Grassroots banking

By Julian Rogers, Deputy Editor

Since its emergence in the early seventies Commerce Bank’s philosophy has always been to put the needs of the customers first. Today, it’s a business riding an upward curve with its flexible and innovative approach to banking. FST tracked down Executive Vice President Linda Verba to discuss the banks’ cult-like following among its “crazy fans” and building brand loyalty through legendary customer service.

“I am in charge of customer experience – any channel that touches the customer falls into my bailiwick. I will have been here 10 years this September but what is intriguing about my appointment is that I am not a banker by profession. In face, I have absolutely no banking experience at all. My expertise in retail and customer service. So when I was hired the focus was not on processes or banking but rather the customer experience. However, 10 years later I know a heck of a lot about banking, the industry and all of the regulatory challenges”
-Linda Verba

In the dog eat dog world of financial services the banking giants are often accused (sometimes unfairly) of losing touch with their customers. The idea of popping into your branch and dealing with a human face is being slowly eroded with the proliferation of call centers, ATMs and, of course, online banking. You could argue that we all lead busier lives compared to yesteryear and that the banks are merely catering to the 24/7 lifestyles that a significant chunk of us lead. That’s true, but there is little doubt that striking that balance between maintaining upward growth and still offering an engaging customer experience can prove a tricky balancing act. And with margins being squeezed by the fallout from credit crunch this is no mean feat.

One bank that has put the whole customer experience on a pedestal since its conception back in 1973 is Commerce Bank. Great customer service is in its DNA. This is a company with an outlook that it is a retailer – not a bank. It also sees its stores, as they are referred to, as the lifeblood of the business, while its other channels are extensions of the nucleus. Above all else though, the customer comes first, explains Linda Verba, the bank’s Executive Vice President. “The expectation is that the customer is going to get a legendary experience whether they dial-in through IVR (telephone banking) or if they use our online banking systems or whether they walk into one of our stores. We have always taken a grassroots approach by staying close to our customers. It is safe to say that we are different – we think of ourselves a power retailer as opposed to a bank.”

Verba is also a firm believer in the idea that a bank should always keep its feet on the ground as it grows and not lose site of its customers and their expectations. “As you get bigger you need to stay focused in preserving customer experience through every customer channel is what we cannot lose sight of.” Another of this bank chief’s forthright opinions is that many of Commerce’s rivals follow the crowd in the race to sniff out the next revenue channel or latest cost-cutting exercise. “What I have noticed, and I say this with a bit of tongue in cheek, is that bankers have a bit of a herd mentality. So if one bank stands up and announces what it is going to do, everyone follows.” So has going against the crowd worked for Commerce? “Absolutely. What has stood us in great stead is that we have always been a retailer at heart. This is what we need to focus on in order to continue the organic growth that we have experienced over the past 10 to 15 years.”

Fresh thinking
With a background in the retail industry, Verba has been instrumental in this organic growth, which has seen the New Jersey-based bank balloon from just 75 stores to 472 in the nine and a half years that she has been with the firm. These are the kind of impressive figures that make Commerce one of the fastest growing banks on the East Coast. Convenience and excellent customer service is key, says Verba. All, including the drive thru stores, are open seven days a week, from 7.30am until 8pm – perfect for those who find traditional banking hours restrictive and archaic. Inside, the open-plan stores exude an unpretentious and relaxed feel with corporate stuffiness virtually non-existent.

And while Commerce offers all of the traditional banking products and services, a few extras have proved a real hit, including its free ‘penny arcade’ coin counting machines for both customers and non-customers. At some banks customers bringing in a heap of coin are hardly welcomed with open arms. However, Commerce realized there was a niche in the market and set about mass production of its unique, beautifully-made, machines. A fun element has been introduced too – each unit houses a screen with an animated character that interacts with the user. Then came the idea of offering small prizes if you could guess the total value of the coin in your jar followed by the creation of miniature versions of these machines for kids to use alongside their parents.

Other banks have since followed suit with similar versions of these ‘penny arcades’ but added a fee for the service, much to the bemusement of Verba. “The other day I read that one of our rivals was going to charge eight percent to use one of these machines. It’s a bank for crying out loud – change is money.” Another ground-breaking service at Commerce has been its instant creation of a debit or credit card when a customer opens an account. “This is an example where we have absolutely revolutionized the industry,” Verba announces. “Someone was having a conversation here and said ‘wow, wouldn’t it be great if a customer did not have to wait two weeks to get their card’. We feel that if they meet all of the criteria then why can’t we give it to them?” Commerce also offers no-fee Visa gift cards, a free notary service and gives away merchandise as a way of rewarding its customers’ loyalty. Oh, and let’s not forget the free lollipops and dog biscuits.

With the idea of making a visit to the bank a fun experience, it is little wonder that the stores are seeing a high turnover of people through the door. For instance, the New York outlets handle well over 100,000 customers every month. As you would expect, speed is key. Verba says a few seconds shaved off the time it takes to process transactions can free up staff to better engage with the customer. “Twenty or 30 seconds when you are handling a high volume of customers is 20 or 30 seconds that your teller can make eye contact and speak with the customer.”

Away from the stores, the call centers, manned by humans Verba points out, offer 24/7 banking and enquiries literally 365 days a year. The call center is also based in the US, not half way around the world – a big plus point for those who prefer telephone banking. This 24-hour service has proved its weight in gold for customers, says Verba. “We have so many anecdotal instances where that 24/7 service really does make an absolute difference. For example, we have had a variety of occasions where someone is about to fly somewhere but they left their passport in the drive thru, or they forgot their passport and it is in the safe deposit box, and our call center works absolute miracles, in tandem with the store, to stay in touch with the customer. This is just one example of what simply defines us as ‘America’s most convenient bank’.”

This obsession with the customer has created a cult-like status among clients and the bank’s 15,000 employees – something that the bank actively encourages. “Our customers are what I would refer to as raving fans and that’s what we live for,” Verba reveals. “So it’s a relationship that extends beyond the customer and is literally about creating fans.” She continues: “We have a cult following because of that attachment we have to our customers but we also have that same attachment to our employees. You have to have employees who are engaged in what your strategy is.”

Against the tide
By pure coincidence, the day that FST met up with Verba was a U.S Federal holiday. Not much unusual there you might think. However, while many banks and other businesses were closed for the day, Commerce was open as usual. In fact, transactional volume on this day rises four percent above any other Monday in the winter months. As well as boosting profits, going that extra mile for the customer gets you recognition too. Last year Commerce was rated no.1 for customer satisfaction by JD Power Associates. “This recognition is something that you have to earn,” Verba warns, “every day, with every customer, and through every exchange.”

She also says that feedback from customers and employees is important, too. The bank provides comment cards for customers and carries out regular surveys to discover what is being done right and what needs improving. Customers are also quizzed about new product launches. “They tell us what they expect in so many ways, which makes it important to listen to your customer.”

Another innovative idea is ‘kill a stupid rule’. This is where employees – whether it’s a teller on the frontline or a C-level executive – can flag up rule that they feel needs scrapping or amending. This is how the instant issue credit card idea was born. Sometimes, the request for change comes from the customers themselves. “We have group who examine these ‘stupid’ banking rules and literally vet them up through the organization for us to have a look at,” Verba enthuses. “This means that at the simplest level employees can raise their hand and ask why we do a certain thing. It could be a teller, a CSR or someone looking at processes in the backroom. We take these ideas and we run with them.”

This feeling of teamwork and egalitarianism allows staff at all levels to get involved and pitch ideas, all of which gives them a sense of ownership in the company. Those who work hard are rewarded too. For instance, every year the bank honors its outstanding employees at its annual WOW! Awards or the “Oscars of Service’ as it is also referred to. It might sound out of the ordinary but then again this isn’t any ordinary bank. Commerce sees it as a way of rewarding great service and injecting even more energy and enthusiasm in its workforce. This energy is reflected in how staff promote and explain products to the customers when they walk through the door or dial the call center.

Mouse clicks
Of course, behind all of the customer-facing operations is a whole heap of technology, much of it there to meet the raft of financial regulations imposed on the banks. For instance, Commerce’s teller system automatically feeds data to the back office in order to comply with AML laws, the Bank Secrecy Act, and the Patriot Act. Systems also allow staff to verify that checks being cashed belong to the correct bank and account. “Technology in our world is an enabler for the brand strategy, we couldn’t do it without it,” Verba muses. “The whole card strategy and instant issue that I mentioned earlier rely extremely heavily on technology.” It plays it part in the website too. However, Verba reports that customers who bank on the site tend to also visit stores. “By not restricting customers to one particular channel, our experience is they choose to use more channels and provide more wallet share.” She continues: “Therein lies the finite difference between the customer a fan. A fan buys more products from you and, more importantly, they recommend you to other people.”

So with word-of-mouth recommendations, innovative customer offerings, flexible opening hours, ‘penny arcades’, instant issue cards, and free lollipops and biscuits for your pooch, this is a bank going from strength to strength. So much so that its performance, unique business model and loyal customers (sorry, fans) has attracted the attention of Canada’s TD Financial Group who snapped up the bank last years in a deal worth $8.5 billion. The deal, expected to be rubber stamped in the spring, will swell the group’s branch network to 1000 by 2009, Verba reveals. She says a cautious approach is needed at this stage: “We will open stores and continue to have a high growth strategy but it may be a little different as we work our way through the consolidation. We still have an organic growth strategy but one of the things that I know about execution is that you have got to be able to keep your eye on the ball.”

With the interview drawing to a close Verba touches on what else is on the agenda at Commerce. “The online banking sectors is going to get bigger,” she notes. “Also, mobile banking is something that a lot of banks, including us, are taking a look at but with this sort of technology we are sensitive to being a fast follower and not on the bleeding edge.” Verba says the US has some catching up to do with banking on the move. “In the UK mobile banking is a much more heavily used technology out of the box than what we are experiencing here. So we are king of watching and learning from that.” Anything else? “Personalization is some thing that we are looking at as it is related to engaging customers and non-customers as they use what I refer to as more self-service channels, whether it be ATM, IVR or Commerce Online.”

Of course, the main goal for Verba is to keep those all-important fans happy and coming back for more, not easy in the fickle world of banking. Putting herself in the customers’ shoes helps, it seems. “My primary reason for living is that I think like a customer. These are customer that we earned one by one; we didn’t go and buy them – we earned them.” Building a solid brand is critical too. “Brand is the emotional attachment that your customer has with you. Everything that we do, both on the retail side of the house and on the commercial side, is to fulfil that brand promise.”

So what advice does she have for any bank exec striving to build customer loyalty? Verba fires back a response: “One of the simplest things that a customer expects is delivery on your promises. They expect you to be reliable and if you say you are going to do something then you should do it.” From chatting to this passionate bank chief it would seem that Commerce’s original philosophy of the early seventies is alive and kicking. In fact, the sky is the limit for Commerce right now. “The bank is one a roll and this success is building momentum,” Verba concludes.

Commerce Bank’s ‘smart principles’:

Just say yes – Don’t hide behind bank policy to avoid helping a customer. Discover what you can do for them.

Make them feel special – be personable, pleasant and positive!

To recover is divine – Take ownership of every customer’s problem and solve it for them.