Accountants gird for new competition. How worried are you? Join the survey.
by Rick Telberg
At Large
for the AICPA
For CPAs already competing with banks, or worried about losing clients to them in the future, a new market competitiveness report sponsored by the American Bankers Association’s Community Bankers Council may be a healthy reality check.
CPA firms are growing increasingly concerned about competition from beyond the accounting field, particularly from financial institutions and other financial and business services providers. But the ABA’s study is a good news/bad news story.
The good news is that banks are more vulnerable to losing customers than at any other time in recent history. More than 68 percent of community bankers surveyed nationwide said it’s harder to retain key customers than it was just five years ago, and only 41 percent reported increasing their number of key customer financial relationships in the past five years. Furthermore, one-third said they access less than half of the potential business from key customers.
Brokerage services and retirement products are the areas the bankers cite most often as trouble spots with key customers.
The banks also noted that the three intangibles that helped them build market share in the past — local ownership, staff longevity and community service records — no longer count as much. So the banks will be de-emphasizing them in the future.
The bad news is that banks are hard at work shoring up their vulnerabilities by, among other things, deploying new strategies to maintain and cultivate relationships. While in past years banks have usually terminated relationships upon realizing a client was unprofitable, seven out of ten banks that assess client profitability now stick with unprofitable clients and try to turn the relationships into moneymakers.
Who are the banks chasing? Customers aged 55 or older account for 36 percent of banks’ key customers now, but are just 28 percent of the key “future prospects.” The 30-to-55-year-old group accounts for the majority of community banks’ current and future key customers, and banks are more aggressively pursuing even younger customers. More than 57 percent report using seminars and Web sites and other marketing initiatives tailored for younger people and students.
Local banks, also, will be getting closer to all clients by opening more local branches. Seventy-nine percent said that local branch expansion is the key to growth, and almost 72 percent opened or enhanced local branches in the last five years. The new branches will also bring new client conveniences, include an expanding use of Saturday and Sunday operating hours, and make a “one-stop shopping” move to offering more and more consumer and business services under the same roof.
CPAs should start thinking now about how to take or hold market share from local community banks. CPAs can’t afford to wait for banks to overcome their present vulnerabilities.
This is yet another reason to step forward with consultative services that can determine a client’s shortcomings and open the door to offer more services. Even though banks say they try to build relationships with unprofitable clients, 62 percent surveyed never offer to analyze their clients’ profitability.
And, by all means, look for ways to make your Web site more serviceable and valuable to clients because the Internet will be a major battleground with banks. The community bankers cited online services as the second highest priority for their future customers and are responding by making technology planning their top priority for future resources.
Banks will also be investing heavily in employee training and strategic planning in response to what they believe will be future customers’ biggest issues: service quality, staff attitude and costs.
Indeed, the bankers, in stating the obvious, noted that service quality is the key issue for both future and present key customers. It should also be a key issue for CPAs in their business strategies.
[Originally appeared May 2, 2005 at www.cpa2biz.com.]
One Response to “AT LARGE: CPAs Battle Banks for Business”
Telberg Notebook
?AT LARGE: CPAs Battle Banks for Business? reported on how community banks seemed to be muscling in on CPA services like tax prep through their trust departments while they are reducing their reliance on CPA-prepared financial reports.
But most CPAs ar