Few industries have undergone as many disruptive changes as the banking and financial services industry within the past twenty years.  Once an industry that prided itself on predictability, and hidden behind government regulation, each bank had almost identical products, services and brand image.

Things have greatly changed.  The banking and financial services sectors face continuous disruptive change.

New competitors continuously enter the market, offering new solutions with a strong focus on winning over customers.  In addition to disruptive changes driven by competition, industry disruption has also come from technological innovation, economic changes, demographic changes, and consumer expectations.  Few people outside of banking appreciate how much the industry has changed.

Keeping customers and winning new customers requires a strong understanding of what drives customer decision-making in this competitive market.  This understanding can also help your bank reduce its operating costs by reducing the time and mistakes for using your bank’s products and services.

In this short article, we outline some of the main types of research banks and financial services use to understand their markets and gain a competitive advantage.  For each type of research, we provide some examples from our work.


The Research Should Your Bank be Doing

Unlike many other industries, banks can have a very diverse range of customers they need to understand. Banks often need to understand the consumer and business markets.  Depending on your bank’s business model, you may also need to understand their trade channel (advisors, brokers) and stakeholders.

List below are the eight main types of market research undertaken by successful banks and financial service providers are shown below.  This list covers operational and strategic areas and provides insights through understanding how consumers engage with a bank and their broader financial needs.  Depending on your bank’s needs, these research areas can cover consumer, business and trade partners, and some projects may have cross-over.

  1. Path-to-Purchase (Market Behaviour)
  2. Interaction diagnoses
  3. Relationship insights
  4. Brand and communication development
  5. Campaign evaluation and brand tracking
  6. Product development
  7. Service development
  8. Attrition research

Let’s briefly explain how each area delivers actionable insights that can grow your bank and build your brand.


Path-to-Purchase (Market Behaviour)


Understanding what drives consumers to consider, choose or reject your bank is the foundation for evidence-based strategy development.  Path-to-purchase research provides these insights.

Path-to-purchase goes by many names, including usage and attitude (U&A), category research or market profiling research used for segmentation.  At its core is the focus on understanding what triggers banking decision-making and the factors that shape choices.  Path-to-purchase research is often coupled with a brand or product development research, to give broader context to understanding a bank’s brand on market sizing for a product.  This research can also be coupled with customer relationship research to provide an external and internal understanding of your market.

Because path-to-purchase research is foundational, before conducting a large-scale survey, analysis of existing market data and qualitative research is needed to ensure the research uncovers deep insights and not generic market descriptions.

Interaction Diagnoses

Interaction customer research uncovers day-to-day problems banking customers experience.

Each time a customer has contact with you is a ‘moment of truth’.  These are the periods that set expectations and define a customer’s image of a bank.  These moments focus on initial account opening, early account feature use, additional product consideration, and account closing.  Early marketing activity can also be an important time for consumers to learn how their bank will treat them.

Interaction research should focus on being short and diagnosing the presence of issues.  To do this they need to be specific.

Asking Net Promoter Score type questions here will give you superficial results.

Not every engagement is equally important in defining a relationship.  The first step in implementing a feedback system is to map out the customer journey and what access you have to people during that stage.  Qualitative research at this stage will also greatly help know how customers see the journey and when they want to be contacted.

Warning:  Customers can get survey fatigue.  Surveying every point of contact may look great in an internal presentation, but for customers, it is tiring and builds an expectation you are just automating and not listening.

Working with a global bank, we uncovered the core interaction periods, removing some redundant surveys and changing questions to focus on specific events and behaviours. Although happy with the new account sign-up process, we uncovered significant issues leading to abandoned applications when we checked the validation process.   We also implemented a system to protect customers from surveys and communication to avoid engagement fatigue.


Relationship Insights

Relationship customer research uncovers growth opportunities among your bank’s customers.

Relationship Insights oriented research moves from the tactical problem-identification to a strategic perspective.  With relationship insights research, you can uncover the underlying health of your brand, attrition risks, customers’ interest in expanding or narrowing their relationship with cross-sell, customer segments, the impact of customer campaigns, brand engagement, and how you can drive more profitable relationships.

Through a relationship study, we learnt that our banking client’s customers saw them as a way to manage their money away from their main bank and partners.  Over time we helped them convert customers into using them as their main bank.

Relationship banking research takes a broad financial services perspective of your customers.  Large banks may need to reduce the scope breakdown to avoid overly long surveys and delivering only thin insights.

Warning:  Avoid thin insights!  Make sure your focus is on your business areas and not nice to have.

Although doing customer surveys is a common way to understand customer relationships.  Consider also undertaking qualitative research in either the development of your survey or to help dig deeper into areas uncovered in the survey.

Our article on How to Do Customer Research gives a guide on how to get the best from your customer market research.

Brand and Communication Development

Brand and communication research ensures customers and non-customers consider your bank.

In conjunction with path-to-purchase research, brand research provides the core insights into how to get consumers to consider and choose your bank.

The range of research conducted for communications development is broad.  This research can cover the early stages of brand development, competitor and semiotics landscape analysis, through to testing campaigns and specific communication in pre-testing.

Working with a banking client, we used communication research techniques to understand which brand assets – logo, colours, characters, and celebrity – drove brand recognition and how these same assets contribute to brand positioning.

Brand and communication research tends to use qualitative research to gain insight depth for strategy development and clear directions.

Our article on Using Advertising Market Research to Create Effective Advertising explores how to get the best from your market research.

Expert Tip: Go broad and go deep with brand research.  Consider your bank in the context of competitors, not just banks that you see as the most similar.  Go deep by understanding what drives brand perceptions.


Campaign Evaluation and Brand Tracking

Campaign and brand tracking research will help you get ROI from your marketing spend.

Campaign evaluation research needs to reflect the potential impact on your bank.  Focus on campaigns that have a broad reach or heavy investment rather than tactical communication.

How often you need to undertake tracking, and campaign evaluation will reflect your media investment and your competitor’s activity.  For a large banking client that had campaigns running most months across multiple product categories, we ran a continuous tracker.  For a regional bank that mainly spent during the main home sale period in spring, we ran pre and post-campaign evaluations.

Warning:  Don’t use campaign evaluation for communication development.

Our article on Seven Ways To Get The Best From Your Brand Tracking will provide you with practical tips on how your bank can benefit from this important type of research.


Product and Service Development

Product and service development research delivers insights for successful launches and business growth.

Once product and service development were separate areas with different teams.  Increasingly banks and financial service providers see the opportunity to think of the service they provide as part of the product.  Banks are differentiating standard products like savings and transaction accounts to have features that greatly benefit customers in their day-to-day lives to achieve broader personal goals.

Using principles from design thinking, product and service design research can start at the broad level of understanding what consumers want and the frustrations they face in solving those problems with your products, to understanding the relative value of different features.

Because product and service development research can have long-term profit implications, we use a wide range of techniques to understand the product’s actual value and features.  For a start-up Fintech client who was offering a new investment product, we used Kano Analysis to understand which features were must-haves, those that were nice to have, and those that were irrelevant and down margin.

Whether using agile, stage gate, waterfall or another management approach, product and service development research uses a combination of qualitative and quantitative research approaches.  More embryonic concepts should use qualitative research, while concepts that are being fine-tuned and require market sizing should use a more quantitative framework for projecting potential uptake.

Expert Tip: Make sure you have a clear idea of the product’s purpose for the customers and your business.   


Attrition Research

Attrition research is very important in uncovering areas for improvement and is missed or poorly done.  Understanding why customers leave your bank is critical.  Also critical is mapping the trends in reasons for leaving and uncovering reasons for trends.

Some reasons may appear to be out of your control, like paying off a mortgage or changes in personal circumstances.  By understanding the reasons for attrition, you are better positioned to develop strategies to reduce overall attrition from your bank.  Some reasons attrition may also be turned to your advantage.

A banking client noticed that it was losing many of its younger customers.  After conducting qualitative research, we discovered the main reason for attrition among the segment was marriage.  Couples were consolidating their accounts. A follow-up study helped identify ways that we could become the preferred account for couples and a marketing campaign that targeted competitors’ couples so that we would grow from their attrition.

Attrition research can be undertaken like a transaction survey, with a short survey triggered when an account is closed or becomes inactive.  However, the research should also reflect the type of account and customer value.


Other Types of Bank and Financial Service Research

Banks and financial service businesses cover a wide range of business models and market positions.  The above list covers just the main types of research this business regularly undertakes and areas we work with clients.  However, there are other types of projects we have undertaken for clients that reflect different needs.

What type of insights and market research is most relevant to your business will reflect your mission and market.  What is common across all banks and financial service providers is that those businesses that use insights to develop evidence-based strategies and refine their offering from actionable customer feedback are more successful and more respected by their customers.


Where to next . . .

With over twenty years of experience in banking and financial market research.  An experience covering working with small regional banks through to internal banks and working with both established and start-up Fintech companies.  If you are looking for help with how you can get market research to deliver the insights you need for your bank or financial service provider, contact our team or call us on 0404 707 752.