A propos of this month's cover story, we came across some unused notes from our interview with ABA President Bill McConnell. When asked if Park National Bank (of which he is CEO) used customer profitability software, McConnell said, no, "because I'm afraid of what I might find, and then I'd be tempted to turn away customers."
From as far back as McConnell could remember, the now $800 million assets bank operated on the basis that you should give all customers good service, because today's small-balance customer may be tomorrow's big customer.
Some might consider that a quaint notion no longer applicable, or at least not applicable in an urban market. But even among some of the large banks in this country (and elsewhere) there is no uniformity of opinion on what steps to take once you've identified which customers are not profitable. One big bank we spoke with also endorsed the idea that an unprofitable customer represents an opportunity.
A lot of attention has been given to the issue of what to do with the high-profit customers--from assigning them personal bankers, to having someone greet them when they walk into a branch, etc. Much less is said about what to do about the folks at the other end of the profitability spectrum--people who may or may not be of modest means. Most of the cover story (p. 42) deals with the unprofitable part of the equation.
How banks deal with "the unprofitable" is relevant to the special supplement accompanying this month's issue. Entitled "How consumers see you," it reports the findings of ABA's second national survey of consumer perceptions of banks. (If your copy of the supplement is missing, fax a request for one to Mary Chapman at 212-633-1165, or e-mail same to email@example.com)
If, for example, a bank decided to address profitability by adding fees for certain transactions, or on certain accounts, it could well affect the public's perception of the industry. Many bankers, of course, think of First Chicago in that regard. The midwestern regional is as likely to be disassociated from its now infamous teller-fee plan as Bill Gates is from his "dinosaur" comment of several years ago. Given the plan's success, the bank can afford to shrug off the notoriety.
Banking, however, cannot afford to shrug off the findings of the ABA survey, especially since they indicate trends spanning three years' time.