Branch Transformation by design, part 2: The cautionary tale of Kodak

| by Suzanne Cluckey
Branch Transformation by design, part 2: The cautionary tale of Kodak

photo istock

Some years ago, the president of SLDNXT, a company that specializes in brand strategy and customer engagement, sat in a meeting with senior leadership at Kodak, a client company. He was there to present research on a promising new business segment — digital photography for professional photographers.

In that very meeting, Kodak leadership killed its exploratory digital program because it threatened to cut into the company's silver halide film business.

"[Digital photography] was the future, but they didn't see it because their strength — making inexpensive silver halide film — was their biggest liability," SLDNXT President Jean-Pierre Lacroix said at last month's Bank Customer Experience Summit, in a session titled, Branch design: Built environments for a new era in banking.

"To avoid disruption, you need to look at your biases in the decisions you make when you look at branch transformation," Lacroix told a room full of bankers.

The Kodak story illustrates one of three insights from SLDNXT research that Lacroix shared in a short presentation:

1) One size does not fit all

What Kodak failed to account for was that photographers (like bank customers) do not all want the same thing. While some preferred the more painstaking process of working with film, many more jumped at the convenience of working in the digital world.

Likewise, digital banking has enabled greater choice — and more fragmentation — in the retail banking sphere, Lacroix said. He described four different categories of financial services consumers:

  • Advice-centric (14 percent) — the most loyal customers and the least likely to switch to nontraditional or online banks.
  • Branch-centric (25 percent) — the second most loyal, but vulnerable to switching to other traditional and nontraditional FIs.
  • Transaction-centric (57 percent) — less satisfied with their primary FI and apt to switch; they see banking as a purely functional activity.
  • Digital-centric (9 percent) — the least loyal and most vulnerable to switching to traditional, nontraditional, or online only banks.

The dilemma for traditional FIs is that the least loyal customers (transaction- and digital-centric) are also generally the most affluent.

To capture — and keep — these consumers, FIs must find a way to migrate them to the advice-centric category. But how in the world do you do that?

 2) Get deeply emotional

"I was asked yesterday, 'Why is Toys R Us failing? Why is such a megabrand failing?'," Lacroix told summit attendees. "The argument is that, 'Well, it's the shift to online.'

But the reality is that what Toys R Us has failed to do is to build an emotional connection with their consumers. They were the emotional brand; people went there for the pleasure of shopping, of discovering new products. And they've lost that."

Like Toys R Us, many retail banks are overly focused on the cognitive, functional side of the business — saving money on service delivery and making it more convenient for the customer.

But creating an emotional connection is not about driving cheaper transactions, "it's about doing the hard work," Lacroix said.

"It's about enabling your front-line staff, educating them, empowering them with technology, providing them with the ability of providing that financial wisdom, financial security."

Understanding the customer's journey and emotional triggers, and driving a sense of desire and pleasure in the experience along that journey is what drives loyalty, Lacroix said.

"The carrot for you as bankers is you're not selling margin business, you're selling loans, you're selling financial investments. You're selling the things that allow you to provide a sticky relationship with your customers, and that's really important."

3) Agile process

Test, test, test. Learn, test. Learn, test.

"A lot of you in this room are learning that this target is not a static target," Lacroix said. "This target is moving on an ongoing basis and there is no one solution. There's no silver bullet in branch design or branch transformation that's going to solve the problem. It's a journey."

In closing, Lacroix offered the audience a parting thought: "Maybe you're going to have to look at your customers not based on the products you sell, but on the needs they have within their life. …

"I think your real opportunity for disruption is to rethink your business model. And to think in the terms of what problem you are solving for your customers, and how you can solve it differently than other categories and other competitors."

Topics: Bank / Credit Union, Bank Customer Experience Summit, Branch Transformation, Branding, Trends / Statistics

Companies: Bank Customer Experience Summit

Suzanne Cluckey
Suzanne’s editorial career has spanned three decades and encompassed all B2B and B2C communications formats. Her award-winning work has appeared in trade and consumer media in the United States and internationally. She is now the editor of and wwwView Suzanne Cluckey's profile on LinkedIn

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