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Customer Loyalty, to Coin a Phrase
For banks, connecting with customers is the coin of the realm.
Posted Nov 21, 2007
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The sight of a customer strolling into a bank with a sack full of coins might prompt groans among tellers. However, a recent report suggests that automation can help turn those mounds of metal into an important revenue stream. The once-common practice of tellers counting up and cashing in coins for customers has been abandoned in most banks as overly time-consuming. Since the mid-1990s, the retail industry exploited the loss of that service by introducing automated coin-counting machines in supermarkets, which charge a fee based on a percentage of the coins deposited. According to a report from TowerGroup, many banks are missing out on a chance to provide these convenient, lucrative machines for customers. "TowerGroup believes that the banking industry will benefit from a second look at the self-service coin-counting machine in light of the inevitable evolution of the branch in today's delivery channel strategy and the role of automation in the branch," says the report, which surveyed an unspecified number of banks of various sizes. With banks facing a changing landscape of declining check volumes and a greater focus on sales, the report suggests that embracing automation in the seemingly trivial form of coin machines and other technology can support the needs of both customers and banks, and play a major role in the future of banking. As customers increasingly expect quick automated solutions for routine financial transactions -- ATMs, online banking and so on -- the common bank strategy of requiring people to count and roll coins themselves in order to cash them can seem outdated, and has zero financial incentive for the bank. Yet according to the report, bank customers cash in $6 billion in coins each year, while $3 billion is cashed in at retail-based coin-counting machines, which charge a fee of up to nine percent of the change deposited. Installing those machines in banks, and charging the same fee as supermarkets, could be a $500 million market. "The self-service coin-counting machine represents an interesting opportunity for banks to evaluate as part of their delivery channel strategy and could have a significant impact on customer acquisition and organic growth strategies as well," the report says.
Unlike most automated banking strategies, coin counting machines don't have the disadvantage of discouraging customers from actually entering the bank. The machines still involve a face-to-face interaction with a teller to get their cash, and theoretically provide an opportunity for acquiring new customers and cross-selling existing ones. However, the few banks surveyed by TowerGroup that did have coin-counting machines mostly tended to only charge non-customers for using them, and reported few new customers by adding them. The report thus urges banks to target new coin-changing customers and make the machines part of their marketing strategy. "For self-service coin-counting to fill a strategic role in the bank's growth plans, the bank needs to develop marketing and sales plans (and supporting technology and processes) associated specifically with the coin-counting machine," the report says. It goes on to note that the self-evident convenience of the machines, even when they involve a fee, is a relatively easy marketing sell.

Related articles: Viewpoint: The Emotionally Detached Customer E-banking means fewer visits to the branch and fewer opportunities for banks to interact with customers. Viewpoint: Retail Banks Cash In by Updating Branch Technology Offering the personal touch starts with implementing customer-centric tools. Viewpoint: Rival Consumption and Customer Profitability in Banking Customer profitability is about nutritional profitable consumption and not just rival revenue consumption. Online Banking for the Little Guy A new study highlights the importance for financial services firms to round out their SMB offerings, fresh off the heels of a related announcement by Wells Fargo. Gartner Navigates 'The Client-Driven World' Financial Services Technology Summit '07: Relationship roles are changing as customers take control of how they want to do business. Market Focus: Financial Services--Cashing In on Integration Financial services companies must focus on shifting away from siloed processes across departments and channels. Financial Services Firms Must Invest In Customer Advocacy Forrester's Finance Forum highlights the importance of interacting independently with target customers. Closing In on Bank Customer Churn Poor treatment or lack of branches or ATMs when they move are some reasons why bank customers switch banks; consider boosting loyalty by offering and promoting sticky services, one analyst says. Trust Will Drive Market Share for Banks Financial institutions must respect customer data, use the Web, and respond to email to help ensure growth. Private Banks Rate High in Customer Satisfaction Publicly owned banks need to weigh short-term financial results against long-term customer loyalty. Consumers Want Banks to Show Tough Love Financial institutions must act as better consumer advocates by improving customer education and encouraging financial discipline. Banks Are Failing to Cash in on Customers Large retail banks allow chances to garner loyalty to erode; the purely service-call model misses sales opportunities.
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