Category Archives: Customer Experience

Why Bank Branches Suck (And Why The Branch Of The Future Stuff Is Nonsense)

Chris Skinner recently published a blog post titled Banks designed for humans, not money in which he argues that:

“Branches are banks’ retail stores but were designed for money. They were designed to handle physical forms of cash and cheques, as secure transaction centres. This is the core challenge of why everyone thinks branches will disappear. Because they are not retail stores engaging the brand community but transaction centres run like some administration process.”

In imagining — in Chris’ words — “how the branch experience becomes a retail experience fit for 2013 and beyond,” he identifies a few examples:

  • Washington Mutual (Occasio) and Umpqua removed teller counters and opened the dialogue over a face-to-face table form.
  • Caja Navarro and ING Direct instigate “community engagement” (Chris’ words) by having open house sessions. Caja Navarro offered evening classes in their stores including hair styling and flower arranging, and ING Direct offered sessions where anyone could just ask questions like: “how does a mortgage work?”
  • Umpqua allows branches to be booked in the evening for cocktail parties or business meetings.

My take: These are all interesting examples of alternative (and creative) uses of branch space, but do little or nothing to prove that the branch is an economically viable (i.e., profitable) way of doing business for banks.

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In his post, Chris cites a Bloomberg article that appeared shortly after Apple launched its retail stores:

“Jobs thinks he can do a better job than experienced retailers. Problem is, the numbers don’t add up. I give them two years before they’re turning out the lights on a very painful and expensive mistake.”

Bet that guy wishes he could take those words back.

But the important point is why he was wrong. So-called “experienced retailers” were experienced at selling consumer products (clothing, jewelry, shoes) — not technology products.

At the time of Apple’s launching of retail stores, there were two frames of reference: 1) How existing retailers sold consumer products, and 2) How existing technology companies sold technology products. Apple stores didn’t fit either frame of reference, and hence, geniuses like the one at Bloomberg wrote them off.

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Apple reinvented the way technology products were sold. (It took a couple of tweaks, they didn’t get it right on the first try). What Apple has got right, regarding the sale of technology products, is creating a retail experience that is:

  1. Visual. People want to see the product.
  2. Tactile. People want to touch and use the product.
  3. Informative. People want to talk to store reps who know about the products.
  4. Advocative (I made that word up). People want reps who will recommend products that are right for the customer, not just for the store.
  5. Lean. The buying process if fast, with a minimal number of steps. No waiting in cash register lines. Fast and lean.

Apple stores are successful because — for the most part — they succeed at accomplishing these five things. And it doesn’t hurt that the products Apple sells are products that consumers consider to be very important in their personal lives.

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This is why bank branches suck: They don’t accomplish these five objectives (yeah, I know, if I flip-flopped #2 and #3 we could say that branches aren’t VITAL. I hate stupid acronyms).

Granted, banks are handicapped here.

It’s tough to “see” and “touch” most financial products and services. You used to be able to touch a checking account — i.e., your checkbook — but nobody does that anymore, and you didn’t get that until days after opening your account anyway.

And, for the vast majority of consumers (at least here in the US), although money is really really important to us, our choice of financial products and providers isn’t. We spend more time figuring out what restaurant to eat out at on a Saturday night than we do which bank we do business with.

There is, however, no excuse for why banks don’t meet the informative and advocative hurdles.

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This is also why the various “branch of the future” concepts fall short: They don’t do anything to reinvent the way financial products are sold.

The branchlet concept is great — as are the hair styling, flower arranging, yoga classes, and cocktail party ideas. But they only address the efficiency (cost) side of the coin, not the effectiveness (sales) side.

Chris was spot on in describing the branch as a “transaction centre run like some administration process.” Hair styling and flower arranging classes, however, is just lipstick on a pig. 

Chris was also spot on in suggesting that banks should “combine the two worlds: the retail store and the remote experience.” But I’ve yet to see a “branch of the future” concept that does that. Most BOTF concepts bring more technology into the branch, but few (if any) do anything to integrate the branch experience with the remote experience.

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Banks (and credit unions) have two huge hurdles to overcome in order to make branches profitable:

1. Redefining how financial products are sold. Sitting down at a desk with someone who may or may not be well informed about the products, asking me personal questions about my finances that I have no interest in sharing, talking about they may or may not be right for me….it’s a crappy experience.

2. Getting more people engaged in the management of their financial lives. Chris talks about “using stores as a method of building a sense of community around your brand.” It works for Apple because people really care a lot about their choice of smartphones, PCs, and music devices. You don’t get brand engagement without product category engagement.

There’s a chicken-and-egg situation with this last point. If I’m not engaged in the management of my financial life, why would I go into a branch to learn how a mortgage works? (Unless, of course, there was a free meal there. Free drinks, even better. Offer Macallan 18yo Scotch and I’ll even come in for the hair styling and basket weaving classes).

Apple may have reinvented the way technology products are sold, but the company is successful with its retail strategy because they get people in the door. Ironically, when new products are released, there’s often a line, and people can’t get in. But you know what I mean. 

Flower arranging classes don’t count as a way of “getting people in the door.” Banks don’t have the luxury of having a “cool” product that, when announced, will drive flocks of people to line up at the door. 

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The recent consumer research I’ve done (not yet published) suggests to me people are increasingly engaged with their financial lives. Younger consumers are more engaged with their financial lives than older consumers, and certainly more so than older consumers were when they were in their 20s and early 30s.

But the financial services industry has a long way to go before it can talk about branches as a place that fosters a sense of “ownership, belonging, and loyalty.”

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Bank Customers Want A Seamless Experience (My Foot)

Foot wasn’t exactly the first body part that came to mind, but I’m trying hard to keep it family-friendly here.

Yet another consumer survey from yet another technology company finds that bank customers want…..wait for it….a seamless and personalized customer experience. And that consumers are even willing to share personal information with the bank in order to get that personalized experience!

Only problem here…well, actually, it’s one of a number of problems here…is that this really doesn’t hold water.

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Before I explain what the main problem is here, I should come clean and give you the self-psychoanalysis of what’s bugging me here.

It’s not simply a claim that doesn’t hold water.

It’s two other things: 1) the Questionable Chain, and 2) the potential revenue loss.

Here’s the Questionable Chain:

  1. A technology company commissions a consumer research study which asks consumers questionable questions…
  2. …which produces a bunch of questionable conclusions….
  3. …which finds their way into a questionable press release…
  4. …which provides a questionable argument for why said technology company’s technology should be purchased.

Here’s the potential revenue loss: They didn’t pay ME (or my firm) to do the study for them.

So yes, I have some dishonorable (questionable?) reasons for bashing the research. But that doesn’t mean that what I’m going to say about it is wrong.

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I’m not going to provide a link to the research or name the company. You can Google it and figure it out. I’m deluding myself into thinking that if I don’t mention the firm’s name, I can avoid pissing them off.

The headline of the press release reads as follows: “Consumers want a more seamless and personalized customer experience from their bank.”

My take: No they don’t.

Consumers want things to work. Period. But if you must elaborate, they want things to work the way they expect those things to work, when they use them, and where they use them.

And consumers don’t want to have to think about any of it. They just want it to happen. If you really think about it, what they really want is for banks to be invisible.

“Seamless” is a term that implies that there are seams that need to be hidden or sewn together. I don’t want “seamless” pants, I don’t think my wife wants a “seamless” dress. We want clothes that fit and look good.

Same mentality applies to banking. Consumers don’t think in terms of “seams.” It’s true that there are interactions that require handoffs between channels or people within the bank, and yes, customers don’t want things falling through the cracks or to have repeating their problem five times.

But those interactions are really few and far between for most customers. Most customers don’t start checking their account balance in one channel, and finishing it another. Or starting to pay a bill online and then completing the payment on their smartphone.

The concept of channel integration or consistency in banking is misused and overrated.

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The other problem with the press release headline is something that is very common among the customer experience transformists: There is no such thing as “the” customer experience.

Interactions between a bank and its customers run the gamut of many different types of transactions and interactions. There is no single “experience.” Washing over the differences in the types, qualities, and importance of the various types of transactions/interactions is fool’s work.

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A third problem with the press release: When asking consumers if they would provide more personal information in order to get more “personalization,” what does that really mean?

What are we talking about when we say “personalized” experience and what information is really needed to provide it?

Asking “would you be willing to provide personal information for a more personalized experience” — without getting into more specifics — is simply poor research. It makes for a nice headline, but it’s completely useless, and very misleading.

Let’s explore this for a moment.

How about I personalize your experience on this blog if you provide me with some personal information. OK?

So….why don’t you tell me your sexual fantasies, and the next time you access my site, I will show you pictures of people engaging in those sexual activities.

A “personalized” experience based on your personal information.

OK, sorry. Back to reality.

What exactly is a bank going to do to “personalize” customers’ transactions and interactions? (I’m trying to avoid using “experience”).

There have been lots of attempts to do this already: Use the customer’s name online or at the ATM, customize a dollar amount to be withdrawn at the ATM or the amount to be transferred between accounts, based on previous transaction history.

But those didn’t require additional “personal” information.

I simply don’t understand what personal information I’m supposed to be giving up in order to get a more “personalized” experience that I can’t visualize.

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The release also quotes a company exec as saying “Retail banks that succeed in providing a seamless customer experience across all channels to market- branch, mobile, online, contact center- will be the winners of the future. Superior customer experience will be the only long term sustainable differentiator.”

Nonsense. 

A corporate competency to continuously design, develop, and deploy superior products and services can be a sustainable differentiator. And as I mentioned before, customers don’t use every channel for every transaction/interaction, so this concept of seamlessness just doesn’t hold water. 

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The rationale for publishing research like this comes down to some combination of two reasons as I see it: 1) To generate publicity, or 2) To align or tie the company’s products to the concept of customer experience.

It may have succeeded on the first point, but I think it does little to accomplish the second. 

Are Credit Unions Falling Short Of New Member Expectations?

Consider the two following pieces of news that crossed my desk yesterday:

  1. The December 2012 ACSI Customer Satisfaction scores for financial services revealed that credit unions scored higher than banks (as a whole) for the fifth straight year. However, credit unions’ score dropped from 87 to 82, a 6% drop, from the previous year. This comes was after a seven point gain in 2011 over the 2010 score.
  2. NerdWallet analyzed data published by the NCUA and found that half of all federally insured credit unions experienced an increase in membership from June 2011 to June 2012. According to the NCUA, credit union membership ranks grew by 2.1 million from October 2011 through September 2011.

My take: This raises some interesting questions. What caused the drop in credit unions’ satisfaction ratings in 2012? And, for that matter, what caused the huge jump in 2011?  Why would membership ranks continue to grow in the face of declining satisfaction? Would membership have grown even faster if satisfaction levels had remained at its 2011 level?

I can come up with two competing schools of thought to explain what’s going on:

1. Satisfaction rankings are worthless. Did credit union member service levels fall off a cliff (pun intended) over the past year? Did credit unions look back at their perceived Bank Transfer Day success and say “Great! We’re done. Don’t have to try anymore!”? Doubtful.

The more likely explanation is that the satisfaction scores don’t reflect just members’ satisfaction with their credit unions, but incorporate broader perceptions about banks and the financial services industry as a whole.

There is insufficient statistical history to draw on, but it appears that there may be an inverse relationship between CU and banks’ scores.

In 2009, CUs and banks’ satisfaction scores remained unchanged from their 2008 levels. In 2010, as banks went up a point, CUs went down four points. In 2011, however, banks declined a point, and CUs wen up seven points. This year, banks went up two points, and CUs lost five points.

The drop in credit unions’ scores in 2012 make no sense. As banks were eliminating free checking and imposing fees, credit unions held their ground. Based on the research done by Aite Group and Filene Research, credit unions significantly increased their investments in online and mobile offerings in 2012.

So how do you explain the drop in satisfaction score? Either customer satisfaction scores are useless, or….

2. New member expectations aren’t being met. Tom Glatt likes to argue that tCU membership gains aren’t exactly evenly distributed across CUs, and the NCUA data, which shows that only half of CUs experienced gains, bears that out. But that doesn’t negate the fact that over the past 18 months, a lot of Americans have become new credit union members.

Why? I’d argue that in many cases it was less about the superiority of a particular credit union, and more about the inferiority of the bank they were fleeing.

And what did they find when they started interacting with their new credit union?

They found really really friendly, helpful people — but people who weren’t that good at helping them make financial decisions. They found an online and mobile experience that, although the CUs were investing in them, were inferior to what they had at their big bank. And they found that, despite all the hype, credit unions still charged overdraft fees, inactivity fees, and a host of other fees.

In other words: Their expectations weren’t met. And the result was lower satisfaction scores in the ACSI study.

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Bottom line: If you’ve got more theories to explain the drop in satisfaction scores, I’d love to hear them. As for my two competing theories, I strongly lean to one of them as the right explanation. But I’ll play Fox News here — I’ll report, you decide. 

SedUIced

The Finovate conference is very well run and employs a great concept — 7-minute vendor demos. As a result, it has become one of the better attended fintech conferences. It’s a great place to gauge the temperature of the fintech industry on what’s hot these days.

For a great vendor-by-vendor analysis, check out Bank Innovation. I like the fact that BI has established its criteria for grading.

As for many other attendees, however, criteria for best in show appears to be less specific. I came away with a somewhat disturbing conclusion:

Many fintech people are seduced by UI.

This thought took hold after Money Desktop — one of the best in show winners — presented. After the demo, someone tweeted:

“Now that’s what I call innovation!”

I’m not downplaying what MD has done. Its tablet app and online offerings are very-well designed and highly creative.

But is another way to visualize your household budget really an “innovation”?

To the extent that no one else is doing it that way, then yes, it’s an innovation.

But it’s not an innovation that rises to the level of materially impacting the bottom line of a financial institution. I’m happy to entertain any arguments with this assertion. But I think — no, I KNOW — that you’ll have a hard time finding data to disprove my assertion. I’ve been looking for that data for 10 years with no luck.

And it’s the kind of innovation that creates new products or markets.

Interestingly, I don’t think Money Desktop disagrees with me. Its slick interface helps it win Finovate awards, garner press, and generate interest from prospective clients.

From my discussions with a few of the MD folks, I think that they agree that the real economic impact that will come from what they’re building won’t stem simply from having a great UI. The firm’s vision for how PFM will evolve is compelling, and I say that with the back-of-mind concern that I’m only saying it because I agree with it.

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Yet, looking at the list of best in show winners, I’m struck by the thought that these were the vendors whose apps had the slickest UI.

But is the purpose of the conference — and the best in show votes — to reward the best presenters? Or is to acknowledge those firms that are truly bringing the best — that is, most impactful — innovations to the financial services industry?

Lookng at the Bank Innovation scores, some of the best in show winners were rated low on profit potential. And I have to admit that some of the vendors did themselves no favors by turning in less than stellar demos:

  • Linkable Networks, which claimed that it can bring SKU-level data to improve targeted marketing efforts didn’t show that capability.
  • Truaxis, who I believe will help create new revenue streams for banks and credit unions, chose to highlight customer profitability analysis and campaign management functionality.
  • Banno‘s mobile app helps consumers make smarter financial decisions at the point of sale, but the demo started off by highlighting mobile banking and bill pay features (ho hum), and suffered from a glitch.

So maybe these firms didn’t deserve best in show for not telling their stories well, or for telling the wrong stories.

Other firms did respectable jobs with their demos, but didn’t get the respect they deserved:

  • Finovera and Manilla (did they present? I missed part of the afternoon day 2 session and didn’t see a score from BI) are creating a whole new space — bill management — that could create huge economic benefits for billers and added conveniences for consumers. So why the low profit potemtial from BI?
  • Personal Capital rated a B in profit potential from BI, but didn’t seem to be on anyone’s best in show list. Really? A 401(k) with a 0.5% could revolutionize that market (which I would argue has been more detrimental to the financial health of US consumers than any retail bank or mortgage provider). In my book, the innovation and profit potential of Personal Capital is huge.

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Ironically, perhaps, Personal Capital did win a best in show award in 2011 when it showed its online investing platform. So it wins for its great UI, but not for its new business innovation.

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Past winners of best in show at Finovate have include 7-time winner (I don’t know, I’ve lost count) Mint.com, which, of course, has revolutionized the financial services industry with its disruptive technology.

That was a joke. You’re laughing, right?

Mint.com might have 10 gazillion users (they gain users faster than McDonald’s sells hamburgers), but it’s hard for me to believe that the PFM platform has had a big impact on the industry. PFM adoption is still about 20% across US consumers, and I can’t point to a single financial services exec who says that Mint.com has helped them gain customers, or believes that they’ve lost customers because of the site. 

What did Finovate attendees see in Mint.com?

Sexy user interface. 

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All this makes me wonder what the composition of Finovate voters really is. I can’t help but think it’s skewed toward the vendors themselves, who sometimes (but not always) get too caught up in the technology, and not the business impact. 

Three Myths About Consumers–And One About Engagement

The HBR Blog Network recently published an article titled Three Myths About What Customers Want. The authors defined the following myths:

1. Most consumers want to have relationships with your brand.
2. Interactions build relationships.
3. The more interaction the better.

According to the authors, “Most marketers think that the best way to hold onto customers is through ‘engagement’ — interacting as much as possible with them and building relationships.”

My take: The authors’ are spot-on in their identification of the myths, but misinterpret what engagement is — or, rather, what it should be.

The authors offer consumer research results which showed that “only 23% of the consumers said they have a relationship with a brand” and advise marketers to “understand which of your consumers are in the 23% and which are in the 77%, and apply different expectations to those two groups and market differently to them.” The authors tell marketers to “stop bombarding consumers who don’t want a relationship with your attempts to build one through endless emails or complex loyalty programs.”

This advice ignores two questions:

  1. Do the 23% who have a relationship with a brand, have a relationship with a brand from the same industry or product category? In other words, maybe some types of products lend themselves more to the prospect of a brand relationship than others. I say “maybe” when I believe damn well that the answer is yes.
  2. How did the 23% get that way? Did the 23% just magically come to have a brand relationship? Or was it the result — or at least the partial result — of “endless emails” and/or “complex loyalty programs”? Isn’t it possible that if the study had been conducted 10 years ago that the researchers could have found that just 13% of consumers had a brand relationship? And that it was the result of email and loyalty marketing that grew that percentage to 23%?

While the authors rightfully identify three myths that many marketers have, they do a disservice by not distinguishing  engagement from interactions.

It’s usually a fool’s quest to try and impose a definition on a murky concept, but I’ll try anyway. Engagement is:

“Repeated interactions that strengthen the emotional, psychological or physical investment a customer has in a brand.”

What this definition does–and what the authors of the HBR article fail to do–is recognize that not all interactions are created equally.

The myth that the authors define–”interactions build relationships”–is correctly identified as a myth, as stated. But it is not a myth that “interactions that strengthen the emotional, psychological or physical investment a customer has in a brand.” The challenge that marketers have is understanding which interactions strengthen the emotional bonds.

The authors of the article want marketers to believe that “shared values build relationships” and offer up the usual suspects of Patagonia and Harley-Davidson as examples of brands that have “higher” values that prove out their point.

Personally, I can’t wait to see what kind of “demonstrable higher purpose” Fruit-of-the-Loom comes up with. Or any of a million other types of products in categories that just don’t lend themselves to this kind of nonsense.

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One of my favorites brands is REI. I couldn’t care less what its “higher purpose” is. All I know is that every time I deal with REI, I get great advice.

If REI’s “higher purpose” was “rip off consumers by making them think we really care about them” I’d have a hard time telling a researcher that that was a “shared value” but it wouldn’t change my opinion of REI.

An opinion that is borne out of REPEATED, POSITIVE INTERACTIONS which strengthen the emotional, psychological or physical investment I have in REI.

In the case of REI, the type of interaction that produces the emotional connection is advice. On more than one occasion, REI employees have steered me to a less expensive product because they thought it was the one that was right for me.

It isn’t the shared value or the higher purpose that drives my relationship with REI — it’s the engagement.

The Truth About Bank Channel Preferences

Boston-based research firm Yooseless Research revealed the results of an important new study looking at consumers’ bank channel preferences. According to Distinguished Principal Analyst Phuquing Yooseless:

We asked consumers about their bank channel preferences, and their response was unanimous: “What the hell is a banking channel? We thought channels were something on TV.”

When we explained what bank channels were, consumers were again unanimous in their response: “Aha! Got it. We’d prefer to not have to use any bank channels. We’d prefer for there to be no problems to be resolved, we’d prefer to be hoodie-wearing bazillionaires who don’t worry about what their account balance is, and we’d prefer to have our money transfer itself between accounts. No, wait — we’d prefer to not have to keep separate accounts to move money between in the first place.”

My take: This endless stream of research that purports to show how consumers’ banking channel preferences cause banks to miss opportunities to “better engage with consumers online and create a consistent brand experience across all channels” has got to end.

The latest study shows that two of the four most popular reasons why consumers use the online channel for banking is checking their account balance and transferring money between accounts. Do you really think there’s an opportunity to create a “consistent brand experience across all channels” to do those things?

And so what if banks do create a “consistent brand experience across all channels”? Do you think bank customers will be lulled into forgetting the other issues and problems with their that they face?

One of the amazing things about being human is that we adapt. Adapting to an “inconsistent brand experience across channels” is one of the easier things that we adapt to.

Here’s something that Kristen Christian, the founder of last year’s Bank Transfer Day, did not say:

“We can’t let banks get away with an inconsistent brand experience across channels. We need to rise up and move our money to credit unions.”

Looking at the results of a survey of US consumers regarding their financial lives, here’s what I can tell you: Of people who switched their primary bank last year, maybe 2 out of 1,000 said that it was because of a poor cross-channel experience, and as best as I can tell, those two people were Phuquing Yooseless and his brother Totalee.

At the top of the list of why people switched: Fees, followed closely by fees, and in third place, fees. 

The other side of this channel preference nonsense is the conclusion that many people come to regarding channel investments. Their logic goes something like this: If 50% of people prefer the online channel, and only 20% prefer branches, then we should be putting 50% of our investment into the online channel.

Sadly, this is not only faulty logic, but it’s a reflection of the dysfunctional organizational structure found in so many financial institutions. Not that there’s any easy fix to the problem. But organizing by channel will lead the people that work in that department to find any argument they can to protect and grow their budgets.

If, however, the focus was on “fixing problems” or “redesigning” processes and interactions, then maybe funds would flow to the places where they’re really needed.

But you’re not going to effectively prioritize those investment alternatives by asking consumers about their channel preferences.

Train Consumers To Make The Right Decision

It’s one of those motherhood and apple pie statements that bankers believe without question or critical analysis:

“We’ll do business in the channels our customers want to do business in.”

It’s a tough statement to argue against. After all, if being “customer-centric” means giving customers what they want, then how can one argue that a bank shouldn’t do business in the channels customers want to use?

The situation isn’t so cut and dry. You have to be open to the notion that maybe customers don’t know what they want, that their stated preferences are influenced by what and how you asked about, and that — most importantly — those preferences can be shaped and changed.

What  got me started on this is a post on NetBanker called The Missing Tab which states:

“Financial institutions do a good job showcasing products, rates, and available accounts. But shoppers, especially ones not already familiar with you, want to understand what it’s like to bank with you and whether you’ll be there for them if there’s a problem. So along with your usual product and line of business tabs, consider adding a tab on the primary navigation leading to a section highlighting the benefits of your bank or credit union.”

I don’t disagree with NetBanker about the need to beyond product information. What I’m questioning is the “how to do it.”

Imagine that you invited a life insurance salesman into your home to discuss life insurance. Imagine that this salesperson started the conversation by saying “What can I tell you about life insurance?” And then shut up.

Is that any way to conduct a sales meeting? I doubt many good sales people would do it that way. They might conduct every meeting the same way, but I bet they would know — ahead of time — what information they want to get from the prospect, and what information they want to convey to the prospect. And I bet they would have a sense for how to proceed from the start of the conversation to the close.

But most bank Web designers are concerned more with things like placement of content on the page, providing consistent navigation, and what colors are on the page than how to influence the prospect’s decision.

The tab that NetBanker advocated putting on bank and credit union sites may very well be — or should be — a critical part of a prospect’s process for deciding which bank to do business with. But by sticking that potentially critical information under a tab that consumers may or may not click on, the effort to create the tab is potentially wasted.

Can You Train Customers?

Let’s take a broader view of financial services for a moment. Why have consumers reacted so negatively to the account fees that many banks have created? According to Brett King:

“In the US, there are actually people who will tell you that free checking is, or at least should be, a constitutional right. Thus, emotion runs high when a bank suggests that you now have to start paying for the right to keep YOUR money with their bank – it’s an outrageous concept to many! The biggest problem for the US banking industry is that for the longest time it trained customers to believe that this was exactly how they should feel.”

Bingo. We trained consumers to expect free checking.

And if we can train them to expect free checking, we can train them to use them certain channels, and that we can train them on how to make the right decision about choosing a financial provider.

[I imagine that after seeing the word "train" four times in the past two sentences that, like me, you're a little disgusted at the imagery of "training" people to do something like they were some trained lion in the circus. Sorry for that.]

Training Consumers How To Choose A Financial Provider

I totally agree with Brett’s comment — but I do think that a problem right up there with “training customers to expect free checking” is that when choosing between accounts — free or not — consumers don’t always use the right criteria.

How many times have you seen surveys that show that branch location, and number of branches, were the most important reasons why  a consumer chose their bank? This flies in the face of reason and logic (for reasons we won’t go into here).

There are two explanations for this. Consumers don’t understand: 1) How they made their decision, and 2) How they should have made their decision.

The second explanation is what NetBanker’s proposed website tab would address.

But unless consumers are trained to look at that tab — or for that information wherever it is — then it will never become a factor in influencing consumers’ choice of providers.

Create An Online Sales Process

The answer is to create a process or flow on the bank’s site that mimics the flow of a successful sales interaction.

The previous sentence probably made somepeople in banking (and credit unioning) get that little throw-up taste in the mouth. Their distaste for the word “sales” leads them to have an immediate allergic reaction to using their website to “sell.”

They have to get over it. The industry has to train consumers to use different criteria when choosing a financial provider. It has to.

Consumers may do this on their own, over time,  I don’t know. But if I were running Marketing at a financial institution, I wouldn’t be sitting around waiting for this to happen.

There’s a huge opportunity for FIs to train consumers on how to make smart decisions by creating an app that someone looking to switch FIs could download and use to gather information about various providers and make an informed decision. The app would likely favor the institution that created the app, but if it wasn’t objective enough, it would be rendered a useless app, defeating the purpose of creating it in the first place. 

Maybe a non-FI could create this app, but the potential business model leaves a lot to be desired.

So it’s really up to banks and credit unions themselves to re-train consumers on how to choose financial providers. I tried to get at this in a previous post titled Will 2012 Bring A New Approach To Bank Marketing?

Whatever the new approach turns out to be, I think we need to start by agreeing that the existing approach isn’t working.

Credit unions continue to harp on their so-called service advantage, yet member growth is anemic. What does that tell you? It should tell you that maybe consumers aren’t using the right information to make decisions (if you’re looking at it from the perspective of a credit union exec, that is).

You have to train consumers to make the right decision.

Banks’ Mobile Challenge

At the risk of ticking off or alienating any of my friends (like I have any) or other people that I have a great deal of respect for, I have a confession to make:

I am sick and tired of hearing people warn banks that if they don’t [innovate/use social media/etc.] they’re going to disappear, or be disrupted, or whatever.

Sorry to be blunt, but any idiot can come up with that claim. And plenty of idiots do. Sadly, a lot of smart people make these claims, and that’s what ticks me off.

What banks (and credit unions) need is good advice, not apocalyptic warnings.

I may or may not be able to provide valuable advice (after all, I didn’t say I wasn’t an idiot). But what I do think I can provide is a little more focus on the problem than simply spouting dire admonitions.

The question that banks need to answer is simple (not that there is a simple answer):

Where in the mobile customer experience do banks add value?

Take a look at the picture below. Many thanks to Jaime Punishill who I stole this picture from.

In this picture, Kelly is out shopping, when she sees a pair of shoes that she wants.

A number of questions immediately pop into her head: How much do these shoes cost? Can I get them cheaper somewhere else? Do any of my friends have these shoes, and what do they think of them?  Possibly — but not necessarily — Kelly might also ask: Can I afford them?

In the old world of shopping, Kelly would had to have gone into the store to check the price, then go home, and search other retailers’ sites to see if they carried the shoes and what they sold them for (in the OLD old world of shopping, she couldn’t even have done that), and call around to her friends to get their opinions.

What I’m not sure a lot of banks understand just yet is that mobile shopping is more important than mobile banking or mobile payments.

In the new world of mobile shopping, banks must figure out how to add value in this process beyond “checking balances” prior to the transaction, and being the “payment mechanism (mobile device or not) at the culmination of the transaction.

The potential areas to add value, as I see it, lie in answering questions like:

    • Can Kelly afford it?
    • What will this do to Kelly’s budget if she buys this?
    • Which payment method should Kelly use?
    • Which payment method(s) do FIs want Kelly to use?

Answering the first question is fairly straightforward. Does Kelly have the money in her account or not?

Answering the second question is a little more tricky. It presumes that Kelly has used the FI’s PFM offering to set up a budget, and/or categorizes her expenses to enable the FI to provide some analysis. Although many FIs are moving in the direction of making their PFM offering mobile-enabled, answering this question — at the point of sale — is not that easy.

The third question is where the realm of possibilities leapfrogs what is currently available. With a mobile wallet that stores multiple payment methods, conceivably an FI could make recommendations on which account (e.g., checking account, credit card, or other account) would be best to use based on the account balance, rewards, and other criteria.

But even more value can be added if FIs could compete, in real time, for Kelly’s business. Perhaps American Express would offer Kelly an additional 5% discount if she uses her Amex card instead of her debit card. Perhaps her bank would offer her 50% off the cost of the purchase if she applies for a credit card (and is approved, of course).

There are probably many more questions that could be addressed. But my advice (helpful or not) to banks and credit unions is this:

The mobile challenge in front of you is determining where you add value in the mobile shopping experience.

Many mobile banking functions are just the porting of existing capabilities to the new channel. And success in mobile payments is dependent on adding value to the mobile shopping experience.

I hope this is a little more specific than “banks are going to disappear if they don’t innovate!” And I apologize to those of you who have said that. I know you know who you are.

The Best Bank Customer Service Story I Ever Heard

The incident happened 18 years ago, and I only heard it for the first time yesterday. What makes that worth mentioning is that the story was from my father.

I was in Florida yesterday for a conference that was 45 minutes from where my parents live, so they drove down and joined me for lunch.

Here’s the lunch conversation:

Mom: So what did you talk about in your speech?
Me: Stuff.
Mom: What kind of stuff?
Me: Bank stuff.
Mom: What kind of bank stuff?
Me: Bank customer loyalty stuff.
Mom: What kind of bank customer loyalty stuff?

Then it hit me. Thirty+ years past my teenage years, and my conversations with my parents haven’t changed one bit. (Where you going? Out. With who? People. What kind of people? Friends. What are you going to do? Stuff. Where are you going to do “stuff”? Out.)

So I told my parents that my presentation was about the stories that loyal customers tell. And my father says “oh, like the story I told you about our bank.” To which I replied, “you’ve never me told me that story.” (Which is incredulous, because my parents have ~10 stories, all of which I have to hear every time I see them. My people know what I’m talking about).

So he told me this story:

“We had been in Florida for no more than two or three months when late on a Friday afternoon I got a call from your uncle telling me that your grandmother had passed away. I started making arrangements to fly up to NY to take care of everything, and realizing that I needed a lot of cash, asked your mother to call the bank to see what time they’d be open until.”

Now, at this point in the story, he has to pass the storytelling baton over to my mother, because God forbid he should mess up even one small iota of the story that involves her:

“So I called the bank and talked to the branch manager and told her what happened, and that your father was on his way down to the bank. She said “oh, I’m so sorry to hear that, but the branch is closing in a few minutes and the vault is already closed, and it can’t be re-opened because it’s on a timer. Can you get in touch with your husband?” I told her I couldn’t and she said “OK, then I’ll wait here for him.”

With my mother’s piece done, the storytelling shifts back to my dad:

“So I got to the bank, and found it was locked, but knocked on the door, hoping someone would still be there. A woman came to the door, unlocked it, let me in, and told me that she spoke to your mother. She said she was sorry about your grandmother and that the vault was locked so she couldn’t get any cash. But she told me to come in, asked me to sit down, and said “Make yourself comfortable. I’ll be right back.” She went back to the front door, went out, and locked me in the bank. There I was, locked inside a bank branch by myself on a late Friday afternoon. A few minutes later she came back to the front door, unlocked it, and came back in. She then gave me four $100 bills and said “I know this isn’t as much as you wanted, but I hope it can tide you over until you can get more.” I asked her where she got the money from, and she said “I went out to the ATM and took it out of my account. You can pay me back when you get back from NY.”

I looked at my dad and said “I can’t believe you’ve never told me that story before! Do you know how much mileage I could have gotten out of that in presentations?!”

To which my mom replied, “We have no idea what exactly you do, dear.”

There’s a p.s. to the story.

I told my dad that I hoped he did something really nice for that woman. He said “Oh yeah. When I paid her back, we gave her a huge bouquet of flowers, and a gift certificate for dinner at a nice restaurant. And I wrote a letter to the bank CEO letting him know what happened.”

After a few seconds, though, he added this: “Which backfired on me.”

I asked him what he meant by “backfired” and he said, “As a result of my letter, she got promoted out of the branch to district manager.”

Now, a good son would’ve let it go at that, but noooo, I just had to ask: “How did you know it was your letter that got her promoted?”

He said, “because she told me that it was my letter that got her promoted.”

And that’s when I realized how truly amazing this woman was. You and I both know that no one gets promoted to district manager just because one customer sends a complimentary letter to the CEO. But this woman wanted my father to think that he was the cause of her promotion. Truly amazing.

Two final thoughts: With the decline in branch traffic, it becomes harder and harder for banks (and credit unions) to be in situations that create the stories that loyal customers tell. Electronic interactions just don’t lend themselves to this kind of emotional level. It isn’t about the branch, it’s about the interpersonal contact. But face-to-face contact seems to hold more potential for emotional connection than phone, video, or chat. Or tweeting.

Lastly, there was another thought I couldn’t help but have. I’m sorry to say this, but while listening to my dad’s story, I wanted to wring the neck of all the bank bashers out there, those who refuse to believe that banks can’t provide this level of customer service. 

—————

UPDATE: There’s actually another part to this story, which I wasn’t going to include here, but I just got the following tweet from Alan Bergstrom (@truebrandguru):

“Point is it happened 18 years ago. If only banks were the same now.”

Good point. Let me tell you the rest of the story:

After he told me the story above, I asked my dad if he was still with the same bank. He said “yep, although, they have gone through some acquisitions. They’re PNC now.”

“Do you get the same level of service now as you did then?” I asked.

“Funny you should ask,” he said. “Do you know who James Rohr is?”

Now here’s the absolute BEST part of the day: I said “CEO of PNC. I’ve met Jim Rohr.”

Which is a technically true statement. I did a presentation ~10 years ago for the PNC executive team, and did, indeed meet Jim Rohr. Not that he’d remember that meeting. But the opportunity to brag to mom and dad (mostly mom) that I’ve met the CEO of their bank put me one rung up the ladder closer to the position held by the “good” son, my “calls-his-mother-regularly,” rich lawyer, brother.

Anyway, my father goes on to say that he just wrote a letter (yes, another letter) to Rohr commending the woman he works with on a regular basis at his branch (who isn’t the branch manager, but a customer rep of some sort).

I asked him what makes her so good, and he said: “Two things. First, her knowledge of financial services and products is excellent. I’ve worked with expensive lawyers that don’t know as much as she does. Second, she always recommends what I need, not what the bank needs. Example: I was going to set up two revocable trusts, one in your mother’s name, and one in mine, but she recommended that I just set up one joint trust and avoid the extra fees.”

So, Alan, while you’re probably right that in many cases, branch service isn’t what it was 18 years ago, in some places, it is.

And to all the banks out there whose service isn’t as good as PNC’s, be thankful that my father doesn’t bank with you. Otherwise, your CEO would be receiving a lot of letters. 

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Urca (Or How One Bank's Wealth Management Strategy Is Completely Backwards)

The title of this post could probably win the award for the most SEO-unfriendly blog post title. Ever. Nobody searching on Google is going to find this post, let alone click on it.

Unfortunately, it’s the only title I can think of. Mostly because it’s the most appropriate title I can think of.

If you’re wondering — and I know you are — Urca is Acru backwards.

And now you’re thinking: “Aha! That clears it up. Not.”

According to Financial Brand, Acru is:

First Cherokee State Bank’s new sub-brand created around its wealth-management division, described as “a revolutionary new retail concept where wealth strategists give away financial wisdom at no charge.”

At the risk of quoting too much from the Financial Brand article, the following caught my attention:

  • “Our community space design is intended to be as comfortable as your own living room — great coffee included,” it says on the Acru website.
  • “We want you to come in and stay for a while.”  “Everything Acru does starts with a conversation,” bank spokesman Rob Kremer explained. “We believe coffee houses facilitate conversation.”
  • “The goal at Acru is to remove the transactional element from financial services and create a more interactive, relational environment,” added [Acru CEO Matt] Hames.

So why did I title this post Urca? Because Acru’s strategy is completely backwards:

1. Advice shouldn’t be free. One of the biggest problems in the retail banking industry today is the misalignment between what consumers pay for and the value they get (at least, their perceived value). People don’t like paying $5 month for the “privilege” of writing checks or using a debit card, and they certainly don’t think it’s fair that they have to pay $35 each time they overdraw on their account. It’s analogous to the $100 doctor’s visit that lasts for 5 minutes: You’re not paying for her time — you’re paying for her expertise to make a diagnosis and write a prescription. If a bank wants to get radical, it should charge for advice and give away the transactional stuff.

2. Most people don’t need wealth management advice. Is there a shortage of qualified wealth management advisors in Georgia? If there is, shame on all the existing providers of wealth management services (Merrill, Schwab, etc.) who have overlooked the opportunity. The mass market doesn’t need wealth management advice — it needs everyday financial management advice.

3. Physical location doesn’t matter. Coffee houses facilitate conversations? REALLY? Most of the coffee shops I go into are populated with geeks with their laptops plugged in, silently working away. People don’t want to go somewhere to get financial advice. They want it in the moment: At the point of transaction (when they’re at Best Buy ready to drop a grand on a HDTV) or at the point of decision (when they’re reviewing their finances at home at 9pm on a Thursday night). Acru’s wealth advisors are available from 9 to 5, Monday thru Friday. That’s when I’m working. What’s the rest of the wealth management advice-needing population doing those hours?

I’m willing to bet that Acru will generate more profits from selling coffee than it will from selling wealth management services. Any strategy that centers on getting customers to come to you is completely backwards from the convenience and value that consumers want from their financial services experience.