Author Shannon McLay makes the case for taking an old-school approach to an increasingly automated financial service industry, building the trust millennials consumers want with community and personalization

Despite working for a bank for 13 years of my professional life, I’ve always felt as if I had a very superficial relationship with the bank. I treated my bank like it treated me—a transactional counterpart. I only go into a branch unless I absolutely have to and I dread having to call the 800 number if I have a problem with a product. I use banks, but I have no personal ties to any of them; however, banking wasn’t always a transactional relationship.

I’ve heard enough stories from older generations to know that there used to be a local community bank in every community and inside these banks were local bankers who knew all of the customers. They knew if you had young children, they helped you finance your first mortgage or your first car, they helped you secure loans to build your first business, they knew your bank account information and in general they performed a multitude of services for you without charging you high fees. I loved hearing the stories of the special bond people had with their local banker, mostly because it was something I had never experienced and assumed I never would.

With the creation of the first ATM machine in 1969, I think the banking industry started to distance itself from its customers. In the process of giving efficiency, it focused less on the personal side of personal finance. Then the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 was passed, allowing for national banks to be created and thus led to the death of the local community bank. 

The larger acquiring banks had shareholders to appease and efficiency ratios to achieve and branches in every community no longer made sense. I started working for Bank of America (which was previously Nationsbank and BankAmerica) in 2000; and my clients frequently complained to me about the decrease of personalization with all of the acquisitions. The big banks were killing their favorite local community banks and bankers and there was nothing they could do to stop it. 

Not only were banks becoming less involved in their local communities and with their local clients, but the events of 2008/2009 revealed that they were also profiting off of the challenges faced by their consumers. 

I truly believe that the best way for the financial services industry, and banking more specifically, to build better relationships with their customers is to take an “old school” approach to banking and embrace a relationship-centered model to customer service rather than a transactional approach to customer service. 

Seven years ago while I was working as a financial advisor at Merrill Lynch, I saw the inherent flaw of the financial services industry. They essentially created a profitability model that solely focused around their ability to sell consumers products, bank accounts, investment accounts, credit cards, mortgages, life insurance, etc. Consumers need products; however, how can they best assess the products they need? After dozens of people telling me that they would pay me to help them make these decisions, I decided to leave Merrill Lynch and create a true financial services company, one that provides a service and not sells products. 

For six years now, my team and I have been intimately involved in the personal finances of thousands of clients across 48 states; and in all of these interactions, I can tell you that consumers have reached their limitations and desire for efficiency and technology from their financial services partners. They want a relationship, a trusted relationship that their parents and grandparents had three decades ago. They want someone to understand their financial picture, know what they’re working on and help them achieve their goals. 

I was told repeatedly by venture capital investors and Wall Street executives that I needed to focus my business around technology and create some sort of online bot to help people with their money; and I’m thankful I haven’t listened to them. The problem with the financial services industry is that they stopped listening to the voice of the consumer a long time ago, probably dating back to 1994. Once you put the needs of shareholders in front of customers, you stop truly understanding what the customer wants. Banks weren’t listening to customers when they closed local branches, they weren’t listening to customers when they added fees, they weren’t listening to customers when they created products that would financially ruin families and communities. 

More so than ever in financial services, consumers are looking for someone to trust. It’s been more than 10 years now since the last major financial crisis and banks haven’t done a whole lot to change this relationship. They have invested millions of dollars into advertising campaigns to convince us that they are changed, but the reality is that nothing has changed. Trust is not built on transactions and fees, it’s based on relationships and listening to your customers. Our clients pay us a fee every month to have a trusted relationship with my team. Every month, we have to earn this trust or lose our clients. It forces us to provide great customer service and a great customer experience; and I know we’re doing this well since over 40% of our new clients consistently come from referrals. 

For financial services to change for the future, I hope they start taking playbooks from the past and embrace more relationship rather than less with their consumers. I truly believe that it will not only build a healthier client relationship, but it will also be best for their bottom-lines.


Lead image: stock photos from Monkey Business Images/Shutterstock

Despite working for a bank for 13 years of my professional life, I’ve always felt as if I had a very superficial relationship with the bank. I treated my bank like it treated me—a transactional counterpart. I only go into a branch unless I absolutely have to and I dread having to call the 800 number if I have a problem with a product. I use banks, but I have no personal ties to any of them; however, banking wasn’t always a transactional relationship.

I’ve heard enough stories from older generations to know that there used to be a local community bank in every community and inside these banks were local bankers who knew all of the customers. They knew if you had young children, they helped you finance your first mortgage or your first car, they helped you secure loans to build your first business, they knew your bank account information and in general they performed a multitude of services for you without charging you high fees. I loved hearing the stories of the special bond people had with their local banker, mostly because it was something I had never experienced and assumed I never would.