Late Payment Notice

Where is the retail in retail banking?

Retail banking remains the poor stepchild of North American financial organizations. Few banking CEOs have ever had line responsibility for their banks’ retail divisions. It’s as if they are in retail because they have to be, rather than want to be. As one catty white-shoe banker told me after having had one too many, “Retail is where we park women, and guys with funny last names.” We have been asking the rhetorical question for more than thirty years: where is the retail in retail banking?

Last October, I ran a short consulting project for a major US bank. The assignment was to lead a group of global brand managers through a prototype branch and talk about what worked and what didn’t. We call it a store, or branch, clinic. I’ve conducted clinics in a dozen countries across the world. It is an unambiguous way of assessing the effectiveness of the physical design, merchandising and operating culture, on location. The client bank is one for which I’ve done work for more than 30 years, starting with their first installation of ATMs to their modern domestic prototypes, and most recently their new models for Moscow and Singapore. The irony is that the connection internally between those that manage the brand, and those that design the branch, is often distant.

At first, the work was to happen in Tokyo, then it got moved to London and finally ended up taking place here in New York City at the very branch I do both my personal and business banking. At risk of calling to mind the Cheers theme song, it’s a place where the tellers greet me by name, and the bank manager always returns my calls. I am what they call a gold customer.

After selling me on the premise that there were advantages to having all my accounts under the same roof, the reality is that various banking silos—credit cards, investment services, mortgages and other financial products—have very little to do with one other. As well as the branch staff treats me, the flaws in the system have contributed to more than half my business having been lost to other institutions over the past ten years. The bank does not have a credit card that doesn’t have a foreign transaction fee, in spite of billing itself as an international institution. And having a seven figure total balance doesn’t translate into any real advantages in applying for a mortgage, much less a lock in a competitive rate. Neiman Marcus and Macy’s (M) know who their best customers are. But let’s get back to ground level.

The Robin ReportAny clinic I conduct starts on the outside, either on the street or in the parking lot. That is where the customer experience starts. We asked the very simple question: what can a passerby read from the outside? In this case—a branch bank on lower Fifth Avenue—the answer is not much. There is often a homeless person who controls the door or solicits donations from exiting or entering customers. The signage and window displays, like the posters and much of the signage on the inside, are recycled print, media and online advertising images. They have nothing to do with that branch, the unique customer base it serves or characteristics – opportunities – in the surrounding community. Despite a culturally diverse staff, Hispanic branch manager, and the presence of a distinguished educational institution less than 100 yards away, there is nothing in the windows or vestibule that showcases my branch as a major global bank.

In the ATM vestibule, there is the ubiquitous flat screen monitor, playing a variation of the media ads the bank runs. Not one person in ten entering or exiting the branch looks at the TV. For the one in twenty that does, the typical exposure time is less than three seconds, a duration that has absolutely nothing to do with the structure of the programming playing on the screen. The screen placement is not situated where it might get the best exposure, so was probably installed to look symmetrical in the architectural renderings of the branch. As people stream in and out of the branch, it isn’t hard to point out where the screen should be.

What’s known in the industry as the check-writing ledge is less than eight inches wide. There is a direct relationship between the support of the wrist and forearm while writing, and the writing’s legibility. An eight-inch wide writing surface is an architectural decoration rather than a functional surface. The error rate in processing handwritten deposit slips is directly linked to the writing surface where they were filled out. In this case, what was also missing on the ledge was the key piece of information that goes onto every slip – today’s date.

The greeter desk has two seating positions behind it and is open only on one end, which is the farthest end. To go from sitting at the desk to being out on the floor is a minimum of twenty steps. Our experience has been that with greeter desks open at both ends, the ability and frequency of the person assigned to that desk stepping out from behind it goes up by a factor of two. One of the operational issues with modern bank design is the challenge of getting people out from behind their desks and out on the floor interacting with customers. Historically, in any branch bank in America, the person sitting at the desk farthest from the front was generally the person in charge. This branch is no exception. To be fair, the branch manager often leaves his office and during many peak hours can be found staffing that front greeting desk. In banking and in battle, good leaders lead from the front.

One of the most difficult issues in branch design is to get past the legacy of bank robbery. As you should remember from any classic western or gangster movie, massive bars, sometimes of plexiglass, have historically protected the tellers. The concept of “we are on this side of the fence, and you are on the other” has been part of retail banking for centuries. Go back to the moneychangers on the Temple grounds of biblical times and you’ll find the same real or conceptual fence. However, in 2011, as bankers try to shift as much of the transactional business as possible from a teller station to online, the telephone, or the ATM, branch banking should be trying to break free of the historical ties that prolong this divide with the customer.

For the vast majority of citizens, the exercise of going to the bank is a chore. We don’t go to shop; we go with the expectation of getting in and out as rapidly as we can. What drives us in the door is a specific mission. What progressive retail bankers seek is the opening to have a conversation. Money is a topic that is endlessly fascinating in the world of Suze Orman, or the business section of the local bookstore, yet is curiously missing in your local branch. Almost every major event in our lives, from graduating from high school, to marriage, to buying our first home, to birth of a child, to a divorce, to the incapacitation of a parent, to retirement, has huge financial implications. Your branch bank and your branch staff are where you should be turning to get information and education to guide you through those events.

The modern branch isn’t about interest rates, or the sale of financial products; it is about facilitating life’s changes. In any branch bank there are distinct and focused opportunities to offer those services. Progressive merchants look on the three dimensional spaces as a piece of branding, and the messaging that goes inside them as information architecture.

It was a fun clinic; I enjoyed doing it and the small group of bankers responded very positively. We have been informed that a large amount of the material discussed has been put to work, and other themes and messages are still percolating.

My contract called for a fifty percent down payment on the job and the balance in thirty days. I have yet to be paid a dime. Multiple e-mails, re-issuing of invoices and several phone calls later, and finally, I was told last week, “please be patient, we are changing our payment systems.” The bill is coming on 120 days overdue. What would happen if I treated my mortgage payments, much less my credit cards, in the same fashion?

There is a new branch prototype of this bank that opened in January in Union Square. Many of the same mistakes we have been reporting on for the past thirty years have been repeated. If any of the bank’s board members are reading this piece, I’d be happy to give you a tour of that branch for free. I and the rest of your retail customer base deserve better.

Paco Underhill is the CEO of Envirosell (www.envirosell.com) a behavioral research and  consultancy firm focused on commercial environments. His first book, Why We Buy, was an internationally bestseller. Call of the Mall, released in 2004 is a humorous walking tour of an American shopping mall. His columns and editorials have appeared in The New York Times, Money Magazine, The Washington Post and The Wall Street Journal, among others. Underhill is the only foreigner to hold a position on the Board of Advisors at Hakuhodo—Japan’s second largest advertising agency. His latest book published in July of 2010 is entitled What Women Want. It is not a sex manual.

Paco Underhill About Paco Underhill

Paco Underhill is the CEO and Founder of Envirosell, a behavioral research and consulting firm with 10 offices globally. Paco and Envirosell’s work has been featured in The New York Times, 20/20, National Public Radio, Smithsonian Magazine, Wall Street Journal, and other major news media. Paco is also the author of What Women Want, which was published in soft cover edition by Simon & Schuster in July 2011; Call of the Mall, a walking tour of the American shopping mall; and Why We Buy, the bestselling book about retail in history. In addition, Paco’s columns include regular features in major trade publication DDI Magazine, as well as Goldman Sachs’ in-house publication.