Banks Are Failing Customers — Financial Life Stage Planning Is the Missing Link | The Banking & Payments Show
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Hello, everyone, and welcome to the Banking and Payment Show, a behind-the-numbers podcast from eMarketer made possible by Sint. Today is June 10th, 2025. I'm Rob Rubin, Head of Business Development at eMarketer and your host today. Today, we're going to talk about why banks fail customers.

and what they can do about it. I'm really excited to have principal analyst Tiffany Montes and banking analyst Lauren Ashcraft join me for this discussion. Hi, guys. I love the title. Why do you fail? So exciting. Let me sign on to that. We should have thought of that. Who thought of the title? Not me. Come on. Take credit for that. How are you guys doing?

Good. How are you? Good. I want to sort of set this up with a little lightning round to sort of get us all warm. Either of you can answer at any time and maybe you're not. What's the biggest CX myth in banking?

I think there used to be a myth that if you don't build it the right way the first time, that customers will never come back and use it. And I think that that myth has been broken. I think consumers understand that technology moves quickly, and they know that experiences will only get better. And so that should never be a reason to hold back on implementing something.

All right. First thing that I thought of is that it's not totally untrue, but people always think the bigger banks have the better digital experiences than smaller ones or credit unions. Some recent surveys just came out showing that credit unions are more satisfied with their overall experience. So

So definitely their digital is part of that and does some of that stereotype. So this is a good one. FinTechs that keep big banks up at night, who are they scared of? Scared of Chimes IPO. Yeah, that's true. And it'll probably mean that there are more IPOs coming. All right. I think it's also more big tech and payment players that they're probably the most fearful of.

Right, because they can own cash management and take that away. Yes, exactly. They can get closer to every single purchase that a consumer makes. Yeah. Well, this was, I think, fun and a fantastic way to start the show. So thank you for the quick fire. Let's get right to our first segment, the headlines. ♪

is going to be a little different. In the headlines, I choose a story related to this topic. And today, the title, which we laughed about, Why Banks Fail Customers, I asked eMarketer's new AI chatbot, why do banks fail customers? Our AI chatbot is only trained on our data. So it came up- Which is always the right answer. It is always-

It came up with a headline, U.S. banks struggle to meet customers' needs. Innovation and service gaps persist. And it went on to list five reasons. High fees, poor customer service, erosion of trust, limited access to banking services, and a lack of innovation.

So how did it do, guys? I think it's pretty spot on. Yeah. But there's definitely nuance though, right? Like, Lauren, what's missing? Or what is the list like? What does it beg for more or an expansion of? Well, I was looking at the first one, high fees. It is something that's really important. I just...

Speaking of credit unions, I was just writing an article today about how almost a third of them would leave their credit union for lower fees. Really? Because credit unions have no fees, practically. They're non-profits. A lot of them do still have some pretty high fees. And especially with this law that the overdraft fee ruling, that we're one step away from undoing, that only ever...

to the larger financial institutions anyway. So there was all sorts of inequity in the industry, but high fees are still a big, it's a big differentiator if you're able to offer lower fees or none at all. Definitely it's something that causes customer dissatisfaction if they realize that if they could just bank elsewhere, they would be saving a lot of money. So I would say that is an important thing

want to have probably in the top place. Tiffany, are you happy with the list and the order? I am. I think to your point, it's missing some nuance, right? When I think about lack of innovation, like lack of innovating what, and we think about lack of innovation, what really comes to mind if you're looking for the nuance is that

consumers are willing to switch for better mobile banking features. And so perhaps that is what number five means. The one that I'm surprised is not on here is security and fraud. I wonder if that's encompassed in an erosion of trust. That could be, yep. Right? Like when it says erosion of trust, it really means I don't think that it's safe here. I wouldn't trust you with, you know, I don't trust you anymore. Or it could be a bad thing.

Customer service experience where you were assessed a fee that you didn't think that you earned or the bank earned rather. See how I think punitively as a parent? It's like you earned that punishment, my friend. Exactly.

And with that erosion of trust, I had a quick piece of data is trust is even harder to earn among Gen Zers. And they're the least likely to trust banks as a whole or the banking industry. And what they're really looking for is a brand's values and like commitment to those values, which includes DEI, which I know is a

But why don't they, why don't they, so why do you think that like a younger person would be less trustful? Is it like, is there some sort of like older people were raised to be more trustful of institutions than younger people are today? There's more information about the flip side of institutions or the things that they do, which aren't great.

Like that's why they might support DEI? What do you think? That's a great question. I think some of it definitely goes back to them watching their parents probably go through financial struggles. And they also interact with the world of marketing in a completely different way. So if they feel that there is an overt attempt to market something to them or to make a sale, they're very turned off by that as a whole.

So whenever banks are marketing to them, like the more authentic types of social media content seem to work better.

I've raised Gen Zers and I raised them through the pandemic. And I wonder if part of it also is their sort of experience at that particular age in their life. And therefore, like their trust of things is a little just everything is a little different, like how they spend and save money. Where they research products. Their end all be all is what you learn on TikTok. Yeah.

Well, this has been fantastic discussion about why banks fail and what some of the reasons are. And certainly it is, as we point out, the list is good, but there's a lot of nuance to it. So I want to transition to our final segment, which we haven't done in a while. And I literally just told Tiffany about it before we started recording. Feeling bamboozled. Yeah.

In our final segment, we're going to pretend that Tiffany is interviewing for a new role at a bank. The chief customer experience officer, the CXO. For this, Lauren, you're going to be the CEO and I'm going to be the CFO. And we're going to interview Tiffany together. And what we really want to do is understand her vision of how banks can delight their customers. So, Lauren, as CEO, I'm going to defer to you to answer

ask the first question. Great. Tiffany, it's great to have you here today. Thank you, Lauren. I don't know how I ended up here, but here I am. Well, your resume ended up at the top of my pile today. Well, my question is, we are a product-led organization. Can you be a product-led organization and be customer-centric and how? Sure.

Well, I think if you think about a product-led organization and a customer-led organization, I think they have two very different operating principles.

Product-led organizations typically sell products by lines of business. And oftentimes, those lines of business don't necessarily act always in the best interest of consumers. They're about meeting their goals, where a customer-centric organization is one that really takes under consideration what a consumer's needs are, where

where they are in their life and offers the right products, service and experience that aligns with that. So I think it would be very difficult to be both. And I think if you do customer centric, right, you're naturally going to sell the right products to someone. But how do you get like,

We're a large siloed organization that is a product-led organization, which is why Lauren asked the question. So how do you get an organization like that, a large one, to move together towards customers? I think you have to change the context in which they think about customers, right? So it goes away from selling one product and focuses on the actual long-term value that you can add to a consumer's life.

And so if you start thinking about long-term value, it isn't about just getting someone in the door with a product that seems to be the right fit in that moment or the product that

that you want to push to them, it becomes more about how do you actually understand where someone is in their life based on their financial goals, their spending patterns, and even what you know about what might be going on in their life. And how do you build experiences around educating people, advising, guiding, and growing alongside them? So if you think about that under the context of

I'll use vehicle ownership as an example. Okay. How do you help someone understand what they can afford based on their spending, what they expect to pay for insurance, what they expect to have to pay for maintaining that car? How do you help someone create a savings plan for unexpected emergencies? And that aligns with the savings product. How do you help them over time understand that

Should they be paying more or less for insurance so that you can increase their cash flow? How do you help them be able to understand when those maintenance activities are going to occur and when they can expect to pay for things? And most importantly, how do you help them understand when the cost of keeping the vehicle that they own outweighs them actually purchasing a new vehicle? And when you think about banking under that context, it's not about interacting with a product. It's about interacting with an experience, right?

aligns that product with your life and your financial goals and helping advise, guide, and push someone through different life stages and not just interacting with them, actually showing up as a true financial partner. Do customers want that? Actually, they do want this. So we do a study every year where we go out and ask consumers about their mobile banking experience.

And so for the last couple of years, I've asked a question around how valuable mobile banking users would find features that were available in an app to help manage them around life stage. And more than 60% of consumers indicate that they would find value in features like planning, preparing for and saving and living in retirement, planning, preparing for and filing their taxes,

buying, protecting and maintaining their vehicle, and even finding, buying and maintaining their home. So being able to do it all across life stage. So what are fintechs doing that keeps them closer to customers? And why can't banks do the same thing?

Banks mainly can't do the same thing because they're stuck in their product-centric experiences. And fintechs are really focused on serving an actual need for a consumer.

So when I think about sort of life stages and some players that have come in to, I wouldn't say support the whole life stage end to end, but do a good job at capturing at least some of the phases of a life stage. So there is a company or a fintech called My Home Pathway that improves mortgage readiness with personalized recommendation and data analysis. So really helping someone get ready for that home ownership experience.

There is another company called Chimney that helps users track home values, gauges their borrowing power, and helps them assess their home's equity directly in banking applications.

And when you start to think about college planning, Fizz supports students with credit monitoring, spending insights, and even swipable financial lessons. So there are fintechs out there that are really stepping back from focusing on selling products and building experiences around those products, which gets them

much closer to everyday moments where consumers are making decisions that have financial impact. But they're passing, right? Like Fizz is focusing on a life stage. So you're going to be past that life stage. So they need to get another customer who's in that life stage to replace you.

Whereas a bank, if you're a bank of... Yes, and graduate the other one. Right, if you're a bank of America, you have all those customers across all their life stages, but you don't know how to sell them a product like Viz or when to sell them a product like Viz or when to...

Show them how much when, you know, being ready for when they want to buy a car, right? I mean, that's their challenge is that those FinTechs are so focused on a specific thing. And I'll bring up Chime. Like Chime launched into the market and that was one that we mentioned already. They're going to have an IPO, but they're

They had a perfect value prop to me, get paid two days early. Like it just met, it like hit a market perfectly. Like there was a big audience of younger people in particular, people that were checked to check that two extra days was a big deal or is a big deal. And that was all, that was their value prop. So it met the need of a particular audience, very targeted. And I don't know how a big bank would be able to do that.

Well, you have all the data that's there, right? And I think part of this becomes opting in. So if we think about, we'll think about homeownership as an example. There are very few, if any, financial institutions that show you the equity that you have in your home. They'll show you your mortgage balance and the payments that you've made, but they're not going to show you the equity in your home.

And so when you think about the equity in your home, that's part of one phase of a broader life stage, tapping into the equity of your home. And tapping into the equity of your home could mean that you want to do debt consolidation. It could mean that you want to pay for another major purchase. It could mean that you want to remodel. There's lots of different things that it could mean, but getting yourself closer to signals that allow you to be able to anticipate where there might be a need is really where banks need to go versus passively sitting back and waiting for something to happen

that encourages a customer to seek out products and services that allow. You know, one of the interesting challenges as acting CFO here, I would say that having product lines have budgets that are organized by product line. And marketing is also, budgets are also organized by product line. So like,

The auto loan department is selling auto loans. They have a goal of selling a certain amount of auto loans. And they have a marketing budget to do that. To be more customer-centric or to read signals and be at the right time, right place with all the different types of products. So like the auto loan might have to take a back seat to the mortgage department.

product at a certain life stage, for example, how does a bank readjust its marketing budgets and how it lines up or evaluates how to spend money on marketing when it's not the way they've been doing it for the last hundred years? Yeah, it's a fundamental shift in the business model, right? It's rethinking your business model from the ground up.

But under that context, if you start thinking about consumers' financial relationships that they're spread across various providers, everyone's beginning to lose sight of who has accounts where and how to actually integrate and add value. That is manifesting now with consumers. I have a data point that I'm putting into a recent report that I'm writing that 46% of consumers feel pressured at least once

some of the time to accept products and services that serve banks more than they serve themselves. And so when you think about it under that context, that speaks perfectly to a product-centric organization versus customer-centric. And so customers recognize that banks aren't always acting in their best interest. And when you think about trust, trust is acting in the best interest.

And so how do you build experiences that support what consumers want at the life stage and the stage, the phase in that life stage that they're in and offer them the products that support that versus the products that you're being, have an incentive plan to sell against. I was also, I was just thinking about the, like the urgency of, of banks kind of

having to understand this and make that shift because Chime, like we talked about, is really close to that IPO and they started out with a very targeted customer base and solving their targeted customer basis problems

And now they are, they're branching out and targeting, for example, like higher income customers, just expanding what that base looks like. But as they're expanding, they're still customer centric and developing products like for these different demographics as well and selling it directly to them to solve their problems and

And meanwhile, banks have the opposite problem, like you were describing, Tiffany, of just kind of being product-led and unable to shift that mindset very quickly. So while the clock is ticking, these fintechs are expanding. So there really is some urgency there. Maybe a bank should reorganize itself as separate life stage banks. Yeah.

And then the products sit on top of it, but they operate like the young professional bank, the close to retirement bank. And I think the other option is also to integrate into other third party apps, right? And place your products where they're relevant. So not just be the superstore, but be the product. Exactly.

Be the superpower and go everywhere where your customers want your products and services. I think that that, be a superpower, go where all your customers want, is the perfect place for us to end this. Because that was a great way to finish it. I loved it. Does this mean I got the job? Lauren and I are going to have to talk about it. Lauren, I'm so sorry. I already offered you the job. I see.

And I'm the CFO here. I guess you have the job, Tiffany. Well, thank you for the offer, but my heart and soul belongs to eMarketer. So I'm going to have to respectfully decline your offer, but I hope you will invite me back. I will always invite you back, Tiffany and Lauren too. Thank you so much for joining us today. It was fun.

So fun. Thank you for having me. It was fun. Thank you. I also want to thank everyone for listening to the Banking and Payment Show brought to you by Sint. Also, thank you to our studio team who puts these episodes together. Our next episode is on July 8th, so be sure to check it out. See you then. Thank you. Bye, everyone. Thank you. Bye.