It never ceases to amaze me that companies spend millions to attract new customers (people  they don’t know) and spend next to nothing to keep the ones they’ve got! Seems to me the  budgets should be reversed! – Tom Peters

Background  

This pandemic has thrown open a Pandora box, full of new opportunities and  avenues, whilst with a lot many challenges as well. Firms, individuals,  organizations that have quickly adapted to the ways and means are still afloat  while others have crumbled like a pack of cards or are at the brink of extinction! 

Side shifting business has been the new mantra but mostly for the unorganized  sector. A street food vendor has become a vegetable vendor, a dairy store has  converted into a full -fledged grocery store. So today resilience is the formula  for survival. The resilience will further come from 'respond to resurrect’. It is a  level playing field and is not different for banks and financial institutions either. While the banks may not have the luxury to side shift or completely overhaul  their core business, they certainly can tweak their businesses. It shall mean  offering the same lentil soup, only it is customized and delivered faster. 

The question remains: How? Banks have been aggressively transcending new  boundaries to offer their conventional products and the solution has been  digitalization. What was earlier in the realm of imagination is now a possibility.  Some kinds of loans can be availed in under a minute just by logging onto one’s  mobile devices. The most encouraging feature is that many public sector banks  like Bank of Baroda, SBI etc. are making huge inroads into the space of digital  lending. 

A study in 2011 revealed that 50% of India’s population was under 24 years. While much has been debated and deliberated on the need to tap into the youth  population of this country by offering them modes and channels for  convenience banking, the existing customers cannot be left in the lurch. In times  of distress, the bank that has the most loyal customer base will find it relatively  easier to get on top of the tide. The major challenge for banks is to now  patronize the existing customers who at this juncture have brittle confidence  and strong self-esteem. There is disquiet amongst the existing customers with  regards to them dropping down in the pecking order of priority list. Their taste  buds need to be prepared for the newly packaged tantalizing lentil soup !

A satirical take on customer retention: 

Boss: What’s our marketing strategy? 

Employee1:  New customer acquisition. 

Employee2:  We will buy data of customers and reach out to them non -stop! 

Employee3:  We shall offer unsustainable deals to them! And may convert some % of targeted database. 

Boss: OK. Good. But how would we pay for all this? 

Employees in unison: By shafting our existing ones! 

(Inspired by a post on Pinterest) 

Objective  

This paper sheds light on the finer details and nuances on retention strategy  gaps and not the well-travelled path of retention strategies. One can liken this  study to a Risk Control and Self -Assessment (RCSA) exercise under Operational  Risk Management. The working population in a bank is heterogeneous in skills  and homogeneous in objective. Hence sensitizing staff members across the  hierarchy can be a daunting task but not impossible. 

Let’s put forth few nuances in the retention strategy gaps with an illustration as  under:

* Frequency would be in the range of 1 to 5, with 1 being least frequent  

* Severity would also mean magnitude of loss and would be in the range of 1 to 5,  with 1 being least severe. 

Banks are advised to keep a record of such events, especially at the branch level and  maintain it in a tabular form for better comprehension by any related stakeholder. This frequency-severity mapping can be best adjudged and admeasured by the  branch which shall aid in foretelling the probability of future occurrences. Thus,  suitable evasive measures can be planned. The branches have to be careful about  less frequent and high severity events because they bring in the maximum  destruction and are generally unforeseen. 

On the basis of the implications, a data repository can be maintained and improved  both centrally and branch-wise. Over a period of time, such a rich collection of  information can be shared amongst peer banks by RBI and a robust operating culture  can be thus envisaged.

A simple pictorial matrix can be resorted to for better understanding. 

The above matrix clearly suggests that events in the first and third quadrant  should be listed out and persuasive measures are to be deployed to keep such  future occurrences in check. 

Conclusion  

While many banks are working towards it, there still are few laggards. There has  to be a comprehensive coverage of such issues across the entire industry so that  the fraternity can be sensitized of the significance of it. These are the times when  customers are to be pampered and held back. Any complacency can lead to a  flight of customers, more so in the context of changing demographic patterns  and the millennials stamping their authority as influencers. 

(The views in this article are purely that of the author’s and his employer doesn’t bear any  responsibility.)