Talk about the changes in commercial bank retail business and private domain practices

For many industries now, private domain building is one of the effective ways to acquire customers and transform marketing. For example, for the retail business of commercial banks, a suitable private domain marketing strategy will help promote transformation. So, how can the private domain strategy of the retail business of commercial banks be implemented? In this article, the author has expressed some insights and ideas. Let's take a look.

1. The big retail strategy has become a consensus in the banking industry

“Whoever controls retail controls the world.”

Large-scale retail strategic transformation has become a consensus among commercial banks.

McKinsey mentioned in the "China Top 40 Banks Value Creation Ranking (2017)" that in the next 5-10 years, retail banking will contribute more than 50% to the profits of the banking industry. According to McKinsey statistics, China's retail banking industry has maintained an annual growth rate of 12% since 2014.

As of 2020, the proportion of retail business revenue of listed banks in total revenue has reached 42.33%, and the proportion of pre-tax profit of retail business of listed banks in the overall pre-tax profit of banks is 45.61%.

In the industry, whoever can find a high-efficiency retail growth path first will be able to take the lead in the competition in the following years.

It is important to note that diving headfirst into the retail banking pool and investing more energy does not mean you have a chance to take the lead. Well-known U.S. retail banks, Wells Fargo and Capital One, have proven that having a high business share does not mean you will continue to lead in the future (for example, Wells Fargo, with its main community banking business declining in recent years, saw its net profit plummet 50% year-on-year in the fourth quarter of 2022).

Choosing the retail business is inevitable, not an advantage. The key is to find a stable business path with a high investment-output ratio. ​

2. What are the key points in promoting large retail business?

1. Customer-centric marketing transformation

In the past, bank marketing was typically product-centric. After all, as a rare channel for financial products, banks had strong market voice. However, with financial disintermediation, the financial retail market has also become a buyer's market.

In a buyer's market, customer experience is often directly related to the final performance conversion. When products are homogenized, the comparison point of customer decision-making will focus more on the supporting service experience of the product.

2. Private domain segmentation is the key

So, what is the key to better customer experience for financial retail? It comes from a more refined and customized experience, which requires banks to change from simply grading customers based on AUM to categorizing operations based on customer profiles. Behind this is the change from a marketing mindset that is based on banks to a marketing mindset that focuses on individual customer needs. ​

This change requires the bank's retail team and business to not only be responsible for the user's lifetime value and have a stronger customer influence, but also puts forward higher online operation support requirements for the headquarters and the middle and back offices:

• Technical support - existing customer labeling system and online operation mechanism;
• Content support - customer marketing content library;
• Skill support - guidance on specific business issues.

3. Retail Private Domain Practices of Commercial Banks

Private domain is essentially a tool, a means, and a channel. It strengthens or fills the gaps in capabilities at a certain stage within the business process.

For commercial banks of different sizes, the business problems that need to be solved in the retail business are not the same, and the positioning of the private domain is also very different.

1. Large banks

Large banks, led by the Big Four, already have a huge customer base in retail business. It is difficult for them to achieve customer growth and asset improvement through channel expansion. They focus on maximizing the value of existing customers, especially the mid- and long-tail customers that have not been activated. ​

Faced with such a large number of mid- and long-tail customers, from the perspective of efficiency and input-output ratio, the approach chosen by major banks in managing private domain customers is to increase the online tool system.

The version iterations of ABC's mobile banking and CCB's mobile banking in recent years are gradually laying out the ecosystem of life circle + bank. Through online tool systems, they provide richer life services and better online delivery experience to lock in customers.

Of course, this approach is still effective for small and medium-sized banks. Since we don’t need to deal with a huge number of customers, we can use simple tools to go deeper. For example, a city commercial bank chose to directly cooperate with ecosystem merchants to provide services, provide a series of products, operate ecosystem communities and activities, and fully understand the customers of this ecosystem.

2. Medium-sized banks

Ordinary joint-stock banks are in the backbone of the industry. From the perspective of the status and volume of retail business, although there is a need to continue to expand users, due to reasons such as brand effect, expansion cannot be achieved purely online, and more offline channels are still needed.

Therefore, the private domain exists as a defense system for the business, ensuring that our existing customers are not cannibalized. In particular, we want to provide differentiated experiences to our key customer groups through fine private domain services.

The strategy of this type of bank is to manage existing customers in a solid and effective manner through the form of corporate WeChat + offline activities.

The corporate microblog is responsible for the customer's online experience, and the activities are responsible for the customer's conversion results (referrals/AUM increase). A specific example is a joint-stock bank. The corporate microblog is used to continuously share and teach financial literacy content, cultivate customers' investment habits and intentions, and invite online active customers to participate in offline financial literacy salons to conduct on-site 1V1 marketing conversions.

3. Small city commercial bank

As for small city commercial banks, if the private domain cannot solve the most urgent problems of my business, then there is no way to promote it, because there is not much testing cost and space.

Therefore, the most suitable way to play in the private domain is live broadcast + corporate WeChat.

Using private domain live broadcasts to attract new customers, consumer finance is the main product for attracting new customers, and the enterprise microblog is responsible for taking over and guiding the conversion. This has been verified in the past when we served city commercial banks. A single live broadcast brought in 100 million yuan in credit, directly solving the urgent needs of the bank.

IV. Summary

The trend of big retail has already arrived. In the process of finding the most suitable big retail strategic posture for the bank itself, private domain is an inevitable move.

We have seen and participated in successful cases, such as the full coverage of customer groups by adding online tools suitable for large banks, the existing customer management method of WeChat + offline activities suitable for ordinary joint-stock banks, and the live broadcast method suitable for small city commercial banks to attract new customers.

The size of the practical results of the case is, to some extent, a manifestation of online professional skills, which can rely on the support of external teams. However, whether the private domain practice can produce results still requires the internal person in charge of the bank to think clearly about the top priority issues in the current business and what the private domain can enhance and fill around the top priority issues.

Author: Teacher Yi Rui