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Imagine a Bank Operating for the Benefit of All

This article is more than 9 years old.

What if a bank had the goal of helping its customers thrive, rather than just maximising shareholder profits? The first one that does will be a huge success.

Consider the unthinkable: a commercial bank shifting its purpose away from turning a profit, to benefiting the society at large by assisting its individual clients to achieve personal financial success. It would be a financial institution serious about putting purpose before profit. How would its actions differ from the banks we know today?

It would regard all of its customers as partners – and the customers would view the bank as a partner, too. Bank and customer would work in SMARTnership. The bank wouldn’t pour time and resources into selling overpriced loans, CIBOR accounts or investment packages. Instead, it would work together with each client to find the best way to improve his or her financial situation.

It would help its clients gain a thorough understanding of their current finances. Not just by presenting a date-ordered list of bank transactions or a deluge of figures and accounting jargon, but reviewing the client’s income and spending patterns with easily understood graphs and diagrams, carefully explained.

The bank would interact with any other banks or credit companies the client dealt with as part of providing a complete financial overview.

The bank would not simply be a passive ‟payment central” (read IT company). It would take an active role, offering clients advice on how to get more out of their money. Ideally it would consider its clients to be a potentially interactive network, not just isolated individuals. Imagine how such a network might function, with individuals assisting, inspiring and doing business with each other, to the benefit of all – including the bank.

The bank would be on the client’s side if he got into trouble of any kind – a source of solutions rather than another problem. Naturally the bank would have to be profitable to continue to exist, and would have to be paid back anything it loaned, plus fair interest. But it would not be continually, solely focused on its own risk and profits. It might, for example, help a challenged client find a competent advisor, or suggest other clients who might be willing and able to help.

Now, this is clearly not the way traditional banks think and act. However, the first bank to take venture into such an operating basis is almost guaranteed to win incredible popularity; managed with intelligence, enormous financial success will surely follow.

It’s all about trust

Recent surveys and studies have found that trust in banks has never been lower than it is today – both within the business community and by individuals. This doesn’t seem to bother the banks though; they know they are the only game in town.

If you were lucky enough to find a bank that truly, tangibly helped you, you would share the experience with your family, friends, and colleagues. You’d talk about it on Facebook, on LinkedIn – through whatever communication and networking channels you favored. So would the rest of that bank’s clients. Almost overnight the news would go viral. That bank would no longer be just a bank. It would be the core of a movement.

I did a survey a few years ago among 15,000 people, asking who they trusted most. Number two on the list was non-governmental organizations – NGOs. Global corporations – including big banks – were very near the bottom. Why? People do not trust individuals or businesses who are clearly and solely “in it for the money.” NGOs are seen as operating on a higher purpose than profit, so whether or not we happen to agree with their stated aims, we still tend to trust them.

Trust is good for business

Now imagine a world in which, for instance, a customer is entitled to a new phone at the end of his two-year contract. Even though the customer doesn’t notice that the contract period has passed, the phone provider sends a reminder, and an invitation to come choose a new one. How loyal would that company’s customers be? Most phone companies don’t do this. They “let the sleeping dog lie” and wait for the customer to make the first move, meanwhile maximizing their profit. For the moment, at least.

There are a few companies around who’ve picked up on trust as a successful orientation. Apple ’s iTunes gives you a heads-up if you try to purchase a song that’s already in your library. They could let you go ahead and buy it, and take the extra profit. Considering how often this scenario would play out among their millions of users, it would amount to a handsome sum. Apple doesn’t do it, though. And their customers know it, and trust and appreciate them all the more.

Back in the days of the Gulf War, insurance giant USAA sent out refund checks to thousands of its military customers who had served abroad. The idea was that since they clearly weren’t using their auto coverage while deployed overseas, they shouldn’t have to pay for it. When a soldier returned home, he or she received a refund check for any coverage during their time abroad. Now, is it any surprise that USAA is consistently named as the most trusted financial services organization in the U.S.? Or that their customers say they believe the company will always do what’s right on their behalf? By the way, 2,500 of those refund checks were returned to USAA, uncashed. Their grateful clients told them “thanks, but keep the money – and keep on being there when we need you.”

How could anyone compete against a company whose customers loved and trusted it so much that they’d refuse to accept a refund like that? A company with a healthy percentage of third-generation customers and counting?

Business built on a foundation of trust is the way of the future!

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