Finance and Banking Sales Strategies: 3 Skills You Need

Crucial Skills for Finance and Banking Sales in a New Era

The banking and finance industry, while resilient, faces an emerging set of challenges. In turn, sellers need to expand their banking sales strategies to address the following challenges:

• Falling net interest margin
• Commoditization of products and services
• Digital transformation across the industry

Each of these three presents a unique obstacle. First, the steep ascent of interest rates is one many banking and finance professionals are experiencing for the first time. This leads to uncertainty about how to respond. Second, customers, forced to seek alternatives during the pandemic, are now comfortable using a range of digital banking options. Third, there is increased pressure on banks and financial institutions to properly execute their digital transformation goals which require a range of new skills. 

These changes are systemic, not cyclical. When the challenges are spotted early, sales professionals can adjust their finance and banking sales strategies. In turn, they can transform these challenges into advantages. Keep reading to learn what skills you need to adapt to the changing banking and finance industry.

Higher Funding Costs are Putting Pressure on Net Interest Margins

The Challenge 

Rising interest rates present a risk to net interest margins (NIM). This is due, in part, to declining deposits as customers limit their borrowing amid rising costs. Simultaneously, some customers are moving away from non-interest-bearing accounts to seek higher yields in money market funds. As a result, some banks will face an increase in their cost of funding. Responding to these challenges is particularly challenging given that many banking and finance professionals have not experienced rate hikes of this size and speed. 

The net result of this is heightened competition for deposits. Managing this competition is especially difficult for banks that are addressing falling NIMs with fee hikes that must be communicated to customers. All of this is happening against a backdrop of declining non-interest income for many banks. In fact, between 2006 and 2021, non-interest income as a proportion of operating revenues for US banks fell from 43% to 35%.

The Solution

To counter these factors, financial and banking professionals need to effectively increase their efforts to grow their customer base. To manage this challenge, sales professionals need to understand the customer’s entire financial picture. In doing so, the professional has a better chance to position a range of products that work holistically to serve a set of financial goals. This approach is a differentiator that is crucial to winning new customers in a competitive arena.

Making this work means taking the time to ask the kinds of questions that reveal the customer’s long-term goals, their risk tolerance, and even needs they did not realize they had. Those in customer-facing roles are in the best position to do this. However, for many, the first step is to adopt a new mindset that goes beyond a transactional approach. In other words, even if the professional helps the customer with their transactions, the conversations shouldn’t be transactional.  The solution is to take time to develop the dialogue skills that equip customer-facing professionals to ask exploratory questions. When done well, the professional becomes an advisor. In this setting, the customer is comfortable volunteering information. These details often create avenues to an expanded business relationship or the start of a new one. 

Learn more about how to enhance your customer’s experience and build brand loyalty with Richardson’s training program, “Enhanced Service for Retail Banking,”

Products and Services are Becoming Increasingly Commoditized

The Challenge 

Customers today have access to fast, affordable, and intuitive fintech alternatives. This comes at a time when demographic changes mean that customers are younger and more comfortable with digital options. The customer’s movement toward these options also accelerated during COVID-19 when account holders needed non-traditional solutions. COVID-19 also generated increased turnover among financial and banking professionals. As a result, a relatively new cohort of professionals now need the skills to engage customers who have more choices than ever.

The pandemic, however, is just one reason why customers have adopted these alternatives. The other reason: customers increasingly expect greater personalization. Those who can deliver on this expectation stand to win big. Consider that “companies that excel at personalization generate 40 percent more revenue from those activities than average players,” according to recent data from McKinsey.

The Solution 

The same body of research concluded that one of the most effective ways a company can become more personalized is to “commit to an agile operating model.” This approach also works at the personal level. That is, banking and financial professionals who adopt an agile approach when working with customers can more effectively serve the customers where they are, with solutions that are most relevant to their needs.

This happens by adopting an approach in which the professional adapts and adjusts to the customer’s changing needs. This strategy is particularly powerful today as customer needs are changing faster because of rising interest rates, and inflation. Putting this approach to work means learning to iterate on the right solution. This means taking the time to fully understand the customer’s needs before suggesting a solution. It also means being prepared to adjust on a customer-to-customer basis and resist the tendency to assign the same few products and solutions to all customers.

The key is to remember that personalization happens in the conversation. It happens when the professional takes a bit more time to understand the customer which avoids costly price-only conversations. If a professional is going to win the sale, they need to develop the kind of trust that makes the customer feel comfortable talking about finances.

Executing a Digital Transformation Requires a Broader Skill Set

The Challenge 
Digital transformation in banking and finance often puts more information in the professional’s hands. This data alone, however, is not enough to make a digital transformation successful. What makes it all work is having a team that knows how to put that information to use. Professionals need to be able to use the data to pair the right solution with the right customer.

This is a challenge because many digital transformations are new. This means that the skills needed to make them work have not yet caught up. The prize for catching up, however, is considerable. Research from Deloitte shows that banks that excel in their digital transformation efforts outperform competitors in both ROE and ROA. This makes sense given that a successful transformation equips professionals to unite disparate, often messy sets of information into a clear picture of the customer’s needs. Additionally, rising M&A activity means that banks often have a wider set of solutions to offer. Sellers need a better understanding of those products and services and how to ask the kinds of questions that enable them to link a broad offering to the customer’s needs. 

The Solution 

Making a digital transformation work means rethinking the sales process. Banking and finance leaders need to use the information available to them across platforms to get a better visual of where customers are in the buying journey. This leads to a better customer experience, more accurate sales forecasting, more efficient use of resources, and a higher win rate.

Making this work means developing a sales process that is built around understanding the customer’s state rather than their stage. In today’s setting, customers rarely progress towards a purchase along a clear set of stages. Instead, they move in a non-linear way through a series of states. In one state they may be evaluating a particular solution. In another state, they may have new information that leads them to pursue a completely different product or service. In this example, the customer's buying journey loops back, before finally moving forward again.

Building a sales process that can work with this kind of change means being able to use data to learn and re-learn the customer’s challenges. With an agile sales process, professionals can embrace buying cycle complexity in a way that competes with competitors who are digital natives.

Success in the New Era of Banking and Finance

Sales professionals who can address these three challenges and adjust their sales strategies immediately place themselves among a small group that will be prepared for the new era of banking and finance. Sellers must move from a purely transactional approach to one in which they explore more of the customer’s unmet needs. They must also avoid price-only conversations and instead develop a more customized way to meet each customer’s individual needs. Finally, by understanding the customer's state, rather than stage, sales professionals will be better prepared to move alongside a non-linear buying journey. Sales professionals who adapt their finance and banking strategies as the industry changes are poised to stay ahead of competitors. Learn more about how to increase these skills with Richardson’s Financial Services Sales Training program.