course materials transforming your bank from branch
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Course Materials
TRANSFORMING YOUR BANK FROM BRANCH CENTRIC TO CUSTOMER CENTRIC:
You don’t have as much time as you think!
Lance Kessler President
Lance Kessler & Associates Mechanicsburg, Pennsylvania [email protected]
717-766-1005
August 4-6, 2016
Graduate School of Banking at the University of Wisconsin - Madison
Lance Kessler & Associates Marketing Consulting and Training
Discuss the dramatic changes that are occurring in financial services and identify the key drivers of that change.
Understand the implications of a mindset shift from branch centric to customer centric.
Understand why Market Segmentation and Customer Experience Management have become essential to competing in the financial services arena.
Gain insight into the Parallel Transformation Process and how to use it to find the balance between providing stability and promoting change in an industry experiencing disruption.
Understand how to use the Parallel Transformation Process to define the role of the branch and the role of electronic delivery going forward.
Banks need to accept it’s no longer a race the big and strong are guaranteed to win. Speed and agility count just as much . . . if not more.
And the time to accelerate is now. 2016 Banking Industry
Outlook Survey - KPMG
Issues and Trends in the Financial Services Industry 2016
Lance Kessler & Associates Marketing Consulting and Training
_____________________________________________________________ Transforming Your Bank from Branch Centric to Customer Centric
Financial Services Industry: Issues & Trends
1. Net income for 2014 was $152.3 billion for all FDIC-insured financial
institutions. Did net income increase, remain flat, or decrease for all FDIC-insured financial institutions in 2015?
a) Increase b) Remain flat c) Decrease 2. From 2013 to 2014, FDIC-insured bank deposits grew at 5.9%. From 2014 to December 31, 2015, FDIC-insured bank deposits grew at
______%. a) 2.6% b) 3.8% c) 5.2% d) 8.2% 3. Were total loans for all FDIC-insured financial institutions on December
31, 2015 higher than, lower than, or about the same as total loans on June 30, 2007?
a) Higher than b) Lower than c) About the same 4. As of December 31, 2015, noncurrent loans decreased to ______% of all
loans outstanding on December 31, 2015. a) 1.56% b) 1.96% c) 2.71% d) 3.94%
Issues and Trends in the Financial Services Industry 2016
Lance Kessler & Associates Marketing Consulting and Training
_____________________________________________________________ Transforming Your Bank from Branch Centric to Customer Centric 5. ______ commercial banks and savings institutions in the United States
failed in 2015. a) 7 b) 24 c) 75 d) 140 6. For every Starbucks store in the United States, there are ______ bank
branches. a) 3 b) 6 c) 9 d) 12 7. According to an ABA survey, which one of the following banking methods
ranked the highest and was preferred by 32% of customers? a) Branches b) Mobile c) Internet d) ATM 8. Within just ten short years, we’ve gone from 50-60 percent of our day-to-
day transactions being done over the counter at the branch to ______% of our day-to-day transactions now going through the Internet, mobile, call center, and ATM.
a) 65% b) 75% c) 85% d) 95%
Issues and Trends in the Financial Services Industry 2016
Lance Kessler & Associates Marketing Consulting and Training
_____________________________________________________________ Transforming Your Bank from Branch Centric to Customer Centric 9. The average number of In-branch transactions per month across the U.S.
in 2000 was 11,400. The average number of In-branch transactions per month across the U.S.
projected for 2016 is ___________________. a) 9,400 b) 6,800 c) 5,600 d) 4,800 10. Have customer wait times in the branch increased or decreased from 2011 to
2015? a) Increased b) Decresed 11. ______% of consumers whose bank offers a mobile app have
downloaded it. a) 23% b) 56% c) 61% d) 72% 12. ______% of consumers still visit their branch at least 5 times a year. a) 44% b) 56% c) 65% d) 74% 13. ______% of consumers report they do not have a banking relationship
with a member of the staff at the local branch. a) 40% b) 50% c) 60% d) 70%
Issues and Trends in the Financial Services Industry 2016
Lance Kessler & Associates Marketing Consulting and Training
_____________________________________________________________ Transforming Your Bank from Branch Centric to Customer Centric 14. When business customers were asked to rank what they find most lacking
in their bank’s business services, which of the items below was ranked number 1?
a) Poor omnichannel experience (access over web, mobile, etc.) b) Lack of modern services such as video, etc. c) I feel my bank does not know me very well as a business customer d) Understaffed in terms of specialists 15. ____% of small businesses surveyed in a BAI Research Study preferred online banking to in-person banking. a) 20% b) 30% c) 40% d) 50% 16. ______% of Millennials applied for a checking account in person at the
branch. a) 22% b) 36% c) 55% d) 73% 17. ______% of Millennials would like to have the ability to have a pre-booked
appointment. a) 33% b) 43% c) 53% d) 63% 18. ______% of Millennials demonstrated basic financial literacy. a) 24% b) 31% c) 44% d) 49%
Issues and Trends in the Financial Services Industry 2016
Lance Kessler & Associates Marketing Consulting and Training
_____________________________________________________________ Transforming Your Bank from Branch Centric to Customer Centric 19. According to Forrester research, which one of the following changes
related to transforming the branch experience was ranked the highest by banks at 37%?
a) Deploy digitally enabled self service capabilities for teller
transactions b) Deploy digitally enabled self service capabilities for account
opening and maintenance c) Re-define banker roles d) Invest in branch technology to increase operational efficiencies 20. The 2016 Future of Retail Financial Services Research Study indicated
that ______% of respondents agreed that finding innovative ways to provide value-added services to customers based on data-driven insight will be crucial to long-term success.
a) 64% b) 79% c) 87% d) 93%
Source: Only the Paranoid Survive – Andrew S. Grove
Drivers of Change
External Forces
Positive (Growth–Opportunity)
Negative (Threats-Pain-Fear)
Opportunities Threats
Conditions
Organizational Environment
Industry Environment
Contextual Environment
Less or No Org Influence
Some Org Influence
High Org Influence
Source: Adapted from Monitor Group – Global Business Network
• Competitive Strategy
• Products & Services
• Customer Experience
• Delivery Channels
• Costs & Pricing
• Industry Dynamics
• Customer Behaviors
• Competitor Moves
• Other Stakeholder Developments
• Political Environment
• Economic Environment
• Technology Advances
• Cultural/Social Change
Call Center
ATM
Credit
Online Banking Mail
Kiosk
Debit Card
ATM
Online Banking
Credit
Face-to-Face
Call Center Mobile Banking Smart Phone/Tablet
Video Teller Machines
Branch Banking
Web Site
Prepaid Debit Cards
Customer-Centric Self-Test
7 or 86 or less
7 or 8
6 or less
Misaligned Customer-Centric
Aimlessly Wandering Misdirected
Organizational Engagement
Customer Familiarity
Source: Adapted from Forrester Research, Inc.
Scoring: 0 = Disagree with statement 1 = Somewhat agree with statement 2 = Mostly agree with statement Customer Familiarity 1. Our company has a clearly defined set of target customer segments. 2. Employees across the company share a consistent and vivid image of
target customers. 3. Market research is used to fully understand the needs and behaviors of
target customers. 4. Decision-making processes systematically incorporate the needs of target
customers. Total Customer Familiarity Organizational Engagement 1. Senior executives regularly interact with target customers. 2. Senior executives consistently communicate the importance of serving
target customers. 3. Employees across the company are recognized and rewarded for improving
the experience of target customers. 4. The quality of interactions with target customers is closely monitored. Total Organizational Engagement Source: Adapted from Forrester Research, Inc.
Identify Your Target Market(s)
Understand What Your High Priority & Priority Customers Value
Persona: Laura Henderson BACKGROUND: • Accountant in a manufacturing firm • Second job since graduating from college in 2011 • Laid off from first job at technology firm • Has been employed at current job for 1 yr. • Single
DEMOGRAPHICS: • Female • Age 27 • Income: $39,000 • Rents an apartment in the city
IDENTIFIERS: • Confident, practical, and optimistic • Prefers texting over e-mail communication • Frequent user of social media
Persona: Laura Henderson GOALS: • Pay off student debt of $24,000 within 10 years
(or even sooner) • Buy a house but must postpone until student
loans are paid off • When financial position improves would like to
work for a non-profit • Marriage is not on her radar and she doesn’t plan
to have children
CHALLENGES: • Paying all her bills, including student loans • Not enough time to get everything done • Some safety concerns with living in the city
WHAT CAN WE DO: • Determine if anything can be done to help lessen
the financial burden of her student debt • Explore ways to make banking easier when she is
on the go – mobile banking, etc.
Persona: Laura Henderson REAL QUOTES: • “I would love to eventually work for a non-
profit whose purpose I am passionate about so I can contribute toward making the world a better place.”
• “My job is demanding and I also like to spend time with my friends. That leaves little time for things like banking.”
• “I like to keep things local. I don’t want to deal with a big bank whose headquarters is in another city.”
COMMON OBJECTIONS: • She feels that banks are inflexible and make
you jump through hoops; she wants to deal with companies that are flexible.
• She’s short on time, so if product/service takes too much time to set up she won’t be interested.
Persona: Laura Henderson MARKETING MESSAGE: • Mobile banking allows you to do all your
banking on the go, wherever you are and whenever you want.
• Mobile deposit allows you to deposit checks to your account using your smart phone.
• We would like to explore the possibility of lessening your student debt burden.
ELEVATOR PITCH: • We know your life is very busy, and you don’t
have extra time in your schedule to go into a bank branch. We want to show you a way to do your banking wherever you are and whenever you want, hassle-fee.
• If we can find a way to lessen your student debt burden, it would make it easier for you to pay your bills.
Identify Your Target Market(s)
Understand What Your High Priority & Priority Customers Value
Allocate Resources So You Can Differentiate Yourself with Your High Priority & Priority Customers
Make Your Marketing Dynamic & Adaptive with Your High Priority & Priority Customers
Sales & Service Building Relationships
Touchpoints: Human Engagement Digital Engagement
Creates Customer Value
Differentiated in the Marketplace
Consistently Delivered
Q 1: High Value, Low Differentiation
D i f f e r e n t i a t i o n
V A L U E
Q 2: High Value, High Differentiation
Q 3: Low Value, Low Differentiation
Q 4: Low Value, High Differentiation
Low Low
High
High
Source: Harvard Business Review – Manage Your Human Sigma.
• Human Engagement
• Digital Engagement
In the branch environment, banks need to shift from focusing on transactions to meaningful interactions.
In all customer contact situations, bankers need to understand the customer and his/her situation in a way that allows them to
create real, differentiated value that is perceived by the customer.
The bank needs to figure out how to fit into the context of the customer’s life rather than expect the customer to fit into the
context of the bank’s physical presence.
The bank also needs to remove the obstacles/friction wherever feasible and make it as easy for the customer as possible.
The Challenge with Digital Engagement
How do you make sure all of the delivery channels work together seamlessly to deliver a superior customer experience?
Identify key variables/drivers that you can deliver that will differentiate you in the marketplace
Define from the customer perspective
Put into written form
Attributes Important to Customers ◦ Trust ◦ Responsive ◦ Customized/Individualized ◦ Respect ◦ Caring ◦ Guidance/Good Advice
Customer Research
Responsive to customers’ individual needs
Received special treatment from someone who respects them and cares
Trust us and our advice today and in the future
Viewed as trusted financial advisor
Customer Perspective:
When we are successful in creating a superior customer experience, our customers will feel we have been responsive to their individual needs. They will feel like they have received special treatment from someone who respects them and cares, and they will trust us and our advice today and in the future. We will be viewed as their trusted financial advisor.
Criteria for Success/Measures
• Customer Satisfaction
• Customer Retention
• Customer Experience Score
• Net Promoter Score
Customer Experience Employee Goals • $ Loan Goals
• $ Deposit Goals
• $ Fee Income Goals
• # of Accts/Services Per HH
Customer Perspective:
When we are successful in creating a superior customer experience, our customers will feel we have been responsive to their individual needs. They will feel like they have received special treatment from someone who respects them and cares, and they will trust us and our advice today and in the future. We will be viewed as their trusted financial advisor.
Low Performance High Performance
High Importance
Low Importance
Critical Improvement
Issues
High Leverage
Issues
Low Priority Issues
Low Leverage
Issues
. Responsiveness . Individualized
Solutions
Trust .
Caring .
Financial Advisor .
Special Treatment
. Respect .
Overall Customer Base ◦ Accounts ◦ Balances
Existing Customer Base ◦ Accounts ◦ Balances
New Customer Base ◦ Accounts ◦ Balances
Checking Accounts ◦ Accounts ◦ Balances
High Priority Customers ◦ Accounts ◦ Balances
Existing High Priority Customers ◦ Accounts ◦ Balances
New High Priority Customers ◦ Accounts ◦ Balances
High Priority Checking Accounts ◦ Accounts ◦ Balances
Branch Employees Scored on Defined Customer Experience Behaviors
◦ Each branch position is shopped & given Customer Experience Score
◦ Individual branch position shopping scores are totaled to achieve monthly overall branch Customer Experience Score
◦ Each branch is rated and ranked on Customer Experience Score
How likely are you to recommend Encore Bank to a friend or colleague?
10 = Extremely Likely 0 = Not At All Likely 10 9 8 7 6 5 4 3 2 1 0
Source: The Ultimate Question, Fred Reichheld/ Satmetrix Systems, Inc. and Bain & Company
Promoter Passive
Detractor
Promoters – Detractors = Net Promoter Score
Branch Banking Experience
Face-to-Face Experience
Call Center Experience
Online Experience (Website, Online Banking, & Mobile Banking)
1. Customer pulls into the parking lot / drive-in 2. Customer walks into the branch / up to ATM 3. Customer goes to teller line to ask / conduct transaction 4. Customer needs to meet with someone / conduct transaction 5. Customer directed to appropriate person 6. Customer meets with appropriate person 7. Service need addressed / sales process applied 8. Service solution / sales process completed 9. Follow-through 10. Follow-up
Branch Appearance Outside the Branch Facility
Branch Appearance Inside the Branch Facility ___________________________________
Customer Interactions Inside the Branch Environment
◦ Desired Skills & Behaviors Related to Service
◦ Desired Skills & Behaviors Related to Sales
Branch Appearance Outside the Branch Facility
Branch Appearance Inside the Branch Facility ___________________________________
1. Customer pulls into the parking lot / drive-in 2. Customer walks into the branch / up to ATM
___________________________________
Customer Interactions Inside the Branch Environment
◦ Desired Skills & Behaviors Related to Service
◦ Desired Skills & Behaviors Related to Sales
1. . . . . 2. . . . . 3. Customer goes to teller line to ask who they should talk to about a
service issue / Customer wants to conduct a transaction(s) 4. Customer needs to meet with someone other than the teller / Teller completes the transaction for the client 5. Customer directed to appropriate person 6. Customer meets with appropriate person 7. Service need addressed 8. Service solution provided – Follow-through/Follow-up
Customer
The Three Step Approach
Service Sales Service & Sales Desired Skills & Behaviors
Desired Skills & Behaviors
Desired Skills & Behaviors
Results: Deepening & Broadening of Relationship
Acknowledge & Greet ◦ Acknowledging the Customer ◦ Greeting the Customer
Gain Understanding ◦ Why did the customer come to the bank today?
Respond ◦ Determine who can best help the customer ◦ If it is not the person who acknowledged & greeted the customer, transition the
customer to the person who can best help him/her
___________________________________
Customer Interactions Inside the Branch Environment
◦ Desired Skills & Behaviors Related to Service
◦ Desired Skills & Behaviors Related to Sales
1. . . . . 2. . . . . 3. Customer goes to teller line to ask who they should talk to about a product
or service or delivery channel they don’t currently use 4. Customer needs to meet with someone other than the teller 5. Customer directed to the appropriate person 6. Customer meets with the appropriate person 7. Customer need(s) explored 8. Solution identified and provided based on customer’s need(s) 9. Follow-through 10. Follow-up
Step 1: Pre-Sales Planning Step 2: The Opening Step 3: Probing & Profiling Step 4: Identifying Needs Step 5: Recommending Solutions Step 6: Handling Objections Step 7: Gaining the Commitment Step 8: Follow-Through & Follow-Up
Level of Intensity
Consultative Selling (Focused on Customer Needs) Hard Sell (Pushing Products)
Level of Intensity
Consultative Selling (Focused on Customer Needs) Hard Sell (Pushing Products)
Reactive Relationship Sales & Service Starts Here
Proactive Relationship Sales & Service Starts Here
Customer
The Three Step Approach
Service Sales Service & Sales Desired Skills & Behaviors
Desired Skills & Behaviors
Desired Skills & Behaviors
Results: Deepening & Broadening of Relationship
Acknowledge & Greet ◦ Acknowledging the Customer ◦ Greeting the Customer
Gain Understanding ◦ Why did the customer come to the bank today?
Respond ◦ Determine who can best help the customer ◦ If it is not the person who acknowledged & greeted the customer, transition the
customer to the person who can best help him/her
Make client feel welcome (Adhere to Customer Service Standards) Establish Rapport Determine customer’s immediate need(s) (customer focused, not product focused) Educate customer on available options Satisfy customer’s immediate need(s) Transition beyond the immediate transaction
Level of Intensity
Consultative Selling (Focused on Customer Needs) Hard Sell (Pushing Products)
Reactive Relationship
Sales & Service Starts Here
Cultural Transformation (People Issues)
Business Processes
Technology
Leadership & Accountability
Deposit Operations – Support and Processing
Loan Support, Processing, and Servicing
Third Party Relationships – Bank-Customer Connection / Bank-Third Party Connection
IT Support
Etc.
Brand Promise
Brand Positioning
Competitive Strategy/Competitive Advantage
Pillar
Vision, Mission, & Values
Customer Centric
Pillar Pillar Pillar Employee
Engagement Relationship
Banking Superior Customer
Experience
Provide Stability
Promote Change
Source: Linkage, Inc.
Transformation A
Transformation B
Reposition the Role of the Branch
Reposition the Role of Electronic Banking
Greater Integration Among Delivery Channels
Branch Delivery Channel Strategy
Types of Physical Locations
Branch Delivery Channel Staffing & Support
Implementing an OmniChannel Approach at Encore Bank
Electronic Delivery Channels Strategy
Electronic Products & Services, Digital Devices, Electronic Delivery Channels
◦ Analysis of Existing E-Delivery Solutions
◦ Relevant Software/Hardware in the Process of Being Implemented
◦ Relevant Software/Hardware that Needs to be Developed and/or Implemented to Address the Needs of the Target Market(s)
Implementing an OmniChannel Approach at Encore Bank
Branch Delivery Channel Strategy
Types of Physical Locations
Branch Delivery Channel Staffing & Support
Implementing an OmniChannel Approach at Encore Bank
Overriding Question: How do you evolve the branch system so that the bank can effectively compete long-term?
◦ Who owns the branch system going forward? (Retail Banking? Business Banking? Wealth Management? Retail Investments Services? Insurance Services? Should it be some combination of these lines of business?)
◦ Gain clarity of insight into who wants to use the branch and for what purposes going forward. (High priority customer segments, Priority customer segments, Everyone else)
How do you consistently deliver the predetermined customer experience in the branch so that it will differentiate the bank?
How should the branch be organized? (Clearly defined organization chart)
What type of financial services providers will staff the branch? What will be the role of transactions in the branch? What will be the role of sales in the branch? What will be the role of service in the branch? How should staffing levels compare to what they are today? What should the compensation structure be for branch employees? What type(s) of physical branch (including layout) will be used?
How should digital devices and electronic delivery channels be coordinated with and/or integrated into the branch experience?
Electronic Delivery Channels Strategy
Electronic Products & Services, Digital Devices, Electronic Delivery Channels
◦ Analysis of Existing E-Delivery Solutions
◦ Relevant Software/Hardware in the Process of Being Implemented
◦ Relevant Software/Hardware that Needs to be Developed and/or Implemented to Address the Needs of the Target Market(s)
Implementing an OmniChannel Approach at Encore Bank
Overriding Question: How do you evolve the electronic products & services, digital devices, and electronic delivery channels so that the bank can effectively compete long-term?
◦ What unmet needs do existing and prospective customers have in today’s environment that can be solved with digital solutions? (High priority customer segments, Priority customer segments, and Everyone else)
◦ How do you consistently deliver the predetermined customer experience through electronic delivery channels so that it will differentiate the bank?
◦ How will the bank decide which electronic products & services, digital devices, and electronic delivery channels to invest in?
The bank needs to figure out how to fit into the context of the customer’s life rather than expect the customer to fit into the context of the bank’s physical presence.
◦ What will be the role of sales related to digital devices and electronic delivery channels? ◦ What will be the role of service related to digital devices and electronic
delivery channels? ◦ How will you build relationships with customers who primarily use digital
devices and electronic delivery channels to do their banking?
How should digital devices and electronic delivery channels be coordinated with and/or integrated into the branch experience?
How will you capture and use customer data resulting from their use of the branch, electronic products & services, digital devices, and electronic delivery channels?
How do you make sure all of the delivery channels work together seamlessly to deliver a superior customer experience?
Lance Kessler & Associates Marketing Consulting & Training
6206 Charing Cross Mechanicsburg, PA 17050 Telephone: 717-766-1005 E-Mail: [email protected]