Brett King

Archive for September, 2010|Monthly archive page

Beyond the transactional branch

In Branch Strategy, Customer Experience, Engagement Banking, Retail Banking on September 27, 2010 at 08:00

Given the challenges of branch banking today, there’s a bunch of innovations taking place in respect to “Engagement Banking” within the branch property and it’s clear that many banks feel the branch environment has to change to stimulate different activity in the branch. In BANK 2.0 I classify this need to change the engagement in this way:

“The core function of the branch moving forward will be about establishing the relationship with the customer at inception, and extending that relationship through an advisory sales process and excellent customer support systems. It is conceivable that all of the transactional elements within a branch will be moved to automated banking within electronic banking centres, automated branches, ATMs or the Internet within the next 10 years. What then is left? The face-to-face, value-add of a real, live human interaction.”
Chapter 3 – Rebuilding the Branch One Customer at a Time, BANK 2.0

So I wanted to take a quick snapshot at some true innovation in branch design and deployment today. I’m not talking about a fresh repaint, some new plastic signage, and more laptops and kiosks around the branch, I’m talking about something fundamentally different for customers.

The Flagship Luxury Engagement Model

There’s something about walking into a Louis Vuitton or Versace Luxury store, the expansive space of Virgin’s flagship store in London (Oxford Street), or the wonderment of the Apple Store in Manhattan or London. A retail experience like this is just begging for customers to visit you. On the other hand the traditional branch is just not, well … attractive. Design is an under leveraged resource in attracting and engaging customers today. Some banks, however, have tried to change that. Have a look at these innovators in branch design, and say goodbye to the high-counter, bulletproof glass paradigm:

CheBanca! – Milan, Italy

Where's the teller?

Nope...not here either

More great photos here…

Deutsche Bank Q110 – Berlin, Germany

Where's the teller - not here either...

Engagement Banking with Microsoft Surface Tech

More great photos here…

Some other great examples of branch design for the low-counter, sales engagement model include Jyske Bank,and an innovative explanation of branch function redesign from Grey Architecture for “Info Bank”.

The POD concept

Clearly many banks see the “POD” or a customer engagement area as a key component of branch design moving forward. This will be either through ‘stations’ or sales pods designed for customers to sit in privacy with a relationship manager to discuss their needs. Here are demonstrations of the two core concepts in deployment today:

The teller 'pod' with stations with some transactional capability

The 'sales' pod - maximizing the face-to-face engagement

Too far??

But some take it too far – like this example from HSBC at Design Miami 08 where the temporary branch/vip lounge looked more like a farmyard than a bank…The point is – it’s not about design as the sole criteria, it’s about the engagement.

The digitally-enabled branch

We already saw Microsoft Surface technology enabled in Deutsche’s Q110 branch – there are a bunch of other banks who are doing the same. In the video below you can see a discussion from the Microsoft Surface team on a possible Financial Services application, or click through to the Razorfish app on Microsoft Surface.

Microsoft Surface Financial Services Application – Razorfish Demo from Razorfish – Emerging Experiences on Vimeo.

HSBC Premier in Hong Kong and YES Bank in India have given their customers RFID-enabled ATM and Debit cards, so that when you walk in the branch, they already know who you are and can start anticipating how best to serve you.

YESBank's RFID readers are hidden behind brand signage

We know Banco Santander has already deployed a very cool media wall in their corporate headquarters (along with Robot assistants), but I envisage that media walls will increasingly come into the branch to create both a super-dynamic advertising environment, along with a place for customers to interact in-branch.

Jeffry Pilcher at Financial Brand has done a great piece on branch design and the use of interaction – The Future Of Branches. Check it out if you can…


The future of the branch is about engagement. The old thinking that was based on getting customers into a branch to do a transaction and cross-selling them is no longer a viable model, because the branch provides no value-add for a transaction. Thus, if the branch is about an excellent, high-quality face-to-face interaction, we need to build for that. Open up the branches, hire new staff and put new systems in place designed to support the conversation with the customer. The high-counter old teller stations and staff who are versed in transactional banking, won’t work in the BANK 2.0 world.

See our work on engagement banking in more detail here…


Innovating the Bank that’s too Big to Change

In Customer Experience, Strategy on September 26, 2010 at 09:43

Getting a head start on customer centricity

As I tour the globe talking to banks and other financial institutions, the issue of how to make the migration to a truly customer centric organization is often agonized over. While many are keen to see that goal materialize, there are just as many who feel organizational inertia and long entrenched silos are just too significant a hurdle to circumvent.

Innovation in the customer space is often a challenge too. How do you really create an innovative organization when your traditional roots are all about, well…tradition. The big ships of industry, banks definitely included, are like massive supertankers. Ships that turn slowly and once they have a head up of speed are very difficult to slow or turn when set on a course. In a world where channel complexity, technology adoption and consumer behaviors are pushing the envelop of just about every service organization to adapt at warp-speed, how do we create speedboat type instincts when the organization is lumbering along supertanker style?

Big Banks are like SuperTankers - they don't change direction easily

The Google Time Initiative

Google gives it’s engineers 20% of their time to work on the project of their choice. The Google time initiative is consistently cited as one of the reasons why employees rank Google as one of the best companies to work for as voted by Forbes, FastCompany, etc. It’s also a great generator of innovations as adhoc collaborations are born out of necessity, common interest or just the pure exploration of a better user experience. Some of those initiatives like Android end up becoming a stable of Google’s core range, while others like Google Wave burn bright for a time, create great learnings, but go on to become something entirely different from what started.

Getting a bank to give their employees 20% of their time to work on a project or initiative of their choosing, might be too much of an ask for those ships of industry, but it is a way to drop a speedboat in the water and see how it performs. If the idea works, it can then be incorporated back into the overall business as part of a longer-term shift.

The VC Approach

If you’ve ever engaged in discussions with Venture Capital firms about a business plan, you’ll appreciate how brutal the process is in dismissing badly thought out ideas or poor business cases. If we ran a lot of the existing bank processes, products and business units through a VC selection process these days, many simply would not survive. But because they are embedded ‘traditions’ they get retained. Good examples of this today are paper statements sent by snail mail, or offering a checking account to new customers by default. If we were a brand new start-up bank, it’s unlikely these would be the preferred approach in a business plan today.

Using the VC approach, however, can select the most likely candidates for success in the innovation sandbox. VCs often use the formula of reviewing 100 business plans, selecting perhaps 5-10 for further review and selecting perhaps 2 or 3 for some scale of investment. This is a solid approach to pitching new ideas for seed capital internally to see if individual innovation initiatives have merit versus other competitive ideas or bids. It also means that work isn’t done on the basis of simply cool technology, but real revenue or cost savings thinking.

The IDEO Approach

I’ve always admired the IDEO design team for their deep dive methodology. I think that the deep dive remains probably the most creative management and design process that there is today. By dividing teams into separate groups to brainstorm innovative approaches, you get not a single idea, but many competing ideas to flesh out. The advantages to this process can best be summed up by a great quote from their design team:

Enlightened trial and error succeeds over the planning of the lone genius…
IDEO Design

Once a month, or once a quarter, try getting your channel team together and brainstorming a new customer journey or experience. Then use the VC approach after you’ve prototyped the idea to come up with something better for the customer. The deep dive process will take you to new heights of innovation much quicker than the planning of the lone banker. Especially if that banker has had 30 years of banking experience – trying to get him to think innovatively is like trying to turn that huge supertanker.

The Customer Centric Initiative

So putting all of these best practice approaches to innovation together, I propose a new initiative for your bank today to get started on the path to customer satisfaction, deeper relationships, and more profitability.

Give everyone in your product and channel team, 20% of their time over the next 2-3 months to spend on improving customer journeys and experience. Underpin this by creating a multi-channel deep dive session once a quarter where all of the channel teams, supported by product representatives, look at new ways of engaging the customer. Prototype the customer journey on paper. Sketch up new web, mobile, or ATM screen flows to show how the interaction could be simplified and improved, or even come up with completely new ideas based on behavioral analytics.

Let’s get this customer centric initiative on the road. It takes a long time to break silos, so let’s not even try to tackle that until we can get the team thinking about customers. The Customer Centric Initiative is a way of doing that without breaking the bank…

Business Internet Banking – What does PFM for business look like?

In Business Banking, Customer Experience, Internet Banking, Offer Management on September 15, 2010 at 11:05

Have a look at your bank’s local website in respect to business internet banking and you’ll see lots of demos, and promotion of basic features like ‘instant balances’, ‘convenient transactions’ and ‘anytime access’. In 2001 that might have been world-class features but today that’s tired, boring and hardly a differentiator. So why haven’t we seen much improvement in business banking since 2001? Basically because most banks are out of touch with the day-to-day banking needs of their corporate customers.

The Three worlds of Business Internet Banking

There are effectively three worlds in Business Internet banking, there is the sole trader, the Small to Medium size Operator (SME) and the Large Corporate. In respect to platform, the challenges of the sole trader and SME are somewhat similar operationally. However, for a sole trader, they tend to run their bank account more like a personal facility, but with business transactions coming in and going out. They usually have a very small staff footprint, if any, but their primary banking activities are paying for goods and services, and chasing payments from customers/clients.

The SME has, by definition, fewer than 100 employees. They have the same concerns as a small trader, but incorporated in operational concerns are payroll and Human Resources functions, and the job of managing cash flow – increasingly tough in a challenging economy. The large Corporate has a much more complex environment from a payments and banking perspective. Managing complex suppliers and procurement relationships, group life, health and pension concerns, along with credit facilities, receivables management, etc. So what role can Business Internet Banking (BIB) 2.0 play in the corporate landscape today?

The Sole Trader

Collecting money is one of the biggest challenges for a small trader, as cash flow needs are often acute. Especially in the early phase of the business, a sole trader will often be operating hand-to-mouth, month-to-month. So the ability to collect payments is critical. However, as dealing with cheques and cash becomes increasingly erroneous, many sole traders turn to Merchant services either through POS capability or e-Commerce integration to solve the payments dilemma. But if you are a sole trader, good luck on getting a Merchant account.

Many banks require a minimum of US$100,000 a year in transaction throughput before you ‘qualify’ for a merchant account. Then the onboarding process for a merchant account is extremely complex. You need to sign contracts with the bank, with each of the card issuers (Mastercard, Visa, Diners, American Express, Union Pay, etc), and you typically need to set up a completely new ‘merchant’ account. This process is not simple, and in many cases small businesses just don’t qualify. Additionally, ask a sole trader when they were ever proactively offered a merchant account…

This is one of the reasons we see a host of workarounds for accepting bank payments today. Jack Dorsey, one of the founders of Twitter has started up Square, a cheap and fast alternative to traditional merchant onboarding. Square has had some recent competition in Europe (UK and Germany to start with) from iCharge. There are also a bunch of online virtual merchant and e-commerce payment options from the likes of Shopify, Yahoo! Merchant Solutions, then you have Amazon and Google Checkout, many, many more. However, the future looks bright for sole traders. With Visa announcing trials of NFC mobile payments this year, with Orange and Barclaycard doing the same in the UK, and Apple hiring some big names in NFC for their next iPhone – we’ll all soon have the ability to accept contactless payments with ease as our phones become POS terminals of a sort.

With payments sorted, the remaining issue is cash-flow and financial management. As I already posted back in June, there are huge possibilities in the area of Accounting, Cash Flow Modeling and Credit services in the cloud. But don’t think cloud as in outsourced from a banking perspective, think that the bank is the ‘cloud’ and the Business Internet Banking platform is the services layer that provides the key functionality to customers. Already the sole trader today probably has most of his transactions going through one account – so his bank statement is effectively his general ledger. Be smart banks … formalize this. Recognize that the sole trader’s internet banking system – is also his day-to-day accounting function. Enable that, and you have something really helpful for the small business owner.

Small to Medium Enterprise

Small-to-medium size businesses face their biggest challenges oddly enough when they are dealing with rapid growth. Small businesses don’t have a huge pool of resources to draw upon, so when business steps up a notch the hiring lag can often be a problem, as can be hiring ahead of the receivables. Take a medium size company of 20-30 employees, and throw a $3-4m contract at a company of that size – life changing yeah? Maybe, but if your total revenue last year was $4m and you are going to double that, you need to hire another 15-20 staff today. Problem is, the cash isn’t going to come in until the end of Q1 next year? So how can you afford to ramp up? This is the type of scenario where banks are supposed to help, but are too risk adverse these days to assist.

SME's often face their toughest challenges in times of rapid growth

By getting closer to SMEs and understanding their business better, there are real opportunities here. But don’t stress about the investment in direct banking resources, just offer SMEs a platform where they can upload their accounting data and get free cash flow analysis, along with suggestions about how to deal with cash issues. The system then can act to provide better triggers for SME relationship managers to talk to their clients. Right now banks do a lot of waiting for clients to come to then, and they the first thing we ask is to provide the last 3 years of accounts. I’m proposing a reversal of that. Get the accounts by allowing SMEs to upload them to their Internet Banking platform, offer free financial analysis and on the basis of smart analysis, provide the services customers need as they need them, not only when they ask for them.


Business Internet Banking can become the platform for so much more leverage with Business clients, but today it is a very basic transactional platform for the bulk of customers. We need to shift it to become the PFM of business banking – a toolset that enables the bank to help your business when you need the help, not only when you ask for it.

I’ll discuss Business Internet Banking for the large corporate on my next blog.

Consumers shun bank marketing in preference for online research

In Customer Experience, Media, Retail Banking on September 13, 2010 at 10:14

At their annual ThinkBanking event last Thursday (Sept 9th) in Sydney, the Google Financial Services Team released their latest behavioral research supported by Global Reviews’ Customer Experience Benchmarking. The results are a shock to those expecting traditional marketing methods to strongly influence customer behavior in respect to product selection in the financial services space. Barney Pierce, the Head of Industry – Finance for Google in Australia articulated that the research “shows a fundamental shift toward the online channel dominating research for financial products and services. A large part of which is search related activity.”

Greg Muller and his team at Global Reviews who assisted with collecting the research explained that the research was conducted across Australia with a sample size of over 900 people from all walks of life – it was directed at all users of financial services products. In the research customers were simply asked to find ether a deposit product, a credit card, or a mortgage and report back on the process they used to find and select a product.

88% of customers research online

Staggeringly when it comes to financial products, 88% of customers today start their journey online. For deposits and credit cards, 78% of time spent researching options overall is done in the digital space for an average of 3 hours and 20 minutes. (that’s up from 58% in 2008) For mortgages and home loans, 62% of their overall research is done online spending upwards of 11 hours and 25 minutes before settling on a product. 77% of those surveyed said that they didn’t know about the product they finally chose before when they started the task.

The data shows a significant shift in behaviour when it comes to the selection process. Traditional marketing theory suggests that brand marketing and campaign marketing are strong influencers of behaviour when customers are selecting products, but this most recent data flies in the face of accepted theory. 51% of customers had a preferred brand when they started, but of those that used search to attack the task, 58% didn’t search for their preferred brand. Of those that started with a preferred brand 1/3rd (31%) ended up selecting a different brand.

What about the branch?

So what about the role of branch, call centre and other channels in the actual application process? 68% of those surveyed prefer to apply online, compared with just 29% who prefer the branch experience. However, 89% of people said they are open to applying online in the future if bank’s and FI’s get their approval processes up to scratch.

The research shows that for poor usability was the primary reason that customers would abandon a website and pick a competitors brand online. The highest % of customers who stay with online throughout are the $100k+ p.a income bracket, in fact, 82% of High Income customers total research is done online today and 74% of these indicate they would prefer to apply online for deposits & credit cards.

Google Finance research shows a big shift to online for finance products


The data indicates the following shift has taken place in the last couple of years:

  1. Consumer behavior has radically shifted in respect to financial products with brand and search being the top 2 mechanisms for product selection/choice these days,
  2. Financial Institutions need to invest big time in Search Engine Optimization, Search Engine Marketing, Social Media Support, and
  3. Financial Institutions need to streamline and produce highly usable web experiences so they don’t lose customers looking for their products.

Based on this data, if you are a FI and you aren’t spending at least half your marketing budget in the online space, you are going to have severe problems with acquisitions moving forward.

The Mad Men are Dead – Long Live Engagement

In Engagement Banking, Media on September 7, 2010 at 02:46

The perfect Ad is something advertisers dream about. Some “mAd” men, go their entire career searching for it, others who are creatively gifted, come up with home runs, Gold Lions and accolades time and time again. Mad men have come to believe that if you can get the perfect mix of emotion, message, imagery, nuance and impact – that you can practically sell anything. There are Ad’s that make us laugh, make us cry, sit in awe, or clutch our hand to our mouth in disbelief. Messages that have the ability to inspire, change our opinions and most importantly get us to part with our hard earned cash in exchange for a little piece of that same magic that was embodied in that message.

There’s only one problem – those messages … aren’t getting through any more.

The problem

The digital world has been upon us for close to two decades, starting with the emergence of the commercial internet back in 1994. In October 1994, HotWired (Wired Magazine’s former online brand) made history by placing on their website the very first banner ad for none other than AT&T.

Figure 1 - The first ever banner Ad (Credit: Hotwired and AT&T)

That may not have seemed significant at the time, but it represented a very significant shift in advertising modality – a move from static messages, to interactions in response to a message. The difference with this Ad was that you could ‘talk back’. It allowed you to have a dialog of sorts, to be part of the experience, rather than just passively watching, listening or reading the Ad. Why is this important?

Marketing 101 states that consumer behavior is defined by things such as stimulus response, cultural and core values, social influences, personal determinants, and psychology. Marketing (and Advertising) has been mostly designed to influence behavior – the accepted mantra being that if those messages work, then the ‘brand’ or product becomes embedded in a ‘choice-set’ of filtered options. The premise is that if the message works, then you will recall the product or brand at the critical time. We’ve been delivering those messages by broadcasting to audiences through mediums such as our TVs, newspapers, radio, direct mail catalogues or offers, and billboards.

Over time, however, as consumers have been bombarded with more and more messages in greater frequency and breadth, it’s become more difficult for advertisers to get ‘their’ message to dominate and influence your behavior. This has lead to increasingly brash TV Commercials (i.e. think Superbowl) and other such Ads driving the psychology of advertising into a superfine art and science. The problem is that these broadcast methods are largely failing today. Why? Simply put, the message is no longer enough, as consumers we have to be engaged.

The death of the campaign

In 2008, the Internet surpassed all media except television as the primary source for national and international news. In March 2009, the 146-year-old newspaper Seattle Post-Intelligencer went completely virtual. Since January 2008, at last count, 58 regional newspapers in Britain have “folded”. New York Times reported a $35.6 million loss for the 2009 third quarter alone due to falling Ad revenues. In 2009 TV Ad spend declined by as much as 22% in the US, declines of 27% and more were recorded in radio too. In the UK, TV Ad revenues were down 12–14% in 2009, but OFCOM has forecast the total TV Ad spend in the UK could fall from £3.16 billion in 2007 to £520 million in 2020 – an 83% decline. This is a trend that we’ve been seeing for more than a decade. In fact, the only forms of Ad spend that have consistently increased in the last 10 years are web, mobile and most recently social media based advertising.

This is more than a shift in modality, it is a change in the way we process marketing messages. Those that have the highest impact are contextual, based on our own searches, criteria, classifications or psychology. Increasingly, they are time sensitive and are in response to a behavioral trigger, event or a location. Because of increasing use of digital interactions, the messages have had to become experiences with the intent to engage us and produce a response in real-time. It is no longer sufficient to deliver a static message and hope for a latent stimuli response…

This is why the campaign itself is failing. Campaigns rely on the assumption that if I choose the right segment, and marry the right message – I can get a latent stimulus response that will result in a change in buyer behavior at a future date. But the digital space is teaching us that latent response based on broadcast messages are simply not for us – they aren’t targeted, we can’t respond in real-time, and more often than not, they are delivered when we don’t have a need; so we filter them out, ignoring them – thus they just aren’t effective. In fact, we even have technology now such as TiVo to automatically block them. While brand will still be able to be reinforced through broadcast (if you can afford it,) campaigns cannot possibly survive because the ROI is not sustainable with decreasing effectiveness.

As modality shifts, "Messages" like this are untenable thru traditional broadcast media

Engage me – don’t tell me

So that’s why advertisers need to think differently about the journey or behavior of the consumer. We have to forget the concept of producing a latent response through the impact of telling consumers a message, we have to aim to deliver a message that elicits a response in real-time. In that respect, the more poorly targeted the message is, the greater the likelihood is that the engagement will fail – so broadcast campaigns designed to be one-size-fits-all need to be exorcised from our marketing departments today. We need to be thinking beyond the message – we need to create an engagement experience.

Engagement Banking

For bankers, it’s going to be even worse. Banker’s are relying not only on a latent response to a campaign message, but they’re also relying on you to physically walk into a branch to demonstrate your response to that message. Increasingly this is just not going to happen. The engagement has to be brought to the customer! Think blockbuster, no amount of advertising is going to change my behavior when it comes to downloading movies and getting me back in the store…

Last week Sapient, Geezeo and BANK 2.0 launched what is the first ever digital whitepaper based on this concept of engagement banking. Check out the engagement and tell me how you are planning on reaching your customers and getting rid of the campaign – ping me on Twitter (@brettking) with the hashtag #engagementbanking. Whatever the case may be, starting phasing out campaigns today – get targeted, get digital and engage!