The surge in overdraft fees being paid by consumers is expected to lead big banks to lose 13 million checking accounts nationwide between 2010 and 2011, according to a recent USA Today article. Meanwhile, newly installed limits placed on debit card interchange fees, which once averaged 44 cents per transaction but have been capped at 24 cents under the Durbin amendment to the Dodd-Frank financial overhaul law, are expected to cost banks about $6.6 billion in annual revenue per year starting in 2012, according to Javelin Strategy and Research.

Taken together, consumers are spending less and they're also reluctant to incur more debt. There's limited top-line growth available for banks through their array of existing consumer credit products.

Clearly, banks that hope to survive need to find new ways to generate top-line growth. While there's no magic bullet for banks to emerge from this firestorm of volatility, financial services companies do need to apply greater precision to their growth strategies. This means gathering and acting on more insight about their customer bases to help identify cross-sell/upsell opportunities for products that specific customers have not yet purchased or appear to need.

In short, banks need to drive relationship banking strategies. Banks can strengthen and extend the relationships they have with their customers by drawing on meaningful information that customers share through their transactions and interactions across multiple channels and products.

Indeed, banks have a wealth of data about their customers, including critical information about family dynamics (e.g. number of college-age children, primary earner's proximity to retirement, income, and products used). Decision-makers can use this information to help craft relevant cross-sell/upsell offers to their customers. However, banks can only truly act on the full range of customer intelligence that's available by eliminating the product and divisional barriers that inhibit the free flow of information across the enterprise.

Pinpointing customer needs

The use of customer data to help generate new revenues extends beyond identifying existing cross-sell/upsell opportunities. Banks can also use customer data to help identify and develop new products to address segmented customer needs.

For example, no customer wants to get slapped with a $35 checking overdraft fee. Fee-based penalties upset customers and lead them to take their business to banks that don't charge such fees or reduce the likelihood of customers doing more business with fee-imposing banks.

However, some customers might be willing to pay a small amount annually for insurance that would cover them in the event of a bounced checks or overdrafts. In addition, given the current financial pressures that many consumers are wrestling with, banks might also consider developing cash flow management tools or services that can be offered to customers for a reasonable fee.

Instead of hitting customers with product fees and penalties that might alienate them and push them into the arms of your competitors, offer them products that can help them to manage their finances more effectively. You can do this by identifying the needs and preferences of various customer segments (e.g. mass affluent) through the use of analytics tools and by creating products and tools aimed at addressing those interests.

Tough economic times often present companies with opportunities to develop new product ideas since consumers are more receptive to various options which may benefit them. Given the spending limitations banks currently face, decision-makers in financial services need to prioritize where to invest.

A word of advice: don't target capital towards channels or products. Prioritize investments around customers. As competition continues to intensify, particularly for credit-worthy customers, this is where the smart money is going.

About the Author: Orkun Oguz is a Partner of Peppers & Rogers Group. Contact him at ooguz@1to1.com.