April 7th, 2011
Banks Aren’t So Bad
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Banks have had it tough lately. Many have felt the very real sting of failure. In 2010, over 150 banks closed, and this year we’re up to 26 failed banks, according to the FDIC’s regularly updated list.
Other banks have felt a different kind of sting—that of rejection. In February MSNBC reported that only 43% of Americans trust banks. That’s higher than other financial institutions like big corporations and the stock market, but it still communicates that over half of us don’t trust banks with our money.
And it just keeps getting worse. Now with savings and investment account interest rates at a low, giving banks your money through a short-term savings account doesn’t seem worthwhile. And the debit card swipe fees battle may cause banks to pile on different fees, this time for the consumer.
But banks aren’t all bad. They’re trying to combat the negative buzz, although they may have a long way to go. Banks want to increase customer loyalty and retain business, and there are several approaches they’re taking to do so. Here are a few steps banks are taking to keep current customers and gain new ones.
- Financial education
- More availability
- Doing good
- Future innovations
The Financial Literacy Month blog reports that over two in five Americans grade themselves a C, D, or F when it comes to personal finance knowledge. And 76% know that they can benefit from the advice of a financial professional.
Banks have clued in on the fact that people need educating, and they’re finding ways to help. ING Direct’s “We The Savers” blog asks readers to sign a “Declaration of Financial Independence” in which they pledge to live within their means and defend good credit, among other things. The blog also offers up financial advice, tips, and stories from customers.
Other banks are taking their educations programs directly to the community. We’ve mentioned before Bank of the West’s student financial education program. “Mad About Money” encourages youths to learn the importance of saving, budgeting, and investing through humorous improvisations performed in schools by professional actors. Bank of the West is starting young to educate those who could be future customers.
Another way banks are seeking to make their businesses more likeable is by becoming more available to customers. Pilgrim Bank, based in Pennsylvania, has branches that stay open until 7pm some weekdays, boasting to have “the latest banking hours in the country.” Bank of Blue Valley, a regional bank in Kansas, also offers extended hours to their customers. And many larger banking institutions offer weekend hours.
Banks, like most businesses, want to be seen as charitable and empathetic. Wells Fargo customers recently raised $1 million for Japan disaster relief efforts just by donating through the bank’s ATMs.
Other banks encourage their employees to do charitable work. For instance, Bank of Oklahoma has a “Community Commitment” statement on its website. The bank not only partners with nonprofits, but also supports and encourages employee volunteerism in the community.
Banks are also getting more technologically savvy. Bank of America is testing out new video-enabled ATMs where customers can talk to remote tellers. It’s an indicator that there will be—and already are—fewer Bank of America branches countrywide, but it also indicates a move toward being on the forefront of technology. And it could make ATM transactions more efficient.
Other banking institutions are hoping to change their brand to be more in line with technology giants. Citibank has started launching new flagship “Smart Banking” branches in major metropolitan centers around the world, like Singapore, cities in Japan, Hong Kong, and, in December of last year, New York. Eight Inc., the architectural firm responsible for the Apple Stores, is behind the design, incorporating the clean lines and digital interactive spaces Apple is known for. Citi hopes the flagships will convey a consumer-centric type of banking that’s innovative and dynamic.
Bottom Line: All of these innovations could make you like your bank more, but it’s still yet to be seen. And with more regulations on the horizon, more banking fees are a possibility. These strategies shouldn’t convince you to bank somewhere. Remember that the ultimate goal of banks is to build and retain their money-making business. Find a bank with fewer fees, honest practices, and consumer-centric thinking, not just likeable strategies.