Debunking the Banking Customer Service Myth



Brian Cantor
02/13/2012

When Bank of America’s utterly-illogical, thankfully-reconsidered idea to charge customers a fee to use their debit cards for transactions replaced Netflix’s pricing fiasco as the punchline of customer service jokes, significant attention was paid to the notion that the big banks had fallen out of touch with customers.

In response, customers were beginning to recognize regional banks, online banks and credit unions as compelling alternatives to the major, international institutions. There, customers disappointed by the service from the big banks would finally be treated to the customer experience they deserved.

Or, they at least hoped so.

Contrary to the hype about the down-home, customer-centric atmosphere created by smaller financial institutions, a new report reveals that the big banks are actually leagues better when it comes to delivering a better customer experience and instilling confidence in bankers.

From the way they greet, to the way they assist in opening an account, to the way they drive repeat business, the major financial institutions simply know better how to treat the customer, even if their fee structures and IVR systemssuggest otherwise.

To assess the customer service offered by the financial services sector, RateWatch teamed with IntelliShop to send 120 mystery shoppers through banking institutions across America. These individuals, quite clearly, revealed that the big banks are creating a better experience for their customers.

Key points of differentiation:

Greetings: 60% of customers reported being "enthusiastically greeted" upon entering the big banks; only 37% reported the same of credit unions. (76% received some sort of greeting from the larger institutions; 53% did from a credit union)

Studies (and common sense) have consistently shown that first-impression factors like smiling, greeting customers and identifying them by name greatly influence customer satisfaction.

Particularly interesting about this differential is the fact that credit unions, in theory, are supposed to be more community- and relationship-driven. While many might assume a major institution like Chase or Bank of America sees its customers as "numbers" and minimizes pleasantries, it is quite surprising to see that the credit unions are struggling to make their branches feel like "home."

[eventPDF]

Affability: 40% of big banking customers gave a "truly outstanding" rating to the representatives they encountered; only 22% did so for small banks and credit unions.

It is certainly plausible that the big banks devote more resources to employee training programs, which help representatives flesh out their personalities and learn how best to interact with customers. But when it comes competing in today’s customer experience-driven world, excuses cannot be made—affability must be a way of life.

And that is especially true for credit unions, who are supposed to be more personable and in tune with the needs of the individual customer. The importance of hiring and coaching friendly employees cannot be overlooked by smaller banks.

Relationships: 84% of big bank sales reps pitched customers on opening account during their visit; only 60% of small bank and credit union reps did so.

While some customers might see this as a theoretical positive for the credit unions—after all, many hate being upsold—it still speaks to a notable customer management shortcoming.

Aversion to sales pitches or not, customers ultimately want a banking service that conveniently, efficiently and valuably meets their needs. And if a sales rep can demonstrate a connection between the customer’s needs and his bank’s services, he is delivering welcome value to the customer. He is showing that he understands the patron’s unique needs and wants to solve them through an engaging, long-term relationship rather than a series of isolated transactions.

If small banks and credit unions are serious about their supposed customer-centricity, they have to consistently focus on ways to create and sharpen long-term relationships with their customers.

Questions: Only 2% of big bank representatives failed to ask one of the "11 crucial questions" for banking customer service. 29% of small bank and 23% of credit union representatives did so.

Admittedly, this one raises some methodological questions. But when it comes to the customer experience, the implication is clear: the big banks are providing better service.

Following up on the relationship category, this failure to ask relevant questions reflects the lack of a relationship mindset on the part of small banking institutions. Instead of thinking about how to work collaboratively with the customer going forward, far too many approach their interactions on a transactional basis. We’ll do what the customer wants—perhaps really well—but that is it.

Some of the "crucial questions" include no-brainer qualifiers like "do you use online banking," "how many checks do you write per month" and "do you need a personal or business account"—it is very unclear how a representative could meaningfully recommend and/or design a long-term account package for a customer without clarifying this information.

Beyond demonstrating a commitment to forming a personal, customized relationship with customers, asking the relevant questions and recommending the right account also reflects positively on the knowledge of those who operate the bank. Customers entrust significant assets—if not their complete life savings—to financial institutions, and as such, they are naturally going to flock to the ones that instill confidence.

If a bank does not demonstrate knowledge of the customer, knowledge of the bank’s services and knowledge of how they all relate, it cannot create the necessary confidence.

Sure enough…

Confidence: 42% of customers left big banks confident that it would be the "right choice" to patronize; 30% felt that way for credit unions and 22% did for small banks.

Asked to help customers make the safest, wisest decisions for their money, banks need to reflect stability, intelligence and honesty. They need to demonstrate a true passion for their customers’ best interests.

When a company like Bank of America tries to introduce a fee counter to the best interests of its customers, it damages that confidence. It portrays itself as a business rather than a financial partner, and it makes customers skeptical about the extent to which it is directing them—and their assets—in the most valuable, secure direction.

Yet, when push comes to shove, major organizations like BoA and Chase still know better than smaller banks and credit unions how to put customer at ease. They know the importance of greeting customers, showering them with friendliness and offering services that make life easier and more valuable.

They, to a far greater extent than the regional banks, think about the long-term relationship potential of each customer interaction. They do not limit their dealings to the borders of a single "transaction."

RECOMMENDED