by David Ward

Let us start by expressing a typical opening statement found in many media coming from banks ‘……to meet the constantly changing needs of corporate customers and private individuals, including investment banking services…..’
Notice anything striking? Yes? Customers are diverse?, needs are not what they used to be? Corporate and private individuals are two distinct entities? The list is endless, as would be the debate if we were to go into detail about their meaning.
Banks are quite rightly worrying about change but perhaps the most incredible fact is they we are still very much in the dark when it comes to knowing the true needs of their customers, if not knowing their customers at all.
Another example? ‘……above a certain level of wealth, you need customised advice from someone who understands your unique circumstances?…..’ Here we have customization as the plinth for building customer loyalty and satisfying specific needs. Now this is more viable! but how far does the bank actually go in customizing? Does the bank satisfy the declared needs or does it go further and try to find out what really exceeds the expectations of the customer?
The point is that all banks should of course endeavour to satisfy declared needs, but this is expected not exceptional, latent needs are exceptional by nature. Many know nothing about the latent needs of their customers and consequently the majority of banks are fighting for the same customer in the same competitive scenario. In the words of Kim and Mauborgne, bankers are competing for the same customers and trying to get a big slice of the finite market (the red ocean) they know today rather than create a new marketplace where competition becomes irrelevant (blue ocean). Their policy is to compete in the red ocean while building blue oceans to harvest the newer, unknown and wealthier catch. The key is understanding and reacting to customer needs.
The paper provided here is a summarised version published recently to address the whole aspect of needs theories. In other words this shortened paper examines the theories that underpin human needs and how they are linked in the context of consumerism. Many of the principles discussed here are directly transferable to the banking system.
The objective is to stimulate the mind of the banker to look further and deeper and stimulate a similar structured approach to defining and classifying bank customer needs. Indeed the scope goes even further, could we see (finally) the birth of new banker not just in terms of ethics and Basilea 3 (if it arrives) but also desiring to know what his or her customer really wants. It could be the dawn of new era in customer relationship based on needs theory and one that could provide both better understanding and greater customer loyalty.