If customer service gets great lip service at your bank, but short shrift from IT, there might be a good reason: lack of solid and usable metrics behind the business case.
This article was originally published in BAI Banking Strategies on April 22, 2013
Providing superior customer service has been a key differentiating strategy for many financial institutions. After all, we are in a service business and service quality matters. But measuring the payoff has been elusive. We know it’s the right thing to do but can we measure how our investments in customer service really translate into bottom line impact with the same discipline that we apply to other aspects of our business?
One problem is the way we describe service quality. “Wow,” “delight” and “Disney-style” are usefully descriptive adjectives but what do they really mean in a service context and how do they impact the bottom line? An even bigger issue, in our experience, is the lack of disciplined metrics and financial models that link these investments to financial return. How can management measure the return on investment (ROI) from the human, Information Technology (IT) and capital resources required to attain higher levels of service?
As with any other investment, management needs tools to quantify impact and prioritize investments in a disciplined way. Without them, we are forced to navigate by touch and feel, responding by instinct and emotion to determine what customers want and value, rather than managing with facts and metrics.
Branch acquisitions can be a fast route to market share, but today there are more reasons than ever for buyers to approach branch for-sale signs with a long checklist and a cautious attitude.
This article was originally published in BAI Banking Strategies on March 15, 2013
BY TOM ZAYKO, Director, Peak Performance Consulting Group
With the expansion of digital channels, a decline in branch traffic and the current industry focus on controlling costs it’s not surprising that some financial institutions are reducing their branch network. In 2012, over 700 branches were closed. Institutions with large branch networks, such as Bank of America Corp., HSBC and SunTrust Banks Inc., have all announced significant branch closings.
Community banks see this as an exciting opportunity to acquire attractive sites and expand market share – and, in many cases, it can be. But given limited capital and changes in the ways consumers and businesses are using branches, how should banks approach this opportunity?
Our view is that too many institutions become enthralled with the real estate “deal” and sometimes overlook strategic implications of their investment. Competition for an attractive property in an appealing market makes it easy for buyers to be seduced by aspects of the branch that ultimately will have little to do with whether it will turn a profit.
While physical branch presence is still valued by consumers and businesses, its utility is declining. The trend is undeniably moving toward greater use of non-branch channels, such as the call center, online and mobile. That raises the relative cost of the branch per customer served and makes for a tougher business case for a branch buyer.
As we see it, a “look-before-you-leap” approach is in order:
This article was originally published in BAI Banking Strategies on February 15, 2013
As customer transaction activity declines in branches, hyper-local sales and marketing strategies are required to bolster branch network profitability.
Former U.S. Speaker of the House Tip O’Neill famously coined the phrase “all politics are local”, expressing the need for successful politicians to understand and reflect the concerns of their local constituents. And the same sentiment couldn’t be more true for banks and bankers. In this era when consumers and small businesses are migrating away from physical bank branches, it is even more critical for banks to be relevant to the communities they serve.
It is clear that customer still value branch presence. Almost two thirds of consumers identify branch convenience as the primary reason for choosing their bank. But it is also clear that channel preferences are changing. Transactions conducted in bank branches are declining 5% to 6% per year due to direct deposit, debit, electronic bill pay, remote check capture and other methods of check displacement. And shrinking branch traffic means fewer sales opportunities, with new accounts opened per branch full-time employee (FTE) declining year over year.
While retail branches may have diminishing value for transaction processing, they remain the primary driver of customer acquisition and consultative sales. Most new household relationships are still opened face-to-face, not through remote channels. Business customers are also dependent on branch-based services.
There is a valid argument about optimal branch network configuration, i.e. the appropriate number of branches and the mix of self-service vs. in-person delivery. But there is no doubt that physical presence to serve geographically defined communities and trade areas is still basic “table stakes” for being in the game.
Tom Zayko and Ric Carey, Directors at Peak Performance Consulting Group, were interviewed recently by SNL Financial. To them, banks are overemphasizing expense reduction efforts at the cost of engaging with customers — interactions that could lead to greater, more profitable relationships. Zayko and Carey propose leveraging the branch network to make it a more effective transaction point with customers, marrying data about channel usage and current products to customize offerings. They encourage banks that have been focused on cost cutting through branch optimization and investments in technology to try a different tactic: talking to retail and small business customers and tailoring services and packages to their needs.
This is a modified version of the SNL Financial article.
What is your read on 2013 so far and what do you think will be an area of interest for banks?
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I am very pleased that two well-known bankers/strategists: Ric Carey, formerly with Umpqua Bank, and Tom Zayko, formerly with Citigroup, have joined Peak Performance Consulting Group as Directors.
As EVP and Head of Retail Banking for Umpqua Bank, Ric managed Umpqua’s internationally acknowledged best-in-class community banking program. Additionally, he has particular expertise in Small Business Banking.
Tom is an expert at identifying growth opportunities and creating high performing marketing and sales strategies. His work includes developing specific competitive and growth strategies based on individual market potential. In addition, he was responsible for creating a unique survey program that gathers customer feedback in real-time.
Ric and Tom bring tremendous expertise to our clients, having led their banks in strategies that achieved revenue growth with superior profitability and improved distribution effectiveness. With long careers in banking, they understand the challenges the industry faces today, and they know how to deliver bottom-line results. In addition, they expand our geographic coverage: with Ric on the West Coast and Tom focused on the Mid-Atlantic and New England area, we are better able to serve our growing client base.
But, as they say on TV, “wait, there’s more!” Go here for the full release from BusinessWire.
This article was originally published in BAI Banking Strategies on Nov. 21, 2012
Effective bank-at-work programs require a target market strategy, relationship sales process, segmented offers and deep penetration of the employee base.
“Bank at Work,” or workplace banking, is not a new concept but it’s one that may deserve a second look from growth-starved bankers since best-in-practice banks have embraced this strategy to drive as much as between 40% and 60% of all new consumer accounts. And the time is definitely right for this renewed attention. Fewer customers are coming into bank branches as preferences shift to alternative channels. At the same time, traditional media and direct response is becoming less efficient as a means of acquiring and converting prospects. In this environment, bank-at-work can be a highly effective and efficient acquisition channel by reaching prospective customers at their workplace.
Our analysis of over 20 workplace banking programs suggests a clear roadmap for building successful programs. We surveyed a broad spectrum of financial institutions, from Top 10 to super-community banks. Some had developed highly innovative solutions that enhanced their ability to penetrate the bank-at-work channel. Others, who were equally effective, simply maintained a clear eyed focus on basic executional excellence.
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