Magazine article American Banker

Consumer Education Is the Answer

Magazine article American Banker

Consumer Education Is the Answer

Article excerpt

Highly consumer-visible.

That's how supermarket operators characterize their industry: People come to a store on an average of twice a week and can choose from several stores within a short distance from each other.

Sound like banking?

It is, except for one thing: Because a supermarket bases its profits on meeting the needs of the food shopper better than the competition up the block, food marketers never do anything which might upset their penny-pinching customers.

This attitude, expressed forcefully by food marketers last week during a white House conference on the consumer and the financial services revolution held in Dallas, was evidenced in regard to concerns they raised about the installation of check verification, direct debit, and automated teller systems in food stores. Most of their concerns, they said, are their customers' concerns, gleaned through research about consumer desires.

The intensity of their feelings points out that food marketers, like many of the consumerist attendees at the conference, are worried about bankers forcing electronic fund transfer systems on them without carefully examining and understanding retailers' needs and the needs of their customers.

At the foundation of these fears is financial services deregulation which has brought higher bank fees and minimum balance requirements. It has also brought market segmentation practices that, in many cases, are driving low- and moderate-income individuals from bank lobbies. Because they have not explained their changing business to consumers, bankers have been accused of insensitivity.

Given this historical perspective, the food marketers' fears are not unfounded. Like others attending the conference--itself an attempt to create a dialogue among those affected by the financial revolution -- food marketers furnished some valuable thought food for bankers. Angry Consumers the Worst Enemy

"Supermarket operators have to be aware of the needs and interests of their customers because it is so easy for customers to switch their preference in stores," said Todd S. Mann, director, planning and industry relations for the Food Marketing Institute, the supermarket industry trade association. His comments echoed other speakers who warned bankers that fickle or angry consumers could be their worst enemies in the financial services war.

Madeline Tatum, director, communications and consumer information for Schnuck Markets Inc., Bridgeton, Mo., a conference panel member, rattled off a list of concerns that included everything from convenience -- how easy are the machines to use, how intimidating--to service issues such as, "What if I already have my groceries but not enough money in my account?"

She also wondered about crime and fraud, proof of payment, consumer responsibility, privacy, error resolution, cost, reliability, and choice. For example, "Are many financial institutions on one system so the consumer has enough choices? Any system selected must be available to substantially all of the supermarkets' customers." Educational Tools Must Be Available

Another concern of Ms. Tatum's: "What educational tools are available to consumers during transitional periods of learning?"

That question basically summarizes the focus of the entire conference which ended up finding few such vehicles but creating a beginning dialogue that emphasized a dire need for consumer education.

Asked who should undertake these educational efforts, bankers or community and consumer group leaders, Ms. Tatum said that bankers, who knew their business better than anyone else, had better lead the educational parade or find their own considerations co-opted by others. Always ask consumers and consumer leaders to participate in these efforts, however, Ms. Tatum asserted.

Also on the panel was Brenda Schneider, second vice president and director, community relations, Manufacturers National Bank of Detroit. …

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