Don't Listen To Your Customers

At a financial technology conference this week, in response to a question about the state of mobile banking in his firm, the CIO of a community bank said:

“Maybe we’ll be doing something later this year. We surveyed our customers and only 20% wanted mobile banking.”

This comment has so much wrong with it, it’s hard to know where to begin, but I’ll try:

1. It was bad market research. I’m assuming here that the survey simply asked customers if they wanted mobile banking (or how interested they were in it).  If that assumption is true, then the bank violated the number one rule of consumer research: Don’t ask people a question that they can’t answer.

Think back, for a moment, to when blepfards were introduced. Remember what they felt like in your hands? Remember what they felt like next to your skin? Of course you don’t. Blepfards don’t exist. And because they don’t exist, trying to imagine what it’s like to hold it and feel it is a fruitless effort.

This is what I call the blepfard effect:

Asking people to imagine a situation, a state of mind, or something that they can’t possibly imagine because they have no basis of experience to do so.

For people who interact with their bank online, or prefer to avoid the online channel, and continue to use branches and the call center, visualizing or identifying the potential benefits or added convenience of mobile banking is an impossible task. For people who aren’t interacting with other firms using their mobile device — and despite what you might have heard, that’s still the majority — anticipating the benefits of mobile banking is difficult.

2. The CIO should be reprimanded for dereliction of duty. Guess what, Mr. IT Dude: Sometimes YOU have to take the reins and tell customers what THEY need based on your vision of what technology can do for them. My favorite response to an executive who tells me “well, my customers aren’t asking for XYZ” is “yeah, well Apple’s customers didn’t ask Steve Jobs for the iPod.”

Here’s another thing I’ve done at conferences when this subject comes up: I ask audience members to raise their hand if they drive car. Pretty much everybody raises their hand. Then I ask “how many of you pump your own gas?” Pretty much everybody raises their hand. I follow that with “and how many of you wrote letters to Exxon, Mobil, etc. and told them you’d prefer to pump your own gas? And, of course, nobody raises their hand. You CAN get consumers to change their channel behavior. You can use the carrot or the stick, different tactics will work in different situations.

If it’s better for you — as mobile banking promises to be for banks (not to mention consumers) — then sometimes you have to WORK AT DRIVING ADOPTION. Novel concept, eh?

3. 20% — in and of itself — is not an adequate decision point. I have no idea if the 80/20 rule holds true for bank customer profitability. If it does — and if the 20% that wants mobile banking is the 20% driving 80% of your profits, then are you really sure you want to dismiss an initiative because “only 20%” of the customers you surveyed want it?

And what about the customers you want to acquire but don’t already have? Did you think to ask THEM what they wanted? If 80% of Gen Yers consider mobile banking a major criteria for selecting a bank — and if Gen Yers are a segment of consumers you want because they represent a disproportionate percentage of demand (compared to the percentage of the overall population they represent) — don’t you think you should offer mobile banking?

I’ll tell you a little story: Back in 2002 (maybe it was 2003), I wrote something for the analyst firm I was working for at the time that argued that banks should not be investing in mobile banking at that time. My argument was that there were higher priorities to focus on.

A colleague of mine wrote something with the exact opposite opinion.

The CIO of a large bank flew us both down to his office, and in front of his management team, had us each present our case. I won (I guess), since the bank discontinued their mobile banking investment, and a year later, I got an email from him thanking me for convincing them to stop investing in mobile banking because it saved them millions of dollars, with absolutely no negative impact on customer satisfaction or retention.

Fast forward to 2011 and the situation is very different. The rapid adoption of smartphones will drive demand for mobile interactions and transactions (not just in banking but across a range of industries), and — perhaps more importantly — will create opportunities for banks to develop apps to add value in ways they can’t do in other channels (I like to call these “purely mobile” apps).


Taking a pass on mobile banking because “only 20% of your customers” want mobile banking is short-sighted, and, I might add, a bad management decision. For g*d’s sake, don’t listen to these customers.

Oh — and please don’t try and tell me how your customers don’t want PFM.

13 thoughts on “Don't Listen To Your Customers

  1. I hope that CIO doesn’t rely too heavily on the product managers or retail bankers who gave him the data (maybe he ignored “good” data to save the team some work?). A better question for their customers would have been how many of you have/actively use smartphones? Community banks are about growing deposits and my experience has been they are challenged at best when it comes to their sales skills so why not come up with a “product” that will attract new accounts (or at least help in that effort). Oh retention of their existing accounts wouldn’t be bad either.

    Good post. Have a nice weekend.

  2. The reason the CIO isn’t investing in mobile banking is because his customers said they didn’t want to drive so far to his branches and didn’t want to stand in lines. He is investing in more bricks and mortar and tellers.

  3. Interesting post, especially in light of the BAI webinar on mobile banking done recently by Kristen Rankin, VP and Mobile Channel Manager of SunTrust. When asked about ROI, she immediately pointed to customer retention: “The real benefit to us is that mobile banking customers are more profitable, they’re stickier, they transact more often, they become loyal to SunTrust and they migrate transactions to a lower cost channel.”

    Seems to me like that would be a pretty good reason to give it major consideration.

    By the way, in our experience the 80/20 rule is more like 120/10 in community banks.

  4. A couple of years ago, when I was researching mobile banking, we put a survey out asking customers about their mobile usage. Although ultimately we asked if they wanted mobile banking, I geared it more towards how they used their phone. There were questions like, “do you have a smart phone”, “do you use text messaging”, “do you download ringtones”, “do you browse the internet on your phone”, etc.

    I agree Ron, people don’t know what they want because they can’t really imagine what it would be like. What I did was try to find out was how open were they to the idea.

    Well, we were the first FI in the nation to offer mobile banking without requiring that you use online banking. Also, our adoption rates are even faster than the poster child B of A. I believe 9% of all our customers use mobile banking, after releasing it less than 18 months ago.

  5. “We surveyed our customers and only 20% wanted mobile banking.”

    20% sounds like a lot to me. I can’t imagine too many new services that would get higher ratings than that. Chocolate dispensing ATMs?

  6. Thanks, all, for the comments. Much appreciated.

    Howard: Funny you should say that. I mentioned the CIO’s comment to a colleague yesterday, and his first reaction was the same as yours.

    Which really brings up another question: At what point do you decide you have a forecast of sufficient demand for a product or service to begin developing or deploying that service?

    What it comes down to, as far as I’m concerned — and this is fitting, since it draws on a DM conversation I had w/ Bartoo — is that without some clear strategy for what you’re trying to do, a firm is bound to get into a product or service too late in the game.

    Not saying you have to be on the bleeding edge of stuff, but if don’t have a clear idea of how you’re going to compete in the market, which customers you want and don’t want, etc., then you can’t really answer I posed above.

    But, Howard, you’re spot on re: your comment.

  7. JP: Yep, and no doubt that adoption will go up.

    But we’re forgetting a whole ‘nother issue here (ok, I’M forgetting another issue): The ROI. I have no idea what the ROI on deploying mobile banking to a bank is (Accenture says its “as high as 300%”, but don’t get me going on that).

    If a bank could achieve 100% ROI on its investment in mobile banking with 20% adoption, then the CIO quoted above is foolish for waiting. Unless, of course, there is a whole slew of projects on his plate with a higher projected ROI.

  8. As a banker, one of the things that customer are looking for is great convinience. It seems that the CIO’s customer do not have the convinience they need. I work for a larger bank, and I’ll have to say that my customers appreciate mobile banking. Technology today allows customers to have access to their bank on the go. So who wouldn’t want that???…

  9. My boss always tells the story of when we surveyed our members in the ’80’s and learned that none of them would ever consider getting cash from a machine.

    He also points out that in the early ’90’s nobody wanted a plastic connected to their checking account, but that attitude changed pretty quickly.

    His point echos yours but also adds that if you are going to survey your customers about what they want, you can’t rely on their answers for very long because consumers have a nasty habit of changing their minds on a dime.

    On a side note, I’ve been culling through the last four years of both of your blogs, Ron, to find a post I’m going to use for a presentation in Vegas next month 🙂 I enjoy what you write so much. You are a smart man and a good writer. Thank you.

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