Banks more likely to achieve organic growth with a formal plan, study says.

• Position: Marketing News

The best way for a bank to achieve organic growth is to have a formal strategy that focuses on four areas: customer retention, customer service, employee satisfaction and customer profitability.

These are the conclusions of a new study by the financial services practice division of PA Consulting Group, which has U.S. offices in New York and nine other cities.

Financial institutions that emphasize these areas, "far outperform those that don't," the study says.

The study was based on a national survey of 40 financial institutions of varying size, niche and financial strength. The median asset size of the institutions was $2 billion.

Organic growth was viewed as important to an overwhelming majority of these banks. Sixty-five percent ranked it as its number one strategic priority.

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Despite growth's importance, over 40 percent of the studied banks conceded that they had been "less than successful" at attracting and retaining customers.

Banks without a formal growth strategy performed less well: recording a 4.58 percent return on investment compared with 11.75 percent for banks with a formal strategy. Those without a strategy had a negative (-2.02 percent) five-year income growth compared with a positive 13.98 percent for those that did.

Two of the tactics for driving growth that were seen as increasingly importance were setting branch sales targets and branch staff training.

Banks with higher financial returns recognized staff turnover as "one of the greatest challenges to growth."

Banks with...