While Brian Moynihan of Bank of America (NYSE:BAC) and Jamie Dimon of JPMorgan Chase are likely in the headlines more than Jeff Bezos of Amazon (NASDAQ:AMZN), the two bankers would do well to listen closely to a few recent remarks by Bezos.
Last Sunday, CBS broadcast "60 Minutes" sat down with Amazon founder Jeff Bezos to discuss the direction of the popular retailer. News of the delivery drones grabbed the headlines, but there were three key things that other well-known, but not nearly as highly regarded CEOs could learn from the wordsof Amazon's founder.
Put customers first
"I would define Amazon by our big ideas, which are customer centricity, putting the customer at the center of everything we do..."
It isn't just retail clients that these big banks serve, but also business, corporations, and institutions. In fact, one could argue that these banks likely serve a wider and diverse range of customers than Amazon, who all have very different needs and desires. From a 15-year-old opening a checking account to a company that does $15 billion in annual sales, the biggest banks would do well to operate in a way that puts the customer first and builds loyalty.Perhaps more than any other time, Bank of America has been recently characterized by its inability to please their customers. Amazon, on the other hand, is -- in the words of Bezos -- defined by "customer centricity." Countless customers of the biggest banks are happy with their services, but there remains a loud and boisterous group that continually bemoans the inability of the banks to serve them well.
A recent study by Bain, a consulting agency, noted that, "For many bankers, the link between loyalty and financial results is somewhat unclear," but "earning high levels of customer loyalty definitely helps the cause."
Clearly, building loyalty is essential in both retail and banking.
Don't always trust the math
Jeff Bezos: In the long run, if you take care of customers, that is taking care of shareholders. We do price elasticity studies. And every time, the math tells us to raise prices.
Charlie Rose: But why don't you do it?
Jeff Bezos: Because doing so would erode trust. And that erosion of trust would cost us much more in the long term.
Running a bank is very different than running a retailer, and one cannot help but think back to the $5 debit card fee fiasco at Bank of America. Endless models in Excel were likely built out that expounded the financial benefit of the proposed fee, but you have to wonder if they truly took a step back and considered the non-financial ramifications of the potential move.
The banks would do well to occasionally remove themselves from the endless modeling that can often characterize them and take a page out of Bezos' book and consider the non-quantitative benefits and risks, too.
"We like to pioneer, we like to explore, we like to go down dark alleys and see what's on the other side."
Although at their very core, banks are very simple in that they securely hold the money of people who have it, and then lend it to people who need it, they would do well to follow Amazon and other companies down the path of innovation. Banks have done their fair share of it lately with mobile and online banking, as well as advancements in ATM technology, but as Bezos put it, "you gotta earn your keep in this world. When you invent something new, if customers come to the party, it's disruptive to the old way."
While tough to imagine a decade ago, there have been countless smaller enterprises that have begun to disrupt some of the more traditional methods of banking, and those trends will only likely be exacerbated in the coming years. Think of credit card terminal Square helping revolutionize the payment industry, the growth of PayPal showing how ready customers are to make changes to the way they interact with their money, as well as countless others. Banks will need to stay on top of the technological advances to remain at the forefront.
Jeff Bezos has successfully turned Amazon from a garage-based book distributor into one of the largest and most innovate companies in the world, and he has done so with relative ease -- so heeding a few of his core principals would likely benefit Brian Moynihan, Jamie Dimon, and many others along the way.
Fool contributor Patrick Morris owns shares of Bank of America and Amazon.com. The Motley Fool recommends Amazon.com and Bank of America. The Motley Fool owns shares of Amazon.com, Bank of America, and JPMorgan Chase. Try any of our Foolish newsletter services free for 30 days.