Lending an Ear Aids Household in Designing Comfortable Bank

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Lending an Ear Aids Household In Designing Comfortable Bank

When Household Financial Services discovered that the vast majority of people were uncomfortable with banks, the company used the information to design a bank that people would love.

The result is Household Bank, which has one simple form to apply for all products, because that's what people told Household they wanted. It's open seven days a week, because people said that next to simplicity, they wanted access, and they didn't mean automated teller machines.

As Edward G. Harshfield, president and chief executive officer of Household Financial Services explained in a recent interview, the bank has "a meeter and greeter system.' An employee greets customers coming through the door to help speed transactions, because people told Household they wanted more efficiency in conducting basic banking.

The company is betting that listening carefully to people and delivering what they want should enable it to eat what traditionally has been the banking industry's retail market lunch.

Household Financial Services is the Household International unit responsible for the conglomerate's financial services business.

The new consumer bank strategy complements Household Finance's existing operations. The company aims to get a leg up on competing banks by attracting the deposits of young borrowers who are growing out of the net borrowing stage of the financial life cycle into the net saving stage. Finance company customers approaching that point in life typically shift their business to a bank.

Like other competitors, Household's goal is to own a piece of the customer's mind so that someone thinking of financial services will think first of Household. "Origination of the customer will be key to success in all financial services. The idea is to get someone before they know they need something,' Mr. Harshfield said.

Banks aren't particularly attractive that way, noted the former Citicorp executive. "People think banks are "stuffy, hard to deal with, full of bureaucratic rules, haughty, and unfriendly,'' he said.

Those characterizations were mentioned repeatedly in thousands of questionnaires and focus group interviews Household conducted in several states. The company conducted a great deal of demographic and psychographic research before planning the national consumer banking strategy it started to roll out three weeks ago in Maryland, Mr. Harshfield said.

The linchpin of that strategy is Household Bank, a federally chartered savings bank with offices in California, Colorado, Kansas, Maryland, Ohio, and Illinois. The offices were acquired in the last two years through the purchase of troubled thrift institutions with net operating losses. Mr. Harshfield revealed that Household has turned them around--all six are currently profitable in their own rights. …