KQ Article

Every trip you take happens for a reason. You may be vacationing, traveling for business, road tripping with friends or visiting family. You can travel by car, bus, train, ship or air. You can opt for luxury or economy. Where you end up (the destination) is inextricably tied to how you get there (the journey). I bring this analogy up because the banking industry often tends to forget the customer’s journey.

Here’s what I mean: Banks and credit unions often focus on the products and services customers and members should buy (the destination), without giving much thought to why they should choose one brand over another, what customers need, and how they will use products in their daily lives (the journey).

Destination thinking creeps into our work in subtle ways. An expression I hear frequently from banks and credit unions is, “We’re your one-stop shop.” In other words, it doesn’t matter how you get here, why you need these products, or what you do with them — just get here and start buying stuff.

That’s not the message we intend to send, of course, but it’s the one that sometimes gets through. And it’s emblematic of a broken system that does not understand what customers are thinking and feeling anymore.

Avoiding motion sickness
Destination thinking causes real harm. It saddles customers with inefficient processes and products they aren’t sure they want or need. Imagine getting on a plane, then arriving at your destination only to discover it’s not the same one on your ticket. Pretty infuriating, right? Now imagine the airline telling you it’s all for the best, the issues are really complicated, and when it comes to judging destinations, airlines know better.

This happens in our industry all the time, especially when it comes to new regulations. Customers are told, for example, they should opt into overdraft protection — not because it’s beneficial to them, but rather because the bank needs to comply with Reg-E (while still collecting related fees).

Lack of control over the journey creates trepidation among today’s customers, who have very different expectations than they did pre-recession. They dread requesting a loan, line of credit or mortgage. When they are denied, they are not told why they don’t qualify: “Sorry, official policy.” It’s as if a customer or member is lucky to be considered at all.

This attitude can become a serious problem. While I appreciate both risk management and regulatory compliance, banks and credit unions that deny products or services to customers must have very good reasons for doing so — and be willing to explain why with clarity and transparency. Traditional service models, which often deflect customer questions instead of answering them directly, have got to go.

If financial institutions don’t do this, the inequality of the relationship will encourage customers to leave. Or worse. At the moment, there is at least one large bank struggling with such poor customer relations that it is having to buy up URLs that use its CEO’s name in a less than flattering way. This is the opposite of brand-building. It’s brand destruction.

Finding a better way
Financial institutions need to adapt to these new realities — not only for the sake of profitability, but to protect the brand, assets and revenue. One way to do this is to take the customer’s journey seriously.

When Apple launched the iPad 2 last March, fans camped out all night waiting for the stores to open. This happens because Apple doesn’t have customers, it has fans. It provides compelling journeys that help customers figure out which products will best enhance their lifestyle.

Banks and credit unions can learn a lot from this approach. Apple really knows how to make customers feel great about the product (destination) and the retail experience (journey). If you look at the entire Apple continuum — its products, stores, web presence, packaging, marketing, developer support and customer focus — what you see is a company that understands the destination and the journey are equally important.

For example, customers can engage the brand in a store, or online, or through the App Store on a phone. They have a great experience in every instance. Is your financial institution thinking along similar lines? It should be. New customer attitudes are not a fad. They have permanently altered our industry, even if many institutions haven’t recognized this yet.

Rules of the road
Paying special attention to the journey is becoming increasingly important in light of recent regulatory changes. Are you telling customers and members to fill out forms or change their banking habits so that your institution can achieve compliance? Or are you integrating regulatory compliance into the entire customer experience, with an eye for how new regulations benefit them directly? Are you assuming customers will act the same as they did five years ago? Or are you looking at how customer behaviors have already changed and shaping your approach accordingly?

Ultimately, banks and credit unions need to have systems and processes in place so that compliance occurs automatically and seamlessly, behind the scenes. Regulations should not detour front-line staff away from serving customers. Nor should regulations hijack customer experiences, driving them away from what they really want and need.

Easier said than done, certainly. But banks and credit unions that go the extra mile stand to gain a distinct competitive edge.

_{© 2010 Brett King}