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“Own the conversation by improving the conversation” | gapingvoid

This long (8,000 words) but incredibly worthwhile post from Hugh a few days ago is a classic.  It expounds on the marketing and what it means in todays environment.  I will resist the temptation to call it new marketing or any other buzz word.  Its just a worthwhile read, and essential reading for bankers if they want to get inside the head of new marketing (oops .. I said it)

He speaks of the shift from the old way of marketing and why it no longer applies.  There are two core drivers, although one might argue they are related – the inverse of each other to a certain extent, but anyway:

  1. the invention of the internet
  2. the demise of what Seth Godin calls the "TV-Industrial Complex

The central premise is that of the “social object”. Don’t get hung up on the Blue Monster thing – its just an example.  Also i suggest you don’t read into this that it does not apply to banking, at least until you have assessed all the implications.


How does one build a useful service around social objects? Five key principles.

  1. You should be able to define the social object your service is built around.
  2. Define your verbs that your users perform on the objects. For instance, eBay has buy and sell buttons. It’s clear what the site is for.
  3. How can people share the objects?
  4. Turn invitations into gifts.
  5. Charge the publishers, not the spectators. He learned this from Joi Ito. There will be a day when people don’t pay to download or consume music but the opportunity to publish their playlists online.

Here are some examples of social objects:

  • iphone
  • Nike running shoes
  • starbucks cup
  • gmail invites (during the early days)
  • bottle of wine

But lets step back to why the social object is necessary and in the context of the shifts relative to internet and TV.

The Social Object, in a nutshell, is the reason two people are talking to each other, as opposed to talking to somebody else. Human beings are social animals. We like to socialize. But if think about it, there needs to be a reason for it to happen in the first place. That reason, that "node" in the social network, is what we call the Social Object.

Hugh says “In terms of communication, the company no longer has first-mover advantage.”  Traditional marketing wants to control the message, walk the customer through the “marketing funnel” and get them to select the optimum and hopefully most expensive product.

Traditional marketing is taking the same behaviours into the new internet space.  They have discovered bloggers.  I get emails all the time from PR folks, or from companies direct.  There are two types:

  • those trying to get to know me, and the blog purpose.  They have studied the blog, the comments and have a sense of the blog purpose.  I listen to them – don’t always agree, but I listen.
  • those that send me something that has obviously been sent to a gazillion other blogs, without context, and often not on my radar.  I ignore, and if they do it more than twice, they get ‘report spam’.  Sorry but welcome to new marketing.

Lets go to the title.  What a power statement

"Own the conversation by improving the conversation."

Is your bank having conversations with customers online?  Ask to read the email responses from your call centre.  Are they:

  1. scripted
  2. spontaneous

Read those emails as a customer – how do you react to them?

The first question you should REALLY ask yourself is:

"How do I want to change the way I talk to people?"


The definition of a social object.

The Social Object, in a nutshell, is the reason two people are talking to each other, as opposed to talking to somebody else. Human beings are social animals. We like to socialize. But if think about it, there needs to be a reason for it to happen in the first place. That reason, that "node" in the social network, is what we call the Social Object.

Now that its defined lets not forget that its not that important in and of itself.

The final thing to remember is that, Social Objects by themselves don’t matter in the grand scheme of things. Sure, it’s nice hanging out with Lee talking about Star Wars. But if Star Wars had never existed, you’d probably still enjoy each other’s company for other reasons, if they happened to present themselves. Human beings matter. Being with other human beings matter. And since the dawn of time until the end of time, we use whatever tools we have at hand to make it happen.

Relevance to Bankwatch:

I think at its basic form, the idea of the social object is to provide context for a conversation – context that works for both parties to the conversation.

Written by Colin Henderson

November 16, 2008 at 03:46

Some fresh thinking – The New American Bank Initiative (NABI)

I worry about the bailout plans led by newly famous Gordon Brown (Prime Minister UK), and which every other world leader is falling over themselves to adopt.  Such an approach is natural for Brown and his political leanings, but to see it occurring around the world to the extent it is happening is worrisome. 

That worry is exacerbated now that we see proposals to help out the auto manufacturers.  This is protectionism by another name, and will result in worse companies with worse products.  The same can be said of Banks.  How can a bank with a financial tap opened from the government be motivated by anything but keeping that tap open.  This is dysfunctional to making the service better and more attractive for customers.

So it was refreshing to encounter this thinking and the paper that makes the proposal, however its still worth digging deeper to understand if this will be better or just another way of creating dysfunctional government backed enterprises.

Forget the bailout, start over: the New American Bank Initiative | O’Reilly Radar

The bailout of the US financial system isn’t working. The government’s rescue plan has fundamental flaws, including incentives that favor the failed firms, not the country as a whole. New ideas are needed. In "New American Bank Initiative:

In this paper, we argue for a New American Bank Initiative: use the $700  billion in government funds to capitalize new banks and distribute the shares of the new entities to the American People.

These new banks would then acquire the operational and human capital  assets of failed banks in FDIC receivership

The paper goes on to outline the backdrop to their proposal.

The core issue with the current crisis is that the financial system is no longer properly functioning as a conduit of capital from savers to investment projects that generate real economic growth. The focus of every major proposal to date has been to inject liquidity and capital into current institutions in the hope that it will build confidence and start lending again to real projects (i.e., unclog the conduit).

First the scale of the US initiative is noted.

$700 billion is a huge amount of money–more than the equity book values of Goldman Sachs, Morgan Stanley, JP Morgan, Citigroup, Washington Mutual, Bank of America and Wachovia combined.

The basis of the NABI solution is to construct 20 new banks across the country, and eliminate government interference in those organisations, but transferring ownership to the US people.

To avoid a concentration of risk, the capital should be distributed amongst at least 20 new institutions. To avoid the hazards of government ownership or sponsorship, the shares of these institutions should be  distributed to the American people (each bank can have 300m shares; one for every American man, woman, or child).

Relevance to Bankwatch:

While I applaud the notion from the perspective of creativity and innovation, its not clear to me how the business strategy would be defined for the 20 new banks, other than by the US Treasury, and that might be worse than the Paulson plan.  At least the Paulson plan retains the business and strategy drive from the existing bank leadership to counter the government bias.

Having said that there is something there in the idea of finding a way to bring the leverage of the $700 bn that will retain innovation, yet retain a credible banking system. 

A fresh proposal:

Split the $700 in two.

  1. $350 towards a US Government owned credit union.  Provide the mandate to offer basic banking, account, loans and mortgages.
  2. Use the tax system, or other methods available to government that support startups that keeps the innovation in the financial services startups.  Aggressively review the regulation of financial services, and fast track changes to accommodate internet. 


The problem with banks is confidence.  The reality of banks going under is irrelevant to most other than stockholders, but they understood the risk of investment. 

Point 1. above offers customers a safe structure to restore confidence.  Customers who are afraid of banks disappearing and taking their money with it could shift to the US Government bank.  The rates would be terrible, the service basic, but its safe. 

This frees the existing banks to sort out their problems write off their bad debts, including telling the truth about their bad debts, instead of the current exaggerations.  Incidentally most estimates place mortgage defaults at no more than 10% overall.  That means 90% are current.  So why does a bank need a bailout if their mortgages are still relatively current?  The headlines scream that sub-prime mortgage loans have lost all their value but that’s simply not true, or at least not the whole story.  The banks need to evaluate their portfolios, loan by loan, and define the write offs – deal with that, and move on.  Its simply ridiculous to see companies like AMEX proposing to become a bank – just so they can get money.

Point 2. will offer support and space to accommodate creativity and alternatives that will further pressure the banks to stop whining and move on. 

Thoughts welcome – how should the US Government use the $700 Bn if at all.

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Written by Colin Henderson

November 13, 2008 at 12:57

The Enterprise of the Future in Financial Services | Five traits

Here is another study on the characteristics of financial services required to survive.  IBM is always thoughtful and this one is no exception.  They entitled the piece as applying to Financial Markets, but I have interpreted this to apply to Financial Services, generally, and not just say money markets.  Since they spoke to 1,000 CEO’s I think that assumption is reasonable.

The enterprise of the future in the financial markets industry | IBM

What will the financial markets enterprise of the future look like? To answer that question, IBM spoke with more than 1,000 CEOs from around the world. These conversations, together with our statistical and financial analyses, provide a unique perspective on the future of the enterprise. During this critical point in the market, five core traits of the enterprise of the future revealed through our study provide important implications for the financial markets industry—an opportunity, if not a mandate, to reevaluate business and operating models.

The enterprise of the future in the financial markets industry (188KB) – pdf

The central point is that this is no longer business as usual, and whether startups or old businesses, the traits mentioned are core to survival.

The five core traits of the Enterprise of the Future revealed in the IBM Global CEO study hold important  implications for the financial markets industry as it navigates one of the most financially devastating
periods in history

The five traits [only partial implications shown here – click through to IBM for full report]

  1. Hungry for change

      Implications:  … having the right governance, culture and incentives will allow firms to manage change, not simply react to it.

  2. Innovative beyond customer imagination
      Implications: … Moving slowly on this trend puts firms at risk of losing clients to innovators that are improving client collaboration and segmentation capabilities …
  3. Globally integrated

      Implications:  To drive faster and bolder innovation, employees need the means to collaborate openly across organizational fiefdoms. And despite the industry’s bias toward proprietary intellectual capital and a do-it-yourself approach, market realities are making external collaboration even more crucial.

  4. Disruptive by nature

      Implications:  Firms must also nurture a series of innovation programs that span multiple business
      model areas and include industry-changing plays. In this industry, perhaps more than most, technology will serve both as an enabler and an instigator of business model innovation.

  5. Genuine, not just generous

      Implications: Their negative reaction to client and regulator demands for increased transparency and ethical behavior may be causing financial markets firms to underestimate a major financial opportunity. We believe industry leaders will find ways to grow their bottom lines while being a socially responsible role model. They’ll not only work to become more “green” and invest in social causes, but also eliminate incentives that encourage unethical behavior inside their own ranks.

Relevance to Bankwatch:

The most intriguing part for me about this paper is that none of these characteristics come natural to any financial institution.  There are a couple of exceptions for one or two of the points and while I accept that, I can think of no institution that has all five.  This particularly applies to big banks.  Any exceptions within individual traits would be in the Credit Union world.

All five traits require a deep look inside the culture of the organisation, and the ability to see yourself as others see you.

Written by Colin Henderson

October 23, 2008 at 09:31

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.

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

“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


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


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.


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

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