They are very tech-savvy, and they were among the first businesses to go online with transaction processing. Nevertheless, banks continue to be viewed as unfriendly by many of their customers. Why? Because banks are naturally risk-averse, and this natural aversion to risk taking is even more pronounced now that we have gone through years of economic recession.
Online banking apps, whether they appear on desktop or mobile computers, are unwieldy and slow. Banks also boast about their "instant" decisions on loan applications, but these aren't really final decisions. They are preapprovals that still take one to 10 days to be reviewed and approved by underwriters.
Are these cautions warranted? Worldwide loan losses and losses from fraudulent transactions are in the billions. Annually and even quarterly (if banks have had excessive loan loss or fraud experience), auditors and even industry regulators come in to evaluate institutional financial health -- and if it stays shaky too long, managers lose their jobs.
Ultimately, losses from loans and fraud translate into higher operating costs, and those costs are passed back to customers in the form of fees, higher loan interest rates, and lower payout rates on deposits.
Despite these pressures, there is still a line that should be drawn between prudence and downright stodginess. This is the area where startups like BankSimple are starting to make a case. The value proposition of BankSimple and other unbanks is built around sensitivity to customer needs and lifestyles.
For instance, when you check your account online to see if you can use your debit card for a purchase, do you care more about your current account balance or whether you can afford to make the purchase, given your account balance and the fact that some payments are still out? Your bank gives you your account balance, and you do the rest. BankSimple calculates what you have out and what your account currently holds, and it gives you a complete answer on what is safe to spend.
Then there is the area of savings goals, which banks have tried to work for years. They have focused their efforts on younger customers, meeting with them to establish goals and even setting up separate savings accounts for money being put aside for a vacation, a new car, or college tuition. But they haven't made the process easy in a mobile environment, as emerging unbanks have. These new competitors provide online dashboards where customers can immediately see how far they are from meeting their savings goals.
The new unbank challengers also don't charge the fees that banks do -- and they provide a way for customers using mobile devices to photograph their checks with their devices and then securely send the photos in, with checks immediately being credited to accounts. Banks and credit unions require you to go to a branch, use the mail, or find an ATM in their network that takes deposits.
Can banks change their cultures to the point where they finally get into the right personal zone with their customers?
They have rolled out more in-field kiosks and ATMs -- and they have even tried hiring clerks from retail stores as tellers in an attempt to be more sensitive to customers. The in-field access has worked to an extent -- but the struggle to find and retain customer-centric service personnel is ongoing.
Now the battle points are shifting to mobile banking, where banks again must reinvent themselves. Their unbank competitors are capitalizing on social media techniques to make their offerings customer-centric and to deliver more services without fees.
This is the area of the mobile fight to which banks have to commit themselves.
— Mary E. Shacklett, President, Transworld Data
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