Here's how it started: This summer, I needed to pay the contractor who was renovating my house out of my account at a large bank. (I'll call it BigBank.) So I drew a $6,000 check on my line of credit at a community bank - let's call it TinyBank - drove down to the local branch of BigBank, put the check and the deposit slip in the night deposit box and headed out of town on business.
Then the trouble began.
My tale is not particularly unusual. But it illustrated to me in a very personal way how banks of all sizes ignore their customers' needs and feelings in the name of efficiency. In so doing, they put their basic franchise at risk.
Later that week, my "significant other" prepared to pay our contractor by checking the balance of our BigBank checking account, only to discover that the $6,000 had never arrived - would I please take care of it? My next phone call revealed that BigBank had never "found" the deposit in the night depository; our check to the contractor would have bounced.
Because I was on the other coast, I had to have TinyBank wire a second $6,000 to BigBank and stop payment on the first so-called lost check. In doing so, I incurred a $25 fee from TinyBank to wire the money; some $10 in fees for BigBank to receive the wire; a $10 TinyBank fee to stop payment on the first check; and, potentially, a $15 returned-item fee from BigBank if the original, "lost" check were found, processed, and rejected. The grand total was $60.
"O.K.," I said to myself, "at least it's handled for the moment, and I'll straighten it out when I get home." Right. Before I could get home, TinyBank called, flummoxed by BigBank's presentation of the original check. My account officer - the fourth in eighteen months - was concerned that I didn't have enough funds in my line of credit account to cover it.
"That's strange," I said. "Do the math. A $100,000 line of credit with a $40,000 balance can't be overdrawn by a $6,000 check. Second, there's a stop payment order on that check."
Oops. TinyBank had put the wrong check number on the stop payment order.
So when I finally arrived home, I gathered up all my papers and drove to see the friendly bankers at my local BigBank branch. "Fix this," I said.
The platform person across the desk understood my problem, apologized for the confusion, and credited me $60 for the flurry of fees its mistake had triggered.
While we were waiting for the paperwork to be approved, we got to chatting. I waited for the inevitable question: "Why do you have a credit line at TinyBank? Would you like to consolidate your banking and open a line here at BigBank?"
It never came.
So I probed the officer to find out what her responsibilities were to me and to other customers who did business with BigBank. "Who is responsible in this market for selling personal credit services?" I asked.
"Well, I am, really," she answered, "but I really spend most of my time putting out fires like this."
"How do you know who to approach about moving from simple deposit- based relationships into credit and investment products?" I asked.
"Once a month, the region sends me data runs of all branch customers with maturing CDs," she replied, "but I really don't get a chance to look at them much."
There you have it. Neither bank expressed a desire to be my one-stop financial services provider.
Neither bank indicated by its actions that I was a valuable customer it wanted to get to know. Neither bank "empowered" its customer contact people with the right motivation, the time, and the resources to expand the relationship the bank had with me.
As an individual customer with a wide array of financial services needs and purchase capacity, I don't exist. That's not true at every retailer. For example, at USAA, I exist as an individual customer relationship with specific needs and purchase behavior. Likewise, I exist for George Good Clothiers, my local suit store. I exist at Lee's Deli. I even exist at Home Depot.
In a nutshell, banks that claim to be relationship retailers fall short of their goal because the customer does not feel taken care of.
TinyBank, with $300 million of assets, declares itself to be a niche relationship retailer to its small-business and business-owner customers. It failed by pushing down responsibility for those customers to low-quality workers who were not able to meet basic requirements, much less anticipate coming needs.
BigBank, on the other hand, opens one million new accounts a year. It offers every consumer financial product or service under the sun. And while it claims in extensive advertising to want "to be my bank," it can't train its people or align its organization to meet my needs. Perhaps that's why it also closes over 990,000 accounts a year.
Declining margins and increasing competition have led bankers to increase fees for service and to enter into new businesses - insurance, securities, etc. - to broaden product offerings and, ostensibly, to cement long-term customer relationships.
The result has been greater near-term fee revenues, but much of this revenue is still based on traditional, low- or declining-margin business. Bank retailing employees are pushed to sell more but still have to focus on putting out fires when they can focus at all.
Information needed to sell other, nontraditional product lines is not integrated into bank information systems or management systems. The customer-contact person neither has the time nor the capability to step back from day-to-day tasks to become a relationship-nurturing retailer.
What's the solution? We think it's to "reverse engineer" the bank: from the customer's needs backward. The term "user-friendly" comes to mind. But in the meantime, I promise, I will never, never, ever use the night depository again.
