See how BCG used consumer research and a unique “branch lab” pilot to improve a financial institution’s product offering.
BankCo is a major U.S. financial institution with a historical focus on traditional financial services products such as checking and savings accounts and home equity loans. It was the number one player in many markets, having established its position largely through mergers and acquisitions.
However, BankCo was faced with increased competition from new, more innovative players that were offering extended hours, more inviting retail-store branch layouts, and more innovative services. In addition, BankCo was suffering from low customer satisfaction and retention rates, low employee morale, and low share-of-wallet among its existing customers.
BCG partnered with BankCo to help it develop a strategy to increase profitability through a new, tailored mass-market financial services offering.
We conducted many one-on-one, in-home interviews with customers to discuss ways in which they interact with and use financial services. We asked them to share with us their financial concerns, their unmet banking needs, and what they would most like to get from a financial services provider.
In addition to traditional interview techniques, we also used more creative approaches, such as asking interviewees to develop collages representing how they viewed BankCo’s brand. We also conducted what we call “wallet audits,” to learn what products our interviewees already owned and to get a firsthand understanding of the decision-making processes used to select those products.
We then analyzed our findings to gain an in-depth understanding of consumer segments based on attitude, emotion, and preference. From this, we developed new potential mass-market products. These products were then further refined and prioritized through more targeted focus-group discussions.
Operational procedures for the most attractive of these potential new mass-market products were then brought into play: bank selling processes were restructured, product offerings were adapted, and tracking tools were created.
BankCo then “road-tested” these products by putting them to the test through what it called its branch lab approach. The branch lab provided a collaborative and dynamic structure in which, for example, branch staff were actively involved in the development of the pilot program and were encouraged to experiment with, and be active participants in, strategy refinement.
Also, a strategy team subset was based at the branch lab to work closely with staff. Progress was reviewed daily and then weekly, a move away from the traditional monthly and quarterly review cycles.
BCG worked closely with BankCo to execute this new strategy, introducing a change management program to help align retail operations with the new branding and value proposition.
BankCo experienced significant impact from its branch lab pilot.
For instance, consumer share-of-wallet—among top-priority consumers invited to review the new targeted cross-sell process—increased by 15 percent. In addition, BankCo saw an increase in identified business opportunities and referrals and an increase in its customer retention scores.
One year after the project’s completion, the company saw 10 percent growth in total deposits. Further, it was estimated—based on projected pilot results—that the branch lab pilot program would create a net present value of $400 million.