How banks can be pillars of the community in the 21st century

Posted October 17, 2006

Remember the end of It’s a Wonderful Life? The entire town came together to help Jimmy Stewart’s Building and Loan because he was a keystone of the community.

My town’s banker, Walter Deutsch (Unity Bank):

WalterDeutsch.jpg

This mythical age of banking may have never truly existed, but we seem to be moving further away. As banking moves online and credit scoring replaces reputation, banks sacrifice the human touch.

As community dissolves, banks lose. We are still highly trusted, but there are fewer places to apply that trust.

Don’t get me wrong - technology is terrific for banks and their customers. Anyone who feels different should imagine life without ATM and credit cards. But where does community fit?

Smart bankers have always used automation to handle their mundane tasks better and focus more on their customers. They visit their customers, sponsor community events, and make their branches more inviting. Many banks are now using CRM systems to enhance their customer contacts. These steps help, but they are only keeping pace against the treadmill of iPod isolation.

Web 2.0 is finally delivering technology that enhances community: social networking. In a nutshell, sites like Insider Pages, Yelp!, and Judy’s Book allow people to recommend local businesses. These are more than blind reviews. Users care about the reviewer’s reputation and don’t want to read marketing puffery.

Social networking will become increasingly important and banks can use this to enhance community. Banks should think about applying their reputational power. Branch managers can simply write reviews for the good businesses in their area (starting with customers).  Follow up with a note to the business owner and you have just built goodwill along with community.

UPDATE: Bankwatch points out the flip side of community: online alienation.

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4 Comments so far

  1. Jay Bhattacharya on October 17th, 2006

    An interesting hypothesis is that if the introduction of virtual community capabilities happened 10 years prior in the banking industry timeline, the ability for the retail banks to take advantage of these supra-community tools may have been more leveraged. With the mega-merged, mega-cap banks and the service only branch network that emerged from these monoliths that you HAD to do business with, the interest to commune with society and the leveraging of the trust in banks has not occurred.

  2. Colin Henderson on October 17th, 2006

    I think all is not lost. The tools and concepts embedded in Web 2.0 and in particular engaging customers at an emotional level over the web is a start. Its just that Banks till now believed all they had to do was put all their transactional capability on the web, and everyone would be happy.

  3. Banks risk alienating customers - 2 « Bankwatch on October 17th, 2006

    […] The Price of Everything, builds on the concept that we spoke of here, that online banking is satisfying customers to a point, but it is not addressing customers needs to develop a relationship and be known at their Bank. This mythical age of banking may have never truly existed, but we seem to be moving further away. As banking moves online and credit scoring replaces reputation, banks sacrifice the human touch. […]

  4. mschoeffler on October 17th, 2006

    Jay -

    Interesting thought experiment.

    But I think the loss of community is much bigger than banking. It’s just that banks are one of the few large industries to suffer at all from this loss.

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