Consumer intelligence is an invaluable asset for any business and retail banking is no exception. The real value however, is not just in monitoring customer behavior but also in understanding how customer behavior translates to profitability. Banks therefore need to find ways to incorporate strong consumer intelligence into their strategy.
The democratization of power to the customer has created a new era in retail banking. Customers are more dynamic, technologically savvy, know what they want, and therefore are more particular about their needs and expect banks to deliver increasingly higher quality products and services. The need to leverage on organizations with the capability to provide meaningful intelligence and insights to the changing market economics has become more critical.
Failing to satisfy customer needs today leads to a loss of credibility for banks with the repercussions in the industry being endless, from loss of market share to a decline in investor confidence. The economic times show that failure to understand the profitability of customer segments could render institutions irrelevant.
The Evolving Needs of Nigeria’s Retail Bank Customers
The economic climate of 2016 was one of the most challenging experienced by the Nigerian retail banking industry. The Central Bank of Nigeria (CBN) reported a 158% increase in nonperforming loans from N649.63 billion in December 2015, to N1.678 trillion in June 2016.
One of the major causes has been attributed to the unavailability of foreign currency in the market. Financial experts explained that bank revenues were constrained by businesses not being able to access foreign exchange for import activities. All these challenges affected the cost of funds and bank deposits, with inflation rates rising to 18.44% in November 2016. Nigerian banks were challenged to not fail, employing different strategies to prevail.
Nonetheless, the difficulty of the terrain did not stop innovation and new entrants into the industry, as there was an increase in specialization and the offering of targeted financial solutions. Nigeria had its first Fintech bank established, reinforcing the threat of disruptive financial service providers in the industry. For the first time, executives of 17 different retail banks came together to deliberate on the future of their sector. The consolidated workshop revealed banks to be more open to a collaborative future for the industry. In the course of the discourse, the main need identified for the retail banking future was access to credible market intelligence.
The banking landscape has become more competitive, as specific demographic segments are increasingly targeted. Banks’ ability to understand profitable consumer behaviors and take advantage of opportunities identified would therefore offer a competitive advantage. This explains the need for understanding the perception of the retail banking industry by customers. As the most critical stakeholder in the retail banking industry, a bank’s attention and response to customer insights has the potential to define its future.
