How Umpqua Bank answered the question, 'What business are we in?'
It's early morning. While an instructor helps Mom perfect her Pigeon pose, the kids are off playing in an area set aside just for them, and the dog is dozing by a thoughtfully provided water bowl.
The vibe of the place is contemporary; clean lines and open spaces. The furnishings are simple, but chic. And of course, there's the requisite internet cafe on site.
It might sound like a trendy yoga studio in hipsterville, but really, it's an Umpqua Bank branch (or "store," as the FI calls them) in Seattle as described by Brian Read, executive vice president and head of retail banking at Umpqua.
Read delivered the opening keynote presentation at the Bank Customer Experience summit last week, kicking off two days of panels, general sessions and special events designed to challenge, inform and inspire bankers who have been tasked with a little project called "branch transformation."
Read explained that, for Umpqua, transformation was about more than shuffling furniture, moving walls, re-titling tellers and deploying bleeding-edge technology — although, to be sure, they have done all of the above.
But these things can rightly be described as changes, not transformation. By Read's definition, transformation is about answering the question, "What business are we in?"
He said, "When [Umpqua CEO Ray Davis] first asked that question, a lot of people said, 'What business do you think we're in? We're a bank. We're in the banking business!' And he said, 'No … We're in the customer experience business. If you look at everything we've got, it's a commodity.'"
So Umpqua set out "de-commoditize" itself, leveraging the customer experience as a key differentiator.
That was in 1994. Twenty-two years later, the bank continues to evolve right along with its customers. Today, branches offer next-generation consumers the next-generation consumables they insist upon, with a coffee bar, free Wi-Fi, personalized attention and a strong sense of community
Hence, the yoga class, held before the branch opened in the morning.
"Whether it's a group like this doing a [limited time] event; whether it's an external group or nonprofit organization; whether it's a municipality — it might be the local city or county or school board; we allow people to use our store. We built our space to accommodate the needs of our customers."
The payoff isn't just in good will. Read told the audience about a store that allowed a CPA from Portland, Oregon, to use a private space in a Seattle store when he was in town. One day while visiting the store, Read was introduced to the visitor.
"He popped out [of the room] real quick and said, 'Hey, you guys are the greatest for letting me use this room. I've done it three times and it's fantastic. I tell all my clients about it,'" Read said.
Then the CPA turned to the store manager, "And he said, 'George, I've got my next client coming in and when we're done, he wants to talk with you about a home equity loan.'" Later, Read learned that the CPA had sent a lot of business to Umpqua.
This kind of "customer-centric" approach has brought a lot of industry attention to Umpqua, an institution founded in a Masonic lodge in a little Oregon timber town in 1953, Read said.
"Umpqua has made a name for itself in the industry, but people catch up to you. The competition catches up. … If they emulate you, that's a nice compliment, but you're not different anymore."
And while they're catching up, customer expectations, preferences and needs are changing.
This has been especially challenging with millennials, whose expectations are high and needs are many. Read checked off a list of statistics gleaned from studies of millennials:
- 90 percent use banks, but one-third say we won't need them in 20 to 30 years;
- but … 75 percent want to work with a person when they need advice;
- 70 percent use online and mobile;
- but … 60 percent feel that physical locations are important;
- 40 percent are ready to switch banks right now;
- half are likely to do business with an entity that they perceive supports a good cause; but
- 25 percent think banks are scary.
Still, Read questioned whether the banking industry might be overcomplicating the millennial formula, which boils down to several inter-generational truths:
- millennials want convenience and ease of use;
- they want peace of mind;
- they want knowledgeable bankers;
- they want their FI to look out for them;
- they want it to make them smarter; and
- they want it to help them be a part of something good.
"Yes, the technology has to be there, but there's this whole other set of basic needs that have to be addressed," he said. "As we're addressing the technology piece, we have to address these as well. Otherwise, we're going to miss the boat. We won't be creating the best customer experience for that segment and we won't be winning their hearts and minds."
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 ATMmarketplace.com and BlockChainTechNews.com