The Bankwatch

Tracking the consumer evolution of financial services

Archive for the ‘Customer experience’ Category

Wells and Wachovia is a much better arrangement


A pleasant surprise this morning to read that Wachovia is being wholly taken over by Wells. 

Wells Fargo in a Deal to Buy All of Wachovia | NY Times

Wachovia’s deal with Wells Fargo will further concentrate Americans’ bank deposits in the hands of just three banks: Bank of America, JPMorgan Chase and Wells Fargo would control more than 30 percent of the industry’s deposits. Together, those three would be so large that they would dominate the industry, with unrivaled power to set prices for their loans and services. Given their size and reach, the institutions would probably come under greater scrutiny from federal regulators. Some small and midsize banks, already under pressure, might have little choice but to seek suitors.

This is good for two reasons imho. 

  1. It provides Wells greater scale to promote their internet strategies for financial services.  As the clear leader in that area, this is good for the industry, and should make for some interesting news on this blog.  The operationally efficient and frankly boring Citi would have had the opposite effect had that deal gone ahead to break up Wachovia…  which leads to the second point
  2. Wachovia has customer loyalty, and this deal keeps the bank intact, aligns with another bank that has customer loyalty, and the combination should be even better for customers.
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Written by Colin Henderson

October 3, 2008 at 08:22

Posted in Customer experience, US

Banks | Today is the perfect day to start a blog – begin the conversation with your customers


Confidence in financial institutions has been shaken, and the rules for regaining confidence are not clear.  Part of the reason that the road ahead is unclear, is because the rules have changed.  Its not uncommon for people to suggest that banks don’t ‘get it’, however in fairness to all concerned the new rules are not always clear.

One side outcome from the financial headlines has been to isolate some clear rules that anyone can follow, including Banks.  These posts deal with some of the issues for banks, and any company to consider.  Incidentally, this is the heart of step 1 of  Web 2.0 for banks.

5 Steps: How Banks Must Regain Trust (hint: Not Via Advertising)

But some serious trust has been lost. Managing our own personal finance is one of those things that the average American feels less and less confident about. Most of us have no choice but to surrender our trust to financial experts and institutions.

And this from my own contribution over at thebankwatch.com.

“Stop reinforcing the idea that bank leadership is out of touch with reality by delivering your same “plan for retirement” ads”

The main page is running their (AIG) latest ad here, and it speaks about ‘what we see’, has photo’s of football players, and is generally a typical wealth management type ad.  … If I had an AIG policy, what are you doing for me – is my policy still working?  Simple basic comments addressing what people are actually thinking.  This is what people expect and what social media mean.  Talk to people and listen to people.

In the ’5 steps post’ John speaks about 5 rules, and here are three of them with a similar theme.

  • Stop your traditional advertising with your old campaign now
  • Whoever said corporate blogging is dead is an idiot – start a blog for godsakes
  • Listen and react to your customers publicly

The theme here is simple.  Get personal with your customers, and get real with your customers.  Ask yourself and ask your friends.  Does the sight of football players jumping around, and other typical corporate branding exercises engender trust in a time of confidence crisis?  If a friend is have a crisis is the first thing that you would do is suggest a new paint job, or buy a new car? 

In a time of confidence crisis, the first thing to do is match the communication method, and media to the times.  In times of confidence crisis, people want to be spoken to.  They want to have a conversation, ask questions get answers.  In fact as you follow this theme along you will see that this is not just in a time of confidence.  This is something to expressly do at all times – because at any given time someone is having a financial confidence crisis and needs re-assurance.   This football player ad don’t help those people at that moment.  They want … a conversation. 

Something to try Mr financial services executive:

Adopt the persona of a customer – read a few headlines in the business section …. close your eyes … now go to your web site – how does it feel?

Written by Colin Henderson

October 1, 2008 at 12:41

Is your Bank properly aligned to the new competitive threats | Case Study – Microsoft


Many of us complain about Microsoft, but this Arrington post at TechCrunch caught my attention because it highlighted larger picture of the environment of the company that appears not to see the competitive forces surrounding them.

Microsoft Annual Report

To sustain the growth of our Server and Tools business amid competition from other vendors of both proprietary and open source software, our goal is to deliver products that provide the best platform for network computing – software that is easiest to deploy and manage, and that is most secure – with the lowest total cost of ownership.

# of mentions:

linux – 9

Open source – 1

Live™ – 22

Business Description:

Client – Operating Systems

Our operating system products compete effectively by delivering innovative software, a familiar, easy-to-use interface, compatibility with a broad range of hardware and software applications, and the largest support network for any operating system.

Server and Tools

We believe that our server products provide customers with advantages in innovation, performance, total costs of ownership, and productivity, by delivering superior applications development tools and development environment, compatibility with a broad base of hardware and software applications, security, and manageability.

Online Services Business – includes Search, Live, Hotmail

We believe that we can compete effectively across the breadth of our Internet services by providing users with software innovation in the form of information and communication services that help them find, discover, and experience what they want online and by providing merchants with effective advertising results through improved systems and sales support.

Microsoft Business Division – includes Office, Sharepoint

We believe our products compete effectively with these vendors based on our strategy of providing interoperable, adaptable solutions that work well with technologies our customers already have.

Entertainment and Devices division

We think the Xbox 360 is positioned well against competitive console products based on significant innovation in hardware architecture, new developer tools, expanded revenue sources, and continued strong exclusive content from our own game franchises such as Halo.

In reviewing the five business divisions and their comments on competition, a couple of things stood out:

  1. they do a good job at summarising the breadth of competitors
  2. the comments on Microsoft’s strengths relative to the competition (shown above) are less clear.

Relevance to Bankwatch:

The general assumption amongst commentators today is that Microsoft is not well placed in Browser, Search, Online Advertising and future shifts of enterprise office applications into cloud computing environments.  What struck me in this brief review is that challenge is spread across three divisions, Client (Browser), Online Services Business (Search, Advertising), and Microsoft Business Division (MS Office).  This may seem rational at first because the nature of search/ advertising is different than office applications … or is it? 

I look at Google Apps, and Gmail, for example, and search is a key component of both.  Yet the Microsoft Search team are in a different team than the Office group.  But the real stunning point is that the Internet Explorer Browser, the fundamental requirement for all the pieces is alone in the Operating System division! 

This is an organisation destined to fail, because the components for success are not aligned.  Why am I commenting on this here, apart from the fact I care about Microsoft?  How well is your Bank aligned for addressing the components of future success?  Lets look at some Banking examples to wrap this up:

In your Bank …

  1. who owns social media ?
  2. who owns advertising?
  3. who owns customer experience
  4. who owns the web site – public
  5. who owns online banking?

then .. in your Bank …

  1. who is thinking and planning social media ?
  2. who is thinking and planning advertising?
  3. who is thinking and planning customer experience
  4. who is thinking and planning the web site – public
  5. who is thinking and planning online banking?

In times of disruptive competition, its worth looking at the world as others see it, versus how the old organisation sees it.

Written by Colin Henderson

September 14, 2008 at 15:10

Banks have to understand the ‘cloud’ and solve their security concerns


The latest report from PEW offers Banks something to think about.  The reality of cloud computing already exists, with a clear majority of internet users taking advantage of the convenience of cloud computing.

PEW – Use of Cloud Computing Applications and Services

Some 69% of online Americans use webmail services, store data online, or use software programs such as word processing applications whose functionality is located on the web. Online users who take advantage of cloud applications say they like the convenience of having access to data and applications from any Web-connected device. However, their message to providers of such services is: Let’s keep the data between us

image

And while the usage of cloud computing is heavily skewed to youth, it is still heavily used by 50 and above.

image

However the most important point in the report should be lost on no-one.  The reason people use them is nothing more esoteric that convenience.

image

That’s convenience that can be summarised from three key aspects.

  1. Easy to use
  2. easy to share
  3. Information is not lost in event of computer failure

The corollary to #3 is that people trust cloud computing.  Speaking personally, the number of times I have had to change laptops, has been dramatically simplified because of the cloud.  Another example of convenience is cross devices.  I have been in a meeting, and needed some information, with no laptop or wireless connection handy.  I can search my gmail from the Blackberry gmail application.  The implication of my information being in the cloud is that its simply retrievable anywhere.

Another example:  At CommunityLend we are building an application with developers and editors in multiple locations and timezones.  With the use of Github, we are able to maintain version control, yet share an entire application with everyone working locally on the latest version, without concern for overlapping versions.  Take that scenario, and apply to business documents.  Establishing true version control, and maintaining convenience is hard, and the future of productivity for business users must be in the cloud. 

Relevance to Bankwatch:

For consumers, cloud implications for their financial data might be:

  • use of wesabe or mint
  • how about an open API for online banking that negates the need for customers to provide their usernames and passwords to other services

In other words Banks have to get their head around the cloud, and solve their security concerns, not hold them up as roadblocks.

Written by Colin Henderson

September 13, 2008 at 15:57

Retailers have improved the online shopping experience as far as they can


Once in a while Doc Searls comes up with a classic statement, and this is one of those [emphasis mine]. 

The buyer’s envelope, please

In the meantime, consider this thesis: Amazon and other excellent online retailers have improved the online shopping experience as far as a retailer can. Yes, there is always room for improvement, but there is only so much improvement you can carry out only on the sell side, even if you’re equipping buyers to do a better and better job. At a certain point the improvements need to happen on the buy side. You need better buyers, not just better sellers. You need to improve the tools available to buyers — tools that help buyers with all sellers, and not just within each seller’s walled garden or silo.

Therefore… At a certain point the problem is no longer scale but scope.

This is the argument for Vendor Relationship Management

Written by Colin Henderson

September 11, 2008 at 00:02

Google’s legal counsel exhibit good internet practice and responsiveness


What an good example of responsiveness and openness from Google’s legal counsel.  Chrome is their new browser that was released 2nd Sept, and here on 4th Sept they are updating the terms of service in response to users.

The Official Google Blog

Whenever we release a product in beta as we just did with Google Chrome, we can always count on our users to come up with ways to improve it. This week’s example: several eagle-eyed users and bloggers have expressed concern that Section 11 of Google Chrome’s terms of service attempts to give us rights to any user-generated content “submitted, posted or displayed on or through” the browser.

Relevance to Bankwatch

Part of being effective as an internet company relates to this type of responsiveness.  A typical Bank approach would be to review this for weeks, and make the changes quietly. 

Note the blog post is issued by Mike Yang, Senior Product Counsel – a lawyer no less!

Written by Colin Henderson

September 4, 2008 at 20:05

The power of internet, and drivers of change


Internet has flattened old hierarchies, made information freely available, and eliminated distance. This is a revolutionary driver of customer expectations, and customer buying methods. It has also had the impact of opening previously closed kimono’s and exposed old style advertising for what it is … management of peoples opinions. Internet has allowed people to form their own opinions, and act on them.  That empowerment is fundamental to many changes we see now.

One market driver is therefore ‘customer empowerment’.

Another driver, comes from the way customers are continually required to manage their own affairs, at the ATM, the pin pad, online banking, bill payments, office card access, airport check in, car rental drop off, quick hotel checkout, travel booking. This frequency of self service is now pervasive and required several times daily for everyone. Organizations have become impersonal and are represented by their self service touch points. Self service has been underway for a long time, and internet has only sped up that process for Banks’.

Customers appreciate self service, but the sheer pervasiveness of it, means customers are continually, comparing and evaluating it. Without realizing it, customers are comparing your bill payment web process flow, to the Hilton quick check out, the credit card pin pad machine to your ATM, etc etc. People do not interact with products; they interact with self service touch points, and that is where the value is experienced, or value is lost.

So our other main driver is the advent of ‘the experiential economy’.

While Banking has benefited from technology advances in information management, and elimination of human processes, it has absolutely not addressed these drivers.  Bank motivation has been entirely financial driven by the vagaries of the quarterly announcements and the impact on stock prices.

Banking has benefited from detailed analysis of customer behavior allowing enormous profits on credit cards through targeted marketing, and portfolio management of card holders supported by high interest rates.  However banking has suffered from having to bear the additional costs associated with the new technologies, and in particular the plethora of new channels, including direct mail, ATM, telephone banking, online banking, and disruption in traditional marketing channels.

Relevance to Bankwatch

How has your Bank adapted to customer empowerment within the online experiential economy?  This would involve re-thinking marketing tactics, site design, and even branch personnel training and tools.

Written by Colin Henderson

September 4, 2008 at 15:03

How can your Bank help with the other 95% of a customers mindshare relative to their money


After the previous post, thought I’d check out Andera, the service provider for those online account openings.

The graphic below from their site is the classic view to which all Banks with an integrated multi channel strategy aspire … ie almost every Bank.

Andera Corporate Web Site

The Andera platform offers financial institutions an end-to-end solution for online account opening and funding.


The Andera platform is accessible everywhere – to tellers, call center representatives, Website visitors, and more – on an on-demand, as-needed basis.

It got me thinking about whats missing in the picture. This picture [sorry Andera] is what bankers expect to see, but is dead wrong.

Relevance to Bankwatch:
The view above is 100% bank centric. It accurately depicts the activities customers undertake at the Bank, but those activities only account for what … 5% of the customers interactions with their money?

A more complete view would require not just web, branch and call centre, but also:

  1. debit card purchases
  2. credit card purchases
  3. spending pattern analysis and advice
  4. account alerts to mobile
  5. messaging between bank and customer
  6. new service notifications, and sign up or opt out
  7. bill payment and management
  8. etc etc

These items and the ones I missed account for the other 95% of a customers mindshare relative to their money. How can your Bank offerring help with that experience?

Written by Colin Henderson

July 30, 2008 at 22:25

Financial Services in 2010 – Deloitte | Review and analysis


Thought provoking and well prepared new report from the prolific team at Deloitte. Following is a brief summary and analysis of the report, then my take on the conclusions. [hint: no-where in this report does the word internet or social media appear - is that right or wrong?]

Financial Services in 2010 – Deloitte Touche Tohmatsu [produced June 2006]

The worldwide market for financial services is evolving rapidly, and is likely to look very different by the year 2010. This study from Deloitte Research identifies major market drivers and operational challenges that financial institutions will likely face over the next four years and pin-points the strategies and practices recommended to create the “Hallmarks of Success.”

Hallmarks of Success
These are characteristics Deloitte Touche Tohmatsu (DTT) expect to be exhibited by the winners in 2010:

  1. Global markets and a business model to match
  2. Mass efficiency and focussed premium service
  3. Consolidation (mergers) with a purpose
  4. Winning the struggle for growth through stronger customer relationships
  5. Transparency and compliance as a performance springboard
  6. Cracking the IT value code

Market drivers

  1. New asset classes
  2. Aging population
  3. Payments
  4. Emerging markets

Some key quotes:

  • on customer retention and growth: successful organisations will embed innovation into … strategy, processes, people …
  • on transparency and compliance: .. using transparency and compliance as a way to win hearts and minds of investors
  • on general observation: we expect evolutionary progress … unlikely to see revolutionary change … highly regulated and high barriers to entry
  • on market driver – new asset classes: the major impact of new asset class firms is likely to be on the business models of traditional capital players
  • on market driver – aging population: .. large influx of retirment related funds .. people who neglected their nest egg trying to catch up … seeking higher than average returns
  • on market driver – aging population: next wave of retirees .. more
  • will the consumer identify their relationship with the FI as peer to peer? [Anyone from Deloitte care to explain this one further?]
  • On market driver – payments: each market area of the financial services marketplace has its won separate infrastructure .. plumbing is duplicated .. opportunity to eliminate or truncate paper
  • on market driver – emerging markets: exportable, repeatable model
  • more top performing FI’s need to commit themselves to enhancing customer experience through service innovations .. even where the cost is high [example Commerce Bank - 30% annual growth / exceptional service/ below market returns offered on products]

Summary:
DTT see a shift to payments and away from product. Product margins in traditional products will continue to become thinner, with greater competiion for yields. The markets will be awash with boomer money, and this will both force competiion for returns, and development of new assets classes that offer better returns.

People still need to move money however, and the focus on payments and revenue from that source, as well as eradication of duplication and costs will be a focus.

The few, and getting fewer big Banks (DTT expect to see 700 banks disappear worldside by 2010) will require globalk scale to achieve growth targets.

Relevance to Bankwatch:
I see the market drivers as a mix of drivers and outcomes:

  1. New asset classes – outcome
  2. Aging population – driver
  3. Payments – outcome
  4. Emerging markets – outcome

This where I get on my internet bandwagon. Internet changes everything, and now that it is pervasive it is easy to forget that. Internet has flattened old hierarchies, made information free, and eliminated distance. That is a revolutionary driver of customer expectations, and customer buying methods. It has also had the impact of opening previously closed kimono’s and exposed old style advertising for what it is … management of peoples opinions. Internet has allowed people to form their own opinions and that empowerment is fundamental to many changes we see now.

I would respectfully suggest one market driver is therefore ‘customer empowerment’.

Another driver, comes from the way customers are continually required to manage their own affairs, at the ATM, the pin pad, online banking, bill payments, office card access, airport check in, car rental drop off, quick hotel checkout, travel booking. This frequency of self service is now pervasive and required several times daily for everyone. Organizations have become impersonal and are represented by their self service touchpoints. Self service has been underway for a long time, and internet has only sped up that process.

Customers apppreciate self service, but the sheer pervasiveness of it, means customers are contunually, comparing and evaluating it. Without realising it, customers are comparing your bill payment web process flow, to the Hilton quick check out, the credit card pin pad machine to your ATM, etc etc. People do not interact with products; they interact with self service touch points, and that is where the value is experienced, or value is lost.

So my next driver is the advent of ‘the experiential economy’.

Why are customer empowerment, and customer experience important? I believe they help us understand why the items I marked as outcomes above.

Payments come across as obscure to many, but if we think of them not as SEPA, or as interchange, but as customer experience, the complexity falls away. If ever anything is crying for innovation it has to be payments.

Similarly the need for new asset classes is driven by a surplus of worldwide liquidity seeking higher returns, but those new classes do not just apply to the hedge fund type money referred to in the report. In fact the report mentions the current vlaue of hedge funds at $700 Bn, and 15,000 funds so its relatively small. The real money, and the war for Banks will be in the new asset class expectations of the mass affluent (as the report recognises). Their experential needs must be taken into account, and that includes how they expect to interact with their FI. I note one item mentioned in the report ‘peer to peer’ [refer above] and I suspect that while it was not discussed, one of the authors may have intended this point.

Anyhow, great report, worth taking the time to read and digest, and hope this was of some value.

Written by Colin Henderson

July 18, 2008 at 11:33

Citi to develop a new integrated technology infrastructure


Another signal of big [and needed] changes at Citibank. Their old strategy was highly collegial and permissive of disparate groups autonomy and individual projects. That is changing reflecting the obvious that its hard to be customer centric to the external customer, if you are not aligned that way internally.

Finextra: Citi hires Lippert to overhaul IT operations

Kessinger says Citi is looking to Lippert re-engineer the bank’s creaking IT infrastructure “by developing technology and operational platforms that are robust, agile, and cost effective. His role will involve the design and deployment of globally integrated solutions that are client-centric, and will reclaim Citi’s position as an innovative leader in the financial services industry.”

Written by Colin Henderson

July 6, 2008 at 21:35

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