On September 29th, 2011, Bank of America disclosed plans to collect a fee for standard checking accounts. The fee sparked an outcry among Americans threatening to close their bank accounts and move to other institutions.
Americans rallied together for November 5th, Bank Transfer Day (BTD), as an opportune time to make the switch. Community banks and credit unions capitalized by encouraging customers to move their money to the institutions that don’t charge such fees.
In the final week of October leading up to BTD, eight major financial institutions one-by-one decided not to charge debit card fees, falling to the threats made by consumers.
We’ve seen the power of Americans rallying together to stand up and protect their financial needs. When consumers stand as one, even some of the most powerful corporations in the world will listen.
Consumers stood as one on Bank Transfer Day. In the aftermath, Credit Unions picked up 650,000 new customers – more than all of 2010 combined – totaling $4.5 billion in deposits. Big banks stand to lose more. Their reputation is so thoroughly tarnished among the masses that the ten biggest US banks could collectively lose $185 billion in deposits over the next year if they don’t do more to please their customers.
A Changing World: Consumers Gain Control
Consumers are connected and better informed more so than ever before. Advances in technology are driving new capabilities and new ways of delivering services, changing how we communicate with one another and through what platforms and devices.
The rise of smartphone has created the expectations that almost all services can be managed and delivered regardless of location. With ubiquitous service availability, we’re seeing apps more and more bringing us together to provide advice, motivation, resources, and support to one another. Our shopping is becoming more connected, with platforms such as Pinterest that create conversations surroundings stuff consumers love, Fab.com that attract people of a similar lifestyle, or Sneakerpedia where people can share their passion for shoes. We’re becoming more connected to the physical world around us, through augmented reality, QR codes, and Stickybits. Our health is becoming more connected, with sophisticated monitoring devices such as Jawbone’s Up wristband letting consumers monitor and share their daily activities. Our television is becoming more connected, with co-viewing apps bringing an added layer of social activity through smartphone and tablet. In the age of the algorithm, we’re more informed to what others like, follow, read, watch, and whom we’re interacting with. We can even learn what our best friend wants for Christmas through Walmart’s Shoppycat app.
In the near future, our banking services will become more connected, providing consumer even more control. We’re seeing glimmers of this already, with American Express’ social currency consumers are sharing purchases, with Movenbank and Credit Sesame people are encouraged to share their financial personality profile, with PayDivvy consumers can share meals and travel expenses, with Holvi consumers can share checking accounts, and with Prosper we can bring together people who want to invest with those who want to borrow.
As financial services consumers become more connected and better informed, the greater the pendulum will shift, with traditional financial service providers holding less and less power. Americans will expect greater control with the financial services products and services they purchase and will demand to be a part of the decision process. From changes to the private-side transactional banking experiences to fees, financial service institutions must listen for how consumers will respond.
If banks don’t listen, consumers will begin taking their business to a host of newcomers in the financial services space providing simpler and more transparent personal financial management and bank services.
Industry in a State of Transition: Opportunity in 2012
Now is as good a time as ever to reinvent the industry. In 2012 and beyond, traditional banks will be competing with newcomers such as Simple, Betterment, and Personal Capital for mindshare over customers in banking, investment and advisory services. A host of virtual banks – PFM and saving specialists, prepaid and payment solution providers, and investment managers – are distancing themselves from their traditional counterparts in terms of branding and offering innovative solutions. They have positioned themselves as a new breed of banking in a market where consumers are fed up with the “business as usual” of traditional banks.
How to Win Back Their Trust: Harness the Voice of the Customer
Brand loyalty is won in financial services when customers believe firms have their best interest at heart. In a new era of banking where consumers have control, banks must win back trust to stay relevant.
In an era where customers hold more power, like any healthy relationship, winning back trust means banks must begin to communicate with customers differently:
•Be supportive.
Recognize when the masses are upset. Be understanding when they express concerns over changes to products and services. Take concerns seriously, and address them openly.
•Listen.
Find creative and innovative ways to connect with customers. Allow them opportunities to share ideas about your brands’ products and services.
•Be available, direct and helpful.
Bring customer service to the forefront of key digital touchpoints, simplify product offerings, and provide more contextual advice and guidance. Customers will tell their friends if they have a positive brand experiences.
•Do Good.
Leverage the power of the masses to spread more goodwill. Brands that make giving back a major part of their business model are being praised.
