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Customer retention critical in rapidly changing environment

Banking Today

Customer retention is a prime consideration for any bank that has played the merger game in recent years.

Indeed, considerable press coverage – mostly negative – has been devoted to Top 50 or Top 100 banks that botched their integration strategies in the execution stage.

In many instances, these banks failed to consider the impact of staff reductions, branch closings, product-line and pricing changes until acquired-bank customers ran off in droves to the nearest competitor.

While most of the attention has been focused on retaining acquired-bank customers during a merger scenario, another set of customers may also be at risk – the hometown clients of the bank that’s doing the buying. Assigning lead-bank personnel to head up transition teams in new merger markets or relocating experienced lenders to merged-bank cities can have a significant impact on long-standing customers at the purchasing bank’s headquarters.

Well-intentioned banks can spend so much effort trying to digest and integrate new markets and customers that they neglect those that have provided a loyal base.

While I appreciate the new competitive realities that are facing the banking industry, a colleague’s recent customer experience illustrates my point.

For the past decade, this friend has banked with one particular financial institution that prides itself on its knowledge of its customers.

As a long-time customer, this colleague appreciated the fact that branch personnel knew him and were professional in the manner in which they transacted his business.

In recent months, however, there appeared to be a lot of turnover at this location. Of course, this happens in any industry, so it didn’t particularly bother my colleague. One transaction changed that though.

During one interaction, the teller told my friend that she didn’t know him and then proceeded to yell down the teller line to ask the other teller if she knew who he was. The other teller looked at him, and called back down the teller line that she had never seen him before. The original teller then told him since the bank didn’t know him, he needed to provide some identification, which he did – quickly – because he was totally humiliated and couldn’t wait to get out of the place.

Having worked at a bank myself, I appreciate the importance of security. In fact, I’m glad that tellers and other personnel are focused on protecting my interests as a customer. Of course, I’m always willing to provide appropriate identification – as my colleague was.

But on the other hand, I am perplexed by the manner in which the teller handled the situation. If she didn’t recognize him, she should have simply asked for ID.

With the way the industry has changed in recent years, you wouldn’t expect every teller to know every customer by name. Understandably, though, the situation was embarrassing to my colleague who had banked there for quite some time.

While change continues to redefine the financial services industry, good common-sense training never goes out of style. Some institutions believe that a broader geographic scope is necessary in order to enhance their strategic goals, and I won’t argue with that.

I also won’t argue about the importance of properly integrating the needs of new customers acquired through bank or insurance company mergers. That’s important, too. But in the broader scale of things, it’s also important to keep a keen focus on customer service/interaction practices at all areas of the company – even the company headquarters – during a merger.

Tupelo-based freelance journalist and consultant Karen Kahler Holliday writes on banking issues every month in the Mississippi Business Journal. Contact her at mbj@msbusiness.com.


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