FS Edge

I was speaking with a friend the other day about the proposed financial regulations here in the U.S., including the creation of a Consumer Financial Protection Agency.  Industry opposition to the CFPA brought to mind an incident in high school.

A monitor was hired to patrol the student parking lot before first period and again during lunch hour.  Her job?  To make sure the kids who gathered there didn’t smoke.  The plan caused the kind of uproar you might expect from rebellious teenagers, with the president of the student council likening the monitor to Orwell’s Big Brother.  When council representatives met with the principal to complain (assuring him that of course they didn’t smoke), he asked them, “So what are you worried about, if you’re not doing anything wrong?”  The controversy was quickly forgotten and the monitor became a regular fixture, winning everyone over (the non-smokers, anyway) by handing out free candy on Halloween and Saint Valentine’s Day.

The moral of the story?  Forward-thinking banks and credit unions already cast their relationships with customers and members as a fair and transparent exchange of value; they’re not worried about the creation of an agency meant to clamp down on practices they’ve shunned anyway.  As Bloomberg’s Susan Antilla wrote in her column on January 25, “Among [the CFPA’s] goals, which in some sections read like a treatise against loan-sharking, are to truthfully explain costs, benefits and risks of financial products to consumers and to do it all in plain English.”  In short: that is nothing earth-shattering, nothing that will change the way reputable institutions already do business.

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Today’s post isn’t really Operations related.  In fact it’s not necessarily Financial Services related though it is related to finance…sort of.  It’s really about spending and consumer behavior.  My colleague, Elisa, alerted me to a recent article from Gallup, written by Dennis Jacobe.  The article talks about the “New Normal” when it comes to spending behaviors.

The article is a really interesting read – it’s well written and I enjoyed it a lot.  Also, it pairs nicely with the section on customer preferences in last month’s teleconference, Succeeding as a Head of Operations in 2010.

In the teleconference we mentioned that we’re seeing different generations impacted differently by the economic crisis.  For instance at this point in time of the crisis, Millennials, those born between 1982 and 2001 and are entering college or the workforce for the first time, are considered economically formative – they’re forming their spending habits.  Think about the impact that the last year or two has had on this group of young individuals as they’ve formed their spending habits and how the recovery will impact that.  It’s most likely to be different than baby boomers who long ago shaped their spending habits and have encountered multiple recessions.  Read More »

Most recently, I’ve been exploring the Future of Retail Banking (upcoming posts will preview the Council’s predictions). Through my work, I learned that it is important to have a firm understanding of today’s realities in order to gain a window into the future.  One reality that has become increasingly clear to me is that banking is becoming a social right rather than a privilege. Just see a few examples of “banks” that are bringing a social purpose to financial services: Read More »

My favorite topic, after banking that is, is relationships. This secret (or now not-so-secret) interest of mine is probably driven by the fact that I have become the “go-to” girl for relationship advice among my friends.

After years of counseling friends on their romantic relationships, I’m now turning to banks. Yesterday, I asked myself, “If close to half of serious relationships end in divorce, do banks stand a chance of growing lifetime relationships with customers?” How many millions has your bank spent on CRM, technology, or consulting to achieve lifetime relationship profitability?

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As many of you may have read in my bio, I grew up in a developing country, and recently visited my family there over the holidays. While I was there, I had the opportunity to make a pretty simple transaction at a banking institution, and was so annoyed by the time I left I was determined to make my next blog entry about the customer experience.

We’ve written about the customer experience before at the Operations Council. Some of the main conclusions I’ve personally derived from our research are that:

1) Factors critical to the customer experience with a financial institution are very different than factors that drive the experience in other industries we try to model ourselves after. Banks and insurance companies are not hotels!

2) The biggest loyalty gains (as defined by a customer’s intent to continue to do business with, give more business to, and recommend an institution) come from truly understanding customer expectations and meeting those expectations, rather than arbitrarily crafting a strategy to create “customer delight”.

3) The customer experience is about much more than customer service, and factors under Operations’ control, such as processes, forms and systems, just to name a few, have a big impact on that experience.

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I’ve spent the last few weeks reviewing retail banking products launched within the past 12 months, working to identify the key product trends that have emerged.  I’ve selected seven trends to focus on – from educational web sites to transparency to credit– and noted what the best examples look like (more on this later).  Yet, there is one trend I left on the cutting room floor: mobile banking.  Instead, I’m exploring it here in the blogosphere in hopes that someone will let me know if I should create trend number 8.

Sure, everyone keeps saying that mobile banking is going to be huge.  In fact, just this week American Banker told us that 2009 marked a turning point for mobile banking and that 2010 will be the year when mobile banking gains real acceptance.  However, many of the executives I speak with still aren’t sure how much to invest in mobile banking, and neither am I. So, when I finally upgraded my ancient cell phone to a smart phone, I decided to see what all the hubbub was about:

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I took a moment over the holidays to reflect on my conversations with members during the last few months of 2009.  It dawned on me that, inevitably, a majority of conversations turned to process improvement and often times, more specifically, Lean.  While I wasn’t all that surprised by the interest in the topic it did get me wondering (I should warn you “wondering” often gets me into trouble)…have we not come close to solving this whole process thing yet?  I know members have been working on it.  I know we at the Operations Council have been working on it.  What’s going on?

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