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?

Like all parents I teach my kids to always tell the truth. Honesty is important. Very important. At the most basic level, if you always tell the truth, you don’t have to worry about remembering what you said. On another level, if you always tell the truth, then people will trust you in the future, accepting your word at face value. And of course, it’s nice to be able to look yourself in the mirror at night and know you did the right thing.

The media headlines these days are filled with tales of corporate dishonesty. The list is long, and the transgressions differ. But it all boils down to the same thing…important people who wielded an incredible amount of power have lied. Bernie Madoff. Eliot Spitzer. Jeffery Skilling. Kenneth Lay. Arthur Anderson. And for those of you in the tri-state area, Eddie Antar.

These days corporations seem to disclose things in itty bitty print buried in a revised terms and conditions document. My bank did this to me recently. They started charging me for online banking. (I mean seriously. They WANT me to do online banking. It makes me a loyal customer, remember?) I am sure they sent me a notice that I missed somehow.

Regardless, I don’t feel like they looked me in the eye and stated, “Susan, based on the type of checking account you have, we must charge you $4.95 per month to pay your bills online.” Turns out that the type of account that I opened, about 8 mergers ago, was no longer available and wasn’t eligible for free online bill pay.

However, based on my activity, and my relationship with my bank, I do qualify for free online bill payment. The bank had to “upgrade” the type of account I had, which from my perspective meant that they just had to change the name of the account. I’d feel much better about my bank if they had more proactively reached out to me and suggested some changes. Honestly.

Perhaps if banks would clearly and simply state what they are doing, customers would trust them more. After all, isn’t it about the customer?

In a recent blog post I mentioned that I didn’t feel as though I had a relationship with my bank. Instead we have a “transactional history.” To figure out how my bank can really help me, I’ve started talking to various people about what it is I want from my bank. (My colleagues are interested. My friends and family think I am a bit crazy.)

I really need my bank to offer me services and products that will Keep My Life Running Smoothly. For me that means keeping me organized and on top of things. I struggle with organization. It just doesn’t come naturally to me. And with a husband, an elderly dog that requires almost weekly trips to the vet, three young kids, a job, and 10 caterpillars that I’m raising to become mature, independent adult butterflies, I need all the help I can get.

In my statistically non-valid sample, I’ve determined that most people can use help in getting more organized. Except for my neighbor. She is a natural organizer. In fact, it’s what she does for a living. She is starting a project for me this weekend, so hopefully by next week I will be a Truly Organized Person.

And that brings me back to What I Want From By Bank. I think there are a lot of things that banks could do that they are not currently doing, but would greatly help customers – specifically me. So here’s my wish list:

1. I want all my bills sent to my bank electronically.
2. I want a calendar that shows when they are due.
3. I want emails to remind me to pay a bill.
4. I want budgeting ability.
5. I want to track special things like my Christmas spending and how much I spend on my kids’ birthday parties.
6. I want remote deposit.
7. Sometimes I want to do it all through an app on my phone.
8. Other times I want to be able to do it on my computer.
9. Ideally my phone and my computer would sync everything together for me.

My bank will probably say that all this is impossible. But I know it is possible, because other banks are doing it. For example, First Internet Bank of Indiana allows customers to have all their bills sent to the bank. I know this because a friend of mine has an account with them. She is amazed that my large, national bank doesn’t provide the same type of service. To make sure I wasn’t missing something, I double checked my banks’ website. If they provide the service, I certainly can’t find it.

We all know that USAA has an iPhone app that allows remote deposit. Bank of America allows remote deposit through a scanner. (Industry experts are expecting the bank to launch its own remote deposit app for phones, given some public comments made by the CEO.) I think all banks should offer remote deposit.

Then I found out that Zion’s bank offers a great budgeting tool called eZBudget. The tool allows anyone (not just customers) to set up monthly, project, event and gift budgets. For some reason banks don’t seem to be eager to move into this space and they’re letting outside players such as Mint.com own online budgeting.

So, I don’t really want a “relationship” with my bank. I have relationships with the people in my life, not the businesses. Instead, I want to be treated as a valued customer and be offered the products and services that help me manage my financial life.

For me the highlight of the Digital Marketing Days Conference held in New York this week—Mintel Comperemedia was a sponsor—was listening to Thomas Hoehn, Director, Interactive Marketing and Convergence Media at Eastman Kodak. In his session entitled “Your Brand Deserves More Conversation,” Thomas showed how Kodak is a leader in social media marketing. As financial services companies grapple with social media, they could do themselves a big favor by looking at Kodak for an example of best practice.

Kodak has transformed itself, in recent years, from being a traditional “film” company into being a “digital” company. This was primarily an issue of consumer perception. After all, when we think of Kodak we think of a “Kodak Moment” – a phrase first used in 1961 which was meant to represent a special memory captured on Kodak film.

However, not many people know that Kodak was a pioneer of the digital camera business and actually invented the first digital camera in 1976. Fewer people know that, because of Kodak’s digital technology, it was able to provide the only television pictures of the Tiananman Square Protests in 1989.

A key part of the Kodak strategy involves social media, and the company stands out as one that has truly welcomed social media into its marketing mix. Kodak produces four blogs—it has been blogging for four years—and is always seeking new and creative ways to utilize the full range of social media tools.

Thomas Hoehn passionately believes that the worst thing consumers can say about you is nothing. Positive and negative comments about your brand, products or category abound in social media and both can provide marketing opportunities.

He handed out a color booklet entitled “Social Media Tips” which has been produced as a guide for vendors and partners of Kodak. The booklet includes Kodak’s social media policies as well and an outline of the company’s “Convergence Media Tactics.” It provides fascinating insight into Kodak’s approach to social media. He also handed out a booklet entitled “Mobile Marketing Tips.” You can download both booklets and review Kodak’s social media marketing efforts at http://www.kodak.com/US/en/corp/ourCompany/index.jhtml?CID=go&idhbx=followus.

To see how Kodak has recently updated its “Kodak Moment” campaign for social media, go to http://www.youtube.com/watch?v=HA9puP2f6Fs.

I like my bank. Through online banking I tell the bank which bills to pay and the bank pays them. Once a month my bank wants my mortgage payment, so I submit it electronically. Both sides seem relatively happy.

And to be honest, I think I’m a great customer. We have two checking accounts, three savings accounts, a jumbo mortgage, a line of credit, and a credit card account. I pay almost all my bills online and use the ATM for my deposits and withdrawals. I go to the teller once a year around Christmas time. Every once in a while I make a mistake and the bank kindly transfers money from my savings account to cover my oversight. They happily charge me a $10 fee for this service. I don’t begrudge the fee, after all, I’m the one who made the mistake. Clearly I’m a perfect customer – I have multiple products with them, I don’t cost them a lot, and every once in a while they can assess me a fee. I’ve also been with them for 13 years. Loyal and profitable, what more could you want?

Recently I’ve read a lot about how banks are trying to develop “relationships” with their customers. I also see a lot of offers in the Comperemedia database about “relationship accounts.” (I’ve presented on this topic – see the Seven Predications for the Future of Banking Webinar.) In thinking about this, I’ve realized that I don’t have a “relationship” with my bank. At least not from my perspective. Instead, we have a “transactional history.”

Case in point…I recently discovered that my bank was assessing an “inactivity” fee on my checking account. To be frank, my position is that the value of all my accounts should trump an activity fee of $6. Typically, in a “relationship” there is a natural back and forth communication process which allows the relationship to evolve and continue. If we truly had a “relationship” I feel the bank would have called, emailed, texted, mailed, or posted something on the site when I logged in as me. Something along the lines of, “Dear incredibly valued customer: We are concerned about the lack of inactivity on your account. Because we love you as a customer, we would like to suggest some ways to avoid an inactivity fee. Please, dear customer, call, write, email or text us back so we can mutually address the issue.” Instead, I took the time to call the customer service department. When I pointed out the size of my relationship, the rep responded by reading me the terms and conditions of that particular account. After doing this twice, I asked to speak with a supervisor.

I’m happy to report that all fees are now refunded. The supervisor convinced me to establish automatic deposits on the account, which solves the inactivity issue, but also builds the balance. I’m happy to report that both bank and customer are satisfied. But I’m still not sure we have a “relationship.” Maybe we just need to get to know one another better.

I recently bought a new cell phone. I previously had a phone that let me do my email and instant messaging, but wouldn’t allow me to do much else. I learned a lot of important things during the process of buying a new phone. Most importantly I learned that I only TALK on my phone for about 83 minutes every month. (My husband, who supposedly hates cell phones, uses our other 1,317 minutes each month.) But I’m getting off topic…

When I realized how little I talk on my phone, I realized that I needed a newer phone that would allow me to do more STUFF on it. What else I needed to do on it wasn’t exactly clear, but how else could I justify the $219 we pay each month for our cell phones? (Two phones, both with data and 1,400 minutes.)

After the agonizing process of trying to find the perfect phone, I now own an Android Incredible. I’m still learning how to use it. In fact, I’m learning really important stuff about it every day. So far it’s helped me navigate to strange places across town and find a restaurant in the mall. I also now always know the five-day forecast. Yesterday I bought my first app for the phone. It is going to organize my entire life and I know it will be life changing. I have a long list of other apps that I want to find.

I didn’t grow up with a cell phone. I didn’t grow up with a computer, let alone email or the Internet. I didn’t grow up with a scanner, a fax machine, a color printer, or an iPod. I grew up with Trim Line phones, typewriters and record players. But in this day and age I use my phone to run my life. I use it for my email, instant messaging, my entire calendar, my grocery list, my to do list, Facebook updates, GPS navigation, the weather forecast, to name a few.

And that brings me—albeit in a roundabout way—to my point. Mobile banking. Clearly mobile banking is going to happen – it needs to happen. It’s a question of when, not if. Right now mobile banking isn’t on my list of things to do on my phone. For me to do mobile banking, I need my bank to receive all my bills electronically. And I want to be able to use my bank to do all my budgeting. Those two things would make mobile banking work for me. But right now I don’t want to pay bills remotely because all my bills are at home in a folder. Is there an App for that?

Nothing annoys consumers more than paying for things that used to be free or feeling that they are being nickel and dimed. As the banking industry struggles with how to recoup money lost to overdraft fee income, they are wise to take some lessons from the airline industry.

The airline industry attempted to stem huge financial losses by charging a wide variety of fees. Flyers now pay to book the ticket, redeem frequent flyer miles, make a particular seat choice, change a ticket, check bags, obtain a pillow or blanket, and for food and drinks.

Unfortunately, added fees haven’t propelled the travel industry into profitability. AMR, parent of American Airlines, posted a $1.5 billion loss. US Air, Continental, United and Delta also posted losses. Combined, the industry lost $3.4 billion in 2009.

Southwest, however, was one airline to post a sizeable profit. The company heavily advertised “Bags Fly Free,” and that strategy may have paid off. The company’s Chairman and Chief Executive Gary Kelly attributes the success, in part, to the fees that its competitors are assessing. In a January conference call with Wall Street analysts, he was quoted as saying, “I hope they charge $100 a bag. That would be terrific. We’ll have 100 percent load factors.”

Going beyond the fee

With customer satisfaction, loyalty, and brand image on the decline over the past few years, banks can hardly afford to alienate customers. Rather than focusing on what fees to charge, the industry should focus instead on innovating services and products that give people confidence. It’s not that fees are never justified – it just might not be wise to assess fees on previously free services. In fact, a recent JD Power study indicates that high customer satisfaction rates are possible to maintain as long as consumers perceive that they are receiving sufficient value in exchange.

At the end of the day, customers know that it’s their deposits that fund the banks other, more profitable, activities. So while consumers need a place to bank, the banks need consumers just as much. Shouldn’t there be recognition of the mutual need from both parties?

As media continues to tell stories about the lack of loans to business and consumers, a number of banks are currently running “Continue to Lend” or “Responsible Business” print advertising campaigns.

These campaigns come in direct response to an environment that calls for banks to articulate what they are doing, especially as the press continues to report about the lack of lending. It is definitely an effort to focus on the positive and move beyond the troubles of the past few years by highlighting their newly-implemented practices of responsible lending.

Recently, Chase launched its “The Way Forward” campaign, which includes media support and a microsite. The ads communicate the company’s commitment to lending and, similar to other banks, the ad provides lending statistics for the past 12 months. The company placed targeted print ads which detailed lending activity by state. The campaign utilized testimonials from companies located within the state where the ad ran and stated how Chase helped.

Not to be outdone, Bank of America ran ads informing readers, “Last year, we extended more credit than any other US Bank. It’s part of our effort to help fuel the economy.” Another ad read, “Thank you.” This ad was directed to US taxpayers for the TARP money and announced that the bank had repaid the money. The ad included “The Facts” which listed the type of lending and the amounts the company had done over the past 12 months.

It makes sense that in troubled times, companies would focus on what they are able to bring to consumers and the economy. Banks are taking steps to discuss what they can do for consumers and not letting failures or the economy define the company. These efforts help increase employee morale and begin to rebuild trust with consumers. Expect these campaigns to continue until banks are on more stable ground and public opinion is more favorable.

Thank you everyone for attending my webinar yesterday on 2010 Banking Predictions, and thank you for submitting so many questions. I’ve answered most of your questions below, so let me know your thoughts!

If you’d like to download the slides or listen to a recording, click here.

Also, if you’re interested in learning more about Mintel Oxygen’s Finance Reports, please email Zach Leahy at zleahy@mintel.com. You can see a list of past and future titles here.

Q. Have you noticed a penetration difference between the $15 incentive and the $50 incentive. What is the optimal figure?

A. The $15 and $50 cash incentives were for increasing debit card usage. Typically on an acquisition campaign we see about $100, although amounts are increasing. For loyalty campaigns, the amounts are lower. The optimal figure is dependent on the total cost to increase debit card usage and the long term profit. Each bank is going to differ in that equation.

Q. As it relates to incentives, do these predictions still apply to non-traditional banks, like Schwab bank and other asset managers looking to acquire new clients and assets?

A. Investment firms are struggling right now with an image crisis. As a result, most investment marketing is focused on regaining trust or convincing consumers that the firm is focused on the customer rather than just on selling products or services. Investment firms typically don’t rely on incentives to acquire customers. Instead they rely on free seminars, webinars, education, etc.

Q. Do you predict any differences in these trends between banks, credit unions or other types of financial institutions?

A. Credit unions and smaller banks are less likely to use cash incentives and more often offer merchandise or the offer to buy back unused checks and debit cards. Across the other trends, however, we see similar types of things. We tried to incorporate examples from all types of banks to illustrate that point.

Q. Who’s going to win, regional or big banks?

A. Big banks are always going to win on the national level. However, while it’s almost impossible for a regional bank to compete with Chase, for example, on a national level, they can certainly compete with the Chase branch across the street.

Q. What banks do you see as having best practices in social media at this point?

A. Since banks are doing so little in social media, none of them really have developed a “best practice.” Certainly Chase was successful in its Community Giving Program that it moved to Facebook. It was a program that existed offline, but in an effort to make consumers part of the decision, the company moved it online. More importantly, Chase did it in a way that allowed Facebook members to participate in a meaningful way.

Q. Have we seen debit card promotions targeted at non-customers?

A. Absolutely. Debit cards are being aggressively marketed in acquisition campaigns. We see this mainly through rewards programs, since rewards are earned primarily through debit activity. But we also see cash incentives for opening a new account tied to a debit card and debit usage.

Q. Any predictions on credit cards as stand-alone products outside of a banking relationship?

A. Companies have recently moved away from this, so I don’t expect a return anytime soon. MBNA was bought by Bank of America and Capital One obtained its banking charter so that it could use deposits to fund its lending activities.

Q. Can you explain how the deposit money app works on the iPhone?

A. The feature works through an iPhone application that customers download from the iTunes Store. When the user accesses the application they are asked for their user name and password. To deposit a check, the customer touches “Remote deposit.” The check must be placed on a dark surface. Then the customer takes a picture of the front and back of the check. While in this mode, green lines are visible so the customer can line up the check correctly. Once both sides are captured, the customer clicks submit and the transaction is complete. A video of the process is available here:

Q: Have you developed any predictions for the future of credit cards?

A. My colleague Andrew Davidson conducted a webinar last September titled “Seven Predictions for the Future of Credit Card Marketing.” If you’d like a copy of this presentation, please email press@mintel.com. His predictions were:

1. Direct mail is coming back
2. There will be more integrated marketing campaigns
3. The brand message will become more important
4. The CARD Act will lead to creative new products
5. The national wallet will shrink
6. The subprime segment will redefine itself
7. The card industry will adapt to the environment

Today (Wednesday, May 5th), Mintel Comperemedia is hosting a webinar on “Seven Predictions for the Future of Banking.” Join Susan Wolfe, Vice President of Financial Services, as she explores seven key predictions for banking in 2010, using research and examples taken directly from Mintel Comperemedia and custom consumer surveys.

You can register and learn more here: http://www.mintel.com/us-email/compere_sevenpredictions.htm

This presentation will examine:

–The return of banks to “relationship banking” and how they will promote this
–Incentives and their importance in acquisition marketing campaigns
–Use of financial literacy programs by banks as they rebuild from the financial crisis
–Mobile banking as the “new” online banking
–Use of social media among financial institutions

Date and Time: Wednesday, May 5th, 2010 2:00pm-3:00pm CST (45 minute webinar, 15 minutes of Q&A)
Cost: Free