“If your bank isn’t leveraging third party benchmarking data yet, now is the time to start.”
– Matt Steenson, EVP and Head of Retail Growth Strategies at PNC
With decades of experience at PNC, Steenson knows a thing or two about growing a business. He’s worked across several disciplines, including deposit products, finance, business banking, consumer banking, marketing, strategy and more. In his spare time, he puts his analytic mind to work as an analog version of Shazam, identifying song titles with lightning speed.
He recently sat down with us to discuss the critical role third party benchmarking data plays in understanding a bank’s place in the market to inform strategy, identify growth opportunities and set up an institution for success over the long term. We have compiled some of the greatest hits from our conversation here.
Everybody wants to rule the…competitive marketplace
Since 2006, Steenson has been relying on the insights he gleans from third-party benchmarking reports to identify his institution’s position relative to the broader competitive environment.
The reason a third party is an essential element of the equation?
Steenson says the reality is that while you can compare your performance data year over year, you can only see so much. If you want to know where you stand in the market, you’re going to need to understand how your business stacks up against the competition. Since it would be nearly impossible for a bank to conduct this research on its own, you’ll want to choose a reputable vendor with a proven track record. While these reports are blind, the data they contain is extensive.
When making the business case for this investment, consider the many applications for this reporting. “Benchmarking is invaluable to helping you truly understand how well you’re executing so you can see where you are doing well, where you are lagging, and how you are handling challenges that exist across the industry,” Steenson advises. Benchmarking highlights the efficacy of specific initiatives and comparison to peer institutions, which in turn enables you to identify new opportunities and strategize about new products and services. A data-informed perspective is essential if you want to take market share from your competitors, particularly since some are already leveraging benchmarking data themselves.
Don’t stop ’til you get enough…market share
In a vacuum, it can be difficult to determine whether a particular struggle or success your team is experiencing is a strategic or execution problem or part of a larger market trend—Steenson offers the example of a bank that is good at acquisition and retention but lagging in balance growth and credit card penetration. Benchmarking data allows you to take a closer look, give insight to your model and see if your challenges are consistent with the rest of the industry.
For example, Steenson explains, if your team is doing everything they can and still not seeing credit card growth, the data can help you understand that shortcoming in a larger context. If there are six outfits ahead of you, all within 10 to 15 points, then you know that growth is possible. It might just be time to switch up strategy, tactics or both.
The same can be said if your top peer is at 44% and you are shooting for 80%. In both cases, benchmarking data delivers invaluable insights for accurate forecasting and adjusting goals and expectations.
In addition to pinpointing weaknesses, benchmarking reports can also serve as a framework to galvanize your team around these prospective wins. Rallying the troops around an initiative is much easier when you can show that you’re leading the market but have room to grow.
“If you can see that you are the high-side outlier,” Steenson says, “and you’re doing really well among your peers, but the penetration is only 12%, you know you can do better.”
Born to run…the numbers
If you are new to benchmarking data, it can be easy to get overwhelmed when presented with 100+ pages of information. Steenson recommends limiting your focus to a few key metrics in the beginning. Once you become familiar with the report format, extracting the data you need becomes much easier.
In time, Steenson says you will find “there is a rhythm to this.” With consistent reporting and practice, you’ll be generating insights that help your bank strike the right chord and dominate the charts.
CONSIDER STARTING WITH THESE QUESTIONS:
• What’s your growth rate?
• What’s your acquisition rate vis-a-vis peers?
• What’s your retention rate?
• What are your net growth rates?
• What are your cross-sell rates for both new and existing customers?
• What’s your product penetration?
Learn more about the strategic value of benchmarking
For more insights from Matt and other benchmarking pros, read our ebook, Unlocking Competitive Insights: The Strategic Value of Benchmarking in Banking.
