The Herman Trend Alert

April 20, 2022

Return on Bank Experiences

Like many other service industries, banking has been concerned about its investments to deliver positive experiences to its customers and employees. To that end, the Toronto research, design, and branding firm SLD conducted an extensive study and discovered eight high-level insights. In this Herman Trend Alert, I will share some fascinating statistics and a few of my favorite insights on the importance and relevance of what SLD called ROX (Return On eXperience) which in previous Alerts, we have referred to as ROE. The goal of this research was to determine how drive greater branch visitation and brand loyalty.

1. Bank Branches Continue to Be Important to Consumers

Although a significant percentage of transactions have shifted online, physical branches remain fundamental channels for banking customers. Interestingly, 50 percent of customers said they visited their branches at least once a month and 60 percent said frequenting their physical branches is convenient. Only 29 percent of consumers indicated their primary transactions were conducted in physical locations, while 31 percent of consumers banked through digital platforms only. That means way more than half of the respondents still prefer banking in their physical branches.

2. Increase Visitation with Renovation

Renovating branches attracted 20X times the visitation and growth. Customers whose bank was renovated indicated this increased their visits significantly and drove them to purchase more services and products.

3. Many Banks are not Measuring any Aspect Pre-purchase

Most of the banks' focus on the purchase and retain stages---with retention being most important. What they are overlooking is that a great customer experience will affect all three stages of the banking journey, Pre-Purchase, Purchase, and Retention.

4. Focus on ROX to Grow

The SLD survey found a strong correlation between the measurement and understanding of ROX and growth. Institutions that grew 10 percent or higher in the past three years were tracking ROX at a higher level (67 percent versus 52 percent).

5. Banks are not Measuring What Customers Value Most

This research revealed a significant gap between what a successful banking experience means to customers and bank executives. While the banks are focused on profits, consumers really want them to be customer centric. For example, customers said banks are not meeting their expectations for financial advice; not surprisingly, assessment of advice is not a top metric for executives. Tracking ROX is financially driven for bankers, while consumers defined their ROX by ease of doing business, excellent customer service, and the staff being engaged and helpful. There is a critical lack of emphasis on the human side of banking like ease and speed of transactions, level of expertise, and level of attentiveness to and understanding their needs.

What these Insights Mean for the Future of Banking

Wise bank executives will heed these assessments and take to heart the perceptions of (at least) their key stakeholder groups---employees and customers. As this study exposed, the problem is that most banks are so focused on their own bottom lines that they overlook what is important to their primary stakeholders. What they do not realize is that in engaging these and in fact, all their stakeholder groups at deeper levels, they will drive greater profits. However, many bankers are stuck doing things the ways they have always done them. Their attitude is, "If it ain't broke, don't fix it?" The challenge is that they are leaving billions in profits on the table as the values and attitudes of employees and consumers have changed, and they have not kept up with those shifts.

Special thanks to J.P. LaCroix of SLD in Toronto for this fascinating study. To download the entire study for yourself, visit www.SLD.com

Whether you are a banker or in another industry, taking care of all your stakeholders is the way to optimize profit. For more information, reserve a copy of my new book, Experience Rules: How Positive Experiences Will Drive Profit Into the Future. Send me an email at  joyce@hermangroup.com to receive one of the first copies hot off the presses.

Next Week's Herman Trend Alert: The Increasing Value of (Inter)Personal Benefits

For this Alert, I will do a deep dive into the specific benefits that people are looking for, those extras that can make or break your new hire. This topic is vital to staffing today, yet few are talking about it from this perspective. This is one Alert you will not want to miss!

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