Kristin R. MoyerDavid Furlonger and Stessa Cohen here. I nearly choked on my breakfast in Winnipeg the other day. As we have been advising our clients for some time (for example: Customer Onboarding: Case Studies Highlight Process and Technology Failings, Customer Experience Management: A Financial Services Perspective and The Biggest Threats to the Bank Franchise: What Banks Should Do About Them Now), the current economic climate has increased the focus on trust and authenticity and the nature of the bank/client relationship. Biting the hand that feeds you is not a viable long term strategy.
Over breakfast, the Globe and Mail carried an article [Brace yourself for some unusual fees from your bank, Rob Carrick] about the prospect of increased/new fees from Canadian Banks being levied on consumers. It’s -30 degrees outside and this suggestion still cast a chill over the restaurant.
One scheme involved the allotment of an annual inactivity fee on unsecured lines of credit, others hinted at credit card rate increases of 5% if 2 consecutive minimum payments were missed. The article also suggested a defined bank strategy in a time of recession was just to sell more products, and used some strange tactics to push that approach.
One wonders how viable these strategies really are. In recessions of old, not only was a bank the only source of funds, it also had a tied relationship to the client/borrower. In today’s market, the consumer has multiple potential sources of financing and customer loyalty is no longer a given. Price comparison services can quickly advise consumers where the best deals lie, and even boomers (not just Gen X&Y) are prepared to shop around.
As was mentioned in a research meeting I had yesterday, “this too will pass.” That is, banks need to focus on not just the immediate economic climate, but spare time to build a strategy for when the market conditions improve. We’ve blogged on this before it happened: biting the hands that feed you now is not a recipe for good, long-term customer experience.
Canadian banks caught a break on the day this news hit — because the Bank of Canada slashed rates the same day. There were a TON of tweets about that but about these new inactivity fees? Not much. Not yet. Twitter bloggers have started to pick up on the news now that the dust has settled on the interest rates news.
One action item for IT execs is to make sure your senior management is aware of, and can potentially join the feedback loops (blogs, social network conversations, Tweets etc) that can haunt the banks brand and continue to raise questions about authenticity and trust as a result of their strategies. In a highly volatile market, such messaging may have as big an effect on viability as announced earnings numbers.
Category: Executive Decisions Uncategorized Tags: banking and investment services, customer trust
2 responses so far ↓
1 Coffee Mugs are Probably Not the Answer: Consumer Dissatisfaction with Banks on the Rise February 20, 2009 at 3:51 pm
[...] What does this mean? Can or should banks act more like credit unions? I don’t think so. And people will sniff out that kind of posturing now, more than ever. Straightforward communication is probably best – don’t pretend your customers are happy…and do something about it. More transparency, for starters. Take a look at the US Government’s website, recovery.gov, which tracks ARRA funds. New coffee mugs aren’t the answer. Neither are new fees. [...]
2 Consumers Fees for Deposit Insurance? Better Check with Your Customers March 5, 2009 at 4:16 pm
[...] Are bank execs that out of touch? My colleague David Furlonger and I recently blogged about increased and new fees Canadian banks were looking to charge customers. [...]