In the last two weeks, we have seen two banks in the US with strong ties to the tech industry go belly-up and Credit Suisse, as described on their website as "a leading financial services company, advising clients in all aspects of finance, across the globe and around the clock" being rescued from the financial bullying ground by it's Swiss bigger brother.
Everyone sitting on the finance side of the fence will say this is part of the ups and downs of the financial markets; every ten years, a big boy falls victim to the global influences, and the Governments say, 'don't worry, we are ok as most of us have a family trust fund to fall back on so Joe Blogs-Average, you will be fine too!'
Thinking that your average person is naive and not becoming wise in these situations is very silly. It will make people question the system and the customer experience that big bank clients receive.
To give a simple snippet of how the big banks work; for every dollar ($) you deposit into a bank (or any other currency), the bank can leverage or borrow 4x that amount. So, in more realistic terms, if a big bank's customers deposit $1 billion in a day, they will borrow $4 billion from another bank the next day.
On day three, the big bank will take that $4 billion of borrowing and splash this cash on assets and investments to make themselves crazy profits in the long term.
However, if all those customers that made the original $1 billion came to the bank asking to withdraw their cash on day four, they would need more time to be able to.
In the extreme, if the bank made terrible asset and investment choices and lost all $4 billion, all those deposits would be gone for good.
This example somewhat simplifies the situation beyond reality, but it does help paint a picture of what banks do with your hard-earned cash and probably begs the question, can I trust my bank?
Since the 70s, when the banking system drastically changed and the leaders of significant banks realised how they could make huge profits and very tidy bonuses by leveraging deposits, the fundamental of banking customer experience went out the window; trust.
If a new bank evolved from the financial noise of the 21st century, stating that they would look after your money for a small annual fee, thus guaranteeing that you could withdraw all or some of your cash at any time, would you sign up?
A good percentage would, and this new bank's customer experience strategy would not need to be extravagant as the essential ingredient is already cemented within the customer, trust. Maybe it is time for customer experience bank to basics.
If your business would like help navigating customer experience in 2024, get in contact with us to discuss further: experience@yourcxc.com
Comments