Voices: the CMB Blog

When I moved to Boston in 1988 for college, I was very excited to receive my first “BayBank card.” For those of you from the area, you’ll recall with a smile that BayBank was the dominant area bank; it subsequently merged with Bank Boston which then merged with Fleet. However, through all those changes everyone (at least in my circle) called their ATM card their “BayBank card.” Getting a BayBank card was really your only option if you valued the convenience of an ATM on each and every corner of the three mile stretch from Kenmore Square to Packard’s Corner in Allston. Back then I needed to get cash in $10 increments as easily as I could grab a slice at Captain Nemo’s Pizzeria on Comm Ave. or talk my way into Father’s First Bar in Allston.

Over time, however, my needs as well as my definition of convenience changed. As time marched on, I started to think about buying a home, saving, and investing. Convenience was still the most important thing to me, but convenience now meant ubiquitous ATMs, a close branch to open new accounts, as well as a host of connected financial products. I liked being able to do all my business in one place. I was an established customer, and pretty pleased with the convenience of one-stop-shopping.

However, I feel like a new definition of convenience is on my horizon having more to do with useful, practical technology solutions. I want to view my investments, credit cards, savings accounts for my kids, and checking accounts all on one screen. I want to work with my bank virtually; I have two checks in my wallet, just sitting there waiting for me to make my way to an ATM machine. There is one up the street, about a half block diversion from my train, but without exception I leave work later than I should in order to collect my children from their babysitter, so I bypass that ATM. So there they sit, my sad paper checks, uncashed in my wallet and feeling very inconvenient.

The latest Consumer Pulse study from CMB uncovers some very interesting findings regarding convenience and perceptions of value among consumers. Nearly half (48%) of bank customers believe banks can differentiate themselves with good service. But they are like me—the definition of “good service” is evolving; convenience is no longer just about more branches and ATMs, but also about innovative technologies and remote banking options.

The study also found that while larger banks have a reputation for offering the most online and mobile services, credit union customers report online banking usage that is just as high as larger bank customers, and they give their institutions higher marks on performance than they’re larger peers. I would never have associated credit unions with convenience, but technology and their smaller customer bases are leveling the playing field. I wish that I had remote deposit capture, and I hear rumors that my big-bank provider has it, but I can’t find any information about it on my online banking portal. Not very convenient.  

My brother-in-law is a 26 years old gadget-guy, and a rabid fan of USAA for both insurance and banking. He was never in the military (his grandfather was), so when I learned about his fandom, I was curious because it didn’t add up. I thought of USAA as traditional player, the epitome of an old-school company.  He cited “great service” as the reason he’s loyal. When I asked what he meant by “great service,” he mentioned that he was first among his friends to have remote capture deposit. Definitions of service and convenience are changing; it will be fascinating to see which financial institutions keep up.

Learn more about how technology is changing the definition of good service:

 Download the full report: The New Banking Value Proposition.

Posted by Christine Gimber, Christine is an Account Executive with CMB’s Financial Services team. A few of the things keeping Christine from cashing those checks are her three little kids, and competing in triathlons.

If you believe the news you might imagine Americans have a pretty low opinion of bankers. It seems cut and dried; the recession laid bare a lot of anger over banks’ role in the economy’s crash.  But new insights from our Consumer Pulse research on banking approval, suggest bank customers’ views are a bit more balanced. We asked over 1,400 bank and credit union customers how they felt about their primary bank and the industry as a whole.  

We found that while it’s true that most Americans aren’t happy with the banking industry they are pretty happy with their own banks. This kind of discrepancy isn’t shocking or unusual— Congress has abysmal approval ratings, but people tend to rank their own representatives quite highly, clearly personal experience counts for a great deal.  

When we looked at customers' banking approval and experience we found some things worth noting:  

• Approval ratings vary by bank type. Community banks and credit unions were rated more highly than regional and large national banks, with credit union customers giving high marks to many elements of their banking experience, from fees and rates to commitment to the community and remote banking offerings. In fact 85% of credit union customers rated the value they got from their bank as “excellent.”

• As for what doesn’t appear to impact approval ratings, those with household incomes under 50k gave just slightly higher approval (51%) to their banks, compared to those making 100k or more (47%).

• Just 9% of customers who disapprove of their banks (and 2% of all respondents) say they’re actively looking for a new bank, but willingness to make the switch also varies by bank type. A full 22% of regional bank customers who disapprove of their bank say they are actively looking for a new bank, versus only 7% of large bank customers. One explanation for this disparity is that while large banks are known for accessibility and product breadth, and small banks are recognized for personal service and lower fees; regional banks are often chosen for their proximity. And as we’ve seen in our previous Consumer Pulse research, increasingly that is not enough.

•  Wondering why customers so displeased with their bank, end up staying? Over half (54%) agree switching banks is a hassle.

Amidst the real anger and displeasure aimed at banks and the banking industry as a whole, the real message may be: don’t underestimate the power of the customer’s banking experience. Fewer than one in five of respondents agreed that “all banks are pretty much the same.” This is good news for banks who can take the opportunity to differentiate themselves from the competition and from a terrible industry reputation.

Download The Future of the full-Service bank Branch here.

Posted by Jim Garrity, Jim is Managing Director of CMB’s Financial Services    practice. He isn't looking to switch banks anytime soon.

Infographic designed by Stephanie Kimball. Stephanie is CMB's Marketing Operations Manager. You can follow her on Twitter at @SKBalls

Thirty years ago, the ATM revolutionized banking convenience by letting customers conduct their business at any time, and without stepping foot in a branch— there are now several generations who can’t remember a time before you could just “hit the machine.”  But all that automation meant fewer bank customers face to face with bank reps and the products they sell. Decades later, rising cost pressures, new regulations, consumer desire for added convenience, and diminishing returns on full-service bank branches have created an economic challenge for banks.

To understand the impact of these changes, through our Consumer Pulse we explored customer perspectives on bank convenience, fees, and branch alternatives. We found what bank customers say they value, doesn’t necessarily match up with what they’re actually doing.  We asked people how important having a branch nearby was to their sense of banking convenience—most (67%) reported it was “very important.”  Taken by itself this isn’t a shocking statistic; we know bank customers appreciate personal service and convenience. But asked how often they actually go to a bank (not an ATM—a full-service branch) nearly half (45%) go fewer than 5 times per year.   

What explains this disconnect between what consumers say they need and what they actually use?  Online and mobile banking services mean customers can conduct most transactions from the comfort of their home or office. Although a trip to the local branch is often unnecessary when you can check your balance, transfer funds, or make payments from your phone, customers find full-service branches appealing. Still, fond memories may not be enough to keep branches, as customers know them, open.  

For the first time in over a decade, banks are closing branches faster than they’re opening them, and banks are looking to alternatives with lower overhead and operating costs. To understand what alternatives were most and least appealing, we asked respondents to participate in a trade-off exercise to evaluate new banking concepts. When forced to choose, customers were willing to give up their local branches rather than see fees rise. These findings suggest branch proximity, while still important to many, is not as critical to a convenient banking experience as it might have been in the past.

One of the alternative banking concepts we tested was the” teller-less” branch. The teller-less branch is largely automated, but sales professionals are available to discuss bank products, and customer representatives are available by phone. In one of the more surprising findings, customers said they would rather have their local branch close altogether than have it replaced with a teller-less branch. This finding, while counter-intuitive, is telling—banks will need to educate their customers on how new banking concepts will affect and benefit them.

While the full-service bank branch may become a thing of the past, banking convenience and service are as relevant to today’s bank customers as ever—even as the modes of service change.

Download the full report: The Future of the full-Service bank Branch here.

Posted by Jim Garrity, Jim is Managing Director of CMB’s Financial Services practice. He hasn’t stepped foot in his bank branch in months.

This summer, New Corp’s alleged hacking of celebrity and crime victims’ mobile phones ignited a fire storm around mobile security. Closer to home, the dark side of online convenience wasn’t news to the millions of customers who’ve had their passwords, email, social media accounts, and credit card information hacked. What has received less attention in the U.S. are the privacy issues and risks that stem from burgeoning mobile usage, particularly mobile banking. This spring CMB along with iModerate asked 1,461 Americans over the age of 18 to share their mobile banking habits; the findings reveal consumers’ concerns about mobile privacy.

Data breaches are uncomfortably common, with over 13 million customers falling victim in 2011 as of September. While having an email account compromised may be frustrating, time-consuming, and embarrassing, the thought of financial information in the hands of hackers is the stuff of nightmares.  The vast majority of major banks offer the convenience of online banking, and the growth of smartphone ownership has made mobile banking increasingly popular. According to CMB, over half (52%) of smartphone owners use their device for banking activities including checking account balances, transferring funds, or purchasing stock. Nearly 68% of those under 35 use mobile banking compared with 41% between the ages of 35 and 49, and only a quarter of those over 65. The difference in mobile phone usage by age is consistent with lower use overall by older smartphone owners, who are less likely to take advantage of the array of mobile capabilities than younger users. 

Mobile bankers and non-mobile bankers alike indicate feeling more concern (54%) over personal privacy when using smartphone “apps” for banking than when using a personal computer.  The feeling is unsurprisingly more pronounced among non-mobile banking smartphone owners. A look at motivations behind the lack of use reveals real concerns about mobile privacy and security from smartphone users across the board. As one respondent noted:  “I do not want to do any banking on my phone, at all. Too many security risks…Lose my phone and all my info is cached…phones are easy to access and mine data out of,” Female, 30-34.

Forty-seven percent of smartphone users, who did not use their phone for mobile banking, expressed concerns about privacy (having location tracked by mobile devices, or wireless carriers). Nearly the same percentage (49%) noted security concerns (identity theft, malware, viruses) as reasons not to bank with their phone. Privacy and security concerns aside, half of non-mobile bankers said they preferred to do their banking in person or online. Said one respondent, “I am comfortable with my desktop, my firewall and security system, etc. Plus, in general, I am more productive and faster on the desktop,” Female, 55-59.

The fear of security and privacy breaches is powerful, 71% of smartphone users who don’t use mobile banking say they are highly unlikely to start within the next six months, 86% say they’re unlikely to begin investing on their device. But there is a bright spot for mobile app designers: of non-smartphone owners who plan to buy a device in the next 6 months, nearly 40% said they’d be “highly likely” to use their phone for banking.

So what is the takeaway for the banking and mobile industries?  For some, concerns over security and privacy may always trump the ease and convenience of new platforms and devices; banks and mobile providers must still actively address the reasonable privacy and security concerns of their customers to establish trust among those who may be wary. Banks who can deliver new product and service bundles that satisfy these very real concerns about mobile security will gain the trust, and ensure the growth, of their mobile banking customer base.

Posted by Jim Garrity. Jim Garrity is VP of CMB's Financial Services practice, never wears blue jeans to work, and loves the convenience of banking.

Download our recent Consumer Pulse report: A Consumer Perspective on Mobile Banking. It looks at how smartphone and tablet owners are conducting mobile banking and transactions on their mobile device.