Steve Schmidt
The banking industry continues to go through turmoil, and the pressure’s building up on all sides. Beyond regulatory scrutiny and competitive stress from both inside and outside the industry, customer demands aren’t letting up. Driven by today’s digital, on-demand, anytime world, customers are more likely to have financial relationships with multiple providers and often less likely to engage in face-to-face interactions with their bankers. Even so, just like in the world of retail, the expectation for a personal, positive overall customer experience isn’t going away.

In fact, banks and credit unions can learn a lot about how to tackle today’s biggest challenges by taking a page from what the best retailers in the world do so well. Here’s a look at some of the top banking issues today, along with a few examples from the retail environment.

Banking Customer Personalization.

Will that be half-caf, soy milk, vanilla flavored and sugar free? Customers expect a tailored solution to their needs, just like they expect to be able to get their own special order at their favorite coffee shop. But an Accenture Global Consumer Pulse Research study found that while 48% of consumers expect specialized treatment for being a good customer, 33% of those who abandoned a relationship did so because personalization was lacking. Plenty of financial institutions are missing a huge opportunity to uncover what customers really want and value and to personalize solutions for those needs. Asking the right questions is the first step, and for many banks, this means upgrading your questioning model.

Going the extra mile.

Complaints from consumers about problems with their banks continue to grow, and it’s becoming easier than ever to file a grievance. But when a problem is solved efficiently and effectively, it can turn a disgruntled consumer into a loyal customer. Just ask the Nordstrom customer who was treated to a house call by an employee who came to exchange a pair of shoes. Top-performing financial institutions have figured this out, as well, and the payoff is well worth it. According to Bain, “Top-performing banks have fewer disputes, resolve those they do have faster and use digital channels better. As a result, they spend much less on disputes.”

Moving Banking customers from satisfied to loyal.

Affluent banking and credit union customers generally insist on premium service and tailored, expert advice. Moving affluent or mass-affluent customers from a detractor to a promoter is worth roughly five times the economic value of turning mass-market customers into promoters. That’s a lesson that Lexus knows well. Early on, Lexus achieved a remarkable 63% repurchase rate among first-time buyers because they knew their buyers were attracted to comfort, long-term value, and reliability. They relied on loyal customer recommendations and provided them with special services to instill that loyalty. To grow wallet share and create more loyal affluent customers, banks will have to do more than train people to sell; they’ll have to change mindsets about what selling is.

Creating a customer experience culture. 

More than three-fourths of executives say that the customer experience has improved at banks while two-thirds of consumers say they have seen no change. It will take a foundational change in culture and language to bridge this gap. Ritz Carlton’s motto, “We are Ladies and Gentlemen serving Ladies and Gentlemen,” is legendary, but what’s even more admirable is how the Ritz-Carlton experience fulfills even the unexpressed wishes and needs of guests. As Deloitte put it in the latest Banking Industry Outlook, “Long-term sustainable growth in the banking industry seems only possible with a radical departure from a sales- and product-obsessed mindset to one of genuine customer centricity.”

Building trust. 

Financial institutions are slowly chipping away at the trust gap, but revelations like the Wells Fargo scandals reinforce lingering negative perceptions about the industry as a whole. They also show how quickly trust can evaporate. It’s worth noting that customers aren’t the only ones who care about trust. Banks that want to continue to attract and retain talented, committed employees will need to show them that they are trustworthy, operate fairly and ethically, and contribute positively to society.

Increasing products per household.

Financial institutions overall have struggled with cross-selling, in part because the approach to cross-selling isn’t hitting the mark. Banks and credit unions need a new mindset of customer cultivation that includes growing their relationships from simple accounts to loans, investments and business banking. To do this, they’ll need to move away from selling products to solving problems, and this requires employees who have a strong commitment to creating customer value rather than just filling orders and requests.

Thinking omni-channel.

With banking customers making fewer visits to a branch, services and interactions have to be seamless across every channel, a reality that traditional bricks-and-mortar retailers have been dealing with for a number of years now. When actual human interactions do occur, the quality of the experience matters more than ever. The omni-channel consumer expects everything to be instantly available, with no gaps in the brand experience. The question financial institutions have to consider is whether or not their entire team is willing, able and aligned to consistently deliver on this promise.

Nurturing small business. 

For most small businesses, the bank relationship starts with setting up their operating accounts and establishing credit over time, but these products barely scratch the surface of the customer’s overall financial needs. To maximize the mutual value of the relationship, banks need to go for the trifecta: the small business relationship, the personal relationship and the wealth management relationship. This is something that Visa has perfected over the years with their consumer and business products, along with their relationship with the horse racing Triple Crown. 

Connecting with Banking customers on their terms.

Banks and credit unions are slowly evolving to customer segmentation to get to know their customers better, following the example of retailers like Target that have used segmentation well for many years. But the layers go deeper than just segmentation. A person’s behavior style influences how they communicate, make decisions and relate to others. When customer-facing employees understand their own style as well as that of their customers, they can better understand needs and create more powerful, mutually productive relationships.

Creating a sales culture.

What many of these trends point to is the need to align service and selling so that the organization can maximize every customer interaction. Many financial services leaders and front-line employees alike struggle with this idea, though, because they worry that it will require manipulative sales tactics and scripts — all those negative sales stereotypes that are in direct opposition to being service-oriented. As Robert Blumberg, CEO of Wauna Credit Union, told us, “We don’t want the member to leave the credit union not feeling good about the product or service they purchased. And likewise, we don’t want our employees to feel badly about what they’re doing. You have to believe in what you are doing and really embrace it.”

He found that a sales culture supported by a values-based selling process and effective manager coaching actually strengthened the banking service culture while delivering more value to both the bank and the customers. Not only that, the team comes to work every day feeling good about what they do. Now that’s an investment that will pay off time and again.

About the Author
Steve Schmidt
Steve Schmidt

Executive Partner

Steve Schmidt is an Executive Partner and a member of the ownership team with Integrity Solutions. Since joining us in...
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