Invert the Pyramid - And Then What?

At major banks, a CIO can draw a salary of up to $1 million. At the bottom end are check processors and tellers. Turnover at these levels pervades the entire industry. Technology never compensates for poor performance in these two key positions. Like restaurants, a bank branch at any time faces a surprise visit from a premium customer or an industry critic. That may turn out to be her most important visit (and even the last one ever). Professionals usually enjoy the luxury of advance notice of a key client visit. Tellers do not.

No way a bank would dare to invert the compensation pyramid, but at least incentive vehicles make eminent sense when selling at POS. One idea would bring professional advisors and analysts to the branch weekly and rotate them among branches. With promotion and appointment sign-ups, customers could be cross-sold. Tellers won't do it all, especially without the expertise or incentives.

Teenagers with Adult-Sized Debt

Pre-teens and teenagers are prime targeted segments. Their purchasing power is backed by a parent's credit card. Brand impressions form, and loyalty can go for a lifetime.

Credit card issuers aren't holding back, especially on campuses, where promos permeate. But Nellie Mae reports that campus credit card balances average $1,843. College administrators express serious concerns.

If brand loyalty lasts a lifetime, so should the customer's financial well-being. Banking firms should not hesitate to devote resources to meet and plan the financial needs of students. Perhaps here's where nationals and super-regionals can deliver, due to customer mobility.

Help for the Internet Banker

Pretend that the bank's virtual mall becomes real, banners included. The customer can, at one NYC bank's site, open 35,000 doors. Customer choice is king and will be in the next century.

Customization for a bank site versus a customer's personal site/desktop are totally different issues. Internet banking utility parallels simplicity. For instance, over 55% of customers get lost on bank Web sites, according to NetSmart America. This is not good. Instead of being within easy reach and return, the customer is spun outside of the massive electronic mall. Clicks refract into disparate directions.

Forget the brand packing for a moment. Give the customer simple, reliable navigability on the site. Build it even in-house with a specialized or customized page-tracking feature. Make sure it is tested from a PC with an average speed modem. Absent reference points, customers get lost, sometimes for good.

The CEO Footnote . . .

HBS Associate Professor Clayton Christensen shared his underlying hypotheses about innovation this week at BAI Retail Delivery '99. The analysis in his book Innovator's Dilemma: When New Technologies Cause Great Firms to Fall is compelling. One theory he advances is this: A bank's business unit survives only if directly challenged by an autonomous, competing business unit. Internet banking units engage management attention and receive internal subsidies. These units disparage the paper check but have unwittingly tested the resilience of the paper check. Unless the Bank makes it prohibitively expensive for customers, it will survive. Rather than remain in denial, the Bank could exploit new ways to make paper checking more fee-driven. In other words, move Internet banking out of protected status and force it to thrive in the long term.

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