Delivering Value through Product Bundling for Banking
Banks have been pushed to adopt new technologies, including mobile banking and other relevant technologies, and in the past have sometimes opted to push out new offerings without reflecting on what the change in banking channel access means about the service itself.
For example, more customers today use internet banking than at any time previously. One might conclude from this that the independence fostered by the use of the channel, ie., ‘I can pay my bills online without any help,’ is reflective of the individual in terms of his or her own financial literacy. This of course is not the case. A new client might be an expert in social media marketing and might want to interact with a bank in these new media; however that does not mean they are going to be able to apply for the right mortgage online, understand all the various terms and commitments, choose appropriately, and then borrow money and buy a home. While this summarizes the bare bones of a complicated transaction, there is of course more to it in the mind of first-time home buyer.
What this suggests is that banks and financial institutions need to focus on increasing the value they provide to each customer. Online banking and new methods of interacting with the bank are valuable but they are not reasons why we need banks. We need banks because we all want more from life and are not always sure how to get it, financially speaking. Questions like these are often what are rattling around in our heads:
Do I have the right portfolio mix if I want to retire in 5 years? Can I pay less interest by consolidating these loans? What is the best credit card for me?
If banks focus on delivering the right product to the right customer at the right time, tools that enable relationship pricing, product creation and bundling, will help banks manage margins and remain both profitable and relevant.