COMMUNITY BANK OF THE FUTURE: A CONTINUING SERIES

By Steve Cocheo, executive editor, This e-mail address is being protected from spam bots, you need JavaScript enabled to view it

Michelle Gula makes her living serving community banks, and she’s horrified. She personally mystery shops branches and she thinks some CEOs would be equally horrified to see what she sometimes sees.

“Everyone considers community banks to have good service,” says Gula, head of M.rae Associates. “But just being a community bank doesn’t mean you automatically have good service.” Gula has found some community banks offering service little better than the big-bank brethren they typically crow about competing with on the basis of service.

Face it, she says, differentiation continues to be the key to community bank success. “It’s hard to come up with a product that just your institution has,” adds Gula. Further, large banks, with their ability to be first out with new products, have also been stressing service. First Niagara and PNC are two examples Gula cites.

“We community bankers think that our employees provide the best service,” says Brian Constable, executive vice-president and chief commercial banking officer at $700 million-assets Sunwest Bank, Tustin, Calif. “But just because I believe that, doesn’t mean it’s so.”

The risks are huge. “One bad teller talks to 50 clients a day,” says Constable. If you lose five clients a month, he says, that’s catastrophic.

More than ever, community bank leaders recognize the need for premiere customer service. But, as community banker Jeff Smith said months ago, in the comment that sparked this entire series, what will service mean to the new generation that hardly visits bank offices?

Another question bankers are asking: Is the definition of “service” expanding for all customers? If so, how do we get there?

The urgency is real, because counterforces keep building. Case in point: Dodd-Frank. “People stare at their computers when they deal with customers now,” says Gula, “because they spend so much time checking boxes to stay in compliance.”
 
Meanings far beyond smiles
N.J. banker Cindy Munley says community banks often confuse being polite, knowing the customer’s name, and dispensing lollipops to the kids, with good service. “That’s just expected,” says Munley, vice-president, marketing, First Hope Bank, N.A., $416 million-assets, Hope, N.J. “We’ve got to move beyond that.”

Seattle banker Laurie Stewart has her definition: “Satisfying a client’s needs before they knew they had the need.”

“The executives of community banks may have missed the fact that service standards have changed,” says Stewart. “What was considered good service ten years ago is just basic service now.”

Stewart, president and CEO of $345.8 million-assets Sound Community Bank, gives an example. One of her branches has been calling clients who show up on the overdraft list. Employees let the customer know they are overdrawn and offer assistance. Customers appreciate this.

Sometimes, such efforts have led to extraordinary results. One such call connected with a customer stuck on line at Starbucks with no money behind his debit card. A Sound Community branch was nearby, so a banker shot over to the coffee house with $5 to get the customer out of hot water (it was a joint account).

“That is an all-star-service branch,” says Stewart proudly.

Texan Mike Mauldin, mulling the definition for service, says friendly branch atmosphere is certainly important, as is accuracy. Yet, he continues, he personally deals as much with machines as people, and for banking by technology, the key factors are availability, accuracy again, safety, and reliability.

So Mauldin, president and CEO of $152 million-assets First Financial Bank, Hereford, comes down to a single word: “Expectations.” He elaborates: “If I were on the other side of the desk or the ATM, what would I expect?”

Alabama banker Bob Jones, president and CEO of $481 million-assets United Bank, Atmore, builds on the concept. Jones, whose bank is heavy in ag lending, notes that farmers have seen large banks blow hot and cold on their industry. “Community banks don’t enjoy the luxury of choosing a line of business, they choose a community,” says Jones. “You can’t jump in and jump out. Memories are long.”

So, with that in mind, Jones’ definition: “Consistency in meeting customer expectations. Being consistent in your ability to respond to the needs of the market.”

Asking questions—the right questions
Chad Watkins is an expert in mystery shopping and similar evaluation techniques, and is manager of the Market Intelligence Group at Informa Research Services. After an extensive interview on modern mystery shopping (see the Reporter’s Notes blog at www.ababj.com), he was asked for his definition of service. He instantly came back with, “Identifying my needs and fulfilling them.” If he were shopping for a car, he continued, he’d want good prices, of course, but he would also want a car that fit his lifestyle.

Don’t just look for obvious factors such as eye contact and smiles, says Watkins; look for answers to questions, such as:

1. Is the banker asking needs-based questions?
2. Are they profiling the customer as they go, to better match them to the right bank products?
3. Are they digging into what the customers’ needs are?

Frankly, says Watkins, Informa attacks mystery shops critically. “We don’t feel banks should just be fulfillers,” he explains. “We look for people to take things a step further, not just to look for a quick kill without being consultative.”

Indeed, as futurist Brett King predicts in his book Bank 2.0, subject of the August installment of this series, as tech increasingly takes over more transactions, the value of many physical locations will be for consultations.

“Everybody used to offer free checking,” says Watkins by way of example. “Now customer service reps won’t have free checking. They are going to have to uncover a lot more about the customers to put them in the right account.”

Sound Community Bank’s Laurie Stewart thinks this is dead on: “Customers want bankers to be aware of client needs without the client having to do the heavy lifting.”

Now, let’s look at steps some banks are taking. You’ll find more in a Special online Pass the Aspirin at www.ababj.com/blog/1462.html

Advisory boards that produce
Bob Jones’ United Bank taps advisory boards—some geographic, one market-focused—for help.

As one example of how these groups helped the bank, Jones took the issue of gift card fraud to the advisory boards to explore their views and perceptions. As it turned out, understanding of the difference between consumer rights and protections on debit cards and credit cards was quite low. Jones says this helped the bank put more effort into education. And it also began encouraging customers who shop online with debit cards to open “shopping accounts” separate from their main household account.

Revamping across the board
First Hope Bank has felt service had to be kicked up a notch to compete. Cindy Munley says the bank is about to launch a new customer relationship management system.

But the bank has done more than shop for better tech. Training has been revamped to stress role-playing, Munley says. The bank wants its staff to know how to spot cues that could bring bank products and customers together.

Munley says the banks’ CEO, Norm Beatty, likes to say “everyone can be taught to balance.” So the bank looks for new hires that fit its renewed service emphasis.

“Retail is a great background,” she says. Susan Porter, the bank’s senior vice-president and chief administrative officer, notes that there is a balance between friendliness and analytical skill. “You don’t want someone who will just talk your ear off,” she explains.

Among the tools the bank uses to find the right people are the Predictive Index tests that sort out personality types. Another tool is TalentPlus, an open-ended interviewing process that helps probe for integrity, honesty, exactitude, and work intensity.

“We are hitting the nail on the head in hiring people who want to be tellers, rather than just hiring nice people,” says Porter.  

 

The electronic version of this article available at: http://www.nxtbook.com/nxtbooks/sb/ababj1210/index.php?startid=16

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