Tailored benchmarking data helps you compare your bank to others with a similar size, geographic footprint, target customers and product mix.
With this analysis, you can assess your bank’s true position in your specific market to help you identify new growth opportunities and make data-driven decisions about where to focus your efforts.
However, not all benchmarking firms are created equal. A good benchmarking partner should deliver timely, relevant, reliable and actionable data and analysis. Here are the top six considerations when choosing a benchmarking firm.
1. YEARS OF EXPERIENCE
“You want someone who has been doing it for decades so you don’t have to think twice about the rigor or consistency of their data collection.” Matthew Steenson, EVP, Head of Retail Growth Strategies, PNC Bank
Financial services is a dynamic industry, with new players, challenges and opportunities always arising. A benchmarking firm with decades of experience has seen these shifts and can give you the data and insights you need to navigate them. With their historical data, you can analyze both short- and long-term trends to see the bigger picture.
What to look for
Extensive experience in the financial sector. The firm should have a proven, long-term history working with a consortium of banks similar to yours so that you can leverage like-for-like comparisons based on your unique size, region, customer base and offerings.
2. PEER GROUP SIZE
“Comparing your data with information from other organizations gives you the context you need to determine what is a consistent behavior, what is the movement of the market and what are the signals that might dictate strategy.” Jessica Wadd, Segment Leader, Strategy & Innovation, BDO
To access benchmarking analysis, your bank typically must participate and share data with the firm in return as part of a “give to get” model. The more banks that participate, the more likely you’ll have a large enough data set to provide like-for-like comparisons with your bank.
What to look for
A large, diverse participant base of banks similar to your bank. This will help ensure that the analysis you receive is relevant and usable as a base for comparison.
3. DATA COLLECTION METHODOLOGY
“The biggest part of benchmarking is apples-to-apples comparison with similar peers. This means it has to come from a trustworthy source that collects the data from others the same way it collects it from you. That way, you won’t be questioning it every time or wondering if other banks are using a different definition or data collection method compared to you.” Isio Nelson, Managing Director, ProSight Financial Association
Data is only as good as how it is collected, processed, audited and reported. If data isn’t presented the same way your bank internally measures it, it creates inconsistent comparisons, misguided decisions and questions about which numbers you should trust.
What to look for
Complete transparency on data collection and consistent reporting taxonomy. Understanding the unique taxonomy of the firm enables you to ensure you’re leveraging the insights correctly as you move through your analysis and decision-making.
4. DATA GRANULARITY
“An average balance of all accounts tells you nothing. Granularity lets you do things like compare mass market versus high-net-worth, checking versus savings, new customers versus long-time customers or customers in two different markets. This enables you to answer new, deeper questions.” Isio Nelson, Managing Director, ProSight Financial Association
Granular data lets you go beyond industry-wide indicators to dive deeper into the specific areas that will move the needle for your organization. By breaking data down by organization size, geographic coverage, customer type, account type, product types and more, you can better assess exactly how your bank is performing compared to the competition while identifying areas for improvement.
What to look for
Flexible and detailed product-, market-, customer-, segment- and channel-level data to uncover macro and micro trends relevant to your organization.
5. COMPLETE OBJECTIVITY
“There’s a magnitude of difference in the level of trust when you work with an impartial benchmarking partner because you know the data, analysis and insights are not a Trojan horse for another project.” John Rountree, Head of Client Engagement, ProSight Financial Association
Benchmarking data only works if it is impartial. If it’s delivered by a firm that also offers consulting, you run the risk of data being presented in a way that could be used to sell you further services or maintain the client relationship.
What to look for
An independent, non-consultative benchmarking firm ensures the data you get is free from hidden agendas or conflicts of interest, enabling you to trust the data to make decisions.
6. DATA CONFIDENTIALITY
“Most organizations are rightly sensitive about how their information could be used in the future. Non-profit firms are usually a solid option for benchmarking because they are least likely to use your data in unexpected ways—and therefore require less oversight on data usage than other firms that might have pressure to create new revenue streams.” Jessica Wadd, Segment Leader, Strategy & Innovation, BDOFor banks just beginning to benchmark their data, sharing business performance data with their fiercest competitors can feel counterintuitive. To avoid giving away trade secrets, data needs to be shared in a way that provides insights to all without providing rivals with an unfair advantage.
What to look for
A third-party benchmark research firm that has no specific connection or allegiance to any one client. They can ensure that all data is received securely and shared in aggregate, with all identifiable information removed, so banks can share specific performance data without fear of exposing sensitive information.
Learn more about the strategic value of benchmarking
Selecting an experienced, reliable benchmarking firm is the first step in leveraging benchmarking data to make smarter decisions for your organization.
To learn more, read Benchmarking for Banks: Leveraging Competitor Data to Drive Strategic Success. In this guide, banking and financial services thought leaders share how they use benchmarking so you can see how other banks harness insights to develop profitable growth strategies and sustainable competitive advantage.
