In my firm's most recent podcast, I editorialized near the end of the episode about declining service levels in banks, particularly the largest banks. I compared service levels to airlines, citing my recent spate of bad luck with air travel.
Do I have a point? Or is it perception? According to Federal Bureau of Transportation Statistics (yes, this agency does exist, and you are paying for it), US airline flights were on time 83.45% in May 2016, up from 80.48% in May 2015. I went back five years and the trend is similarly positive.
So I'm wrong about airlines, right?
Not so fast. How do they measure those stats? Ever wonder why airlines board planes and push off the gate only to wait on the tarmac? Hmmm. Wonder if they measure "on time" from the time you push from the gate. The devil is in the details.
If airlines were so good, why do we not feel it? Why does strategyand.com, pwc's consulting arm, describe air travel as remaining "for many a disappointing, grumble-worthy experience"?
My theory is that airline mergers have reduced our choices. So our overall experience is "disappointing", simply because our options to economically get from point A to point B might be with one or two airlines for that route.
On to banks. My theory is similar. But the proof, like in airlines, is elusive. According to the J.D. Power 2016 US Retail Banking Satisfaction Study, our satisfaction with big banks rose for the sixth consecutive year. Satisfaction with mid sized banks dropped for the first time since 2010.
Again, I think the devil is in the details. I always wondered when working with community banks how they achieved such high satisfaction numbers, usually high 80's to mid 90's. And it seems like every large bank has a trophy case of J.D. Power hardware. But my experience with large banks points to inflexibility, lack of front line empowerment, and basically an "I don't care about you" attitude.
Similar to airlines, I think it relates to how much of US banking assets are in the comfortable arms of so few banks. Seventy five percent of US bank assets are held by the top 50 banks. Losing individual customers is no big deal. But drop a notch in BSA or CRA, that's a big deal. In other words, they don't necessarily care as much about being flexible with you as they do about rigidly complying with bureaucrats.
This feels like how socialism begins. Continue to consolidate power into fewer and fewer hands, be it government or large oligopolies, and pretty soon we're giving blood samples for our DNA to open a savings account.
If a bureaucrat reads this, he/she is probably thinking: "Not a bad idea. We'll say we're doing it 'for the children'!"
It could happen!