It seems that everyone under 30, and most people under 40, know that this is South By Southwest week in Austin. Or SXSW, or simply “South By” for those in the know. 15,000 people from all over the world pay from $700 to $1,300 to attend the various “tracks” of the festival. For us who live here, it seems that the official conference registrants only reflect a small percentage of those who converge on Austin this week to meet up and mash up.
The fastest growing section of SXSW is the Interactive Festival. This is where Twitter first got widely noticed and where Facebook’s Mark Zuckerberg was a recent keynoter. It seems that every influential blogger, developer and internet media mogul is here.
I was fascinated to see that one of the first sessions was titled “Banks: Innovate or Die!” The premise was that banks are simply too big and moribund to innovate, and that new financial players can give better service and steal customers away with creative new products. This was not just a wake-up call to the financial services industry, but a call to action to all the developers in the room that the payment industry is a wonderful opportunity for entrepreneurial growth.
Last week I was at the BAI Payments Connect conference. While there were some interesting new ideas, I’d have to say that much of the discussion in the DDA Under Siege track was around the “disastrous” impact of the new interchange fees and how this is bad for banks, and bad for consumers. As one speaker put it, “a lot of opining and whining”.
The folks attending South By can’t understand why financial institutions, which are facing disruptive change and frustrated consumers, are digging in their heels and not innovating. They are asking fundamentally different questions. Instead of “how can we protect our payment revenue”, they are asking why we even need a traditional payment system. Think about PayPal a few years ago, which asked why we couldn’t just email or text money instead of having to write checks.
Too many banks are saying that if the proposed new interchange restrictions go into effect, they’ll have to raise fees and it will force many people out of the banking system.
I don’t buy this logic.
First, the assumption that banks will have to raise fees assumes that income declines but the expense base and business model remains the same. That doesn’t make sense. It’s like a small retailer, faced with Wal-Mart moving into their community, explaining that they have to actually increase pricing because their revenue is declining due to low cost competition.
Second, some consumers may be forced out of the banking system but I don’t think they care. With all the innovative new solutions, there are plenty of ways for them to be served at even lower cost than offered by banks today. If PayPal, Facebook and Google offer payment solutions, why should I care if banks don’t want me?
There is so much innovation in the consumer and B2B space today that it is confusing. What should we invest in? Which technologies will dominate? We don’t have to be on the bleeding edge, but we can’t stand still and hope that the model that worked in the past will continue to serve us well in a very different future.
“Innovate or Die” is a real imperative!
What was on the mind of our audience at the BAI Retail Delivery Conference? Here’s a summary of the questions from the audience, and the answers from the panelists (Jay Freeman of Wells Fargo, Ric Carey of Umpqua Bank, and Jeff Talpas of BBVA Compass):
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Will the Branch of the Future result in big changes coming rapidly, or will change be gradual? There was general agreement that the pace of change will continue at about the current rate
- whether you consider that gradual or rapid is in the eye of the beholder. The key take-away is that change is coming, and we need to experiment with solutions and prepare for a changed world.The panelists cautioned that it is not “one size fits all”. For example, the smaller, automated, neighborhood stores work well in downtown Portland or Seattle. But in more rural communities, the traditional branch concept is not changing or at least not changing rapidly.
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How do you see the role of in-store branches vs. traditional branches?
Only Wells Fargo had any significant experience with in-store. There was a lack of excitement among our panelist for this format.
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With the new economic times and regulatory expense, how long on average does it take to bring a de-novo to profitability?
Umpqua reported that their new Neighborhood Store format was profitable at 11 months. It takes less than 8 weeks to build at a cost of about $400,000.
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It is understood that creating more branches is the basic means to book more customers and increase deposits, but should they always be profit centers?
Enthusiastic “yes” from all the panelists, with the caveat that certain non-controllable expenses should not be included in the formula.
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How do you develop distribution organizations that are prepared, and have the skills, to support the changing role of the branch? Given the evolving role of the branch, how have your hiring practices and training initiatives changed?
Start hiring and training for the changes you know are coming. Our hiring has changed over the years, and continues to change as our industry changes. (See the last page of the presentation for more detail)
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How are Umpqua’s neighborhood stores staffed?
Smaller number of staff with more of a sales and service orientation. These are community centers, with events, exhibits, and coffee bars to make them a destination. They serve smaller markets
- often just a few blocks in an urban area. These are not principally transaction sites, although they have transaction capability. -
What do you think about customer acceptance of teller automation, i.e. self checkout like grocery stores, video, virtual teller, etc.?
Umpqua is experimenting with all of these concepts now. They use their Innovation Lab to test new ideas
- many of them technological, and many not. Through a partnership with Cisco, they are testing video conferencing and are expanding utilization in their branches.In a related discussion, BBVA Compass described their mobile application with geo-location capability (take a picture on your smartphone camera or the street and the application will automatically recognize where you are and locate the nearest branch, ATM, etc.). They also described their new CRM application, which will bring to their US branches the very sophisticated capabilities already in use at BBVA in Spain.
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Everything I read tells me that Millennials do not want to use a physical branch. The branch may not be dead, but it will be soon unless we find a way to entice the Millennials to come in?
“Millennials” are not homogeneous. Jay Freeman and Ric Carey were emphatic on this point. As they stated, “It’s a fallacy to think none of them want to use branches. You’d be surprised to find out how many do not want self service, or do not have the degree of computer literacy you normally think of with this age group. Plus, many of them will change as they grow older, have families, and mature. Just look at your own behavior and needs now, compared to when you were in your late teens and early 20′s.”
The panelists agreed — avoid the trap of thinking about customers as numbers or statistics, but rather look at what they want, how they behave as individuals.
A few months ago I was working with a client on a suite of new consumer and business deposit products. We were almost ready to begin roll-out training when the Director of Retail Banking resigned for another position. The CEO and I started discussing how to keep momentum moving until the position was filled. He jokingly asked, “Why don’t you run Retail for a while?” One thing led to another, and — to my surprise — I found myself signing up to be Interim Director of Retail Banking at a Texas based community bank.
Well, I guess it’s not quite so surprising. I become strongly vested in my clients’ success. And success for this bank meant getting more involved in day to day decision making.
Although I’ve managed as many as 1,000 branches in my career, I’ve spent the last 10 years helping retail banking managers and bank CEOs improve their sales management and customer profitability strategies. “This will be fun”, I thought.
But before you think that I’ve taken a sudden career change, Peak Performance Consulting Group is stronger than ever. It’s just that this project has gotten a little more hands on.
So — how have we done?
First, the details. The bank is less than $1 Billion and less than 10 branches. We didn’t change pricing. The marketing budget is miniscule — we spent only $1,000 last month on promotion.
Here are the results: new account openings grew 46% in the first month, and headed for similar results this month. Fee revenue is on track to double.
How did we do it? It was a laser focus on sales process: sales management, sales behaviors, and sales coaching.
You can get the same results in your organization. Just think of the profit impact if you attain 25-50% growth in sales in only 30 days.
As they say, its all in the details. I’ll be talking about some of the specific things we did (along with continued updates on results) in future blog postings. But you don’t have to wait. Give us a call, or send us an email and I’d be glad to tell you how we can help your organization substantially improve sales management success.
I was at my favorite Dairy Queen on Sanibel Island (my wife says it’s my favorite Dairy Queen because it’s on Sanibel Island), and Colleen said to me “They run this place the way you keep saying banks should run branches.”
They had a simple menu. Nothing fancy. And when patrons with their northern accents asked for that unique combination that might exist in the boutique ice cream shop back home, the staff patiently explained how they really wanted chocolate, vanilla or a combo.
Everyone could do everything – no specialization.
When they were customer facing, or “on stage”, or whatever you want to call it
- they were fully engaged. I could see a big sign directed at the staff: “no cell phones while on duty!”
So isn’t this kind of like running a typical branch? Most customers want simple, basic banking. Most banks
- especially Community Banks – don’t have, and can’t have, a very complicated menu of products. The majority of branches are staffed with about 4-6 FTE
- with this small a staffing complement, doesn’t everyone have to be able to do everything? And finally, don’t we all have to be fully engaged when we’re in front of customers?
By the way, this DQ has consistently been the top performing in total sales for years.
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Need expert help improving the performance of your branches? Peak Performance Consulting Group has best practices and unique solutions, with a proven track record of success helping clients achieve industry leading results. Contact us
- our experts can help you unlock the key to additional profitability and efficiency.
I recently met with two banks that had very impressive sales results – opening nearly twice as many new accounts per branch as peers. But when looking further at their total program, account growth was no better than our benchmarked average. Simply put, high attrition offset most of the impressive sales gains.
It’s not how many new accounts you book, but how many you turn into long term profitable relationships.
Some thoughts to ponder:
- You need to pay as much attention to account retention as you do to customer acquisition. In the retail bank, retention programs often don’t get the attention and focus they deserve when compared to front end sales efforts, marketing acquisition programs, and the like.
- The impact is huge. Think about the effect on revenue, core deposit Cost of Funds, and marketing expense if you can simply retain a higher percentage of your customers.
- You need to know the numbers. What is a good acquisition and retention rate? How do your metrics compare to peers? How do they compare to top quartile performers?
- You need to know what the best practices are, and assess which ones have the highest impact for your organization. Improving sales process by correctly profiling customers and placing them in the right product for their needs? Ensuring structured on-boarding processes are implemented? Cross-selling “sticky” products? Implementing attrition prediction models, backed-up with targeted retention campaigns? Reducing problem incidence and increasing overall satisfaction rates?
In the end, account churn is very costly – but it is also relatively inexpensive to control. We can help — we have benchmarks, best practices, and proven results. Give us a call.
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Need expert help improving revenue from your consumer and business customers? Peak Performance Consulting Group has best practices and unique solutions, with a proven track record of success helping clients achieve industry leading results. Contact us
- our experts can help you unlock the key to additional profitability and efficiency.
Last week I was on my annual “veg out at the beach” at one of my favorite places, South Seas Island Resort. Over the weekend, the place filled up with top performers from a leading educational firm on their recognition and reward trip. It was deja vu all over again. Colleen and I were sitting in the sun with our beach bags all labeled from rewards trips we had been on to Hawaii and Mexico “back in the day” when I was a sales manager, watching this energetic crop of top guns. We started reminiscing, and the conversation worked its way around to how you motivate sales staff.
It reminded me of the question that I often hear from clients: “What is the right mix between monetary and non-monetary recognition?”
So here are my “notes from the beach”:
- Top performers crave recognition. They are already at the top of the incentive pay scale. They want the feeling of recognition, especially the knowledge that they are part of a select group.
- Come to think of it, all good salespeople, not just top performers, crave recognition. People who like sales do so because they like the positive feeling they get from interacting with people, and having people respond to them. Recognition of a job well done is as important
- sometimes more important – than money (but they’ll never tell you that). - It’s not just about recognizing your top performers – you’ll learn more from them than you realize. When I set up my own “President’s Club”, I got my best sales management tips when I asked each of my participants for one good idea, something they did that worked for them. I got some of the simplest solutions, that I could then turn into coaching tips for the rest of my staff.
- It’s not as expensive as you think. I was in Florida during the off-season. Some of my most successful recognition trips sent Texas branch managers to Mexico in July (from hot to hotter!), or Chicago branch staff to a Wisconsin ski resort when there was no snow. It was all about the fun, excitement and recognition.
And here’s my last thought: if you need expert help improving the performance of your branch staff, contact us. Peak Performance Consulting Group has best practices and unique solutions, with a proven track record of success helping clients achieve industry leading results. We can help you unlock the key to additional profitability and efficiency.
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