Why Banks Should Win the Organic-Growth Wars MacroMonitor Marketing Report Vol. VII, No. 6 November 2006

Banks basically have two choices for growing their business: Buy their way to profitability through mergers and acquisitions, or grow "organically" (that is, attract more customers and do more business with their own customers through more product offerings). This MacroMonitor Marketing Report highlights the advantages that banks have in pursuing an organic growth strategy.

Historically and currently, households gravitate more to banks than to any other type of financial institution for financial products and services. They do so if the households are looking for the first time for a particular financial product or service, if they are looking to switch institutions, or if they are looking to consolidate their financial assets and debts.

Figure 1: Institution Household Would Prefer As Primary

The following are among the findings from trended MacroMonitor indicators:
  • Seven in ten U.S. households have a bank as their primary financial institution.
  • A higher percentage of households have a great deal of trust in banks than they have in any other institution.
  • Households are more likely to turn to a bank advisor than to any other type of professional for financial advice.
  • More of a household's financial assets and liabilities are held at a bank than at any other institution.
Although banks have many significant advantages in meeting consumers' financial needs, they cannot take this high consumer regard for granted. The MacroMonitor data also reveal a steady erosion of the banks' preeminence in consumers' financial life.

The MacroMonitor data indicate that banks have not done a great job of capturing consumers' financial business. And their continued preeminence among consumers is slowly eroding. Despite all the financial products and services offered by most banks, banks have been unable to collect a greater share of assets or fee-generating income when households consolidate their holdings. The MacroMonitor team can facilitate the banking institutions' organic growth by helping to define, develop, and deliver appropriate products and services that meet consumers' financial needs. For more information, please contact a CFD customer-service representative.