Some banks make heavy use of personal bankers under the belief that having a dedicated person to help with problems would make a difference in the customer experience. Up until this month, we believed this notion. We were also jealous of other banks that use a personal banker model. A survey we conducted last week shows that approximately 22.4% of bank customers either have a personal banker assigned to them or have a banker that they have selected that they use as a personal banker. However, the belief that a personal banker helps customer satisfaction may be misplaced. In this article, we highlight the counterintuitive finding of why adding a personal banker may LOWER satisfaction, not help it. Further, we will delve into which customers benefit most from having a personal banker.
Satisfaction and the Personal Banker
It is true that those with a personal banker tend to be more satisfied and happier with their bank. However, some of this difference can be explained by the general happiness with the bank. Some of this difference stems from the fact that those with a personal banker tend to have higher household income, tend to have a longer term relationship with their bank and tend to use more products.
If you adjust for those factors, take an average customer at an average bank, provide a personal banker and then measure satisfaction, the rating drops in one test we conducted with 118 target participants. On a scale of one to ten, with ten being “Very Satisfied” the base rating for those customers that did not have a personal banker was 7.53. Provide them a personal banker and their satisfaction dropped to 7.36.
This isn’t what we expected. In addition to increasing the cost of servicing this account group, the participants in our study where a personal banker was added felt that they did not need one with many remarked that it created an extra burden to track, remember and try to utilize this banker. This group merely wanted a call center or branch to be responsive to their needs.
When to Use a Personal Banker
You would think that the higher your household income, the more resources you have, and the more you would use a personal banker. In fact, most banks base their personal banker model on this premise assigning a banker to their wealthier clients. Ironically, this may be a mistake.
It turns out that the higher your household income, the fewer financial problems you have and when you do have issues, you are likely to have other financial professionals to rely on such as investment advisors and accountants. Those customers that have personal bankers use them a limited amount of time with 38% not using them at all and 44% using them once or twice per quarter. Only 18% of customers use their personal banker once or more per month.
Despite that fact, personal bankers make the greatest difference with those households making between $75,000 to $125,000 per year. Add a personal banker to this cohort and satisfaction goes from 7.69 to 8.18. Similarly, if you provide a personal banker to those over 60-years of age, satisfaction also increases slightly. For most other demographic categories, adding a personal banker either has no material impact or has a negative effect on customer satisfaction.
Putting This into Action
At 150 bank customers, this is admittedly a small sample size, so we caution drawing too many conclusions. Further, we did not adjust for the quality of the personal banker or the platform. For all we know, the right personal banker can have a huge difference in both profitability and satisfaction. However, this data does send a note of caution that bankers should be careful adding a personal banker to the service platform where none is needed. Banks that do this might find that not only do you increase your cost of delivery, but you end up hurting your customer experience.
This research indicates that it might be far better to “reward” your customer with the option of a private banker and then let them self-select. In this manner, you have a higher probability of increasing satisfaction and potential profitability.
Submitted by Chris Nichols on March 20, 2018