Banks – A cat with nine LivesDr. Nicos Rossides: CEO MASM GroupBud Research Taylor Research Director Consulting MASM GroupIntroduction
Branch banking is dead! Technology is killing the retail industry! The Internet rules! Young tech-savvy customers are taking over and that the brick and mortar customers die! Maybe. But now we did not quite cut the head of the face-to-face banking Hydra. Things may be different in twenty years, but they are not radically different today. But we like to be in denial. Whenever we are confronted with evidence of the survival of bank branches we find ways to reject it. For example, research in the United Kingdom published by Deloitte & Touche in September 2002 revealed that 80% of bank customers use the branch, and 52% regarded it as an ideal channel. Similarly, a Gallup poll conducted in the United States in April 2003 revealed that 83% of Americans have visited their bank at least once a month on average over the previous year. It is easy to ignore these studies – we can not dismiss it as dated.
When we update the studies that we get some indication of the imminent demise of branches. For example, a survey by the American Bankers Association in the summer of 2007 revealed that 36% of U.S. consumers use bank branches as the primary method. Is the death knell? Not really. That 36% is still the largest group for a channel. Online banking is second at 23%, followed by the DAB to 21%, by mail to 8% and telephone banking to 5%. Damn, thought we had!
Ok, ok. Branch banking still exists, but is it fair for old and infirm? You know, those people who have difficulty moving around and it would be more convenient to do their banking from home. Yes, this group. Well, maybe they are clinging to their legacy, but it means that young people do not want their transactions in a public place? The evidence merely confuse matters further. The 2007 American Banker’s Association survey revealed that those who go to a bank branch are generally older, but still substantial 25% of those aged under 34 side with older people who prefer to conduct their banking in person. When these young people learn?
Even if we look a little closer to the network of bank branches in New York, it comes with the same trend. In September 2007, the New York Times reported that visits to the Branch has decreased by 11. 5% between 1995 and 2000, while they rose 28% between 2000 and 2006. What can we conclude? Many things, but the imminent disappearance of bank branches is not.
If we extend our vision beyond banking, we find that the younger generations, as physical retail, even in their world of technology where you might think they are always attracted to purchase online for the latest electronic gadgets. This is not the case. Retail Stores Apple is a magnet for young consumers, and this proves to be a bargain. These stores now account for nearly $ 1. 25 bn. annual revenue of the company to $ 6. 2 billion and rising – with a profit margin exceeding 20%. That’s huge by the standards of detail. Of course, we must be cautious. Is it really possible for transactional banking services to rival the experience of retail Apple? It may not be possible, but it is a good target.
Why not customers comply with the effectiveness of the technology? So far as we try, we can not be argued that retail banking is dead in the United States, Europe or in emerging markets. It may be in decline, decrease, or decreases, but it will not die. May only good news for customers, but this is bad news for bank managers. The branches are the most expensive to conduct transactions. Computers were invented to process millions of transactions at cents per transaction. To do this, from your home or car phone, please! You do not need to go into a building that houses a friendly people. Banks have capital to invest in information systems and technology to do to handle the volume, but we prefer not to continue the flight of capital into the structures and operating expenses for people.
Why not just bank customers “stop” from the branches? Why not follow the principles of good business and complete their transactions efficiently by machines? Well, MASM research shows that the assumptions (trust a concept somewhat elusive but critical) is an important engine of choice, and confidence tends to be better made by people than by machines.
“Banking”, read that, “my money” is so important to customers that they want to entrust to a transfer of their personal wealth to a human being – in the case where a person understands the value of the transaction, then one considers the machine as a transaction. This is an interesting hypothesis and a research organization supports MASM. We see that customers want more than one transaction, they want to personalize their relationship with the bank.
This desire for a relationship may be stronger in the banking sector than in many other sectors because banks have high switching barriers. Customers are fundamentally opposed to artificial constraints as a means of doing business – they want choice. When customers have no choice, they want to be compensated. When it comes to banking, the allowance is the personalization of the transaction. Customers tend to say: “… I may not be able to easily put my money elsewhere, but I can make my bank provide personal accountability when I want, I want to be sure someone takes care of my money – and not just a machine. I want to see human beings, so I can carry with them, and I do not want to travel across town to a strange find. I want down the block at the corner. ”
Banking should see this as a huge opportunity. Relationships are the essence of customer loyalty and they fell into the lap of banks. Banks continue to build their business on anonymous transactions are lost in a world increasingly competitive. The pressure for faster, better, cheaper is a siren call. In banking commoditised one competitor is allowed to dominate at a time – until someone else shaves a point off of a transaction. Customers give us the answer to these circles ever-smaller concentric reduction of costs. They want a relationship. The question is whether we are ready to listen and can provide this cost effectively. The bank that listens will win. She keeps her customers who buy more and refer to the other bank. For the foreseeable future, banks will continue to invest wisely in their branch network. The fact that bank branches are expensive is irrelevant – it has to do.
Since you have to make the investment, is it not wise to maximize the performance of a strategy of development of the industry? Of course yes! So what do we do? We must meet customer expectations for two things: operational excellence in the mechanical (size wise), and commitment to the creation in the dynamic relationships (affective dimension). Customers want more than one operation “painless”
Our bankers are very good with the mechanical operation. They understand that they can control it, it’s just reckless. Banks have a good handle on their missions far from a domestic point of view transactional. They have numbers and they know how to manage by the numbers – even from a perspective of the customer. They go immediately to the definition and implementation of best of class actions, including: o effective to measure the relationship between inputs and outputs. In other words, what does it cost to make a transaction? How many tellers does it take to serve 100 clients? How many square meters of floor space is required per 100 guests? How much computer time does it take to process a transaction? O Level of service is slow in the equation, as the recovery. Time required to complete a transaction? Time to solve a problem? O quality of service that brings precision to the table. Number of error free transactions? Number of complaints resolved at first level?
This is essential. We know how to evaluate transactions, identify gaps in services and take corrective action. But these elements are just an ante. These take the “pain” of transformation, but this is not to play the entire game. This is not where we should stop. Yet often, managers do exactly that. They do not want to go further. Stopping here is comfortable. But stop here does not “gain”, and so the banks can differentiate themselves. Differentiation is enhanced dynamic relationship that customers have with their banks – and the focal point of this relationship is the branch. Of course, we can “humanize” the IVR system, recognizing the caller by name, and it can evoke an emotional connection to a website by integrating your avatar in the transaction. However, the extent to which a machine may or technology in this regard? At which point the smart technology will not fail to overcome the cynicism customer? For now, at least, our research indicates that most people prefer to interact with humans, not machines. What this group of customers looking for? Focused on customer business StrategyAt MASM we know that once customers have their needs met rational when they are ready to enter into a relationship. Something that is emotional and personal. There is an enormous amount of research and documentation to support this belief. Often, developers have very different perspectives on how our rational and emotional beings interact. For example, Clotaire Rapaille presents the thesis of our “reptilian hot buttons” and argues that our emotional brain reptilian always wins. Antonio Damasio is a view that emotion and reason are not separate, but are very dependent on each other – no leads or follows. Branches of the Bank in May will not solve these positions, but they need to address the point of agreement, that emotions matter! There is a relationship between our memories, our emotions and our behaviors. The need for emotional connection while the bank will be different for different customers. This is not essential for all, it is likely higher for people who continue to go to branches. So if we spend money on a strategy to branch, how can we make the best of him, how can we tap into the emotional connection that customers seem to want? First, we need to realign the business model in banking client. This may seem like a truism, but in fact the traditional service models tend to focus on optimizing the efficiency of back office with insufficient attention to the front part Office of the equation.
Research shows that companies with high performing MASM put the customer at the center of their strategy. They articulate their strategic intent based on an analysis of customer needs and then build the key to their operational capability in alignment with that. They recognize that the heart of their business is to provide painless transactions that are infused with connectors that evoke emotional responses of customers. The best way to do this in a bank is face-to-face at a branch. A branch is more than a building – it is at a stage where we can create a spectacle, an experience for our customers where we can connect with real people. But we need to know which buttons to push. Research can give us some answers. Guest reliable are hard to get complaints, even from clients are not a particularly reliable indicator – for many reasons, not least, is the fact that customers tend not to complain, even after bad experiences. To circumvent this obstacle, we use a number of research methods to align within their needs “standards of customer service” with the outward-looking “promise to customers. These methods include Strategic Research customer loyalty programs to understand the drivers of customer behavior and corrective actions, performance monitoring transactions, and mystery shopping to check if the promise is delivered to customers.
All these methods aim to discover the unexpressed needs held by customers who drive them to a face-to-face at a branch. What we learned is that relationships with loyal customers down to an activation of the sense of the person about their deep conviction of what a bank should be. We all know the five senses that trigger emotions. They see, hear, smell, touch and feel. These must go hand in hand with the personification of their client bank. That is, how the experience of branch banking to strengthen customer expectations that the bank should be? The branch can not offer this experience until we know what customers want – and this may vary depending on the branch. For example, some customers may want their branch to appear “safe and secure”, while in another industry people expect to be treated “in an informal and relaxed”, the branch must also be the “convivial meeting place “A social experiment, while the Cross-town guests want to have a sense of” efficiency and frugality.
The right customer experience has a business purpose – it helps the economy due to additional sales. Building relationships will require counseling and profile directed within our agencies physically redesigned. A better design of more skilled employees will certainly need to personify the industry to strengthen the focus on the emotional triggers – Beyond a transaction to relationship building. Branches winner will find ways to work this personification and greater added value to their operations. As neuroscientists tell us, we are emotional beings before we are rational. If we were fully rational, no smoking and everyone eats organic. May clients have difficulty expressing their needs, but they return to their branch of wanting to be comforted by the feeling that people of their bank was “one of us”, “… I’m comfortable in my bank, they understand me. ”
The emotional response to the customer experience starts in the parking lot. Not finding a space creates anger, if the path to the door is clean, most people feel a sense of comfort when the door opens easily as they feel confident that things are working well in their bank. What happens when they come? Is there a safe to promote a sense of security? Is there music that they feel welcomed? What is on TV while waiting for the service – financial information that helps them to feel up-to-date? How is the transaction completed? How are staff dressed? Do they convey a sense of professionalism? Is the deposit slip on re-cycled paper to make them feel responsible for the environment or is it engraved with the logo of the bank to make them feel smart? The beauty is that branches can be configured to meet local needs – one size does not fit all. It’s all about “staging” at the industry level. By carrying out research on the customer experience, we can identify how to activate the emotions and keep customers coming back.
The bank branch is the strongest point of contact for customers by ensuring that their bank, “he receives.” The industry agrees with the deeper emotions of the client. This is the branch that provides the closest strong and active emotions. Website in any bank can be easy to navigate, and ATM transaction can be effective – but key to effective one dimension of a complex network of requirements from d ‘ a banking partner. Slick automation does not tell us much about the professionalism, safety, and concern for me when things go wrong. I want to go to my branch, and I do! Bank branches and the credit crunch
Of course, the headlines worldwide in 2008 were dominated by the impact of the credit crunch and banking crisis following the bank failures, bankruptcies, government bailout and partial nationalization possible in some countries. Billions of dollars have been pumped into the world economy to prevent a systemic banking failure, and try to encourage greater liquidity in money markets.
Yet, how this affects the client of an individual bank is difficult to judge at this point. Clearly when there is fear of a banking collapse, the scenes of depositors trying to withdraw their money are at the forefront in the media, as published in the United Kingdom with the collapse of Northern Rock in 2007. However, if this fear has permeated the customers at a general level spread is too difficult to judge at this point. There is little evidence to date that customers are concerned that their own bank – whether an institution or another, or the government – provided that their savings and deposits are not at risk.
And it may be in these difficult times that the branch will have to play an increasingly important role in terms of providing a visible sign of the permanence of a bank and sustainability. MASM research has shown that in emerging markets, where banking is still relatively immature and local bank failures are not uncommon, for many customers visiting the branch is important – not only because it helps to better understand the details of bank products and services, but as a way to provide reassurance about the stability of a bank. In a world where even banks in developed markets are perceived as weak, the branch may acquire greater symbolic status. It can give customers what they really need: a sense of trust and confidence that their bank is there to stay and has a relationship with them. This is not a glass tower filled with more offset frames. It is part of their life, and composed of people like them – good people trying to build a good life and strive to serve with honesty and care. Ultimately, the decisive criterion is whether customers believe that through its bank branches is an indispensable part of their own lives.
ConclusionThe branch is critical in the life of a bank. A significant number of customers still visit the branch weekly. But branches should be more effective than simply transactional level. They need to exist at the personal level, where relationships are developed, and it is these relationships that will turn the center branch of the main transaction in a home for loyal customers. This is good news for banks and the crisis they are going through. Trusted banks and their branches are an important source of client commitment and income generation.
The future is bright for the bank branches. They are a source of reviving business for banks. Customer loyalty through customer experience staging increasingly turning to the bank and cross-selling value-added advisory services. By connecting the rational and emotional elements, the branches reinstall confidence in financial institutions and restart economic growth.
Customers have shown they want to work with their bank branches, banks today must find ways to make the experience interesting and rewarding for both parties.
Sources: Bank branch transformation: The multi-channel reality “Eontec Limited and CEO Mark Greene, CEO, Global Banking Industry, IBM Corporation, The Bankwatch, March 23, 2005″ Bring Back the Branch “, Deloitte & Touche in September 2002 “Banks Race to add branches,” USA Today, June 19, 2003 in Apple stores, some Aura enchants the faithful, “New York Times, December 27, 2007″ How to Develop stronger Partnership Retail Sales Accelerate Small Business “, Martha Crawford, NBW Consulting Group, American Banker 8th Annual Small Business Banking Conference, October 2003″ Customers still like to use bank branches, “Dennis Jacobe, Northwestern Financial Review, August 1 on August 14, 2003 “The Bank Management is Dead, Long live the branch bank,” David Webber, The Banker, November 2000 “Long Branch Bank, Greg McBride, Bankrate. com, May 17, 2004″ Retail banks must redefine the role of ATM for customer satisfaction and overall cost savings, “Tom Brogan, TowerGroup Research, July 2008Damasio Antonio. Descartes’ Error. Putman Publishing, 1994. Lehrer, Jonah. Proust was a Neuroscientist. New York: Houghton Mifflin Company, 2007. Rapaille, Coltaire. The Culture Code. New York: Broadway Books, 2007. “Bank-Branch Frenzy Peaked?” Sewell Chan, New York Times, September 10, 2007. About the ‘AuthorsDr. Nicos Rossides: CEO MASM Research Group
Dr. Rossides is CEO of MASM Group, a leading independent research agency operating in Central and Eastern Europe and the Middle East. Prior to joining MASM he was CEO for the region METC Synovate, the global head of solutions, as well as CEO for its retention practices.
Nicos has over 20 years of market research and consulting experience, much of which was to develop research infrastructure in Central and Eastern Europe.
Before becoming a market researcher, Nicos was Senior Research Fellow at Kyoto University, where he earned a doctorate in engineering. A Fulbright scholar and Monbusho, he also received training from senior management at the Sloan School at MIT.
Nicos has published numerous articles in professional journals, papers at numerous conferences and lectured at several universities and conferences.
Bud Taylor Director MASM Research Consulting Group
Mr. Taylor is a senior partner MASM where he advises clients on how to save their data for research work. MASM Before he was Vice President and Global Director of Consulting for Synovate Loyalty. Prior to joining Synovate Bud was a partner at Deloitte, where he conducted his practice change in the American Southwest.
Bud is a Canadian and naturalized American citizen. For over 30 years, he has advised clients in all major business sectors Marquee and in all regions of the world. Bud clients include: Microsoft Europe, the National Commercial Bank (Capital) of Saudi Arabia, Whirlpool, Sony Electronics and the Chinese Overseas Banking Corporation.
Bud contributes articles to professional journals and has published a book on business: the changing focus on the customer that shows how to unite customers, managers and employees in the process of organizational transformation.
