Alenka Grealish is the manager of Celent's banking practice. Her research focuses on the automation of the financial supply chain, B2B payments, check imaging, and retail Internet banking. Prior to joining Celent, Ms. Grealish worked for The Boston Consulting Group and for the Federal Reserve Bank, where she was an associate economist.
Which banks are getting retailing right?
The banks that are looking at all the contact points they have with customers, from remote banking to the branch, and are thinking about how they can improve that interaction.
Where should banks focus?
A lot of homework needs to be done in the branch. Branches have been the necessary evil in retail banking and they haven’t always gotten attention. Bankers measure them on productivity, cost, and deposit gathering, but they have not really focused on what drives deposits – like customer satisfaction.
You want bankers to get touchy feely?
Banks are realizing you have to have happy customers before you can cross-sell. You need a customer service-oriented culture, whether in the branch or at the call center. Then you will be on the short list when the customer is looking for new products. For that you need the appropriate infrastructure. You can’t wave a wand to make that happen – you need the appropriate infrastructure, which is largely in compensation. You have to provide incentives for customer services, which is slowly happening.
Any good applications for incentives?
Callidus has some interesting stories. For most banks, though, this is a second-tier priority, which I don’t agree with.
Who is getting it right?
Commerce Bank in New Jersey. And Umpqua Bank here in Portland. When my mother moved here I had her open an account at Umpqua. She gushes about the bank, and when her CDs come due, she will move them to Umpqua because they treat her so well. Card companies have done remarkably well in figuring out what kind of card garners the greatest response, but they have a tight feedback look.
Umpqua must have good customer relationship management.
CRM is a classic example of banks seeing this nirvana. But they have to take action on the data, and you have to have customers amenable to your approach. It comes down to your people, since only a portion of your business will be self-service. The challenge is getting the employees motivated to go that extra mile to attract and sell a customer. The key is to get on the individual’s short list – they will come to you if they like you, then you have to be able to turn around an application quickly.
Where do the banks have their best opportunity to impress customers?
The key encounter is when the customer opens an account. People still tend to open their accounts in a branch, and that might be the only time they are going into a branch, but if they have a positive experience they might go back, like my mom does. For account opening you want to make sure you have the appropriate person and appropriate systems to expedite it. There’s nothing like sending people off with a bag of coffee beans like Umpqua does. Then the customers are reminded of Umpqua every time they grind coffee beans. That’s just smart.
What are banks doing wrong?
Some banks are painting themselves into a corner – they have become addicted to overdraft fees, and there is going to be backlash, particularly if CSRs aren’t empowered to waive those fees to retain the customers. When rates go up and the consumer loan pipeline starts drying up, banks start hunting around for other ways to get fees and get greedy on NSF fees. As they move to check imaging and close down that float window, they have to think much more long term and say we are going to invest now to build customer satisfaction so we don’t have to do a hard cross-sell; we will be able to soft sell.
Where do you see investment occurring?
In middleware. A lot of banks are thinking about how to simplify their operations and getting rid of siloed middleware to harness the potential of service-oriented architecture. I think that will be a real big deal. They are not going to replace core DDA systems – it is hard to argue the payback. But loan core systems are being shaken up by demand for product innovations. You can turn around a new product so much faster with new technology that you can justify the costs.
Who is leading?
Household has one of the cleanest IT architectures; they run on one or two platforms. Most finance companies, especially those with car portfolios, live and die by their ability to harness their data and the knowledge that they can extract from that data.
What would you like to see happen in retail banking?
Branches and call centers are a big pain to manage, with high costs, turnover, and not a clear ROI, but they are the face of the bank. Banks should apply best practices, monitor customer service and compensate for quality customer service. Then you can retain good employees. You have to get the right people and then install a program to pay them incentives. The key to the credibility of an incentive plan is that the time between the action and the reward is short and guaranteed, and that can only be enabled through technology.
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