Hey! WAKE UP!

Sorry, it's been awhile between posts. I was re-grouping, as I think a lot of us are. But that's over.

As reported in Payments News, Wal-Mart just announced that they are rolling back the price on their pre-paid Visa debit card to $3 from $9. Re-loads are $3, and there's a $3 monthly fee, but there is no reload fee if the card is loaded through direct deposit, or through a payroll check cashed at the store. The $3 monthly fee is waived if $1,000 is loaded in a month and there is no fee for withdrawing cash from the card at the Wal-Mart POS.

In addition, they're rolling out a major financial education and money management program for their customers.

Hmmm, a very low cost DDA replacement, a highly trusted brand, locational convenience, aggressive customer education. Looks to me like they might be serious about this financial services thing. And what about their competition? Bank brands are in the tank, fees are going up, not down, and services across the board are being eliminated.

The retail banking value proposition, the core of the business, is rapidly being co-opted by one of the most powerful players in the land. Seems to me that somebody ought to be responding to this, but how do you compete with Wal-Mart?

The only competitive position that works against price is value. And the value that retail banking can bring to customers is knowledgeable, caring people who can help their customers through difficult times. It's time to get back to thinking about the reason banks exist, to serve customers, and let the media and the finance people worry about the rest of the stuff. Get front line people back into a positive frame of mind. Remind people that customers need their help now more than ever. Train people to be sensitive to the very real concerns that their customers are facing. Give managers the flexibility to waive fees to keep a valued customer.

It's always hard to manage customer relationships through down times, and this one is tougher than most. But that's not an excuse to walk away from the basic business of banking, which is to help people.

Because obviously, if banks don't do it, there's someone right around the corner who will. Check out this video and have a good talk with yourself about what you and your organization need to be doing.

Great new blog on the future of banking

Happy New Year! I hope that 2009 is a good year for all of us.

There's a great new blog called the Future Banking Blog, written by Jeff Carter of Bank of America. Jeff leads the Bank's Center for the Future of Banking in conjunction with the MIT Media Lab. They're out on the extreme ragged edge of the impact of technology and society on financial services, and they already done some great work that will help move our industry forward.

It's worth your time to check out the blog and to see what the Center is doing.

What to say? Ask SunTrust

The immediate crisis to the system appears to be over, and from a customer's point of view, it's a mess. Investments are wrecked, banks have vanished, the big have gotten bigger, and now there's real concern about the long term impact of the crisis on jobs and the economy. The credibility of any brand in the financial system is low, and trust has got to be a limited, and precious commodity.

How does a bank position itself in this environment? There are a lot of different approaches being taken; from the dramatic increase in available ATMs created by an acquisition, to fairly generic "safe and secure" messaging that a lot of smaller banks are using. It's a difficult time to be communicating because uncertainty in the environment puts any communication at risk of either missing the mark or alienating the target audience.

SunTrust, I believe has nailed the messaging for this environment. The following spot is running now, along with a very powerful companion spot in radio.




Entitled "The Joneses," the spot talks about giving up conspicuous consumption for "real, true, and honest," and how people want a bank that does the same. The message is positive, simple, in plain english, and it tells people that it's not only OK, it's right to be frugal and careful about their money. And it says that SunTrust feels the same way.

No shouting about safety, no bragging about size, no artificial scenarios. A clear, simple, powerful message supported by strong visuals.

SunTrust has captured a positive vibe that may be perfect for this environment. If they can bring that message from the media all the way through to the teller line, they have an opportunity to differentiate the bank in an environment where differentiation is really difficult.

But, it's all about execution. To be effective, great messaging needs to be supported by aggressive communications and coaching across the organization.

What to say? Ask SunTrust.

The four people that matter in a crisis

Priorities. The hardest part about working through a crisis environment is figuring out what’s important and what isn’t. Obviously working out mortgages and fixing the plumbing of the company is the first priority in any difficult situation, but what next? What gets priority?
It seems to me the highest priority should go to taking care of the people that really matter to the success of your company. And, like everything else, some people are more important to the equation than others. I think there are four people who are critical to the recovery of a financial institution in a crisis. Others matter too, but these are the most important.

1) The front-line employee – No one in a financial services institution has a tougher lot than the person who faces the customer each day. They’re worried about their own economic situation, they may be worried about keeping their job, they might not have a clear understanding of what’s going on in their company, and their entire reason for being is to deal with people who are anxious, worried, and occasionally very angry. And for this they generally get the lowest salaries in an organization. The front-line employee is the single most important person in an institution, and in a crisis situation, they should be the first priority for coaching, motivation, communication and appreciation.

2) The front-line manager – In addition to being the critical link in making sure that the front-line employees are taken care of, the front-line manager also has the “privilege” of making sure all the reporting is done accurately, that everything balances, that all the company’s programs are being effectively delivered, that the right marketing support is in place, and after all that, they get to deal with the really tough customer issues that their front line people can’t handle. Keeping managers well informed and making sure that they have the coaching skills they need to help their people is an essential element of crisis management.

3) The good customer – No matter what, the place won’t run without customers, and good customers are critical to recovery. By good customers, I’m not necessarily talking about the high net worth/private banking customers, I’m talking about the profitable mainstream customers that have four or five products with the organization, have been there for several years, and are generally seen as “low maintenance.” Their steady revenue and loyalty can carry an organization through some very tough times. Too often they get lost in the shuffle, and often, all they need to stay fiercely loyal and happy is some recognition of their value. A letter, a phone call, anything that tells them you know who they are and that they are important will make a huge difference.

4) The new customer – With all the tumult in the market, a lot of people are rethinking their choices and are deciding to change organizations. Some are showing up in your offices and on your website. They may be showing up because your organization is perceived to be a safer or more stable place to do business, but that will only get them in the door. What happens in the six months after they switch will determine if they will become the good customers described above, or will continue to look for a new place to do business. A well orchestrated on-boarding program can reinforce their purchase decision and lock them into the organization.

There are a lot of things, and a lot of people to worry about in a difficult situation, but focusing on the four people that really matter can clarify priorities and help an organization move past the short-term issues and build a solid customer base for the future.

What’s coming…

I attended the Finovate 08 conference in New York yesterday. For those of you who are unfamiliar with the event, it is a deep immersion into emerging companies in the financial services space. Twenty-four companies present and demo their offerings in one day, with each getting just seven minutes to make the sale. There are opportunities for deeper conversation and questions in a separate forum, but the real focus is on the demo.

So after 24 presentations, what’s my take on innovation in financial services and its impact on the customer? It’s going to be good -- very, very good. Let’s play out a scenario:

I’m a 20 or 30 something, and I’m starting to make some good money and get serious about my financial situation. I sign on to Mint, Quicken Online, Thrive or Wesabe, where I can see all of my accounts, bills and investments in one place so I know where I am. And, if I want to do it all on FaceBook, I can get the MyMoney app and run my banking right out of my home page. I go to CreditKarma to check out my credit rating and based on my rating, it looks like I can get a better deal on my credit card and some other stuff as well. Then I check out my credit card choices at FiLife, BillShrink, or RateSurfer and discover a couple of cards that match my lifestyle and can save me money. If I'm looking for a great rate on a mortgage, I can go to SmartHippo.

It’s time that I start thinking about investments but I’m really clueless and intimidated, so I go to WeSeed to learn how to invest and share ideas with others who are learning as well without risking my money. Once I get more sophisticated, I can go to Boulevard R for some financial planning guidance and then when I’m in the market, I can analyze my positions at Inner8. To add to my portfolio I can visit MoneyAisle and have banks compete for my CD in an automated reverse auction, or I can invest in person to person loans at Lending Club or Loanio.

After a couple of years, I decide to start my own business so I use Small Business Finance Works through my bank’s online banking service (Note: This won't be live until December).

There’s a remarkable explosion in the integrated delivery of information and services going on and what we saw provided some great examples. The value of the customer experience is being enhanced and customers are going to benefit.

The question is how do existing, physical world organizations capitalize on this explosion and move to the next level of customer service? Embrace new applications and new technologies, allow customers to use and accept them on their own terms, and find ways to build them into the overall service delivery strategy. The opportunity is there to create a financial services enterprise that completely changes the playing field. It will take strategic vision, and a lot of hard work at the street level, but it will be worthwhile.

The truth is that the alternative will probably be to watch an entire generation move to a different way of managing their money. Not necessarily a good thing.

Why do we do this?

I had the opportunity to take a cab ride this week from my hotel to the airport. It was 4:30 a.m., I was tired, and in no mood to talk. But my driver would have none of that. He talked about cabs being robbed, his kids, his grand kids, the last family reunion they had in Atlanta, and how he loved to “ride” in his cab because he was too poor to have a car when he was “coming up.” Cab driving was his second career; his first was working for 34 years at the Swift meat packing plant. He’d been driving for 20 years.

He made what could have been a dreary, mundane experience terrific, just by talking to me about him. He was eighty years old.

It occurred to me that it’s easy to forget why we mess with customer experience and customer service. It’s not about improving efficiency, increasing profitability, decreasing attrition, or keeping a high first call resolution percentage. Those are metrics, ways of keeping score. It’s about helping people live successful and prosperous lives in a world where that’s difficult to do. My cab driver has spent 80 years on this planet working hard, raising his six kids, putting four of them through college, dealing with high gas prices, factory closings, health issues, and job loss. I doubt that there’s a lot of space in his world to think of or care about banking or payments.

Maybe instead of worrying about the metrics that help us keep score or on trying to “surprise and delight” when we can’t really deliver some of the most basic services, we should just work hard to get out of people’s way so that they can do what they need to do. Maybe not being noticed is the highest level of service that we can provide.

Setting realistic goals in terms of customer experience and understanding the customer in their context may be the best way to deliver the level of service that is really valuable to the customer, so people can get on with the stuff in their lives that really matters.

What now?

Sooner or later, this will all settle down. I’m not sure how, but it will, and when it does, it’s going to be different; fewer, bigger players, constrained lending and underwriting policies, and, most importantly, a focus on the real business of banking, the preservation and growth of individual and business capital.

A few banks, the banks that you don’t see in the headlines, have been focusing on that all along. This idea was brought home to me by a person from one of the banks that’s actually doing just fine right now. One of the key reasons that they’re doing just fine is that they didn’t make high risk mortgages. Why? Not because they thought the risk was too great, not because it wasn’t in their strategy, but BECAUSE IT WASN’T IN THE BEST INTEREST OF THEIR CUSTOMERS TO MAKE THOSE LOANS. Think of it, bankers realizing that putting a customer in an over-leveraged loan was a bad idea for that customer. No doubt a lot of those customers ended up with loans from other institutions, but this bank didn’t make that loan.

The lesson…when you start and finish by thinking of the best interest of the customer, and you manage your business prudently, you rarely go wrong. So, what now?

The customer will re-emerge as the center of the banking universe. Banks will realize that core deposits and basic lending products are the most important assets on their balance sheets, that their customers are the ones who own those products, and there will be a shift to acquiring and retaining customers as a core strategy.

Then, it’s about execution. Some banks will decree a "focus on the customer" and continue to deliver lousy service at a high price. A few will take a hard look at their organization and realize that they need to completely re-align, re-train their customer service teams and aggressively coach their front-line managers. And one or two will continue to do exactly what they were doing before because they never stopped thinking about what was best for the customer.

A.P. Giannini, the founder of Bank of America said, “If an institution becomes great, it is usually by the consent of the people it serves.” At this time, in this place, truer words were never spoken.