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Old Family Banker’s Role Needs to Be Filled

Not everyone welcomes the new technology in banking. “I really like the human contact,” says one man in a B of A promotional movie. “I like to come in and visit with everyone in the bank.”

Forget it, buster. That’s not where banking’s going now. It’s a new age: We’re talking retailing, not relationships; marketing, not just messing around.

Certainly the teller machines, the home banking, the debit networks mean a lot of automation and electronics. For many people, high-tech means low-contact, and they don’t like it. Moreover, bank marketing so far has not successfully made it all sound like much more than a cost efficiency for them. (Some, of course, consider all the self-service good news, having had experiences with bank personnel that give them, says one consumer, “more faith in the technology.”)

Certainly high-tech banking means there will be fewer full-service branches and fewer tellers at their counters. The obvious question is what banks will sell if not friendly tellers and neighborhood convenience, and what the employees will do instead.

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The consensus is they’ll be doing fewer transactions and more marketing. No more just taking money and filling out forms: They’ll be salespeople, just like in the retail world.

‘Selling and Cross-Selling’

They’ll be expected to sell more of the bank’s services to everybody--quite a change in an industry where “a vast number of consumers buy less than two services from any given financial institution,” says Leonard Berry, professor of marketing at Texas A&M; University. This is no easy task, he adds, given “a reasonably mysterious series of services and new products, and a lot of consumers ill at ease and only partially informed.” The same could be said for the personnel; banks “will have to upgrade the quality of the people in teller lines,” says Thomas Thompson, professor of marketing at Virginia Commonwealth University, “to do both selling and cross-selling of a related series of activities"--from “deposit” accounts to loans, brokerage, even insurance.

The selling emphasis could be a problem; some say bank marketing is in its adolescence, others say infancy. “All too often banks have tried to sell customers high-tech automation,” says Berry, “strictly from their own perspective, simply putting it out and expecting people to accept it.” Look at check truncation, or “check safekeeping"--a reduction in service transparently positioned as an expansion. “If they can’t say what’s in it for the consumer,” says Berry, “they have to fall back on charades. In fact, it does provide several real benefits--a cost differential for the consumer, and perhaps eventually some kind of computerized budget analysis of expenditures. Why not do something for the consumer in return for the consumer doing something for them?”

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They’ll also try selling more to the top of the market, the customer providing bigger deposits and more activity. Having “offloaded a lot of the traditional functions,” says Charlie Pedersen, senior vice president of California First Bank, “we’ve freed people up to sell and service more complicated products.”

Two-Tier System of Services

Because those involve personal handling, it’s called high-touch banking, the new companion to high-tech banking. It was precipitated by a competitive environment in which everyone offers the same technology and services, and “everyone” no longer means just banks. Thus, says Thompson, “the customer is at a point where, if he has any strength, he tells the bank what he wants. And if the bank says no, he says thank you, go to hell, and goes to Merrill Lynch or Sears or somewhere else. So banks are giving that aspect of the retail market the same kind of attention they always gave corporate customers because corporations have so many places they can go.”

The attention could include a “personal banker” at B of A, among others--someone who coordinates multiple accounts for customers who have them, providing advice and even financial planning, using computer analyses of the customer’s financial affairs. Hardly mass market, high-touch gives banking a two-tier system of services, just as many critics predicted: Already banks distinguish between plain “customers” and the “clients” whose multi-service relationship with the bank qualifies them for such personal handling, or “relationship banking.”

The push to sell more and to treat the best customers as special certainly puts banks squarely into the retail tradition, although there’s something very gee-whiz about the way it’s presented. Even Berry and Thompson, two esteemed and oft-cited commentators, write about banking’s new marketing “mission"--"not only attracting new customers to the bank but also servicing and selling existing customers"--as if it weren’t the oldest selling principle in any good merchant’s book. Even “relationship” banking is old hat, a principle appearing in sales campaigns that range from today’s “frequent flyer” programs back to the special stops of yesteryear’s camels and caravans.

The principle is not even new to banking: For years, customers with substantial balances got many services free of charge and favored treatment. Banks tried briefly to introduce “explicit pricing,” charging everyone equally for every single service, but soon began again to waive those costs for people with significant “account relationships.”

The current “relationship banking” may be, in Berry’s words, “more formalized, more segmented, different in both degree and kind,” from the old family banker, but it’s the same old idea. Banks have dug their way out of competitive darkness and struggled into the light only to find they’ve met their own other end.


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