Customer centricity: the essential driver of growth, powering both organic expansion and the successful integration of acquired platforms.
Small is beautiful, as the old saying has it, but it doesn’t hold true where financial services are concerned. Here in Australia and around the world, small and mid-sized banks are under pressure to contain costs while meeting ever-evolving – and increasing! – customer expectations.
Merging with, or acquiring, complementary businesses, coupled with energetic organic growth, are the strategies commonly adopted to achieve these ends and it’s likely there’ll be further announcements in this space in the next 12 months.
‘Heightened competitive pressures, increasing commoditisation of banking products, and the need to realise scale benefits to meet digitisation, funding and compliance demands’ have led to a wave of consolidations in the mutual banking sector, Minter Ellison partners Siobhan Doherty and Haydn Flack observed in a November 2024 Insight.
‘Small and medium authorised deposit-taking institutions in particular are grappling with increased competition from alternative (often digital) financial services providers and the rising cost of doing business, driven by regulatory compliance and technology costs and the increasing ease by which customers can change between products,’ they noted.
To truly thrive, banks must address the limitations of legacy systems, embracing transformative solutions that not only enhance digital capabilities but also pave the way for sustainable, long-term expansion.
Coming together successfully
Bringing complementary or competitor organisations together successfully is no simple undertaking. Cautionary tales abound, of brands and businesses that have bungled it; expending large sums on a merger or acquisition, only to experience a high volume of customer churn as the two enterprises are blended.
Delivering consistently excellent customer experience is the surest way for banks and financial services providers to mitigate this risk and maximise the benefits of consolidation.
In today’s digital-first banking world, that hinges on the provision of finance facilities that address customers’ requirements, along with flexible, secure services that allow them to engage with the institution, whenever and however they choose.
Forward thinking operators also need to focus on identifying ways to create new revenue streams, as the personal and business banking landscapes continue to evolve.
Struggling to deliver stand-out service
There’s a lot for leadership and ICT teams to contend with, and it’s little surprise many institutions fail to make a good fist of it.
Providers that fall down on the CX front, in the wake of a consolidation exercise, typically do so because they haven’t developed a workable strategy for integrating the programs and data that underpin their services into a seamlessly integrated software eco-system.
Instead, they’ll pursue a piecemeal strategy; stitching standalone solutions together in the hope of developing a solid foundation for their blended operations.
All too often, disjointed, sub-par customer journeys are the result. These can lead to dissatisfaction, followed by defection to competitor organisations that are more responsive to customers’ needs and wants.
Beyond the allure of mergers and acquisitions, the strategic imperative lies in cultivating organic growth. This demands a relentless focus on digital innovation, the crafting of hyper-personalised customer journeys, and the implementation of agile, future-proof technology.
Becoming bigger and better in 2025
In today’s ultra-competitive financial services landscape, keeping the customer satisfied is an imperative for providers of all stripes and sizes. Joining forces will be the means by which smaller players seek to achieve this end in FY2026.
Customer-centricity is paramount. Organisational capabilities and strategic approaches that empower banks to maintain a strong customer focus during periods of change are essential for adapting, competing effectively, and achieving long-term success in a dynamic and competitive market.