NEW YORK–It is a brave new world for retail bankers, who are struggling to mend their reputations and relationships with their increasingly disgruntled customers.
Some executives are confronting that problem more directly than others.
"You don't have to look much farther than the Occupy Wall Street situation to see that consumers are somewhat frustrated with their banks," Laura Kelly, a senior vice president for global payment operations at American Express Co., said in a Dec. 8 interview.
Kelly was one of about 300 bank executives, marketers, social-media experts, technology gurus and other industry members who gathered here this week to discuss credit card loyalty programs and consumer marketing. PaymentsSource and its publisher, SourceMedia Inc., organized the two conferences.
On the heels of what has been a rough few months for the industry, some conference-goers tried to emphasize the positive. Speakers and participants at the two events brainstormed ways to communicate with their customers on Facebook, Twitter and iPad apps, how to increase customer loyalty to their brands, and how to use marketing dollars effectively.
But in the wake of roiling public anger over new bank fees, stoked by the Occupy protests and Bank Transfer Day, a more fundamental–and unanswered–question kept bubbling up: how do banks regain their customers' trust? Consumer frustration "is actually having marketplace impact," Anthony Johndrow, a managing partner at the Reputation Institute, said during a Dec. 7 panel discussion. Banks' negative "reputation is a barrier to growth, and may be a path to a loss of customers," he added.
Paul Kadin, who runs customer strategy for Citigroup Inc.'s North American consumer banking business, echoed those concerns in a Dec. 7 speech (
"When you step back and look at the world through our consumers' eyes, the context of their life beyond financial services has seen dramatic innovations," he said. But when "you stop and think about ... the equation for what value is in retail banking, ... how do we help our clients understand that?"
Kadin partially answered that question by pointing to Citi's efforts to give its customers more products and new technological bells and whistles, including an iPad app.
"We can add value by adding functionality," Kadin said, adding that these products help consumers bank more easily. He declined to comment beyond his prepared remarks.
Other conference attendees agreed that banks have to do more to improve how customers interact with their banks and credit card companies. "If you can think about how to make the experience simpler and more accessible, it helps drive the customer experience," Kelly said. "People have tried to crack the loyalty code for a long time," she added.
The "most-successful way is to give consumers what they want but also to give consumers what they haven't thought of. Right now consumers are very ripe to get true additional value from their products," Kelly said.
Kelly pointed to American Express' efforts this summer to capitalize on consumer frustration over sometimes-high prepaid card fees, by introducing a prepaid card without monthly fees.
Consumers "want to have more control over their finances and be in a place where they can understand what the fees are, and manage and control those fees," Kelly said. But while account fees, and in particular some banks' failed efforts to introduce debit card fees, have been a flashpoint for consumer anger over the past few months, retreating from those fees will not solve banks' reputation problems.
This year, several banks started charging their customers for using their debit cards. But it was Bank of America Corp. that became the face of the industry's fee debacle this fall, after it announced and, under pressure, retracted plans to charge customers $5 per month for swiping their debit cards (
That made BofA "the Toyota" of the banking industry, one banker said on Dec. 7 in a reference to the negative publicity the carmaker faced over a series of product recalls in 2009 and 2010.
Such reputational damage, while seemingly intangible, risks decreasing the profits BofA and its competitors can make from consumer banking. Financial companies are looking to recoup the revenues they have lost from recent regulation, but adding transparent fees has proven to be more trouble than it is worth.
"All of us are deeply troubled by the lack of profitability in this business," Christopher McComish, executive vice president of personal banking and co-head of North American specialized sales at BMO Harris Bank, said during the panel discussion about reputation. "We deserve to make an appropriate return, and we've got to be able to prove that to the customers over time."
Harris Bank ranked first on PaymentsSource sister publication American Banker's 2011 survey of bank reputation published in May.
"It goes back to what the customer is telling us: 'This isn't your money. It's my money.' We need to think about it in that manner: 'You're doing business with me, and I will pay you for that,'" McComish said.
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