Retail banking sales strategies to increase bank profitability

How retail banks make money is always changing. As a recent Deloitte report puts it, “banks’ ability to generate income and manage costs will be tested in new ways.”

This is because traditional approaches to revenue generation fall short as customer behaviors and expectations change in response to the geopolitical climate and technological progress.

Take loans, for example. Deloitte predicts that loan growth will be modest in the short term due to high borrowing costs and restrictive lending policies. The report claims that banks have tightened credit standards across all product categories and are predicting this trend to continue.

But the prognosis isn’t all doom and gloom for banks looking to drive revenue growth. There just needs to be increased emphasis on non-traditional approaches to increasing the conversion rate.

In fact, an Accenture study predicts that “the share of revenue of traditional banking products such as auto lending, consumer finance and mortgages that are sold through non-banking channels will increase by three to five percentage points by 2052.”

To put it another way, there is a wealth of opportunity out there for traditional banks that want to increase revenue – provided they embrace new methods. So, what are some approaches that banks can take to increase conversion rates among their current customer base?

A more diverse product offering

Increased competition from fintech companies and neobanks means that incumbent institutions must look into diversifying their product offerings. For many traditional banks, this means embracing the trend of industry convergence and partnering with third party providers to offer a wide range of options.

The Accenture study of 36 banks cited above found that their non-financial services ventures differ across markets, in accordance with customer preference. In Europe, for example, banks are focusing on mobility services, which includes toll payments, car sales, and car rentals. Latin America and the Asia Pacific region, however, have opted to focus on e-commerce services, mostly for customer goods. In North America, the golden egg appears to be home buying referrals to partners such as real-estate agents.

However, these types of products aren’t usually sold through core banking platforms. In total, 60% of the sales are made through other channels, mainly a third-party website that isn’t integrated with the mobile app.

Incorporating upsells into service support

But that’s not to say that a bank’s digital channels are ineffective in encouraging customer sales. The low uptake in product purchases from a banking app are often due to the strategy the bank employs, rather than customers’ willingness to use these channels.

The majority of bank enquiries using digital channels are of a service nature, rather than a sales one. In a retail banking context, sales agents are trained to bring the customer issue to a speedy resolution and let the customer go.

Deflecting low-value inquiries

In many cases, this is the correct approach as a customer with a simple query is unlikely to be receptive to further product purchases. These queries should, where possible, be directed to self-service channels, such as Artificial Intelligence chatbot technology.

This is what the Prague-based bank Raiffeisenbank tried to do, incorporating digital interaction software into their service channels to offload the strain on traditional phone calls.

Identifying conversion opportunities

However, Raiffeisenbank had more in mind than simply improving their service experience. The bank knew that within the storm of service calls there were opportunities for new conversions or upsells.

The question is – how do you identify them?

Leveraging labels

Identifying customer potential comes down to organization, with customer labeling being a key feature in this. Customer labeling is an easy way to track upsell potential when talking to individuals, made possible through interaction management software hubs.

Likewise, customers with specific labels can be targeted with information that might be of interest to them, via outbound messaging features like broadcasting.

Service-to-sale offers

The specific approach that Raiffeisenbank took was to use next-best offer campaigns and service-to-sale offerings to gain insights about the customer’s interests. After a successful interaction and based on these insights from the CRM, the service agents were trained to recommend products that may be useful to the customer.

In tandem with this, the bank also displayed and prioritized the Live Chat channel on high purchase intent pages on the website to encourage more customer interactions and create opportunities.

This key strategy worked, with an average of 6,400 conversations showing the potential to lead to a new upsell conversion out of 12,000. In August 2022, this resulted in 320 new deals, representing a 5% rate – which increased to 8% the following September.

Most importantly of all, this experiment validated the fact that customers really are willing to conduct business over digital channels, provided they are given the opportunity to do so.

Bringing back the bank branch

Bank branches are often dismissed as relics of the past, given the ever-increasing popularity of digital banking and mobile banking. It’s true that most retail banks have reported branch closures in recent years, with a 20% reduction in physical locations since 2017.

The Swiss bank Valiant was no different, recording a fall of personal assisted transactions by 35% from 2014 to 2017. By 2016, with over half of the branches open for just three hours a day, the bank had to make the decision to close much of their network or take another approach.

The hybrid branch

Valiant decided to go for an innovative option, trusting that physical branches do still have an important role to play in local communities. Instead of closing branches, they decided to expand branch locations but following a hybrid approach.

With lower operating costs and longer opening hours (moving from three to ten hours a day) the individual branches are now financially viable. Given this, Valiant was able to expand the branch network to new locations – which now account for 50% of the bank’s revenue.

Profit through customer experience 

The banking industry thrives when customer satisfaction is high and retail banking customers from all target markets are willing to make purchases.

Make no mistake – a retail bank’s customer base represents a wealth of opportunity. But what they expect has changed. Now, with online banking so popular, retail banks need to do more to offer the financial products that they want on the channels of their choice. 

Whether through online channels or in person, retail banks must find new sales practices that echo consumer behavior and appeal to your client base. 

At Unblu, we offer financial industry communication platforms that help retail banks to connect with their target customers, whether they are mobile-first customers or in-person ones. By providing superior customer service and exceptional customer experience at all stages of the customer journey, we help banks to improve customer retention and drive sales.