Hear Susan Wolfe, VP of Financial Services at Mintel Comperemedia discuss consumer dissatisfaction with banking fees and offer ways banks can keep their customers happy while still making a profit.

Click here to view the video.

One for $5? Or Two for $9.99?

Pricing.  Both tricky and possibly not terribly interesting. But repricing an existing product?  Nightmare.

Apple is one of the few companies that can price its products higher than the industry and they still fly off the shelves.

Other companies, of course, don’t do as well with higher than market pricing.  Charging customers for something that was once free doesn’t work.  As banks struggle to increase revenue they’re examining things like charging for debit card use.  Bank of America’s statement is now notorious.

The challenge, of course, is that customers expect the debit card to be a free access point for their cash.  Why?  Well, simply because they’ve always been free.

Bank of America. Debit card fees. Ouch.

Molly Katchpole certainly expects her debit card to be free.  She felt so strongly about the issue that she started a petitition to protest Bank of America’s new $5 per month fee for its debit card. She stated,”I can barely afford to make ends meet.  I’m expected to hand over money to Bank of America each month just for using my own debit card?” She voiced a sentiment 300,000 other people felt and made clear when they signed her petition.

But nothing, of course, is free and debit cards are no exception.  There’s a cost to plastic that makes the card, and in creating and running the card networks, maintaining them, authorizing transactions, making sure the transactions sync with online and mobile banking, ATM queries and paper statements.

Whether it costs the 44 cents per transaction, as banks claim, I don’t know.  But I do know that people are employed to create and maintain the systems and hardware is purchased to keep it all running and to store the information.  So there has to be a cost.  And by pricing products appropriately, customers understand there is a cost and a value.

The best things in life (aren’t) free

Over the summer I was talking to my uncle about my cousin’s evil rabbit, Charlotte, their family pet in the late ‘80s.  In the discussion he mentioned that the family sold her to someone else for $1.  When I asked why they didn’t just give her away, he replied, “My father never believed in giving away anything away for free.  If you do, the person will fail to see the value in the item and take it for granted.” 

Is $5 per month too high to pay for the debit card?  I think the answer to that is now clear.  Hindsight always is.  But it was a moot point from the beginning, because debit cards have always been offered free of charge.  When Netflix failed in its 60% price increase, bank executives should have realized that a 500% price increase was also doomed. 

Putting it into context

What is missing in banks’ quest to charge debit fees – and also for online banking years ago – is context. 

A lot of young banking customers have never had to buy boxes of checks. In my unscientific poll around the office, of those who are younger than 30, when I said “checks” most of those surveyed said, “huh?”  Several people had never ordered checks.  That’s right. Never.

But if you’ve ever bought checks, you know there’s a cost to them.  Today, one box of 125 duplicate checks is roughly $18.95. Writing 33 checks a month would equal that $5 monthly debit card fee.  And then there’s the cost of 33 stamps – $14.19 at today’s cost.  That’s twenty bucks a month. 

If banks had charged for debit cards from the beginning, not only would they have the recurring monthly revenue, they would also have the interchange fees and customers would realize there’s a cost and a value to debit cards.

Intead Bank of America, along with Wells Fargo and SunTrust, has realized that fees for debit cards are not going to be accepted by their customers. They’re going to have to find another way.

I’ve banked with my bank for 14 years.  It’s a significant chunk of my life – somewhat less than half but more than a quarter.  Together we’ve navigated the excitement and work of four mergers – three acquisitions on their part and one marriage on my part.  In that time, my husband and I have also welcomed our first dog (and said goodbye), bought a house, had three children, refinanced our mortgage a couple of times, changed jobs six or seven times, gotten a new credit card (or ten), bought and sold six cars, said good-bye to three grandparents, finally got serious about a 401K plan, established an IRA rollover account to deal with 401Ks from pervious employers, set-up a brokerage account, set-up college savings accounts…

Life goes on, right?  Our story isn’t much different than many other peoples’ stories.

And frankly my bank’s story isn’t that much different from other banks’ stories.  They’ve merged, expanded their online banking and mobile services, done away with free checking, and struggled with earnings.  And no, they haven’t started charging a monthly fee for a debit card, but they’re thinking about it.

So, at the end of the day, we’re just an average customer and an average bank doing business together.  But to be honest, I feel like I’ve changed more than they have.   My bank pretty much handles my day-to-day banking transactions as it always has.  Granted, the ability to deposit a check with my phone is a revolutionary change from my point of view, but I’m not sure that anything else about my bank has gone through a revolution.

Oh, I know all sorts of things have changed on the backend.  I know this, because literally one second after I deposited a check with my phone, I got an email that they received the deposit request.  And another second after that it popped up in my online banking statement. 

But from a customer standpoint, my bank handles my business the same way it did when I first opened my account with them 14 years ago.

I’m writing about this because I’m working on a Webinar about lifecycle marketing.  I don’t get many offers from my bank.  Of course we get a few.  Most recently they asked us to set up automatic mortgage payments made directly from our checking account.  Since my husband doesn’t believe in online banking, we won’t be signing up for the service anytime soon.  Not even for the $25 they are offering us.  The offer promises to “make your life easier.” It won’t really though.  Because if I brought it up with my husband he’d say “no.” And then I might be unable to refrain from muttering something about a “technology laggard.” And then he might be tempted to say something along the lines of “you’re not as cool as you think you are.” And then we’d be in a quagmire.  Which is really the complete opposite of making my life easier.

But back to the lifecycle of our relationship with our bank…We often get offers encouraging us to open a savings account.  Uh…did they not notice that we already have four savings accounts?  Throughout our “relationship” I’m sure we’ve gotten numerous offers. And from the banks’ perspective they are probably exactly where they want to be in their relationship with us…two checking accounts, one jumbo mortgage, one credit line, three credit cards, four savings accounts.  Much of that growth has happened with little effort on their part. They inherited the mortgage, the line of credit  and two credit card accounts through merger activity.

Truth be told, they haven’t done the best job of knowing what’s going on with me.  If they truly knew me, they would be trying to sign me up for a 529 Account (3 kids, remember?)  Or better yet, offer me  a wedding savings account so that I can save for when those same 3 kids eventually decide to tie the knot.  Or a car loan.  One car has 130K miles on it, the other has 99K miles on it. A new car is in our near future….I wonder if my bank realizes that?

Right now football season is in full swing and the holidays are right around the corner.  For banks, however, there seems be little hope of a lot of holiday cheer to look forward to.  Why?

Two words: Earnings. Season. 

In advance of most banks releasing their earnings, The New York Times stated in an article, “For banks, the situation is likely to get worse before it gets better.” 

The scary thing, of course, is that we’ve been saying that for years now.

Chase released its earnings on Friday and posted a 4% profit decline for the third quarter compared to the same quarter of 2010.  This doesn’t bode well for the rest of the industry given that Chase is considered one of the best managed banks in the industry.  Indeed, according to data from Trepp, overall revenue is expected to fall 4% in the third quarter, slipping back to 2005 levels.  Consumers, however, seem to be worse off  - household income has reportedly dipped to 1996 levels, when adjusted for inflation…

The banks, of course, are looking for ways to make up the revenue lost due to new federal regulations.  It’s no secret that banks are attempting to do this by imposing fees on their customers.  Free checking – if it even existed in the first place – has largely been eliminated.  And infamously, Bank of America announced a $5 fee in any month in which a customer uses a debit card. Wells Fargo and Chase have been testing debit card fees for some time.

Consumers aren’t taking these announcements lightly.  One woman – Molly Katchpole – has started a petition asking Bank of America to “stop the debit card usage tax.”  Her appeal isn’t to just Bank of America customers.  She goes on to write, “Even if you’re not a Bank of America customer, this should matter to you. This campaign will show other banks who are planning to follow suit that the public won’t stand for Wall Street’s newest way to take money from its customers — and that they will take their money somewhere else.“  The petition currently has 224,000 signatures and has received TV, radio, online and print press coverage. 

Uh, can you say, “viral?”

Remember Netflix?  Remember when they increased their prices by 60%?  As a result, the company’s stock lost 60% of its value and lost 1 million customers.  The company has also had to backpedal on its plan to split into two services – again because customers were angry.

So what’s a company to do?

Granted, it’s much easier to leave Netflix than it is to leave your bank.  Javelin Strategy and Research estimates that only 7% of consumers will switch banks in 2011.  An article in the New York Times claims that online banking is the reason that customers don’t switch.  But from my perspective, that’s just customers being lazy.  It’s also a pain to move, change email addresses, or change phone numbers, but people do it all the time.  Can you imagine living in the same place your entire life because it’s too much trouble to change your address? 

Perhaps the state of inertia is finally poised to change…November 5^th is “Bank Transfer Day” and a Facebook page dedicated to the day has almost 13,000 “likes.”  Most likely the day needs a few more supporters to make a difference, but combined with Molly’s petition and the Occupy Wall Street protest, who knows what will happen in the coming weeks.

The irony of the situation is that banks developed debit cards as a replacement for paper checks – debit transactions are cheaper than check processing.  Lloyd Constantine – lead counsel in the 1996 antitrust lawsuit against Visa and Mastercard – makes the point that debit transactions are still significantly cheaper than check transactions.  If so, aren’t the banks potentially cutting of their now to spite their face, so to speak?

It’s a free country, so banks can charge what they want for their services.  But I always wonder about the wisdom of punishing the people who keep them in business – their customers. Isn’t there some merit in having Happy Customers?  Surely there’s another way to make money besides charging fees? Until the banks figure this out, expect earnings season to be dismal.

These questions are from our recent Webinar, “ The Role of Online Advertising in Bank Marketing.”

The Zappo’s example had a panel that said “Why am I seeing this ad”. Do they allow an opt out?
If someone clicks on: “Why am I seeing this ad?”, they are taken to the Web site of Criteo, the advertising technology company behind the Zappos ads, where the ads are explained. Once there, users can opt out. You can view the messaging here:  http://tinyurl.com/3t5oda7

What types of adoption rates have you seen for QR code marketing downloads, and if so, do you have any by channel (i.e. print versus digital out-of-home)?
While we don’t track adoption rates across media per se, we are seeing more QR codes used in direct mail than in previous months.

Have you noticed any of the banks using a unique online media strategy for more urgent offers? Such as a current cd rate?
Savings products – CDs and money markets – are almost always marketed based on the rate. Often a “rate booster” is used as an incentive. For example, customers would receive double interest for a period of time for deposits over a certain amount. Banks have the ability, with online media, to change the rate on a daily basis, if necessary. However, we have not picked anything up that advertises a rate that is good for one day only.

I see QR codes popping up everywhere, and they are being used in several different innovative ways. What do you see as the future of QR codes? Do you think they are going to become a significant channel? Or is this just a trend that will die down soon?
I don’t think that QR codes will fade away – instead I think they’ll increase in popularity. I think they are a useful marketing tool, but companies are still figuring out how to use them. They’re a great way to extend the message or to include information that works better online or in video, than in print. Additionally, it’s a great way for customers to save information. For example, being able to look up the nearest branch location or a phone number and saving that info in the phone. Bank of America is currently using QR codes in direct mail so customers can download its mobile banking app.

Retail is obviously a lot more mature in this space – but aren’t subject to the same compliance rigor that financial services is (i.e. 2 pages of mouse type with every direct mail piece) What are trends or approaches that you’re seeing from financial services¬ that are good ways to handle what will make compliance happy?
The trend is to use a fairly general message in the ad and then include the fine print in the landing pages.

What do you think are the most interesting marketing approaches for upmarket consumers?
Bank of America is piloting a program for its upmarket customers. It’s called Platinum Privileges and is designed for customers with combined balances of $50K+. It’s really a loyalty program – not just a reward program – that provides specialized customer service, special rates on mortgages, CDs and money market accounts, and a reward credit card. The program is currently being piloted in: Arizona, Georgia and Massachusetts.

How does Capital One Bank compare with the brands you’ve covered here?
Capital One focuses mainly on advertising the number of branches it has, or on the interest rates of its savings products. For more information, please contact us.

Do you find that most banks are using email and mobile for promotional or transactional messaging?
Most banks are using email and mobile for customer communications. They are much more focused in the messaging that direct mail is, for obvious reasons. We see banks using email to promote online banking and mobile banking, new features or services, or reminders that the account statement is available online. Mobile so far seems to be reserved for text messages that the customer has set-up to receive or to request information such as balance. For example, customers can set up alerts for instances when an account goes below a certain amount, a deposit is made, an automatic debit is made, etc. Currently Bank of America is allowing customers to text the bank to download its mobile banking app.

What programs have worked best for regional banks, in your research/experience? How do they differ from national banks?
Regional banks utilized the targeting capabilities to a greater degree than the national banks, to ensure they reach potential customers only in their footprint. To a large degree the strategies are similar. The regional banks are slightly more likely to advertise based on free checking, no ATM fees or better service.

What are financial institutions doing in marketing on Facebook and Twitter?
Financial institutions have been somewhat slow to embrace Facebook, although there are some good examples. Chase moved its Community Giving program to Facebook, and it seems to be successful.

Citibank has been using its Wall Street Journal ads to promote its presence on Facebook. The bank is offering exclusive content for its Facebook fans, and the ability to redeem ThankYou points for merchandise. The page has 164,000 “likes” to date, and the page has been available since November 2010.

American Express has a promotion on Facebook called “Link! Like! Love!” which provides members offers based on their Facebook “likes.” Customers choose the deals they “love” and then use their American Express card at the store or online. Customers get the savings through “statement credits” that are reflected on their next statement.
Banks use Twitter to promote events, products, and to respond to customer service issues.

For more information on either of these topics, please contact us.

Do you see a difference in the marketing strategy between banks and credit unions?
Yes, credit unions are more likely to advertise their free services, lower fees and better customer service. We also see them advertise online banking and mobile apps, perhaps in an attempt to communicate that they offer all the services the large banks do.

What is the proper mix of display and search online advertising? 60/40 Display/Search?
I’m not sure there is a general proper mix. I think it’s a matter of evaluating conversion rates and determining which performs better.

Mobile app or Mobile site… which is more important?
I think a mobile app is more important. They are easier to use and offer functionality that a mobile website can’t provide – such as remote deposit and ATM locator.

What advertising tactics seem to be successful in driving new accounts?
Cash incentives are included in almost all direct marketing across all banks, which indicates that they are successful in driving new accounts. In addition, we see banks advertise their online and mobile banking capabilities because these are functions that customers have grown to rely on and expect. As consumers are exposed to more and more media, an integrated message is important so the whole campaign works together and the messaging builds upon previous messages.

I recently read that Wells Fargo plans to start testing a $3 monthly fee for any new debit card account opened in five states starting in October.  This is not new.  Chase last year tested a $3 monthly debit card fee in northern Wisconsin.  Maybe Chase was thinking if Green Bay Packers fans will pay that fee, then maybe anyone would…  However, I believe this experimentation is more likely due to new Durbin regulations that limit the amount of interchange fees that banks collect from debit cards to 21 cents per transaction, which begins on October 1st.  Earlier this year, we saw debit reward programs end at Chase, Wells Fargo, PNC Bank, as well as other banks as the result of this legislation.  Mintel, in a May 2011 survey, asked respondents what they would do if their bank started charging $2 a month for having their debit card.  The majority of our respondents indicated that they would switch payment mechanisms.  The respondents indicated that they would use cash, credit card, or checks instead of their debit card.  A significant number – 24% – indicated that they would switch banks over the issue and 19% said they would pay the fee to continue to use the debit card as they always have.  Do these trends forecast a scary, foreboding end of free debit cards and their associated rewards programs?  I wanted to find out more information and make my own prediction.

Ally Bank recently introduced its Ally Perks program, which is a merchant funded rewards program.  This rewards program deposits cash back into a consumer’s account for making specific purchases with retailers.  For example, a consumer makes a $50 purchase at Target and the bank deposits $5 back into their account.  There are no points or miles to be earned and no redemption process.  The simplicity of the program is nice, but it is limited to 20 retailers right now participating in their program.  To participate in the program, a consumer just needs to open an Ally Interest Checking account, which requires zero dollars to open, no minimum balance, no ATM fees, and no monthly maintenance fees.  Ally Bank even pays the consumer interest on their account.

PerkStreet Financial has kept its rewards program that offers a debit MasterCard with 2% cash back.  To get the 2% cash back, the consumer needs to have $5,000 or more in the free checking account.  Otherwise, it is 1% cash back.  A PerkStreet Financial consumer can also alternatively choose coffee rewards (Spend $100, get a cup of coffee worth $2) or music rewards (spend $50, get a song worth $1).  Consumers can switch among the different rewards programs at any time.  The rewards come to the consumer via an email code for music rewards with Rhapsody or Amazon; a reloadable card for coffee rewards with Peet’s, Starbucks or Dunkin Donuts; or a gift card for cash rewards, such as a MasterCard gift card or a gift card from Best Buy, Target, Ticketmaster or the GAP.  PerkStreet Financial offers no annual fee, no monthly fees, and a large network of free ATMs.  The bank even offers rotating categories and stores for 5% cash back on purchases.  For example, in the month of August, non-PIN purchases at Apple store and Half.com would be eligible for 5% cash back.

Will all banks soon eliminate free debit cards and debit reward programs?  Probably not.  In fact, I think competitors will likely utilize free debit cards and debit card reward programs in their messaging as a point of differentiation against banks that are charging fees and offering no rewards for their debit card customers.  Alternatively, banks could have merchants fund their rewards program like Ally Bank.  Now, if I can only predict when the Chicago Bears will next win the Super Bowl…

Previously the remit of USAA, Chase has created banking products available only to military personnel. Chase’s new products are more generous than its standard free checking and savings products and include features that are normally available only through premier level products. These products are only available if the service members deposit their base pay (not just allotments) into their Chase accounts, but the products don’t have a minimum balance requirement. Along with the consumer banking products, service members are offered Military Mortgages and special Business Banking products.

How do these compare to the products already offered by USAA?

There isn’t a huge difference between the Chase and USAA consumer banking and mortgage products. Chase and USAA both offer free checking and savings accounts, no out-of-bank ATM fees and pay interest on some checking balances. The mortgage products both have discounts on fees, specialized military-focused consulting and VA loan benefits. Chase added free safety deposit boxes, doesn’t charge additional fees on wire transfers and 1% cashback on mortgage payments (offered on mortgage products to civilians, too). But, Chase is the first mover in offering business products to service members who have their own small business.

The government has spent the last few years repeating that the American people need to support the troops, and that small businesses are the only way out of the recession. Chase is stepping up to the challenge of supporting service members’ complex personal financial needs and found the white space of supporting service members who are both protecting the country and trying to pull us out of the recession.

I love the quote from Henry Ford:  “If I’d have asked my customers what they wanted, they would have told me ‘a faster horse.’’ I love it so much I’ve used in my past two webinars. 

And at the risk of sounding like a broken record, I’m using it again here. Obviously.

But who hasn’t relied on customer surveys and focus groups to guide future decisions? The problem is that customers don’t realize the full realm of possibilities.  Certainly customers can provide feedback on the user experience – what they like, what they don’t like, whether a product fits their needs, etc. But it’s incredibly difficult for customers to provide anything beyond “tactical” information.

Some of the most significant product developments have been brought about by applying new technologies to our everyday life.  Which customer suggested getting money from a hole in the wall as a way to improve the banking experience? When Netscape first became available, which customer requested online access to bank accounts and as a way to pay bills? When cell phones became mainstream, which customer suggested it would be great if they could get their email on it AND deposit checks with it?  

I know it wasn’t me. I suggest things like better account management.

I like – no, love – the Apple approach. Specifically the Seven Principles of Innovation. While I think everyone can find relevance in all the principles, I think three of them are particularly relevant to financial services.

• Principle #4 – Sell Dreams, Not Products: Think differently about your customers
• Principle #6 – Create Insanely Great Experiences: Think differently about your brand experience
• Principle #7 – Master the message: Think differently about your story.

Much has been written about Steve Jobs’ approach – there’s no shortage of blogs, articles and books detailing the approach. The reality is that few – if anyone – will be able to replicate the approach. But I do think it can challenge banks to do better.

Everyone is well served to think differently and of course, every company wants their customer to have insanely great experiences. At least I hope that’s the goal. And finally, there’s no harm in thinking differently about the message customers get about the bank.

My colleague, Susan Menke, has written about the fact that banks need to stop promoting rates, fees, products and services and focus on what the customer really wants. And in my last webinar, I spoke about how banks tend to market based on the number of branches and ATMs available. Mintel research indicates that customers visit a branch 1.76 times a month and an ATM 1.95 times per month. That’s a lot of marketing for something customers do less than 4 times a month.

But in this day and age, who needs an ATM? It seems like as long as you have your phone, you’re set. You can check balances, pay bills, or transfer money, deposit checks, email a friend money, and even pay bills through remote capture.  

And if Google has their way –which they often do –your phone will become your wallet. If you’re thinking that the Google wallet is a far-off vision, I’m not so sure. With all the great new tools out there, does The Bank With the Most ATMs really win? Or is it about services, benefits, features and customer service? Because in the end, those are the things that instill customer loyalty.  

My intention is to challenge the wisdom of doing things just because that’s the way they’ve always been done.

How do you establish customer loyalty when the main reason people bank with you is simply out of convenience? It’s this type of thing that has commoditized banking and eroded customer loyalty.

Banks talk about relationships. But I have a sneaking suspicion that relationship really means number of accounts. Isn’t a relationship more about a great experience and loyalty? In my book, it is… So what does that mean for bank marketing?

Does anyone remember the short-lived Kardashian Kard? To refresh your memory, that was the disastrous prepaid debit card created by the celebrity sisters late last year which was quickly taken off the market for what was considered “pernicious and predatory fees.” Now American Express is offering a prepaid card that’s exactly the opposite. Last month, American Express announced the launch of a new, reloadable prepaid card with no activation or maintenance fees. In fact, the press release from American Express highlighted the absence of almost all fees typically associated with prepaid cards such as fees for purchasing the card, balance inquiries, alerts, card replacement, foreign currency conversion or loading via bank account. The only fees that will be charged are ATM cash withdrawal fees, but even those are waived for the first month.

This new product comes at a crucial time when consumers are working harder than ever to pay down their debt and may be looking to avoid traditional charge and credit cards. Reloadable prepaid cards are safer than cash, but don’t carry the risk of overdraft and won’t negatively affect your credit score like charge and credit cards. While there are many benefits to prepaid cards, they are not always the best choice because they don’t build credit, and they often come with hefty and confusing fees; but, American Express it attempting to remove that stigma.

American Express is looking to tap into a new consumer segment with this product and it is doing so by highlighting the fee-free nature of the card in addition to American Express’ award winning customer service. Another benefit of the card is the ability to add and manage additional cards for other users such as family members, contractors or even the babysitter. According to Dan Schulman, group president of American Express’ Enterprise Growth Group “We created a simple, transparent and easy-to-use everyday payment card to address a real pain point that consumers have with existing prepaid products in the market that are laden with fees and confusing terms including monthly and maintenance fees.”

There are however, some other crucial differences to be aware of with this new product that weren’t exactly made clear in Amex’s press release. Money that is stored on Amex’s prepaid card is not FDIC insured, and unlike other leading prepaid cards, this card is not a debit card and thus, not issued by a bank. This may not seem like a significant difference, but it means that unlike other prepaid debit cards on the market, Amex’s new product does not allow non-card withdrawals such a bill payment or P2P payments which require a linked account. Since the initial launch, there has been some speculation about the structure of this card, particularly in relation to the Durbin cap on interchange fees.  In fact, a columnist from American Banker, Andrew Kahr, recently addressed the Durbin-exempt nature of this Amex prepaid card in his article titled, ‘Amex Prepaid Card Makes Lemonade Out of Durbin.” Kahr’s key point was that because this Amex prepaid card is not linked to a debit or “asset account,” it is different from earlier debit cards designed prior to the Durbin amendment.

Could this be the start of a new prepaid trend?

A number of studies (including branding studies conducted by Mintel) have shown that there is very little differentiation in the banking industry – primarily because of the endless mergers and acquisitions over the years, but also because banks really don’t do what is necessary to make themselves stand apart from the rest of the industry. The result is an industry that primarily competes on quantifiable criteria such as rates and fees, along with a basic messaging of strength and stability. In other words – the industry is commoditized. And no one institution is doing a good job of standing out from the rest.

If you were to ask executives at most traditional retail banks what their core strengths are, most would use words like “strength” or ”stability”.  Both are admirable qualities to be sure, but are those the qualities most important to their customers right now?

Perhaps not. One of the biggest issues banks and other financial institutions have is the lack of trust people have in these institutions. In a Mintel survey conducted in May of 2010, only 43% of respondents stated that they trust their banking institution to do what is best for their customers. Most people in the banking industry agree that if we can work to regain trust, then we will have made a great deal of positive headway in our relationships with our customers. Hence all of the messaging about “strength” and “stability”.

But those characteristics are not necessarily what cause people to have trust in their bank.

Take a look at these results from another recent Mintel study. The survey questions were worded as follows:

Left column - “Thinking about what it means to “trust” another person please indicate on a scale of 1-5 how important each of the following is in establishing that trust.”  (percentages reflect top two boxes 5 – very important and 4-somewhat important)

Middle column – “Now thinking about what it means to “trust” a financial services company.  Please indicate on a scale of 1-5 the degree to which the following are important in establishing that trust.”  (percentages reflect top two boxes 5 – very important and 4-somewhat important)

Right column – “Please indicate how much each of the following currently describes all bank.”  (percentages reflect top two boxes, 5 – totally describes, 4 – somewhat describes)

The top ranked attributes which people say are important in trusting  a hypothetical bank (middle column) are basically the same attributes necessary for trust in a person (left column). What people want from their bank is honesty, fairness and respect. However, what they are getting from their bank is usefulness and control (the column on the right).

It is time to seriously consider a new paradigm. The economic and financial debacle of 2008 has created what is likely a permanent shift in consumers’ attitudes about banks. This is due in part to the “Decline of Deference” trend, because people have more information to make better decisions for themselves. In other words, people are not relying as much on banks to be their “choice editors” when it comes to financial products.

Obviously banks are not really giving their customers what they want and this can only cause a further deterioration of customer relationships over the long term. How does the industry get past that?

Well, for one thing, they can do a much better job of relating to half of their customer base—women.

Why women?

Mintel’s data shows that about half of women who live in households with an income above $75K are making all of their own financial decisions. And that number is growing every year.

Women are also the biggest users of social media on their mobile phones—which means they could very well be the early adopters for mobile payments if they were approached with the right messaging.

How would that messaging look? It is probably best to start with the numbers comparing the responses of men and women for the list of attributes that we had previously discussed:

Attributes rated as “important” or “very important” in trusting a financial institution

When indicating what they would like to see in order to trust their financial institution, women scored significantly higher than men on every attribute excluding “usefulness”, “control” and “empowerment” —all of which might be characterized as primarily masculine or “rational” attributes.

Now when looking at how men and women describe actual banks we see just the opposite:

Attributes ranked as 5 – “totally describes” 4 – “somewhat describes” all banks

The overall numbers are much lower for both genders, but the genders are reversed, i.e. women are scoring lower than men when those attributes are used to describe actual banks. What this most likely indicates is that both genders are not particularly satisfied with their banks, but women are much more dis-satisfied. And the reason is that they want something very different from what they are getting.

The bottom line

For both men and women, the messaging needs to be less of a reflection of the commoditization of the industry  (control and usefulness, stability and security), and a little more about fairness and respect. And rebranding efforts that incorporate these attributes will do a much better job of capturing the attention of both genders, but particularly women. 

Basically, banks and other financial institutions need to stop thinking about rates and fees, products and services, and start thinking about what the customer really wants. Believe it or not – they want a real relationship with their bank.