Community Banking Challenge: Anticipating Problems

Although every bank prides itself on customer service, no bank is perfect. Our Benchmarks gather millions of customer reviews across thousands of banks, and on average, 12% percent of banking customers tell us they have encountered a serious issue or mistake with their bank within the past six months. Some banks are higher, and some are lower. None are zero.

The good news is that reacting to and fixing problems is where community banks often excel. The lack of hierarchy allow staff at community banks to address concerns and remedy problems quickly. And our surveys show that, on average, 79% of those customers said that when they told the bank about the issue, they are happy with how the bank resolved the problem. Some banks are better, with several in the Northeast US approaching 95%, while several others are well below 50%. (Please contact CES if you want to know how your customers rated you).

While that is a pretty good resolution rate, resolution is only possible if the customer tells you about the problem.  Unfortunately, not all of them do.

Banks are not always aware of mistakes.

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Community Banks: Big Bank Customers Are Waiting for Your Excellent Customer Service

One of the biggest myths out there is that community banks are always better at customer service than big banks. While this may be true in aggregate across the totality of the US, no community bank that I know of is competing on that level.  Every community bank competes on the local level, and the reality is that in over 75% of local markets that we cover in the Northeast, at least one big bank ranks in the top three in customer service. That means that in the vast majority of markets, community banks cannot say to local prospects that small banks always outshine the big guys.

Community banks may be more personal, more involved in the community, and more likely to know the people who bank with them, but if they’re not delivering on key service areas, they will struggle to compete with big banks in their community. In our latest New York benchmarks, more than 40 community banks across the state were rated lower in customer service by their own customers than any of the big banks in their market. So much for the service advantage.

Yet delivering on customer service should be low-hanging fruit for community banks as a way to compete with and take customers from the big banks, so if your community bank or credit union is getting bad marks on customer service, it’s an easy place to make rapid changes and retain the customers you have and attract new ones away from the big banks. Start with these three areas:

Improve Customer Service with Better Training

Employees who are knowledgeable about your bank’s products and services make banking customers feel confident that they are putting their money in good hands. Hire the best talent for your bank. You can teach banking, you cannot teach attitude or a true desire to help customers. Once you hire the right people, make sure your employees can answer questions, provide insight, and make recommendations that make sense for your customers, beyond just which checking account they should open. This sounds obvious, but both big and small banks often are not up to the task. In our latest survey, 38% of banked adults said their bank was not proactive enough in offering solutions. Customers are asking to be cross sold more! 

Improve Customer Service with Better Communication 

Not only do your customers and potential customers need to know that you’re capable of meeting all of their banking needs, but they need to know that you offer other financial services as well. From mortgages to retirement accounts, make sure your customers know you are more than just a place to have a Christmas savings account. In our latest survey, only about 50% of bank customers concentrate most of the banking with one bank, even though the vast majority say they want to consolidate. The two top reasons customers gave for not giving their primary bank all of their business were:

  • “I did not know they offered other products” and
  • “They never asked me.”

In several cases, well-meaning community banks were missing out on potential 25%-35% growth rates, simply by not being as proactive as their own customers were wanting.

All banks also need to make sure communications are effective in letting your target market know about your community involvement – one of the ways community banks and credit unions are able to set themselves apart from big banks. This is especially important in the commercial space since community involvement is a strong driver of consideration.

Improve Customer Service with Better Technology 

Being small and local doesn’t mean you can get away with not having the latest and greatest technology to make your banking services easy to access for your customers. From mobile banking to online check deposits, customers expect you to have all the conveniences of a big bank – and when you do, it levels the playing field and gives you an opportunity to draw dissatisfied customers away from big banks. Just because you are small does not mean you cannot compete in technology. Don’t believe it? Ask your customers. We did, and found that in almost every county in the Northeast, at least one community bank ranks in the top 3 in technology. Those community banks know that the key is not just the tools, but the servicing and training around the tools.

There is enormous opportunity to improve your ability to grow your community bank or credit union, but it starts with knowing what existing customers and prospects think of you compared to your competitors. Take action now and request our benchmark study for your region.

Ask The Right Questions

For Staffing Issues, The Right Questions Yield Surprising Insights

As bank executives think about ways for their business to survive and thrive, they are beginning to take a hard look at staffing – both hiring and retaining the best people for their banks.

But before they can do that, they need to be asking the right questions: What are tomorrow’s staffing needs and why? Customer service choices are growing rapidly as we apply more uses for technology to include the world of AI and robotics.

And once you’ve asked and answered those questions, do you have access to the customer data and information that will point you in the right direction? Perhaps this article will provide an approach to assist you in finding the right questions leading to the right answers for your situation.

First, a look at where we are; then perhaps rethink where you need to go.

As management guru Peter Drucker phrased it, “quality in a service or product is not what you put into it; it is what the customer gets out of it.”

Here are some of the findings from the most recent Customer Experience Solutions research in Connecticut.

The Purpose of Customer Service

Ninety percent of customers surveyed said the staff at their bank is friendly and treats them with respect. However, 29 percent said they sometimes have to ask more than one person to solve an issue and 20 percent said that staff sometimes can’t solve the issue at all. So it’s no wonder that despite 95 percent saying the staff is friendly, 11 percent said they are about to switch banks.

Personal Staff Interactions

More than a quarter of respondents said the staff is not proactive enough in suggesting solutions to meet their needs, but you need to balance that against being pushy: 11 percent say the staff at their bank is too pushy (because they don’t know what the customer needs).

For example, there’s one community bank in Fairfield County that has the balance correct: 89 percent of respondents said that bank’s staff are proactive; only 4 percent said they are pushy. And there’s one mega bank that has it exactly wrong: 52 percent of their customers said they are pushy and only 21 percent said they are proactive.

It’s little wonder that almost 30 percent of the mega bank customers are currently looking to switch banks, while less than 5 percent of the community banks’ customers say the same.

‘How Can I Help You?’

Self-directed interactions and call centers are a very important element of customer service. Over 40 percent of customers said they preferred to solve problems using the phone rather than online or by using the mobile app. A poorly performing call center can be a major driver of dissatisfaction and defection from a bank.

Connecticut banks in general do not perform well in this category. Overall, customers are more satisfied with service online and through mobile apps than the service they get over the phone – which is their preferred method of communicating with their banks.

Some banks are getting it right and increasing customer loyalty with top-notch call centers. Some are not, with one community bank achieving a very rare negative score – meaning that customers would be better off just accepting the problem than calling in to try to fix it!

There is also some variance even within the same bank: one bank had the third highest rating in one county and the single lowest rating in another.

Retail vs. Commercial

Fairfield County banks provide the highest average levels of customer service for retail customers; New London County banks provide the highest levels for commercial customers. Customer service ratings are higher for community banks as a whole, but in six of Connecticut’s eight counties, at least one of the big banks ranks in the top three. So community banks certainly do not have a monopoly on service.

Connecticut banks do better at serving retail customers than serving commercial customers, according to those customers themselves. We suggest staffing needs – the types of positions and the numbers of them – be aligned with the bank’s goals and strategies to acquire and retain customers. It helps to know as much as possible about your customers and your prospects.

In assessing your human resources and technology capabilities consider Peter Drucker’s advice about focusing on the customer. The latest tech may be exciting, and it may even be fun talking to a robot. At the end of the day, did you solve the customer’s problem per their expectations and use of their resources (time and money; physical and mental)? Follow the money by following your customers.

Originally published on The Commercial Record