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:
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?
We are continuing to see mobile devices, like Square and Intuit’s GoPayment, displace traditional credit card terminals. While initially targeted at smaller merchants, they are now moving upstream.
The mobile wallet (using smartphone applications for payment) looks to be the next frontier for smartphones as a means of payment by the consumer. Starbucks, for instance, allows customers to pay for their purchases using Square Wallet — the same company that offers the Square card reader. There are also efforts under way by some companies to allow consumers to use their smartphones at a cash register as a substitute for a credit or debit card.
Jerry Siebenmark of the Wichita Eagle/McClatchy News Group wrote about these trends recently (with some nice quotes from us).
Although the ultimate winning technology is unclear (EMV? NFC?) it is clear that people are using mobile phones to make payments and transmit them in some way. For banks that make money from merchant processing, Square and other card readers threaten to take business away from them, or dilute the number of players in that space. Longer term, it also changes how consumers use bank branches – it is one more service that lessens businesses’ and consumers’ need to use a bank facility.
This article was originally published in BAI Banking Strategies on January 11, 2013
Banks have the opportunity to nearly double their business banking profitability by digging deeper into small business sub-segments to find unmet needs.
BY RIC CAREY AND DAVID KERSTEIN
It is accepted wisdom throughout the industry that small businesses represent banks’ best opportunity for higher spreads, improved fee income and superior relationship profitability. Yet we find that few banks are actually succeeding in doing what it takes to effectively penetrate this segment and unlock the profit potential.
It’s not for lack of trying. Many banks put serious money behind their commitment to small business – primarily by staffing up on lenders and increasing marketing support.
And it is an exciting time to focus on the small business banking segment. Our research that probed deep into the sub-segments of small businesses reveals that banks can provide huge value. Thanks to new channel advances and advanced analytics, banks have more to offer than ever and small businesses have urgent banking needs that go unmet.
But to do so, bankers must re-think old assumptions about customer needs, channel preferences and marketing tactics.
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.