Retail specialists urge bankers to get into marketing

HONOLULU -- Your bankers may soon be out to get you, with sales pitches geared to your financial and social situation.

Reject stodginess, leave your desks, study customers' needs, retailing specialists told bankers attending the American Bankers Association convention in Hawaii's largest city.

Tellers must educate people about bank-offered mutual funds and insurance, trust accounts, stored value cards, home equity lines of credit. More services mean more fees -- and more profits, currently at record levels. "Everybody says to me, `What's banking going to look like,' and I say, `It's going to look like the grocery business,'" said William Seidman, a top bank regulator-turned TV commentator, who prepared a 10-point list for successful banking. "Marketing is everything because you're selling a commodity." The commodity sales already have begun in some creative ways, often at community banks. Consider South Umpqua Bank of Roseburg, Ore., where customers sip house-branded coffee at bars beside serpentine glass-block room dividers. They surf the Internet, watch business news on TV. And they are pitched "value packages" of bundled services at "classic," "premium," "gold" and "platinum" levels. It's part of bank chief Ray Davis' plan to expand from five to 11 branches and sell more financial products to every investor at each of those banks. So far, those "cross sales" have skyrocketed. "Bankers don't understand bank image at all. It's a sea of sameness," says Charlene Stern of Berkeley, Calif., a former Levi Strauss marketing specialist now applying those talents to help Davis and others abandon the "temple of money" look and attitude. The push to more user-friendly banking comes at an industry crossroads. U.S. commercial banks will turn a $50 billion profit this year. Bad loans are down two-thirds since 1991 and capital cushions against losses are at levels last seen in 1941, Federal Deposit Insurance Corp. Chairman Ricki Helfer told the bankers. But mutual funds and other investments have reduced banks' share of total savings from 34 percent in 1990 to 24 percent in 1996. To keep banks healthy, regulators are making it easier for them to provide more services, said Comptroller of the Currency Eugene Ludwig, another top regulator. If only they would learn how to do so, says Stern. She was first hired as a marketing expert by Wells Fargo Bank where, seeking first-hand experience, she stood in a branch lobby for 27 minutes before an employee greeted her. Smart retailers fall over themselves to get customers through the door; banks let hundreds per day queue up in silence, Stern says, almost groaning. "Staring at the backs of those customers are sales people sitting at desks, just staring at the very customers they need to get to know to make their sales quotas," she says. At South Umpqua Bank, the traditional teller-loan officer distinctions have been banished. Everyone's job is really sales -- and making caffe lattes, Stern says. High technology is a banker's friend in the new endeavors, allowing identification of key customer groups that can then be custom-pitched appropriate products -- mortgages for young professionals, trusts and savings accounts for older customers. Anita Gentle Newcomb, a Washington, D.C., consultant, showed off computer programs that break down bank customer bases into "lifestyle clusters," showing the size of each group and the percent of profits it throws off. In one example, the "Pools and Patios" crowd -- 45- to 65-year-old college-educated empty nesters -- accounted for 35 percent of a bank's accounts but 41 percent of profits. "Young Suburbia" had 14 percent of accounts but 20 percent of profits. Obviously, it paid to concentrate on those segments. But woe may betide depositors at another bank whose cluster was titled "Back Country Folks." They and other less desirable groups produced little profits for a lot of work. Indeed, said Newcomb, studies show that 60 percent of households with bank accounts are modest money-losers for banks. Banks must either convert such customers into users of more fee- generating services or "let them go down the street to your competitors' bank and be their unprofitable customer," Newcomb said.

Copyright 1996
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