Shaking Up Traditional Banking


banking-strategy-2-10-17.pngUnlike some executives, David Becker likes to be told what he’s doing wrong. The chairman and chief executive officer of First Internet Bank in Fishers, Indiana, says bank interns speak to the senior leadership team at the end of their internships to discuss ways the bank could improve. He expects the same of staff throughout the organization.

“[Our hire] is the dissatisfied banker,’’ he says. “They were in an organization that had a boatload of rules and policies. We take the banker who says, ‘What if we did this?’ We want the person who questions the day-to-day operations.”

Running the bank in such a way has paid off.

The bank’s holding company, $1.8 billion asset First Internet Bancorp, grew loans 31 percent last year from the year before, to $1.3 billion. Net income grew to $12.1 million from $8.9 million in 2015. The bank’s return on average assets was 0.81 percent in the fourth quarter of 2016, and its return on average equity was 11.24 percent. First Internet has its headquarters in Fishers, a suburb of Indianapolis, and a loan production office in Tempe, Arizona, and that’s it. With a focus on digital banking, First Internet can grow its loan book nationally while keeping expenses low. One of its niches is digitally savvy investors who own properties or businesses in multiple states because the bank can accommodate lending that may take place in different parts of the country.

Investment bank Keefe, Bruyette & Woods has an outperform rating on the stock, in part based on its cheapness relative to the bank’s performance. The bank will have to continue to grow to achieve efficiencies, because internet banks have to pay slightly more for deposits than other banks do, says Michael Perito, a KBW analyst who follows the stock.

Becker feels as if the big banks are getting consumers more accustomed to digital banking, and therefore, more likely to leave for digital-only banks. When he first started the internet bank in 1999, customers had to deposit checks by sending them in the mail to the bank. Now, they can just remotely deposit them through the bank’s mobile banking app. If customers use another bank’s ATM, First Internet reimburses them for up to $10 per month in surcharges—making up for the bank’s lack of a branch network.

The bank has been growing lately in part because it is hiring seasoned bankers to tend to its loan book of mortgages, commercial real estate and consumer loans. Becker says the bank has managed to survive by building slowly and carefully in its early years, so as not to overstep its infrastructure. “The team we have on board are all folks at the senior level that worked at multistate, large, regional banks and have the expertise and the ability to help us grow to that multi-billion-dollar position,’’ Becker says. “It is all about the people. We can create computer tools and algorithms, but at the end of the day, somebody has to talk to you if there is a problem and know how to underwrite a loan.”

The bank is acutely focused on customer service, and in its early days, it didn’t hire anyone right out of high school or in their first job. “We needed talented people who could handle anything that came in the door,’’ Becker says. There are no tellers per se, and everyone who works in customer service needs to handle multiple functions, from wire transfers to starting a new deposit account. Staffers can communicate with their customers on the phone, in online chat rooms or via email. They keep track of customer reviews on sites such as Yelp, because bad reviews can damage the company’s reputation. Software vendors are held to account, and the bank doesn’t sign any long-term contracts with vendors, Becker says.

Although the bank relies on vendors rather than developing its own software, it follows the workplace ethic of a tech company: a 24-hour gym is available, and people can show up in jeans to work every day. “We use technology to revolutionize the banking process,’’ Becker says. “There really isn’t any limit to our potential growth. Are we a drop in the bucket in the whole community of financial services? Yes. But the consumer is coming our way. We are getting better at it and we are bigger day by day.”

Five Ways to Improve Your Bank’s Commercial Lending Department


commercial-lending-5-27-16.pngWhen running a business, one of the most important things an owner needs is access to capital. Unfortunately, getting their hands on that much needed capital is never easy, quick or painless. In fact, it’s quite the opposite. But the experience doesn’t have to be all bad. If you are a lender, consider these five steps to stand out from your competitors.

Be Convenient
For people who own or run a business, many times it is their passion (or their obsession) and most spend 60 plus hours a week tirelessly working on making that business a success. The last thing they have time for in the middle of the day is to run to the bank to talk about their borrowing needs. Provide your business customers with a way to explore and even apply for a loan outside of the scope of normal bank hours and in a way that leverages technology as a productivity enabler. In this instant online access world, banks need to provide their customers convenience, and technology is essential to that.

Be Fast
When the need for capital arises, most business owners needed it “yesterday” rather that “six to eight weeks from now.” Let’s face it, in the world of banking, we’re always thorough, but we’re not always quick. The time to process most loans, from application to funding, can take a very long time. One of the biggest negative influencers on the customer experience is the frustration borrowers have to deal with as the lending process drags on. Through automation, banks can streamline lending processes without compromising their credit requirements. Leverage technology by integrating resources for data collection, underwriting, collection of the required documentation as well as closing and funding.

Be Easy to Work With
It takes a lot of time and energy just to complete a loan application. And it’s by no means over once the business owner gets approved. Streamline and automate your application loan processing workflows as much as possible to eliminate tedious re-keying of the same data over and over again, or requiring applicants to fill out or review elements of the application that don’t apply to them. Provide a way for clients to get the bank what it needs, including bank statements, tax returns, financials etc., in a simple, automated and timely way by integrating technology where possible.

Be Aware of the Big Picture
Business owners are coming to you for more than just a loan. They want help running their business and welcome any advice or value-added information the bank provides. Know that the loan is only one part of the picture. Understand what the capital means to the business. What does the new piece of machinery mean for the long and short term of the company’s performance? How will the extra employees impact the growth of the company? How does what you are doing for the business enhance both the business and personal side of the relationship? To really be a trusted advisor, ask questions that focus on the benefits the business will realize from engaging with the bank. Create a loan process that allows bankers to focus their time on helping customers. Bankers should be building relationships, cross-solving, and maximizing the bank’s share of wallet instead of spending their time spreading numbers and chasing down documents.

Be Prepared
Study after study has proven the the main difference between a top performing sales person and an average producer is the amount of time they spend “preparing” for a conversation with a business owner. The more prepared a banker is, the better the customer experience. Being prepared means doing your homework and understanding the business, the industry, the business owner, and the local economy, for starters. The more prepared a banker is, the more help they can provide and the more value they will bring to the relationship.

With every bank knocking at the doors of the same businesses, competition for quality customers has never been more intense. Follow these five simple steps to set the customer experience your bank delivers above all the rest.

Some Banks Offer Digital Appointment Booking, But It’s Rare


mobile-appointment-3-18-16.pngIf a customer wants a haircut, chances are that individual can go online and schedule an appointment at a local salon. But if the same person wanted to schedule online a convenient time to sit down with a banker to discuss a loan, that customer likely can’t do the same. A bank’s website should be a strong prospecting tool for banks, but despite the drive to digital, many banks don’t offer a way to go online to schedule an appointment. Shouldn’t banks offer an easy way to direct the customer from the web to the branch?

Few banks offer digital appointment booking, according to the research firm Celent. According to a Celent survey conducted in October 2014, just 36 percent of North American financial institutions above $50 billion in assets offer online appointment booking to their customers. For institutions below $50 billion, online booking is even rarer, at less than 5 percent.

Bank of America was an early adopter of online appointment booking, starting with its mortgage lenders in 2008. The bank has since expanded to allow customers to book appointments within its mobile app as well, and customers can arrange appointments for a score of products, including checking and savings accounts, credit cards, investments, financial planning, small business banking and various loans. Prospective customers just choose a product area, select an in-person or phone meeting, and type in their zip code to find a nearby branch. From there, the client can select a date and time. “We do 21,000 appointment requests a week now through either smartphone or the website,” Bank of America’s head of digital banking, Michelle Moore, told the Associated Press in February 2016.

Users of digital appointment scheduling in the U.S. include Wells Fargo & Co., Regions Financial Corp. and PNC Financial Services, and small community banks such as Santa Barbara, California-based Montecito Bank & Trust, with in $1.2 billion in assets, and $577 million asset Paducah Bank & Trust Co., based in Paducah, Kentucky.

“You’ve got to figure out how to be smarter in engaging customers, and digital appointment booking is one way to do it,” says Celent Senior Analyst Bob Meara. “Make it easy to click to call, or have an online chat with somebody or to make an appointment in a branch.” Celent reports that Bank of America’s digital appointment features were developed in-house, but vendor solutions are available that can easily tie into a bank’s current infrastructure.

“We’re in this on-demand economy,” says Gary Ambrosino, president and CEO of TimeTrade, based in Tewksbury, Massachusetts. Clients that use TimeTrade’s online appointment scheduling technology include retail banks, healthcare companies, universities and retailers.

Prompting a potential customer to make an appointment online makes that person more likely to follow through with bringing their business to the bank. A customer may be looking for a loan late at night, and want more information. “It makes sense to have a link” for scheduling a time to come in to see a banker, says Meredith Deen, president of Alpharetta, Georgia-based FMSI, a branch performance technology provider serving the banking industry.

Bank marketing teams also gain valuable data—even if that customer skips the appointment. “They just handed you their name, their phone number, [and] their email,” along with information on the products and services that the customer is interested in, says Glenn Shoosmith, CEO of BookingBug, an online booking platform based in London, with offices in the United States. “That’s the marketer’s dream set of information, and you’re getting that for free.”

Scheduling appointments online means that bankers can meet at a time that’s convenient for the customer. By doing so, branches can better schedule their day, reducing traffic at peak times and instead creating a steady flow, so ideally even walk-in customers will have a better experience. Banks can also make better, more profitable use of specialized employees that float between branches, who can now potentially see more customers within a day, says Deen. And bankers can better prepare for their day, by knowing exactly why the customer is coming in, and the product that customer is interested in.

Adoption among Montecito Bank & Trust’s customers has been slow, according to Megan Orloff, director of marketing. However, she expects that to change when the bank improves its website. To ensure the success of such appointment platforms, bank marketing teams could advertise their availability to customers, and ensure that it’s easy to find and use on the bank’s website or app. The financial institutions that offer digital appointment booking now remain in rare company—which means newcomers easily will stand out in a competitive marketplace.

Should Community Bankers Worry About Digital Transformation?


fintech-8-28-15.pngI was sitting in a group discussion at Bank Director’s Chairman/CEO Peer Exchange earlier this year when the subject of the fast growing financial technology sector came up. That morning, we had all heard a presentation by Halle Benett, a managing director at the investment bank Keefe, Bruyette & Woods in New York. The gist of Benett’s remarks was that conventional banks such as those in attendance had better pay attention to the swarm of fintech companies that are targeting some of their traditional product sectors like small business and debt consolidation loans.

The people in the room with me were mostly bank CEOs and non-executive board chairmen at community banks that had approximately $1 billion in assets, give or take a hundred million dollars. And I would sum up their reaction as something like this: “What, me worry?”

In one sense I could understand where they were coming from. Most of the participants represented banks that are focused on a core set of customers who look and act a lot like them, which is to say small business owners and professionals in their late forties, fifties and sixties. The great majority of community banks have branches, which means they also have retail customers, but their meat and potatoes are small business loans, often secured by commercial real estate, and real estate development and construction loans. I suspect there’s a common dynamic here that is shared across the community banking sector, where baby boomer and older Gen X bankers are doing business with other boomers and Gen X’ers, and for the most part they relate to each other pretty well.

There are two trends today that bear watching by every bank board, beginning with the emergence of financial technology companies in both the payments and lending spaces. The latter is the subject of an extensive special section in the current issue of Bank Director magazine. I believe the fintech trend is being driven in part by a growing acceptance—if not an outright preference—for doing business with companies—including banks and nonbank financial companies—in digital and mobile space. The fintech upstarts do business with their customers almost exclusively through a technical interface. There is no warm and fuzzy, face-to-face human interaction. Today, good customer service is as likely to be defined by smoothly functioning technology as by a smiling face on the other side of the counter.

The other trend that all banks need to pay attention to is the entry of millennials—those people who were born roughly between the early 1980s and early 2000s—into the economy. Millennials can be characterized by a number of characteristics and behaviors: they are ethnically diverse, burdened with school debt, late bloomers from a career/marriage/home ownership perspective and they generally are social media junkies. They are also digital natives who grew up with technology at the center of so many of their life experiences and are therefore quite comfortable with it. In fact, they may very well have a preference for digital and mobile channels over branches and ATMs. Although digital and mobile commerce have found widespread acceptance across a wide demographic spectrum, I would expect that the digital instincts of millennials will accelerate their popularity like the afterburner on a jet fighter.

Although they now outnumber boomers in the U.S. population, millennials are not yet a significant customer segment for most community banks. And the universe of fintech lenders is still too small to pose a serious market share threat to the banking industry. But both of these trends bear watching, especially as they become more intertwined in the future. The youngest boomers are in their early fifties. The cohort that follows, the Gen X’ers, is much smaller. Who will bankers be doing business with 10 years from now? Millennials, you say? But will millennials want to do business with bankers then if an increasing number of them are developing relationships with a wide variety of fintech companies now?

A board of directors has an obligation to govern its company not only for today, but for tomorrow as well. And these two trends, particularly in combination, have the potential to greatly impact the banking industry. Learning how to market to millennials today by focusing on their financial needs, and studying the fintech companies to see how community banks can adapt their technological advancements, is one way to prepare for a future that is already beginning to arrive.

For research on millennials and growth in banking, see Bank Director’s 2015 Growth Strategy Survey.

How New Technology Drives Sales in Your Bank


4-3-15-yseop.pngIn this highly competitive and data-driven environment, financial institutions are looking for innovative new ways to drive sales in the finance sector.

For banks, one of the most exciting technologies to explore is the artificial intelligence and natural language generation (NLG) space. NLG is a technology that can write like a human and turn big data into narrative and easy-to-understand content. It serves big data analytics, customer service and sales.

Three Ways to Drive Sales
Artificial intelligence-powered NLG software allows banks to understand unprecedented levels of client data, enhance customer service and ensure regulatory compliance.

  1. Make Sense of Big Data
    Banks need tools that explain what their big data means, what to do about it and why—in plain English (or the language of their choice) and in real time. The challenge is there is too much data, too few data experts and too little time to transform volumes of data into insight. But AI-powered NLG technology can turn data into written financial reports, executive summaries or portfolio analysis, for example, and explain how and why a conclusion is reached.
  2. Provide the Highest Level of Customer Service
    Banks are competing to deliver expert customer service—on the phone, online and in the branch. AI-powered NLG systems, often called “smart machines,” can be programmed with the expertise of your bank, can connect to client data and serve as an interactive expert to guide customer service teams through interactions. These systems can turn customer service agents into top tier sales people. They can even be deployed online to replicate the in-store banking experience and help make selling complex products and services easy.
  3. Ensure Compliance and Autonomy
    The advice-giving space is fraught with the potential for litigation in the face of ever-growing levels of regulations. Financial advisors and bankers must protect themselves by keeping meticulous records. These records, a sort of audit trail in case of litigation, coupled with legal fees and the fear of legal action, cost businesses millions if not billions of dollars each year. But AI-powered NLG can help. Programmed with the bank’s unique regulatory and legal framework, it can ensure compliant, expert advice, as long as the system is kept up-to-date. In case of litigation, it creates what we would call in banking an “audit trail.” The software shows its decision-making process, the advice it gave and explains why (and pursuant to what rules) it gave the advice. Since the software is incapable of human error, it never forgets a rule.

Is AI-Powered NLG Ready for Your Business?
NLG has been around for several decades, but NLG software has only recently been commercially viable, really since 2008. Fast forward eight years and Fortune 500 companies on both sides of the Atlantic are already using the combination of NLG and AI as a single software to make sense of big data, provide the highest level of customer service and ensure compliance and autonomy—all to drive revenue. In fact, these solutions are now fully scalable so banks can build their own applications—with no need to rely on vendors. Additionally, leading vendors of AI-powered NLG software provide configuration environments so easy to use that even non-technical users can build and update their own applications.

Coming Up With a Mobile Banking Strategy


Banks have to offer some kind of mobile banking service these days to compete. But deciding what to offer, what to spend, and what will provide the biggest bang for the buck are difficult questions for the board. Bank Director magazine got on the phone with Sutherland Global Services’ Niket Patankar to discuss how the board can develop a mobile strategy, what banks are offering, and what revenue opportunities are available. The company provides customer care, IT, and back and front office services, including mortgage banking servicing and processing.

What are the most popular mobile services that banks provide?
Banks are still in the early stages of mobile banking. The most popular are balance information, interaccount transfers, transaction history and basic customer self-service. Some banks offer advanced transaction services. Some allow a customer to search for a bank location by branch or ATM, while some offer bill pay. With respect to innovation, some banks are offering mobile wallet (the ability to carry cash around on your mobile device, load your debit and credit card information, and use the phone to make payments) and person-to-person payments (pay other people instead of companies). Banks also have the ability to offer contextual offerings through a mobile device for more revenue opportunities. A simple example is a person on a biweekly payroll. This person goes to a store to buy something on a Saturday, and it costs $200 but he has a $100 balance. But the bank knows the payroll is coming and therefore, the bank can offer a short-term, two-day advance for a fee of $3 right there. People will pay for that convenience.

Should you charge customers to access their accounts via mobile?
No. You will lose your customers that way. A personal financial management tool might be something customers are willing to pay for, such as a simple note telling them, ‘you spent $200 in groceries, your average spending has been $150 on groceries,’ which helps that customer make a financial decision. You can always offer more functionality within the mobile app that is transaction-oriented, for which customers will pay (the equivalent of in-app purchases), just like people pay the convenience fee for withdrawing from other banks’ ATMs.

What factors should a bank consider when deciding on a mobile strategy?
Where is your bank headed? Who are your customers? How is your customer demographic changing? What services and functionality should your bank offer, what are the costs and expected benefits, tangible and intangible, and what is your bank’s ability to analyze usage? You can offer this great service, but if nobody is using it, you need to know that. You need to look at the different kinds of costs. What is the cost of implementing it and maintaining it and marketing it to let customers know about it? It’s a simple cost-benefit analysis that should be presented to the board. It needs to be based on analytics. Your mobile strategy cannot be based on your gut feeling. In terms of benefit analysis, what has moved the needle in terms of similar services at other banks? If that’s not available, your conclusion needs to be based on detailed analysis of your customer base.

How does rolling out a mobile strategy impact the branch network?
There are still some customers who like to walk to a branch, but that number is declining as we speak. Mostly, they are going to a branch if they have exhausted other options, if they have an issue or a complex problem that has not been resolved through self-service options, or if they are seeking advice. If you are staffing your branch with the normal skill set of a teller, you will not be able to offer that. Branch traffic is declining. It has been coming down over the last seven or eight years. The number of visits from the average customer per year is coming down from 12 to 2. Branch traffic reduction is not necessarily a bad thing. It’s an opportunity to engage with the customer at a level that is unique. You need the best customer relationship managers there who can sell innovative products at the branches.

When Was the Last Time You Really Listened to Your Customers?


5-5-14-sutherland.pngE-commerce pioneers like Amazon and Zappos have trained customers to expect all of their providers, including their banks, to wow them at every point of contact. Channel usage, whether you are talking about branch, mobile or online banking, is one of the hottest and most debated topics in the banking community.

Is it possible to provide all the latest digital platforms yet still fall short in customer care? Yes. In fact, many banking experts argue that call center usage will increase as customers lean on contact centers as a digital help desk. Are there times when a customer needs a real person to listen to and resolve his problem? Absolutely—even if it means personally visiting a branch.

Findings from Gallup’s latest U.S. Retail Banking study underscore this point. Querying customers on their channel usage, one of the key themes that emerged was that the BRATMO trifecta—branches, ATMs and online banking—still defines the core of day-to-day banking.

Consider the credit-card customer who, concerned about recent massive security breaches at retail outlets, decided to get her card reissued with a new number. She tried ordering a new card online but couldn’t find the tools to complete the task. A live chat window opened, and the customer learned that getting a new card would take about a week. Anxious about being without her primary card for that long, however, she stopped by her local branch and talked to a live person, who sent her a card by express mail — it arrived in two days. The happy customer, in turn, raved about her positive experience on Facebook.

What did it cost that card issuer to provide the empathetic agent who had the authority to immediately spring for the express-mail cost? And what did the issuer gain in the loyalty not only of that customer but also the positive social media buzz she generated? Research continues to find that people trust peer recommendation far more than they trust advertising.

Listening to Customers
Anticipating and responding empathetically to customer needs can take many forms. Consider the following approaches:

  1. Instill a culture of customer service. At Zappos, customer service isn’t a silo; it’s the mission of every employee. The company backs that pledge by providing every employee with at least a month of customer-service training. Empower your contact center agents with the ability to provide inquiry resolution that’s quick, accurate and easy to access.
  2. Tune in to social media. More banks are monitoring social media posts to respond directly to customers and to gain valuable insight into their own and competitors’ strengths, weaknesses and opportunities for innovation. The best social media outlet is the one the bank commits to supporting 24/7, says Joseph J. Buggy, senior vice president and chief strategist at Sutherland Global Services. “If the bank has a Facebook page, you’d better staff it. If you have a Twitter account, it better be active and quick. If you’re not as responsive as your competitor, the customer who asked the question will move on,” Buggy explains.

  3. Conduct surveys and other market research. To ensure alignment, customer-centric banks engage in ongoing market research at all levels. And while surveys have their place, don’t stop there; qualitative research and user forums provide insight into how you can do a better job.

  4. Offer incentives for customers to suggest new products and services or to help beta-test them. Everybody loves free samples, and customers who feel part of your innovation team will be quick to tweet about their experiences. Initiatives like MyStarbucksIdea, where Starbucks takes suggestions and comments from customers online and through social media, shows that your organization can gain unvarnished feedback and access to your best customers’ social networks for little cost.
  5. Complaints? Bring ‘em on! A customer who takes the time to express her dissatisfaction possesses a wealth of market intelligence. Promote multiple channels that make it easy for disgruntled customers to talk to you versus publicly griping about the issue on Facebook. Whether it’s a live agent or a live chat online, explore all the options for swiftly escalating problem calls to the next level. Follow up with customers to ensure a satisfactory resolution.

How your bank listens to customers may be the single most important factor in your capacity to gain ambassadors and champions for life.

For more information on this topic, see Sutherland’s white paper “The New Age in Customer Service.”

Transforming Customers into Lifelong Champions—as Quickly as Possible


3-28-14-Sutherland.pngThanks to e-commerce stars like Amazon and Zappos, consumers expect exceptional, real-time customer service every time—whether they’re buying books, boots or a mortgage.

Do it right and your customers will come back again and again, even trumpet you on social media. Disappoint them or move too slowly, and they’ll rant about you to their 10,000 Twitter followers. Even if they like you, they can be quick to abandon you to sample your competitor’s cool new app.

How can you respond to customer needs at both ends of the urgency spectrum: instantly, with transactions conducted 24/7 on mobile devices, and over the long haul, ready to respond as a customer moves from college, to home buying to retirement?

Creating Loyalty for Life
Keeping customers engaged for years and less susceptible to competitors’ pitches means offering products that sync with key milestones. Those include savings and checking accounts, student loans, debit and credit cards, auto loans, mortgages, insurance, home-equity loans, child-focused savings plans for their kids, college savings plans and retirement planning.

Consider the loyalty created with first-time homebuyer programs. One example is the First Home ClubSM, a matched savings program administered by the Federal Home Loan Bank of New York. For every dollar a pre-qualified customer saves over a 10- to 24-month period, participating lenders match $4 for a one-time payment of up to $7,500 in matching funds that may be applied toward the down payment or closing costs on a home.

Technology-Driven Competitiveness
But technology is forcing banks to do much more. Those lifestyle-sensitive products must be personalized and delivered quickly and easily, says Joseph J. Buggy, senior vice president and chief strategist at Sutherland Global Services.

Witness digital-wallet and virtual-currency solutions like Isis, Bitcoin, Square, PayPal and Google Wallet. Tech-savvy young people are quicker to snap a smartphone photo of a paper check for deposit than to visit a branch.

Banks are struggling to embrace customer expectations for mobile self-help solutions, Buggy says. And yet they must move quickly, with customers adopting mobile banking five times faster than they adopted online banking back in the 1980s.

Customers want the same experience when accessing their bank, whether via personal computer or smartphone, Buggy says, and the technology is there to allow banks to offer that. Many banks, though, immersed in replacing core systems, have hesitated to invest in syncing Internet- and mobile-based platforms into a single interaction channel.

Leveraging Social Media
With Facebook boasting a billion users and Twitter many millions, engaging with new and existing customers means moving into those spaces effectively. Banks large and small are using social media to promote services, respond to customers, recruit employees and even supplement crediting decisions. Soon, customers may check balances and conduct bank transactions via social media.

Buggy advises banks to take a clear position on social media and commit only to the channel(s) the bank can staff 24/7. A static account with outbound-only communication, where you are promoting your bank but not interacting with customers, is worse than none, he says.

“It’s more forgivable, from the customer’s perspective,” Buggy adds, “to not have a Twitter handle at all than to have one and not respond quickly to it.” Particularly with Twitter, “the demographic using it expects the interaction to be close to real-time.”

Must-Have Customer Service Qualities
Banks have little choice but to meet customer demand for:

  1. 24/7 mobile access
    Banks not “open” around the clock will lose market share to whatever entities allow customers to transact business from their devices at 3 a.m.
  2. Single dashboard/single login interfaces that show the breadth of a customer’s interactions
    Credit cards, mortgages and insurance may be separate operations inside your organization, but the customer doesn’t care. She wants to reach all of her accounts from one screen.
  3. Inquiry resolution that’s quick, accurate and painless
    When communicating with you, do your customers prefer live chat, mobile apps, online self-help or social media? Are you using traditional interactive voice response (IVR), which requires the customer to type in lots of numbers when calling you on the phone, or have you moved to voice-enabled IVR, which is easier on the customer? How do your customers prefer to have complex questions or complaints resolved? Do snail mail and personal visits still have a place in your customer service strategy?

In a follow-up article, we’ll focus on finding the best ways to listen to your customers to ensure you’re serving them expertly—both in the moment and over the long term. For more information on this topic, see Sutherland’s white paper “The New Age in Customer Service.”

A Mystery Shopper’s Guide to Improving Customer Service


five-star.jpgI’ve done hundreds of mystery shops over the years, at branches all over the country.  While I find that the branch employees I meet are generally friendly and professional, I’m frustrated in the small number of truly great mystery shop results that I get to report.  Banks spend big marketing dollars to get new customers in the door, but what happens when they get there sometimes becomes an afterthought.  My mystery shops usually follow a familiar scenario.  I’m just a guy walking into a branch to get some information about a new checking account.  That’s an important scenario for your bank to master.  Here are five tips to help your branch teams make better first impressions and improve customer interactions.

1.  Acknowledge people as they walk into your branch:

 Some branches I shop seem more like funeral homes than sales and service environments.  It’s amazing what an enthusiastic, “Good Morning!” can do to make a great first impression.  This is even more important when the branch is busy, and when people have to wait.  No one likes to wait.  A simple, “I’m sorry that we’re so busy today, someone will be with you in just a few minutes” will lower frustration and perceived wait times.

2. Tell your bank’s story:

Tell your story every chance that you get, especially with new customers.  What makes your bank unique?  Why is your bank the best choice?  During my mystery shops, I love it when I heard the words, “we’re the only bank that…”  Good banks invest in new products and services that give them a competitive advantage.  The great banks train their branch teams how to highlight that competitive advantage with every interaction.

3. Sell at the desk, not the teller line:

Sometimes during my mystery shops I’ll approach the teller line with the question, “Whom can I talk to about checking accounts?”   More times than not, this usually ends up with me receiving a brochure and a rushed sales pitch as the line behind me grows.  Instead, train your teams to escort teller line inquiries to a branch service person at a platform desk. 

There’s more privacy.  There’s more time.  And, hopefully you’ve got a customer service expert that is trained to ask a few good questions in order to make a good recommendation.  None of those things can really happen consistently at the teller line.  No one wants to answer financial questions with their neighbor standing at the teller window next door.

4. Build better sales tools:

Disclosures are not sales tools.  In my mystery shops, I still find branches that use them to explain products to me when I present myself as a new checking account prospect.  Make the effort to have a great brochure.  Make sure it’s designed to fit with the way that you’re teaching your branch teams to sell.  If you train them to ask questions, why not put a few of those questions right in the front of the brochure? 

At our company, we’re fans of tools that we call placemats.  They’re big.  They have lots of room to highlight features and benefits, and not just tiny text on a page.  Some banks laminate them and keep them at each sales desk.  Others print them on tear-away pads, and give them to each customer as a reminder of the things learned during the branch visit.

Regardless of what type of brochure you use, make sure that the branches keep them in stock and up-to-date.  You’d be surprised how many times I’ve watched branch people shuffle through drawers for brochures.  And I sometimes find old versions of brochures mixed in with newer ones. 

5. Don’t chain the pens to the desk:

Ok, maybe this last one is just a personal pet peeve.  But seriously, if I were a bank marketer, I’d love for all of my customers to balance their checkbook or sign their debit card receipts with a pen that has my logo on it.  It’s an easy brand-building tactic, and it’s cheap.

First impressions are everything.  Make a great one, and you may earn a customer for life.  We’d love to hear about things that your team has done to make great first impressions.

Originally published on December 29, 2011.

Video Banking: Folly or Foresight?


touchscreen.jpgThe past several years have not been kind to the retail banking business model. Low net interest margin, depressed lending demand, significantly eroded fee income and higher compliance costs have all contributed. Moreover, steady migration of branch transactions to self-service channels has been eroding branch foot traffic. The result is typically higher branch transaction costs and declining sales results. What is a bank to do?

The “Branch of the Future” May be Emerging

While substantive branch transformation remains a rarity in North America, there appears to be a growing consensus that the status quo is unsustainable. Celent couldn’t agree more! To understand the state and likely evolution of North American retail banking, Celent fielded surveys in July 2010 and again in July 2012. In 2012, considerably more institutions indicate intentions to make modest to sweeping changes in branch configuration.

Institutions appear to be eyeing a variety of approaches. Some (55 percent in the 2012 sample, up from 24 percent in 2010) see enterprise wide branch design changes likely. An equivalent percentage (57 percent, up from 48 percent) see ultra-low-cost designs in the mix. These small, highly automated outlets may replace some existing branches, while others may be built instead of more expensive traditional designs in new markets. A common objective in contemplating redesign supports a sales/service rather than transactional model (66 percent up from 58 percent).

Source: Celent survey of NA FIs, July 2012, n=132

None of this is going to be easy, and banks are wisely being cautious about what to do and how to do it. What has changed over the past two years, however, is the growing number of banks contemplating branch channel initiatives. In the July 2012 survey, more than a third of banks and nearly half of credit unions surveyed expect significant changes in size, capacity, technology and staffing over the next five years. About a third expected more modest changes, and only about one in five surveyed financial institutions expect their branch networks to remain mostly the same over the next five years. We are witnessing a tipping point.

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Most branch transformation initiatives seek to achieve the dual objectives of cost reduction and improved sales effectiveness. But, branch transformation, whether modest or significant, doesn’t itself suggest the use of video. Is video banking going to be a good idea? Celent is bullish on the use of personal video conferencing in banking applications. But before defending this assertion, let’s first look at the variety of ways video can be used to accomplish these two objectives.

Video Tellers. Video is being used at drive-through locations and in branch lobbies and vestibules alongside transaction automation technology to provide a low-cost alternative to the traditional teller experience. Credit unions have taken the lead in the use of video tellers both as a replacement of traditional teller roles and as a way to augment traditional teller arrangements. Some financial institutions have used video kiosks (a.k.a., personal teller machines, or PTMs) in de novo branch designs while employing live branch personnel inside the branch to engage customers with needs that go beyond simple transactions.

Video SMEs. In contrast to using video to support routine (teller) transactions, some banks and credit unions are using desktop video conferencing applications to connect customers with subject matter experts (SMEs) such as lending officers and specialized customer support personnel. Consumers could also be connected to SMEs via desktop videoconferencing as part of an online banking experience.  Thus far, the prevalent use of video SMEs has been among smaller and rural branches as a way to provide cost-effective service delivery.

The business case for video banking has been demonstrated in many financial institutions, while in others, those still piloting, the jury has not rendered a verdict. Those with successful implementations have seen benefits that may surprise you.

  • Cost savings. Coastal Federal Credit Union centralized all its tellers and deployed 63 PTMs across its network.  Coastal replaced 74 branch tellers and supervisors with 44 tellers, supervisors, and service staff to support its 15 branches, resulting in a cost reduction of 41 percent while expanding branch hours by 86 percent.
  • Improved customer convenience. Multiple PTM implementations are being accompanied by expanded branch hours. Video SMEs can offer expanded offers and shorter (or no) wait times by connecting to an available SME regardless of physical location.
  • Improved sales results. Celent has interviewed multiple financial institutions asserting improved sales results through the use of video banking. In most cases, this occurs through automation—largely removing teller transaction processing and reconciliation activity from the branch environment. Remaining branch staff, freed from the administrative burden, can now be devoted to sales and service. With remaining branch staff more focused on sales and service at Coastal FCU, average sales per full time equivalent (employee) per day increased to 2.4, up 49 percent from 1.6 sales per FTE per day when each branch had tellers.

But, will customers accept video banking? Done well, customer response has been strong, with measurable improvements in customer satisfaction. Customer response appears to be strongest when video banking is introduced alongside meaningful benefits such as expanded branch hours or shorter drive-through wait times.

A few short years ago, this would likely have not been the case. Technology improvements have made video conferencing both affordable and more satisfying. The growth of Apple’s Face Time and Microsoft’s Skype bear testimony. But, just as Skype is not for everyone, video banking isn’t either. Celent expects the topic to remain controversial for years to come. In the meantime however, savvy banks will give the idea careful consideration.

Originally published on December 3, 2012.