BofA + Merrill, The Customer Experience Angle

With Bank Of America buying Merrill Lynch, I thought I’d weigh in on the deal. Rather than joining the discussion about what it means to mega issues like the economy and financial markets,  I’ll talk about the impact on customer experience. Let me start with my overall assessment: it can’t hurt too much.

In Forrester’s Customer Experience Index (CxPi) which ranked 112 US firms, Merrill Lynch came out 49th overall and next to last out of 10 investment firms; only beating out E*TRADE. It’s key problem: The investment firm is not easy to do business with.

Bank of America came out even lower, 91st overall, which was 10th out of 14 banks in the rankings. The bank’s problems spanned all areas of the CxPi.

My research has shown that there’s a high correlation between customer experience and customer loyalty in financial services. So there’s an enormous opportunity. But the questions is: Which firms will benefit?

If Bank Of America takes the opportunity to overhaul it’s customer experience as part of the integration, then it could mean a siginficant improvement in customer experience in a few years; good news for both its banking and investment clients. But the integration will likely take the financial giant’s focus away from customer experience in the short-run.

So there’s significant opportunity for other financial institutions to beef-up their customer experience and grab some market share. My guess at some of the winners in this battle: Wells Fargo, Wachovia, and some smaller banks. It might also be a good opportunity for TD Bank to expand its Commerce Bank footprint and for someone to buy Umpqua Bank. And, I’m adding Edward Jones to the list of firms that could be winners (see the comments on this post, thanks Eva).

The jury is still out on what this means to the behemoth Citibank, which was the worst ranked bank on the CxPi and near the bottom of the entire list of firms. My suggestion to Citi is the same as in my post from late last year: Two Words For Vikram Pandit (Citigroup CEO): “Customer Experience”

The bottom line: I’d make customer experience improvement a core tenet of the BofA/Merrill integration effort.

About Bruce Temkin, CCXP
I'm an experience (XM) management catalyst; helping organizations improve results by engaging the hearts and minds of their employees, customers, and partners. I enjoy researching and speaking about these topics. I lead the Qualtrics XM Institute, which is the world's best job. We're igniting a global community of XM Professionals who are inspired and empowered to radically improve the human experience. To achieve this goal, my team focuses on thought leadership, training, and community building. My work is driven by a set of fundamental beliefs: 1) Everything starts and ends with human beings, so you need to understand how people think, feel, and behave; 2) XM is a discipline that needs to be woven throughout an organization's entire operating fabric; and 3) Building the XM discipline requires a combination of culture, competency, and technology.

3 Responses to BofA + Merrill, The Customer Experience Angle

  1. Eva says:

    you never mentioned edward jones – the uppest non big american reatiler in this ranking.. thats an interesting case because the only thing i found about them is that they responded to internet threat by putting stronger pressure on “face-to-face personal dealings with clients to offer them long-term, conservative investment advice” – its very diffcult to find any information about them though they look like number one excluding stores which entertaing people so much..

    from article on EJ
    “We have elected not to follow the crowd. We
    think online trading is for speculators and entertainment.
    We are not in the entertainment business.
    We are in the ‘peace of mind’ business.”
    How then is Edward Jones responding to the
    online threat? By purposely focusing on its established
    business model and using the Internet as an
    opportunity to improve its existing value proposition
    to its targeted customers. This means looking
    at the Internet as simply another distribution channel
    and using it to offer customers better service
    and more information. Jones’s value proposition is
    face-to-face personal dealings with clients to offer
    them long-term, conservative investment advice.
    As a result, the Internet is used not for online
    trading but as a way of enhancing the relationship
    with the customer. As the ex-CEO John Bachmann
    reiterated in a recent article in Fortune magazine:
    “You will not buy securities over the Internet at
    Edward Jones. That’s going to be true as far as I
    can see into the future. . . . If you aren’t interested
    in a relationship and you just want a transaction,
    then you could go to E*Trade if you want a good
    price. We just aren’t in that business.

  2. Bruce Temkin says:

    Eva: Good point. I should have listed Edward Jones as one of the potential customer experience winners. So I’ve made a change to the post. Thanks!

  3. Taj Carson says:

    It’s really a shame that customer services is the first thing to go, whether it’s because of a merger, a shake-up or belt tightening. But there is definitely, as you indicate, a big difference between the big and the small banks here. Many smaller banks have not gambled with sub-prime mortgages the way that the larger brokers have, and are feeling a little more solid. Research indicates that customer satisfaction doesn’t matter as much if you are a monopoly or a virtual monopoly, but if the smaller banks can make inroads the customer experience may start to matter more to behemoths like Citibank and Bank of America.

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