Urca (Or How One Bank's Wealth Management Strategy Is Completely Backwards)

The title of this post could probably win the award for the most SEO-unfriendly blog post title. Ever. Nobody searching on Google is going to find this post, let alone click on it.

Unfortunately, it’s the only title I can think of. Mostly because it’s the most appropriate title I can think of.

If you’re wondering — and I know you are — Urca is Acru backwards.

And now you’re thinking: “Aha! That clears it up. Not.”

According to Financial Brand, Acru is:

First Cherokee State Bank’s new sub-brand created around its wealth-management division, described as “a revolutionary new retail concept where wealth strategists give away financial wisdom at no charge.”

At the risk of quoting too much from the Financial Brand article, the following caught my attention:

  • “Our community space design is intended to be as comfortable as your own living room — great coffee included,” it says on the Acru website.
  • “We want you to come in and stay for a while.”  “Everything Acru does starts with a conversation,” bank spokesman Rob Kremer explained. “We believe coffee houses facilitate conversation.”
  • “The goal at Acru is to remove the transactional element from financial services and create a more interactive, relational environment,” added [Acru CEO Matt] Hames.

So why did I title this post Urca? Because Acru’s strategy is completely backwards:

1. Advice shouldn’t be free. One of the biggest problems in the retail banking industry today is the misalignment between what consumers pay for and the value they get (at least, their perceived value). People don’t like paying $5 month for the “privilege” of writing checks or using a debit card, and they certainly don’t think it’s fair that they have to pay $35 each time they overdraw on their account. It’s analogous to the $100 doctor’s visit that lasts for 5 minutes: You’re not paying for her time — you’re paying for her expertise to make a diagnosis and write a prescription. If a bank wants to get radical, it should charge for advice and give away the transactional stuff.

2. Most people don’t need wealth management advice. Is there a shortage of qualified wealth management advisors in Georgia? If there is, shame on all the existing providers of wealth management services (Merrill, Schwab, etc.) who have overlooked the opportunity. The mass market doesn’t need wealth management advice — it needs everyday financial management advice.

3. Physical location doesn’t matter. Coffee houses facilitate conversations? REALLY? Most of the coffee shops I go into are populated with geeks with their laptops plugged in, silently working away. People don’t want to go somewhere to get financial advice. They want it in the moment: At the point of transaction (when they’re at Best Buy ready to drop a grand on a HDTV) or at the point of decision (when they’re reviewing their finances at home at 9pm on a Thursday night). Acru’s wealth advisors are available from 9 to 5, Monday thru Friday. That’s when I’m working. What’s the rest of the wealth management advice-needing population doing those hours?

I’m willing to bet that Acru will generate more profits from selling coffee than it will from selling wealth management services. Any strategy that centers on getting customers to come to you is completely backwards from the convenience and value that consumers want from their financial services experience. 

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Boozos On Banking

Let me be direct and get straight to the point: This blog post is about the absolutely worst presentation about the changing world of banking that I have ever seen.

And I’ve seen (and possibly created) some real losers.

Booz & Co. (a very reputable consulting firm) published a PDF called Next Generation Retail Banking: The Rise of Social Apponomics. Some of the lowlights from this deck include claims regarding:

  • The end of all things. According to the authors, as a result of the financial crisis, corporate cultures have been torn apart, and good and evil have been blurred. The report states that “Arisen from chaos have new views of the world, beliefs, and behaviors that pose significant new challenges to banks.”
  • Digitization of human culture, the key to growth and profitability. The authors believe that a “fundamental paradigm change towards offering a holistic customer experience is required, implying transforming a bank from its core to its periphery.”
  • Customized banking through coordinated networks. To quote the report: “The result of the digital transformation are coordinated banking networks organized by concentrators that work to offer the individually most relevant experience and solutions that maximize value-to-customer across the entire lifecycle.”

And that’s just slide 1.

The second slide attempts to elaborate on the “required paradigm change” and discusses something referred to as “nevolution” — broaden one’s horizon, creating options, preparing for change.

The third slide informs us that the Internet changes everything, and in case we didn’t quite understand that, goes on to mention that Broadband changes everything. And for good measure, the final bullet on the slide lets us know that Mobile changes everything. A little clip picture on the slide contains the label: “Customer expectations are evolving.”

Slide 4 is a word tag chart.

The fifth slide talks about how the “key capabilities” in retail banking  have evolved from technology (the past) to value (the present), and how they will evolve to engagement (emerging).

There are a couple more slides, and if you have a strong constitution and high tolerance for pain, you can read them for yourself.

My take: I’m serious about this: Booz should remove the deck from its website, apologize for publishing crap, and call a do-over.

In addition to being just a bunch of buzzword bingo, what’s really mind-boggingly annoying here is that Booz is trying to create some new term to describe the new environment (social apponomics), but no where — I repeat, NO WHERE — in the deck is there any definition or even further mention of the term past the title slide.

Really, Booz?

[h/t to The Financial Brand for alerting me to this one. Although, maybe I shouldn’t be thanking him :)]

Online Banking Satisfaction 2011

ForeSee Results released its 2011 Online Banking Satisfaction study recently. According to the firm, “satisfaction with online banking overall regains two points to 83 on a 100-point scale one year after dropping by the same amount.”

ForeSee breaks the results down by bank size, comparing the top 5, next 5, large banks, community banks, and credit unions. The comparison — by score component — is shown below: 

Component                  Top 5    Next 5    Large  Comm.   CUs

Products/services        82          81            85            83         84

Look and feel                 83          82           86            84         84

Navigation                     82          82           85            86         85

Website value               86           85           89            86         89

Privacy                           82           83           87           87         88

Site performance         83          85            88            86         87

Transactions                 84          84            89            88         88


I come to two conclusions based on this data: 1)  Different banks’ customers have different expectations of their bank’s websites, and 2) Satisfaction is influenced — heavily influenced — by subjective, and not just objective factors.

How did I arrive at this? From an admittedly subjective perspective:

There ain’t no way in tarnation that community banks’ and credit unions’ websites have better look and feel, navigation, privacy protection, site performance, or overall website value than the top 10 largest banks’ websites.

It’s not even a valid and fair comparison. A large percentage of community banks and credit unions use third party vendors for their online banking platform. So “look and feel”, “navigation,” and, to a certain extent, “site performance” aren’t even in the control of those institutions. 

It’s pretty clear what’s going on here. On one hand: Negative halo effect. “I hate my bank, therefore I hate it’s website.”

On another hand, there’s likely some demographics at play here. Credit unions are always crying that the average age of their members is high, so it’s very possible that credit union members that were surveyed by ForeSee are, on average, older than the customers of the top 10 banks that participated in the survey. Is it valid to compare the satisfaction rates of two (potentially) very different customer segments? I don’t think so.

If you work at a community bank or credit union and want to capitalize on the ForeSee findings, go for it. It makes for great marketing fodder. 

But please: Don’t delude yourself into thinking your website is better than the largest banks’ sites. 

The One Question You Shouldn't Ask Your Customers

Capgemini, UniCredit and Efma recently published their annual World Retail Banking Report. Lots of interesting data in the report, definitely recommend that you give it a look.

There are some surprising findings in the report, as well. You might not have guessed that customer satisfaction with primary banks was highest in the United States (especially if you’re a credit union executive here). Personally, I’m not surprised. I like the way they asked the question: Satisfaction with primary bank. Everybody hates banks — just not their own.

But there is one finding that bank (and credit union) executives should take with caution. Bank Systems & Technology summed it up in this headline: Customers Say Branch, Online Channels More Important Than Mobile. Per BS&T:

“Mobile was considered the least important channel in all regions, but was valued more highly by Latin Americans than customers elsewhere.”

This finding leads us to the one question you should never ask your customers: Which channel is most important? (or alternatively, Which is your preferred channel?)

There are probably a thousand reasons why this is a bad question. In the interest of time, I’ll share three of them:

1. It’s too generic. Which channel is most important or preferred for what? You don’t really believe that when a customer says the branch is most important or preferred that she means for all transactions and interactions, do you?

2. It’s unactionable. What are you going to do with this finding? Pull money out of the mobile and call center budgets because they’re “not as important” as the branch and online channels? You might very take money away from a channel, but only if the interaction volume in that channel significantly declines, or if the mix of interactions changes. You’re not going to mess with the budgets simply because some survey shows one channel is preferred over another.

3. It ignores the Blepfard Effect. The blepfard effect states:  “It is impossible to ask people to imagine a situation, a state of mind, or something that they can’t possibly imagine when they have no basis of experience to do so.”

The mobile channel is a blepfard. It doesn’t exist for the vast majority of customers. Asking them “how important is the mobile channel?” is a ridiculous question. They haven’t experienced the channel, and what it can and can’t do — and more importantly, what it might be able to do. In fact, for most financial institutions, the mobile channel doesn’t really exist in a mature state, either. What most FIs have done to date is simply port existing functionality from other channels to the mobile device — they’ve hardly scratched the surface of what the mobile channel will be able to do.

There are a lot of good questions you should be asking your customers in the surveys you do. Channel preferences isn’t one of them.

Brand Control To Major Tom

I attended Unica/IBM’s recent Marketing Innovation Summit. A very good event, with lots of excellent presentations. In one of the keynote presentations, the speaker said:

“You are no longer in control of your brand. Brands are shaped by consumer-generated content on customer experiences and interactions.”

If I had a nickel for every time I’ve heard this, early retirement would be a reality for me. But there are two problems with this statement.

Marketing gurus love to spout off about how marketers aren’t in control of their brand. But, as Stephan Chase from Marriott said in a panel discussed labeled The Future of Marketing:

“We haven’t lost control of the brand because we never had control. Look what happened to Coke when it tried to introduce New Coke. That happened long before the Internet and social media.  What is different is that in the past consumer influence on the brand was invisible. Now we can see it. So if anything, we have more control than we did in the past.”

Second, if brands were shaped by customer experiences and interactions, then how do you explain Harris Interactive’s reputation rankings? At the bottom of the barrel of corporate reputations — in last place and in third from last — are AIG and Goldman Sachs.

Fact: Few consumers have direct interaction with AIG or Goldman Sachs.

That can only mean that those companies’ brands — or as Harris is calling it, their reputations — are shaped (at least in part) by forces other than customer experience. Which means that your advertising and PR efforts are still valuable and impactful.

In fact, a lot of the discussion around the so-called “customer experience” is pure BS.

In a lunch roundtable discussion about how multichannel marketing needs to move towards customer experience management, the discussion host, Mike Coakley from Epsilon, admitted that few firms are really able to get their arms around managing the “customer experience” without significant, if not radical, reorganization of the firm.

In the marketing panel, Matt Smith from Best Buy nailed the reason why:

“Few people in marketing think of the customer experience. They advocate for their business, their product, their function, or their channel — they don’t advocate for the customer.”

Preaching and proselytizing about the importance of customer experience — which is what I would argue is all that most customer experiences gurus do — ain’t gonna change that, folks.

By the way,  although I came up with the title of this blog post on my own, it turns out it’s been used before. So let me credit Roger Sametz, from Sametz Blackstone Associates, who published an article on MarketingProfs.com of the same title. As Roger wrote: “Yes, the new age of extreme participation is a challenge for brand managers. No, you haven’t lost control.”

Phew. Glad we agree. 

The Problem With Customer-Centricity

A 2007 CMO Council survey asked 477 B2B IT users to rate their technology vendors, and, apparently, surveyed the vendors as well. The study found that 56% of vendors perceived themselves to be extremely customer-centric. Only 12% of their customers agreed, however.

That’s a big gap. One group must be wrong, right?

Not necessarily.

Of all the marketing lingo and jargon, there’s probably no term so poorly-defined yet frequently used.

I mean, really, what exactly is customer-centricity?

I’m sure it’s something I want to be, and sure it’s something that if I am it, then I must be satisfying my customers, improving my NPS score, and driving up my profits, right? Right?

But what is it? How do you define it? If you buy into the notion that “if you can’t measure it, you can’t manage it”, then, how do you measure it?

Your guess is as good as mine. Or, to be more precise, your lame and feeble answers to those questions is probably just slighter better than my lame and feeble answers to those questions.

So it’s entirely possible that both the IT vendors and their customers were completely right in their assessment of who’s customer-centric. They could be using different definitions of the term.

I googled “customer centric definition” and found some entries:

“An approach to doing business in which a company focuses on creating a positive consumer experience at the point of sale and post-sale. A customer-centric approach can add value to a company by differentiating themselves from competitors who do not offer the same experience.” http://www.businessdictionary.com/definition/customer-centric.html

“Placing the customer at the center of a company’s marketing effort, focusing on customers rather than sales.” http://dictionary.reference.com/browse/customer-centric

“Being Customer Centric is about an ability for everyone in the company to continuously learn about Customers and the market. It is also the responsibility of everyone in the company to respond appropriately to what we learn.” http://www.businessinberkshire.co.uk/threestep/news2.html

Hmm. Those don’t quite do it for me. After all, a firm could “focus” on “creating a positive customer experience” but if it fails to do so, would it qualify as customer-centric? In addition, any firm can claim to focus on customers rather than sales — how would we know if they really do or not? And, c’mon now, there are plenty of companies that strive to “learn about customers and the market”, and then take those learnings to stick it to customers.

I also found some hoo-ha about the “6C’s of customer-centric DNA” which shouldn’t be confused with the “6 laws of customer experience excellence.” Neither of which deserves links provided here.

The best attempt I’ve seen to define — measure, would be a better word to use here — customer-centricity comes from Carlos Dunlap from Kobie Marketing. In the November 2010 issue of Loyalty Management magazine, Carlos outlines a framework with four dimensions  — organizational readiness, data, IT support, and analytics — that helps companies calculate a score to determine how customer-centric they really are.

It’s a good approach, and definitely worth evaluating your company on.

But I think it misses a simple point: Being customer-centric means making decisions that benefit your customers, potentially at the expense of your firm’s short-term profitability. Emphasis on potentially and short-term.

If your company can’t point to a systemic history of making decisions that puts customer satisfaction and customer benefit ahead of firm’s short-term profitability — that is, making decisions with the belief that it will improve customer loyalty and retention in the long run — then I, your humble blogger, refuse to believe that your company is customer-centric.

Is being customer-centric better, then, than customer-uncentric? You can’t unequivocally say “yes.” Many of us might prefer to work for firms that are truly customer-centric because that’s what we’re more comfortable with. But what if you could make a million dollars this year working for a firm that is customer-uncentric but only $50k for a customer-centric firm, would you do it? Not an easy decision.

Here’s the bottom line: All this talk of customer-centricity is an utter and complete waste of time. The term means nothing. There’s no common definition, no definitive way to measure it, and therefore, no real proof that a company that claims to be customer-centric is any better (for any of the stakeholders) than any other firm.

If your goal is to make your company become more customer-centric, you’ve defined your goal incorrectly.

Don't Confuse Courtesy For Competency

I grew up in New York. I’m used to walking into a New York-style deli, sitting down, and within 7 seconds, being approached by a waitress who rudely wants to know if I’ve made up my mind yet, and if I haven’t, being told — snarkily — that she’ll come back later, because she doesn’t have all day to wait for me to make up my little mind.

And while you might find this hard to believe, I actually prefer that to waiting for 10 minutes for that oh-so-friendly Southern waitress to get around to paying my table a visit. And getting my order wrong half the time.

You might prefer the latter to the former, and be willing to tolerate the extra wait, and possibility of getting the wrong order, in order to get friendly, courteous service.

To each his own.

At this point, you’re likely thinking: What the hell are you talking about, Ron?

I’m talking about confusing courtesy and competency.

My friend Jim Marous recently blogged about BankSimple and said:

“Today, BankSimple set themselves apart from any of my current or previous banks. They sent me a personalized, seemingly non-promotional email from a Customer Relations Representative named Rachel acknowledging my request for an invitation to try their bank and asking for my ‘story’. Rachel asked for my “loves, hates, quibbles, desires, hopes and dreams” regarding my financial life. Rachel went on to say that the bank was committed to building the best service a bank can offer and wanted to know “what’s up?”

I don’t disagree for a New York second that this is not the type of email today’s banks send out. Definitely a differentiated approach on the part of BankSimple.

But it’s not — I repeat, not — necessarily a “better” approach.

According to BankSimple’s site, Rachel has been “handling social media outreach, online fundraising, and website maintenance for MADRE, a nonprofit organization in New York City.” I don’t mean Rachel any disrespect — really I don’t.  But how does this experience qualify her to help me realize my “hopes and  dreams” regarding my financial life? In fact, exactly how is BankSimple going to do that regardless of who they hire as a customer service rep?

In addition, let me share a lesson I learned from the CEO of a firm I used to work for. This is one of the best pieces of sales advice I’ve ever heard: Don’t ever call up a customer and ask “how’s it going?” That’s what the CEO called a”dumb touch”. Customers, he said, don’t want their time wasted with dumb touches (and he’s not even from New York!). If you’re going to call a customer, figure out, in advance, how you will add value. That’s what he called a “smart touch.”

Putting a smiling, friendly face on top of a poor product, service, or process is often referred to as “putting lipstick on a pig.”

You gotta give the folks at BankSimple credit for creating so much positive buzz about the firm. But the proof is in the pudding, and to date, I can’t say I really see anything more than a promise that the lipstick will make the pig look better.