The Bankwatch

Tracking the consumer evolution of financial services

The Bank as a “Friend” to your customer

 Just before Banks consider getting into blogs (with exception of Credit Unions and Wells Fargo), Steve takes us beyond basic blogs, and the new environment.  He tries to summarise the drivers behind the current shifts.

Advertising Age – The Case of the Incredible Shrinking Blogosphere

  • First, there’s the Attention Crash. The demands on our time — be they work, family, passions — are growing. Brevity rules.
  • Second, there’s the proliferation of mobile devices, which, through text messaging, encourage people to publish more often but in a far shorter format.
  • Last but not least we have social networking, which makes it easier for us to tune into “signals,” i.e., people and topics we care about, and block out noise. Content you truly care about finds you.

I buy the first two, but the third is as much an outcome as is Twitter.  While Banks must react to 1. and 2. and implications are clear, 3. still sounds like an implication to me, so what is driving it?

I respectfully suggest the third element (big things always come in three’s) is web 2.0 technology; the application internet … the shift from static web sites to online applications.  Why is that important? 

Everything today is driven by technology change and capability.  Social networks did not work 10 years ago because the technology to create them.  Social interaction within a site was limited to groups and forums.  FaceBook could not exist in 1997.  The database connections, page refreshes, componentised pages, and page speed could not happen with 1997 technology.  The latent desire existed, whether BBS, NTTP news groups, or online forums.  But the capability did not.

Lets consider my three restated drivers:

  1. attention crash
  2. mobile
  3. technology capability

These drivers bring a confluence of a need, and capability for personal focus, organisation, and control, over ones time, otherwise it is out of control.  Granted this is felt to an exponentially greater extent by early adopters such as Steve, but everyone is going there over time.

Consider the evolution of social, from BBS —> Forums —> Friends.  Thats why I don’t buy social as a driver.  It has always been there, just evolving.  It won’t evolve too much more beyond the Friend concept, near term, but it will broaden and deepen, with richer capability, and subtle connections to applications, including smart Banks’ online banking. 

Banks are obsessed with having a relationship with customers.  Why not, as a Bank, consider yourself a “Friend” to your customer(s), and the implications of that concept.  Consider it in the important realm of servicing [examples:  bill reminders, maturity dates, RM messages, financial planning].  These would make the Bank a relevant and most useful “Friend”.  Friends do not push things to each other, they just talk about them.

Relevance to Banks:
Banks need to care because they are losing peoples attention. 

  1. As financial services fragment and are re-positioned and offerred by many, the lure of the one-stop branch is just not a lure any more.
  2. Opinions and views of Banks (and everything else) is shaped online today.  When we refine that idea, the opinion source has to be within the blogging/social space.
  3. Banks have to be where their customers are.  The branch must come to the customer.

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Written by Colin Henderson

August 9, 2007 at 23:41

4 Responses

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  1. A lot of what you say here makes good sense. Unlike other streams of commerce, banking maintains a “distance” between it’s customers and maintains a relationship purely on the nature of transactions it undertakes with them.

    Yet the information a bank holds should enable it to create an incredible relationship with its clients. Yet it fails to capitalise on that knowledge because its systems are too outdated, inflexible and isolated.

    I feel that maybe the idea of a bank seen as a friend may be taking it too far, but there are lessons to be learned from the explosion of the social web networks. The direction banks have taken since the days when a bank branch acted as an autonomous entity is clearly the wrong one.

    Consider this. Once upon a time, a business man knew his bank manager personally, maybe through the local Rotary club, golf club, through his kids attending the same school or church, even. The relationship was a mix of socio-vocational commonalities. In essence, perhaps the banker as a friend as you elude to.

    Now a far more distant and clinical relationship has replaced it based on the level of funds within your account (richer=better).

    The old adage a bank only wants to talk to you when you don’t need it (ie, have a healthy financial position) is very true and acts as a barrier to a close relationship. Yet when a customer is reaching out, to a bank, the opposite is usually true.

    Banks need to use web 2 technology to mobilise and extend the reach of their relationships closer to their customers and connect their clients together, as a social network like FaceBook does. Make the relationship a mutual one.

    For example, if a bank talks to a client who is growing his business and has another client who could help that client, connect them. If the client has a son or daughter about to finish their education, see if they want to join the bank. banks should form bonds!

    Neil Robinson

    August 13, 2007 at 08:18

  2. @Neil … thanks for the thoughtful comments. At the root of the ‘friend’ idea is the basic belief that Banks’ strategies to develop ‘relationships’ is flawed. Generally, people do not want a relationship with their Bank as may have been the case 40 years ago. For those who do, there are Private Banking services available to those who qualify.
    I thought the ‘friend’ model, or even ‘casual acquaintance’ might provide a viable platform for Banks to offer cost effective service that meets the needs of the non Private Banking segment.
    As you rightly point out, Web 2.0 capabilities and some creativity, offer Banks a new opportunity here.

    Colin Henderson

    August 13, 2007 at 13:58

  3. Thanks Colin, wise and considered comments as usual. My apologies for the awful spelling and grammar in my response, I rushed it a bit as I was on my way out the door! [Ed; thanks and fixed]

    Neil Robinson

    August 13, 2007 at 15:15

  4. […] 16th, 2007 The ever pertinent Bankwatch has an interesting post on why banks need to become friends of their customers to stay relevant in an age of social […]

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