Lessons in Retail Banking

by Edward O'Brien 0

As the chairman and chief executive of Ally Bank, Barbara Yastine was in charge of one of the most unusual experiments in the banking industry — and, from a customer service perspective, one of the more successful ones too.

The aim, starting when Ally was reborn as an online-only bank from the wreckage of the bankrupt GMAC in 2009, was to capitalize on what other banks were doing wrong in retail.

Ally’s sales pitch to customers was higher-than-average interest rates on deposits, hassle-free service and no hidden fees, and its marketing got the message across with humor.

This strategy worked superbly in the task of gathering deposits for the parent company’s auto finance business. Deposits have increased 42%, to $61 billion, since 2012, when Yastine took the helm.

The world of retail banking has been changing with advances in new mobile banking technologies, some introduced by market entrants from outside of traditional banking. With the expansion of online and mobile banking capabilities, new options are available to banking customers from both traditional financial institutions and alternative provider’s such as direct/online banks and payments and software providers. Traditional banks and credit unions should be particularly vigilant about mobile threats when assessing their markets, and take into consideration the relative low barriers to entry available to new market entrants in this new age of digital banking. .

Overview by Ed O’Brien, Director, Banking Channels Advisory Service at Mercator Advisory Group

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