Chief Investment Officer
BirdsEye Viewseeing the world as it is
Several years ago I read a fascinating study by Greenwich Research. In it, the firm surveyed bankers and small business bank customers, asking them the same questions: what matters to bank customers and where do they see value-added. The results were striking. Any similarity among the two sets of ten elements was purely coincidental. Bankers thought their small business customers were most sensitive to price and fees. Customers said: give me the same banker consistently, someone who knows me and can add value to my business through industry expertise, and I’ll be happy. Greenwich repeats this study annually, and the results remain the same.
BAI conducted similar research on the consumer side. Again, striking disconnects appeared among customer attitudes and perceptions and bankers’ picture of customer wishes. The gap between industry perception and customer reality continues to widen. Retail customers are becoming increasingly less trusting of banks, and feel disconnected from their institution. Only a third of all respondents responded positively to the statement, “my bank understands my financial needs and goals”. A marginally higher percentage agreed that “my bank is concerned about me”. A mere 45% said “I am comfortable discussing my personal financial goals” with my banker.
These numbers are widely divergent from banker perceptions. Bankers responded that consumer confidence in the overall economy has improved over the past six months. Bankers further believe that while consumers do not trust the industry in general, especially after the crisis and the excellent PR work the Consumer Financial Protection Bureau has done, but that they do trust and are loyal to their own bank. Something like the saying, “everyone hates congress but loves their own representative”.
Bankers think consumer trust their companies and that they are doing a better job of understanding their retail customer needs. Consumers’ response trends indicate the opposite when it comes to banks, but not to credit unions.
Consider the past 8 years. The industry has been brought back from the brink, but hundreds of banks failed. The surviving banks felt stability has returned to their world, but consumers believed that their survival was due to a government bailout. Consumers don’t see how the industry healed itself and the great returns the government received on TARP funds. Their confidence in the system has been severely shaken, and the media, government and social media validate their concerns daily.
Following years of customer mistrus,t the industry started recovering. Financial stability and overall economic improvement helped. And then Wells Fargo happened. It shook both the industry and its customers to the core. The most trusted universal bank failed us all, allowing bogus accounts to be opened by instituting an intense sales culture. We are now all paying the price for that development.
Banks have traditionally addressed perception issues through customer surveys. They spend millions of dollars asking customers in various ways and at various times the most mechanical questions about their interaction with the bank. I find it ironic that so many banks which are committed to differentiate themselves on the bases of service ask the very same questions of their customers regarding the interactions they had with the bank. For example, branch-bound surveys almost always ask questions such as “Did they stand up? Did they look you in the eye? Did they use your name?” etc. How can we create differentiated experiences when we strive to achieve the same mechanical results?
It is time we find out the reality of our customers’ perception of our banks. We need to understand their feelings about us, not just how long they had to wait. Many surveys today ask as the first question “How did you feel about your interaction today?”, offering words such as “angry, relieved, delighted, disappointed” as options. Counting things that are easy to measure, such as wait times and whether everything functioned as it should have (e.g. was the room clean at a hotel), might be easy to measure but it is not as enlightening as to the overall experience. Interestingly, it is the interpersonal interaction that most often makes the difference, even if the product exceeds expectations. A cushy comforter on a plane is a wonderful thing, but a surly flight attendant can diminish its importance and yield an overall negative experience. Similarly, a great rate is a major satisfier, but a cumbersome path to get that rate can sour the overall experience.
My conclusion is simple: any successful bank starts with the customer reality. We should not believe our own press. Instead, ask your customers, both internal and external, what they see. Real or not, their perception IS the reality we all must deal with. It’s time to get closer to those we serve and understand better where THEIR value drivers are across all lines of business. Pre-crisis assumptions and the vague mantra of “world-class” service don’t cut it in today’s uncertainties. Instead of looking ourselves in the mirror, let’s look the world in the eye, see it as it is, and go from there.