Value Beyond Bank Products

Transcription:

Nick Miller (00:09):

Good afternoon. I'm Nick Miller and I'm joined on stage by Sandra Felegy and Isio Nelson. And we're here to talk about value beyond bank products. And the context for this is that more than 20 years ago, fleet Bank and a few others began by experimenting with value or products and services beyond the traditional bank set in an effort to differentiate. So in fleet's case, for example, they offered website services. If you were a business fleet would help you set up a website store, which at that time was pretty new stuff and they offered some financial products that were not part of their traditional set. Well, over the last 20 years that sort of fell out at his favor. It didn't seem to produce much. Fleet stopped all of that after a couple of years. And in more recent times, people at banks have added accounting software and some other things to go beyond that. But the question that we're really wrestling with today, we'll start with Sandra and what Comerica is doing. I'll offer some insight from banks overseas. Izi O will talk about some research that he's done about what attracts customers to banks and what may be coming in the future so that we have just a different perspective of this. So Sandra, maybe I could just ask you to add a little bit to my very brief introduction of you.

Sandra Felegy (01:23):

No problem. Good afternoon everybody. I am Sandra Felegy and I am the Regional Director of small business for California at Comerica Bank. I have over 20 years of banking experience. I was telling Nick, I started my banking career as a teller in an in-store branch of a Wells Fargo bank. And I did start when I was five. So I just want to make it very clear to everybody. I'm not that old or I'd like to not think that I'm that old, but I've seen a lot of change in the financial services industry with respect to how we look at customers, how we go after customers, how we talk to small businesses, what they value, what they don't value, what they perceive as value. And it is very different across the board. So very excited to be here to talk about what Comerica is doing in terms of responding to what we have heard from our customers around what they value and what they're looking for from their bank.

Isio Nelson (02:15):

That's a little bit difficult. I'm a little more gray than you are. So 25 plus years in banking. I also started taking applications on the phone as my first job and then worked my way through Capital one City. Spent 15 years at Equifax managing different parts of that business, and then most recently at BAI here. So I like it as far as our mission to be able to give the information to the industry to make better decisions so that we collectively can be better.

Nick Miller (02:41):

And I started out in the banking industry 50 years ago and I got you both. That's true. Anyway, so we're going to start with Sandra and Ika to tell the story of that too. Brian introduced some of this yesterday and one of his slides had to do with the feedback that Comerica heard from their clients and then how they evolved that into a value proposition. So Sandra, I'll pass the clicker to you and you can take it from there.

Sandra Felegy (03:12):

Fantastic. So many of you heard Brian Haney talk yesterday about what we were doing in response to feedback that we received from our clients. And I think the most important thing to talk about is not all of the feedback that was on the slide, but that we actually asked for feedback. We have to be able to ask our clients what they need and what they value because we cannot make assumptions around what they need and what they value. And for every small business customer, it's going to look a little bit different, but the top most responses are on the slide here and Brian did go over that yesterday. So more time discounts. How do they acquire more customers money to advertise? And so from that, you heard Brian talk very high level around co-work spaces. We talked about small business, we also talked about shred site, and I'm going to give you a little bit more detail.

(04:08):

I'm going to do a double click into each of these for you because ultimately all of these came about for Comerica because of what we stand for as a company. Our core values and our motto for the bank is to raise expectations of what a bank can be for our colleagues, our customers, and our communities. And we do that with falling upon the four pillars of our core values, which is one Comerica, the customer comes first, the bigger possible and a force for good. So when we looked at trying to achieve what our company stood for and how we were going to provide value back to our customers, these all came about in a very simple fashion because they all respond to what we stand for as a company. So here's your double click, Comerica Co-work Spaces. You all heard from Brian yesterday that we found we had a lot of brick and mortar and we had a lot of extra space.

(05:12):

And out of the pandemic we found that we have small business customers, employees included, that can't necessarily find quiet space to work from. And I know we tried to show the marketing clip, but ultimately Brian gave a very good synopsis of what happened. And it's real life. I just lived it a couple weeks ago, right? Had a big meeting. I was working from home. I thought I had everybody squared away and it never fails. The UPS delivery that was supposed to come tomorrow came today. UPS rang the doorbell, my dog started barking. My neighbor's landscaper is blowing the fan and I can't hear what's going on in this meeting and it just feels chaotic. But for me, it's okay. I can say, Hey, I'm sorry to whomever. Speaking to, and people understand because we are in corporate America, but for our small business customers who are trying to earn more business and reach their customers, that may not be the best look, right?

(06:07):

And so what we heard from them was they needed a space that was quiet. They needed a space that they could work from. They needed space where they could have meetings where they could make copies, where they could send a fax. Some people still use faxes where they could have the digital tools and capabilities that us as big organizations have at our fingertips, but they as small business owners may not have. And that was what co-work spaces became for us. We have this in our headquarters market in Texas, and as you heard from Brian yesterday, we are seeing month over month growth with respect to bookings and co-work spaces is specifically designed for our existing clients to utilize that space. That is a value add that we are giving to them as a thank you for being clients of Comerica Bank. Now, shred sites, my husband makes fun of me all the time.

(07:04):

I work for a bank and I know how important it's to shred all those pre-qualified credit card applications that you get in the mail and whatnot. And what happens? We have this box that's in our downstairs closet and I've got 10 pounds of material that just needs to be shred and it's sitting there. I need to do something with it. Well, as a financial institution, we know how important it is for our clients to preserve their identity, keep that information safe. And so to be able to provide shred site locations at our banking center offices to protect their information is a responsibility that we as a financial institution should provide to our clients and we can provide to our clients. But I'm going to tie this back to our core value because I said earlier these were easy for us to accomplish and these were easy for us to do because we built them off of what we stand for.

(07:52):

Brian said it, we had 126,000 pounds of shred that came through some of these shred sites. But what are we doing? We're shredding that material and we are recycling it, and that is what better for the environment? And so that is us living that force for good core value that we have as a company. Small Biz co-op Brian shared that the co-op opportunities enables our customers to take advantage of some of the things that we have as an organization. We've got sports tickets that sometimes use and sometimes don't get used. And what we heard from our clients is I'm a small business, but I don't have the same reach as big businesses, right? They've got multimillion dollar marketing plans, they've got the suites at the games, and I want to be able to do that, but I don't have the means necessarily for that. And so hearing them say that Small Biz co-OP enables small business customers to have the abilities like big businesses to treat their clients to events.

(08:59):

What you see on that right hand side of the screen is APEX Inspections. They are a client of Comerica Bank. They actually got to invite a couple of their clients to a recent Texas Rangers, Arizona Diamondbacks World Series game. And they had a fantastic time and they did that through our Small Biz co-op program. And the feeling that they got, the interaction that they got between their business and their client was something that they couldn't even imagine to be able to take them to an event like that and act like those multimillion dollar big businesses. And that's what small businesses are aspiring to be. They're all looking to grow and have the same access and tools. Now I have to thank Brian and I do also have to thank scenario because they left me one last thing. And so yesterday and some of the breakout sessions in the women business owner section and in the diverse business section, there were some questions asked about how we ensure our programs reach the mass market.

(10:04):

How do we ensure that there is consistency around that? The last item that we had to share with our communities and with our customers, but also now with prospective customers is Business HQ. Business HQ is something that we developed in partnership with community groups in the Dallas market. And when we talk about asking for what is needed, we did this with all of the community groups in Dallas. Dallas is where we are headquartered. And so we are starting there. And ultimately Business HQ is a location for small businesses that are starting up looking for education, for incubation programs, for assistance to get what they need. And as part of Building Business HQ, we asked not just customers and prospective customers, but we asked our community partners what they needed. If we want to be part of the community, we have to ask them what they need.

(11:07):

We cannot go in assuming that we know what they need or just telling them, this is what we're going to give you because if that's not what they need and they're not going to find benefit in that, that isn't going to do us any good, right? As a financial institution to help our community succeed. So a couple weeks ago I had the wonderful opportunity to visit Business HQ in Dallas along with the entire small business leadership team for Comerica Bank. And we got to meet VR Small who is pictured there on the right hand side of the screen, and she is part of the community group that's in the incubation period for Business HQ. And she runs the Women Veterans Enterprise Center. And so she works with veteran women business owners to grow their businesses and they go through an educational program and that enables them to utilize that business HQ space.

(11:58):

But outside of asking for that programmatic information, our corporate social responsibility groups and our external affairs team, which Brandon Jones pictured with VRA Small there as part of, they asked, what are you looking for from this space? And they said they needed Wi-Fi because Wi-Fi was spotty in that location. Who would've known? So they needed consistent Wi-Fi , they needed standing desks, they needed locations where they could have small meetings, huddle rooms, digital access and large conference space. And so Business HQ was born. So this is just a subset of what Comerica is doing to provide value to our customers, to prospective customers, and ultimately to our communities that is outside just normal checking, savings, accounts and loans.

Nick Miller (12:46):

Awesome, thank you. I'll just pause for a moment. Any questions for Sandra about what she's shared so far before we go on to the next piece? One second microphone on its way.

Audience Member 1 (13:06):

Yeah, this is a really great idea. The question I have is who manages the logistics of all that? Does a small business team do that or facilities or is there a whole group that manages the whole program?

Sandra Felegy (13:18):

Yeah, so our corporate social responsibility team, as well as our external affairs team manages this site. And this site was actually born from the same premise of Co-work space. We had an extra location, it happened to be a loan facility. It was large enough to make Business HQ work, and it actually neighbors one of our banking centers. So it's a multi-line of business type of management with respect to who manages the programs, the facility, and obviously the staff that operates the location.

Audience Member 2 (13:54):

On the co-work. Is that a market rate or is it a preferential rate for your clients or free just altogether? If you're a customer, you can get in the queue and get a room, man.

Sandra Felegy (14:06):

So, we're in banking and we don't often hear this, but if you're a customer, it's free. You go onto the website and you book it out and it is free.

Nick Miller (14:19):

One more at the back.

Audience Member 3 (14:23):

So I think it's really great that you offer all these services, but as we talk today, small business owners can be kind of lonely and they may not know about a lot of these products and you don't want to say products. So how do you necessarily tell these clients of all your brand new services that you're offering so that they could use the Business HQ and the workspace and the shredding machine, which is amazing.

Sandra Felegy (14:45):

Yeah. So we've got on a prior slide, there was collateral around the co-op, right? And so it gives, with respect to all of the details that come with co-op and the most common one is the advertising. We've got a really great story around the advertising piece and how easy it is. So on our website, most clients may or may not have had experience creating their own advertising or mass advertising for sports venues. And so we have a template that is available on our website. It gives basic 1, 2, 3, 4, 5 steps as to what to do. The client will then submit that information to us and then we give that to the venue that we're going to be partnering with. So we have this fantastic story with international coolers. They are a Dallas-based company. They follow the easy steps with creating the advertisement. We placed it on the jumbotron at American Airlines Arena during a Dallas Mavericks game. Obviously they got a lot of attention from that advertising, but the real beauty out of this particular customer was American Airlines Arena decided to offer a contract to our customer because of the advertisement that was on the jumbotron that day. So it is very easy for our clients to get information, get access, and understand how to utilize these additional tools that are at their fingertips just by going to our website.

Nick Miller (16:12):

So we're going to go on and we can come back if there are questions later. So I thought it would be interesting to look outside the US to see what banks are doing. And I went north to Canada first. This is Royal Bank of Canada, and they offer, can we bring that back up?

(16:43):

Who put a blank slide in there? Guilty as charged. Who knew? So on Royal Bank's website, they actually on one of their pages, they offer services beyond banking. And if you click that link, it takes you to this page where they're offering access to four other services. Hello. Darwin, for example, is a service that helps you find experts for tax and application development, so on. Sure, web is managed service providers, cloud solutions and so on. So they've got four interesting, clearly not bank products, looks like carefully chosen partners. This bank, I've got two slides for them, is in Asia and they offer, I mean on this page and the subsequent one, there are over a dozen of these extra services, some of which overlap, which raises the question, what problem are they trying to solve and how do they choose the services and why are they there and why do some overlap?

(17:42):

And I don't know the answers to any of those questions, but the point is, as you look at this, they have in the upper right hand corner, a booking expense management app in the top middle. There's one for application development outsourcing, greytHR at the bottom is a cloud-based HR service. If you go to the next slide here, you've got a couple on supply chain logistics platform to managing startups, some software that we would recognize, Zoho, for example. But it's a very wide variety of services. So going back to other things that we've heard in the conference about figuring out who your clients are and what problems you're trying to solve. I think here I would be asking the question, what are you guys doing? But it is interesting to see how broadly they're doing. This is an Asian bank import export is very important.

(18:32):

So there's quite a heavy emphasis on applications that would help clients with those sorts of services. So another blank slide. So the idea here then is where do we go from here? What is it that attracts clients and appeals to them? How would a bank's having these things on their website appeal and draw somebody to be a customer or retain them? And that's where Iio Iios research comes in. They recently launched a study which he's going to share with you that gives some insight into how people see this now and what sorts of issues are rising in importance as banks and customers begin to get smarter about some of these things.

Isio Nelson (19:18):

Thanks, Nick. As Nick and Sandra, we got together to talk about this, and Sandra has a little bit of energy, if you can't tell is great, but I'm the data guy. So I got to go back and say, well, what does the data say? I've been in the industry for a while. I know what most customers would say with the BCG. People ask, what do customers think about their primary? And it's pretty consistent, right? They look at primary checking, they look at trusted, they look at convenient. Those have always been the top box areas that people look at. And I said, I don't know if we're going to see different that you can offer other value. We started to see some things pop up, and this is also on the consumer side, we're seeing it too. And this is, you see it in the five to 10 million right now, but we're seeing it in other places, which is shares my values.

(19:57):

And so a lot of what Sandra's talking about is where are our customers looking that share our values and how can we portray that to them? We started to look at that as far as the primary bank was concerned, and we said, well, what about switching? What do customers switch for? Of course, it's a no-brainer. Lowest fees. We're going to look at rates, convenience branch locations, still very, very important for small businesses, but we start to see some of those other things down there below the line. Some of these things are creeping up into what is making decisions for these small businesses so better understands my business. And this again, lines with the things you guys were looking at, positive reputation and then helps me run my business. So all of these things are factors, assuming everything else is consistent, you're all competing on rates, you're all competing on fees, you're all competing on a branch network that's within the areas that your customers are looking for.

(20:51):

What are these other things that small businesses are looking for? And these all align to the things that Comerica and to some of the things you mentioned that are overseas are starting to build around. So the one thing that I thought was interesting too, we keep on looking the sweet spot between five and 10 million in some of our research is at the very top is the positive reputation. So again, everything that, and when I talked to Sandra, I kept on pushing. I said, so tell me why you're doing this. What was the business case? How did you get the funding for it? She says, it just aligns to who we are. And that going back to some of the stuff we heard yesterday from Ben about humanizing the experience, not thinking about it all in terms of numbers, and I'm the numbers guy, so how do we go ahead and start to align these things that say if we do good, good will happen to the bottom line? So a lot of the research is starting to come into some of those things that we before would dismiss or say, they're kind of around the edges and nice to haves, and it's actually influencing the decisions that these small businesses are making and supporting, which I thought originally would be No, no, no. It's actually supporting a lot of the stuff that Comerica's doing.

Nick Miller (22:01):

That's, it went so fast. So I think the question that we're left with is, so what kinds of ancillary products and services should banks be considering in order to differentiate, in order to retain, in order to attract clients? And I think Sandra, I'll come to you because it's clear from the research that you did that reducing time and friction, eliminating manual tasks, discounts, perks that the big boys get are all things that are desirable. But if you're a bank thinking about what comes next, how do you think about that?

Sandra Felegy (22:37):

I think it's not necessarily about how we think about it. Again, you have to go back out to your client base and ask what they need and then take a look at what you have from a financial institution standpoint and then wrap it all together. I think Comerica was lucky enough to start this project a couple years ago and start looking at these things a couple years ago. And because of that, we saw we had excess space that we could repurpose for co-work space. We saw that we had the marketing tools that we could utilize and share with our customers. And if we think about what we've been talking about over the last two days, building trust and building relationship, when I think about my relationship with my husband, what's mine is his and what his is mine, we share. And so if we have things as a bank, we should be able to share those things with our clients as well. So I think from a financial institution standpoint, you've got to look at your core values, what you stand for, and then also look at what you have available to share. It all also depends on the market and the economy, and some things may be great ideas, but they could be cost prohibitive. I mean, we have to be honest about that. But some things might be at your fingertips and you just haven't uncovered that yet.

Nick Miller (24:00):

So I'm wondering, is there anybody in the room representing a bank that is attempting something beyond what Sandra's sharing? So Sandra's sharing, how do we share our current assets? The examples from Asia are examples where a bank has gone beyond their own assets to draw in partners to do it. I'm wondering, is there anybody else in the room that has an example? They could share one at the back.

Audience Member 4 (24:31):

We have partnerships with the Chicago Bulls, the Black Hawks. So we've designed affinity programming across the different calendar to be able to highlight customers and share the assets at the stadiums and different venues like that. Now, we haven't created any program around it because we don't, I mean, it's kind of hard to offer that to all your business clients. So I'm more so curious as to how Comerica through that co-op is able to broadly put that out there, and how many businesses actually get the benefit of that asset sharing?

Sandra Felegy (25:00):

So ultimately it's up to the clients to participate in the co-op, right? And so they do have to provide their advertising material. We do do an intake, and then ultimately we are going through all of what we receive and then sending it through to the different sports locations that we are doing that with. Obviously we just launched the program. We have some data around it. I unfortunately am not able to share all of the data today, but all of the output, the response has been positive. We have not had a client say, Hey, I've submitted it. You have not responded. We don't know what's going on. Things of that nature. So ultimately this is going to be a program that we continue and we are looking to expand it broadly as we look to further the programs in our other markets.

Nick Miller (25:50):

That's great. Thanks. So we have a couple of minutes left if anybody has other questions before we wrap up, going once, going twice. Question at the back,

Audience Member 5 (26:04):

Just a question I guess on, you had a slide with all the other ancillary items that other banks have been offering overseas. Do you feel like these items help create that stickiness with customers that will enable them to stay with you long term? Or are they items that are easily transferable to or won't allow them to stay with you that they'll just switch and find somebody else who provides that type of action or item?

Nick Miller (26:33):

So we didn't interview anybody at that bank to ask that question, so I can't comment specifically. I think that Comerica's experience suggests, and other bank's would suggest that if you help them save time, reduce cost and friction and so on, that that does build trust and that they would look to you first, for example, for other things. I think the question with that bank in particular is that if you look at the mix of their offerings and remembering that import export is important, those supply chain logistics for example, I would guess yes, I'm not sure about the HR software. That to me seems almost like a throwaway, like, yeah, we offer it if you need it, fine, but it doesn't seem like it's part of the core mission. So if I were their consultant, I would be asking those questions. But I think in general, what we've heard when banks have offered other services and clients have used them is yes, it ties them in, it makes it closer and it does build trust.

Isio Nelson (27:29):

Yeah, we talked a little bit about that too. And again, I was asking Sandra for some of the KPIs and I said, how are you doing this? And I think there's a couple things. One, what are the KPIs you want? Is it attrition? Is it additional household growth? Is it deposit growth? What do you want? Is your KPIs? And then I know that you guys are doing as far as champion challengers, so you've got certain markets, you're doing it in, certain markets you're not. And you start to look at how is that actually performing? And then of course benchmarking. So is it just the market that's moving in those areas or are there other things that are going on? How are you benchmarking against the overall industry? Those different things should help you to understand if what you're doing and implementing is sticky and meeting the objectives you had not to take away from all the other stuff, which is how's it aligned to my values? And it's not going to be a six month or 12 cycle to be able to measure everything, but you'll be able to understand is it making the progress that you want to?

Nick Miller (28:22):

Yep. So I think if you back up, a main purpose of our presentation today was really to prompt the question for you, what is it that your clients are struggling with beyond what you already provide for them? Where does it really hurt? That was one of the themes of Ginger's presentation. And so with Comerica's example, we've offered an example of how a bank can leverage its existing assets in order to do that. The Asian bank as an example of one that's gone dramatically into partnerships as a way to try to do that. And from Isio's presentation, we see that reputation and other softer variables are becoming more important in terms of how people would choose a bank or choose to stay with a bank. So we would just leave you with that question or that encouragement go deep when you talk to your clients.

(29:11):

You can't, in our experience, I think the three of us would say, you can't figure this out on your own. You have to go talk to the communities that whatever Sandra said to me earlier, whatever we would think about offering for co-work space or the consulting support is going to look different in Detroit than it looks in Dallas. And it's going to look different there than it might in Los Angeles because the communities are different, the values are different, the context is different. So it's a nice idea, but it's not something that can be rolled out without modification to different markets, otherwise it will fall flat. So that I think is the challenge for any of us who are offering products and services, is to be close to those local markets. So thank you all. Have a good evening. Enjoy the live band at networking. Here we go.