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Share of the Wallet or Share of the Heart?
- 1. Share of the Wallet or Share of the Heart?
- 2. The Battle has Begun Self-assessment Tie value to emotion? “They” are coming for your customers Making the connection
- 3. Our Legacy?
- 4. Why would we offer a 9 yr. loan?
- 5. Share of the Wallet
- 6. Let’s Explore “Embedded” Bill Pay Auto debit 5+ products Rewards = “Hard to Switch” If I enter, can I ever get out?
- 8. Have we Aimed for Trust? …Or have we simply trapped?
- 9. The Emotional Connection with Money #1 cause of divorce Event Daily Living – checking/credit cards Auto-debits – bills & debts Savings – emergency funds Borrowing - Autos, Student Bonus, Tax refund, Bargains Emotion Anxiety Normalized - neutral Comfort/security Guilt Excitement
- 11. TITLE GOES HERE Your text goes here
- 12. TITLE GOES HERE Your text goes here
- 13. TITLE GOES HERE Your text goes here
- 14. Let’s look at one quick example
- 15. 82% of SMB failures are due to cash flow problems 51% report cash management as challenging Let’s Pivot to the SMBs
- 16. Your text goes here TITLE GOES HERE We Expect:
- 17. Bills to pay Retirement Rent Tuition Bank reports to submit Bills to pay Business to run…. Rainy Day Fund Our customer ends up here….
- 18. Wins New Customer Ships/ Invoices Pays Raw Materials Payroll/ Overdraft Applies for Loan 3 Weeks Later Typical Customer Journey Liquidity event Begins
- 19. What if…. Your bank provided an add-on to your online banking that: Facilitated invoicing Registered expenses Facilitated collections Integrated A/P management & Payment Integrated with financial software Predicted cash flow What if…. When your customer lands that new client: An alert is issued when the invoice is created The customer has a link to set up a call with a banker We review the cash flow forecast together You provide a loan custom-fit to their needs Wins New Customer Ships/ Invoices Pays Raw Materials Payroll Collects Invoice
- 20. Credit Availability is #1 Your text goes here
- 21. TITLE GOES HERE Your text goes here
- 23. Not Just the Usual Suspects Your text goes here
- 24. How do you Build an Ecosystem? Your text goes here
- 25. User Journeys & JTBD
- 26. “I worry about …” Ask Your Customer…
- 27. Study the New Direction of Interaction Your text goes here
- 28. Barriers to Data Sharing are Dropping Your text goes here
- 29. Take Action
- 30. Be Part of the Steady Foundation for your Client so that they can see the horizon clearly
- 31. It’s Time to BankOnPurpose. The conference aims to spark innovation, share inspiration, and show the financial services industry how to focus on the customers, and build a team, brand and a bank with purpose. May 1-3, 2019 Austin, Texas ThePremierGlobalEvent forCommercialBankingExecutives Register today @ bankonpurpose.com Use the code HOLIDAY for $100 off your registration now until 12/31
Editor's Notes
- Good morning and afternoon, depending on your time zone. Thanks for joining. Today, we are going to explore a premise that the banking industry must make a pivot in how we think about our relationship with our customers. Can we move from “share of the wallet” to “share of the heart” and what does that mean exactly? We won’t be diving into the execution of AI or discuss just how cool API’s are or any of the latest tech innovations today. What we will be doing is exploring how we must change our attitude and culture to think differently about the customer relationship BEFORE we begin designing and implementing the latest and greatest in tech
- The battle for our customer is already underway. To gain an understanding of the importance of taking a different tact toward the customer, we are going to walk through how there has already been a shift in the consumer relationship and how expectations have shifted. We are then going to pivot to the world of small business and how that same paradigm is playing out in the commercial side of the bank.
- So let’s talk about the banking legacy and our historical relationship with the consumer. Have we participated in laying money traps? How does the consumer feel about stacked overdraft fees, or overdraft fees in general. What about the news circulating the internet and social media that quotes stats that the average American consumer pays over $450/year in OD fees? Should we talk about IVR’s and the endless attempts to press zero so many times that you break a nail on your phone? How about our quest for efficiency when we started bringing in swing shift tellers causing the endless snake in lines at lunch time? Well at least the teller line problem is sorting itself out these days since so few people visit our branches. Our past is littered with some pretty ugly truths about how we have approached our customer.
- Let’s take a deeper dive on just one product – the ubiquitous credit card. Did we really design an unsecured credit product that would take 9 years to pay off if you only paid the minimum payment? When thinking about the features/benefits of this design, who gets all the benefit? Maybe the bank by keeping the balance high? It’s okay, we’ll make it up in volume….
- Let’s examine one bank’s path Notice in the first column the objective starts with “Optimize margins and fee income?” We begin the discussion with a focus on the bank. By the time they get around to “Improving customer’s financial well-being” do you think they will have the customer embedded? (Trapped) Do you think they really have investigated how the customer feels about them at this stage? How does a customer equate value to this relationship?
- When we get s customer embedded, what we really mean is that we have created a captive audience. We know from experience that once we get to this point, inertia becomes our ally because it is now so difficult to switch banks.
- If you don’t know Revolut, they are one of the Challenger banks in the UK who are digital-only with a full banking license. There are currently over 50 “challenger” banks already I recommend that you follow the UK and EU banking scene to get a view of what’s coming our way. Open banking is in full swing over there and many of the upstarts are planning on coming to the U.S.
- Does the typical customer trust his financial institution? One possible acid test is to ask this question: “Would they be willing to pay you for advice?” I would suggest that if they truly trusted you, they would Let’s take a deeper look at how money and emotions are connected.
- The #1 cause of divorce is financial problems. That being said, our behaviors with money are tied to the whole spectrum of emotions. I've listed a few examples on this slide. Daily spending - who's stood at a checkout counter doing a mental exercise to decide whether to pull out the debit card or credit card.... The point is that all of these actions are tied to emotions. Understanding these ties is an important aspect of designing features and services that delight the customer. Can we relieve anxiety, can we provide feelings of security?
- Behavioral science – higher expectations and dopamine. 2 day shipping is now the expectation. Five years ago, you would not have expected to receive a package in 5 days.
- We have three groupings of age cohorts represented. The far left is younger and the light blue bar represents the importance of a mobile app The far right, the older cohort is more concerned with the location of branches as represented in the dark blue. Stop and thinkl for a minute what will this mean for a bank just five short years from now? Look at the second bar from the left “Ability to get financial advice” In five years, not only will the younger cohort be entering their 40’s, they also will be in the beginnings of what is predicted to be the largest wealth transfer in the history of the U.S.
- Remember that age cohort who are going to be the biggest recipients of wealth transfer? Let’s look at their adoption rates for four core products – Checking savings, borrowing, investments and payments. The farther the bubble to the right, the greater the digital adoption. We’re all on board with payments already. The younger groups will be leading the way for our other core products.
- Once digital products enter the fray, they are here to stay.
- Mobile apps can now direct customers to find and save. What if you were shopping and you scanned all of your products and then walk out of the store. What if your financial app, paid for your goods by choosing the correct method based upon your own personal financial situation and goals. Maybe you are planning a trip? The app would pay with your ff mile card and then transfer half of the payment from your checking account and then half from your line of credit. Then it would pay $10 per day on your line.
- Who wakes up in the morning saying “I can’t wait to get to work so I can do my banking?” Who wakes up looking forward to data entry into quickbooks? Banks have focused on cross-selling a loan, not helping the customer solve cash flow or avoid unnecessary debt.
- What if we were to provide a 45day loan? what would we charge? What if the customer was paying us $50/month for the auto CFO service? We have reduced risk by gaining insight into exact support for the cash flow equation. The underwriting is minimal. Instead of waiting for the customer to provide backup and support, it is already in our hands. We need to get in front of a clean whiteboard and start from scratch.
- Why do we leave the small business owner in this state of mind? 44% are worried about credit. Today we leave the motivation to plan ahead and prepare for credit needs totally in the customer’s hands. We wait for them to prepare to engage with us . Meanwhile, they swim in anxiety. Often times, they don’t take action until the need is urgent.
- They have told us that they want cash flow management tools and integration with accounting systems.
- Other players aren’t waiting – here is the requisite Amazon example.
- But it’s not just Amazon
- Once a portfolio of JTBD are identified, Payroll, insurance, legal matters, taxes, vendor management, etc. are all in the broader ecosystem. Can those be brought to bear to the customer with smart partnerships (and APIs) First you have to have a deeper understanding of the customer need. What jobs are they executing each day. Next slide
- How will my customer choose to communicate with me in the future? Will they even pick up the phone? 5 years ago, you would not have imagined talking into a cylinder in your kitchen to find out your account balance and then transfer money (after you turned the lights on with your voice).
- Look at this one stat – 70% of consumers are willing to provide more financial info to a lender by exposing data if in increases their chances for loan approval. Don’t assume that you know the answer to where the consumer will be willing to go.
- WHAT’S THIS CONFERENCE ABOUT? This is a conference that focuses on the front of the bank – how we interact with customers and how to make those relationships stronger. WHAT SORT OF TOPICS WILL IT COVER? With topics like leadership, company culture and purpose, and customer relationships on the agenda, you’ll learn how you can sell more by selling less. Specifically, subjects include: How to manage your sales processes How to foster customer relationships while still ensuring profitability How to put systems in place that help you attract the best customers. WHO ELSE WILL BE THERE? The networking aspect is really key. We’re going to have our star customers there, so it’s a chance to pick the brains of people who are facing the same sort of challenges that you face.