banks underwhelm expectations, reversing
years of growing client satisfaction.⁸

#5 High-value insights

LESS
THAN 15%

of commercial banks have mature data analytics and data management strategies that are regularly used to make business decisions.⁹

Commercial banks don't need more data. They need to improve their ability to apply data-driven intelligence across the organization.

Actionable business insights — when delivered to the right person in the right place at the right time — are what close the favorable deals and cross-sell services that boost the bank's bottom line. Equipping RMs with the insights that lead to better conversations and better deals makes a tangible difference. It also builds a better brand for the bank over the long term.

Don't miss out

Digital innovation is not just possible, it's essential. Learn more about the kinds of innovation initiatives that yield the best results: Download our eBook, Flip the Formula: How Top Banks Innovate to Win.

Start Innovating

Sources

1. "Window on the Future," CEB (Gartner), Feb. 15, 2018.

2. "Banking in the Age of Consumerized Digital Expectations," Greenwich Associates.

3. "Unleashing Sales Enablement: The Unexpected Supports That Best Drive Bank Revenue," CEB (Gartner), 2017.

4. "Window on the Future," CEB (Gartner), Feb. 15, 2018.

5. "Unleashing Sales Enablement: The Unexpected Supports That Best Drive Bank Revenue," CEB (Gartner), 2017.

6. Ibid.

7. "The Future of Fintech and Banking: Digitally Disrupted or Reimagined?" Accenture, 2015.

8. "Banking in the Age of Consumerized Digital Expectations," Greenwich Associates.

9. "Unleashing Sales Enablement: The Unexpected Supports That Best Drive Bank Revenue," CEB (Gartner), 2017.