At BankThink, blog posts on the bank model of the future might delve into predictions about the role of branches, the potential for partnerships with startups and the best use of big data. It all ties back to one central question: What does the customer want? On that, the pundits are divided.
So in a new series this year, we've asked consumers from different demographics to describe firsthand what they are looking for from the financial services firms they do business with. Our fundamental pitch was: "If you could design your perfect bank, what would it look like?" The responses are anecdotal, but taken together they could point to trends regarding what it is that drives consumers' banking choices, and what will determine their choices in the future.
Full versions of the edited excerpts published here, plus additional installments in the series, can be found online at americanbanker.com/bankthink/what-bank-customers-want. -Jeanine Skowronski
For much of my life I've been poor: as a child of undocumented immigrants, as a young adult in college, as I was starting out in the working world, and again years later, as a law student. Today, I make a good income, but I rarely have a lot of money for any amount of time. What I pay in student loans every month is what many families pay for rent in the San Francisco Bay area. I am what some banks might call a "high-transaction, low-balance" customer.
Fortunately, my work as a financial services advocate has given me insight on what to look for, including red flags. Any institution that hard-sells overdraft is not for me. With the number of transactions flying through my account, and the different kinds of transactions, including checks, debit card purchases, electronic funds transfers and recurring automatic bill payments, I could (and several years ago, did) easily rack up a scary amount of fees.
Even accounts with lower overdraft fees, such as those offered by credit unions or those that withdraw money from a savings account rather than leaving a balance owed to the bank, would not work for me if the transactions are re-ordered to maximize the number of overdrafts or simply processed in an order that I can't predict.
I operate with an abundance of caution and have three accounts now. One is a credit union account with low insufficient-funds fees (just in case) from which all my bills are paid. Another is a "big bank" account that I get for free because I bank electronically. (This account does not allow overdrafts for debit card transactions.) I also have an Internet-based account that pays interest and covers out-of-network ATM fees.
Having embraced the digital lifestyle, banks haven't received much face-time from me. From credit card bills to the monthly paycheck, most of my money flows in an automated system that requires almost no effort on my part. And it's been great. The less I have to deal with the physical aspects of banking, the more I've come to appreciate my banks, JPMorgan Chase and Ally Financial.
But no matter how streamlined my finances are, there is one thing that has proven to be a regular nuisance. It's the need for a no-cost method of sending money to and from family and friends, without the friction that comes from having to provide hard-to-remember information like account numbers and routing numbers.
In two recent situations, I struggled to come up with ways to make and receive personal payments. A friend who uses Citibank could have used Citi's person-to-person payments feature (through Popmoney) to send me money, but I didn't want to deal with signing up for a Popmoney account. And when I wanted to send money to a family member who uses Bank of America, the relative didn't want to deal with entering hard-to-find information to collect money through Chase QuickPay, which I would have used to make the transfer.
Bank of America and Chase are both founding members of clearXchange. This peer-to-peer, or P2P, payment network allows customers of member banks to send money to each other with just an email address or phone number. According to the FAQs, there is no fee to send or receive money, which is all any consumer can ask for. But Chase is not yet capable of providing P2P payments through the clearXchange network.
The argument for third-party services may be brought into the discussion, but the likes of Google Wallet, Square Cash and PayPal can never earn the amount of consumer trust that exists when someone knows their money is moving between two financial institutions, as opposed to through a middleman.
-Simon Zhen is a writer and research analyst for MyBankTracker.com, a website that features consumer bank reviews, personal finance articles and bank product comparisons.