Browse >
Home / Archive: September 2009
James Banks asked:
It is a fact that at one point in time or another nearly all entrepreneurs need a bank business loan, either to start up the enterprise, expend it, or to bridge difficult times when the consumer turns fickle. Of the many lenders and types of loans available, a bank business loan will probably be the best bet for starting the venture. A bank business loan is often the best way to establish and maintain your venture’s credit rating, if it is fastidiously repaid.
But, if you are experiencing financial problems, is a bank business loan a good idea to use to get current on the debts? Just what is a bank business loan and what is the application procedure? A bank business loan is an unsecured loan that does not require collateral of any kind. It is based entirely upon the credit rating of all of the involved partners; the prospectus or the plan that was developed that outlines the venture, including both the financial liabilities and the anticipated income. You will have to provide well-organized and scrupulous detail, together with a good credit rating for this type of loan. A bank business loan is the primary vehicle for starting up an enterprise and gets a venture off to a good start, however it is a poor remedy for existing financial problems.
It is far better to obtain professional advice on how to deal with your financial problems. The first thing that a qualified business debt consultant will want to know is the type of loans and financial obligations make up the entire situation. If you have unsecured debts, especially a bank business loan, there is quite a bit the consultant can do to make things easier for you to repay your business debt, continue running your venture and even improve your credit rating. One solution that may be proposed is business debt consolidation, which consolidates all of the financial obligations into one account that requires just one affordable payment per month. This has been worked out by the consultant together with all of the creditors who have agreed to accept a reduced payment that is based upon a lowered interest rate.
If the financial obligation is more problematic and either represents a large amount, or has become delinquent, the consultant may recommend business debt settlement. This form of financial relief is aimed only at unsecured loans such as a bank business loan and business debt settlement can be effected in a couple of days.
With either remedy the credit rating will begin to improve almost immediately. When creditors see that a professional business debt reorganization program is being worked out, the business credit rating reflects their approval. However, it is always best to seek help before any real damage is done and to anticipate a remedy before it is actually required. With the advice of a good business debt consultant, any venture can stay on track without taking out additional bank business loans.
Check these links to learn more:
http://www.commercialdebtcounseling.com/
http://www.commercialdebtcounseling.com/business/business-y/business-index.shtml
Content
Once college students arrive on university campuses they might be surprised at how easy it is to obtain a credit card. Advertisements are all over campus, and the offers look so good. It is imperative, however, that students understand credit card usage and how it can hurt them financially.
But it is equally important to direct them on what things credit cards should be used for while they are at college. Here are five things that they should use their cards for while studying to get their degrees.
University Fees
Any fees and charges that are not able to be included on student or other education loans. These include books and other ancillary items that are incurred while attending college and are only available from the college.
Transportation
Whether a student has their own vehicle or uses public transportation (or both), paying for those charges on a credit card is a good idea. Gas, oil and maintenance charges can be paid for on a credit card. Also, should there be a large repair required that can be paid on the card too. Public transportation charges can be paid for via a credit card when purchasing credits or tickets.
Clothing and Living Expenses
Normal living expenses can be paid for with a credit card. These can include any clothing or other items such as toiletries, etc. The challenge is to keep from purchasing items that are not completely necessary, and making the buys from locations that have the best prices. Around many college campuses can be found local merchants that sell used clothes and other items that are worth considering. Most of these take credit cards, but some do not.
Food and Entertainment
Going out for meals and entertainment can get expensive, but it is not something that can be completely cut out from student life. Use of credit cards in this instance is a good alternative instead of carrying cash.
Emergency Medical Needs
Should the need arise for emergency medical attention a credit card can be used if there is no medical insurance card or coverage available. Then, these charges can be submitted later to insurance carriers for reimbursement.
The reason that these charges are good for students to place on their cards is because it helps track those charges. And when working with parents on their expenses, one bill where all charges are brought together is a good thing.
Security enters into the equation here as well. Using a credit card to pay for these things is better than carrying cash. If a card is stolen, it can be disabled right away with a single phone call and financial damage can be kept at a minimum. If cash is stolen (or even a checkbook), once that money is gone there is little change of retrieving it.
Before a student goes to college a discussion needs to take place as to how the charges will be paid. If the student is completely responsible for the charges, then they need to manage their income and make sure they have enough money to make the payments. If the money will come from parents or a majority of the money will come from parents, then guidelines need to be set.
A good plan is to use a combination in which the parents pay for certain items, and then the student is responsible for others. The drawback to this is that it requires the student to have a source of income such as a part-time job which can have an adverse affect on their grades.
Learning how to use credit cards wisely is another key thing for students to learn while they are in college. Avoiding this learning experience can have long-lasting consequences on a person’s financial future.
It would be great to have a list available of the best auto insurance companies so a wondering consumer wouldn’t have to look very hard to find the top rated insurer. Unfortunately, this top rated list isn’t entirely available. There are actually a few lists of top rated insurers, all ranked according to different aspects of their company. One company may be found to have the lowest prices overall while another company is ranked number one for their customer service abilities. It’s nearly impossible to come up with one list ranking the overall top 10 car insurance companies because every driver has a differing opinion about who reigns supreme in all categories.
How To Choose
Most drivers think, well, if there isn’t just one decided top company in the industry, how will I know who is the best? Drivers can answer this question themselves once they realize what is important to them when it comes to their insurer and what they provide. A few of the more popular things that are taken into consideration by people choosing a provider is the price offered, the insurer’s customer service, and the financial strength of the insurer. An additional factor can include whether or not the insurer is recognized by the state. We’ll discuss these factors in more detail below so drivers have a concrete idea as to how the top 10 insurance companies can be found.
Price – The price that is offered by an insurer plays a huge role in deciding which insurers are among the top 10. The most popular insurers will always offer comparable rates, especially lower rates for the same coverage that is being offered by other companies. Finding the lowest price will take effort on the driver’s part, which will include gathering quotes from a number of companies to see who offers the cheapest price. This gathering can most easily be done by using our quote comparison tool found on our homepage or any of our webpages that has a white box asking for a local zip code. Enter in the local zip code and proceed by answering the questions. When the questions are answered and submitted, the driver will then be given a list of quotes that are from local insurance companies who are willing to provide coverage for that driver. The quotes can be compared for the lowest price, and if the driver chooses they can purchase one of the policies right there online with a credit card.
Knowing which insurers offer the lowest prices for the coverage wanted will help drivers choose their own top 10 insurers.
Customer Service – The type of customer service that is offered by an insurer should also be factored into choosing the top 10 insurance companies. No one likes dealing with impolite representatives or even worse, representatives that don’t know much about the company and can’t answer the customer’s questions. Other factors go into customer service as well, such as the ease of getting in touch with the insurer either through a phone number that is answered quickly, an office nearby, or a website that is easy to read. Filing a claim should be simple to do, and even better if that can be done through the website without having to speak to a representative. Paying the bill electronically should be an option for the convenience of the policyholder. JD Power conducts their own evaluation of insurer’s customer service and then they post their findings for public viewing. Drivers can check out their website to see where their current insurer ranks. Also, speaking with other drivers about their insurer’s customer service can also help the policyholder grasp a better idea about who is customer service oriented and who isn’t.
Financial Strength – The financial strength of an insurance company is not something to be dismissed. If the provider does not have the ability to pay for a filed claim, what is the point of having them as an insurer? These insurers who cannot pay do not broadcast their lack of financial strength, especially if it’s something that is gradually occurring for fear of losing customers and making their downfall happen sooner. Policyholders can check on their insurer’s financial strength by looking into the assessments of companies like AM Best, Standard and Poor’s, and Weiss Ratings, who all look into the financial status of insurance companies. These three companies perform their own appraisals and find out what the financial workings of the insurance company are, and then post them for anyone to see. Motorists should take advantage of these third party evaluators since most companies don’t advertise their finances on a regular basis for their customers to view.
Recognized By The State – Most insurers are recognized by the state, but it’s important to make sure. Only the best companies go to the state and register with them. When an insurer is a state approved carrier, the state will assume partial responsibility for their financial loss if something drastic were to happen to the insurance company. Also, knowing an insurer is registered with the state is another way to know it’s legitimate and not a scamming, false company. Drivers can check with their state’s Department of Insurance for verification.
Motorists can look into the local insurers and find out about these four discussed factors, and how each of these factors plays a role in individual insurance companies. The results can be compared and then they will know the top 10 auto insurance companies in US, or even the ones serving their local area. It should be stressed that when these lists are made, they are formed according to what is important to the individual who is building them and not necessarily other individual drivers. One person made decide that the lowest price is the most important aspect while another driver may feel great customer service is the priority, despite paying a little more for the policy. A company who makes the top 10 list on a national level may not be the right choice for every driver due to differing opinions. Making a list of your own top 10 choices may be the best way to figure out which company would be best to provide insurance on your vehicle.
Parents and teenagers often disagree on a number of issues, but saving money on car insurance is one issue that they should agree on. Many times, it’s the parent that is paying for the premium charges and the teenage driver isn’t too worried about the expense. It’s not until the parent sits down with their child and explains the process of purchasing insurance for them and the vehicle, how coverage is decided, and what it takes to pay for the policy that the teen starts to understand the importance of this insurance. Teenage drivers who can grasp the value of the coverage may decide to care more about how safely they are driving, especially when they realize how much accidents cost and affect an insurance premium.
For The Teenage Driver:
Teenagers are placed in a different category of drivers than their parents. When they are ready to be put on a policy, the insurer automatically assumes them to be a high risk driver due to their lack of experience. Don’t take personal offense because this is decided based on the statistics showing teenage drivers being involved in a high number of accidents. If anything, take responsibility and keep your driving record clean, which means free from accidents and traffic tickets. If you can manage to do this for three years, you will begin to see a decrease in your premium rates.
Something a teen driver can do is offer to help pay for your part of the rates as a secondary driver. It becomes an expensive bill as more drivers are added to a policy and parents might offer more flexibility in their rules if they see you trying to make an adult-like effort and taking financial responsibility for your activities. Taking advantage of the good student discount might help lower your price, but you will need to provide proof to the insurer of receiving a B+ average or better each marking period.
Look for a vehicle that is insurance friendly. It may not be the most popular car in the market, but an automobile that helps you get lower rates will be easier on your wallet. Vehicles that are a few years old, have safety features, and aren’t flashy sports cars will be your best bet. If you’re curious about which specific cars will help you save money, contact the insurance company and ask what rates they would charge for different cars.
For The Parent:
Parents are always looking for ways to save money with their children’s endeavors, and saving on car insurance is nothing different. One way to help save on future premium hikes is to set an understanding with the teenager of what is expected, or rules that need to be followed and the consequences that will be experienced if they cause an accident or receive a traffic violation. Some rules could include the specific hours the teen may drive (sun up to sun down), who is allowed in the vehicle when the teen drives, whether or not the radio or cell phone can be used while driving, or how many miles the teen is permitted to drive per week or month. These rules may only need to be enforced for the first year of driving or they may need to be in effect for longer, depending on the teen. As your child demonstrates an ability to follow your rules and state traffic laws, you can more easily trust their driving skills and lighten up on certain expectations. But, this doing is choice of the parent.
Another idea is to expect the teen to contribute in paying for part or all of the premium charges. Many parents require their teenagers to pay for their portion of the insurance rates before the policy period begins. This is another way to instill responsibility in the teen and help them understand the values of money and good coverage. It is cheaper to keep the teen driver on the parent’s policy and not create a new policy just for the teen, especially when they are listed as a secondary driver because their use of the car is limited by the parent.
For Both:
Working together as a parent and teen team is the best way to save money on insurance for the teenager. Look around to find the best price by comparing what each company will offer. An easy way to do this is by utilizing the Internet for quick results. Start with comparing quotes on our site by entering in the local zip code and then answering the remaining questions that appear on the next webpage. Providing honest, accurate answers will ensure receiving a list of quotes that are great estimates and ones that won’t change at the time of purchase (if you choose to make a purchase). This can even be done for teens who only have their driving permit and have some time before they turn 16 and are eligible for a license. These kids do need insurance and can be added as soon as their permit is qualified.
Go over the list of quotes to see which one is cheapest. Then, look through the companies who are providing the quotes to find out more about them. Show the teen how to properly compare companies beyond the given prices. See which companies have a strong financial status and great customer service rates. Showing them this process might have a lasting effect so when they are old enough to leave home and purchase their own policy, they will know just what to look for. Write a list of the pros and cons of each company, and then make a decision.
It could also be valuable to go through a couple things before the teen is allowed to drive. For instance, explaining what is and is not covered on your policy will help the teen better understand the estimated costs of repairs when damages occur. Also, go through the process of what should be done if the teen is involved in an accident, such as who should be called and what information will need to be given to the officer and other driver.
Finding out how much it will cost to provide insurance to a new driver, especially a 16 year old, can almost be jaw dropping. Insurance companies have decided that because these 16 year olds haven’t had much experience on the road, they will most likely be involved in some type of incident that will result in filing a claim and statistics can prove this. Because of the high chance of this occurrence, insurers go ahead and charge 16 year old drivers a high rate even before they’ve had a chance to prove they will be a safe driver. It’s just the way it goes! However, if you know what goes into deciding the rates of the new driver, you can also learn what to do to help lower the rates.
Determining The Rates
What exactly goes into determining the rates of a 16 year old driver you might wonder? It’s the same as how an insurer determines the rates of any driver, honestly. First, the insurance provider will look at the age and gender of the driver, coupled with the residential location and the driving history of the driver, if there is any. These factors are all put together to figure out the “risk level” of the new driver. The younger the driver, the less experience they have and the more risk they have of being in an accident. Young male drivers have statistically shown to be more reckless than young female drivers, and the males are charged higher rates since they are part of more accidents than their female peers. The residential location affects the premium in the sense that if the car is parked in a high crime area, there is a higher chance it will need repairs due to theft or vandalism.
All drivers, both experienced and new, can always be working on keeping their driving record clean and free from accidents and tickets, which will keep rates lower. Learning to always obey the speed limits and traffic signs will help aid them in keeping a clean record. Newer drivers have the disadvantage of not being able to have already proven their ability to drive safe the way an older driver has. There are 16 year olds on the road who do their best to drive safe and not have distractions in the vehicle with them. This is good practice to help them learn the importance of safety and it will also keep them focused on the road and their surroundings instead of a conversation or changing the radio station. Keeping a driving record clean is about the only thing a 16 year old driver can do to help keep their premium charges low. They can’t necessarily change their age, gender, or address which also affects their premium, but they are in control of their driving record.
The Final Price
We cannot tell you a specific amount concerning how much it will cost to insure your 16 year old driver in this article, mainly because we do not know how much coverage will be purchased or what their driving record is. What we can suggest, however, is that you use our quote tool, which can provide an estimate of what you could pay. Start by entering in the local zip code and answering the questions that follow for the 16 year old. Then, a list will be provided that will contain quotes from local companies to insure the new driver. They will have the final estimated price for you to chose from.
Get Coverage Cheaper
Another way to get insurance cheap in addition to making sure the driving record is clean is by qualifying for discounts. Obviously there is the good driver discount, but there is also a good student discount that some companies will extend to college and high school students. To qualify, they must receive a B+ (usually) or better grade point average with each marking period. To verify this information, they must submit a copy of their transcript or report card to the insurer. Another discount that could be possible for a 16 year old is the defensive driving course discount. The teen would take a class on how to develop better driving techniques and skills, which would result in a discount.
Choosing A Vehicle
The type of vehicle a teen drives plays a large part in the insurer determining how much the insurance is going to cost. A 16 year old driver who is the primary driver of a flashy sports car will pay substantially more than a 16 year old who drives a modest sedan. For drivers of all ages and experience levels, cars with a higher cash value are higher to insure than one with a low cash value. Vehicles that are equipped with safety features will get a discount and be insured for a smaller price. Again, insurers know the statistics of teens who drive and plan on having to pay for their mishaps. If the teen is given an opportunity to drive a fast vehicle, they will most likely drive it fast and result in losing control of the vehicle, causing an accident. If you’re not sure which vehicle to allow a 16 year old to drive, contact your insurer and ask which vehicles are more insurance friendly.
Setting Rules
To keep your teen driver safe while on the road, think about setting some rules or guidelines that must be followed in order for your child to be permitted to drive. Limiting their usage of the vehicle will also limit the amount of time they spend on the road in aimless driving, which can decrease their chance of being involved in an accident. Some states only permit 16 year old drivers to drive when the sun is up, meaning they are only allowed on the road from sun up to sun down. This could also be used as a guideline in a home with teen drivers to help keep them safe. Another rule could include who is allowed in the vehicle while the teen is driving to help them limit the number of distractions.
A 16 year old is usually ecstatic about getting their license and being able to drive on their own. Parents and guardians should try their best to make sure the teen is safe and well prepared before they go out on their own, and one of the preparations is having the right amount of auto insurance. We can help parents find car insurance for a 16 year old right here on our site.
A credit card is financial oxymoron because the thing that makes them attractive also makes them dangerous. Of course I am referring to the ‘ease of use’ factor. The main case for plastic is that it takes the hassle out of making purchases both large and small, but this has some not so unexpected side effects. The first is that by eliminating cash we also get rid of our spending boundary.
We are now not limited to the money we have in our wallets but by the size of our credit limit; which unfortunately, more often than not, does not correlate. The second is the fact that the cost of this convenience is actually very high. When you add up the interest on your purchase, assuming you are not paying off your balance in full on or before the due date, the risk of late payment fees, overdrawn fees and even identity theft, you have to ask yourself if they are worth it.
You have probably already made the decision to stop using credit cards but you may have been so seduced by the luxury of plastic availability that you are not sure how you are ever going to live without them. Here’s a list of helpful tips below if you want to stop using credit cards:
1.Destroy the ones you have. You may think that you are strong enough to keep your card on you for ‘emergencies only’ but it is better to be safe than sorry. I have seen even the mighty fall beneath the irresistible pull of plastic, so before you start saying things like ‘buying this pair of shoes is an emergency… it will help boost my spirits and carry me through the work week so I can make money to get out of debt.’ These mind tricks are a sure fire sign that you are not as strong as you think and the best bet would be to take a huge pair of scissors to your credit cards now.
2.Stop the influx of new offers. There is simply no point in getting rid of your old cards if new ones keep showing up at your door. One of the easiest ways to kick the credit habit is to put some distance between you and access to credit cards. You can stop receiving unsolicited offers in the mail by sending a letter to the major credit bureaus or calling 1-888-5-OPTOUT. You need to provide your name, mailing address, phone number and social security number to complete the process.
3.Devise a monthly budget. Now that you have cut your ties to credit you are going to have to come up with a spending plan. Many people have no idea how much money they spend each month when they use credit cards. To make a workable budget you should document your income and make allocations for all your major fixed expenses, such as mortgage or rent, childcare, other loans and so on. Your discretionary spending allocations; which would include groceries, transportation, and entertainment, should be realistic. When you have these basic items down you can then estimate an amount to dedicate to savings by subtracting the total of your expenses from your income. If you come up with a negative figure this would most likely represent the amount you were spending on credit to supplement your lifestyle. In other words, you were living beyond your means and you would have to slowly find a way to cut back until you regain control of your spending.
4.Pay bills using an online account. When you quit credit all of a sudden things seem a little inconvenient. You can’t phone in a payment or make recurring charges to your card and you may be tempted to fall back into the trap. You can save yourself by setting up an online account so you can use your own money to pay bills online.
5.Plan before you leave the house. Now that you don’t have credit cards to swipe on a whim, you are going to have to think ahead. This may take some getting used to, but it will definitely help you to schedule your large purchases and put a cap on frivolous spending. Over time this will amount to increased savings and more responsible choices. Not a bad move at all and definitely worth the initial pain of planning in advance.
If you follow this simple five step plan you will be able to kick the credit habit and live within your means. Choosing to do this may mean the difference between building a savings account and watching a mountain of debt pile high. I know which I would prefer… how about you?
Drivers who are satisfied with their automobile insurance company will often assume they have “the best” company in the business. They are happy with the price they are paying and feel their coverage is adequate. However, many car owners stop there and don’t look further into their provider to find out whether or not they truly do have “the best” insurer out there. They omit checking to see what other companies are offering to their customers, such as more coverage for a cheaper overall price. Past the final cost of the premium, drivers should look for other things about their insurance company before declaring them as the best choice.
How are their finances?
Have you checked into the finances of the insurance provider for your vehicle? It’s no secret that the current economy isn’t allowing for many companies to do well. Even some of the more popular companies throughout all sectors are barely hanging on. Now is as good of a time as ever to look into the finances of the insurer who claims they will insure your vehicle, especially before the time comes where you may need to file a claim. There have been instances where drivers get in an accident and file a claim with their insurer, only to discover their insurer does not have the money to pay up as once promised. This leaves the driver angry and looking for another way to pay for those damages immediately, particularly the medical bills. Had those drivers known about their insurance company’s financial strength, they could have switched to a stronger provider before they needed to file a claim to avoid this mishap.
Checking out the financial strength of an insurance provider is relatively simple and doesn’t take much of the driver’s time. If you think you will need to contact the insurer to get this information, think again. There are third party companies who go in and evaluate insurance companies to determine how strong they are financially. Each company has their own ranking system and gladly shares their findings with the public. The companies who are providing the rankings are trusted companies who have been performing these evaluations for some time.
There are three known companies we’ll discuss today that will give out their findings of which insurance companies are strong and which ones should be avoided. The first is AM Best. They are adamant about sharing who is “Secure” and who is “Vulnerable” in their finances. This is determined by their giving each company a letter grade, much like in school. Any company receiving a letter grade of B or lower is deemed as vulnerable to financial failure, but this does not indicate that AM Best knows the insurance company is going to fail. It implies that based on the company’s current finances and the way they are handling them they are susceptible to a possible failure. Companies who receive a letter grade of B+ or higher are secure, meaning they are likely to remain financially strong for the next while according to their current finances.
A second company that will evaluate the financial status of car insurance companies is Weiss Ratings. Each quarter, Weiss Ratings evaluates other companies and then will post their findings. Weiss explicitly states they do not accept any money from the companies they evaluate, which makes their findings 100% unbiased. They give out letter grades to the companies they rank, ranging from an A to an E. Receiving an A will indicate the insurer is “Excellent” while an E ranking will deem that company as “Very Weak.”
The third company is Standard and Poor’s. They have been assessing financial strength since 1971 and they also distribute letter grades, beginning with the highest markings of AAA. They offer an interactive guide for their readers to help them understand how to properly read their findings and use them for their benefit.
All ratings from these companies are their opinions based on what they have found in their evaluations. They are not guarantees, only suggestions.
How will they treat you?
The top insurance companies will go out of their way to help their customers feel like they are the top priority. Speaking with other trusted drivers about how their interactions have been with their insurer can help a driver figure out which company is best, but this can lead to a small group of opinions and make it a harder choice. JD Power is a third party company that evaluates not the financial status of a company like the previously mentioned companies, but they evaluate the customer satisfaction of an insurer. Not only do they assess the way customers are treated by the representatives, but also the way a customer can pay their bill and the overall experience. JD Power will list their top find each year.
What is their cost compared to others?
Price is a huge factor when choosing an insurance provider for your vehicle. It’s almost the top reason why people will switch insurers. However, as seemingly important as this may be, most drivers don’t bother to see what other insurance companies are offering for the same coverage. It may seem like a tedious task to contact a bunch of other local insurers, but we’ve made it easy with our quote comparison tool. All drivers need to do is enter their local zip code on our home page and answer the short questionnaire that follows. We just need to know information about the driver, vehicle, and coverage wanted, which is exactly what would be asked by other insurers if you were to call around and get quotes. When the answers have been submitted, a page of quotes will be given for easy comparison. One of these can be chosen and purchased online if desired, but there is no obligation to purchase anything to use this tool.
The best auto insurance company is the one that has a strong financial status, great customer service, and low prices. While some companies may only offer two out of the three, make sure you are willing to sacrifice that third factor before you sign on. Occasionally the financial status and customer service may be top notch, but the price is a little higher than other companies. Some drivers may find this to be okay since they’ll be paying a little more for a better quality company, but only they can make that decision. Know what you want before you purchase a policy for better chances of being happy with the company.
Branch Banking – A Cat with Nine Lives
Dr. Nicos Rossides: CEO MASMI Research Group
Bud Taylor: Director Consulting MASMI Research Group
Introduction
Branch banking is dead! Technology is killing the retail branch! The Internet rules! Younger tech savvy customers are taking over as the brick & mortar customers die off!
Maybe. But to-date we have not quite lopped off the head of the face-to-face banking Hydra. Things may be different in twenty years, but they’re not dramatically different today.
But we like being in denial. Every time we are confronted with evidence of the survival of branch banking we find ways to dismiss it. For example, research in the UK published by Deloitte & Touche in September 2002 found that 80% of bank customers use the branch, and 52% regarded it as the preferred channel. Similarly a Gallup Poll conducted in the US in April 2003 found that 83% of Americans had visited their bank at least once a month on average over the previous year. It is easy to disregard these studies – we can dismiss them as dated.
When we update the studies we get some indications as to the impending demise of branches. For example, an American Bankers Association survey in the summer of 2007 found that 36% of U.S. consumers use branches as their primary banking method. Is that the death knell? Not really. That 36% is still the largest group for any one channel. Online banking came in second at 23%, followed by ATMs at 21%, mail at 8% and telephone banking at 5%. Damn, thought we had them!
Ok, Ok. Branch banking still exists, but is it just for the old and infirm? You know, those people who have a difficult time getting around and would find it most convenient to do their banking from their home. Yes, that group. Well, maybe they are the ones holding onto the legacy of the past, but does that mean that young people don’t want to do their transactions in a public location? The evidence only confuses matters further. The 2007 American Banker’s Association survey found that those who go to a bank branch are generally older folks; but still, a substantial 25% of those under the age of 34 side with the older crowd and prefer to do their banking in person. When will these youngsters learn?
Even if we take a somewhat narrow look at branch banking in New York City we come up with the same trend. In September 2007 the New York Times reported that branch visits decreased by 11.5% between 1995 and 2000; yet they increased by 28% between 2000 and 2006. What can we conclude from this? Many things, but the imminent demise of branch banking isn’t one.
If we extend our scope of vision beyond banking we find that younger generations like physical retailing even in their technology world where you’d think they would always gravitate to online purchasing for the latest electronic gadgets. That’s not the case. Apple’s retail stores are a magnet for younger consumers, and this is turning out to be good business. These stores now contribute close to $1.25 bn. to the company’s annual revenues of $6.2 billion and rising – with a profit margin exceeding 20%. That’s huge by retailing standards. Of course, we need to be careful here. Is it really possible for transactional banking to rival Apple’s retail experience? It may not be possible, but it is a good target.
Why Don’t Customers Comply with the Efficiency of Technology?
So, as much as we try, we can’t make the case that retail branch banking is dead in the US, in Europe, or in Emerging Markets. It may be dwindling, decreasing, or diminishing, but it’s not dying. That may be good news for customers, but it’s bad news for bank executives. Branches are the most expensive way of conducting transactions. Computers were invented to process millions of transactions at centimes per transaction. Do this from your house, or car phone, please! You don’t need to go to a building that houses friendly people. Banks have to invest capital in information systems and technology to do volume processing, but they’d prefer not to continue the capital drain into structures and operating expenses for people.
Why don’t bank customers just “stop” using branches? Why don’t they follow good business principles and complete their transactions efficiently, by machines? Well, MASMI research demonstrates the hypotheses that trust (a somewhat elusive yet critical notion) is an important driver of choice; and trust tends to be delivered better by people than by machines.
“Banking”, read that as “my money”, is so important to customers that they want to entrust a personal transfer of their wealth to a human being – on the assumption that a person understands the value of the transaction, whereas a machine only sees it as a transaction. This is an interesting hypothesis and a body of MASMI research corroborates it. We see that customers want more than a transaction; they want to personalise their relationship with the bank.
This desire for a relationship may be stronger in banking than in many other business sectors because banks have high switching barriers. Customers are fundamentally averse to artificial constraints as a way of doing business – they want choices. When customers don’t have choices, they want to be compensated. When it comes to banking, the compensation is the personalisation of the transaction. Customers tend to be saying, “…I may not be able to easily put my money somewhere else, but I can make my bank provide personal accountability when I want it! I want to be sure someone is handling my money – not just a machine. I want to see human beings, so I can relate to them, and I don’t want to travel across the city to a strange neighbourhood to find them. I want them down the block, at the corner.”
Banking should see this as a huge opportunity. Relationships are the essence of customer loyalty and they have fallen into the banks’ lap. Banks that continue to build their business on faceless transactions will lose in an increasingly competitive world. The push for faster, better, cheaper is a siren call. In commoditised banking only one competitor is allowed to dominate at any one time – until someone else shaves a point off a transaction. Customers are giving us the answer to these ever-decreasing concentric-circles of cost reduction. They want a relationship. The question is whether we’re willing to listen and can provide this cost effectively. The bank that listens will win. It will keep its customers who will purchase more and refer the bank to others. For the foreseeable future, banks will need to continue to invest, albeit wisely, in their branch network. The fact that branch banking is expensive is irrelevant – it has to be done.
Since you have to make the investment, doesn’t it make sense to maximise the return in a branch development strategy? Of course it does! So what do we do? We have to meet the customer expectations for two things: excellence in operational mechanics (the rational dimension), and creating engagement in relationship dynamics (the emotional dimension).
Customers want more than a “painless” transaction
Our banking executives are fine with the operational mechanics part. They understand this, they can control it, it’s right brained. Banks have a good measurement handle on their missions from an internal, transactional point of view. They have numbers and they know how to manage by the numbers – even from a customer perspective. They immediately go to defining and implementing best in class metrics, like:
o Efficiency to measure the relationship between inputs and outputs. That is, what does it cost to complete a transaction? How many tellers does it take to serve 100 customers? How many square meters of floor space is required per 100 customers? How much computer time does it take to process a transaction?
o Level of service that brings time into the equation, like turnaround. Time needed to complete a transaction? Time needed to resolve an issue?
o Quality of service that brings accuracy to the table. Number of error free transactions? Number of complaints resolved at the first level?
These are the essentials. We know how to measure transactions, identify service gaps, and take corrective action. But these essentials are only an ante. This is taking “pain” out of processing; but this isn’t playing the whole game. This isn’t where we should stop. Yet, often managers do just that. They don’t want to go further. Stopping here is comfortable. But stopping here doesn’t bring “gain”, and that’s how banks can differentiate themselves.
Differentiation is all about enhancing the dynamic relationship that customers have with their bank – and the focal point of this relationship is the branch. Sure, we can ‘humanize’ the IVR system by recognising the caller by name; and we can evoke an emotional connection to a website by embedding your avatar into the transaction. However, how effective can a machine or technology be in this regard? At what point does clever technology fail to overcome customer cynicism? For the present, at least, our research says that most people prefer to interact with human beings, not machines. What is this customer group looking for?
Customer Centred Business Strategy
At MASMI we know that once customers have their rational needs satisfied then they’re willing to enter into a relationship. Something that is emotional and personal. There is a huge body of research and literature to support this belief. Often the proponents have widely different perspectives on how our rational and emotional beings interact. For example, Clotaire Rapaille presents the thesis of our “reptilian hot buttons” and argues that our reptilian emotional brain always wins. Antonio Damasio comes from the point of view that emotion and reason are not separate, but are quite dependent on each other – neither leads nor follows. Bank branches may not resolve these positions, but they need to address the point of agreement, that emotions matter! There is a relationship among our memories, our emotions, and our behaviours.
The need for an emotional connection while banking will differ by customer. It’s not critical for everyone; it’s likely strongest for the people who keep going to branches. So, if we’re going to spend money on a branch strategy, how do we make the best of it? How do we tap into the emotional connection that customers seem to want?
First, we need to realign the banking business model around the customer. This might seem to be stating the obvious, but, in fact, traditional service models tend to be focused on optimising back office efficiencies with insufficient attention paid to the front office side of the equation.
MASMI research shows that high performing businesses put the customer at the centre of their strategy. They articulate their strategic intent based on an analysis of customer needs and then build their key operational capabilities in alignment with that. They recognise that the heart of their business is to provide pain free transactions that are infused with connectors that evoke emotional responses from customers. The strongest way to do this in a bank is face-to-face at a branch. A branch is more than a building – it is a stage where we can create a performance, an experience for our customers, where we can connect with real people. But we need to know what buttons to push. Research can give us some answers.
Reliable customer feedback is difficult to obtain as even complaints by customers do not represent a particularly reliable benchmark – for many reasons, not least of which is the fact that customer tend not to complain, even after bad experiences. To get around this barrier we use a number of research methods to align the internally focused “customer service standards” with the externally focused “promise to customers”. These methods include strategic customer loyalty research programmes aimed at understanding drivers of customer behaviour and corrective actions; performance tracking of transactions; and mystery shopping to monitor whether the promise to customers is being delivered.
All of these methods are aimed at uncovering the unarticulated needs held by customers that drive them to a face-to-face relationship at a branch. What we have learned is that loyal relationships with customers come down to an activation of the person’s senses about their deeply held conviction of what a bank must be. We all know the five senses that activate emotions. They are seeing, hearing, feeling, touching, and smelling. These have to be matched with the customer’s personification of their bank. That is, how does the branch banking experience reinforce the customer’s expectation of what the bank should be?
The branch can’t provide this experience until we know what customers want – and this may vary among branches. For example, some customers might want their branch to appear “safe and secure”, while at another branch people expect to be treated “casually and informally”; somewhere else the branch must be the “friendly meeting place”, a social experience; while the cross-town customers want to have a sense of “efficiency and frugality”.
The right customer experience has a business purpose – it contributes to profitability through incremental sales. Building relationships will require an advisory and service orientated profile within our physically redesigned branches. Better design plus skilled employees will certainly be required to personify the branch to enhance the emphasis on the emotive triggers – moving beyond a transaction towards building relationships.
Winning branches will find ways to work this personification and enhanced value addition into their operations. As neuroscientists tell us, we are emotional beings before we are rational ones. If we were totally rational, no one would smoke and everyone would eat organic food. Customers may find it hard to articulate their needs, but they come to their branch wanting to be comforted by the feeling that people at their bank is “one of us”, “…I feel good about my bank, they understand me”.
The emotional response to the customer experience starts in the parking lot. Not finding a space creates anger; if the path to the door is clean, most people feel a sense of comfort; when the door opens easily they feel confident that things are working well at their bank. What happens when they enter? Is there a safe in-sight to promote the feeling of security? Is there music to make them feel welcomed? What’s on the television while waiting for service – financial information that helps them feel up-to-date? How is the transaction completed? How are the staff dressed? Do they convey a sense of professionalism? Is the deposit slip on re-cycled paper to make them feel environmentally responsible or is it embossed with the bank logo to make them feel elegant? The beauty of branches is that they can be configured to meet local needs – one size does not fit all. It’s all about “staging” at the branch level. By conducting research into the customer experience we can pinpoint how to activate the emotions and keep customers coming back.
The bank branch is the strongest touchpoint for the customer assuring them that their bank “gets it”. The branch engages most deeply with the emotions of the customer. It is the branch that delivers the strongest relationship and activates emotions. A bank’s Internet site can be easy to navigate, and an ATM transaction can be efficient – but efficiency only touches one dimension of a complex web of requirements from a banking partner. Slick automation doesn’t tell us a lot about professionalism, security, and concern for me when things go wrong. I want to go to my branch, and I do!
Bank Branches and the Credit Crunch
Of course, headlines across the world in 2008 have been dominated by the impact of the credit crunch and the subsequent banking crises, with bank failures, bankruptcies, government bail-outs and eventual part nationalisation in some countries. Billions of dollars have been pumped into economies world-wide to prevent systemic banking failure, and try and encourage greater liquidity into the money markets.
Yet how much this affects the individual bank customer is difficult to judge at this stage. Clearly when there is fear of an individual bank collapse, scenes of depositors trying to withdraw their money become prominent in the media, such as appeared in the UK with the collapse of Northern Rock in 2007. However, whether this fear has permeated customers at a widespread general level is too difficult to judge at this stage. There is little evidence to date that customers are concerned with who owns their bank – whether it is one institution or another or the government – as long as their savings and deposits are not at risk.
And it may be in such difficult times that the branch will come to play an increasingly important role in terms of providing a visible sign of a bank’s permanence and viability. MASMI’s research has shown that, in Emerging Markets, where the banking sector is still relatively immature and local bank failures are not uncommon, for many customers a visit to the branch remains important – not only because it helps them to better understand details about a bank’s products and services, but as a means of providing reassurance as to a bank’s stability. In a world where even banks in developed markets are perceived as weak, the branch may acquire greater symbolic status. It can give customers what they really need: a sense of trust, and a degree of confidence that their bank is here to stay and has a relationship with them. It’s not a glass tower full of over compensated executives. It’s a part of their life, staffed by people just like them – good people who are trying to build a good life, and who strive to serve them with honesty and care. Ultimately, the litmus test is whether customers feel that through its branches the bank is an indispensable part of their own lives.
Conclusion
The branch is critical in the life of a bank. Significant numbers of customers still visit the branch weekly. But branches need to be more than simply efficient at the transactional level. They need to exist at the personal level where relationships are developed; and it is these relationships that will turn the branch from a primarily transaction center into a home for loyal customers. This is good news for banks and the crisis they are currently facing. Trusted banks and their branches are an important source of client engagement and revenue generation.
The future is therefore bright for bank branches. They will be a revived source of business for banks. Customer loyalty, through staged customer experiences, will increasingly turn banking towards cross-selling and value-added advisory services. By connecting rational and emotional elements, branches will reinstall trust in financial institutions and regenerate economic growth.
Customers have shown that they want to work with their bank branches; now banks have to find ways to make this a worthwhile and profitable experience for both parties.
Sources:
“Bank branch transformation: The new multi-channel reality”, CEO Eontec Limited and Mark Greene, General Manager, Global Banking Industry, IBM Corporation, The Bankwatch, March 23rd, 2005
“Bring Back the Branch”, Deloitte &Touche, September 2002
“Banks Race to add Branches”, USA Today, 19th June, 2003
“Inside Apple Stores, a Certain Aura Enchants the Faithful”, New York Times, 27th December, 2007
“How to Develop Stronger Retail Partnership to Accelerate Small Business Sales”, Martha Crawford, NBW Consulting Group, American Banker 8th Annual Small Business Banking Conference, October 2003
“Customers still like to use bank branches”, Dennis Jacobe, Northwestern Financial Review, August 1 – August 14, 2003
“The Branch Bank is Dead, Long Live the Branch Bank”, David Webber, The Banker, November 2000
“Long Live the Bank Branch”, Greg McBride, Bankrate.com, May 17, 2004
“Retail Banks Must Redefine Role of Teller to Meet Customer Demand and Achieve Overall Cost Savings”, Tom Brogan, TowerGroup Research, July 2008
Damasio, Antonio. Descartes’ Error. Putman Publishing, 1994.
Lehrer, Jonah. Proust Was A Neuroscientist. New York: Houghton Mifflin Company, 2007.
Rapaille, Coltaire. The Culture Code. New York: Broadway Books, 2007.
“Has the Bank-Branch Frenzy Peaked?”, Sewell Chan, New York Times, September 10, 2007.
About the Authors
Dr. Nicos Rossides: CEO MASMI Research Group
Dr Rossides is Group CEO of MASMI, a leading independent research agency operating in Central Eastern Europe and the Middle East. Prior to joining MASMI he was CEO for Synovate’s CEEME region, the global head of solutions as well as CEO for its Loyalty Practice.
Nicos has more than 20 years of market research and consulting experience, much of which involved developing a research infrastructure in Central and Eastern Europe.
Prior to becoming a market researcher, Nicos was Senior Research Fellow at Kyoto University, where he received a Doctor of Engineering degree. A Fulbright and Mombusho scholar, he also received senior management training at MIT’s Sloan School.
Nicos has published a large number of articles in professional journals, contributed papers to numerous conferences and lectured at several universities and symposia.
Bud Taylor: Director Consulting MASMI Research Group
Mr. Taylor is a senior associate with MASMI where he advises clients on how to put their research data to work. Prior to MASMI he was an SVP and Global Director of Consulting for Synovate Loyalty. Before joining Synovate Bud was a Partner with Deloitte where he led its change practice in the US southwest.
Bud is a Canadian and naturalized US citizen. For over 30 years he has consulted to marquee clients in all major business sectors and in all parts of the world. Bud’s clients include: Microsoft Europe, the National Commercial Bank (Capital) of Saudi Arabia, the Whirlpool Corporation, Sony Electronics, and the Overseas Chinese Banking Corporation.
Bud contributes articles to professional journals and has published a business book: Customer Driven Change that demonstrates how to unite customers, managers, and employees in the process of organizational transformation.
Website content
Yardbird asked: I keep reading on morningstar and other finance sites about how “such and such a mutual fund is getting too bloated with assets,” and that this is especially a problem for funds that focus on small-cap stocks. And I see that Vanguard and many other companies have closed funds to new investors–even Vanguard’s Windsor II, which focuses on huge corporations, has restricted new investors. Let’s say a mutual fund purchases more that 50% of a company, why is that bad? Isn’t that what Warren Buffet’s Berkshire Hathaway does?
Create a video blog
Small business owners who use credit cards for purchases are seemingly at a disadvantage when compared to large corporations. The reason is that managing cash flow sometimes becomes more of a challenge and being able to balance income against expenses can cause headaches.
That is why small business operators should heed a few strict rules about using credit cards in their daily business activities.
Pay Quickly and Often
Since businesses use credit cards to manage cash flow they should be willing to make payments as soon as the money is available. Managing cash flow means watching income from accounts receivable and being able to allocate that income right away. This will also help prevent interest from accumulating on the credit card balance.
Actively Manage Account Online
Small business credit card account managers should make use of online access to manage their credit card accounts. This will also help them to monitor charges that occur on a daily basis.
Pay Fees and Charges Monthly
Do not allow fees and charges such as annual fees to stay on the account past the month in which they occur. If there is a dispute, it is best to pay the charges and then start an inquiry regarding the charge with the intent of having it reversed.
Watch Your Credit Limit
Credit card companies are doing crazy things with accounts these days that are designed to help them remain profitable. One such action is the lowering of credit limits. This is ok if your balance is paid off every month, but you need to be aware of your limit before you use your card again. If your balance is not high enough to absorb the charge for your purchase, then you will be charged an over limit fee. You might also incur an interest rate charge, too.
Limit Card Holders
In small businesses, usually only one or two people have company credit cards. The challenge that having multiple cards spread among several employees causes is in the management which becomes a larger business activity. The way to minimize this is to minimize the number of cards and accounts that are in use.
Close some if necessary.
Limit Card Uses
Placing strict rules on the use of credit cards for specific purposes will help keep that use from getting out of control. In fact, some credit card companies allow businesses to restrict the usage of accounts to certain categories of purchases which not only helps in managing use, but also helps from a security standpoint.
Manage Money Float
Everyone does it – using that day or so between when a payment is made and when it is late, and how long it takes to clear the banks. It’s a part of wise money management because the more your money stays in your account, the more interest you earn on it. But, running on the ragged edge like this can lead to some sleepless nights wondering if and when your money is going to be where it needs to be in the morning.
Having to pay for credit in the form of interest and other charges just to help your business manage cash flow should force you to become good at minimizing the cost of using that credit. Ideally, using credit cards in a business setting is not something that you intend to do for major purchases, but during tough economic times, you have to do what you can to remain profitable.
Using the principles above will help you stay on track and keep credit cards in their proper place – as a business management tool.
Next Page »
