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Retail banking

A new approach to retail banking: the customer experience

Retail customers provide most of the banking sector’s income. Faced with growing competition and the rapid development of banking services, banks in Central Europe have made a number of necessary adjustments to their business models to maintain their ability to generate profits.  In order to retain existing customers and attract new ones, banks must rapidly come to understand and address their needs and expectations.  A broad product range and high quality of services supported by innovation are decisive factors in gaining competitive advantage.  Because these elements are of key importance to customers, they also provide the basis for building customer satisfaction and loyalty.

All banking market players need to undertake aggressive measures to build sustainable competitive advantage based on client satisfaction and loyalty.  Banks will have to face a number of challenges, including growing competition, in both the short and longer terms, resulting from the redefined structure of the market and relationships between banks and their customers.  This will necessitate the redefinition of existing business models. They must, therefore, be able to create new models that provide quality, that offer and sell products and services successfully, and that are perceived as more attractive than those offered by their rapidly growing competitors.

  • How can banks address customer needs while improving their satisfaction and therefore loyalty? 
  • Which channels, products and services can guarantee customer loyalty and improved service quality? 
  • Can we draw any conclusions from the experience of other industries that have significantly improved performance by changing their approach?
  • Have we reached the point where customers can be segmented on the basis of their behaviors and emotions? 
  • How best to approach customers in terms of their personal finance-related behavior?
  • Can the true “single-customer” segment (i.e. a complete system of individualized offers) realistically be implemented in retail banking? 
  • How can banks prepare an offer that addresses the emotional needs of customers?  
  • Can a single bank respond to the emotional needs of different client groups? 
  • How to address the need to be safe, fashionable and admired at the same time? 
  • And how to meet the expectations of people who do not want direct contact with a bank but nonetheless have major banking needs?

New retail banking models

The current performance of banks in the region clearly indicates that the benefits of scale are of crucial importance in gaining competitive advantage.  Many banks that specialize in discrete product groups or  client segments have had to face bigger problems than universal banks.  Those specializing in mortgage banking, consumer finance or that are dedicated to high-end clients have found it harder to post a satisfactory performance. Cold reality has undermined the niche banking models aimed at “perfecting” a single element of the banking offer.  Does this mean a definitive end to specialization in banking?

  • How to build a low-cost bank that can operate effectively within a niche, without the effect of scale? 
  • What niches could such a bank operate in? 
  • How best could they manage the high fixed costs of the banking sector? 
  • Who could be potentially interested in such a project? How to manage such a bank during a recession?

Serving micro-companies

The CE region’s micro-companies generally make little use of bank borrowings. For 20 years of transformation, banks have told them that they are not sufficiently credible to be their business partners, meaning they therefore cannot get sufficient funding.  This has resulted mostly from the banks' inability to reliably measure the risks involved in dealing with these entities.  As significant GDP generators in many CE countries, do they really deserve to be considered unworthy or unimportant?  Banks have much to do in this area, both in terms of their own solutions and educating the market.  After all, convincing the smallest businesses that they are eligible to borrow is not now going to be easy.  

  • How can banks manage the risk of micro-companies? 
  • How can they leverage the potential represented by micro-enterprises to grow the banking sector? 
  • What do micro-companies expect from banks? 
  • What business areas should banks develop in order to meet their expectations?

The Center will carry out surveys among the smallest companies and present solutions that assist financial institutions in designing and implementing innovative strategies to improve service quality, competitiveness and growth.  

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