It was just a little less than 18 months ago – September of 2010, to be exact – and Citizens Bank was aflutter. It was opening a new branch at Legacy Place in Dedham. But not just any new branch – this, according to Citizens, was a model of innovation.
“The full-service branch is a first of its kind design for Citizens,” the bank crowed at the time. “It has innovative features created to serve busy customers at the popular new open-air shopping, dining and entertainment destination in Dedham.”
But the bank’s idea of “innovation” wasn’t anything like, say, Apple’s take on the word. Among the revolutionary new concepts Citizens brought are private spaces where customers can talk to bank personnel, a small-business banker on site, as well as a wealth management officer and video and audio streams that advertise things Citizens wants customers to buy.
Citizens’ innovation managers, it seems, have never been to a Stop & Shop.
Banking in the United States isn’t a true hotbed of innovation, at least not when it comes to actual product creativity. Research by Bank Innovation Monitor found that most consumers don’t think their bank has done anything innovative.
Of course, there’s a caveat here. Banks have actually been good at driving additional convenience for customers. Being able to scan checks right into an ATM without a deposit slip, adopting mobile banking options, and more, have all made the banking experience a little easier for consumers.
But that kind of advancement has been driven primarily by bank technologists – the IT department. It hasn’t been the province of the bank’s business leadership.
What’s missing isn’t convenience evolution, but product innovation. In the 1970s and 80s, banking saw an explosion of new products: New England created the first checking account for savings institutions with the NOW account; certificates of deposit allowed consumers higher returns and gave banks longer-term access to funds; there was the birth of the individual retirement account (IRA), and overdraft protection came into being.
Now think about what actual new banking products have been rolled out for consumers in the last five years. And no, onerous new fees don’t count.
Listening To Customers
Indeed, the customer base for banks is making itself clear that it’s fed up with being fee-d to the poorhouse. When Bank of America announced last fall it was imposing a fee for using debit cards, the nation’s credit unions opened almost three quarters of a million new checking accounts in less than a week – the same amount of time it took BofA to back off its anti-customer initiative.
Banks need to drive new revenue, particularly as their current revenue streams are being cut off, scaled back and attacked by consumers – and Congress.
But the answer shouldn’t be to just make up for slacking revenue on one side by jacking up fees on another. The answer ought to be to go out and innovate. Find something new consumers want, and for which they’re willing to pay.
Perhaps the answer doesn’t lie here in the U.S., but down under. There, Commonwealth Bank of Australia (CBA) is celebrating its centenary. But there’s a reason it’s reached that milestone. It doesn’t act like it’s old. It acts like it’s on the cutting edge.
It knows its bankers don’t understand everything that consumers might want. So CBA has turned to crowdsourcing. It created a new entity dubbed the “Idea Bank.” It launched a media campaign, including YouTube videos, urging Australians to submit ideas for innovative banking products. The campaign runs until March. Then, the best ideas will be put to a vote by the bank’s executive team and customers, with the overall winner pocketing a $10,000 prize.
CBA says the winning idea will be developed internally and released to the community through the bank’s My NetBank Lab portal, where customers can test new products and services before they go to market.
Asking customers for new ideas? Creating an online portal where they can play with new products, and new delivery systems? Are they mad?
Maybe they should to take a moment and go to the mall, where they can chill out in a private office while a wealth management officer plays them video of products they ought to buy.
