How Experience-Driven Design Is Revolutionizing Physical Engagement

Jim Marous (00:12):

Well, I want to welcome you to the Banking Transformed Podcast, the top podcast in retail banking. As you heard, my name is Jim Marous, I'm owner and CEO of the Digital Banking Report, co-publisher of The Financial Brand, and most recently, which is now five years, the host of the Banking Transformed Podcast.

Jim Marous (00:30):

What is great about this podcast … thank you, there we go, that's all … you did good. What's neat about my opportunity here and over the last five years is that a podcast like this is my learning experience.

Jim Marous (00:47):

I made the decision more than 15 years ago not to be disrupted but to continually disrupt myself to make my impact on the industry meaningful going forward, without knowing what that going forward would be. That was done at age 55 when I knew some of the people that used to visit my offices in the banking system were kind of mailing it in, and that was not going to be acceptable.

Jim Marous (01:14):

I started by writing a blog for myself that looked at research done in the banking industry and provided my perspective. Since then, I've expanded it to build all kinds of content that would basically educate me and educate those around me. I hope I've done well in that mission.

Jim Marous (01:33):

But today's a great example, but an unusual example in that we don't do many live podcasts. The last one I did, and he had to remind me, was at our own Financial Brand forum, where last year, I interviewed seven banking executives about ways they're making banking better.

Jim Marous (01:52):

I'm going to be doing that again this year at The Financial Brand Forum with eight brand new, very influential banking executives, both from the banking world, regulatory world, and FinTech world. So, today, what we're going to be discussing is how have branches changed? How has distribution changed?

Jim Marous (02:13):

I mean, as I kind of referenced, my banking industry experience goes back to the late 1970s. Some of you probably weren't born then. In fact, I know some of you weren't born then just looking in the audience.

Jim Marous (02:25):

But the reality is, in many cases, I can walk into a branch today, and with the exception of having video boards instead of 22 by 28 plaster boards, which it's amazing I still remember the size, but I still reference it often in other ways or having little name cards or little 8 by 10 poster things along the teller counter. It's amazing how many branches still look and feel the same, and are still positioned as transactional facilities. That doesn't make it anymore.

Jim Marous (03:04):

A good, interactive banking experience doesn't make it anymore. More than ever, the consumer, small business and corporate customer expects high levels of engagement. That means that you know them, understand them, and will reward them every time they're interactive. So, what does that feel like?

Jim Marous (03:29):

Let me give you a very recent example, and as I told EJ, I'm not afraid to throw myself under the bus to make a point, and this is going to be a great example.

Jim Marous (03:39):

Today, on the other side of Phoenix, I get up in the place where I'll be staying with my friends during baseball spring season and I realize as I'm getting dressed, I'm forgetting a relatively important part of what I wear — my pants.

Jim Marous (03:58):

Now, as many of you can imagine, I went through the closet and through the two drawers I used, in fact, eight other drawers that I thought maybe I made a mistake and said, "It's got to show up here," and I looked at them eight different ways, going, "There's got to be here." So, what do I do? Good news is I had a little time to spare. I know Fashion Square relatively well from previous visits.

Jim Marous (04:22):

I called Nordstrom, I said, "I have a problem." And this, by the way, was at 9:27 AM, a good 30 plus minutes before they open. And sales representative picks up the phone, I say, "I have a problem. I need a pair of pants, black pants. I need them in this size. I need to pick out two or three different pairs because invariably, they're not going to fit quite right." I didn't even think about alterations, I figured, "Pin me up, I'll be ready to go."

Jim Marous (04:55):

The good news is when I got there, not only were the doors open and there's some at least three minutes before opening time — reference it to the branch people, don't wait until whatever time you're opening time is, open them beforehand. Make it so people realize if you're in squeeze and you're looking for that moment, that's a good first impression.

Jim Marous (05:16):

I walked in, he had three pairs of pants laid out, one that I had already bought and left at home, and two others. I very quickly kind of knew which way I wanted to go. He said, "I'll tell you what, I'm going to get a seamstress down here right now to pin these up and we'll see what we can do." He goes, "Can you get them later on today?"

Jim Marous (05:35):

I said, "No, I have a presentation in about, well, in a couple hours," but I told him I had to be at the event in about 40 minutes. He says, "We'll see what we can do." The seamstress came down, she measured me, she goes, "I'll tell you what, I'm going to put everything on hold, I'm going to get these done in seven minutes."

Jim Marous (05:54):

I know nothing about sewing, but I could not thread the needle in seven minutes, and I know they don't do that, but the reality is, it was in my hands. And I have a picture of myself walking down the escalator with a big ass smile on my face going, "I'm not going to go as the emperor with no clothes," so that's a good moment.

Jim Marous (06:12):

But what's important about that is it wasn't just the experience, it was the engagement. It was the person I dealt with. So, how does that relate to distribution? To the branch experience?

Jim Marous (06:25):

I'm going to be interviewing EJ today to talk about what has changed since the 1970s before he was probably born, and what are we looking to today to make a difference?

Jim Marous (06:37):

So, EJ, thank you very much for being here at the DBSI Visionary Voices event that is really well attended by a variety of financial institutions, but more important, by people that have made the decision to learn more.

Jim Marous (06:52):

So, knowing that that's part of your mantra, is to never let a good day go that I'm not learning something and being very thankful for every day in a different perspective — what has changed in the last 10 years? Not going all the way back to the 70s, but in the last 10 years, what has changed in the way we interact with physical facilities?

EJ Kritz (07:16):

Well, first of all, I'm grateful you're here. I'm grateful you told the story, and if our group is anything like me, I'm trying to wonder if you had to purchase pants at Nordstrom, what were you wearing when you went to buy the pants?

Jim Marous (07:33):

My backup plan was a pair of joggers. It wasn't shorts because I said I have to have an alternative that my line, I already worked on my line. EJ told me I could show up in anything, casual or not, and I figured, I knew I'd have casual down pant on this outfit. I had a quarter zip that had our company's logo on it, and a pair of joggers. Not exactly the way I'd want to make an impression.

EJ Kritz (07:59):

Would've worked okay. Would've made it work. But to answer your question, as I was hearing your story about Nordstrom, it started with a phone call saying, "I have a problem." And I instantly thought to myself, what would happen if a member or a customer of a bank or credit union picked up the phone moments after the branch opened, and did the exact same thing?

EJ Kritz (08:30):

And our audience is probably sitting there going, "I don't want to think about the answer to that question because it's going to vary." It's going to vary on the brand, the day, who happened to be working there that day, but what has changed about the interaction with the physical branch is the problem.

EJ Kritz (08:52):

Is that customers previously, they visited the branch to transact. “I simply need to give you money and have you hold it, or you've been holding my money and now, I need it back.” We have other ways to do that now.

EJ Kritz (09:08):

We have banking technology, we have apps, we have ITMs, we have ATMs, we have payment platforms. I always think of my daughter who goes, "Dad, I don't need a bank account. "So, what are you talking about? You're 15, you're making money. What do you mean you don't need a bank account?"

EJ Kritz (09:24):

She goes, “Dad, I've got Venmo." "And?" She goes, "Well, they can give me a card." Oh, it's working just fine. And so, where does the branch come into play?

EJ Kritz (09:38):

The problem. I have a problem. I need it solved. And by the time I've got to the branch, the odds are good, they've already tried to fix it themselves. You tried to fix your pant problem by going through all the drawers, figuring out, you know, do I have-

Jim Marous (09:57):

Thinking that something would change along the way.

EJ Kritz (09:59):

Maybe something will change along the way. How many times … "The app won't work." "Alright, well let me force quit it and restart it." "Nope, that didn't work either. Let me delete it and redownload it." "Nope, now I have an authentication problem and I got to call the call center." "Oh shoot, it's 8:02, the call center's not open yet, guess I better go to a branch." Things have probably snowballed and evolved to get the person to the branch to begin with.

EJ Kritz (10:28):

And so, the branch went from a transaction hub to a problem resolution center really, I think over the last 10 years, because what else happened in the last 10 years? Smartphones, online banking, mobile banking, it was another thing that could break.

EJ Kritz (10:46):

And so, where am I going to get help? The phone channel where they can't pick up my phone and look at it, and help me physically? I’m going to go to the branch. I probably ought to have a digital problem resolution specialist on site there.

EJ Kritz (11:05):

So, has the physical branch changed? Have we eliminated teller lines? Has bulletproof glass started to go away? Oh sure, all that of course. Is there more self-service in branches? Sure, of course. But the purpose of the visit, I think is the thing that has transformed the most over the last 10 years.

Jim Marous (11:25):

And expectations. Today, I forgot about it until you started talking about how did they bring personalization in this? The first thing they asked is, "Do you have an account with Nordstrom?" Before I even was there. I said, "Yes." They said, "What cell phone number is it under?" I gave it to them. They knew immediately what level relationship my wife has with Nordstrom.

Jim Marous (11:48):

And I say that jokingly knowing that I also go there often, but she has a longstanding relationship that is honored and respected. It's why we pay Amazon for what is the same if you don't have Prime membership in my world.

Jim Marous (12:08):

I'm still getting free delivery with or without Prime, I'm still getting fast delivery with or without Prime, I'm still getting things ordered in a way that they know me and know what they want to do, what's different is I feel that the trust is such that I don't want to give that up.

Jim Marous (12:26):

And to your degree also, the branches that stable function in a marketplace, in the community that if things go wrong, it's where I'm going to go. I still may not get the answer I want, but it gives me immediate access. Something that is not available at a completely digital organization.

Jim Marous (12:46):

In the UK recently, they've had a lot of system breakdowns from solution providers that provide solutions to financial institutions. And as a result, digital banking access has been halted for as much as 24 hours. That is a fear factor.

Jim Marous (13:03):

When you're expecting the digital platform to know you and you don't have that, or when everything runs digitally and they have your money, I can't look up my balance, what happens? So, with that in mind, when we look at the ways financial institutions today respond to these new problems, what's hot?

EJ Kritz (13:31):

The easy throwaway answer is FinTech. When I meet a financial institution that has run into an issue or that wants to seem cool, hip, with it, they go, "Well, we're working to innovate." "No, you're not." I don't know, but maybe three or four, and maybe you correct me if I'm wrong, but I can think of maybe three or four financial institutions that have the money, the time and the talent to be innovative.

EJ Kritz (14:10):

But you all like to think of yourself as innovative. And so, the challenge that I give and where I turn to and I think of what's hot, is if you don't have the chops, the time, the money to innovate, well then you better partner with innovative people. And there are some remarkably innovative people and innovative companies out there.

EJ Kritz (14:38):

Earlier today, we heard from our partners at Connective, and when I spoke to folks who entered Visionary Voices yesterday and I asked them, "What are you excited to see here at the DBSI Ideation Center?" And often one of the answers was the tech. Streamlining experiences and eliminating the friction in the ordinary and the not so ordinary, and I want to go back to your Nordstrom story in a second.

EJ Kritz (15:13):

When you have somebody in your back pocket, like a connective that takes away a lot of that pain and frees up your employees to do the things that matter for me, Jim, that's hot. Freeing up your people to do the things that matter.

EJ Kritz (15:32):

The seamstress at Nordstrom made a choice to put you to the front of the line, also known as colleague empowerment. Did that seamstress need to go to their manager and their supervisor to ask for permission to do that thing for you today? I would argue probably not.

EJ Kritz (15:59):

Again, translate that to banking: would somebody in a bank or credit union typically need to ask for permission? I mean, imagine if that was a loan process. You have a real reason for a quick close. You have a dire emergent need.

EJ Kritz (16:15):

Maybe it was a natural disaster and you need quick access to money. Where is the empowerment to take your loan application from the heap and say, "You know what, based on these parameters, maybe even based on the relationship that we already have with Jim, while we've got all these other people, we're going to move this person to the top of the pile."

EJ Kritz (16:40):

And so, what's hot for me? What's hot for me is innovative partners who can take friction away so that your people can be empowered to do the right thing for the right people on the right day.

Jim Marous (16:55):

And you can't get that in a digital experience usually. For instance, given my parameters today, I could not go to Amazon or the Nordstrom app and order this. In fact-

EJ Kritz (17:07):

Have you ever called Amazon?

Jim Marous (17:08):

Oh gosh, no, no. But it's interesting because we all work on all of our channels and yet it doesn't mean that all the channels always work together. And I'll bring that example up later in my keynote, but the reality is we've got to make the challenging things easier. Every organization here at some point in the last three days has probably mentioned either generative AI and/or personalization.

EJ Kritz (17:43):

Yap. Check, check.

Jim Marous (17:45):

How do those wrap into what DBSI is doing with regards to building a better, what I'm going to call physical, and I know we're going to get into the physical plus digital and things like that, but to make the physical interaction better, what's going on right now?

EJ Kritz (18:02):

What's going on is that data can inform what the physical should look like. One of the things that we've spoken about as a group here at Visionary Voices is branch of the future cannot be a singular phrase. Branches of the future is what each individual, financial institution should be thinking about.

EJ Kritz (18:23):

When we heard from Tom Long at the Long Group earlier today, and we heard about the idea of data driving the design, the staffing compliment, the products and services that will be sold and offered in that location, how can that not inform the design choices within the physical space.

EJ Kritz (18:48):

Banker, credit union goes, "Yeah, we need two teller pods because we're going to have four universal bankers. We always put a commercial lender there, we always put an MLO there, and then we need a hotel office."

EJ Kritz (19:03):

Why? Are you sure you need an MLO there? Does the data show that you need an MLO there? Are you assuming that you need 3,500 or 4,000 square feet just because (and here comes that phrase, you ready?) you've always done it that way? No.

EJ Kritz (19:24):

Allow data to inform the physical form, and then the creative people will take it over the goal line and bring in the branding and the cool stuff and the signature elements and the digital and the wow wall, and all the stuff that makes it sexy, okay.

EJ Kritz (19:43):

But when you build this big thing, this sexy thing, the glowing lights and it didn't satisfy the need that the member, the customer, or the market asked for, you're in a lot of trouble. We are going to be in Las Vegas, we’re going to get in trouble? We're not going to get in trouble.

Jim Marous (20:01):

No.

EJ Kritz (20:02):

Okay. We're going to be in Las Vegas for The Financial Brand Forum next month, in April, and I look at the numbers of what's happening in Las Vegas and the strip is down like 40% right now. They didn't build for the population that is visiting Las Vegas right now.

EJ Kritz (20:29):

The population that's visiting Las Vegas right now isn't gaming like a typical tourist. It's very heavily into a lot of conferences visitors, the sphere has brought a concert goer who's not necessarily there for the gaming element, they're there for the entertainment element of Las Vegas. It's not wildly different than preparing to build a bank branch. It's not build it and they will come, it might be if you build the thing that they asked for though.

Jim Marous (21:00):

Well, it is interesting because when you look at branch builds, we have a situation, we just did a report, The 2025 Trends and Prediction Report. And in our survey, I'll be honest with you, I was astounded by the fact that a higher percentage, in fact, over 50% of financial institutions say they were going to be building a branch as opposed to closing or remodeling.

Jim Marous (21:28):

It was higher than all the others. I couldn't get it. I'm thinking to myself going, "What am I missing here?" We're talking about digital banking and the clients, the financial institutions are still building.

EJ Kritz (21:41):

Are they chasing Chase?

Jim Marous (21:44):

That's the question. Because Chase also is building what I'll call old school branches, but they have a unique scenario as Cap One does. Their base of who they're trying to reach are customers already, they’re card customers and they're trying to expand those relationships.

Jim Marous (22:03):

They're not starting from ground zero, they're not moving into a brand-new market area hoping to generate X billions of dollars of deposits or loans, they're basically serving an audience that already knows them, already understands them pretty well.

Jim Marous (22:17):

And when you come in and you sit down with a rep, they already have information they know about you on their screen, and they have the loan rep and they have the other people, the investment service person, but they know that market can absorb that.

Jim Marous (22:30):

How often are we following organizations that are not us? Oh, and by the way, why would we do that anyway? So, my question to you is today's world (and I know you have a somewhat built in bias), is it physical and digital, or is it digital and physical?

EJ Kritz (22:51):

Oh, can't I just say yes.

Jim Marous (22:53):

Yeah, you could but that would not be allowed. That's not how these podcasts go.

EJ Kritz (22:58):

Let me give you a longer answer, is the part that frustrates me is when the digital experience stops at the door to the branch, that's the missed opportunity. You have to have both. You have to satisfy the digital world, you have to have the physical experience, am I biased? Of course, I am.

EJ Kritz (23:18):

But I'm also biased towards suggesting that gone is the day of the 5,000 square foot branch, gone is the day of the traditional banker versus as I said earlier, that digital advocate, I would far rather the in-branch employee.

EJ Kritz (23:35):

We talk about product knowledge training. Remember we used to drill that? Drill the product knowledge, the product knowledge, the product knowledge. We still drill product knowledge to sell. Where's the drilling of product knowledge on the digital suite to help. Because as I said earlier, that’s often why somebody is coming to the bank branch: “I need help.”

EJ Kritz (24:03):

And the help that they need, at least initially, is not typically tied to a product, it's tied to the digital form. And so, we have to create a branch environment where we have built in spaces, built in technology to make that conversation that physi/digital experience possible. That intersection between the physical world and the digital world.

EJ Kritz (24:33):

And may I share with you one of the biggest hurdles is for banks and credit unions? Is the IT department. And you might say, "How would the IT department-”

Jim Marous (24:43):

Hasn't changed in 45 years.

EJ Kritz (24:44):

No, hasn't. But let's pause on the IT department for a second because when we talk with banks and credit unions about how do we make it possible to help a member or a customer digitally within the four walls of our bank branch, one of the big hurdles is Wi-Fi in the branch.

EJ Kritz (25:05):

I may be in a rural community, don't have cell service to help the customer get on the app and reset this and do that, we need Wi-Fi in the branch. Do you know how many directors of IT will say, "Absolutely not. It's too risky, we're not putting Wi-Fi in our branches, it's a non-starter, end it."

EJ Kritz (25:30):

And we talk about transformation, and we talk about evolution. And if there were any one role in retail banking that is evolving and needs to further evolve, it is that of the Head of IT. And what I mean by that is that the old days of the IT Director, the IT Manager is they were the person who would plug things in, fix the printer when it wasn't working, get the new laptop set up for the new employee, keep the lights on.

EJ Kritz (26:04):

In a bank or credit union, I think that the IT director, the CTO, the CIO of the future, they're none of those things. They're a vendor manager, they're a vendor partner, they're keeping watch over that tech stack and they're saying what fits in and they're managing the relationships with the people that enhance the brand experience, that is a completely different skillset. It is a completely different natural intrinsic human behavioral person than that tech, let me fix the broken thing IT Manager of the past.

[Music Playing]

Jim Marous (26:45):

Well, it's interesting also because I think we're hearing more and more about generative AI's capabilities on a personalization front. We also talk, and I'll be talking later about the importance of democratization of data so that the people within the branch, every one of them, knows about the person that's walking through the door.

Jim Marous (27:03):

We have organizations now that are geofencing the branch so that when a person walks in, they know exactly who it is, and they can offer them something of need to them. It's important because at the end of the day, what I want, I need my financial institution to be in a position to work on my behalf in an empathetic way without selling me a car loan in the fall or equity credit in the spring.

Jim Marous (27:29):

I see people shaking their heads, so some of us go back to seasonal marketing. The reality we got to go to where Don Peppers and Martha Rogers were 35 years ago with the one-to-one future that talked about using data to drive those individual experiences.

Jim Marous (27:46):

Do you know organizations today that are building or starting to build or getting close to implementing personalization within the branch so that when I walk in, you proactively, or at least reactively can offer me something that's not simply the next most likely product but what you may be able to say going, "We see something here in your transactions." Do you see that right now?

EJ Kritz (28:13):

Well, as you were asking the question, I couldn't help but think about my visit to my credit union last week to pay up a loan payment. Now, don't ask me why I had to go into the branch to pay the loan payment to be, that's a different story for a different time.

EJ Kritz (28:30):

And on my way out the door, the banker says, "By the way, if you have any extra cash laying around, I still have my 4.99% CD." By the way, if you have any extra cash … I couldn't believe what I was hearing, and I kind of looked at the guy like my dog looks at the ceiling fan and just kind of kept walking. But the answer is yes, but it's not new.

EJ Kritz (29:01):

I think of my friend Brian McEvoy is here and years ago we worked at TD, and we had a program called Radar. And Radar would alert the teller that the customer in front of them had a propensity to buy.

EJ Kritz (29:24):

And that could have been as simple as a soft pull-on credit because that person might benefit from a credit card, that that person might have a benefit for a savings account based on the system knowing that they were a single product household.

EJ Kritz (29:41):

That was like 15 years ago, Jim, that was pre-AI, that was pre-geofencing in the branch, and talk about light years ahead. So, do I see it? Yes. One of the biggest pieces of low hanging fruit is appointment setting. Talk about the easiest way to prepare a banker to receive a customer is appointment setting. It's the easiest thing on earth.

EJ Kritz (30:10):

I know you're coming, I know why you're coming, I know when you're coming. I can be waiting at the door to greet you. And by the way, I could have done my pre-call research or good old pre-call planning before a business call.

Jim Marous (30:26):

Been there, done that.

EJ Kritz (30:28):

Been there, done that. Good, old pre-call planning and have prepared those great open-ended questions to identify needs. There's the magic low hanging fruit. Here's where I struggle though: do the geofencing, do the generative AI, throw it into the branch, let me know how that goes.

EJ Kritz (30:52):

Because without the people who are ready to do the job, without the people who have received the appropriate training like what we offer to our clients here, without hiring the people who naturally care, who naturally are curious, who actually do care that you might benefit from a CD or notice that hey, every month this guy's got going 4,300 bucks is going to Bank of America on the 10th of every month, I bet that's a mortgage, maybe we ought to chat about that.

EJ Kritz (31:27):

You could put the generative AI in there all you want, if you don't have the employee there who's naturally curious and inquisitive and conversational, they won't execute on that. You just added another thing to your tech stack that's going to sit there and do a whole lot of nothing, and you're going to question the return on the investment. So, is it out there? Yeah. Is it working? I haven't seen major shifts in hiring practices of late.

Jim Marous (31:55):

Yeah, and the challenge also is that do we give the authority to the branch staff to do what is possible with the technology and the data we have today? Will your financial institution get out of the risk avoidance mode to a risk management mode where you're okay with mistakes being made but realize that the trust is built if I continually win that battle of serving me.

Jim Marous (32:26):

When I get in challenges with, when I go to my branch, I don't go there very often. I go there usually for challenges as opposed to opportunities. If I want to make it a positive, I want to do something else.

Jim Marous (32:36):

My challenge is both my traditional financial institutions which are both in the top 10 — my bank for my personal accounts and my one for my business account, both of them probably know everything I do on a monthly basis, but never take any action based on what they know, therefore, a gap. A performance gap, a personalization gap.

Jim Marous (33:02):

So, when we come into a branch, and I know this is something that you and your competitors in the marketplace stress so much, it's not about the physical facility, it's what you do with it. We heard earlier today by the gentleman in the back that if you don't know where you're trying to go, you won't know how to get there or if you've gotten there.

Jim Marous (33:24):

I use the GPS system as an example, that I don't just want to get someplace, I want to get there as efficiently as possible. But if I don't know where I'm going and I simply know I'm going north, I may get there, but I could be in two completely different places.

Jim Marous (33:39):

So, when we have that situation and we have the situation where organizations are risk adverse, they have a big, big toe in the water of the past and they're kind of stepping out there, how do you as a firm encourage your prospect/clients to take that step in the future and not break the bank?

EJ Kritz (34:04):

This event, I think, is a shining example, the financial institutions that are here, they took a step into the future. And this room, our Ideation Center exists so that financial institutions can take a step into the future.

EJ Kritz (34:21):

But what it really takes, and it can happen in this building, it can happen in a restaurant, it can happen at an offsite, it can happen at a conference, but it doesn't happen without a conversation. And what our strategists do really, really well and what any consultant in the industry that's worth their weight does really, really well is ask questions of an executive team that cause them to ask more questions of one another.

EJ Kritz (34:52):

Finding that common ground as an executive team is going to be the only way forward. When you asked about generative AI, when you ask about risk, inevitably within the executive team, there's going to be that subsection of people that are like, “Let's go, let's push, let's add to our tech stack.” And then there's going to be the other group, it's a little more reserved, but it's kind of working fine the way it is. Why rock the boat? Why mess things up?

EJ Kritz (35:26):

And without having that conversation to bring the group together and not necessarily pick a side but find common ground, how can we become more risk aware, risk tolerant, tech tolerant, future-driven, dare I say innovative, value based, exactly.

EJ Kritz (35:49):

Makes me think of a question I have for you. I’m going to spin the table for you on a minute because you said something a moment ago, I hadn't heard from you before necessarily, or I admittedly was having like an ADHD moment and wasn't paying attention. So, you said your primary banking relationships are with a couple financial institutions who are top 10 banks, none of them are here.

Jim Marous (36:10):

Correct.

EJ Kritz (36:12):

What would it take for a community bank or credit union to win the trust and business of Jim Marous? What is missing for you to take that leap?

Jim Marous (36:27):

Do the unexpected rather than the expected really well. I interviewed a gentleman from Accenture last month on my podcast and he said, "Every one of you do a really, really good job of making this so the mobile banking experience meets all expectations."

Jim Marous (36:47):

If you look at J.D. Powers and associates review, everybody's getting a great score, okay, but how are you differentiating? How are you looking a little bit different than your next-door neighbor financial institution or your next-door neighbor retailer, restaurant, retailer, whatever it may be?

Jim Marous (37:05):

One way is to surprise and delight because of activities. I am amazed that certain technologies have been out there, certain information stores have been out there forever and financial institutions refuse to use it probably because of risk tolerance.

Jim Marous (37:23):

So, for instance, if I go into a car dealership and do a test drive, they do a credit bureau hit to see am I going to bring that fricking car back? And the reality is that hit shows up on a credit bureau that says, "This person came into a dealership." I don't know about you, I have done it when my son was younger a couple times, but I don't go into the car dealerships just to drive a car because I want to drive the car, I'm probably shopping.

Jim Marous (37:49):

I'm also probably not going to make the decision that day. I can buy the sourcing for who's shopping for cars in my branch network. And then go to those people and say, "By the way, if you're looking for a car, we have special car loans for our customers right now." Now, the customer's going to kind of know, "Geez, that didn't come out of the blue, but it maybe did."

Jim Marous (38:12):

I watched the TV last night and three things I discussed over the phone showed up as commercials. That's not by happenstance, it's the reality, but that's the customer's expectations. They expect that from the branch, they expect it from the financial institution.

Jim Marous (38:26):

What really ticks me off is you mentioned the transfer of funds between financial institutions. I've been doing it now for seven years, transferring money from my business to my personal account twice a month about the same amount, who's going to catch on that? By the way we could make this easier for him.

Jim Marous (38:44):

And one of the problems is one of my financial institutions doesn't necessarily embrace things like Stripe, as a result, the communication doesn't happen. What happens instead, is I build relationships with Acorns, I build relationships with Robinhood, I build relationships with SoFi and I build relationships with credit card companies.

Jim Marous (39:06):

In addition, my 27-year-old son, very much like your daughter, if you ask them, “What's your primary organization you do financial institution transactions with?” It's Venmo and Discover card, and now Chase card. Not once is he going to mention the fact that, oh by the way, he has a checking account in an organization — he did not mention that set of people.

Jim Marous (39:27):

So, he has basically silent attrited his relationship because they did not serve his needs. How many of your customers are doing that? I'm going to do something that doesn't play well in a podcast, and raise your hands if you've closed a primary financial relationship in the last five years.

Jim Marous (39:50):

Probably see a couple. I think there may be people that have actually left their organization, maybe gone to a new organization because you usually don't change your company unless you're working in the industry, you change the bank.

Jim Marous (40:03):

How many of you have opened up an account at a non-primary financial institution in a FinTech, in a credit card, a payments in a savings app? Raise your hand there — everybody. It's like when I ask how many of you have Amazon Prime?

Jim Marous (40:17):

The reality is look around, that is happening in your financial institution and your branch employees are the gateway to that blockade. They're the damned that can make it so the person doesn't leave if they do things differently. Unfortunately, our risk intolerance makes it difficult.

Jim Marous (40:36):

So, my question for you then, is right now organizations are trying to do things differently. One of our last two questions. Number one, what do you got really cool right now that you're showing and you're starting to implement that you go, “You know what, basically I know what that is because I saw it over lunch.” So, what is it?

EJ Kritz (41:01):

Yeah, that is an easy one and I think it's been an eyeopener for a lot of our guests here, and that's micro branching.

Jim Marous (41:10):

What is a micro branch?

EJ Kritz (41:13):

Remember micro machines? A little teeny tiny branch. We call it Junction. The reality is that testing new markets or even exiting a market, it's something risky, and the investment is massive. Are we renovating branches? Of course, we are. Are we engaged in new build ground ups? Of course, we are.

EJ Kritz (41:38):

But what we are really excited about, what our partners are really excited about is the idea of entering a market in a matter of a month or two from the time a client finds a space (I know, hang on, we'll get there), and opening a branch with little to no permitting requirement for a fraction of what it would cost to actually build a branch and yet, it has all the function, it has all the form, it can do all the things that a traditional branch can do.

EJ Kritz (42:15):

Junction as we call it here at DBSI is that solution. I am really proud of our team certainly, but of some partners of ours at Tech CU who identified they wanted to move into Eagle, Idaho as a new market.

EJ Kritz (42:36):

I didn't know much about Eagle, I assumed it was not much of a fancy place. It turns out I was rather incorrect. There's a lot of opportunity, a lot of affluence and wealth in that community, and they wanted to enter the market.

EJ Kritz (42:56):

But to enter the market full blown and spend a couple million dollars to build up and stand up a new branch, that's a risk versus perhaps testing the market first, building brand equity, and then go build the big cool branch.

EJ Kritz (43:16):

You mentioned Chase, they're not building their branches and markets where they're not known. They know they have households there, they're just wealth or card or both households, so there's already brand equity in the market.

EJ Kritz (43:32):

Tech CU did not have that advantage entering Eagle, but you know what they did have — they had a Baskin-Robbins ice cream store that had gone out of business and they saw in that possibility, and taking and decommissioning that Baskin-Robbins and installing a micro branch allowed that credit union with (and keep me honest, I'm looking at my operations partners) 23 days of construction, I think is what it took, to open that location — hello Eagle? And the secret-

Jim Marous (44:16):

I know Baskin-Robbins unfortunately pretty well. In a space that is an unusual space from a shape stamp-

EJ Kritz (44:23):

It's not big, yeah.

Jim Marous (44:24):

It's a long counter based.

EJ Kritz (44:26):

Yeah, it's not a big space, but again, let's think about it: why does the space need to exist? It's an introduction to the market, it's a conversational environment, needs to be able to handle basic transactions. Do we need a ton of complex millwork and build out to go into a new market and say, "Hi, we're here?" No, not initially.

EJ Kritz (44:55):

And so, they're able to deploy this solution, redo the floors, redo the walls, we actually built the branch here in Arizona. We ship it up, we install it like furniture, which is part of why the permitting is so limited for something like that. And so, you go from a 9 to 12, maybe even 15-month build out to create a branch and enter a market, to two months-

Jim Marous (45:26):

And a whole lot less money.

EJ Kritz (45:27):

And a whole lot less, pennies on the dollar — well, maybe not pennies on the dollar, but for certainly a fraction, maybe even a third of what it would cost to ordinarily build out a branch location. It's not only a game changer from a P&L standpoint for a financial institution that's been skittish to enter a market, but it allows two other things.

EJ Kritz (45:50):

One is you can be nimble. You find real estate, you want to jump on it, space doesn't always open all the time. That's space in that community that you've been wanting, heck, maybe one of your competitors went out of business, they closed up shop in that market and their branch is available.

EJ Kritz (46:09):

Now, you might not need all 4,000 square feet of that branch, go snag a thousand, lease out the other 3,000 is commercial space, you just entered the market. But what about those financial institutions that are thinking about exiting a market? That's maybe even more risky than entering it.

EJ Kritz (46:31):

What's going to happen to our brand? What's going to happen to our reputation in the market? To take a solution like a micro branch, and we didn't exit the market, we just simply moved in the market. We're still here. Your expert's still in the neighborhood. We're still here to serve, we're just not on the corner of Maine and Maine anymore in a 5,000 square foot building.

EJ Kritz (46:54):

We're in the street mall behind where you've always been going. It's got the same people in it. We're excited to see you over there. Now, we've kind of got the best of both worlds. We've downsized our costs, we've stayed in the market, we continue to serve.

EJ Kritz (47:08):

And I think micro branching is a great solution for those financial institutions looking to not necessarily downsize the number of branches they have but just change the complexity of what those branches look like.

Jim Marous (47:22):

So, finally, we have a number of financial institutions here. We have even more that are going to be listening to podcasts and watching the podcast on YouTube and on our podcast channel. If you want to have one takeaway, just one EJ, one takeaway-

EJ Kritz (47:39):

He knows me really well.

Jim Marous (47:40):

Well, and he knows me, exactly. One takeaway that you want to say, "If nothing else, please do this." What is that?

EJ Kritz (47:48):

Dare to be different. Such a commoditized industry. Everybody is generally the same. I love comparing banks and credit unions to other industries. I always say, “You're retailers, you just sell money.” Okay, simple, you're retailers, you just sell money.

EJ Kritz (48:10):

I think we talked about this before, but in my previous life I was a radio DJ, and I worked on a radio station in New York. It's no longer around anymore, but it was like the first Alts music radio station in America, super cool.

EJ Kritz (48:26):

And their phrase was, “Dare to be different,” and that always stuck with me. And when I entered banking, what occurred to me was, I have yet to really find a financial institution that dares to be different.

EJ Kritz (48:45):

And when I asked you the question of, "What could a community bank or credit union do to earn your business?" One of the things I heard from you is to take a chance and know me. But to do that, you have to dare to be different, and that's where partners, great partners can really help.

EJ Kritz (49:05):

It could be the person sitting next to you at the table, it could be somebody in a banking or a credit union association, somebody within your chamber of commerce, somebody that you bump into at The Financial Brand Forum, it could be a company like DBSI, but somebody has to push you to dare to be different and that would be my one biggest takeaway.

Jim Marous (49:25):

It's interesting, along the same lines, in our research we do on the banking industry, the one thing that's been really mind boggling to me, but really exciting is that when we look at what firms today are becoming the most digitally mature, which ones are most likely most advanced in digital transformation …

Jim Marous (49:48):

It is the large banks, which you'd expect that have the money and the smaller banks that have the ability to make partnerships such with DBSI, such as with so many organizations in this industry, to move forward at speed and scale at a price point that wasn't possible four years ago.

[Music Playing]

Jim Marous (50:10):

You leveraged the intelligence, the enthusiasts, and the passion and the focus of partners in the industry so that you can do anything you can better than your competitors because while it's available to everybody, only certain organizations will deploy against that possibility. It's why I do what I do in the podcast through my writings, through my presentations, it's because it's more possible than ever before.

Jim Marous (50:38):

But as I mentioned to you earlier, you got to be willing to let go of that ropes in the ropes class to get to the next rope, or it gets further away, and you'll never get to the future. I thank you, EJ-

EJ Kritz (50:52):

Thank you, Jim.

Jim Marous (50:53):

For being on the show today. I'd like to also thank you, my team back home at Evergreen Podcasts. Leah Haslage, our senior producer; Chris Fafalios, our audio producer, and Will Pritts our video producer. I want to also thank you to the entire team here. There aren't nine different people here, there's a couple doing a lot making sure this podcast was possible here today, I appreciate it. Thank you all.

EJ Kritz (51:16):

Thank you again.