Lessons in Retail Banking from Barbara Yastine

As the chairman and chief executive of Ally Bank, Barbara Yastine was in charge of one of the most unusual experiments in the banking industry — and, from a customer service perspective, one of the more successful ones too.

The aim, starting when Ally was reborn as an online-only bank from the wreckage of the troubled GMAC in 2009, was to capitalize on what other banks were doing wrong in retail.

Ally's sales pitch to customers was higher-than-average interest rates on deposits, hassle-free service and no hidden fees, and its marketing got the message across with humor.

This strategy worked superbly in the task of gathering deposits for the parent company's auto finance business. Deposits have increased 42%, to $61 billion, since 2012, when Yastine took the helm.

Ally also has earned a good reputation along the way — an impressive feat of marketing for a branchless bank with PR baggage from the bailout era. (Go to our story on the 2015 Survey of Bank Reputations to see where Ally ranks with customers and noncustomers.)

The experience has helped convince Yastine, who retired from Ally on June 19, that banks could be doing retail banking, particularly online banking, far better than they are now.

"Every time you see a competitor emerging, you've got to take them seriously, and spend the time to think about the customer experience that they're delivering," says Yastine.

To outmaneuver these new threats, retail banks also need to simplify their digital offerings, use data more effectively, get creative with email and, most importantly, always put the customers first, she says.

In her view — which she shared in an interview shortly before stepping down — one mistake that traditional banks sometimes make is putting too much weight on what goes on in the branch and too little on digital interactions. "Just because somebody goes into your branch to take out more money than they can get out of an ATM doesn't mean they necessarily think highly of you," she says.

Instead, what they want is a financial institution that meets — and, increasingly, even anticipates — their needs with a minimum of inconvenience and expense. Even simple things, like offering to automate a transaction a customer routinely makes in-branch, or giving a customer approaching retirement information about IRAs, can help create a bond.

She recommends using email to send more frequent personalized offers, based on customer data, just as retailers do. "There's almost nothing as important to people as their money — taking care of their money, doing more with their money, being smarter with their money — and banks are the perfect source for ideas, whether it's content or product ideas, that would make sense for people," she says.

Yastine also argues that digital banking needs to get simpler. She cites a handful of banks that she says have made real strides in simplifying their online offerings, including PNC Financial Services Group, JPMorgan Chase, BBVA Compass and Ally itself.

But too many banks still have confusing, cluttered websites that mar the customer experience, she says. That leaves them vulnerable to easy-to-use alternatives like OnDeck and Simple.

"Banks need to be really honest with themselves about whether each of the components of customer experience — the marketing message, branch experience, online experience, product design, features — are all in sync," Yastine says.

Yastine's final piece of advice is to focus on customers, not regulators.

She says some regulations should be addressed — the $50 billion threshold for being designated systematically important, for instance — but in general, bankers need to accept the heightened regulation. "I give Jamie Dimon in particular big kudos for starting to say, 'Whatever the regulators need or want, we'll figure out how to get it done, and we'll still get a 15% ROE,'" she says. "Let's put our energy to something better than just pushing back."