Refinance your home! Buy a car for a low fixed rate! When they interact with consumers, some banks seem to prefer a one-size-fits-all communications model with a heavy emphasis on product pitch. We get it: Email and direct mail are both so easy and play well in a “document-this” metrics-driven era: How many people opened the email? How many calls did that postcard yield? Except that…
“A bank will never build a loyal relationship simply by sending an email or using direct mail,” says Elliott B. Jaffa, Ph.D., a behavioral and management psychologist based in Washington, D.C. Indeed, consumers have long had a message of their own that doesn’t require an email or flyer: You need to listen. More than ever, in fact.
“Banks and financial services in general are operating in an increasingly global environment where traditional borders, such as those limited to a given community, state, region or even nation no longer apply,” says Mark Hamrick, Washington bureau chief and senior economic analyst for Bankrate.com. “That makes it critically important to differentiate, attract new customers and retain existing ones.”
Customers do not think they’re doing a good job at that. One-fifth of people have a negative view of the banking sector, while the BAI Banking Outlook found that across three demographics—millennials, Gen Xers and baby boomers—only a third completely agreed that “my main bank is innovative.”
As for Net Promoter Scores, which measure how likely a consumer is to recommend their financial institution to a friend or colleague, consumers give banks a 31 (cross-sold) or 36 (not cross-sold), BAI findings show. Compare that to the overall NPS for the retail industry, which averages a 52, and USAA—which has posted the highest score in banking for nine consecutive years, and most recently an incredible 79.
Stats like these signify how much things must change. But listening to all of your customers is too complicated, right? Wrong. It’s doable if you practice these principles:
Even in a digital age, old-fashioned relationship building still works and is still the gold standard. “A consultative dialogue works best,” says Andrea Grodnitzky, CMO of Richardson, a global sales training and performance improvement company. “Financial professionals need to [learn how] to ask their customers the right questions to uncover their true needs. Build trust and ultimately you’ll position a solution that adds value for the customer and drives revenue for the organization.”
Given the importance of face-to-face communication, banks shouldn’t be so quick to shutter local branches in favor a spiffy app. Customers may think they want an all-digital world, but they actually don’t. Branches remain key to personal engagement and emotional connection with customers; when EY asked banks “How Well Do You Know Your Customers?” it found that consumers otherwise fine with routine interactions online valued in-person discussions about more complex, higher-value engagements such as mortgages, retirement and investment planning.
Still a passive human presence to hear consumers isn’t enough, Jaffa pointed out. “All of those employees sitting at their desks when you walk into a bank are the listeners, but [can still] fail to build that relationship with each customer that walks through the door.”
Truly listen and respond.
Citing bank policy and procedure, chapter and verse, may be correct from an institutional point of view. But’s entirely absent of the empathetic listening and response customers want.
Bank that truly listen know consumers want more personal service and clear, concise answers for basic-yet-critical questions. Unfortunately, “What’s heard in branches isn’t effectively collected, curated and reframed to the digital context to be solved,” says Philippe Dintrans, senior vice president and chief digital officer for Cognizant’s banking and financial services practice. “Interactions in a branch should be treated as feedback from customers for a similar capability available in a digital channel.”
In a digital world where consumer complaints can go viral overnight, listening may seem more like putting out fires. Most banks do the basics when they monitor social media, run surveys and conduct research, says Mike Fotis, founder of Smart Money People, a financial services review website.
But with the proliferation of review sites, social media groups and consumer forums, the conversations have spread across many media channels, including ones they don’t control. “Responding through these channels is the biggest and most overlooked opportunity for banks to pay attention and tap into the emotional needs of their customers,” Fotis says.
An example he gives of good listening is Finn by Chase, which lets users rate purchases, track spending and set up rules to save for something such as a dream road trip or concert tickets. Clearly, the bank heard the needs of younger consumers. Another example is Monzo, which hosts meet-ups in the U.K. “These events have been on subjects as diverse as creating digital art, coding and debates about high-street banking,” Fotis says. (“High street” is a U.K. term for “Main Street.”) “It’s all by the community Monzo has created around its banking proposition”.
Perhaps the best example is USAA Labs, an online site where members provide feedback on innovations, concepts and pilots. This is smart because as EY noted, “Banks must complete the transition from regulatory-driven transformation to innovation-led change”—in other words, not just listening to regulators only.
Move at the speed of life.
Regardless of how you’ve identified a consumer need or complaint, move quickly or risk leaving the consumer feeling like the victim of elaborate lip service. After all, we live in age where a customer who jumps on an ecommerce site can go from zero to purchase inside of two minutes. Customers who perceive that you’re taking your sweet time will too often feel ignored—and take their sweet business to a competitor.
“Much like the Titanic couldn't turn in time to dodge the iceberg, the same goes for banks,” says Tom Ortega, founder of Omega Ortega, an Arizona-based consultancy that works with financial institutions. With some customer-facing initiatives, “Banks have projects that take years–yes, years—to reach fruition.”
Unfortunately, in the modern world, taking that long risks making the customer feel like you never heard them at all.
“Banks need to implement a customer-first culture that can respond to rapid changes in customer demands now,” Fotis says. “The effects are never immediate but eventually it will mean that fintech firms building user-first propositions will win the hearts, minds and wallets of consumers—leaving banks with the least profitable consumer segments.”
Adds Hamrick: “At minimum, the banks that fail to listen to customers will not grow as much as they might otherwise. At worst, they lose business and market share and either get absorbed through consolidation or go away.”
Which would prove lamentable if based on customers’ perceptions—even if unfair—that banks have told them to go away.
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Dawn Wotapka is a communicator who lives for a great story, no matter how it is told. An Army brat who graduated from NC State University and NYU, Dawn covered the housing crash and public companies for The Wall Street Journal. She enjoys running, overnight oats and business books.