Banks roll with new financial regulations to learn more about their customers

Financial institutions are emphasizing transparency and choice, and trying to learn more about their customers, increase loyalty, and better target their offers in response to newly enacted federal financial regulations.

Credit card industry and financial sector reform legislation has created a number of challenges for banks, from requiring a grace period of at least a year before they can hike interest rates on new credit card customers, to
restricting when overdraft fees can be charged. The regulations mean fewer fees and restrictions for consumers —  and possibly less revenue for banks.

Yet financial institutions are trying to turn these lemons into lemonade by boosting their CRM efforts to better assess customer preferences and interest them in their offerings. Bank of America will roll out programs this month to reward consumers for using certain products such as electronic banking and give them more choices in how they pay for services. 

The First National Bank of Omaha (FNBO), partnered with Cardlytics, a transaction marketing system, to draw on cardholders’ transactional data to give them targeted offers.

“It’s relevant to each recipient; we’re using data to make sure specific customers receive specific messages,” says Michaelynn Rose, marketing officer for FNBO. 

Barclaycard US, which creates customized, co-branded credit card programs for a range of travel, entertainment, retail and financial companies, began using transactional data in its offers, and it gleans information about customer preferences through online panels. 

“The discussion might be about product feature functionality or it might be about an issue that we see recurring with our customers that we want to understand, but our strength has been in mining that customer data,” says Michelle Bottomley, CMO of Barclaycard US. 

She adds that the company has turned the federal government’s calls for transparency into an opportunity to emphasize simplicity in its customer-facing communications, particularly through Barclaycard’s website. 

“We’ve spent a lot of energy making that available so the customer has control, and they can get the answers they are looking for,” she says. 

Mark Beausoleil, director of sales and service for New York Community Bank, says his financial institution has embraced this type of customer relations strategy not only to spot cross-selling opportunities, but also to strengthen the sense of loyalty between the bank and its customers. 

“This regulation came because the government and the customers didn’t trust some of the banks, but it permeated to all banks,” he says. “That relationship between bankers and customers at the local level is, to me, something that’s very different. That’s a relationship that in my mind that is still important.”

Many banks are also seeking new ways to cross-sell when interacting with consumers, making offers for customers’ current purchasing preferences as well as their possible future needs. Many financial institutions, however, still must make more basic improvements in their customer relationship tactics, says Mark Nystuen, principal at The Kineo Group, a financial marketing consultancy, adding that financial firms should contact parents about saving for college tuition earlier, or tap into current interest in do-it-yourself home projects.

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