Winning The Battle For Checking Accounts

Transcription

1 Winning The Battle For Checking Accounts Welcome everyone to today s panel session. My name is Dave Crook and I am with StrategyCorps. I am joined by Leon Manning First National Bank. It is HARD to be in a meeting sometimes when the BEACH and a cold drink are right outside the door, but we will make this time together fun and impacting we promise. Today s agenda is to briefly share with you StrategyCorps experience with what to do to win the battle for checking accounts. I have been to a lot of conferences this year and heard from a number of bankers that this is a very different year than any they have lived through and I agree. With that in mind this topic will focus on specifics and things that you can - and should - do to compete. You see the screen and the man has boxing gloves on and I did that on purpose because this is not a time to be timid. We are fighting for our customers and you should be fighting for yours. As bankers and boxers Leon and I are in pretty good shape. Now if you see us on the beach alter you might say that we make better bankers than beach bums and you would 1

2 First National Bank PRESENTORS: DAVE CROOK AND LEON MANNING Let s start with a quick introduction: In this corner.. My name is Dave Crook. Partner with StrategyCorps. We are a 9 year old privately held company based in Nashville TN. We are all former bankers and have sat on your side of the table. We work with almost 200 banks across the country developing simple retail checking strategies for banks. Our partners call us the checking experts. Our largest client is $51B and our smallest is about 80M. I am an ex-banker. I started my career as a new accounts person at a small S&L in Cleveland OHIO called Broadview Savings Bank and have been in retail banking since then over 23 years to be exact. I started in the Jimmy Carter years and I do not want to see them again. Leon: 2

3 WHAT WE IMPACT AT STRATEGYCORPS Our focus is helping banks improve the performance of their retail checking account line-up: Product and Strategy Branch Sales Effectiveness Marketing Review My marketing manager might not want me to say this but guess is that some of you might not know StrategyCorps or it has been a while since you investigated us. So, here is my 1 minute overview. 1. Like it says on the slide, our sole focus is on making your bank s retail line up perform better. In other words get more keep more make more. 2. The last thing to remember is that we are very smart and experienced, but do not have all the answers or a silver bullet solution to all the issues of the day. We flat out can not be fooled by a sales pitch and we do not shrink wrap answers. We fit solutions to banks so that retail line up perform better, longer. We believe that when the tide rises, all boats float higher especially when the winds of uncertainty and change are all around us. 3. We are not just product people either. We will not come in a slam a free account or a package account or a high yield account into your existing line up and charge you a lot of money. 4. We all know, and Our bankers know, that a perpetual focus on all of the areas on the screen are vital to sustained growth. 5. Today we will focus on these bubbles for our presentation. 3

4 It Is A Different World in 2009! OK do any of you feel this way and have to fight to smile in this environment? Well, I do a couple of hundred of mystery shops a year and this is who I am seeing in some of your branches. Ouch. If you have not picked up on this message yet at this conference or this year, let me state the obvious. THERE HAS BEEN A PERMINANT SHIFT IN THE BANKING LANDSCAPE! We will not- and you will not market the same to customers as you have done in the past. I see some trends that will affect you in your retail push and they are significant. In the near term, most bankers still have the same goals: - More deposits - More fee income - Better retention They are just going about attaining these goals in different ways. You have to find solutions that are low in risk, low in investment and high in performance because you will not get very many shots at this. For some of you in the room today this is a 1 round fight for others it is a 9 round fight. All I would encourage you to do is GET IN THE FIGHT and quit standing around and waiting. Leon is one of my favorite bankers and you are about to hear from him. Tim Quinlan at City National Bank in Charleston WV is another. Look up their numbers at CHCO. He likes to say this, Now is the right time to make a decision on retail banking. It is almost always better to make a decision to do something than to allow yourself to wait. If it is a wrong one, just make a new decision. With that said, let s be specific about some of the fundamentals; 4

5 STRATEGYCORPS FUNDAMENTALS Simple Sells, Complexity Confuses 5

6 IT S NOT THAT COMPLICATED Minimalists Skeptics Self-Servers Servers Sophisticates Traditionalists Loyalists Utility Segments View banking as a necessity like telephony, electricity Characterized by Low potential (Skeptics, Minimalists) Low brand loyalty (Self-Servers) High price sensitivity (all) Substantial investments in relationship development are not warranted But these segments may be very responsive to attractive offers for products they need e.g., loans. Relationship Segments Customers who have some degree of passion about managing their money Characterized by High potential (Sophisticates) Interest in innovation/performance (Sophisticates) Greater brand loyalty (Traditionalists, Loyalists) Investments in relationship development likely to pay off, particularly among Traditionalists and Loyalists Segments often respond to attractive offers for convenience savings e.g., highyield savings Mike: Well, you can blame some of it on checking experts presenting at conferences like this one that seem to use million dollar concepts and thousand dollar words to describe how consumers are segmented and how they buy checking accounts. My experience as a former retail banker and our experience at StrategyCorps is you know, it s not really that complicated. 6

7 How Do Consumers Buy Checking Accounts? Three Types of Buyers Fee-Averse Interest Value Lowest Fee Option Available Today = Free Relatively low balances Investment Want yield on their balances Relatively high balance to routinely avoid penalty fee of minimum balance Not much interest in other benefits Influenced by offer / person Want Best account in the bank Strong average balances ; High retention rate More likely to be cross-sold 3 types of buyers This is a model that we put across all of our partner banks. all our banks I might pick on leon and at one time he may have been a bank that had 7

8 MAKING YOUR PRODUCT SIMPLER: Migrations Made Easy Inherited an account line-up with 40+ checking account types Plus 16 Add-On Club accounts. Simplified Down To: 5 Checking Accounts 1 Add-On 8

9 MAKING YOUR PRODUCT SIMPLER: FEE INCOME STABILIZER 9

10 IT S NOT THAT COMPLICATED Fee-Averse Interest Value Free Checking 65% Interest Checking 10% Fee Based Checking 25% Mike: Well, you can blame some of it on checking experts presenting at conferences like this one that seem to use million dollar concepts and thousand dollar words to describe how consumers are segmented and how they buy checking accounts. My experience as a former retail banker and our experience at StrategyCorps is you know, it s not really that complicated. 10

11 The Knockout Punch Peer Bank Actual Banks Actual Number of Live Checking Accounts Offered 12 7 Actual Number of Grandfathered Checking Accounts to Support Percent NEW Customers - Free Checking 87% 50% Percent NEW Customers Fee / Value Checking 7% 34% These are not even best in class numbers these are just making improvements. 11

12 STRATEGYCORPS FUNDAMENTALS Product Matters 12

13 WHAT CUSTOMERS REALLY WANT FROM CHECKING Save me time! Save me money! Make me money! Make my banking easy and convenient! This is what your customers want. Give it to them and fight to stay important in their lives How many of you bankers BOXERS have mystery shopped your competitors lately? Actually been in their branches? I do it every week. Here is my advise to all of you try it. As a consumer of banking serives you will find that we are pretty simple people. Here is what we really want from a bank and you can deliver this tomorrow! Stay FoCUSED! Save time save money and make a customer money! 13

14 THERE ARE DIFFERENCES Competition: If you do not make your products better you will lose. Consumer Appeal Makes Branch Bankers Confident and Proud Sellers Make it impossible for a customer to leave your bank! 1. How do you compare to the competition? Do not let lethargy set in and think that customers will not move. They do. If you can help it, you don t want customers to leave your bank to go across the street for a better product. You will not pay the highest rate, so have the best offer. Make it smart. Make it unique. That is really all you have. 2. Make it as appealing as possible for a checking account. Remember all customers don t just value saving money on hassle fees. What is really appealing today? Free ATM s worldwide. Local savings. Coupons. 3. Again and again, we find that sales effectiveness is materially and directly correlated to products being offered. If your products are not good or competitive, confident and proud presentations are hard for branch bankers to genuinely pull off. But when we find products that bankers have confidence in and are proud to offer, their sales 14

15 MAKE YOUR PRODUCTS BETTER: IDENTITY THEFT PROTECTION Between 7 and 10 million people are victims of identity theft in the U.S. The average loss per identity fraud case is $6,383. Victims spend on average $1,200 in outof pocket expenses to resolve problems. 15

16 MAKE YOUR PRODUCTS BETTER HIGH-INTEREST CHECKING! 16

17 MAKE YOUR PRODUCTS BETTER: $1,000 GUARANTEE BEST FREE CHECKING 17

18 MAKE YOUR PRODUCTS BETTER: REBOUND CHECKING There is a large and growing percentage of un-bankable customers that bankers are typically turning away. It is estimated that seven-million people are shut out of the financial mainstream as a result of being on ChexSystems. Nearly 10% of U.S. families do not have transaction accounts and over 12% lack checking accounts. 18

19 MAKE YOUR PRODUCTS BETTER: G2G Checking Comprise 30% of the U.S. population. Next decade the total income of the group will reach $3.48 trillion 60% of college students say they will keep their banking relationships after graduation. 19

20 The Knockout Punch Annually Peer Bank Good Banks Gross New Account Growth Per Branch Service Charge Income Per Customer $4.28 $22.50 NSF/OD Per Customer $112 $124+ Debit Swipes Per Customer Per Month

21 STRATEGYCORPS FUNDAMENTALS Smooth, Consistent Sales Process Must Always Answer Why Should I Bank At Your Bank? 21

22 OUR TYPICAL BRANCH EXPERIENCE We have great customer service We have Free Checking Which one would you like to open? Call me if you have any questions. Mike: At StrategyCorps, we mystery shop hundreds of branches a year. We don t sell mystery shops but use them to assess a baseline of sales effectiveness to realistically set expectations for banks. In 8 out of 10 shops, we find branch bankers actually want to help. And in 9 out of 10, they are friendly and professional. But when they get beyond the initial meets and greets, when an influential presentation needs to be made, it usually falls apart. In most cases, branch bankers rely way too much on being able to offer free checking. Notice I said offer and not sell. That s why such a large percentage of new accounts opened are free. 22

23 A BETTER EXPERIENCE We have the best checking accounts in town They save you time and money and make banking easy You ll love our best account, it offers I ll call you in a couple of days to followup... A Top Performing New Accounts Desk Interaction Mike: Now, wouldn t it be a beautiful thing if your branch banker after meeting and greeting me had a repeatable, consistent presentation taking into account some of these bubbles. I can practically count on one hand the number of times this has actually happened on a mystery shop. But if you want to compete, you have to be excellent at retail selling and customer service. 23

24 Confidential to StrategyCorps Confidential to StrategyCorps 32 Confidential to StrategyCorps 32 Confidential to StrategyCorps 32 Confidential to StrategyCorps FIND YOUR BANK S SALES The Fundamentals 1-2-3: Eye contact greet, shake hands, introduce The Interview Questions 1-2-3: Get them to your Where comfort do you bank today? zone your desk The New Account 1-2-3: Say their name What least kind 3 of account do you times in the first have 2 minutes there? Let me show you our best It s as easy as 1-2-3! account The Follow-Up 1-2-3: Why are you looking We also to have other accounts change banks? like I ll call you in a couple of days to make sure You can upgrade your It s as easy as 1-2-3! Your Bank s 1-2-3: account with Bonus Please shop around, you ll see Benefits we really do have the best account in town. It s as easy as 1-2-3! Feel free to try it out Create simpler, more consistent presentations. It s as easy as 1-2-3! It s as easy as 1-2-3! Mike: So get back to basics with a simple approach. (We re obviously fans of or things in sets of three). What you see here are actual training slides we ve developed for client banks that put in place a consistent and repeatable process of meeting and greeting interviewing account presentation and follow-up The key to is simplicity and developing it to fit your bank s culture and selling personality. 24

25 THINGS TO KEEP IN MIND Think like a consumer, not like a banker Provide great customer service AND prospect service Segment marketing not product remember why consumers buy Understand your average branch banker mindset Have a great answer to Why should I bank at your bank? whether asked or not by the prospect Make branch bankers Raving Fans of their products and the sales process Mike: So to recap, keeping in mind these things when formulating your checking account line-up and the branch sales process related to retail checking (or other retail products) will help your bank win the battle for checking accounts. Don t just take my word on it. 25

26 The Knockout Punch Real, Factual, Actual Retention Improvement: 2% - 4% What is that worth to your bank? 26

27 Questions and Answers? 27

28 CONTACT INFORMATION Dave Crook Partner / StrategyCorps dave.crook@strategycorps.com Leon Manning SVP Director of Marketing lmanning@fnbca.com