Posts Tagged ‘GonzoBanker’

Too Much Like Right

May 17, 2010 3 comments

Carol Benson’s post, Memo to Bankers: A Customer is Someone Who Pays You, on PaymentsViews brings up some interesting points.  Here’s an exerpt:

I think the underlying problem that banks are dealing with is that too much of their retail customer revenue is hidden – that is, their customers don’t know they are paying it.  It seems to me that you really don’t have a customer unless the customer is making a conscious decision to pay you.  Otherwise, you have some other kind of business – sort of like a trading business.  There’s nothing wrong with that as a business – the problem is that if you fool yourself that your customer is “buying” your business, then your management framework is going to get seriously out of line.

Katherine Burger’s post, New York City’s Underbanked Population: Growing and Mistrustful of Banks, on Bank Systems and Technology could be considered as the other side of the customer coin.  Here’s an excerpt from that article:

According to the study, concern about bank fees such as overdraft or monthly fees, is the main reason unbanked residents do not use banks or credit unions. This is a somewhat ironic development, considering that, according to the study, residents in just two New York City neighborhoods ” Jamaica, Queens, and the Melrose section of the Bronx — spent more than $19 million a year on check-cashing fees. But speakers at the forum emphasized just how extensive distrust of traditional financial institutions continues to be.

Now, let’s look at these two posts for a moment.  One one hand, you have  “hidden income” because customers don’t realize how they’re helping their bank/credit union make money.  On the other hand, you have potential customers that avoid banks/credit unions because of this hidden income.  Customers that go to check cashing or pay day lender businesses aren’t upset by the fees because they know what they’re paying upfront.  Banks and credit unions list their fees in handy-dandy brochures and disclosures.

What’s interesting is, the conclusion in the BS&T post is offering an account that “for the first two years, includes no overdraft fees, no monthly fees (provided minimum balances are met), minimum balance requirements of $25 or less, and an ATM card”.  Is it me, or did they just completely miss the point?  And why the heck do they only offer an ATM card and not a debit card?  There is no overdraft protection, so the transaction would be declined.  Customers, potential or current, don’t particularly want to deal with the whole “hidden fees” that are attached to accounts.  There’s a reason Congress is making overdraft opt-in now.

What exactly is wrong with charging fees for services instead of “whoops fees” anyway?  The alternative lending industry seems to be making money hand over fist, all because they post their fees and services front and center when you walk in the door.  I wonder how much the banking industry would change if they posted their fees up front and actually charged for their services?  None of this silly fee schedule only in the brochure/disclosure stuff.  No one reads that stuff anyways, and customer complaints about fees prove that.

I never thought I’d say it, but I miss the days before free checking.  Granted, I hated paying a monthly fee for my checking account, but it made me a better manager of my money.  I also made sure I did the correct things in order to avoid that fee.

So maybe we need to get back to the days of charging a monthly fee and doing like Bank of America and drop overdraft protection altogether.  Terence Roche has a great post on Gonzobanker about retail account analysis.  I think this is the direction we need to be heading in.  Being upfront and charging for services is one of the best ways a bank/credit union can survive this current crisis.  But then, that’s too much like right.

Picture by loreshdw

BarCampBankCharleston: Recap

March 1, 2010 1 comment

Well, we finally pulled BarCampBankCharleston off.  Although there were only six of us in attendance, I believe everyone felt that the event was very rewarding.

Jared Smith (@jaredwsmith) from ReadWriteWeb kicked off the first session with a talk about social media.  Because it was mostly First Federal employees at the event, he geared his talk towards how we used social media.

Since we already have a Facebook page and twitter account (@firstfederal), he gave us some ideas about how we could use these sites for lead generation.  One example was using geo-targeting in advanced search on Twitter to target prospective customers.  Another was using Collecta for real-time search about any posts about our bank.

He seemed impressed with what we’re currently doing.  One thing he mentioned was not sending private information through social media.  He said that personally, he would feel very uncomfortable contacting his bank with confidential information through such a channel.

Next, Adrienne Cobbs, from First Federal, gave a presentation on business continuity plans.  Some things she talked about were recovery and resumption tasks for critical business processes, alternative facilities and establishing reliable communications with employees and customers.

She mentioned that continually testing your plan was critical.  A disaster is a poor time to find out that your offsite changed the tape backups and yours’ are no longer compatible or the phone system only has one working line.

Using social media was also brought up as a way to keep employees and customers informed.  For instance, if our website was down, we could post information on our Facebook page and use Yammer to get information to employees.  Keeping the media informed was also a key point.

Finally, Quintin Sykes (@bank_daddy) from Cornerstone Advisors spoke about trends in the banking industry.  One thing that stood out to me was the payments space.  Phone manufacturers seem to be holding off on NFC until the merchants have their systems in place.  But the merchants are waiting until customers have devices that can use NFC.  Classic chicken and egg scenario.  Also, there are many vendors but universal standards haven’t been set yet.

Another thing was the jury is still out on the benefits of PFM.  Although I’ve heard that it helps drive up retention rates, hard numbers haven’t been issued.  So if banks can’t quantify a ROI, they will be reluctant to jump into offering the product.  I plan to discuss my thoughts about this in a later post.

Overall, I think BarCampBank was a success and I look forward to helping organize another one next year.  We’ll really have to get the word out and let people know that collaboration is a good thing.  Just knowing about new tools and what the future for the industry holds is valuable stuff that we can all use.  I’d also like to thank our sponsors: ECPI College of Technology, ClairMail and Cornerstone Advisors. See you next year.