Are bankers dishonest?

Honest Abe is not impressed.

A team of Swiss economists claim that the business of banking makes industry employees more dishonest.

“Our results suggest that the social norms in the banking sector tend to be more lenient towards dishonest behavior and thus contribute to the reputational loss in the industry,” says Michel Maréchal, Professor for Experimental Economic Research at the University of Zurich.

I take the conclusions of this study with a heaping dose of salt: Much of the results center on the employees of ONE BANK, and I have strong reservations about a study that is so influenced by the culture of one company. Frank Eliason, global director of the client experience team at Citigroup, expresses similar concerns–and makes an excellent point about the very real reputation damage the industry has witnessed due to some very bad eggs.

And that’s very true. According to Edelman, the financial services industry remains the least trusted industry globally. American sentiments trend with those worldwide–almost half say that there’s not enough regulation of financial services–but here’s a silver lining: Trust of financial institutions has grown in the past year.

One of the Swiss study’s authors, Alain Cohn, thinks some type of Hippocratic oath for bankers would address the issue.

If an oath like this were supported with a corresponding training program in ethics and appropriate financial incentives, this could lead bank employees to focus more strongly on the long-term, social effects of their behavior instead of concentrating on their own, short-term gains.

I’ve met bankers from all across the U.S., and I have a hard time buying that they’re inherently more dishonest than those in any other industry. But both Eliason, in his post, and the Swiss study’s authors (in a roundabout way), allude to the importance of culture. In Bank Director‘s own research, we’re seeing this more and more as a common theme, with the 2014 Compensation Survey underscoring the importance of culture in attracting talent and the 2015 Bank M&A Survey revealing the challenges bank boards and management face in integrating the purchased bank into the surviving institution–and this includes the bank’s culture. Bank Director Editor Jack Milligan wrote recently about the importance First Financial Bankshares CEO Scott Dueser places on culture, concluding:

And you can’t provide great customer service if your employees hate their jobs, which is why First Financial places so much emphasis on training, career management, empowerment, recognition and, yes, compensation.

It’s probably an axiom that only happy employees can provide great customer service, just like the best milk comes from contended cows. So if customer service is one of your core business strategies, make sure your bank is providing an environment where people enjoy coming to work every day and love what they do.

Eliason, I think, makes a similar point:

…it has to do with experiences we, as an industry, have created for Customers. Change must happen, and it must happen now! Stop worrying about studies, or even these headlines, but instead focus on your Customer, and they will return the favor. The fact is Customers are people and our business has always been about relationships. It is time we concentrate on those relationships.

Banking isn’t evil, and many bankers aren’t dishonest. But negative public perception of the industry is very real. Positive customer experiences–the result of an ethical, client-friendly and employee-friendly culture– will go a long way in restoring trust in the banking system.

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LOFTy Expectations

I’m a big fan of LOFT, the lower-cost little sister to the slightly more upscale Ann Taylor, but their most recent sale probably lost me as an online customer.

LOFT ran a big sale Sunday that offered a 70 percent discount off sale items. Who doesn’t love a good deal? The sale expired at midnight, so I started to browse late Sunday evening on my iPhone. Unfortunately, I couldn’t get past browsing–the website constantly crashed. This isn’t the first time that LOFT’s website couldn’t handle extra traffic during a big sale.

LOFT Response LOFT’s response to my concerns voiced on social media Sunday night came on Monday morning–hours after the end of the sale–and instead of addressing the issue through that medium, they directed me to call an associate. Around the same time, I received a tone-deaf email advertising a 60% off flash sale email.

LOFT Flash Sale 07142014

I should note that the social media team at LOFT seems to be responsive to customers on its Facebook page. It’s true that I was disappointed that, instead of addressing the problem through social media, LOFT directed me to contact them by phone–an extra step that I didn’t want to take–but their team is just doing their job.

The real problem lies in the fact that marketing, product delivery and customer service aren’t strategically aligned.

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Decline in Branch Banking, or an Evolution?

treesroadunsplashSeveral news outlets have picked up on recent data from Bankrate.com revealing that 30 percent of Americans haven’t visited a branch in at least six months, among them Time.com, which called it the one stat big bank CEOs are freaking out about.

Half of Americans visited a branch at least within the last month, 64 percent within the last six months and 73 percent in the last year. A request to Bankrate.com for past data on branch visits was not answered.

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Will Banking Keep the USPS Afloat?

toyboatsI’m absolutely fascinated by the latest idea (though not an old one) that the United States Postal Service should offering banking services, but can’t help but think that this is more about keeping the USPS afloat than helping the unbanked. That doesn’t mean it won’t work, but banking ain’t easy, y’all. As Billy Beale, CEO of Union First Market Bankshares Corp., said at Bank Director’s Acquire or Be Acquired Conference last month: “Banking isn’t complicated. It’s complex.”

The USPS has been bleeding money for years, suffering from the dual challenges of keeping pace with an increasingly technological population relying less and less on traditional mail coupled with its obligation to contribute $5.6 billion to retiree health care benefits–a payment the agency failed to make last year. The USPS ended 2013 with a net loss of $5 billion, and has posted losses for 7 consecutive years.

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Walmart in the Mortgage Race?

pinewoodcarsI blogged here not too long ago about Walmart’s Bluebird. The response from one banker when I shared that post within a LinkedIn group? Bankers don’t need to worry about Walmart. It isn’t competition for us.

With the results of a recent survey by Carlisle & Gallagher Consulting Group showing that ⅓ of Americans would be willing to go to Walmart for a home mortgage, I wonder. You know there’s a team at Walmart right now evaluating how they could offer mortgages, and what partnerships to build to make it happen. Walmart does offer small business loans via Sam’s Club stores, so a Walmart mortgage isn’t that far-fetched.

But it’s not just Walmart. 80% of those surveyed would consider a mortgage with a non-bank, period. Why the dissatisfaction? What’s frustrating consumers?

Three of the big reasons given come down to one very simple thing: COMMUNICATION.

56% of consumers believe the mortgage process is too slow. Can your bank responsibly speed things up for the customer? If not – are loan officers communicating with the customer so they know the bank’s on top of things?

32% find it difficult to communicate with their lender, and – I feel this is related – 31% are unable to track the status of their mortgage application. Communication difficulties with a lender should, I feel, be rare – yet a third of those surveyed cited just that frustration.

And – ouch! – 26% don’t trust their lender’s advice.

As stated in Carlisle & Gallagher’s press release: “Consumer attitude is driven by three things, price, service and trust,” said Doug Hautop, Senior Manager and Lending Practice lead for CG.

Do I think Walmart as a lender is anymore trustworthy – or prone to be a better communicator – than a bank? No. But Walmart or no, if trust continues to diminishes in banking, it looks like 80% of consumers don’t feel a need to rely on banks.

Banks: Mobile Apps vs. Social Media

Video Banking: Folly or Foresight?

More Power to the Consumer

Do you know how your customer base wants to interact with your bank?

Yesterday I attended the Bankerstuff webinar, “Branch Transformation: Positioning Your Branch Network for the Future”. Chris Gill, Jim Flannery, and Jason Wolf of Diebold Branch Transformation Advisory Services presented some fascinating information on consumer trends.

Consumer interactions are changing. Teller transactions should decline, and ATM transactions should remain flat, by 2015. Growth will be found in online and mobile transactions, with mobile growing from 5 billion transactions in 2010 to roughly 18 billion by 2015. Additionally, consumer expectations are shifting as they interact with retailers in a variety of industries. What can you learn from retailers? How do your customers interact with you – and how do they want to interact with you?

Consumers have a lot of choice. Within the banking industry we tend to focus on the fact that the number of banks is declining, so there’s not a lot of thought put to the fact that consumers have literally thousands of banks to choose from – and that doesn’t even include the “non-bank” financial products on the market, like Bluebird. Diebold Branch Transformation Advisory Services found that 64% of consumers select a financial services provider based on the brand’s reputation. How are you strengthening your brand?

The branch isn’t dead.

  • 67% of consumers still prefer to go to the branch to make a deposit.
  • 53% prefer the branch for problem resolution.
  • 73% want to open an account, and 67% want to apply for a loan, in a branch.

The trend in the industry – the call for branch transformation – tends to focus on having a more specialized staff, with a shift in the branch from a transactional center to a service & sales hub. Banks may have to guide those consumers that still want to use the branch for transactional matters, like deposits, in order to create a more profitable branch system. Offering the right mix of branch, mobile, and online banking will help lead these consumers to choices that could be more convenient and better meet their needs – and help the branch become more streamlined and profitable.

Keep an eye on the young ‘uns. Gen Y’s and Millenials will hold the most spending power by 2017, and will conduct 40% of transactions. While only 33% of consumers consider mobile banking important when choosing a financial provide, 49% of Gen Y consumers, and 39% of Gen Z, do. But don’t discount the branch: 56% of Gen Z and 58% of Gen Y still consider the number and location of branches when choosing a bank. Where will these customers transact with you? Where will the relationship be? Are you offering the right mix of web, mobile, and branch?

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PwC Financial Services Managing Director, Nate Fisher, highlights how banks can align their pricing structure by using data from customer preferences.

Mike Branton of StrategyCorps shares how to put the retail back in retail checking.

Mobile Can’t Stand Alone

Earlier this month I interviewed the team at Reliant Bank, for an article that will post Monday on BankDirector.com. The piece is a look inside the late summer release of the community bank’s mobile app, but something I couldn’t include in the story was the other efforts the bank is making to achieve growth in a tough economy. Is a mobile app increasingly becoming a consumer expectation? You betcha. But a mobile app alone won’t generate growth. What else is your bank offering its customers?

Do your customers feel rewarded?

If community banking is largely about relationships, do your customers feel the love? Reliant Bank, a newer community bank in an affluent community, offers rewards checking – not exactly novel, but something that Brian Shaw, chief retail and deposit officer, says has resulted in significant growth of the bank’s client base. Customers earn interest for doing things like using their debit card ten times a month, using online bill pay for transactions, and using online banking. Pretty basic stuff that also encourages their customer base to do more online (which probably saves Reliant money too).

Reliant also waves ATM fees – an important thing for a community bank that can’t be on every corner.

Are you reaching out to current – and future – customers?

If you’ve visited this blog before, you know I’m a big fan of financial literacy. As part of their financial literacy program, Reliant offers a popular, high-interest child’s savings account. Reliant has been able to talk to kids in the schools, and the kids are rewarded for saving with $25 from the bank (or a giftcard). Kids are taught to save – and rewarded for it – with the help of Reliant Bank.

Reliant Bank is also active on Facebook, using the channel to notify customers of new programs (like mobile banking) and for community outreach. If you take a look at their page, most of their posts over the past week are about community events, like a bake sale, customer appreciation days, and seminars available to the public.

What does your bank offer that stands out?

Reliant Bank offers a Groupon-like ‘Raving Fan’ program, connecting Reliant’s business clients to retail customers.

The ‘Raving Fan’ program features local businesses, like area restaurants. Reliant’s retail clients appreciate the discounts to local businesses, while their business clients appreciate the free advertising and connection to consumers.

I love hearing stories of banks that are doing something different. Do you know of a retail bank doing something a little different? Maybe a unique branch concept, or a branding standout? Comment below, or email me at emccormick[at]bankdirector.com.

Update: The article “Reliant on Mobile”, detailing Reliant Bank’s summer release of their mobile app, is now available.