There was an interesting article in the Herald on Saturday:

• Banks: your new best friend

Apparently, there has been as been a loss of customer trust in the big banks. In order to win it back, the big banks are engaged in do-good programmes to get more involved in the community, and remind people of their ‘kiwi’-ness.

I have no problem with banks getting out there and doing good – hell, I was heavily involved in one such programme myself.

But ultimately, I think banks are going to have to do a whole lot more than this to keep their customers long-term.

You see, I don’t want a new best friend. And – dare I admit it – I don’t want a ‘kiwi’ bank either. I want a better bank.

But is this a big ask? How can banks be better than they already are? And how would you know the best bank if you saw it?

There frankly isn’t a lot of differentiation at a core service level. All of the big banks offer the following:

• Transaction accounts – my pay goes in, my money goes out
• Savings accounts – I put money in, and earn some interest
• Credit cards – I use the bank’s money to pay for things now, and have up to 55 days to pay it back before I start getting charged interest
• Term deposits – I put money in, and you the bank offers me a slightly better interest rate than a normal savings account if I agree not to withdraw it for a certain period
• Personal loans – I borrow a certain amount of money and pay it back with interest over an agreed period
• Home loans – like a personal loan, only involving a big asset, more money and more interest over a longer period of time

A transaction account at Kiwibank is no different from a transaction account at BNZ other than the fees I pay to move money in and out, and for having the account.

Contrary to what its ads say, I don’t think Kiwibank is successful simply because it is a ‘NZ’ bank. It is successful because it is straight-up, cheap (low fees) and convenient (located in every Post Shop, and open whenever Post shops were – as opposed to when banks traditionally were). If you want simple, convenient and value-for-money banking, you’d be hard-pressed to find a better bank than Kiwibank – and they’ve won awards four years running to prove it.

I wager that the main reason more people aren’t switching to Kiwibank is because they have home loans at other banks. If break fees weren’t so high, it would be interesting indeed to see how many people remained loyal to their current bank.

So . . back to the question at hand: “How can banks be better?”

I think the lessons found at the end of Lance Wiggs’ recent post on Trade & Exchange’s demise, and in Seth Godin’s Meatball Sundae book lead the way to some of the big answers:

• Redefine what it means to be ‘a bank’
• Deliver a more personal level of service
  (extra challenge: with fewer actual people to deliver it)

I plan to explore these answers in more detail over the next few posts. Stay tuned.

In the meantime, I’m keen to hear from you: If you were a big bank CEO for a day, what would you do?

(Disclosure: BNZ is one of my clients at DNA. I am a customer of BNZ, Kiwibank, BankDirect and ASB.)