Journal Article

Converging trends for financial services

Utterback, Terry

1997

Overview

Headlines about the financial services industry tell us that we are in the midst of a huge wave of consolidation. Press reports about mergers, hostile takeovers and various forms of deal-making are certainly accurate, but they miss deeper, converging trends in the marketplace. Merger mania will eventually end and financial services providers will have to deal with one central reality: banking is a service business, and it will be the customer who will ultimately decide which institutions succeed or fail to achieve their strategic goals. Customer service and satisfaction have almost been forgotten in the current feeding frenzy to acquire, consolidate and maximize profitability. In fact, while mergers make some banks temporarily more profitable, they may do so at the expense of long-term franchise value with the customer. Staff reductions, automation and branch closures are creating a customer backlash, primarily because there are too few resources allocated to make banking more customer-friendly as it becomes more efficient. There are a number of customer trends which will bring about even greater changes by the time we reach the next century in just three years. What industry professionals should recognize is that these trends may eventually be of greater concern than the current confusion over who owns which bank branches. These trends bear directly on the value of the financial services franchise. They include:

• Publisher: CBJ, L. P
• Subject: Banking industry / Banks / Customer satisfaction / Customer services / Financial institutions / Financial services / Trends