The topic of innovation seems to be heating up in banking circles recently. Normally, I would be excited about this. Instead, I have mixed feelings.
My biggest concern is that the enthusiasm over innovation is simply a reaction to recent regulatory actions that have constricted profitable revenue streams. If so, the “innovations” will be nothing more than workarounds designed to return profitability to these same streams.
My fondest hope is that there are real innovations on the horizon. New ways of connecting customers and banks. Technology and processes to make banking more convenient and useful for the customer. And creating competition around customer benefits that customers really want.
The true future of banking lies not in optimizing customers, but in optimizing customers’ lives.
The public outrage over bank bonuses has returned with a vengeance. Right or wrong, it’s a threat to your bank’s brand.
The only question is, what are you going to do about it?
The public is in no mood to be educated about variable compensation. And, as far as consumers are concerned, banks are all guilty by association. Battening down the hatches and hoping to ride it out isn’t going to help either.
Here are three strategies you can use to protect—and even improve—your brand:
Be Perfect
Customer experience is a major contributor to your brand. Make sure all customer touchpoints—frontline, website, call centers, etc.—are functioning at their absolute best. Start by assuming they’re not, then look for shortcomings and fix them.
Mirror Your Customers
Talk their talk. Share their values, aspirations, and concerns. Turn up the empathy. If they see themselves in you—if your story is their story—you’ve got brand. People are drawn to doing business with people like themselves. So be like them.
Get Real Local Amp up your community participation. Think micro as well as macro. Gestures like sponsoring a little league team (and showing up for games) are powerful bonding agents. Seize every opportunity and seek out more. Actions, not words, are key.
Obviously, the object here is to focus on empirical evidence that your bank is different.
The more local you get, the less national issues will reflect on your brand. The more that customers identify with you, the less likely they’ll be to lump you in with other banks. And the easier you are to work with, the more they’ll be inspired to spread the word.
The amazing thing is, as you put these three strategies into practice, you’ll realize—along with your customers—that you actually are different.
That’s what it comes down to, doesn’t it? If you’re not helping your customers, you’re just in the way. And what do people do if something is in their way? Obviously, the shortcut model is the way to go. The shortcut model means you give value to your customers before you give it to yourself. It means you become part of their plan before you can make them part of yours. So which one are you? Roadblock or shortcut? There is no neutral position.
It’s a kind of post that’s become increasingly common—the banks are evil rant. Here are a couple of quotes:
“Banks inconvenience their customers for a reason.”
“They have a naked interest in keeping their service as inconvenient as possible.”
So banks are inconvenient and evil. And inconvenience is no longer a sin of omission, but a sin of commission.
I know that banks are anxious for consumers to just to move on, but the public distrust of banks is still very much with us. In fact, there are indications that it’s building up steam. The billion-dollar question is: how do you build trust (which should be a priority for every bank), when the perception is that everything you do has a sinister motive?
The answer is simple, but difficult to apply. And it takes time.
Here are thirteen trust-building behaviors from Stephan M. R. Covey’s book, The Speed of Trust. It’s as good a plan as I’ve come across:
Talk straight
Demonstrate respect
Create transparency
Right wrongs
Show loyalty
Deliver results
Get better
Confront reality
Clarify expectations
Practice accountability
Listen first
Keep commitments
Extend trust
Any bank that puts even a handful of these into practice will be miles ahead of the competition. Industry-wide adoption could totally transform banks’ relationships with their customers.
Of course, this is just the kind of thing Dilbert would ridicule, but marketing never was his strong suit.
Here’s a fun fact:
Adams got his start in banking, and the experience inspired his successful cartoon strip. Think about that for a minute.
That is, they’re all about the numbers—balances, interest, risk assessments, etc. And, up to a point, that’s how it should be. But when banks continue to quantify beyond that point, they begin to lose sight of reality. They use quantitative methods to deal with human beings. Then they turn back to the numbers to find out what went wrong. These are the banks customers complain about.
Qualitative banks are also about numbers.
They are banks, after all. The difference is that they understand the limitations of numbers in dealing with human beings. So they design their research, products, processes, and communications in light of that understanding. These are the banks that innovate. These are the banks customers love.
If they perceive that your profit drive is negatively affecting their quality of life, the answer is yes. And a bank with a customer base of competitors is simply not sustainable.
There’s been a lot of bad press about overdraft fees lately. Most of it charging banks with rigging the game against customers. Now bank customers are furious, using social media to vent their anger.
So what is the industry’s response? Blame the customer.
Here’s a quote from Nessa Feddis of the American Bankers Association:
“It’s not that different from a parking ticket. If the fee for parking in a fire lane were $5, fire trucks would have a lot harder time getting through.”
It was an incredibly insensitive statement. Comparing profit generation to saving lives is bad enough. But implying that bank customers are lawbreakers who need to be punished is inexcusable. Especially now when trust is low and anger is high.
In your bank communications, keep in mind that a defensive stance is a competitive stance. And that deflecting blame to your customers will get you nowhere.
I read a post in Adrants the other day inspired by this monologue from Craig Ferguson:
The post questions the belief in advertising circles that hip and cool are more important than wisdom and experience. I’ve often questioned that belief myself.
Census data shows not only that, people over forty comprise more than a third of the U.S. population, but that this segment is growing more than twice as fast as those 39 and under. People over 40 also control more than 65 percent of the wealth.
How can advertising speak to people over 40 if those who create the advertising dismiss this huge segment out of hand?
“If the only thing designers know about culture is cool, we have a problem. After all, cool makes up something like 2% of the cultural meanings in circulation at any given moment.”
He goes on to say that:
“Designers who know only cool are in some literal sense of the term incompetent.”
And finally:
“Edgy is easy. If you live in the right part of town, read the right magazines, and consort with the right colleagues, it is not so very hard to capture cool. How much more difficult is to master culture!”
“Banks have become a bit arrogant and detached from the effects of what they do, but by the same token, the consumer has become kind of mercenary, difficult to please and ultimately an enemy of sustainable profitability.”
“This industry is at a decisive moment: if it fails to start engaging and advocating for customers, then it’s destined to become a sort of government-managed commodity business.”
“At the moment, the word confidence in financial services tends to imply things that are structural in nature, but I think there is a greater challenge ahead to build people’s confidence in the motives of financial institutions and in their purpose.”
That’s just a sample. Almost every point he makes in the interview sings like an arrow that just hit the bullseye.
Overdraft fees are one of those things about banks that drive customers out of their minds (and, too often, out of their banks). If an innocent miscalculation puts your checking account a few cents into the red—wham!—you owe $35.
This month, Bank of America has announced that it will charge only $10 if your overdraft is $5 or less. That still leaves room for the carpers to carp (for example, the bank raised its limit from five to 10 overdraft fees-per-day), but I’ll bet that most customers will see it as a win. I’ll also bet that it keeps these customers from defecting.
Could it be that somebody did some number crunching and realized BofA would lose a lot more in defections than they would gain in $35 charges? If so, it indicates that the bank is starting to pay attention to the back door.
It’s always amazed me that—year after year—banks lose as many accounts as they acquire, and seem to think nothing of the money lost in acquisitions. Especially when they’re paying hefty incentives for those acquisitions.
Isn’t it better business to simply keep current customers happy? Not only do you reduce defections, you increase positive word of mouth.
Here’s a video of Joe Garner (HSBC) talking about the concept of trust as it relates to banks. Don’t look for razzle-dazzle here. What Garner has to say is clear, simple and dead on.
A few quotes:
“It’s a shared value in that you can’t have trust all by yourself. Like love, it has to be given and received to exist.”
“Because trust is based on faith, it doesn’t need fact to be undermined”.
“The demonization of the banking sector will only serve to erode trust and work directly against the good of the society it exists to serve.”
At a short eight minutes, Garner’s talk is definitely worth your while.
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Tom Brzezina
Welcome to Outside-In Banking, a blog for bank marketers and anyone else involved in financial services. I believe that many banks are way too internally focused for their own good, so I try to provide an outside-in perspective. Expect a lot of opinions, raves, rants, and unsolicited advice. I hope to get the same from you.
Posted by tombrzezina 
Most banks are quantitative.
Overdraft fees are one of those things about banks that drive customers out of their minds (and, too often, out of their banks). If an innocent miscalculation puts your checking account a few cents into the red—wham!—you owe $35.
Welcome to Outside-In Banking, a blog for bank marketers and anyone else involved in financial services. I believe that many banks are way too internally focused for their own good, so I try to provide an outside-in perspective. Expect a lot of opinions, raves, rants, and unsolicited advice. I hope to get the same from you. 
