Brett King

Archive for February, 2010|Monthly archive page

Bank CEOs, It’s Time for Social Media (InternetEvolution)

In Blogs, Groundswell, Media, Retail Banking, Social Networking, Strategy, Twitter on February 23, 2010 at 14:05

As posted on Internet Evolution (

Internet Evolution Blog

I’m dealing with two of the largest banks in the world right now, engaging them in discussions about customer experience innovation. One of the things that invariably comes up is the phenomenon of social media. To some banks, this is just one of those newfangled Internet “thingies” that comes along from time to time and gets people all excited — but banking doesn’t really change… does it?

What is unique about the social media movement at the moment is that everything you might expect it would be about — it’s not about. Firstly, you might assume that it’s a medium that is used by “Generation Y” (those born from the mid-1970s through the 90s) almost exclusively to trade photos, videos, and witty anecdotes about what they are doing right now.

It might surprise you that by a long margin, the Baby Boomers and “Generation X” (those born after the postwar Baby Boom but before the Y-Gen) are far more into social media than the Y-Gen. In fact, the Y-Gen will probably skip the current generation of social media and go totally to some sort of mobile-based social media and mapping over the next few years, but that’s another story.

Getting back to the banks: These two banks I’m talking about, household brands, don’t have a single senior executive responsible for social media. There are pockets of innovation or customer experience teams trying to do something, but there is no senior manager that has social media in his job title, and there is no high-level sponsor to mobilize around this. Is that such a bad thing?

Continue reading my blog posting on InternetEvolution…


Banks: KYC is Killing Your Customers (Huff Post)

In Retail Banking, Strategy, Technology Innovation on February 23, 2010 at 05:53

See the original blog entry on Huffington Post…

In my discussions with bankers about innovation, I often hear them tell me that perhaps in other industries innovation could be achieved, but due to heavy regulation and the compliance requirements of the banking sector that such is more difficult for financial institutions. This is part of the story, but I’m sure that it is fixable.

I met with a Private Banker from one of the dominant bank brands in Asia this week. In Central Hong Kong this bank has it’s own tower, of which three floors are dedicated to the Private Banking unit, but that’s only half true. Almost half of that office space is taken up by a team that is designed to reduce risk to the bank by ensuring that customers are accurately informed of the risks their investments will carry, and to ensure that the bank does not commit itself or their client to undue risks. The name of this team within the Private Bank – the Business Prevention unit – I jest ye not.

Has it come to this that regulation and risk aversion is such an important part of the bank that we now actively try to prevent business occurring? It would appear so.

This explains a great deal about the current state of our banking sector. If customers are a risky proposition, then how does the bank make money? Well they invest it in stuff where they know they have an element of control, or in the case of sub-prime they try to actively engineer it so that they make profit regardless of the underlying asset risk. Some banks have even been known to borrow money from the government and margin trade on it in recent times…

The point of this is that banks have become so myopic in respect to customer risk that as customer we’ve almost become an anathema. In fact, the compliance workload we as customers have to deal with these days is so offensive, that it is almost not worth engaging a bank for an investment deal or asking for a loan. To illustrate, in the mid 80’s I recall being a student and walking in to open an account with no identification, I filled out two cards with a specimen signature, my address and particulars, and that was it. Now that same bank requires a 100-point identification scorecard to be realized, and the basic current account application form is some 18 pages long. This is progress apparently.

Compliance procedures are Killing customer experience Figure 1 – Internal Compliance Procedures are bad for business

Now, I appreciate we have Anti-Money Laundering, we have identity theft, we have IRS and tax departments eager to know what we’re doing with our money, and we have regulators that are making it their job to ensure we don’t invest in a financial product that we don’t fully understand. Sometimes, just sometimes, however, we just want a decent banking experience. We just want it to work, and the more paperwork you throw at us, the more hoops you make us jump through – the worse our banking experience is.

The thing with this is, that although there are regulations and legal constraints, most of the work we have to do is due to internal bank policy and process. For example, let’s say an existing customer comes to the bank to ask for a loan – this is a customer we’ve known for 5 years, his salary gets paid every month on time, and he’s a low credit risk based on what we already know. Why then is it that this same customer has to fill out an application form with the same details he’s provided us with since day one?

There is absolutely no regulatory or legal requirement for the process to be handled in this way. Right now this is all about making it easier for the bank to mitigate risk for their brand. A customer-focused bank would either allow the customer to sign on with their Internet Banking credentials to agree to the loan, perhaps sign on a tablet or digital form or if absolutely necessary generate a paper application form based on existing customer records where all he had to do was sign. All of these solutions would produce exactly the same result from a regulator’s or compliance perspective as a hefty paper KYC process.

So why as banks don’t we do this way? Firstly, no one senior enough in the bank has sponsored such a move. Secondly, because the internal IT department would probably take 15,000 man days, and $184.63 m to enable this. And lastly, because at the end of the day as bank executives we get rewarded for mitigating bank risk, not for making customer experience better.

Regulators and bankers need to separate ‘customer’ risk from operational risk, and in this way innovation can still occur.

Banks and Social Media – Substance or Hype? FinExtra Twitterview

In Blogs, Groundswell, Media, Retail Banking, Social Networking, Twitter on February 17, 2010 at 09:35

See the original post on FinExtra with ELIZABETH LUMLEY

For those of you unfamiliar with the term Twitterview – it is a Twitter based interview. This limits the options somewhat as your replies have to be able to fit on a 140 character Tweet. Nonetheless, the interview below and Liz’s commentary on the interview are a solid summary of my responses and my views on Social Media’s impact on Banking. You can also check out the latest report on Social Media in Finance from Chris Skinner and myself at the Financial Services Club website. For the first 5 ppl that leave a comment on this blog article I’ll also send you a free copy!

Here’s the Twitterview…

Banks and social media – More substance or more Kool-Aid?

Finextra recently held a live Twitterview with Brett King, banking consultant and author of upcoming book Bank 2.0. During the conversation, King says that online banking will beat branch banking this year – and that the time has come to call all services ‘mainstream banking’.

More controversially, King claimed that regulations were just an ‘excuse’ for banks to not engage in social media and were not a legal barrier. Banks acting as wallflowers in a 2.0 world is not an option, according to King. One comment from @NitinGupta, on #finxlive, commented that banks may lag behind on social media because so many resources have been diverted in order to fight the 2009 credit crisis.

King also saw no reason why the likes of Morgan Stanley or Nomura couldn’t include ‘point-of-impact’ marketing into its dealer portals in order to alert customers of other bank services.

Agree? Did you RT anything? Are you, as King puts it, part of the 20th or the 21st Century? Or do you think this is all social media ‘Kool-Aid’, with no real insight to issues facing modern banking and financial services?

If you missed the #finxlive Twitterview – here is the transcript (some Qs&As have been combined or slightly modified to aid better reading – blogs aren’t bound by 140 characters)

Finextra Welcome all to the inaugural Finextra Twitterview – today we are chatting to Brett King, author of Bank 2.0. Welcome Brett – Let’s start off with our first question

e-Business, social media, Bank 2.0 – Alternative ways of interacting with the customer, or is the medium part of the message?

brettking This year in UK/US Internet Banking revenue will beat out branch revenue – so when do we start calling it mainstream banking? In a recent survey I just finished 93% of respondents consider 2.0 necessary for banking. So WWW, social media, mobile banking are just ways of banking. Banks need to start to understand that they are not alt. mediums

Finextra Is this change in behaviour led by the client or by the technology?

brettking In my book Bank 2.0 I call these changes in behaviour disruptive ‘phases’ – tech is the enabler, but behaviour is the catalyst. Look at adoption rates of new tech since 1900 – we are accepting new tech faster – this influences behaviour.

Finextra Yes, but within financial markets strict regulations prohibited the financial industry from engaging in social media … Are financial services doomed to be 2.0 wallflowers?

brettking Ha! Good Q. Too often regs are used as an excuse. Org. bias towards branch and financial metrics are more of a restriction than regs. On 2.0 wallflowers – it’s a question of whether banks are prepared to start listening and adapting

Finextra I know I mentioned marketing. But getting back to wallflowers – you really dispute the reg issue?

brettking Regs are not the issue – bank’s internal compliance, legal dept and culture put more restrictions on 2.0 adoptions than regs

Finextra Could it be just how internal dept. are interpreting regs?

brettking I think the issue is more about organizational structure – risk mgmt and regs are frameworks, but customer advocacy should be DNA

Finextra ‘Brand marketing’ vrs ‘point of impact’ – why has the financial industry been slow to integrate this type of marketing?

brettking Marketers are having a difficult time adjusting from broadcast to customer. Lack of use of customer analytics is the main hold up. This is a huge change for marketers – they need to develop a whole layer of customer ‘offer’ management capability. Probably today 50% of the skill sets in bank marketing departments are poorly suited to the Bank 2.0 world.

Finextra 50% of marketing skill sets are unsuited to 2.0 – Is this unique to the banking world?

brettking Not really unique to banking, but banks have been too dependent on print and DM – that has to change FAST. I talk about Point-of-Impact in the book. Banks need to service-sell i.e. insert their value into the Tx chain.

Finextra Mobile apps are hot. Will we access all our banking via a phone in 10 yrs – Or will security issues hamper?

brettking Mobile banking will reach 1.1 Bn by 2015 – but already BofA has more than 3.5m mobile banking customers. In many ways mobile phones are more secure than WWW, so don’t think this is issue. Mobile payments are the hotter area though

Risk to banks is I see a lot more third parties infringing on traditional retail banking with apps/widget – like @themozone @square. But mobile is what I call the pillars between the 2nd and 3rd phases of disruption – very powerful consumer enablers

Finextra Ah, the non-bank competitor. Hot issue in payments

brettking Non-bank competitors aren’t bound by the channel silos, compliance rules, etc – so they are more agile. For marketers it is about reengineering from advertising & campaign to customer offer mgmt.

Think of banking as a ‘utility’ – FED=Generator, Bank network=Wires, but these days anyone can own the meter – mobile will be huge

Finextra Is this all about consumer banking – where are the corporate, wholesale benefits?

brettking Corporate banking services are perhaps even more suited to mobile and 2.0 because of informational requirements/real-time demand. Only 1% of the surveyed group said they expect social media to decline incidentally.

Finextra What do they mean by social media? Dealer portals, using RIA, from the likes of Morgan Stanley and Nomura?

brettking Widgets and Apps (RIA) are very important for getting the right content to users for decision making, comes back 2 point-of-impact. But for corporate users Blogs, Privately Owned Social Networks and LInkedIn dominate the space. Facebook and Twitter are great tools for branding and personal networking, but not so effective in B2B scenarios as yet.

Finextra Morgan Stanley gets clients on the portal, then sells other bank services? Point of Impact?

brettking Sure – a gr8 example of point-of-impact is buying an airline ticket on – that’s where I should sell you travel insurance. Or when you walk into Bloomingdales or M&S – you get a location based msg for discounts using your bank credit card. Point-of-impact turns banking into a service – not a sell.

Finextra Which banks do you see with advanced attitudes/projects around social internet media? Is it better to hold back than do social media wrong?

brettking Forcing customers to come to your branch or your website is BANK 1.0 – 20th century stuff! 🙂 2.0 is very transparent – In Nov09 Nordea staff got caught seeding forums – 2.0 is about listening not control @First_Direct is talking a lot about customer scoring, BofA SME stuff good, @Ask_WellsFargo & others are trying out 2.0 customer support.

Finextra Exactly ‘trying out’ stuff. Are other banks sitting back watching the experiment?

brettking 2010 is the year for social banking in more ways than just 2.0 – the bonus backlash has shown that too. Banks need to innovate – experimenting is a great way. Banks are sitting back far too much though – that is the risk.

Finextra 2010 – the year the customer comes to the bank and the banks better be ready?

brettking Take internet payments – PayPal owns 48% of the internet payments landscape today – banks waited on that front too. Customers don’t see banking as special anymore – they just expect it to work – across any channel for them. Banks need to stop thinking about bonuses, branches and budgets – and start thinking about how to reach customers.

A good approach would be the Google approach – give staff 20% of their time to work on customer initiatives and innovation

Finextra Excellent, thanks Brett you were a great Finextra Twitterview.

Customer’s tell banks “We don’t believe you anymore…” (HuffPost Blog)

In Blogs, Groundswell, Media, Retail Banking, Social Networking, Strategy, Twitter on February 11, 2010 at 14:21

Brand reputation the key to banks leveraging social media.
Check out the original entry on Huffington Post…

Recently I posted on how shifts in consumer behavior and technology adoption is significantly changing the marketing dynamic for banks. Essentially my message was that for marketing to continue to be effective in measurable ways, that a large portion of effort needed to be redirected to optimizing the mechanisms for reaching and enabling customers, rather than just reinforcing brand recall and directing campaigns. I have had some brand marketers bristle at this suggestion and asking me how brands themselves would get started or get known it it wasn’t for the fundamentals of brand marketing.

First of all, I don’t believe that brand marketing will disappear, however, I think it is far to say that social media brings a transparency and honesty that means that despite the best brand marketing money can buy, if you screw up your customer relationships it won’t matter – social media will punish you. Google was able to build its brand entirely online, so some might argue that the need for traditional brand marketing is no longer a given either. However, for banks right now, they need all the help they can get, so it can’t hurt.

Brand marketing is useful for telling us as consumers the core brand values of these organizations who want our business. Banks have long held up their brands as bastions of stability, trust and understanding. They kept telling us that they were safe places to hold our hard earned savings, and that when they loaned us money we should be eternally grateful, because it was only out of their gracious generosity that we were able to afford to buy that new home, car or trip to the Caymans. We could trust banks because they were ‘as safe as houses’! Well, guess what…thanks to banks even houses aren’t safe anymore.

The side-effect of the global financial crisis, and the huge botch up that leading financial brands like Bank of America, Citi, Merrill, JP Morgan, Goldman Sachs, RBS and others have made with their bonuses and lack of prudence, is that trust for banks is at an all time low. Brand marketing is not going to save the banks in this environment.

Right now if you go and do a twitter feed search on say… Bank of America you’ll find a plethora of negativity out there in cyberspace. Now to be fair BofA has a twitter feed (@BofA_Help) and they have a Blogsite ( – although it should be pointed out that their blog has no content as yet…

The key issue is that although Bank of America has a brand built over more than a century, their brand presence across the USA is pervasive, and their marketing capability staggering, they face an uphill battle. None of that capability really can help them in the current environment where they lack transparency on fees, are generally seen as out of touch with customers and are struggling in the war on customer word of mouth impact. Brand marketing is not enough to win in the 21st Century – the BANK 2.0 paradigm. Bank’s need to rebuild their brand reputation – and telling us how fantastic they are won’t cut it anymore. We just don’t trust those messages anymore.

What customers long to see is banks that care. Banks that reward you for the more business you do with them. Banks that are prepared occasionally to waive fees because you are a good customer. Banks that try to make it easier to work with them, instead of the endless compliance hoops we have to jump through because the banks find it to much trouble to change their internal processes.

We want the banks to build their brand reputation by restoring their reputation with us – the customer.

Social media is empowering customers – giving them a voice. It’s time major brands took the time to listen and adapt. Most banks spend millions on focus groups, customer satisfaction surveys and mystery shopping exercises each year to find out what they can learn for free just by listening to their customers on social networks and blogs. It’s not rocket science – but it is good branding.

Banking’s biggest challenge – Marketing 2.0 (HuffPost Blog)

In Blogs, Media, Retail Banking, Social Networking, Strategy, Technology Innovation, Twitter on February 11, 2010 at 13:09

See the original entry on Huffington Post

Point-of-impact MMS offer

A location-based offer at the retail point-of-sale is 550% more effective than Direct Mail 3 weeks before

There are some massive changes occurring in the banking space today, but none so dramatic as what is happening in marketing and advertising.

Direct mail offerings have been declining rapidly since 2006. In 2009, less direct mail was sent by banks than in the year 2000. Direct mail has declined 32 per cent since 2007 alone.

In 2008 the Internet surpassed all media except television as the primary source for national and international news; this has taken its toll. In March 2009, the Seattle Post-Intelligencier or the “PI” as it was known, a 146-year old newspaper, closed down, citing rising costs, falling revenues and declining circulation. Since just January 2008, at last count, 55 regional newspapers in Britain have folded. Of the top 25 newspapers in the U.S. in 1990 (the year newspaper employment peaked), 20 of those newspapers have seen declines (on average reporting circulation down by more than 30per cent), and two have been closed down or declared bankrupt. New York Times reported a 30 per cent fall in advertising revenue, resulting in a $35.6 million loss for the 2009 third quarter alone.

In 2009 TV advertising revenues in Australia fell by more than 12.6 per cent in the first half of the year. In the first quarter of 2009, the U.S. recorded losses of more than 14 per cent in TV ad revenues in normally stable locations such as the Bay Area and New York, and is expected to suffer a total decline of 22 per cent for the year. Declines of 27 per cent and more were recorded in radio ad spend for the U.S. for the first half, even worse than the decline in TVCs. Yet, in a recent report commissioned by UK’s OFCOM forecast the value of TV ads in the U.K. could fall from £3.16bn in 2007 to just £520m in 12 years’ time. That’s an 83 per cent decline.

Bank’s are finding their brands are no longer able to just get by with brand marketing, after all BofA and Citibank have great brand marketing, but are being hammered by customers on Twitter, YouTube and elsewhere. Thus I find it amusing that ‘digital’ or interactive marketing still makes up only a fraction of marketing budgets for banks in 2010. The very fact that banks separate ‘digital’ in respect to budget or spend, signifies the challenges of changing a culture that is so dependent on direct mail, print, radio and TV – all broadcast mechanisms.

Let’s play Devil’s advocate for a moment. What will the advertising space look like in 5-10 years? It’s more than likely that TVCs will be gone – with declines in revenue we’ll have to find another way to pay for TV either through subscription or download, but there is no business model that indicates Free-to-air TV can survive with out Ad revenue. Direct Mail will be relegated to very specific segments, and then only for loyalty promotions. Newspapers will be on iThingys with paywalls – we’ll subscribe to newspapers and virtually every newspaper will be digital. Billboards will be all digital, but not based on TVCs – they have to be even more efficient. Physical magazines will be a luxury item, most magazines will be digital. In this space nearly ALL advertising will be digital within 10 years..

TiVo already strips out TVCs. SPAM filters on our phones and email ensure the eDM ain’t going to work. We need something more. In my book BANK 2.0 I call this “Point-of-Impact” marketing. Banks need to insert their ‘value’ message into the transaction where it will have an effect, not send out millions of messages hoping for ‘brand recall’. Brand marketing will still exist, but campaign marketing needs to shift to point-of-impact. To illustrate, when you are on, or and I’m booking a flight, that is where you need to sell me travel insurance. When I’m on a real-estate website, that is where you can target me with mortgage deals. When I walk into Bloomingdales, Marks and Spencer, or Armani Exchange send me a location-based MMS coupon on my mobile offering me a discount using a specific card. Get me when I’m interested, when I need it.

But this requires a complete rethink of the structure of the marketing department, and a complete new set of tools. This is the biggest fundamental change to the marketing department of the bank…well ever. I’m not surprised that quite a few of the banks I’m talking to are not sure how to make this transition, but that doesn’t make it any less likely.