Asset Based Lending
Chief Investment Officer
Commercial Loan Automation
banking gen y - one woman's view
As usual I received many comments on my last article. Below is a synopsis of the messages I hear, which are all valuable!
- On shrinking:
- Recognize that every downturn will pass, there will be a tomorrow, so don't throw the baby out with the bath water in a reactionary response. I would add to that though -
- Pick who you are, not "who you are today in response to current cycles"
- Do not get into businesses that are not consistent with who you are
- Do not exit businesses simply because of "thin" margins. products & businesses are a gateway to organic customer growth and are sticky - in other words "don't forget why you entered the swamp just because the water gets a little higher"
- Margins change with differing cycles, staying in a business while others exit can mean fatter margins when the cycle turns and you are no longer competing with everyone else.
- Exiting businesses lightly creates perceptive customer, market & employee opinions which may not be favorable, use caution.
- In lean times focus on cost efficiency ("efficiency", not simply cost take-out) - this will increase your margins but position you very nicely to be very profitable when the cycle turns
- If exiting products or businesses be quick and decisive, communicate ahead of it and very crisply
- Be contrarian - focus on cost efficiency initiatives generally during up-cycles and revenue/income generation activities in down cycles. This positions your business to remain profitable during tougher times and be more profitable in good times. Over the years I've seen far too many banks where during good times they do not focus on becoming cost efficient and making tough decisions. Rather they "let the good times roll and avoid the tough decisions" when they can afford to make them. Then when the cycles turn they have to slash and burn to get there cost efficiency where they need or want it. They end up make very short term and tactical decisions under duress - not the breeding ground for good and thoughtful decisioning. When the cycle turns around they are already behind the eight ball and now are trying to focus on revenue generating ideas with a demoralized team. Pairing the normal cyclical nature of our business to optimize timing of decisioning and focus is a smart move, albeit a difficult one (it's much easier to affect difficult change under emergency conditions). Just read Alan Greenberg's book, "Memos From The Chairman" - he said it very eloquently and amusingly too.
Liat recently wrote an article that I thought was so spot on regarding Gen Y's banking needs and retention aspects that, although she is not statistically significant, I'm featuring her writings in the column itself. I believe she is representative of millions of young people who are our banking business' future.
Paul is 21 tomorrow. How time flies!!!
Article synopsis: Retaining Gen Y customers requires a delicate balance of robust online presence and functionality combined with an effective human touch -- all at a distance.
Banking Gen Y - One Woman's View
I am currently in the process of moving from my dorm room to an apartment. I am, of course, totally excited - a new place, my own room, a bigger kitchen, my first new bed... oh yeah, and bills.
See, my bank is currently Wells Fargo, and I love them. I'm on hold with them right now and I still love them. Whenever I call and no matter what for, they're always eminently helpful, completely courteous, and even suggest other services to me. Even though I know they're cross-selling because it increases their bottom line (thanks, Mom!) I still appreciate it. Whoever is helping me always asks if I need anything else, and they never make me feel like I'm annoying them by calling, something that definitely cannot be said for all companies.
So, even though they're located halfway across the country with no branches in my area so I have to order a bunch of checks so I have access to my funds-thus being on hold-I really don't want to close my account with them. I opened up another checking account with a local bank, and, well, I felt kind of bad. Like I was betraying Wells Fargo or something, despite the fact that I'm going to keep both checking accounts open and not get a credit card with my new bank.
If what I've gleaned from my mother's articles means anything, this is rather rare. I mean, customer retention is a pretty big deal right? So I thought I might put down (for my own sake as well; maybe then I can get over my guilt!) why I feel the way I do about my bank.
Practically everything is online: This is why it's not so bad that Wells lives in California. I can check my account balance, pay my bills, transfer money, etc., all from the relative comfort of my dorm room. This would be awesome even if I was still living on the West Coast, because goodness knows going to the bank branch is just way too much trouble.
What I can't accomplish online, I can generally do by phone: Whenever I have problems, like when I tried to place an order for checks online and couldn't, I just call. The person on the other end can usually help me out-in my check situation, the banker just ordered the checks for me.
Excellent customer service: On the occasion that I do come into contact with a person, as during my phone calls, they are unfailingly polite. I know they have a script, and I don't care; they're incredibly nice, they call me by my last name (Ms. Bird-and that's a rare thing for a college student to hear) and they make me feel like they actually care about whether what I need gets done. To be frank, it doesn't matter whether they actually do; as long as they make an effort, I'm convinced.
They're my first bank: Sort of sentimental, but also practical. I learned how to use their systems and now I don't want to figure out which number to call or how to navigate new online interfaces or whatever. I want, like everyone, to stick with what I know.
Actual instances where they've intervened for me: One of the biggest reasons I'm so attached to Wells is that they have proven they're in my corner. Somebody managed to get a hold of my information, and they were spending my money in Minnesota. Wells Fargo called my house multiple times, to the point that my parents were getting really irritated. Still, the bank persisted, such that my mom finally got me on the phone by sheer relentlessness. I called Wells Fargo, relatively unconcerned, because I had been in Boston that weekend and assumed those were the unfamiliar charges. They then informed me immediately of the amount spent, where, and on what, so that I could (sort of) freak out and tell them it definitely wasn't me. They then cancelled all the charges, except one that slipped through, which they reimbursed me for immediately. It was the smoothest identity theft recovery ever, and my loyalty was won.
So, here I am, sitting in the Midwest, waiting for my checks.
I still think it's worth it.