Fixing What’s Broken In Bank Product Pitches

There’s a better way to sell pens: Don’t start with the pen.

A classic teaching example for sales hands a shiny new pen to someone with the instruction, “Sell me this pen.” Typically, the student takes the pen and begins to describe it, attempting to use the looks and features of the pen to sell it. The would-be salesperson often struggles to “sell” the pen, because they fail to discover if the person needs a pen to begin with.

This is often how banks sell products and services to their customers. But the search for a solution to this sales dilemma has led to new and advanced ways to sell pens (and everything else) the wrong way.

A better way to sell the pen is to put it in your pocket and, instead, ask the customer questions. The goal is to discover the customer’s needs and help them realize that a pen — the one you happen to have in your pocket — is what will meet their needs.

Artificial intelligence companies and fintech platforms want banks to pay enormous sums of money to help identify products and services for customers. Having given away all manner of financial tools, products and advice, they’re now pursuing bank customers by offering demand and savings deposits, mortgages and loans. Some of the biggest names in technology are joining the fray as well: Facebook, Apple, Alphabet’s Google and Uber Technologies, among others.

Customers aren’t necessarily getting more savvy, but technology is.

A venture capital firm we work with that invests in fintechs was very clear that most online financial tools are merely marketing devices used to poach customers and grow assets. Often these tools expose a problem in a customer’s existing account and offer an immediate remedy if the customer transfers accounts to them. This isn’t necessarily good for the customer, but can be devasting to a bank.

Pushing product is difficult; providing solutions is far more rewarding — and efficient.

Recently, we met with a regional bank that has over 80 retail branches and offers wealth management as part of their service model. They have only 17 financial advisors to service customers in their home state. They confessed that of only 27% of their wealth management clients have a retirement account with the bank.

Only 27%. How is this possible? Is it because they don’t sell retirement accounts? Or is it because they don’t know their customers? After all, who doesn’t need a retirement account?

Another bank we work with wondered if they should start offering business credit cards. They didn’t understand their customers’ needs well enough to decide what products would address those needs or wants, so they opted to pitch a credit card offered by a vendor.

One of the industry’s largest digital banks confessed to us they are considering adding a human element to their arsenal, seeing a need for a digital/human hybrid approach. They’ve realized that society is moving to digital, but also recognize there is not enough value in digital alone.

The COVID-19 crisis will accelerate the shift to digital. If brick and mortar banks are going to survive, and even thrive, they need a digital component that complements their human element. Throwing money at new technology that pushes products that customers may or may not want or need will only lead to costly and disappointing results.

Banks need tools that develop and deepen customer relationships and make it possible to offer real solutions, as opposed to pushing products they hope will increase revenue.

Accenture recently released a study with five key findings about customer expectations. They are:

  1. They want integrated propositions addressing core needs.
  2. They want a personalized offering.
  3. They are willing to share data with providers in return for better advice and more attractive deals.
  4. They want better integration across physical and digital channels.
  5. Their trust in financial institutions is increasing.

Essentially, customers want personal offerings that serve their core needs and delivered in the medium they choose. Banks that want to grow revenue and increase retention shouldn’t continue to “push the pen.” They should find and offer digital/human hybrid models to help customers self-discover solutions.

Bridging The Gap Between Retail & Business Banking

Speed, ease of use and convenience define the customer experience today for both retail and commercial clients. In this video, First Data’s Christian Ofner and Eric Smith explain what retail and commercial customers expect from banks today—and you might be surprised to find they have similar needs. They also share how banks should enhance the experience.

  • Strengthening the Retail Experience
  • Enhancing Commercial Clients’ Experience
  • Technologies Banks Should Consider
  • Evaluating Your Bank’s Digital Strategy

Big Banks Deliver Mobile Shopping Features

The five biggest retail banks—recognized by the brand names U.S. Bank, Chase, Bank of America, Citi and Wells Fargo—control over 50 percent of total assets in the U.S. and are driving the mobile banking agenda. In a race to meet the mobile transaction needs of their customers, these banks have all conquered the most basic services that soon almost all banks will have—mobile banking, mobile bill pay, mobile deposit, ATM and branch locators and P2P payments. Now in phase two of mobile banking, these banks are in an arms race to further engage with customers’ mobile lifestyles, particularly by helping people save money when they shop.

U.S. Bank has been previewing Peri, a mobile app that will launch soon that allows customers to instantly purchase products from what they hear on the radio and television or see in a print ad. For example, if you’re watching a TV commercial, Peri can simply “listen” to it to identify the product and find the place where you can buy it.

On the surface, apps like Peri seem a bit futuristic, but many of us actually already have these types of features on our phone right now. The Amazon app uses its “flow” image recognition technology to allow iPhone users to find the product in the app just by pointing the phone’s camera at it. U.S. Bank is simply taking the best in class, “for the future” shopping features and ensuring they can deliver that functionality in a way that helps their customers.

In a recent presentation to bank executives, Dominic Venturo, chief innovation officer for U.S. Bank Payments Services, shared another pilot program that will allow the bank to be a connector between its retail customers and small business customers. With this technology, merchants can see in real time where consumers are using the app and asking to receive discount offers.

If a customer decides “I want coffee,” or “I want lunch,” they just click in the app to request a discount offer. That message is sent to small businesses in the area, which can access a portal showing all the customers who are currently requesting a deal. The merchants that rise to the occasion will pop up on a map on the customer’s app in real time.

According to Venturo, it’s an entirely different way of thinking about search and awareness offers than banking has produced in the past. The program was tested in Minneapolis and saw offer-to-conversation rates in the mid-double digits, which is an extremely impressive redemption statistic.

In late 2012, Chase Bank acquired Bloomspot, a start-up company that used credit card data to allow merchants to target their best, most loyal customers with offers tailored to their specific interests. Bloomspot was started in 2010, and by the time it was acquired, it had around 2 million members and 500,000 merchants, while raising $46.1 million in venture funding. Chase bought Bloomspot for $35 million, taking in both its technology as well as its team. While Chase has yet to announce their exact plans, they’re likely to use the tools that Bloomspot built for their own debit and credit cards and mobile app experience.

Other big banks are also snatching up or partnering with start-ups that offer shopping assistance in the form of budgeting. When BBVA acquired Simple in 2014 for $117 million, they gained only 100,000 new customers but gained the technology that’s likely to steadily grow a massive audience. TD Bank also partnered with Moven in 2014 to offer customers more advanced financial management tools in their mobile app—tools that the online bank Moven had already built for its customers.

The rest of the world, particularly investors, are beginning to take notice of this growing sector. Just last year, there were 250 investment deals involving Fintech start-up companies, and that number has been growing since 2008. More and more, big banks are funding as well as buying some of these best in class start-ups so they can use their fresh new ideas.

While many other banks are just now catching up, U.S. Bank, Chase and other big banks are now on their way to offer products and services that go beyond the basics to impact their customers’ financial wellbeing.

Optimizing Your Branch Network

12-29-14-Fiserv.pngIn this day of razor-thin interest margins and heightened competition, most banks are focusing on becoming more efficient to increase profitability. Yet, many of these financial institutions may be looking for efficiency gains and cost savings in the wrong places. It’s fine to streamline work processes, scrutinize vendors and tighten the belt on discretionary spending, but that’s not really where the fat is.

The fact is, branch networks and their associated costs, including personnel, make up about two-thirds of a typical bank’s non-interest expense. If you want to make a dent in your cost structure, you have to focus on more intelligent management of people and facilities.

How important is this? Bank Intelligence Solutions, an advisory arm of Fiserv, conducted a study of America’s banks, in which our team gathered metrics such as revenues per branch, core deposits per branch, number of deposit accounts and revenues per employee. We found that 45 percent of banks have an excess branch capacity problem. Their allocation of resources is out of alignment with the needs of the marketplace. As a result, inefficiency and weak performance continue to create a drag on earnings. It’s one of the top issues that banks need to address in 2015 and beyond.

Smart branch optimization begins with tapping into and interpreting data—using market analysis and your bank’s internal reporting to execute informed business decisions.

Know Your Markets
First, you have to understand the markets in which your branches operate, from both a consumer and commercial perspective, as dictated by your unique operating strategy. You need to know the makeup of households and businesses, as well as their product propensities and current growth rates. Is the area populated by young families or retirees? What is the ratio of homeowners to renters? Are the businesses predominantly retail, service-oriented or industrial? Then you need to understand the competitive dynamic – the market saturation of the geographic area, who you are competing with and how effectively.

This market profile, drawn from current census data and other information sources, drives other important questions: Based on current trends, what does the future of the market look like? Considering the types of households and businesses in the market, what product and service set will be most appealing and helpful to them, now and in five years? Answering these questions helps you move beyond a one-size-fits-all branch strategy to serving specific community needs.

Rank Your Branches by Performance
You need to understand the markets, but also how well your branches are succeeding in those markets. How does your bank measure success at the branch level? Review key metrics to measure branch performance, such as the number of accounts, profitability of the branch, fee income and transaction activity. Are you generating sufficient revenue from the loan, deposit and fee activity at the branch? These are all metrics available in your internal data.

Decisions, Decisions
Now that you have your rankings, it’s time to use that information to make some decisions about the future of your branches, choosing from four options:

  • Keep: This branch is performing well, with good growth potential.
  • Close: The community has changed in the last five years and there’s not enough growth to sustain a branch at this location.
  • Move: This branch is not performing well where it is, but market analysis suggests that a move to an area in close proximity would result in more traffic and greater success.
  • Consolidate: Two branches are located fairly close together, and the market data supports the idea of serving this community with one branch instead of two.

What if your bank doesn’t have all the funds up front to make the needed changes to your branch network? Prioritize which branches you need to invest in first, and execute a phased plan over your projected timeframe. And remember, some of your reinvestment may pay for itself if you’re closing a few branches.

Embracing a Unified Approach
Data-driven decision making can bring new focus to your financial institution’s branch strategy and marketing efforts. But whether you attempt branch optimization using these techniques on your own, employ software tools or engage consultants to guide you through the process, it must be a team effort.

It is critical to be in agreement, enterprise wide —from retail to lending to the executive team —on the process you’re going to use and the metrics you’re going to measure and track over time. Even more important is having full executive team buy-in on how to weight these factors. Finally, it must be understood that you’re going to use this analysis to make real decisions.

With smart branch optimization, the goal is growth. Good analysis, intelligently used, can propel you toward it.

To learn more about making the most of your branch network, view Driving Smart Branch Optimization Decisions from Market Analysis, a recorded presentation from Fiserv.

Are Your Retail Branches Too Large or Too Outdated? Here are Some Ideas

12-17-14-Emily.pngWhen it comes to branch innovation, the chatter often focuses on two things: Make it smaller, and load it with technology. But many banks are still left with larger legacy locations, and technology alone won’t drive more customers to your bank. The branch is still seen as a powerful branding tool, and some financial institutions have found creative ways to tap into their local communities, with positive results.

The solution for one credit union was to split their 3,200 square foot branch in half with a local tea house. The space was designed so clients of GECU, a $2-billion asset credit union based in El Paso, Texas, could easily walk over and grab a cup at the tea house—and the restaurant’s regular customers would maybe think of GECU for its next loan. “This shared tenancy approach helps lower costs, and if you can find the right alternate tenant, it will drive in more traffic,” says John Smith, chief executive officer of DBSI Inc., the branch design firm that worked with GECU.

However, a tenancy arrangement with a local business isn’t without its risks. According to the Small Business Administration, roughly half of all new businesses survive for at least five years, and one-third survive ten years or more.

Instead of sharing their branch space with a tenant, more banks prefer to make space available to the community. Even with the rise of digital banking, Portland, Oregon-based Umpqua Holdings Corp., with $22 billion in assets, still values the branch as a way to build client relationships, resolve more complex issues for customers and promote the bank’s brand, says Eve Callahan, senior vice president of corporate communications. As a way to draw in the community, each store hosts events, ranging from Nintendo Wii bowling leagues to an Oktoberfest celebration. For Umpqua’s business clients, Umpqua promotes a local business each quarter and even sells that business’s products within its stores. The program has been popular, with a waiting list of up to 18 months, says Callahan. Decisions on which business makes the cut, as well as which events to host, are made locally by the store manager. “They get to know the local businesses around them, the nonprofit organizations [and] the schools, and program events in their store that are going to reflect what’s happening” locally, she says.

C1 Bank, a $1.4-billion asset financial institution based in St. Petersburg, Florida, designed its newest branch in Miami with the local neighborhood—the Wynwood Art District—in mind. C1 converted an old warehouse into a 4,500-square-foot branch designed with a large, open and adaptable space to host local events, such as art openings. The furniture was designed to be removed for these events, and the bank boasts a kitchen for use by caterers. The space is available for use by local businesses and charities, and the bank itself regularly invites local business owners to network with each other and with C1’s bankers. The unique space—artwork is featured in the branch—makes C1 stand out, and leaves the community with a positive impression, says CEO Trevor Burgess.

In Roseville, California, 120-branch Rabobank N.A., a $14-billion asset subsidiary of a Dutch financial company, worked with DBSI to design a branch that plays on the affluent community’s agricultural roots. A vintage farm truck displays goods from the bank’s customers, such as olive oil, and a glass door opens like a garage to bring the outside in. So far, the bank has used the space for local events, and Kimberly Hval, the bank’s executive vice president and director of channel strategy and support, says Rabobank plans to regularly host a farmer’s market in 2015 as a way to promote the bank’s customers.

Location plays a big role, and sharing space with a coffee shop or hosting events won’t attract more customers if the branch isn’t located in a well trafficked area, says Mark Charette, CEO of commercial real estate design firm Solidus. His firm works with institutions to design for efficiency by minimizing the branch area and relocating another line or channel of the institution—a call center, for example—which creates a cost savings by merging that channel’s location into the redesigned branch.

However, with the right location, a strategy to draw the community in can have a positive impact for the bank. Rabobank attracted its largest depositor through one of its events. “Our community can benefit, and obviously being able to drive in more clients through the experience is certainly icing on the cake,” says Hval.

When Free Checking Is No Longer Enough

When-Free-Checking-Is-No-Longer.pngCity National Bank is a perennial industry leader in retail checking performance. By adopting free checking earlier than most banks in the region, City National helped grow its customer base by appealing to many types of customers in their communities looking for a no-fee checking account. Despite the success, City National realized there was a major market opportunity that was being missed—the chance to attract and appeal to the overlooked value buyer, those who gladly pay a fee for things they feel provide some form of commensurate value in return.

While this buyer type may sound strange for a mature banking market that has been dominated by free strategies, it is a large consumer segment that other top retailers have already capitalized on. More than 125 million Americans pay fees to save at Costco and Sam’s Club or with Amazon Prime. Nearly 100 million pay monthly fees for cell phone insurance and roadside assistance services. Providing value like these money-saving and protective services can be applied to checking products to attract these types of customers and grow relationships. It also helps with a new problem for the banking industry— regulatory initiatives that have reduced overdraft fees and other checking account-related fee income.

“There are customers looking for something more out of their checking account,” said Tim Quinlan, senior vice president at City National Bank in Charleston, West Virginia. “Customers are more willing to pay a monthly fee if they feel they’re getting more than basic banking benefits.” To provide this, City National implemented StrategyCorps’ BaZing checking program. For $5 per month, customers who choose a BaZing account— which the bank brands as City Gold—receive protection benefits like roadside assistance, identity theft protection and cell phone insurance. They also receive shopping, dining and travel discounts with participating local merchants and national retailers, plus traditional checking benefits like check discounts and surcharge-free ATM access. “We want our customers to be excited about their relationship with City National,” Quinlan said.

CityNational.png“City Gold has been a big part of that solution: ‘Wow. I get all these extra benefits and services.’ They feel like they are getting a good deal with us.” When helping a customer determine the right checking account, City National employees are extremely disciplined in educating the customer— without a high-pressured sales pitch. They start each conversation about opening a new account by telling customers about City Gold rather than just having the customer select from a list of checking types. The bank understands that City Gold is not for every customer. But when the fit is right, that customer who chooses City Gold ultimately develops a deeper affinity for the bank.

“We believe our employees should have fun and be excited about offering the product to the customer,” Quinlan said. “We want to make sure we present all the options and that they feel they received great service, not that they were sold something.”

That not only builds customer loyalty but also referrals. “When customers get excited about an additional service they enjoy at their bank, they tell another customer,” Quinlan said.

City National employees also successfully sell City Gold by being active users of its benefits themselves and telling their own personal experiences about the product.

The BaZing program also provides banks with a way to participate with the local business community by allowing local merchants to offer discounts on the BaZing network. Local businesses that want to join the BaZing discount network do not have to pay a fee—they simply offer a discount. They don’t even have to be a City National business customer to participate. Bringing this type of relationship opens the door to a deeper connection between the bank and a key business in the area. City National is seen as a partner that can help these local businesses grow.

“Successful banks like City National are always looking for customer friendly ways to grow fee income. By offering products that fit with customers’ mobile lifestyles, they have succeeded in delivering real value, savings and security that customers will pay for,” said Dave Crook, a partner with StrategyCorps.

The alliance between City National and BaZing’s parent company StrategyCorps will soon mark a decade. Neither firm looks the same as it did in 2005. City National has grown to one of regional prominence, while StrategyCorps has significantly grown and expanded the discounts and other services offered through BaZing.

City National has proven that keeping a sharp eye on serving the value checking buyer with quality products and coaching and motivating employees to meet goals makes it possible to boost customer satisfaction and significantly improve fee income generation on a customer-friendly basis.

Succeeding With Mobile Bill Pay

Succeeding-With-Mobile-Bill-Pay.pngWhen James C. Cherry, a banking executive with over 31 years of experience, left his position as chief executive officer for Wachovia Bank’s Mid- Atlantic Banking sector to take over a small community bank in Charlotte, North Carolina, with just a few branches, his goal was to create a competitive niche he could dominate.

“Our company is working to position itself between the small banks and the very large banks as a regional bank,” said Cherry, who is now chief executive officer at Park Sterling Bank Inc., Charlotte, North Carolina. “People don’t feel like they get the personal service they want from the large banks, yet that’s where everybody banks because they offer a broad array of products and services that the smaller banks can’t. Our objective is to exist between the two.”

The strategy is working. Over the past four years, Park Sterling has grown from three humble branches into a 53-branch institution with $2.3 billion in assets. According to Cherry, mobile banking is expected to play a significant role in his bank’s growth plans.

“I think everyone acknowledges that mobile banking is the fastest growing segment of banking services today,” he said. “I think most people believe that eventually your phone will literally be your bank.”

That could be a problem for smaller institutions that have extended online offerings to their customers but that have not yet made the leap to their own smartphone apps, according to Robb Gaynor, chief product officer of Malauzai Software, Inc., Austin, Texas, the firm Park Sterling turned to for its mobile banking platform.

“Community banks may be shrinking in numbers, but there are also community bankers who are growing their institutions,” Gaynor said.

ParkSterling.pngMalauzai works with about 320 community banks and credit unions across the country, providing them with the tools they need to connect to their customers through smartphone applications. According to the company, 55 percent of all banks with less than $15 billion in assets currently have an app. The rest are already behind.

“Being able to distinguish yourself with mobile banking services becomes really important, but it becomes especially important for a company like ours that may have a relatively small footprint in some markets relative to the larger banks,” Cherry said. “Mobile banking can allow us to play larger than our footprint.” One of the solutions Malauzai provided is called PicturePay, a program that lets retail customers take photos of their bills with their smartphones to make a payment. Cherry says that bank customers like the app better than traditional online bill pay functionality offered through the bank’s website. It’s easier to use and doesn’t require the customer to re-enter information about the payment.

PicturePay doesn’t even require the customer to use a computer to pay their bills, Cherry said. “It’s really an extraordinarily user-friendly, attractive product. It positions us very well to deliver on our tagline, which is, providing ‘Answers you can bank on.’’’

According to Malauzai, about 15 percent of the average bank’s customers will use PicturePay to process their monthly bills. That compares to about 4 percent of bank customers who typically use traditional online bill pay functionality.

“The uniqueness of these products, the fact that they’re not offered generally in our marketplace, sets us apart from our competitors in exactly the way we are trying to distinguish ourselves,” Cherry said. “This speaks to the viability of community banks. Today, bankers can get products and capabilities that previously required more scale than the smaller community banks could muster, but that can now allow them to compete very effectively with the larger banks.”

Ralph Marcuccilli is president and CEO of Allied Payment Network, the company that provides the back-end processing for the PicturePay feature. “I think what Malauzai has proven is that community banks can really lead,” he said. “They don’t have to sit back and wait for the big banks to deliver the technology that >customers are adopting. They can really be out in front of them.”

For Cherry and his institution, it’s about providing the tools bank customers want without sacrificing the feel of a community- based bank.

“We don’t market ourselves as a community bank, nor do we market ourselves as a large bank,” Cherry said. “We market ourselves as a bank that is large enough to provide customers with the solutions they need and small enough to deliver those in a personal way. We think (PicturePay) will result in increased interest in our company, which always translates into increased business.”

Giving Banks a Better Way to Cross Sell

Giving-Banks-a-Better-Way-to-Cross-Sell.pngArlene Vogel, vice president of commercial banking services for Central Bancompany, understands missed opportunities firsthand. When she paid for a recent product, she noticed that the store owner was using a credit card processing service that connected to a smartphone. That store’s business checking account was with a Central Bancompany bank.

“When I asked why she had signed up with that company, she said, ‘It was just so easy,’” Vogel said. “We missed the opportunity when we opened her accounts because we hadn’t addressed that need. Those companies are marketing a specific product around a specific need. We’re marketing mass products. A lot of it is about capturing the few opportunities you have when you have the customer in.”

Banks like those under Central Bancompany—a holding company for 13 regional banks in Missouri, Kansas, Illinois and Oklahoma—face missed opportunities like this each day. Banks are under historic pressures, from regulators as well as competitors that focus on one item in a bank’s significant portfolio of services. One may take merchant services while another offers Small Business Administration loans. And those competitors are taking customers away permanently.

Bancompany.pngBut there is another trend that is playing in banks’ favor—if they are able to take advantage of it. Busy business owners prefer to streamline relationships with one vendor—not multiple service providers.

When Central Bancompany engaged Ignite Sales, it needed to help its front-line associates improve relationships with its business customers. Using Ignite Sales’ Recommendation Guides, the front-line representative now has a tool to better serve business customers while growing its services.

At Central Bancompany’s banks, the customer service representative sits down with the business customer, turns the computer screen where both can see it and logs on to a Central Bancompany-branded page. The business customer answers a series of questions and the program then provides products and services based on those responses.

Central Bancompany initiated the program as a pilot in February 2014. Already, it has doubled the services that a new business customer typically opens from three or four to six or seven.

In many ways, banks are in the early stages of a shift that has happened in all forms of retail in recent years: a proper sales process. Most banks cannot ensure accurate product recommendations across all channels. They are not making recommendations and not tracking what’s being recommended versus what’s being opened. Because these recommendations are not tracked, opportunities for strategic follow-up are lost.

Central Bancompany has taken the initiative to do these things and it is paying off. Not only have its banks seen an increase in the new services opened, but customer sales representatives also say they feel more confident in sharing a full range of products using the program, which is called Business Analyzer.

“Prior to the Business Analyzer, we had products to ask questions around, but our CSRs [customer service representatives] wouldn’t because they were afraid the customers would ask a technical question about the product,” Vogel said. “Now, because these products are recommended in response to questions asked by the analyzer, they have more confidence in explaining it. With a marketing piece that explains the service, the customer is more confident in purchasing.”

Ignite Sales’ is providing Central Bancompany with information about how its CSRs are performing with bank goals as well. Perhaps more importantly, Central Bancompany’s customers are becoming more aware of the range of products available. “It’s been the biggest eye-opener how much our business customers did not realize we could have done for them,” Vogel said. “We’re using the analytics to improve our product design, bundling and pricing. We’re trying to watch particular business types. Is there a standard set of products that they are falling in to? We don’t have the answers on that yet, but we’re doing a deeper dive into cross sales.”

That is consistent with what many of Ignite Sales’ customers find. As they receive better data, they can realign products to what their customers want—not simply model their product line based on what the larger banks in the region offer. It leads to pretty dramatic improvements in the sales process.

And it’s not just for new customers. When Central Bancompany initiated Ignite Sales’ Recommendation Guides, one bank piloted a test around existing business customers. Representatives presented it as a business review. On average, each existing customer opted for at least one additional product.

At a time when competitors are nibbling around the edges of a bank’s customers, increasing existing relationships by one product—and doubling the number of products a new customer selects—can lead to major successes.

How Modern Consumers are Re-defining Their Relationships with Banks

Consumers’ relationships with banks are becoming dependent on how products and mobile banking fit in with their lifestyles. And if that relationship is going downhill, customers are much quicker to break up with their bank. That’s why leading banks are on the prowl to find the next great way to offer more than just the basics. They’re adding interesting features to mobile, introducing ways to help customers save money and offering more relevant benefits—all to create positive, lasting relationships with customers.

Who’s Making the Switch?
Starting at the end of last year, there has been a spike in the number of people who are switching banks. According to a study by AlixPartners, in the first half of last year, about 7 percent of people switched their checking account provider, and that number jumped to 10 percent by the end of the year. That’s the highest it has been since reaching 13 percent during the financial crisis of 2008. Today, mobile technology is driving the switching. Sixty percent of smart phone or tablet users in the last quarter of 2013 said mobile banking played an important or extremely important role in their decision to switch.

Those kinds of numbers tell a big story, but they also leave a need to hear the voices of actual bank customers who are shaping those trends. In StrategyCorps’ man-on-the-street style consumer research videos, we’re asking people those types of questions, and this clip in particular shows a deeper look into the mind of the “mobile switcher” and what is most important to her.

She’s putting her own mobile lifestyle before her relationship with a local branch. And that’s a trend that is only becoming more common among consumers of tomorrow.

How Banks are Responding
The popular online bank alternative, Simple, purchased by BBVA for $117 million earlier this year, as well as Bank of America and other leading financial institutions, are looking outside of banking for inspiration to enhance their mobile strategies and product offerings.

simple2.pngsimple1.pngRealizing that social media is defining the way people interact with their phones, Simple has created a mobile banking app modeled after a Facebook and Twitter-like experience. With each purchase, you can add photos and notes to remember something about that transaction, and the app automatically geo-tags your location. You can also include hashtags in your notes, so by typing #lunch, for example, you are using a budgeting tool that categorizes all purchases with that same hashtag. It’s all for your eyes only though, so rather than these features being used to share things with other people online, they are simply used as familiar concepts that make spending and budgeting become easy and practical.

Are all those features necessary for me to manage my purchases? Not necessarily.

Does being able to use hashtags with my banking app and getting funny gifs in messages from customer service make me really like them? Absolutely.

Bank of America
boa.pngAnother benefit nearly every consumer can appreciate is saving money, and Bank of America now has a two-year head start in taking advantage of this concept. Bank of America released in a 2012 press release, “Our customers continue to tell us how important it is to save money while they shop.” And since then, Bank AmeriDeals has been their response to that request. Customers log into their Bank of America mobile banking app and select the Bank AmeriDeals section of the app. They can scroll through a list of discounts and activate the ones they want to use, and the cash back from those discounts are applied automatically when making a purchase.

While the app currently lacks a wide variety of deals and location awareness, there are indications that Bank of America will be updating the app to include location-based deals later this year. That brings the chance of an even further lead over banks that haven’t made these types of connections with their customers. Discovering how to build your products in ways that can enhance how customers are already using their mobile phones gives you the opportunity to not only keep the customers you have but to also attract new ones.

Find more consumer research videos at

Will Video Kill the Teller Line?

kill-the-teller-line.pngWhen asked about technology, many bankers are quick to tell you that they want to be on the cutting edge—not the bleeding edge. But banks are slowly, if perhaps begrudgingly, adopting new technology in bank branches. And while this technology may not be the flashiest, its adoption could spell the end for that stalwart of the banking industry—the teller.

Sixty-eight percent of consumers visited a branch in June 2013, according to the Boston-based research firm Celent, and more than one-quarter of Americans cite branch convenience as a factor when they choose to switch banks. But foot traffic is declining by as much as 5 percent annually. In the age of digital banking, it’s clear that the industry’s approach to the branch must change. For many banks, this means the implementation or expansion of self-service technology.

Bob Meara, senior analyst at Celent, sees the industry heading towards an increased self-service model, with staff available when needed. “I think the teller line [will be] extinct sooner rather than later,” he says, but since sales typically occur within the branch, “the last thing [bankers] want to do is close branches.”

When it comes to technology in the branch network, “the single biggest sea change I see in branch technology…is the image-enabled ATM,” says Kevin Travis, managing director at New York-based bank advisory firm Novantas. Unlike a traditional automated teller machine, these ATMs scan images of customer deposits, whether cash or check, speeding the process for bank staff and providing confirmation to the customer that the deposit was accepted accurately. Image-enabled ATMs have been around for about a decade, but adoption has not been universal by the industry so far. Celent estimates that about 1,300 banks and credit unions in the U.S. use them—about 10 percent of the industry.

In 2005, Kennebec Savings Bank, a $792-million asset financial institution headquartered in Augusta, Maine, was just the third bank in the U.S. to deploy image-enabled ATMs, by Duluth, Georgia-based technology firm NCR Corp. In addition to four traditional branches, two 24-hour unstaffed electronic banking centers with image-enabled ATMs allow the bank to reach communities within the its geographic footprint in a more cost-effective way, processing transactions at about 10 percent of the cost of the bank’s full-service branches, says Andrew Silsby, the bank’s president and chief operating officer. He says that the bank’s 12 image-enabled ATMs handle about one-third of its deposits.

Despite the success of its electronic banking centers, Kennebec Savings Bank is still on the fence when it comes to virtual tellers, which allow consumers to interact with a member of bank staff operating from another location. According to Celent, as few as 150 banks in North America use virtual tellers—a small fraction of the industry.

“I think it’s going to take another couple of years for the vendors to work out the kinks,” says Meara, and video tellers may not be the right solution for all banks. Unless the bank wants to extend service hours or geographic reach, many don’t see a need for a remote teller.

Conestoga Bank, with $679 million in assets in Chester Springs, Pennsylvania, uses virtual tellers, also by NCR, at two locations in the Philadelphia area. Transactions at these branches are handled entirely by virtual teller machines, so branch staffing at those locations is minimal. “Anything that a traditional teller could process through the teller window, the machine can handle,” says Lori Adamski, chief operating officer at Conestoga Bank. In addition to deposits and withdrawals, customers can make loan payments and print certificates of deposit and cashier’s checks.

Conestoga CEO Richard Elko says sales have increased at these branches. The office on Walnut Street in downtown Philadelphia, once a traditional branch, now opens two-to-three times more accounts each quarter with virtual tellers than with live ones, enabling branch staff to handle more complex services. And while the bank has yet to see a significant cost savings, Elko says that expansion of the new concept by one or two additional locations without hiring additional remote staff will generate the efficiencies that the bank is seeking.

Banks should take a careful look at how self-service technology is deployed within the bank, says Cris Gunter, director at Seattle-based architecture firm Callison. He recommends moving technology to the front of the office. “Make technology the first step available to the customer,” he says.

Extraco Banks, a $1.2-billion asset financial institution headquartered in Temple, Texas, locates cash recyclers, which automate cash handling by branch staff, at the front of the branch. Transaction times have been reduced by half, according to Vice Chairman James Geeslin. Extraco designed branches to be “open and flexible, and they went all-in in terms of automating routine transactions as much as possible, whether it’s check cashing or cash handling of any sort or even opening modest loans,” says Meara. Extraco also uses machines to issue debit cards within minutes, and image-enabled ATMs account for 20 percent of bank deposits.

The successes seen by banks like Kennebec Savings, Extraco and Conestoga reveal that community banks might actually have an advantage in implementing new branch technology. “Smaller banks have been more radical,” says Travis, because they aren’t hampered by extensive branch networks and are well-connected in their communities. “When you go to make a radical change, you’re less likely to lose customers if your customers are already highly loyal to you.”

Technology is not limited to transactions. It can also help familiarize customers with a bank’s many products and services.

“The typical bank has 50, 60, 70 different products, but how do you convey that? How does the customer actually discover that you offer all those different things?” says John W. Smith, CEO at DBSI, a branch design firm. “One of the things that work is interactive digital.” Marketing messages can be quickly updated and even customized to educate consumers on the bank’s products and services.

Customers scan their ATM cards to access the electronic banking center at Kennebec Savings Bank, which not only gives them a sense of security, but allows the bank to experiment with digital signage. “We actually display a personalized message up on the digital signage welcoming that particular customer,” says Silsby. The bank has future plans to tailor the messaging to target the right products and services to the customer.

DBSI worked with $14-billion asset Rabobank N.A. to transform the bank’s Roseville, California headquarters, focusing on the bank’s client base in the agricultural community. The centerpiece of the branch is a table with an embedded interactive touch screen. While the table brings back the nostalgia of a farmer meeting his banker in his kitchen, the modern interactive screen provides information about the bank’s products, including how to open an account and sign up for online banking.

With the continuing evolution of technology, one of the biggest challenges for banks is deciding what technology to adopt. JPMorgan Chase & Co. plans to introduce palm scanners, a type of biometrics, in branches later this year, according to Chase spokesperson Trish Wexler. The palm scanners not only examine the vein patterns in the customer’s hand, but a personal identification number is still required, adding another level of security. And in the near future, it’s likely that smartphones or wearable devices could identify customers who enter a branch. “A banker could understand in an instant who it is that walks through the door…and be alerted to sales opportunities,” says Meara.

In an industry with few innovators, “if you can differentiate yourself, if you can align yourself to your target market more effectively, you have a massive opportunity to win,” says Smith. Banks that find and implement flexible and efficient solutions that please the consumer will be the winners.