Jeff Stephens

Customer Expectations in Banking

// August 14th, 2010 // 2 Comments » // Banking, Banking business strategy, Banks, Credit Unions, Decommoditization, Jeff Stephens

Every bank and credit union’s customers/members have expectations–expectations for service, quality and other criteria you must meet.

The question is: who set the customer’s expectations for YOUR bank or credit union?

Did you set those expectations? Or did the industry do it for you?

The industry did. Tradition helped out. And convention sealed the deal. You had nothing to do with it.  Welcome to yet another massive downside of being a commodity financial services provider.

See, when you’re a commodity, you’re selling the same stuff as everyone else, and doing it in just about the same way. So, your customers/members have a point of reference; they have something to compare you to, because there are so many other banks or credit unions doing the same thing, and years of conditioning and experience with your competitors have created those expectations for them.

When you break out of being a commodity, you have no competition–nobody else does what you do. As a result, it’s much harder for customers/members to have expectations, because they’ve never experienced anything like you before: what you provide, or how you do it. They have no point of reference, nothing to compare you to.

When you’re no longer a commodity, you get to set the customer expectations yourself. Wouldn’t that be nice?

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#MoveYourMoney: Not As Good for Banks and Credit Unions As They Think It Is

// July 23rd, 2010 // 14 Comments » // Banking, Banking business strategy, Banks, Brands and Branding, Credit Unions

I suspect this might be a pretty unpopular perspective. I’m not trying to be a downer, rather a realist, entrepreneur and business strategist.

Over the last several months, the “move your money movement” has gotten a lot of attention, thanks to websites like http://moveyourmoney.info. On Twitter you’ll frequently see hashtags like #moveyourmoney and #banklocal.  More and more, I see links posted to articles all over the web talking about how credit unions and community banks are a great alternative to big banks.  Many seem to be hailing this as one of the best things to happen to community banks and credit unions.  Although I’m not studying market share numbers, it does seem rather undeniably true: consumers are moving their money from big banks to smaller, local banks and credit unions.

There’s just one problem. And it’s a big one, rendering this “movement” only mildly useful for any individual bank or credit union.

When a consumer opens an account at your bank or credit union because of #moveyourmoney, they are doing so because they DON’T want an account at a big bank. Furthermore, they’re opening an account at your bank or credit union simply because you are a smaller, local alternative…NOT a big bank.

Do you see the problem? They are not choosing you for who you are…they are choosing you for what you are NOT. And unfortunately, you are just one of thousands of banks and credit unions who are NOT big banks.  (Metaphor/Translation: “Honey, I’m not marrying you because I actually love YOU, you silly goose; I’m marrying you because you are NOT someone I hate…and you are available. Duh.”)

So what does this mean? It means that these new customers and members you’ve just acquired are not necessarily a good fit for you at all (just because they’re a bad fit for Chase doesn’t mean they’re a good fit for Acme Credit Union).  It means they will be just as fickle and transient as your other customers/members; just as price-sensitive and ready to “move their money” again when a better deal comes along.

You see, there’s one simple fact, and there’s unfortunately no way to get around it (not even with a grassroots effort like #moveyourmoney):

Long-term prosperity at your bank or credit union only happens when consumers proactively choose to bank with YOU for who YOU are:  because they feel you are the one and only fit for them, and they refuse to live without you.

The Bottom Line: If you are growing because of the “move your money” effect, you are the random and lucky recipient of a cultural shift outside your control…and you will become keenly aware of just how outside your control it truly is, once the effect starts wearing off. Instead, focus on attracting people who love YOU.

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What is your maximum potential market share?

// July 9th, 2010 // No Comments » // Banking, Banks, Credit Unions, Decommoditization

What is your bank or credit union’s maximum potential market share?  When you allow yourself to operate in a commoditized banking environment, the answer is pretty simple:

Size of market divided by # of competitors = your maximum market share

Unless you break the cycle of commoditization, your financial institution’s market share potential will never stray greatly from this simple calculation.  Download the free Decommoditization Manifesto, Part 1 to begin learning how you can break free from the commodity dynamic and earn yourself a disproportionate market share.

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Free Webinar on Experiential Branding for Banks and Credit Unions

// June 30th, 2010 // No Comments » // Banks, Brands and Branding, Creative Brand Communications, Credit Union, Jeff Stephens, New banking ideas, Presentations

If you didn’t see it over at CBC’s bank marketing blog, I’m going to be hosting a webinar on July 27 at 11 am PST for one hour, covering one of my most popular topics: Experiential Branding for Banks and Credit Unions.  This webinar will be based on the presentations I deliver as a speaker at bank and credit union conferences around the country.  Here’s a brief synopsis:

“Powerful financial brands can be more than seen with the eyes–they are experienced by customers, employees and the community with all five senses. Jeff Stephens will provide an introduction to how banks and credit unions can use experiential brand development philosophies to create engagement and break from the bonds of a commoditized banking industry.”

Here are the details–I hope you will join us:

Tuesday, July 27, 11am PST / 2pm EST
50 minutes; 10 minutes Q&A
Price: Free
Max Attendees: 15

To register, email webinars@creative-brand.com

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Why banking?

// March 19th, 2010 // 4 Comments » // Banking, Banks, Innovation

It’s funny. When people ask me what I do, I tell them I fancy myself as a banking industry innovation entrepreneur.  After a few seconds of furrowed brows and a couple “hmmm’s”, the question is always the same:  ”why banking?” (This is even more pronounced when we’re talking about Creative Brand Communications: “you focus on BANKING? Do you ever think you’ll expand your focus?”)

Since that question I get is so consistent, my answer has become equally so.  I think banking is a great industry to be an entrepreneur in, because:

• There are VERY few real entrepreneurs in banking. There are lots of people who started or own banks, but that doesn’t really make them entrepreneurial necessarily.
• The industry bar is quite low. There’s not a whole lot of real innovation happening.
• Banking is ripe for revolution. Many of the old guys holding the keys to the banking kingdom are very protectionist, doing whatever is possible to resist change.
• Banking is among the most important sectors to the success of our nation. I truly believe that. In a funny way, improving the banking world is an act of patriotism.

If you’re reading this, there’s probably a good chance you’re in banking, too. Why do YOU like it?

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The Difference Between Banks and Credit Unions

// January 29th, 2010 // 11 Comments » // Banking, Banks, Credit Union, Jeff Stephens

I had an interesting thought today, sparked by several tweets, blog posts, and a conversation with a potential client.  It was about the common discussion in our industry:  the differences between banks and credit unions.

We all know, there is indeed a difference.  It’s not that one is inherently better than the other, but there are differences for sure:  legal charters, ownership structures, regulatory differences, etc. There are thousands of websites (like this one from CUNA) with information about how credit unions are different. Still, people don’t widely understand these differences, and frequently make mistakes about them.  Most consumers confuse the two, and the media clearly confuses them routine–they often call credit unions “banks” in news stories.

So here’s the interesting question:

Why is it only credit unions who get pissed about this misunderstanding and confusion between banks and credit unions?

Shouldn’t the banks get just as angry? After all, lumping the two together is a mixup that adds just as much confusion about what banks really are, as it does to what credit unions really are.

Sure, I understand that credit unions are called banks more frequently than banks are called credit unions. But think about it: both banks and credit unions alike have every reason to be aggravated by this continued and frequent mixup. So why don’t we hear more uproar from banks? How come there are no chants about “the bank difference” like there are for “the CU difference”? Shouldn’t both sides be equally interested in clarifying their qualitative differences and arming consumers with accurate information?

In other words, why aren’t banks offended when credit unions are lumped in with them?

(BTW, I honestly don’t have an opinion I’m trying to sell you, on this topic. I just find it extremely interesting and would love to hear your theories.)

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