How retail banking brands can improve customer experience

1. 1jackmorton.com These are challenging times to be a retail banker. Perhaps the following rings true. You’ve weathered the meltdown of 2008 –2009, but consumer trust in financial institutions remains shaken. You’ve invested in technology, but digital start-ups are continually nudging into your traditional banking spaces, unleashing wave after wave of enticing new products and services. With 78% of consumers saying they would bank with a tech firm like Google, it’s difficult to know who your competitors will be, let alone how to beat them. You’ve attempted to attract Millennials to your offering, but the results haven’t been spectacular. These crucial consumers remain elusive and seem to have ever-higher, ever-shifting expectations. Challenging times indeed. But therein lies bountiful opportunities. Opportunities to re-focus, change gears, find partners and connect with new and existing customers in ways that elevate their experience of what banking can and should be. The kind of extraordinary experience that creates loyal fans, engaged employees and thriving revenue streams. Read on to know what we’re seeing and exploring with our financial services clients around the globe. Elevating experience: Retail banking Contributors: Jon Paul Potts, Nic Dahl, Mary Koerner & Peter Sun

2. 2jackmorton.com Growing your business requires winning over Millennials – the largest demographic cohort in American history and comprising about 2 billion people worldwide. This generation, born between 1981 and 1997, are now the adults disrupting every industry, including banking. These always-online digital natives grew up expect- ing instant answers to their every need. Smart banks have responded with mobile solutions that deliver 24/7. More than half of Millennials are completely or mostly reliant on a mobile banking app and 43% of Millennials have signed up for SMS alerts from their banks. However, even as their financial needs grow more complex – with marriages, children, and home purchases entering the picture – Millennials do not accept having to navigate complexity with their actual banking experience. Fast, paperless and easy are their baseline requirements. No matter the task, their refrain is the same: Why can’t I do this on my smartphone? Creating a different kind of bank for Millennials

3. 3jackmorton.com Increasingly, Millennials can and do more — via non-traditional financial technology services. • Rocket Mortgage from Quicken Loans lets a customer complete an entire mortgage applica- tion in minutes online via an app that accepts smartphone photos of documentation. • Peer-to-peer payments happen via Venmo, PayPal, Square and even Facebook Messenger, bringing together social media and banking. • Student loan refinancing as well as personal loans and mortgages are on offer with SoFi, which dubs itself “a modern finance company” – not a bank. So where do these fresh takes on pe- rennial financial service needs come from? Companies with cultures devoted to constant innovation and ruthless simplicity. As retail bankers, you must up your innovation game across your organization if you want to capture and keep the hearts and minds of Millennials. It can be done. We’ve seen banks transform their results by committing to a culture that rewards efforts at simplifying every aspect of the business –making it easier, faster and more enjoyable to use, online and off, 24/7.

4. 4jackmorton.com As this generational shift has unleashed these huge technological changes and concomitant competition, some brick-and-mortar banking powerhouses have recently decided to join forces with fintech rather than compete with them. For example: • JP Morgan Chase partnered with On Deck Capi- tal to offer new small business lending solutions. • Bank of America works with Cardlytics, a company with access to 120 million consumers’ shopping information, to offer BankAmeriDeals – personalized discounts based on a customer’s previous purchases. These partnerships benefit both sides. Retail banks are leveraging fintech’s nimbleness and qualities that attract younger and/or previously “unbanked” consumers, while fintech gains instant scalability based on banks’ customer base and market leadership. Finding an aligned partner can be a way to kick-start needed changes to your services without having to reinvent your entire approach in one go. You must still work to cultivate a culture of simplicity and innovation, but it’s an easier transition when there are agile role models from fintech within your company’s “family.” Partnering with fintech pays

5. 5jackmorton.com Now, as much as digital-based banking grabs head- lines, most customers still love their traditional branch. In fact, easy access to a brick-and- mortar branch is the third most important driver of brand loyalty in retail banking. And nearly 60% of traditional banking products are still being sold in branches. The big questions are: • What kind of differentiating experience are you providing when customers visit? • Does every employee understand her/his role in providing that optimal experience? • Do your people and your banking technology complement each other? • Do frontline staffers have the knowledge (and management’s encouragement) to deliver what individual customers need? Energizing branch evolution via engaged employees

6. 6jackmorton.com More and more banks are prioritizing employee engagement to fuel a customer-centric experience. • Umpqua Bank – With 350 branches in the west- ern United States, Umpqua is routinely lauded as an exemplar of retail banking done right. Umpqua recruits people based on how well they represent its customer service ethos, and hires those who can be branch “generalists” – capable of discussing an array of products and services as well as troubleshooting the banking app. Knowledge, niceness and digital skills are key to connecting with modern customers, espe- cially Millennials. • Commonwealth Bank of Australia – A multi- national with branches across Australia, New Zealand, Asia, the UK and USA – repeatedly achieves employee-satisfaction rates topping 80% among its 52,000 staff by engaging employees around a unifying mission for customer satisfaction, diversity and inclusion. The team has innovated its way to becoming Australia’s largest mortgage lender and continues to expand their goals to more markets and product categories. • Shinhan Bank – South Korea’s largest retail bank attracted over 400,000 new customers in 2016, while growing retail deposits by 7.7% and retail assets by 8.7%. How? By using data analytics to refine its customer segmentation pro- gram by occupations and life-stage groups, and then empowering employees to super-serve these customers’ distinctive needs. Tomorrow’s market leaders will be those who seamlessly bring both technology and talented people to the branch experience. A recent Accenture study of consumers revealed: • 64% say it’s important for branches to have systems (tablets, screens) where they can access their online account while interacting with bank staff. • 66% say it’s important to have advanced ATMs in branches – machines that can help them open accounts, start loans, pay bills, even print a new plastic debit card – with capable staff nearby to assist if needed. Now’s the time to take a hard look at improving your brand’s branch experience from every angle. Because when it comes to today’s sophisticated consumers, every touch-point matters and any disappoint- ment can send them “swiping left” on your brand.

7. 7jackmorton.com Companies like Amazon and Netflix have raised consumer expectations by providing seamless, personalized and enjoyable brand experiences. Now every player in nearly every industry has to be as good (or better) at delivering hassle-free and entertaining customer journeys, including banking. Some banks are responding with advanced commu- nication services, like being able to text a customer service center or video chat with a relationship banker. Others are exploring new possibilities in gamification and Augmented Reality (AR). According to a 2016 study by Citi in the United States, the AR headset market will achieve explosive growth in the next 5 to10 years, with much of that growth happening at the expense of the smartphone market. How AR’s penetration will transform com- merce as well as entertainment is an open question. What’s not up for debate is the need to pay attention and prepare for the shift before it happens. If recent history is any guide, first-movers often lock in market share and remain ahead of the pack for years. You want to be ready – not playing catch up – when it comes to using the same technologies your customers are. Staying in step with the savvy customer

8. 8jackmorton.com We started this discussion by noting the uphill climb retail bankers have had in restoring consumer trust in financial institutions since the 2008–2009 crisis. In a 2016 Gallup Poll of Americans, 30% said they would rate the honesty and ethical standards of bankers as “very low/low.” Trust is no longer a given; it must be earned – or earned back. The good news is, bankers have an opportunity to adopt the practices of a much more esteemed profession, teaching; and thereby demonstrate good will and a spirit worthy of customer confidence. Innumeracy, or mathematical illiteracy, is rampant among consumers, including those with college degrees. Many people have never been taught basic financial principles, or understand how to navigate the endless choices available for everything from a savings account to a reverse mortgage during one’s retirement. Who better than a local bank to help de- mystify finance and teach customers how to reach their goals? North American TD Bank has a growing commitment to providing financial literacy education to children and adults, regardless of whether they’re current customers yet. Among their programs are: • K-12 personal finance for students – classroom lessons taught by TD Bank instructors. • Small business workshops – helping entrepre- neurs learn about preparing a business plan, perform cash flow analysis among other topics as well as matching them with a mentor through a partnership with SCORE (Service Corps of Retired Executives Association). • General education seminars – spanning crucial topics such as building and maintaining great credit, protecting one’s identity from theft and breaking the paycheck-to-paycheck cycle. What can your bank teach your community? How can your bankers become the go-to teachers and coaches that customers need? Extending a helping hand and showing people how to improve their lives can only chip away at distrust, and replace it with a valuable, expanding relationship. Building trust (and brand loyalty)

9. 9jackmorton.com The challenges facing retail banking won’t disappear by ignoring them. As we’ve seen, smart bankers are committing to elevating their brand experience in myriad ways. Engaging employees to take ownership of their business as a unified force, energized by a culture of innovation and simplicity. Optimizing the customer experience across every channel and interaction – providing a friction- less, easy, fast and pleasing journey with consistency and care. Integrating technology and partnering with fintech wherever it supports the mission of superior products and service to customers. Building trust through the free exchange of information and instruction to help customers drive their own financial destiny. And being ever-attentive to preparing for the next wave of change that’s coming, because there will be more, and then more again. We at Jack Morton have learned to thrive in this per- petual motion machine that is 21st century business. The secret? Keep moving. Let’s start a conversation about how to move your retail bank toward an extraordinary brand experience and ever-greater success. Takeaways Let’s talk. Contact Peter Sun VP, Brand Marketing peter_sun@jackmorton.com Follow us Linkedin Twitter Blog