Could ‘spontaneous magic’ make us trust bankers again?

Jan 9, 2015 · 13 min read

A decade ago, UK banks possessed something most brands can only
dream of: trust. They had it in spadefuls. But we all know what happened. Big banks jettisoned that hard-earned trust in a financial storm of their own making. The reputation of the broader financial services market also suffered as a consequence.

Can that trust ever be regained? If so, does the answer lie in friendly ad campaigns, retro branding and dishing out cupcakes in branches? Or are there more fundamental issues around trust that the major players have still to grasp? Charles Spinosa thinks so. He demonstrates how one bank in the US took a revolutionary approach to earning the trust of its customers through ‘spontaneous magic’ — and wonders whether counterparts in the UK are doomed to failure because they are merely ‘playing the trust game’

Words: Charles Spinosa
Illustration: Mark Airs

magine a bank where, if something goes wrong, you can call the Chief Executive — and if he’s not around, he will call you back. Imagine a bank whose employees are given money to spend on random acts of kindness for customers. And imagine a bank that trusts you so much it may even leave you the key to lock up the branch.

If you live in Oregon, Washington or Northern California, you don’t have to imagine that kind of bank. It already exists. It’s called Umpqua Bank and it has cracked the code of building customer trust, while leaving UK banks (and most US banks) scratching their heads. We’ll be returning to Umpqua later.

If CEOs of UK banks genuinely want to know how to build trust, they needn’t necessarily travel to Oregon — they simply have to go shopping.

Retailers in the UK are good at building trust, and the best example of all is the John Lewis Partnership. John Lewis has created a very likeable, attentive, British customer experience — and the secret lies in actively extending and receiving trust. You ask John Lewis customers what they think and they will say:

“I shop at John Lewis for everything.”

“John Lewis is not just a shop. It’s like home.”

“I trust the store.”

“It’s my spiritual home. When I die, I’ve asked my husband to sprinkle my ashes there.”

Incidentally, all of these quotes are genuine; at least that’s what the people at John Lewis say, and I trust them.

So how do they do it? It starts with a service promise — ‘Never knowingly undersold’ — around which it designs the rest of the customer experience. The promise carries a double load. First, it addresses directly the anxiety that John Lewis customers feel when a John Lewis store performs at its best. ‘Wait, I really like it here; how much am I paying for this experience?’ ‘Nothing! It’s free. It’s who we are, never knowingly undersold.’

Think about anxiety

All businesses at their best create customer anxieties. Most businesses ignore these to take care of frustrations that occur when things go wrong. But by responding to anxieties that occur when things go right, businesses like John Lewis show, first, a special humility. Even at their best, they are not perfect. Secondly, the promise actively extends trust to John Lewis customers. Consider the blow to the stomach any retail sales representative suffers when a customer says, “I’ll just check the price next door.” No one comes back from next door. John Lewis trusts that its customers will not take its promise as an incentive to check out competitors. Customers respect that.

UK bankers know how John Lewis does it. After hearing about service promises, how they build trust, and how some regional banks in the US have thrived with them, the Head of Retail at one of the UK’s largest banks said: “I will never have a service promise.”

This senior manager speaks for most UK financial services senior managers. Insurers are a bit more open-minded. Generally, instead of focusing on trust, financial services senior managers build convenient and friendly customer experiences. True, regional managers and marketing and communications people in the UK are finding ways to build trust, but they need to make senior managers their advocates. That’s a problem. Why do senior managers talk aspirationally about trust but build only the lightweight trust of a consistent experience?

The way of the dodo bird

Senior managers believe that robust trust has gone the way of the dodo bird. Trust thrived when bankers and insurers knew their customers personally. The banker or insurance broker spent time with them in the community. The bankers and brokers also knew each customer’s financial reputation and helped customers grow their reputations. They helped the trustworthy when no one else would. Decisions were made through personal knowledge, not risk algorithms. It seems like a fairy tale now. In the world of mass consumption, no large financial services institution can allow that kind of personal discretion. But without the discretion to override a risk algorithm, there is no real trust.

This story comes from senior bankers and insurers at Barclays, HSBC, Lloyds, the Bank of Ireland, AIB, RSA, Hiscox, and others. The story makes sense. In the age of mass commerce, globalisation, digitisation, terrorism, high-tech crime and volatile markets (the crisis of 2008), calculations of reliability have to replace discretionary trust. The best senior management can do is run the algorithm closer to the managers on the ground to let clients know faster, and senior managers have developed processes to do that.

Some US regional banks do a little better. Peter McGill, the Credit Manager at First Niagara Bank in Buffalo, insists that his team use traditional banking sense. The bank lends more and has fewer defaults than its peers.

But financial services generally stick with the algorithm and the lightweight trust approach. ‘Your trust is our most important investment,’ said one billboard. Such trust coming from mere consistency of experience can be bought and sold like an investment. Purchase the tools from consultants. Is this the trust that RBS’s Ross McEwan, Barclays’ Antony Jenkins and Lloyds’ António Horta-Osório build?

Gee whizz technology

Building lightweight trust only makes sense because financial services people have become smart. They stand back from the market and ask: “What do we really want when we say we want the customer’s trust?” They answer: “We want customers who would feel ashamed for moving their money or not taking our new product.”

Such senior managers want the trust effect — the shame felt for moving money — rather than true trust with its attendant vulnerability and risk. They seek the effect of trust from extremely convenient service delivered via carefully mapped customer journeys with graceful friendliness at every moment of truth and ‘gee whizz’ digital tools to keep everything moving.

Imagine this. You see a house that you would like to own. You photograph it with your phone and receive the relevant pictures of its interior, its price, inspection reports, and a mortgage offer from your bank. Click to send the offer to the seller. Are you a premium customer? You then receive details on comparable homes in the area and an automated suggestion that comes from ‘big data’ analytics. It points out a house closer to the specialist wine retailer. You touch the screen and take your spouse to dinner to celebrate. At dinner you use a similar bank application to select the special champagne. Point. Shoot. And wow! Such banking is nearly here. Look at the Australian Commonwealth Bank’s video: ‘Vision for 2013: we’re improving customer service’. Vernon Hill’s UK Metro Bank offers a Vegas-style experience. Jayne-Anne Gadhia’s Virgin offers no-strings-attached Virgin lounges under the community-centric flag of making everyone better off. Wow!

There is one minor hiccup. Such showiness brings out the worst in bankers. Did you know that you wanted to point your mobile phone at a house, click the camera, and then have your bank prepare your offer to buy the house? Probably not! Gee whizz technology knows us better than we know ourselves. It lacks humility. That lack of humility infuriates financial service customers from the top to the bottom.

The greatest bank in the world

Unlike high-tech thrills, trust is humble. We do not impose our view on people who trust us. We give them our best advice, and when it matters, we do for them what they would want us to do, not what we would do. Smart bankers at Lloyds TSB and smart underwriters at RSA extended this trust to brokers for a while and gained more and better business. But sustaining such humility is hard.

Hans Ganz, the retired CEO of San Diego’s Pacific Trust Bank, knows a thing or two about humility. He grew his bank on the service promise: ‘Try us for six months; if you want to leave for any reason after that, we will pay you $50.’ He thrilled at taking visitors into any branch and asking customers at random, “What do you think of this bank?” Invariably, the customer answered: “This is the greatest bank in the world.” When asked which bank he worried about most, Ganz said Jamie Dimon’s JPMorgan Chase. When 30 successful JPMorgan Chase branch managers in Manhattan were asked what mattered most to them as an indicator of the day’s success, they said ‘the customers’ mood’. Not profitability per customer, not well-executed moments of truth in the customer journey, not the number of products sold per segment per day.

Mood! It is a radical break. To monitor mood, branch managers have to stand in the shoes of their customers and accept that their perspectives count more than their own. Mood leads to humility, and that can lead to trust.

While the US regional banks extend trust, the UK looks to its big bank regional managers. Consider Dan Godsall, now MD of Premier Banking and Small Business at Barclays. In 2011, Dan spent his holidays making his pilgrimage to Umpqua Bank in Portland, Oregon. Umpqua leads all banks in building a trusting retail experience with its customers. Its service promise is clear. If something goes wrong and you cannot get it resolved, call the CEO, Ray Davis. Each branch has a phone on a pedestal to make the call. (With Umpqua’s steady growth, unbelieving observers have predicted the promise’s demise year after year. They don’t appreciate how motivating the promise is to drive employees to make every customer happy.) Employees also receive an allowance to spend on ‘random acts of kindness’ for customers. Umpqua posts the happy consequences on its home page.

Community missionaries

At Umpqua, Dan saw a banker’s fairy tale. Lani Hayward, Umpqua’s Executive Vice President of Creative Strategies, told Dan to go to any ‘store’ and talk to the customers and the manager. On entering, Dan saw neatly stacked products of all sorts. He asked the manager who was brimming with pride, what all those products were. The manager explained that they were products from local businesses. The bank offers some of its space to businesses in the neighbourhood.

Then Dan asked about the pictures of people he saw behind the reception desk. “Those are our customers,” he explained. The manager went on to explain that the bank had evolved from a retail store into a community space. He encourages area businesses, community boards, and others to use the bank space, particularly after banking hours. The staff became community missionaries. They do not promise the best rates but promise to reinvest the money into the local community. Trust is so great that Umpqua managers let their best clients lock up at night after using the bank.

When Dan came back and told his branch managers about Umpqua, his Cornwall branch manager caught the bug. He ran a Cornwall Christmas programme in his bank. In his first year, he had 92 businesses displaying their products and selling them at the bank. The bank staff became so involved they sat in for local business staff when they left their stands. The cashiers did what it took to make the store work. It was like live improvisatory theatre.

The whole scene was so celebratory that the following year, more than 2,000 businesses displayed wares in branches, and the bank signed up vendors to display their goods throughout the year. Dan and his team had to trust the vendors, especially the food vendors, to supply great value, service, and quality. The vendors repaid that trust, as they universally delighted customers and signed up for accounts. The spontaneous trust was magical.

Building on his Christmas success, Dan started a money-saver, time-saver programme for branch staff. Each week he would challenge staff to test out a way to save money. He started by challenging them to go to an energy site and save on energy costs.

Once they started reporting back on the internet, the magic started. They started asking customers. “Have you thought about switching your energy supplier?” they excitedly asked in the middle of a transaction. “I just did and saved money.” Cashiers would help customers enter their information.

Word of mouth buzzed. In one Welsh branch, a customer asked if the bank was the place for changing energy companies. Again, for a cashier to act with such spontaneity, he or she has to trust that the customer will respond positively and spontaneously.

Does it work? Dan has an exceptionally high growth rate in small and medium sized business customers. But the spontaneity and trust are not natural fits with banking culture. Marketing and communications colleagues are pressurised to polish everything up; and senior managers pitch in with de-risked vendor management processes.

While Dan’s ‘improv’ banking is magical for staff and customers alike, it requires a leader’s commitment and the staff’s imagination. Sustaining it will require a team across the entire bank.

What can marketing and communications professionals do to help make this branch theatre happen? The answer is: understand the improvisational character of this new trust and accept the humility it requires.

Did Ross McEwan of RBS simply state a fact or demonstrate humility when he said: “We are the least trusted company in the least trusted sector.” A senior banker can grow trust fast by extending it. Ask yourself: Does your bank CEO trust you the way Ray Davis trusts his customers?

Essential steps to building customer trust

Trust is reciprocal. Demonstrate that you genuinely trust your customers, and they are likely to trust you.

Be humble and always be willing to listen and to learn.

Figure out what makes your customers anxious, and create a John Lewis-style customer promise to take care of the anxiety. Extend trust with the promise.

If you feel you can’t commit to a service promise, identify whether you distrust your people or your customers or both. Then figure out why and fix it.

Build a culture of trust by extending some trust to employees and suppliers. A little vulnerability is better than no risk. Risk free means trust free.

Make your business a visible, active part of the community. Draw other businesses in and create your own community missionaries. Pay your employees for days off doing charitable work in the community

Put trust at the centre like John Lewis Partners or Umpqua Bank, and you will find plenty of room for cool experiences and gee whizz technology at the periphery.

Create an improvisational space with your customers. Ask the unusual question. Share ideas. Give stuff for free. Celebrate. You don’t have to be Richard Branson, Ray Davis or Dan Godsall to do it.

Judge your success on the mood of your customers. Personally, go out and ask customers at random what they think of your business.

How much would you have to change things so that you could lend your customer the key to your business? Make that change your mission.

This story is taken from the first issue of Poppy. Our print run is strictly limited but, if you are based in the UK, you can request a printed copy via the website.

Charles Spinosa, Ph.D., is Group Director at VISION Consulting. For 20 years he has helped clients deploy trust-building customer experiences that drive profitable increases in market share. UK clients have included RSA, UK Post Office Financial Services, Deutsche Bank and ABN AMRO. In addition to trust, Charles writes on issues such as corporate politics, transformational leadership, innovation and promise-based management.

Additional research contributed by Peter McCudden.

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