The Era of "Big Banks" is Over!

by BobMccarron on June 9, 2010

Bob McCarron

Bob McCarron

This may be a bit of an overstatement, but certainly the era of big bank growth through acquiring other banks is over.

Why is this?  Because the U.S. government has decided that they’ve had enough of the “too big to fail” syndrome.  Actually, there has been legislation in place since 1994, The Riegle-Neal Banking and Branching Efficiency Act.  So if you can’t grow your business through acquisition, how are big banks going to hit their growth targets? An ideal place to begin is with their existing customer base.  Building deeper relationships with existing customers through the introduction of additional financial products is not a new concept.  However, the big banks are doing a horrible job at developing the one thing that makes cross-selling possible:  customer advocacy.

According to Forrester Research, the strongest driver of real loyalty is customer advocacy:  the perception that the bank does what’s best for its customers, not just what’s best for the bank’s own bottom line.

The higher a bank scores on customer advocacy surveys, the more likely its customers are to purchase additional products from them.  According to Forrester’s North American Technographics surveys, 2005-2009, the big banks are not scoring well:

Wells Fargo, the top bank in the survey, only had 40% of its customers rating the bank high on customer advocacy.  Citigroup only had 26%.  As a whole, the 10 largest U.S. banks averaged 33%.  Compare that to 70% of Credit Union customers and 58% of Local, Community and Small Regional bank customers and you can see that the big banks have a lot of work to do.

Walking the walk vs. talking the talk:  All the marketing strategies in the world won’t convince a customer that a bank cares unless that bank does the little things that demonstrate they value the relationship. Some examples of the little things:

  1. Making it easy to do business with the bank – One-call problem resolution, remote deposit capture
  2. Trustworthiness – Honoring promises, doing what is right by the client
  3. Transparency – Easy-to-understand fee schedules and statements

These principles apply across the board to all customers.  Using marketing analytics to focus on those customers most likely to purchase additional products and services in order to maximize sales resources is a discussion for another day.


The Riedge-Neal Banking and Branching Efficiency Act

Big US Banks Now Have Just One Way To Grow (Forrester)

About the Author:

Bob McCarron serves as SIGMA Marketing Group’s Financial Services and Insurance Practice Leader.  Connect with Bob on , or follow him on .

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