Full credits for the material to the url
http://www.ababj.com/component/k2/item/4435-43-retail-banking-myths-busted
Financial blogger and frequent Tweeter
Jim Marous
periodically “crowdsources” entries for his Bank Marketing Strategy
columns. He recently emailed the following to his extensive contacts,
including us:
“As I travel across the country, I realize that conventional wisdom
in retail banking may be at odds with how banks actually behave. In
addition, there are many perceptions that retail bankers have that just
aren’t completely true.”
He asked for “a single myth you believe should be busted.”
Reproduced with Marous’ permission, here are the 43 myths his search turned up. See his invitation at the end to add your own.
—Steve Cocheo, executive editor and digital content manager, ABABJ.com
With the financial
services industry changing so quickly, it should come as no surprise
that many assumptions banks and credit unions believed to be true for
years could actually be rendered obsolete.
To uncover retail banking myths and provide new realities, I reached
out to more than 40 global financial services leaders including bankers,
credit union executives, industry analysts, advisors, publishers and
editors, bloggers and fintech followers and got 43 myths.
Myth 1. Banks must embrace big data to be successful.
Reality: Most banks and credit unions have not fully leveraged
insight that is currently available within their firewalls. Account
ownership, demographics, product use, and other behavior data should be
used for offers and communication before adding unstructured data from
outside the organization.
Data analyst from $20 billion bank
Myth 2. The majority of consumers prefer to open "important" accounts in the branch.
Reality: When deciding what channel to use, consumers weigh a
number of factors (eg. reliability, speed, safety, convenience, time of
day, cost, previous experience, brand perceptions, etc. etc.)
Jim Bruene, editor & founder, The Finovate Group/ Online Banking Report /Netbanker blog
Myth 3. New market entrant competition is limited to deposits and payments but lending is safe.
Reality: Over the past five years, emerging online and
independent lenders, many of whom did not exist during the depths of the
credit crisis, have stolen 10% market share away from primarily the
midsize/ regional banks in the US.
Wayne Busch, managing director of Accenture's North America Banking practice
Myth 4. The branch is dead.
Reality: It's not even on life support. There is a place for a
brick and mortar experience, albeit with fewer bricks and less mortar.
We need to rethink the branch model and experience, but bankers will be
offering a strong physical (and digital) presence for decades to come.
Bryan Clagett, CMO, Geezeo
Myth 5. We need to excel in omnichannel banking.
Reality: There is no such thing as a channel. Our objective
should be to ensure a consistent digital approach across the whole
customer engagement without thinking about channels. Channels should be
considered as digital platforms that provide customer touchpoints.
Chris Skinner, chairman, The Financial Services Club
Myth 6. Boomers like the touch of paper.
Reality: While this was true in the past, it is now a myth, based on recent research from Celent.
Bob Meara,
senior analyst, Banking Group, Celent
Myth 7. If you don't cross-sell a new customer within the first three months of the relationship, you've lost the chance to cross-sell.
Reality: It is better to focus on engagement (go with)
services in the early days of a relationship, but selling additional
products is best done later in the relationship when more is known about
customer activity, product use, financial goals, etc.
Ron Shevlin, Senior Analyst, Aite Group
Myth 8. Bankers need to at least sell 6+ (or 10+) products to customers to remain profitable.
Reality: More products doesn't mean guaranteed profitability
or engagement. More importantly, the focus should be on customer needs
and an improved experience as opposed to the bank or credit union's
goals of “more products sold.”
Deva Annamalai, bank marketing technologist, Salt Lake City
Myth 9. Customers are not willing to pay for mobile remote deposit capture.
Reality: Several banks have started to charge for this service without impact to their adoption/usage targets.
Matthew Wilcox,
managing director of
marketing strategy and innovation, Digital Payment Solutions
, Fiserv
Myth 10. To purchase a complex banking product, the face-to-face relationship with an expert is irreplaceable.
Reality: The same was said for selling shoes.
However, this
does not mean you will not need any more experts, in combining face to
face rendezvous and remote access or to describe the rules of artificial
intelligence software.
Raphael Krivine,
director, AXA BANQUE
Myth 11. Banking should be innovative.
Reality: Based on research done at our bank, we found that
being innovative is about doing the right things for customers in the
areas of simplifying products and delivery and improving the customer
experience.
Jin Zwicky, vp, experience design, OCBC Bank
Myth 12. Mobile banking doesn't support product sales.
Reality: Many niche players—like Wonga, a lender in the
UK—have proved that mobile devices are indeed effective for selling
financial services products. Banks just need to design their sales
processes efficiently.
Alex Bray, retail channels Director, Misys Banking Systems
Myth 13. Gamification is just for kids and not for finance.
Reality: Gamification is just another way of thinking about
user engagement, interface design, and loyalty. These factors can and
should be applied in different ways for all age groups.
Alex Bray, retail channels director, Misys Banking Systems
Myth 14. Nobody wants to go to the bank branch anymore.
Reality: For most people this is true, especially for
transactions and things that customers can do on their mobile. But not
all customers want to do everything remotely and not everyone is in
financial control of their lives. Some people want local advisory
services.
Chris Skinner, chairman, The Financial Services Club
Myth 15. Customer Service (JD Power
Scores, Net Promoter Scores) is a successful customer acquisition
strategy and a focus on customer service will lead to higher profits.
Reality: Real or perceived levels of service far underperform a
strong value proposition for new customer acquisition (a better rate, a
lower fee, or a more innovative product, etc.). Service can be valuable
if reinforced with existing customers and can marginally aid in
retention. In addition, banks with the highest JD Power customer scores
have historically had an inverse correlation to profitability.
P. Andy Will, consultant and former super-regional bank executive
Myth 16. Outsourcing customer care will negatively impact the customer experience.
Reality: Outsource providers underpin their service with the
most advanced technology, providing higher levels of automated
functionality that enhances the customer experience
Beth Merle, director of business development, Banking and Financial Services, Sutherland Global
Myth 17. Banks are eager to innovate.
Reality: More often than not, innovation within a bank
represents non-disruptive incremental initiatives as opposed to true
innovation. To keep up with customer needs, banks need to step well
beyond their comfort zone.
Duena Blomstrom, vp of sales, Meniga
Myth 18. Paper application forms help reduce risk
Reality: Traditional forms (even if used digitally) provide a
false sense of security (unacceptable level of risk) in a world where
much more reliable insight can be found through social channels and
other sources.
Brett King, Founder of Moven
Myth 19. If you build it, they will come.
Reality: Adding new solutions, like mobile banking, online
account opening, or personal finance management tools, will not
automatically drive engagement or applications. New technology needs to
be supported by marketing campaigns to raise awareness and communicate
the benefit to consumers.
Melanie Friedrichs, analyst, Andera
Myth 20. You can’t build a business case for PFM.
Reality: Because of the power of retention and the potential
of cross-selling additional services, well conceived and delivered PFM
programs can deepen share of wallet, build loyalty and incase customer
profitability.
Matt West, vice-president of Sales, MoneyDesktop
Myth 21. Upgrading to latest, the most advanced technology will make customers happy.
Reality: The culture within the organization will make it
successful, not the strategy. As Peter Drucker said, "Culture eats
strategy for breakfast".
Deva Annamalai, bank marketing technologist, Salt Lake City
Myth 22. Digital and social media are replacing traditional marketing channels.
Reality: While more consumers are doing their shopping using
digital and mobile channels and social media marketing can be effective,
these channels serve to compliment and supplement traditional channels
as opposed to replacing them.
Financial institution marketer, $200 billion bank
Myth 23. Everyone is our target audience or we want everyone to be our member/customer.
Reality: When everyone is targeted, nobody is targeted.
Marketing is most effective when you focus on serving a narrower range
of consumers you can serve better than anyone else.
John Mathes, director of brand strategy, Weber Marketing Group
Myth 24. Gen Y consumers trust online security.
Reality: Security concerns remain the #1 adoption barrier among all age groups.
Bob Meara,
senior analyst, Banking Group, Celent
Myth 25. Surveying the customer will give insight to design the best mobile/online banking apps.
Reality: Customers don't know what's possible until you show
it to them. An example might be photo bill pay. A few years ago, few
customers would have thought of that, they wouldn't have known what it
was (and many still don't). As it's demonstrated to them and they're
encouraged to try it, they gradually see the usefulness of new tools
like this. Customer feedback is great for telling you what's not
working, and it's extremely important to fix problems customer identify
quickly. But the innovative ideas are not likely to come from customers.
They're more likely to come from creative staff members who are given
the time, room and encouragement to conceive of and test new ideas.
Penny Crosman, editor, Bank Technology News and American Banker
Myth 26. Credit unions offer better service than banks.
Reality: Credit union execs need to shop banks they compete
against (or find out where your employees banked before you hired them).
More than half banked at, or worked for, a bank. Philosophy and tax
exemption does not make a credit union better; consumer experience makes
the difference.
Bryan Clagett, CMO, Geezeo
Myth 27. All consumers will want to use mobile devices as their primary devices to perform banking transactions.
Reality: Consumer choice based on location and context will
remain key to the means by which consumers do their banking. Pushing all
consumers to mobile is just as restrictive as pushing them all to the
branch or online banking. People use diverse means based on what suits
their life and needs.
Stessa Cohen, research director, Gartner
Myth 28. You cannot digitize everything.
Reality: Everything except flesh and blood can be digitized.
The focus should be upon humanizing the digital relationship rather than
digitizing the human relationship.
Chris Skinner, Chairman, The Financial Services Club
Myth 29. Silo'd product areas are superior to non-silo'd product areas.
Reality: There is great value and synergy in understanding the
relative revenue and profit contributions of the various product teams
at a single reporting point, where politicizing is reduced and budgeting
is centralized. Without silos, better service/product packages can be
developed that can better serve the customer.
P. Andy Will, Consultant and former super-regional bank executive
Myth 30. I already know my customers, I don’t need to do much to understand their financial needs or how those needs may be evolving.
Reality: Most banks do a terrible job of collecting (and
using) customer insight. As a result, poorly timed and poorly structured
offers are promoted, disenfranchising customers.
Steven Ramirez, CEO Beyond The Arc Consulting
Myth 31. Online banking penetration of 60% or mobile banking penetration of 50% is good.
Reality: Don't mix up registered users with active users. A
successful digital engagement strategy shouldn't be about channels, but
about being focused on driving simplicity and client delight at every
interaction.
Bradley G. Leimer, Mechanics Bank
Myth 32. Banks are getting into Digital.
Reality: Most banks look at digital like another technology,
completely missing the fact that digital (and mobile) are about new
behaviors, in new contexts, and a different utility value.
Scott Bales, director, User Strategy
Myth 33. Customers don't like to be bothered by bank offers.
Reality: Bank offers that are well targeted to the individual
at just the right time, and offer a compelling value exchange, are
accepted at a much greater rate than typical offers.
Bob Palmer, global industry marketing leader, Banking and Financial Markets, IBM
Myth 34. Banks have built trust and a strong value proposition that is valued by customers.
Reality: Customers trust banks to safeguard their money, but
that is not to say that they trust banks. Too many banks operate under
stale me-too tactics that are not relevant to the current and future
needs of the customer base as demonstrated by embarrassing cross-sale
results, weak wallet-share and customer profitability. As a result, many
banks desperately deploy products and services, but most fail to
capture consumers’ interest due to lack of a cohesive strategy, focus
and clear value proposition.
Serge Milman, Principal, SFO Consultants and Founder of Optirate
Myth 35. In digital, it’s all about account opening and getting a higher share of accounts opened online.
Reality: Given the multi-channel way people shop and buy,
digital’s contribution to sales can’t be measured in online account
openings, but in overall sales. Digital channels are critical to help
drive ‘perceptual scale’ and drive higher overall sales that may
ultimately be fulfilled in branches or other channels.
Sherief Meleis, managing director, Novantas
Myth 36. Retail banking is a profitable business.
Reality: Most banks probably lose money in retail banking and
could generate funding more efficiently without all the costs inherent
in the business. If a bank is going to make money in retail banking, it
has to be very focused on serving specific segments efficiently and
profitably.
Mary Beth Sullivan, managing partner, Capital Performance Group
Myth 37. Legacy IT systems, regulation and security are the enemies of customer centricity and innovation.
Reality: This myth serves more as an excuse than a reality.
While more difficult with outdated systems, many banks have created
market leading products, services and experiences working around these
challenges.
Duena Blomstrom, vp of sales, Meniga
Myth 38. Signature cards are a required form for opening a new account.
Reality: While it is required to know your customer for many reasons, a signature card is not a regulated part of that requirement.
Brett King, Founder of Moven
Myth 39. Banks need to decide carefully where to invest in mobile payments, as there will be “one wallet to rule them all.”
Reality: Banks must look for ways to ensure their issued
payment credentials can be securely used as widely as possible in a
variety of contexts.
Zilivinas Bareisis, senior analyst, Celent
Myth 40. Despite a host of new players, traditional banks will prevail in the end.
Reality: The past is no guarantee of the future. The recent
purchase of Simple by BBVA should be a lesson that many of the new
players in the business are making inroads into how consumers prefer to
do banking. While Simple is relatively small by banking standards,
players like USAA, T-Mobile, Google, Amazon, PayPal, Square, and Apple
can all grab significant portions of our business that generate much
needed revenue streams.
Retail banker at $50 billion financial institution
Myth 41. The traditional bank marketing
and lead generation model will continue to work as it has for decades,
even in a humanized digital economy.
Reality: Many credit unions and community banks have adopted a
variety of digital tools with no unified digital marketing strategy,
leaving them grossly unprepared for the continued consumer shift to
digital.
James Robert Lay, CEO, CU Grow
Myth 42. Customers like being served by bankers in polo shirts.
Reality: Many people still prefer the feeling that the bank takes the role of “money handler” as seriously as they do.
Steve Cocheo, executive editor and digital content mgr., ABA Banking Journal
Myth 43. Mobile banking should be a paired down version of online banking.
Reality: Mobile should be built from mobile experiences
outward, potentially leveraging a downloadable app. The goal should not
be to provide access to all customer account information, it is to
become the Primary Financial Application the customer accesses.
Bradley G. Leimer, Mechanics Bank
Provide your myths
In receiving these great ideas from across the globe, it was amazing
to me that there were only two duplicates (around data and
cross-selling). What that tells me is that we probably have several
dozen or more myths in the marketplace that need busting.
If you have another myth (or a comment on the myths I have provided
above), share it with others in the comment section below or on my
blogsite’s
version of this listing. In addition, feel free to share your ideas on Twitter using #RBMyths.
Thanks to everyone who helped build this impressive (and rather frightening) list.
