It’s become conventional wisdom in the banking industry to say that the “branch of the future” must evolve from a place where customers primarily conduct transactions to one in which they can seek advice, guidance and professional service on all things financial. That, however, is easier said than done. Our surveys and those of others consistently show that the majority of customers do not view their local banker as their primary financial advisor.

How can this gap be bridged? The answer lies with turning frontline employees into both brand ambassadors and consultants for your institution. A brand ambassador is someone who fully embodies the brand they are representing. They should have a full grasp of your bank’s value proposition as well as be extremely knowledgeable and well-versed on your products and services, defined as being able to answer almost any question that a prospect or customer may have for them.

Attaining this level of proficiency turns your brand ambassadors into financial consultants, a level above that of salespeople fulfilling monthly product quotas. A consultant is honest and upfront about the products and services that will best meet the needs of the customer; establishing a bond of trust that is critical. And a good consultant will be able to skillfully recommend and cross-sell your products and eventually be viewed by customers as a trusted advisor. To develop good consultants, you need to create a process by which your employees can be comfortable and supported in making decisions that are in the customer’s best interest.

Here are some principles for helping you make that happen:

Serve your customers when, where and how they want to be served. Financial institutions have finally acknowledged that customers want control of when and where they bank. And, in today’s economy, we are seeing a greater likelihood of customers switching to another institution when they do not receive the service, convenience and solutions they expect.

To create a fully engaged, loyal customer, you must provide them with an exceptional customer experience as well as multi-channel self-service solutions, including ATMs, online and mobile banking services. You must also ensure that you provide a consistent experience across all of these channels. If a customer typically uses online banking to conduct transactions and always has a good experience, but goes to a branch and receives terrible customer service, that customer will be less likely to return to the branch, thus decreasing their engagement with the bank and the most effective medium of cross sale.

When it comes to consumer expectations and engagement, certain companies (think Apple, as many do!) have set the standard across the board for many industries. They have proven that it is possible to create a seamless and integrated experience across several channels, whether their customers are purchasing a product in one of their retail stores, buying a service online, via mobile, or having questions answered over the phone. ath Power research shows that banking customers who utilize multiple channels to conduct their business are much more engaged than those who do not. Furthermore, those who also hold multiple products or services with an institution are more loyal and less likely to leave. Banks that take a holistic approach and master the ability to align their brand promise across the channels that their customer base finds ideal will have an upper-hand in this industry.

Personalize the banking experience for your customers on all levels. Personalization has become a key element in developing fully engaged and loyal customers at financial institutions. Your customers want to feel special. They want to know that you appreciate their individual business and that they are not just an account number attached to a dollar amount.

To properly personalize the banking experience for your customers, make sure you are gathering information about them at all levels. In order to do so, you must utilize technology that supports a customer-centric approach rather than an account-centric approach. Such technology integrates data, systems and processes across all product lines and channels so that up-to-date customer information is available to your frontline at all times. This allows employees to have a 360° view into the customer’s history of interactions and banking products.

Many financial institutions have this technology in place, yet fail to use it to its full advantage. Train your frontline to properly use it to personalize every face-to-face interaction as well as detect opportunities to offer additional products, special pricing or value-added services relevant to each customer. Specific information can also be used to personalize the customer experience across all other channels, including your call center, online and mobile banking. Additionally, you should send personalized communications to your customers on a regular basis, whether it is in the form of email, mobile alerts or a telephone call. Our research shows that customers who receive a personalized banking experience with regular communication are much more satisfied and likely to stay with their bank than those who do not.

Achieve “Primary Institution” Status. Becoming a customer’s primary bank or credit union is increasingly difficult, but the opportunity is there and the concept of increasing “primary institution” status by even five basis points has a significantly incremental impact on profit. We’ve calculated that benefit for some of our clients as tens of millions of dollars in increased revenue at even slight increases on primary bank status. Do you know how many of your customers would consider you to be their primary financial institution? Tell your staff to ask. Insist on it. Nearly half of consumers say they prefer one financial institution. Start with those customers who call you “their bank.” Customers who hold more products with their primary bank are likely to be the most loyal and unlikely to leave, so make sure you have all of their business and do not stop until you have it or know the reasons why you don’t. Then, keep asking and demonstrating why you believe you are the right choice for that missing piece of the customer’s wallet.

Learn from your current customers. Lastly, make use of all types of customer feedback to consistently improve coaching and demonstrate key behaviors that drive customer actions. Communicate with customers the value you place on their input, making it both easy and comfortable for feedback to be shared at all touch points with the bank, whether it is favorable or issue-related. This will help you to gain a better understanding of which customers are most likely to be your advocates and which customers are at risk of attrition.

Employ this feedback by proactively engaging customers in jeopardy of closing accounts and rewarding those customers who are most engaged.

© ath Power Consulting. All rights reserved. Redistribution or commercial use without the expressed, written permission of ath Power Consulting is prohibited.

Based on the findings of the 2011 ath Power Ideal Banking Study, customers at community banks and credit unions have the highest banking experience satisfaction levels and are far more likely to recommend their financial institution to other people compared to customers at their larger competitors, who actually saw a drop in their ratings since 2010. Additionally, across 2010 and 2011, approximately 50% more customers at the Nation’s top-20 banks rate themselves as “likely to switch banks” compared to community banks and credit unions.

These results show us that smaller institutions are now well positioned to be successful in this fragmented financial services market. This is an opportune time for them to take an initiative to sway potential customers of their larger competitors to join their community bank or credit union. Tactics for achieving these gains include marketing, advanced products and loyalty programs.

Reputation Play

Whether your organization is a large national bank or a community player, its reputation is on the forefront today and can be extremely influential in attracting and retaining customers. Yet, in the wake of the 2008-2009 financial crisis, many reputations have been damaged and consumer confidence in some of these organizations has reached record lows.

As our annual study has shown in the past three years, trust and bank reputation continue to be major intangible requirements that customers seek in their primary banking relationship. In fact, nine in 10 consumers feel that trust in their bank and the employees that work there is a “must have” or would make their banking experience ideal; 84% of bank customers say that a strong reputation is also a must-have or ideal component. Not surprisingly, loyalty and advocacy have turned into a central focus for banking organizations, large and small.

The banking industry as a whole has suffered damaging effects, however, smaller institutions have an edge in this category. By employing steps that build trust and reputation, they can attract more prospects, increase customer loyalty/share of wallet and prevent attrition. The first step is to communicate with your customers – as much as possible and in the format they prefer. Use several channels to tell your story, including your Website, email, your social media pages or blogs and, yes, the telephone – long-term, loyal relationships are difficult to create with one-way communication.

Additionally, record your customers’ preferences to leverage more targeted and individualized communication. The outreach strategies and the communication mediums you choose for select segments will have a significant impact on expanding current relationships as well as strengthening loyalty and increasing customer advocacy in the coming year.

Specifically in this economy, it is also crucial to be transparent. Be upfront about your offerings and fees. Remember: today’s customers want to be appreciated, but are also willing to pay for the right conveniences, if they receive the right value in return. Show them the true advantages of being your customer.

A main reason consumers are distrustful of financial institutions is because they are constantly subjected to negative news surrounding the industry and simply do not have all of the information needed to understand the impact of new regulations on banks and how that affects customers. Proactively educating your customers on industry changes demonstrates that you want them to be aware of how these reforms will affect them – ultimately, demonstrating the general care and concern they are seeking.

Finally, use these troubled times to offer your financial expertise. Banks have struggled with the shift of being a place to deposit money and conduct transactions to providing a team of trusted advisors to their customers. When we asked mass affluent customers why they would consider using an advisor from their primary bank in the 2011 Ideal Banking Study, 84% stated that they would appreciate “that level of attention” from their institution. And just as important, another 33% revealed that they are currently in need of investment and/or portfolio type of financial advice.

The study also revealed that only one in eight mass affluent respondents had a designated financial advisor at their primary bank. Of those that did not, more than 20% said they would definitely utilize this type of service if offered, while 55% said they would, in the very least, be open to it. This is a clear opportunity for smaller institutions to deepen their relationships with their customers, and show them that you have their best interests in mind.

With the economy in an historic state of flux, many people are scared and/or unsure about what to do with their finances. “Should I cash out my stocks?” “Do I apply for a mortgage or wait?” “Is a 529 a smart thing to do in this market?” “Who can help me!?” Consumers are thirsty for advice, but may not know that your institution is even an option to turn to – so let them know. Our research shows that those organizations that strike the right balance between offers and advice will see increases in customer satisfaction, loyalty and profitable growth.

Early Follower Strategy

While you may not carry all of the products or possess the development budgets that larger banks do, you still need to provide the services consumers find convenient and essential to bank with in today’s world. The services we are talking about are essentially within the realm of online banking, remote deposit capture and mobile banking – which has become an increasing need among consumers.

Our research shows that online banking and bill pay services have received nearly universal adoption by customers (90% using these services overall), with approximately 60% of customers conducting online transactions on a weekly or more frequent basis. And, while mobile banking adoption has been slower than banks or developers predicted five to eight years ago, it is clearly showing signs of future acceptance. As more and better designed apps become available to a wider variety of handheld devices, mainstream adoption is positioned to take a similar path as that experienced by online banking.

Competing with the large financial institutions that are more established in this arena typically means applying an “early follower” mentality for the community player. Budgets at these smaller organizations do not typically incorporate technological advances for mobile. However, by knowing their customers and small business clients, community banks and credit unions can develop sound strategies to meet the specific needs of their targeted consumers. Furthermore, by implementing and maintaining these strategies now, community banking organizations have the best chance to stand out among not only the industry giants but also against their direct local competitors.

Loyalty programs have likewise proven to be effective in engaging customers and solidifying a customer’s commitment to an institution and significantly reducing the likelihood of attrition. Sound loyalty and rewards programs also provide the type of communications and proactive outreach that facilitate cross‐sell opportunities.

As with other categorical comparisons in our study, community banks and credit unions received higher satisfaction ratings regarding the loyalty and rewards programs they offer. Their participation rates however, are significantly lower than the larger institutions — only 17% of community bank customers cited participation in their respective bank’s program.

This can be fixed. Start by educating your frontline employees on your program and train them to communicate the value to your customers. Utilize other mediums such as your Website, emails and mobile alerts to keep customers engaged and informed. Most importantly, reward them on the most optimal products and services with the types of rewards that speak to them individually. Offering customers the ability to customize their reward package, based on a specific product bundle, enhances buy-in and accentuates engagement.

While community banks and credit unions generally score higher than the large regional or national banks in customer loyalty, challenges remain. Our research shows that most of these smaller institutions still lack the defining elements of a high-level customer experience. Most notably, these weaknesses are found in the areas of personal connections and communications, knowledgeable guidance, and delivering products and services that are in the best interest of the customer.

The rest of 2011 and into 2012 will likely be a period in which negative market perceptions and regulation, or the talk of increased regulation, will weigh heavily on bank executives and dissuade some from investment in customer-centered strategies. Our research shows that even slight diversions from developing or maintaining enterprise customer experience strategies puts banks or credit unions in a less competitive position and certainly reduces customer loyalty and employee engagement. The delivery of a genuine and holistic customer experience is the best opportunity for a financial institution of any size, in any region, to acquire and retain profitable, long-term customer relationships.

© ath Power Consulting. All rights reserved. Redistribution or commercial use without the expressed, written permission of ath Power Consulting is prohibited.

Banks across the nation continue to robustly target the small business customer as a prime source of revenue and differentiation although the going has been tough lately. This sector of the market has been vastly fragmented over the past three to five years as banks found themselves restricting lending and credit due to the economic crisis and focusing more on other streams of revenue to survive. With limited access to credit and lack of personal attention and service, many business owners lost confidence in financial institutions.

Now, with a growing receptiveness to switch to more “customer-centric” financial institutions, small business clients are emerging as a major opportunity for many banks to increase sales and improve retention rates. Here are some key tactics banks need to focus on in order to effectively capture and satisfy today’s small business client:

Create – and stand by – your value proposition.

ath Power Consulting studies show that, in general, banks and credit unions continue to struggle with the small business banking customer experience, particularly in the branch, which remains a key channel for this market. The first step toward progress is to develop a well communicated value proposition that defines your small business banking market position and brand expectations.

Our most recent research shows that “customer service” is far and away the most common response by bankers to the question, “What makes your bank better than where I am now?” The study also reveals little relationship between the frequency that customer service was cited by a bank and that bank’s respective overall score, as ranked by small business customers.

To more sharply differentiate your institution, create a “value proposition script” to help bankers answer the question, “Why should I bank here?” Your message should be inherently clear on how your institution performs with regard to the sector’s key drivers of banker knowledge, ease-of-use and accessibility and overall experience. Ultimately, your frontline needs to intrinsically understand your prominent differentiation in the market and must have the ability to communicate it consistently.

Align your branch managers with your business banking specialists.

Bank executives have made it clear that small business banking is a strategic priority by continuing to dedicate dollars to their business banking model. Institutions such as Bank of America, JPMorgan Chase, Citigroup, Citizens Bank, Fifth Third Bank and Wells Fargo have all announced their intention to hire thousands of new small business banking specialists in the coming months. These banks clearly recognize the current market opportunity. They also recognize that while online banking is strong in this sector and small business mobile banking adoption outpaces its retail counterpart, the branch network remains integral to small business banking profits. That means the alignment of business banking specialists to local markets as well as defining unambiguous roles in the branch is imperative.

With that said, your business banking specialists must work together in partnership with your branch management. The typical small business owner still chooses a bank based on location and will visit his or her nearby branch a number of times each month, providing your staff with many in-person interaction opportunities with these individuals. Branch management and business banking staff need to work in conjunction on both sales and service efforts to ensure a streamlined channel for effectively prospecting, cross-selling and providing an exceptional customer experience at all times.

Train your existing frontline to handle small business prospects or clients.

While it is evident that having a dedicated business banker or business banking specialist in place presents an optimal scenario for a financial institution to meet and exceed customer expectations regarding account capture and ongoing relationship management, our research shows that a variety of well-trained frontline roles can have a very positive impact on the growth of small business accounts. For example, we found that only one-third of potential clients were helped by an actual “business banking specialist” when inquiring about a new account relationship. Others were assisted by a variety of bank personnel, with one in 10 being assisted by a teller.

It is extremely beneficial to staff your branches with multi-functional players who provide value-add and cross-sell capabilities specifically in the business banking arena. Organizations that are able to put business banking resources in place will clearly be well positioned to address the needs of their customers. However, those organizations that are unable to expand that workforce under current conditions or under future scenarios can achieve comparable success through the proper training, coaching and message development with their existing employees.

Understand that initial and early-stage needs assessment profoundly impacts the decision to become a customer – or to walk away.

In one of our most recent annual studies, 700 business owners visited 33 of the nation’s leading banks posing as potential new clients. The study uncovered several gaps in the service experience that would deter a potential client from bringing their business to a bank. For example, results showed that less than two-thirds of the bankers evaluated tried to establish the size of a potential client’s business and almost a third failed to determine what products and/or services the potential client had with their current bank before talking about their own products and services. Even more surprisingly, more than one in five bankers did not ask for follow-up information such as name, business card or other contact specifics!

It is evident that most, if not all, financial services organizations serving small business customers have significant opportunities for improvement with regard to initial and early-stage needs assessment and learning about the prospect’s business. By taking the time to determine needs and subsequently, connect those needs with the right products for the potential client’s business, you are providing customers with the personal attention and product knowledge that they desire – and steering away from the generic product push sales pitch behavior that alienates most prospects.

According to our study, regardless of who they met with, small business owners who received an informed needs assessment and were asked about business objectives were much more likely to be interested in becoming a customer of the bank than those who did not. Consequently, it is vital that any staff member who may interact with potential small business clients develop and receive selling skills training so behaviors, such as asking questions before offering solutions and probing on business size and objectives, come naturally and appear genuine to the prospect.

Make exceptional customer experience a top priority.

When bankers were asked in one of our latest surveys why they care about the customer experience as a leading strategic priority, competitive advantage/differentiation and customer retention emerged as the top two reasons. That stated, our research also shows that a quarter of small business owners indicate some likelihood of switching primary business banks within the next two years, with four in 10 citing poor customer service. Though business owners also cite “fees” as one of the top reasons (behind poor service) for switching to a new bank, reasonable fees are acceptable and typically rank well below the less tangible dimensions of trust, reputation and employee knowledge with regard to what business owners seek in a banking relationship. Small business owners will pay reasonable fees – they just need to see value for what they are paying.

On the flip side, for small business customers who aren’t thinking of switching banks, these were the major reasons cited:

• “Happy with the level of customer service I receive at my current bank” (68%)
• “Rates and fees offered by other banks will likely not be better than what I have now” (47%)
• “Too much hassle to switch” (42%)
• “No other bank has branches as conveniently located for me as my current bank” (38%)
• “I trust my bank more than other financial institutions” (31%)

The customer experience in the small business banking market drives retention and, even more critically, acquisition. One would therefore expect banks to make a directed effort to train, manage and motivate (through value-based goals) platform staff to offer exceptional treatment to their small business clients and prospective account openers.

Based on the span of insights captured in our research, some banks have made progress in improving their customer experience over the last year. However, a significant number of organizations remain concentrated more on product and less on customer relationships as a way to recoup lost fees. Adding new products or increasing rates or fees for existing ones may seem like an instant solution to increase profitability, but these initiatives do not help improve customer loyalty, and oftentimes, can generate a negative impact on customer retention.

By focusing on adding value through the provision of a superior customer experience, banking institutions will be better positioned to attract new small business banking clients – turning prospects into satisfied clients – while improving retention with their existing customer base.

© ath Power Consulting. All rights reserved. Redistribution or commercial use without the expressed, written permission of ath Power Consulting is prohibited.

Most banks today have solid strategies in place for selling their services and providing high levels of customer service prior to each sale. Some institutions have even taken major initiatives to ensure quality service after a sale during typical customer transactions. There is, however, an evident lack of focus on the quality of service provided when a customer problem arises.

ath Power’s 2011 Ideal Banking Study found that problem resolution is not being adequately addressed by the majority of financial institutions. Additionally, data and qualitative insights indicate that banks and credit unions do not fully understand the impact of seemingly minor items that, if left unaddressed, can turn into escalating problems that damage relationship loyalty and reduce relationship growth opportunities.

Approximately one out of every five banking customers has experienced a problem in the last three months with their primary banking institution, according to the study and, for those who attempt to get them rectified, nearly 70% received either an unsatisfactory resolution or none at all (similar in 2010 and 2009 studies). This is an outrageous statistic. The types of problems most regularly reported in the 2011 study were: additional fees charged to account; account errors; trust/fraud issues; service requests not handled in timely manner; and poor customer service.

These lingering issues create discontent with the overall relationship. The ongoing negative attitudes displayed by customers require additional marketing and customer service resources to overcome, if they can be at all.

Interestingly, one of every 10 problems is never even addressed by the customer, which may mean that customers are resigned to facing ongoing issues and/or apathy with their banking relationship. Of the others who do attempt to contact their bank in an effort to have a problem solved, a quarter of them had to contact the bank three or more times in order to get a response – not a solution, just a response. Furthermore, when a customer experiences a problem that is not resolved, they are four times more likely to change banks than if the problem is resolved.

Training and Coaching

So how can banks improve in this area? Focusing frontline activities around “getting it right the first time” and proactive information-sharing remain elusive for most organizations. We have seen marked improvement by clients who shine a spotlight on improving employee knowledge by training correctly and consistently and by simplifying processes in order to minimize problems – making it easier to diagnose and fix a variety of issues.

When a problem does ultimately arise, most have some version of a resolution model to rely on. The disconnect occurs when employees are not adequately trained on how to execute the defined steps in that model. Properly coached employees who can effectively handle customer problems many times can not only prevent a customer from leaving, but can turn an issue into an opportunity to deepen the customer relationship. Here are some basic guidelines to follow:

Respond in a Timely Manner. One of the most common customer complaints in our survey is that banks did not respond in a timely manner to service requests or help with a problem – and some did not respond at all. Problems are not resolved as quickly as the majority of customers want them to be, even when the problem is a mistake made by the bank. Moreover, many customers who didn’t receive a timely response to their issue also complained that the bank did not provide a satisfactory explanation of why the problem occurred or a pledge that it would not happen again. Timeliness of response is paramount in setting customer expectations and relates to the care and concern one needs to project to quickly resolve a problem.

Keep the Customer Informed. Timely communication is a key advocacy driver and a highly correlated variable in customer satisfaction assessment. Customers do not like to be kept in the dark, especially when it comes to their finances. If you know it is going to take time to rectify a particular problem, call and inform the customer throughout the week to keep them updated on the progress in reaching a resolution – even if there is no progress at all. Actively working with the customer to solve the issue to satisfaction salvages the relationship and restores trust. One final thing: did you remember to ask if the customer was actually happy with the resolution you presented? Remember, every contact with a customer is an opportunity to build loyalty.

Be Knowledgeable and Listen to Customers. Nearly half of consumers rate “employee knowledge” as a must have requirement that customers seek in their primary banking relationship – and another 42% list it as making a banking relationship “ideal.” Problem resolution is a direct yield of the employee knowledge dynamic. So, listen to your customers and inform your employees. Post-close research and analysis provides the systemic answers to what is truly causing customer dissatisfaction and attrition – way beyond fee issues. Pinpoint the key drivers of account closure and then do something about them. On average, between 18% and 23% of closures can be saved by having an informed front-line employee ask the customer to stay and then engage in a conversation as to the situation.

Take advantage of the information provided by customers with issues to consistently improve the customer experience at your institution and ultimately increase customer retention. This will allow banks to successfully overcome the problem resolution hurdle.

Based on the insights captured in our recent Ideal Banking and Small Business Banking studies, there is still a significant room for improvement in crucial customer experience categories. Many organizations continue to focus their efforts more on products and less on customer relationships as a way to recoup lost fees from recent regulatory reform. While adding new products or increasing rates or fees for existing products may seem like an instant solution to increase profitability, these initiatives do not help improve customer loyalty and can often have a negative impact on customer retention.

Furthermore, the longer an organization waits to move from the traditional product-driven approach to a more customer-centric and service-driven culture, the more difficult it will be for it to catch up to competitors who have already revamped their strategies for 2011. Here are five steps that we believe will help your institution successfully make that transition:

Understanding your customers’ changing needs is the first step to improving customer experience at your institution. Quite simply, if you do not know or understand what your customers want and need, how are you going to provide them with appropriate banking products and services and, more importantly to them, the correct guidance and advice?

So what can your institution do to make sure this step is addressed? First, ensure that your frontline staff is asking questions. In our recent small business banking study, we found that bankers would be more successful in expanding their small business client base if they consistently took the time to learn about a potential client’s business dynamics before recommending products, since asking questions about the client’s business is a significant driver of customer acquisition.

As simple as that sounds, many banks simply don’t ask important questions about the prospect’s business. Whether that customer fits into the small business or retail category, it is of the utmost significance for your frontline staff to assess their banking needs. Additionally, you should train, track and coach frontline staff on the client needs-assessment process to ensure that a practical and meaningful dialogue is occurring and that it is aligned with the organization’s culture and protocols.

And keep in mind that customer needs are constantly changing. We have evolved from a branch-centric model for meeting all financial needs to one based on convenience, where individuals and businesses want to conduct their banking at an ATM, online or through a mobile device. If your institution is not providing enough of these alternate channels for banking, then it does not understand the changing needs of the financial services customer.

Don’t focus on selling products; focus on selling exceptional customer experiences. This step is extremely important in improving the customer experience, but it may involve a change in sales culture.  We have already mentioned how many banks have shied away from pumping product to becoming more service-driven. Why have they made this transition? Because they now understand that this is the key to long-term success.

When consumers were asked in our most recent studies what they sought most in a banking relationship, half of all respondents mentioned customer service, personal relationships and trusted advice, while less than one in five mentioned products and services. By selling an exceptional customer experience, you are creating a deeper relationship with the customer. No one likes being “sold to,” so rather than pitching a customer every product under the sun to make quick revenues, get to know those customers. Learn about their needs and financial goals, make them comfortable, and make their contact with your institution a memorable one. This step contributes to immediate customer satisfaction as well as long-term customer loyalty.

Make your customers feel safe. Become your customers’ go-to expert on products and services. Let them know about bank industry changes (such as Reg E, Dodd-Frank Act, etc.) and how those changes may affect them. If your customers feel that you are looking out for their best interests, and if they feel nurtured and cared for, they will, in essence, feel safe.

This goes beyond the friendliness factor. While a friendly teller can make a customer feel happy, a demonstration of competence makes them feel confident that they chose the right bank. Thirty-seven percent of consumers cite “Trust in the bank and the employees who work there” as a factor in making a banking relationship ideal, while 50% list it as a “must have.” And in a time of financial crisis when consumer markets still remain skeptical and untrusting of banks, this step can make a world of difference.

Keep up with the times. The expansion of communication channels is changing how we interact with customers and those providers that do not keep up with the times will most likely not survive. Customers are seeking convenience with Web services that remember their names and even recommend products based on their past purchases (think Amazon and Zappos) and they now rely heavily on their interactive mobile devices and social media to find product information or seek customer support. If your institution is not taking advantage of these channels, it is already falling behind in improving the customer experience.

Some banks have created mobile banking apps that allow you to check balances, request insurance quotes and even perform remote deposit capture. And it has already been determined that the customers with a mobile banking application attrite significantly less than customers without such a service. Those banks that stay ahead of the game in providing customer-centric Website technology for online banking, better customer support via social media and the convenient features of mobile applications will surely see happier customers.

Reward the relationship. Today, most people are involved in some type of rewards program whether it involves a grocery store where they can earn coupons to save money on food, or an airline where they can earn miles towards free flights. The fact is that people like be rewarded for their loyalty to a store or brand.

Rewarding customer relationships at financial institutions can take different forms. For instance, customers of Citizens Financial Group can earn points for gift cards, merchandise and travel just for simple things such as paying their bills online or maintaining multiple banking products. Capital One Financial Corp. rewards its checking account customers in the form of “miles” and an Anniversary Bonus, where an account holder will receive 1,000 miles on his or her first rewards membership anniversary with the bank. These miles can be redeemed for cash, travel or merchandise. By creating a reward structure at your institution, you will be well on your way to building that loyalty.

Our research shows that service-driven institutions that truly focus on customer needs consistently receive the highest ratings. We believe these institutions will be the victors post-crisis, and in many years to come.

© ath Power Consulting. All rights reserved. Redistribution or commercial use without the expressed, written permission of ath Power Consulting is prohibited.

Summer is associated with many fun activities that include taking much-needed time off to recharge your batteries. And while we may all focus on a little R&R at this time of year, we need to realize that the CE (the customer experience,that is) does not take a break simply because the weather is nice.

As we firm up the results from our 2010 Small Business Banking Report, we’ve noticed a very interesting trend while measuring customer experience.  Our survey of national small business banking customers shows that many individuals are dissatisfied with the service they have received during summer months.

TRUE STORY: An owner of a $6 million professional services business reported that she recently contacted a bank to inquire about opening a new checking and credit line relationship.  The process started fine, but then correspondence halted.  Ten days later she received an email response that read, “I apologize for the delay. I was with my familyat the beach.”  The customer was astounded that this manager had the audacity to, 1) Not have anyone else at the bank continue to update her with the approval process, and, 2) Explain that the reason for the poor service was a vacation!  Sadly, the “vacation” excuse is used much more frequently than we would like to report.

People do not stop banking during the summer so why should you provide less-than-impressive service during this time?  Top-notch customer experience should be a year-round goal for any financial institution. The summer months present a valuable opportunity to stand out from competition that may be lacking on their customer experience initiatives, as well as a great time to boost your customer loyalty and advocacy.

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Changes to Regulation E are relatively straightforward, but they do bear great consequences if not adhered to properly.  The most significant changes will require affirmative consent (opt-in) on all accounts assessed overdraft (OD) fees for ATM and one-time (point of sale, or POS) debit transactions. It will also require financial institutions to provide consumers with confirmation of affirmative consent. Furthermore, account terms and conditions must remain the same for both opt-in and non-opt-in accounts. These changes must be implemented by July 1st for new accounts and August 15th for existing accounts.

While the most obvious negative impacts of Reg E are the cost of compliance (i.e. new system upgrades and changes, additional staff to handle customer complaints and education, etc.) as well as the likelihood of lost fee income, the potential for decreased customer loyalty and even customer loss are also on the minds of many institutions.

But what if you were to take this rare opportunity to truly stand out from your competition? Let’s face it; there are thousands of financial institutions across the nation. Why do customers choose one over the other? Is it because of “rates and fees”? Are they really offering better products?  The simple answer is, “no.” Based on several ath Power studies conducted over the past few years, the majority of banking customers — in both retail and small business — claimed that customer service was the key differentiator.  So although Reg E compliance responsibilities initially seem to carry only negative impacts for a financial institution, these changes can be turned into opportunities to build trust with your customers, and turn them into advocates of your service.  By taking advantage of this time of change, you could ultimately replace lost revenue and build even more brand loyalty.

So how should an institution prepare for the changes and follow through to ensure that they are complying with the changes while also providing a superior customer experience? My keys to success with Reg E compliance are to:

1. Determine how best to disclose your policy and permit opt-ins,

2. Ensure that your team is knowledgeable and comfortable with discussing the changes with customers,

3. Communicate the new policy to all customers,

4. Upgrade your systems as necessary to handle the changes, and

5. Implement a program to measure the success of your efforts and adjust them as needed.

As we draw closer to the regulatory deadlines, it will be vital for you to ensure that your customers, too, are being educated and that their Customer Experience throughout this time is positive and productive. Specifically, you should be able to answer these critical questions:

Do your employees know what they should about Reg E changes?

What are they saying to your customers?

Can you be sure everyone is getting an accurate message?

Is your Customer Experience at risk?

With a program such as ath Power’s Reg E Shop Audit you can assess the answers to these questions and determine how to fine tune your compliance strategy. It’s only then that you can be sure that you are aligning what customers hear with your brand promise.  The ultimate goal is to achieve a seamless transition for your customers, and to provide a continuous positive Customer Experience.

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