The Bankwatch

Tracking the consumer evolution of financial services

Archive for the ‘CRM (Customer Relationship Management)’ Category

All banks have the same strategy | what happened to the Starbucks strategy?

It was refreshing to read this piece, and takes us exactly where innovation in financial services ought to be going – the new (old) grand ideas.

Starbucks should start banking | FT

What if Starbucks opened an online-only retail bank offering competitive deposit rates and a modest range of loans and mortgages? It could do that by partnering with a finance company such as ING, which has the appropriate banking licences.

All it would need to do is install ATM machines in its outlets, which would involve investing some money but would allow it to get more out of its existing branches.

National supermarkets in the UK, such as Sainsbury and Tesco, have opened retail banks and placed ATM machines in their branches, but there is no national grocery chain in the US with a comparable reach. Even Wal-Mart lacks outlets on most urban high streets.

I recall the brainstorming sessions in the 90’s at the bank, where the discussion about competition arose not from other banks but from:

  • Starbucks levering their distribution and cards as a bank
  • ebay or Amazon offerring a credit card
  • internet only banks – ING was on the horizon – mbanx and Wingspan already out there
  • whether to join the S1 online banking commoditised platform
  • offer an All in One account that pulled together lending and deposits into one account
  • how to deal with the role of aggregation- offer it, join it, or ignore it
  • bill presentment – same idea – offer, join or ignore
  • shift in business model from generalist to:
    • product (manufacturer) – offer loans and deposts through others channels
    • distribution (channel) – sell products & services of others – Open Finance (Forrester)
    • segmentation (customer type)  – focus on a niche market, although most interpreted as the generalist, all things to all market which is where most banks ended

Relevance to Bankwatch:

The problem today is that Banks are on strategy defined 6 – 8 years ago to bricks and clicks, focussed on customer retention and wallet growth.  Customer Relationship Management (CRM) became the strategy de jour.  Who would claim that has worked?  Seibel disappeared inside Oracle for a reason.

Banks are all on the same strategy, focussed on mortgage as the entree, and upsell with other services later.

There is nothing out there that aims at shifting the balance of share of market in a substantial way.  This is not about acquisition or mergers – we have done that, and “too big too fail” is too fixated in everyone’s radar now, or until capitalisation is fixed, in any event.

No, this is about business model shifts … shifts that would have a target of:

  • double digit percentage shift in share of payments,
  • extraction of share of deposits and payments from an existing industry (the Starbucks example),
  • exponential elimination of costs relative to competition
  • focus on what your are good at and eliminate the stuff you are not good at

Business models –

Mr Bank Chairman …  what is your business model, and how is it different than the competition?

Supplementary question –

Who is your competition?  Do you lost sleep over Citibank and Wells, or Tempo and Wesabe?  Does your answer worry you?

PS …  as I finish this post the most telling thing is something I have become acutely aware of.  The blog categories I set up 5 years ago no longer apply, until I do a retrospective post such as this.  Either those were really bad ideas, or ideas yet to come.

Are ad networks really the endgame?

We have had all the ballyhoo about FB’s new ad network, and now MySpace is predictably moving ahead too.  I say predictably because clearly the economics of internet is destined to lever off advertising.  Online advertising spend is predicted to double by 2011.  However I continue to question whether Ad networks will be the right deployment for online advertising.

I see very few ads.  Google Apps (gmail) turns of Ads, and gmail spam filter eliminates most spam (+95%)  The Ad blocker extension in Firefox eliminates the rest of the ads from web pages.  I might be a little unusual there, but I like it.  Those who don’t seek out that approach, must contain many who are just not aware those tools exist.

News Corp (NWS): Launching An Ad Network, Too – Silicon Alley Insider

Easy enough to pooh-pooh the move as me-too. As Saul Hansell points out, ad networks now strike everyone as a sure-fire winner, even though only a few are likely to co-exist with Google in a few years. But FIM’s MySpace property alone gives the network-to-be a shot.

And if/when it can be combined with Rupert Murdoch’s other Web properties — most intriguingly, of course, the Wall Street Journal and Dow Jones — it could be a home run.

Clues from Cluetrain

The Cluetrain Manifesto, written in 1999, holds clues to the real future, and we can see it being acted out now. 

Markets are conversations.  Cluetrain said this in the theses:

  1. There are no secrets. The networked market knows more than companies do about their own products. And whether the news is good or bad, they tell everyone.

  2. What’s happening to markets is also happening among employees. A metaphysical construct called “The Company” is the only thing standing between the two.

Eight years later, 1. is now well underway.  The notion of customers speaking about products online and sharing that information exists, and as social networks evolve no doubt that trend will continue.  Tara wrote today about Get Satisfaction, a new service in beta, that exemplifies the conversations about products. 

Meantime the employee conversation in 2. is no-where yet.  Enterprise 2.0 holds some of that promise, but the big service providers, Banks, Telco’s, retailers, are still pretty much embedded in telephone call centre land, based on principles established in the 80’s and 90’s. 

“Most corporations, on the other hand, only know how to talk in the soothing, humorless monotone of the mission statement, marketing brochure, and your-call-is-important-to-us busy signal. Same old tone, same old lies. No wonder networked markets have no respect for companies unable or unwilling to speak as they do.”
Extract:  Cluetrain Manifesto

But the actual trends towards 1. is promising for the full evolution of Cluetrain.  Sure, Corporations are turning off access to FaceBook and webmail, but that strikes me as a sign that the dam is bursting.  Who will be be the first large Bank to engage with an Enterprise information sharing capability?  [And no, the CEO blog, monitored by Cororate Communicataions does not count.]   One that permits employees to speak watch and speak about current customer trends and needs.  The final evolution would be those informed and empowered employees speaking with educated and empowered customers.  

Companies that don’t realize their markets are now networked person-to-person, getting smarter as a result and deeply joined in conversation are missing their best opportunity.

What intrigues me, is the role of advertising in this people networked future.  With everyone, both employees, and customers, approaching ideal information on quality and scope of products and services, the role of advertising to push product is less relevant, and in fact just plain annoying.  

  1. We are immune to advertising. Just forget it.

  2. If you want us to talk to you, tell us something. Make it something interesting for a change.

It presents a somewhat idealistic view of the future, but it makes sense. Empowered customers, and employees, combined with tools that support them.  While the old way relies on advertising to generate awareness of products and services, we will have tools that follow the Vendor Relationship Management (VRM) approach.  VRM is the converse of CRM.  CRM places management of customer contact in the hands of the Corporation.  VRM reverses that, and places the management of the Corporation(s) in the hands of the customer.  

In a VRM world, sales calls would occur when the customer initiates it, overtly or otherwise, but entirely based on the customers preferences;  and those calls would be much more productive because of relevance, and informed conversations.  

Sales calls outside of VRM would be screened out by people who adopt the VRM concept.  

Oh well, we can but dream.  Meantime, which Banks are willing to bet that they don’t need to get engaged in use of the tools associated with Web 2.0.  Thats the bet that 95% of Banks are making right now.

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Written by Colin Henderson

November 10, 2007 at 01:31

AdBlocking – evil or genius?

I was more than a little shocked to encounter this post on the apparent evil of Adblock Plus. [disclosure; I have used Adblock then Adblock plus for years]. A few months ago, I was shocked to see FaceBook on a colleagues laptop, with ads all over the place …. I had no idea!

Mark Evans – The Evilness of Eating Your Cake and Having it Too

Anyone who thinks otherwise is fooling themselves. Any anyone using Adblock is a fool because they clearly are missing the big economic picture. If you believe in Web 2.0 and/or if you believe in the concept of free, Adblock is pure evil.

But seriously … the argument goes, that the web economy is based on advertising, therefore if I kill the ads, then I am undermining the web economy. This argument is flawed. It misses the point that ads pissed me off for years (since 1994) until I discovered pop up blockers, Firefox, and finally Adblock. I never clicked on ads, and I do NOT subscribe to the future web economy being predicated on advertising. And in the new world, its all about …. ME.

Last time I checked, its a customer centric world we are moving into, and if I don’t like ads, I can zap them in my PVR, and block them in my browser. On a deeper level, I don’t like ads because they are not relevant. Relevance means, I need something, and that the timing is right.

Interruption advertising is well known in television, radio, and newspapers. Thats not a good reference. The web economy is nascient and evolving. Just as we have the Toronto Sun chock full of ads, and occasional news, alongside the Globe & Mail, with a more balanced approach based on product value, I see the web evolving similarly. Just because Google and adwords rule the day today, does not mean that will live forever. Example – Vendor Relationship Management (VRM).

My web is not based on advertising. It is based on value to me. I am a person … find me.

For more, read Nicholas here, or Doc Searls, that I quoted earlier.

Sorry Mark ….

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Written by Colin Henderson

September 11, 2007 at 23:24

Transaction hijacking – cheaper alternatives, at point of purchase

This article is about Google, but the underlying thread is interesting, and relevant for Banks. Just when you thought it would be great when customers could locate your bank/service/product using search, after your mammoth efforts at successful Search Engine Optimization (SEO) up pops a little helper to suggest your offer might not be the best.

Thats the promise of new technology from Autonomy, and inferred by Google.

Autonomy, the UK-based search company is also developing technology for “transaction hijacking”, which monitors when internet surfers are about to make a purchase online, and can suggest cheaper alternatives. Although such monitoring could raise privacy issues, Google stresses that the iGoogle and personalisation services are optional.

This just reminds me, that one approach, such as SEO, is never enough. Constant innovation within the internet space, and improvements to Customer Relationship Management (CRM) to incorporate online and especially email, is essential to ensure your customers want to think of you. I am not talking about spamming here. I am thinking of being proactive and appropriately re-active with customers at those moments of truth, to turn them into yourBank advocates.

Written by Colin Henderson

May 24, 2007 at 15:21

The Bank of the Future | some thoughts on the world of cross-channel sales and marketing

 Just prior to the recent NetFinance conference I was lucky enough to be asked by Dan at eStara to answer a few questions, which were posted on their blog.  Its been a couple of weeks now, and thought I would place them here too. 

Meantime please check out eStara and their blog.  They do a good job at covering many aspects of multichannel development, and not getting caught up in promoting their own products, which incidentally are good, as I can attest from personal experience. 

Anyhow here is the email interview we did, and I relate this to my earlier post on Bank of the Future.

This week, hundreds of financial services executives from all over the world will gather in Phoenix for the 6th Annual Net.Finance Conference to discuss issues pertaining to the marketing and sale of financial products and services. One of the speakers at this year’s event will be Colin Henderson of The Bank Watch blog. Colin, who was formerly director of channel optimization at Bank of Montreal, will be presenting at this year’s conference on Web 2.0, and how banks can incorporate new media and technology to enhance their customer interactions. Recently, we asked Colin a few questions about what banks will be like in the future:

eStara: In your blog, The Bank Watch, you state that the channel efforts of banks ought to be focused on Internet, and then levered across other channels. Explain why you feel this way, and how banks are handling this transition to the Web lifestyle?

CH: This is way to start thinking about things differently, to catch up with customers, yet still maintain old loyalties. Listen, I know that Banking is all about risk aversion. Its about keeping multiple stakeholders happy, both inside and outside the Bank. Generational change is not new, but the rapid rise of internet, means this generational shift that we are going through is new. Telephones took 38 years to reach 10 million mass market customers, cable TV 25 years … www took less than 5. When we overlay that pace of change with GenX/Y/M folks you have an instantly trained generation. That’s a first. Their expectations are not like previous generations (including me). So we have to learn from them, listen to them and be ready for them. By 2011, the net generation will comprise 50% of the working population – that’s only 2 years away in planning/implementation, and execution time.

So, back to the question … by building for internet now, and adapting as required for others, we are aligning the organization for customer expectations.

eStara: How do you feel banks are integrating the online customer experience with their call centers and branches?

CH: With Call centres, I think pretty well. Most are still wrestling with organisation, do you put email people with telephone people, with click to talk people etc, but that’s a healthy discussion. Branches are different .. they are generally still in 1985. Part of this is regulation, and concerns for privacy and confidentiality. The irony is that customers and branch staff are corresponding about banking using email, whether its allowed by Bank rules or not.

eStara: From a customer service and support perspective, how do you think the banks of the future will meet the needs of consumers?

CH: I will take that as ‘should’ meet the needs, because frankly some will and some won’t and will suffer accordingly. Broadly, banks’ will do a better job at being there all the time, as required for their customers. I recall once, an old visionary Banker talking about the ideal future Bank. He said its like a genie in a bottle, your own personal genie. Banking is boring and being in the bottle most of the time is just fine. But at that moment, in a shop, purchasing online, after a phone call – whatever the catalyst, if you need your Bank, you need them right now. It goes from not even on your mind, to instant need. So the good banks will be there, via wireless, online, phone to a certain extent, to provide an answer. Some say this is too expensive, but to me that’s an execution issue.

eStara: You’ve worked in banking in the U.K., Canada and the U.S. Are there any unique challenges in each country? What are some of the shared challenges?

CH: North America is very conservative, conventional. I attended a conference in Geneva in February, and I have to say the interest level in new ways of doing things, including particularly financial services is very high. Its a space I am watching closely.

As a final note, I wanted to mention Web 2.0 and blogs, and before everyone’s eyes glaze over – there are new opportunities there now for Banks to experiment, at low cost, with alternative methods of engaging customers, and consumers. The immediate reaction is often, “It’s too high risk and what about our brand image?”

But that train has left the station … people are already talking about your Bank online. If you do a Google blog search on your Bank, its remarkable … I did one just as I was typing this, and took something at random, on page 10 of the search. It was ‘Dave’ writing about the families of deceased soldiers in Afghanistan losing life insurance, because a war clause invalidated mortgage insurance:

Here is a snippet (Feb 2007):

…she was initially told she would likely not be able to collect on her mortgage insurance because of a war exclusion clause.

She pursued the issue with officials at the Bank XYZ, who issued the policy near her home at New Brunswick’s Canadian Forces Base Gagetown, and was told they’d look into it.

While awaiting an answer, Customer, who has two children under the age of 15, was forced to continue paying her mortgage. Four months later, she says the bank revealed it had no such exclusion clause and would begin payments.

My point is not the specifics here, horrific as they are. The point is that these discussions are occurring online. There were three comments on that blog post, but none from the Bank in question … what a fantastic opportunity, to right a wrong … missed, gone forever. That customer could have been the most loyal customer advocate for that Bank…now how many people will she tell the opposite? Meantime the customer communications group believe that the televised story earlier that week, is over, and phew!, we managed our way through that will minimal press

Source: Thought Leader Q&A: Colin Henderson, The Bank Watch, on The Bank of the Future – Multichannel Musings – Insight into the world of cross-channel sales and marketing


IBM – Unlocking client advocacy in Canadian retail banking

 New piece of research and analysis from IBM, that may be an update on an earlier one, if I recall.  It talks about the lack of advocacy within Canadian Banks’ customers.

Only 27% of Canadian customers are advocates of their banks, compared to 34% for Credit Unions.  That’s a massive gap.

Building the base one client at a time through cross-sell, retention and new customer acquisition is a top priority in nearly every retail bank’s agenda. However, many banks have yet to identify the right segment-based strategies, marketing and sales programs, employee incentives, and process and technology improvements to produce higher returns.

Despite significant investment, the largest banks are not well positioned to grow their client bases: our research shows the majority of clients will be reluctant to commit to a deeper relationship as a consequence of their cumulative experience with the bank.

Source: IBM – Unlocking client advocacy in Canadian retail banking: The client focused enterprise – Executive briefs

Full report (pdf)

What intrigued me in particular, is their analysis that Banks’ ignore the emotive aspect of customer relationships.

This is particularly interesting in that this gap could be (partially) addressed with online, and online social initiatives.  The more customers select the convenience of online banking, the more they are dis-connected from the human side of the Bank.  Banks choose to address this gap with Branch based initiatives, yet customers online don’t want to be in a branch, and are not in the branch.

Relevance to Bankwatch:

Online service, and customer relationship management for online customers cannot be addressed successfully where customers are not – in the branch.


Written by Colin Henderson

March 22, 2007 at 14:29

Chips talk to you as you walk around Ginza

 This fascinating experiment is indicative of the real networked future, when buildings and companies will talk to you as you walk by.  This is makes VRM the more essential, because I don’t want to be bothered by every building as I walk by.

TOKYO – Downtown strollers looking for directions, store guides or historical tidbits will be able to get an earful without talking to anyone – thanks to 1,200 computer chips embedded around Tokyo’s Ginza shopping district.

The information can be heard through earphones that pick up signals from chips stuck in cement, lampposts and subway-station ceilings. The 1 billion yen ($8.7 million) government-backed Tokyo Ubiquitous Technology Project spans several blocks.

University of Tokyo professor Ken Sakamura says the effort gives a glimpse into the future, when such chips will become so widespread that government offices and private businesses will use them to zap information to passers-by.

Source: Chattering chips enliven Tokyo stroll – Yahoo! News


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Written by Colin Henderson

March 7, 2007 at 00:27

What do customers expect of Banks?

 Ron has a deep understanding of Banks, and Bank customer research.  He discusses the Net Promoter Score, and finishes with three types of customer/bank relationships, based on his experience. 

What is interesting here is the reality that most/all Banks seek a ‘relationship’ with their customers, yet customers have different needs.  As a Bank customer, do you seek a ‘relationship’ or something different, and more practical.  Here are Ron’s three types.

  1. Interpersonal excellence
  2. Advice and guidance
  3. Operational excellence

Source: The ONE Question To Ask Customers « Marketing ROI: Whims from Ron Shevlin

The only qualification I would place here is that customers will slide between those three.  I think customers need all three, but not at any one point in time.  If they are buying a home 3. is the need, but if they inherit money, then its 2.  1. is more personal, and may apply to a group of customers just because they like/ need that.

Anyhow, I buy the point the Bank segmentation is Bank focussed, and fails to recognise how customers need Banks.


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Written by Colin Henderson

February 15, 2007 at 23:26

Update; the role of email for Banks

email and its role hit me twice in the last few minutes, so thought I would update the things I have seen lately. 

William over at VanCity asked about the role of email.

I don’t pretend to know it all, but the reading and examples I have seen, point to email as a relationship tool. Pertinent communication that is useful to the receiver. Anything marketing related at all should still meet those criteria, but always with the opt in/out preferences in the hands of the customer. I’ll do up a post with the links I have seen on this, including a good one I read just a few minutes ago.

In terms of email as a marketing/ acquisition tool, clearly the landscape has changed inexorably.  This interview with Justin Cook from BorderWare Technologies Inc covers it well, and he puts it this way:

Marketers as understanding that ‘batch and blast’ tactics just don’t produce the same return as highly relevant targeted emails ‘conversations’

He talks about email “marketing” as appropriate for subscribers, and absolutely not associated with rented lists.  He speaks about the high impact of even a small number of reported spam infractions. 

He has this advice:

  1. Ask: “Who reads or will read our marketing e-mails?”
  2.  Ask: “Do they perceive value in our e-mail content, that it can actually help them perform their job better?”
  3. Build a working opt-in process, and highlight it on every page of your website.
  4. Build a working opt-out process; make sure it’s very easy to opt out if people want to.
  5. Get authenticated.
  6. Don’t spam.

Other comments on this topic here, from the same source as above, AIMS.


Here is an even more sinister reason (phishing life threats) that emails from unknown and untrusted sources are treated with, at best, suspicion.

And, final update – this excellent post from Ron sums up email and relevance to loyalty well.

Relevance to Bankwatch:

Broadly email is accepted as a relationship tool, but hated for spam.  The implication is that either the customer opts in, or has an agreed relationship with you that implies email is acceptable.


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Written by Colin Henderson

January 17, 2007 at 16:16

Microformats as information brokers – the intelligent agents to support VRM

I have been thinking a lot about Vendor Relationship Management (VRM) over the holidays. Doc latched on the the concept as the the corollary to Customer Relationship Management (CRM). He spoke of VRM finally delivering the Cluetrain promise, and that got my attention. CRM places all the power in the hands of the vendor (Bank, telecom, retail store ) and that’s why you get annoying phone calls at dinner time, junk mail, or those annoying “can I put you on hold” comments while the poor call centre rep reads up on your history. CRM does nothing for you as a customer.

VRM is your software, you the customer. The concept (its just a concept right now) would allow you the customer to control your interactions, and effectively manage the vendors based on what you require. CRM allows vendors to manage you based on what they think you need, which is of course ludicrous.

However one of the constraints I see in the current thoughts on VRM is that it does not recognise how customers think. I would like to see this picture evolve to reflect the stages of customer purchasing. Consider your own behaviours. If you need a chocolate bar you go to the store with no thought and buy it. If you need a car, you go through stages in the purchasing process. So depending on what you need, and generally if you are buying it online, this will apply, its more than a chocolate bar purchase, and you want to control the entire process, not just the act of purchase.

Similarly for a new bank account, which is my focus here, but I hope this can be applied to VRM more generally. Brad and Cathy at Forrester have done much research on this topic, and come to realise that the web highlights the way that people think. In the old world it appears that customers walk into a Bank to buy a bank account. This doesn’t take into account the thought process and events that preceded, the discussion with family members, and friends, the picking up of brochures from several banks. In the new world, these events are exemplified on the web, including reading (brochures), discussion and email, (family and friends), web browsing (thinking).

Forrester concluded in the case of mortgage purchase there were several general steps:

We can abstract these steps into five general steps:

  1. research: sources, research product types
  2. education: the process and ways to get a loan
  3. quotes: obtain quotes, perform calculations based on the quotes. consider how it fits with customers expectations, decide what I will specifically apply for, how much, interest rate, terms required etc.
  4. apply: apply to one or more locations, and receive offers
  5. acceptance: accept one offer, and make final decision

Returning to the VRM information flow, the “request for proposal” is an amalgam of 3 & 4. In the consumers mind, these are two discreet steps. In some cases the decision will between 3 & 4 will be made almost instantaneously, but they are two separate processes. #3 is a ‘what if’ analysis, a simulation to consider life after the new service is in place (e.g., I have this great new car, but can I afford the payments, will it fit my garage, will my wife like it, etc). Whereas #4 is after the decision is made, and the consumer is ready to deal.

So thinking about how to manifest those steps online is what I have been thinking about. I recall back in the mid 90’s conjecturing during an IT strategy session, for the concept of intelligent agents, bots that would somehow (we had no idea how), scour the internet for the right service based on the customers preferences. I see VRM manifesting that concept.

Then I read some more on microformats today – (Hat tip to Read/Write, and Alex Faaborg of Mozilla) and this picture.

Link to informationBroker.jpg_large.jpg (JPEG Image, 1481×699 pixels)

The diagram is restricted to contacts, and calendar entries, but the part that caught my attention is the ‘information broker’ bit at the bottom. That information broker could represent the buying process I outlined above.

Consider the consumer who is at stage 1 of my buying process above, and he wants to buy a car. He has in mind a used model, something in the 2002 – 2004 range, and about $25,000, of which he estimates he will borrow $12,000. He instructs his financial services microformat with these facts, and as he browses, it gathers data based on his requirements. In fact, it could gather from sources without him actually visiting those sites, if he chose to instruct it accordingly.

Once he has enough information, the consumer can choose to instruct his microformat to move to stage 2, etc etc.

Part of stages 1 and 2, would include seeking advice and information from trusted social networks. Splogs need no apply, and would be blacklisted. In this view the notion of a splog black list service, similar to phishing black lists would be powerful. Trusted sources that eliminate spam/ splog information. Power would be truly transferred to the customers.

If I was a smart bank I would offer such a microformat for my customers, and it would pull in the best of breed, not necessarily my own products. Who has the nerve to try that? As a Bank I would be building trust with the consumer. If I do a good job there may be a business model there … a referral fee even?

Relevance to Bankwatch:

In this view the consumer is not restricted to Banks. Banks would have to re-architect their CRM systems to lookout for VRM requests, and recognise the stage the customer is at. But Prosper, Zopa and others will be doing the same thing, and can probably react faster than the Banks. Also, if the customer is researching (stage 1, do not press them to close the deal (stage5), or they risk losing the right to bid in future. This customer could blacklist them from their VRM tool.

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Written by Colin Henderson

January 2, 2007 at 11:20

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