Can Big Banks Buy Back Our Love?
Can Big Banks Buy Back Our Love?

With so many trust issues, it’ll take much more than a good app to save this relationship, but it can be done.

Hello, I’m the Bank of Blue online banking chatbot. You can call me Jim. How can I help you today?

Hi Jim, what’s the best credit card for me to get to earn air travel miles?

Okay, we offer the Bank of Blue Skies Visa credit card for you to earn travel miles for every dollar spent. Was this helpful?

Not really, Jim. Is Bank of Blue Skies the best one? How many travel miles do I get? Are there hidden fees?

No fees are hidden fees at Bank of Blue. Here is our list of terms and conditions for Bank of Blue Skies Visa. In it you will find all fees, rates and rules, which are subject to change.

Jim, this is 200 pages long.


This could say I am promising you my firstborn son. My eyes glazed over after three paragraphs.

Nope, just your left arm.

Excuse me?

Unless you are left handed. In which case Bank of Blue will make every effort to extract your right arm instead. However, you must file for a Petition of Arm Change in no more than 30 days or Bank of Blue will have the option of laying claim to both arms, a leg and/or your firstborn child.


In the last several years, Wells Fargo has been accused of opening 2 million fake accounts, illegally repossessing cars, modifying mortgages without consumer consent, charging customers for auto insurance they didn’t need, ripping off small businesses with a 63-page contract designed to confuse and mislead them, wrongly fining mortgage clients and knowingly selling dangerous investments.

In 2016, Bank of America paid out $430M in settlements for misleading disclosure statements.

Last year, JP Morgan Chase and Citigroup Inc. settled a $182M suit for rate rigging

And no one has forgotten Big Banks’ roles in the 2008 financial crisis.

Despite all of that, Big Banking is still faring pretty well. But winter is definitely coming. As this article from the Houston Chronicle notes:

Outsize profits for a service that most people need is precisely what entrepreneurs look for when searching for the next big thing. Retail banking, to use the Silicon Valley cliché, is ripe for disruption.

Headlines and banking execs have been heralding a huge upset from Silicon Valley, but while that might be the ultimate source of the disruption, the focus on tech is misleading. Banks haven’t lost their connection with consumers just because they don’t build good apps or allow them to tailor their investment portfolios with the touch of a button. Of course they could do that, too if that was all it was.

The problem is that banks have fallen so far in the eyes of their public that Chatbot Jim’s disclosure of the arms, legs and firstborn sons is more refreshing than it is horrifying. And while no one poses a real threat to Big Banking quite yet, since Amazon and Google are legally barred from becoming full-on banks, someday, someone will get there. So how can banks win us back before that happens?

The answer is, they might not be able to – at least not directly.



Sowing the Seeds of Disruption

Americans are in need of money advice more than ever before. According to the Chicago Tribune, 41% of households would have trouble coming up with $2,000 for an unexpected expense. NerdWallet reports that in early 2019, credit card debt reached $423B, an increase of over 5% from last year. Additionally, the report says that U.S. households carry an average of $6,741 in revolving credit card balances. The Federal Reserve Consumer Credit report conveyed that student loans totaled $1.524T in 2018, and auto loans totaled $1.113T in the same year.

Add the fact that people spend more money the more digital our transactions become and you have a total savings crisis. But where do we turn? According to Oliver Wyman:

Today, fewer than 30 percent of U.S. households are financially healthy. This means more than 170 million U.S. adults struggle with some aspects of their financial lives, such as paying bills on time or saving for emergencies. At the same time, financially struggling Americans pay roughly $175 billion annually in fees and interest for financial products and services, which too often fail to improve their situations.

Yet the market is deceptively difficult to crack. One of the most significant challenges for financial services companies is establishing trust with consumers, who rank the sector as the least trusted of any major industry.

Rather than look to banks, desperate consumers have been looking to fintech startups or Big Tech giants such as Amazon or Google for investment opportunities, savings strategies, payment methods, everything but the actual banking that they must do through banks. Even Facebook is looking to enter the ring with loans using a new cryptocurrency called Libra

The Financial Brand cites the Retail Banking Vulnerability Study by the firm cg42:

The firm estimates, based on an analysis of a large consumer survey, that 11% of major bank consumers could walk.

People’s top five frustrations with their banking providers include:

  1. Acting in dishonest, unethical or illegal ways
  2. Constantly slapping them with nickel and dime fees
  3. Failing to offer competitive rates and pricing
  4. Data breaches or exposing personal/account data
  5. Hitting them with overdraft charges

Although more than half of those consumers would simply switch to another large retail bank, almost as many say they would consider other choices. Nearly one in ten would be willing to go with an online bank with no branches.

The Ol’ Millennial Playbook Falls Short

We all know about payout fintech giants like PayPal and Venmo, but fintech is especially hot on investment and advising fronts as well. Robinhood Markets is on its way to at least a $7B valuation and just rolled out a financial news arm with the acquisition of Market SnacksNerdWallet started with $800 and is now valued at $500M. Acorns is valued at $860M. The Street reports that 40 fintech companies are about to reach “unicorn” status this year with at least $1B valuation.

It’s no wonder that banks are spending millions trying to emulate these startups with a focus on – drumroll please – the user experience Millennials love about these apps. According to CNBC:

One of the major draws of budgeting apps is the constant, real-time info that keeps users constantly aware of their every purchase. Avendano argues that features like “a mobile delivery experience, driven through texts or an app,” are specifically targeting Millennials.

And this study of Millennial parents by E*TRADE Financial Corporation as reported by Yahoo Finance found that their subjects want mobile capabilities, wearables, chatbots and helpful investment advice, and that they will find most of their information on social media:

The data suggest they crave a holistic mobile experience, enabling them to do everything from monitoring the markets and analyzing their portfolio to rebalancing their holdings and exploring new investment ideas. What’s interesting is that this bucks the conventional wisdom that mobile should be simple and focused. While these are certainly important attributes for the parent population, it’s critical to strike the right balance between being sleek and streamlined and providing everything this population needs.

Banks know this already. They also know that Millennials love social impact investing, but just in case, the Wall Street Journal blew the lid off of that one, too. And yet, according to another article from WSJ, JP Morgan Chase is shutting down an app it spent millions on just one year after it launched:

The nation’s largest bank began informing clients Thursday that it is shutting down Finn, the no-fee banking brand designed to meet the financial needs of younger consumers, and transferring their funds to new Chase checking and savings accounts.

Finn’s strategy differed from other digitally focused banks and startups. It didn’t offer savers rich interest rates to get them to open accounts, a tactic employed by Goldman Sachs Group Inc. and Ally Financial Inc. Because it was started from scratch, Finn didn’t get the boost of an already-active base of digital users, as did fintech startups such as Acorns Grow Inc. when they launched checking accounts.

And there it is. Banks can bring everything but that loyal, trusting user base that comes with being a more neutral entity, one that doesn’t have a history of nickel and diming its customers (or worse). But on the other side of that coin, those neutral entities don’t have the advantage of being actual banks.



If You Can’t Build a Bridge, Buy One. and Then Leave It the Hell Alone.

That ol’ Millennial playbook might have Big Banking running through the usual PR motions for now: community outreach, transparency, mea culpas, etc. Moreover, banks are doing what everyone expects in terms of developing great user experiences that rival the competition, making strategic partnerships, diversifying and meeting consumer needs. Capital One has even rolled out a coffee shop/banking hybrid to make their physical presence more palatable with this audience.

That should all be done.

But maybe the most important strategy would be to just step out of the spotlight:

When Apple announced its credit card last month with a big, splashy announcement, Goldman Sachs was a major reason behind it. But you wouldn’t know that based on where the bank’s CEO was standing.

David Solomon wasn’t on stage in Cupertino, California, sharing the spotlight during the product announcement on March 25. Instead, it was Apple’s Tim Cook touting their effort as the most “significant change in the credit card experience in 50 years.” Goldman Sachs’ chief executive stood clapping in a crowd with the other onlookers. The 150-year-old Wall Street bank — responsible for the actual lending part of the credit card — was just a footnote in the presentation.

The bridesmaid role is something big banks may have to get used to.

Last year when Walmart bought out indie clothing brand ModCloth, loyal customers vowed left and right to never shop there again. And yet, the brand is still going strong:

Kira Bindrim has been a ModCloth customer for nearly five years. She worried the designs would become more basic, that quality would decline, and that the brand would reduce the extended range of sizes it offers. So far, she says, she hasn’t noticed many changes. Some of the same cuts and dresses that the brand has offered for years are still there, and prices haven’t noticeably moved.

Why did this work? Because Walmart bought ModCloth and then left it the hell alone. The behemoth was wise enough to know their brand would never resonate with ModCloth’s customers, so they bought the competing brand and then did nothing to it. And as a bonus, they got all the consumer data benefits one gets from owning a company with a new set of consumers.

Banks should take a page from this book: don’t make the new Acorns. Acquire Acorns. Acorns customers will rant and rave until they see you did nothing to Acorns. Some banks are already starting down this road.

The truth is, both parties bring something to the table. In a survey conducted internally for Ackerman McQueen, we found that many of our employees used mobile banking apps created by their banks, just not for the same functions they use investment apps for (mostly menial tasks like cashing checks and checking balances).

From CNBC:

“Banks are uniquely skilled at understanding treasury management, compliance, and credit risk management,” said Nigel Morris, co-founder of Capital One Financial and now a partner at venture capital firm QED Investors. Those areas can be difficult for big tech to match. Tech companies, meanwhile, “are uniquely capable of originating customers, delivering a great user experience and selling innovative products that customers love,” he added.

Let the brands own the spaces they excel at, and step out of the ones they don’t. Banks are never going to come across as neutral, trustworthy entities because they cannot ever really be that so long as their interests are at odds with their customers. Fintech and Big Tech will always offer more streamlined experiences and loyal customers but will struggle with the actual banking behind the advice they offer. Together they can give users a complete experience now, when they need it most, and all the brands involved can benefit.

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