Brett King

Archive for April, 2011|Monthly archive page

The Best–Practice Engagement Bank

In Bank Innovation, Customer Experience, Engagement Banking, Future of Banking, Retail Banking, Social Networking, Strategy, Twitter on April 27, 2011 at 13:09

Recently when I posted on reforming customer journeys in the banking space I got some push-back for using Apple as an example of best practice. Surely there are banks I could have used as an example of best practice??? Well… not really. There’s no bank, and believe me I’m looking everyday, that has the whole multi-channel customer experience locked down across the board. So I thought if we could Frankenstein a bank together from banks that are there and are getting certain aspects of the engagement right, it might actually be possible to construct a sort of best-practice bank. Even then, the reality is that there are gaps in what is best-practice because by looking at other industries we find better examples of specific channels than in the banking space.

I realize this is arbitrary and there are probably some other great examples out there. If so, feel free to add those in the comments and if I agree with you I’ll make the appropriate amendments or additions and attribute them to your Twitter ID. Here we go…

Best Branch Experience

What identifies a best-in-class branch experience? Well a key here is not how sexy the branch looks but whether a branch redesign resulted in a net improvement in customer engagement and in resultant metrics – namely increase in acquisitions and in cross-sell or up-sell. Recently Citi relaunched their “Apple Store” concept branches in both Shanghai and New York, but there is no evidence that plastering tech around your square footage is an immediate guarantee of success. Creating retail spaces that are hi-tech meccas works for Apple because they sell tech, not banking products and services. So what is the goal of the banking space?

Currently there are two goals for branches, the first is to effectively serve transaction or task-focused customers as rapidly and cost-effectively as possible, and the second is to engage the customer around their needs in a friendly and revenue-conducive manner. In respect to the first, it’s my belief that transactions in-branch are fast becoming problematic for most retail banks and the trend is toward strong sales and service over costly transaction handling. This is part of the reason for SNS in Utrect, Netherlands deciding in 2009 to remove cash from their branches, and why others are focusing on strong service centres.

Metro Bank in the UK unquestionably has a very high quality ‘store’ experience (they don’t call their retail points of presence branches), as evidenced by their Net Promoter Score which is higher than any other retail bank in the UK.

We use Net Promoter and currently we have a Net Promoter score of 87% which I believe is among the highest anywhere in the UK — and eight out of 10 of our new customers come as recommendations from existing customers — 97% of our customers rate our service as being exceptional.
Anthony Thompson, Chairman and co-founder Metro Bank

Deutsche Bank with their Q110 branch in Berlin and Jyske Bank in Denmark, have taken the retail concept to its ultimate with advisors strolling the store and products bundled in packaging you take off the shelf. The point is that the best branches remove the barriers to engagement with customers, and are not transaction points, but conversation hubs. Some other notable designs are North Shore Credit Union in Vancouver and Che Banca in Italy.

The key here is that the retail space is opened up, barriers to conversations are removed, and a warm space is more inviting, more engaging. Transactions which are a cost to the bank, and are redundant for most customers, are relegated to automated cash and check deposit machines or to digital channels.

Best Online Banking Experience

This is a little tough. Firstly, I don’t believe that public websites and personal internet banking sites should be two separate entities, but the fact is that is the reality for most banks today is that their basic online banking experience hasn’t significantly changed in the last 10 years since the dot com. Awards given by EuroMoney, FT and others for the ‘Best Internet Bank’ or similar, are frankly laughable. Compared with the best online experience in other industries, banks are years behind.

Banks have to start thinking about the online channel as a dialog, as an engagement platform – not a transactional or functional platform. The most basic logic dictates that your secure Internet banking portal should be as much about engagement, service and sales, as it is about transactions. However, the level of complexity of selling and engagement behind the login as an industry is appalling.

So who’s the best? At the moment there’s only one bank I would put even close to living up to the promise of User Experience on this channel, which is Fidor in Germany, but even Fidor doesn’t have the sales experience and recommendation engine capability. Mint, Geezeo, Meniga and others are taking on the PFM battle, to transform the advisory space behind the login. Geezeo has recently launched a referral engine that will enable banks and credit unions to engage customers with smart engagement strategies within the secure internet banking space, but also extending this out to platforms like Facebook and Twitter.

In terms of banks…

It’s very quiet. There’s lots of talk about reinvigorating this space, but the only action on the horizon is our friends at BankSimple.

BankSimple doesn't look like a traditional Internet Bank, because they understand context.

If you want best practice in online banking, there is not one bank that has this sorted. There is best practice in functionality, there’s some best practice in transactional platforms, bill payment and the like – but there is no bank that provides a model that represents best practice of where banking should be online today from an engagement perspective. Not one.

Mobile and ATM on Page 2…

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The Curse of the Innovator

In Bank Innovation, Customer Experience, Strategy, Technology Innovation on April 14, 2011 at 16:38

Recently we’ve been discussing at many organizations what it takes to get innovation done in large businesses with embedded behavior and practices. One side of the coin is obviously the impact of Disruptive Technology, but the other is purely the issue of Innovation Management or creating an organization that embraces or assists innovation.

In a recent EPCA workshop I was conducting in Amsterdam, John Chaplin (Ixaris) related a session he had with a bunch of senior banking executives tackling the problem of creating innovation within large organizations. The bankers were asked what the issues with ‘innovators’ were. More often than not it was sighted that strong innovators clashed with the organization culture and so eventually they were fired because they were too good at their job.

In an organization where you can’t change the culture overnight because it is too embedded, it appears that your only option as an innovator is to soften your approach so it is acceptable, or push to the point where you have to walk away because the organization has got to its limit in respect to absorbing ‘innovations’. The problem is, that to survive the types of disruptive innovation we’re seeing, the organization has to adapt. So it really means that you need innovators, but they need to be powerful enough in the org chart that they can force the organization to steer a new course. If not, you get a Blockbuster or Borders moment. Organizations that were faced with disruption and couldn’t change, despite probably having some very innovative thinkers around.

The concern I have is that increasingly I’m seeing some of the most innovative people I know leave their organizations because their desire to implement change is being hit with the brick wall of inertia. This is a serious problem.

The Innovator’s Organization

There are two broad approaches to traditional organizations faced with disruptive innovations that is successful. Obviously we aren’t talking the “bury your head in the sand” approach.

Google uses the 20% time initiative, GE uses “time to think” to assist leaders in their change efforts, and others talk about the VC Approach. For those of you that follow my blog you’ll know I talked about Banks that are “Too big to Innovate” recently where I discussed some of these various approaches.

The two broad approaches, however, are to either try to build innovation into the organization DNA, or to circumvent the organization when innovation is required. There are problems with both approaches.

Changing the organization culture or DNA to become innovative is really hard. The larger the organization, the harder such innovation is because you first have to change the organization structure, the metrics, personnel, and attitudes to change before you can get constructive stuff done. There are some organizations that have achieved this, but usually through a very painful process where many executives who preferred the old world traditional approach have to be exorcised before change can take place.

The second approach creates a maverick structure outside of the broader organization chart, but allows the freedom to go get stuff done, that the broader organization would not be capable of executing on. This can produce some really innovative approaches. The problem with this is that absent the traditional organization structure, sometimes these initiatives take on a life of their own and spin out of control. Egg is a good example in the UK. Egg was very successful at rapidly growing customer support and innovating the customer experience, but they took too many risks on the lending side and were left exposed. This doesn’t mean Egg was a total failure – there are still many banks today that could learn from their customer experience approach. When these initiatives are successful, sometimes they outshine the existing organization and so can never be fully integrated back into the mainstream structure because they show up the weaknesses of the parent organization.

Sometimes Innovation success presents real challenges

Success can be a curse

In some ways then, the successful innovation as a spin off or project becomes a pariah, an illustration of why the larger organization is out of touch. Then those embedded in the current organization work very hard to justify why it would never work in the larger scheme of things. Why? Because if they didn’t take that approach the obvious question would be – well, why haven’t you done this before?

So I figure the only way is to build innovation teams that survive successful innovations is to seed these teams with members of the real organization, that split their time between both the innovation team and their real job. That way their enthusiasm spreads throughout the organization as they see real change being enacted.

The second essential component is to have someone at the top that is smart enough and powerful enough to call an innovation exactly what it is – positive change for the business at large. This individual then can use this to justify further experimentation and to force the organization at large to adopt the positive changes that the innovation has created. This individual can also make the call when the innovations engine of the organization is getting too far off track and drag it back into reality.

Get a sponsor at the top that can use the success to motivate real change, but get broad participation by seeding teams with skills from within the organization. Experiment often, and rapidly to see what innovations have the best chance of success at changing the broader customer experience and providing real future revenue opportunities in a ever more disruptive landscape.

#Winning at the Social Media game

In Blogs, Customer Experience, Engagement Banking, Groundswell, Retail Banking, Social Networking, Strategy, Twitter on April 11, 2011 at 08:54

Ok, so the feedback from Finextra’s #finxsm event this week is that we’re finally coming to grips with the fact that Social Media isn’t going to disappear into the night like some passing fad. Good news!

It’s interesting though, whenever a major disruptor like social media, the internet, etc has come along, inevitably there are many traditional managers and practitioners who don’t understand it and label it as a ‘fad’. Just because you don’t understand something personally, doesn’t mean it is a fad. That’s the realization that the industry is going through right now, that is – social media isn’t a fad, it isn’t going away, we need to deal with it. Just because we don’t understand what the fuss is about doesn’t mean our customers won’t use it, and if they’re talking about us we better be listening.

No Facebook allowed here, unless you’re a marketer

So the first trick with social media and how it’s going to effect the business is learning about how it works. The knee jerk reaction for most banks when social media came along was two fold; The first was to try to figure out how to dump traditional advertising and PR campaigns down the pipe. The second was to shut down any access internally within the organization because it was risky for employees to talk directly to the public, and also because it was feared there would be wholesale time wastage from staff playing farmville and other sorts of unproductive, non-work related tasks.

The problem with this mind-set is that is was fundamentally wrong. Primarily, the organization was prevented from learning about the real capability of social media, and this hampered the brand from creating advocacy and engaging customers. Additionally, the reality was that employees were simply pushed away from the desktop internally to their mobile device and the risks that employers were hoping to prevent by shutting off access weren’t prevented they were simply pushed outside of a controlled environment.

Social Media ROI is not a marketing metric

The marketing-led thinking about attempts to control or spin the brand message out through social media characterized as just another broadcast channel, are also fundamentally flawed. Social media is more akin to a dialog with your broader customer audience, not a channel for slamming more corporate comms or campaigns down customer’s throats. Thus, the traditional marketing metrics don’t apply either.

“The ROI of Social Media is that your business will still exist in 5 years”
Erik Qualman, Socialnomics

I was pleased to see the response of Hakan Aldrin, MD of the Benche at SEB when asked if he has numbers to prove the value of his social media community platform he replied, “No. That’s not what it’s for.”

Having said that, while not being a broadcast channel, it is a channel for targeting key influencers to get your message out. Key influencers are those with a sizeable following (1,000 followers or more) who influence their follows – i.e. get lots of retweets, reposts, etc. Recently when Charlie Sheen burst on to the Twitter scene garnering 3.5m followers in just weeks, what did it mean for key influencer opportunities? Ad.ly worked with Sheen to promote internships.com, a new jobs board – one tweet from Sheen got more than 100,00 applications from 181 countries for the #Tigerblood intern spot. No classifieds ad in any newspaper has EVER been able to get that sort of response. Lesson: Engage key influencers!

You too can be #Winning on Social Media

What is Social Media for?

It’s a dramatic opportunity to listen to what your customers are saying and form useful strategies for advocacy, to inform product and marketing strategies based on real-time feedback from customers and it is increasingly a very powerful servicing tool. While there has been some viral marketing success on social media, if it social media is classified as a marketing tool or channel within your organization it means two things:

1. You don’t understand the two-way dialog nature of social media, and
2. You have too many traditional marketing people in your marketing team today

So now that we know social media isn’t a fad – what happens next?

Who’s responsible?

One of the biggest challenges is figuring out who is going to manage social media internally in the business today. Often this falls to some junior marketing staffer, maybe someone in the online team or perhaps a corporate communications or PR team member. All of these decisions would be wrong.

Social media can be used to build brand and advocacy, support and service customers, research new strategies, design new products, create new markets, and to educate and inform. This is going to require a whole kaleidoscope of supporting skills sets and capabilities underneath to do this properly. So if you limit it to being pigeonholed into the current organization structure, somewhere along the line your social media strategy is going to be deficient.

Do you have a head of call centre? Where does he sit in the organization chart? Well the head of social media should be at least equivalent in the organization chart to this resource. Why? If a customer like Ann Minch, David Carroll decides to target your brand because of poor service, bad policy or just plain ignorance, your share price is going to start to take a hit.

The strategy shouldn’t be to try to shut it down or attempting to force employees to refrain from social media activity. When Commonwealth Bank attempted this it backfired badly. The strategy needs to be one of informed engagement and encouraging positive use.

The biggest risk FIs face today is reputational risk associated with a social media blowout. You need someone in charge with common sense, but also with the organizational wherewithal to actually get something done. This is not a junior role. You need a policy that encourages participation across the organization, but that provides strong guidelines, supported by training, on how to engage customers and how to support the brand through social media. But most of all you need a mechanism to take what you hear from your social media listening post and inform strategy, change policy and improve customer experience. That is the potential of social media that is so underutilized today.

Private Banking 2.0

In Bank Innovation, Customer Experience, Future of Banking, Social Networking, Strategy on April 6, 2011 at 02:24

Since the emergence of online banking there has been a fundamental assertion from high-net-worth bankers that their clients aren’t digitally focused, they don’t use social media or mobile banking, and that they prefer to pick up the phone and engage their banker because the nature of their interactions is defined by their wealth – they want the highest-level of service that only comes from engagement through a personal banker.

Is this business immune to disruption, despite the rest of the retail bank being in an extremely disruptive state? It’s apparent that Private Banks are now seeing customers move more frequently to multi-bank relationships because the basic digital hygiene factors within the Private Bank are not taken care of. For a Private Bank to claim that they are the best of the best, but to be amongst the worst digitally is contradictory.  So the depth of the relationship and scale of AuM (Assets under Management) are suffering because of lack of web, mobile and social capability, and Private Bankers are seeing a fragmentation of service offerings as a result of service perceptions.

If we look at High-Net-Worth-Individuals (HNWI), the facts are that they are extremely service conscious and generally loath inefficiencies. Entrepreneurs and successful business people in the HNWI category were the first to get Blackberry’s, the first to get wireless broadband modems so they could work on their laptop in the limo from the airport to the office or sitting in the Maybach running around town, amongst the first to get the cool new iPad or the latest gadget. So right now, clients of private banks are asking – why can I login and do this day-to-day stuff through HSBC, Barclays or BofA, but I can’t through my Private Bank?

So where does technology fit, and can it provide real value? Is there a way that technology can deepen relationships with clients, or does it mean that relationships are less sticky because they are doing more interactions with the brand electronically?

The digital relationship

Recently a well known ex F1 driver and commentator was spotted on Twitter asking his Private Bank, Coutts of London, whether they had a local branch in Miami. The Coutts team respond within just a few minutes of seeing that enquiry come past the Twitter account and letting the F1 driver know that his Banker would be on the phone to him in a jiffy. Such a response is not the norm.

When presented with this sort of scenario, many Private Bankers scratch their heads and ask why a distinguished client like an ex-F1 champion would use Twitter to talk to his Private Banker instead of a simple phone call? That’s not the point – you can choose to approach every single client and ask them why on earth they would want to use Twitter, or you can simply understand that an emerging channel like Twitter needs support.

As the next generation of Private Banking clients start to take over from their parents, the last thing you want is to be identified as that stodgy, old, out-of-date bank that my father used.

Stereotypes that Private Banking clients don't do Digital are just wrong...

Maximizing the client interaction

Perhaps the biggest revolution is in the primary face-to-face asset allocation meeting with the client. Over time we have gradually increased complexity as a result of KYC and risk, for what used to be a simple chat between a client and his banker. Now we load up our client with forms, risk profile questionnaires, with brochures, technical data, etc. that doesn’t actually enhance the relationship – it just complicates it.

Soon we’ll be asking the client to do the risk profiling stuff at home online and we’ll verify this with the client face-to-face. We won’t ask the client to fill out the same compliance information on a paper form that we’ve already asked for 20 times before, because we’ll execute electronically using the data we already have stored.

When we sit with them in a planning session, we’ll use tablet based tools that allows us to show our clients what-if scenarios and adjusted asset allocations that work better for them, then we’ll give them a selection of product decisions which they can learn more about at home online or execute electronically from behind the login. Why?

The real revolution here is in simplicity of the interaction. By maximizing time with our client for discussing their needs, and shifting other activities to supporting channels, we improve service levels. Even the humble monthly statement will be digitized with interactive components explaining market movements, the client’s net position and short-term investment opportunities.

Social Scoring

In respect to client acquisition, the world of transparency through social media will increasingly start to impact banks in the coming 2-3 years. Brands and private bankers will be anonymously scored online as to their effectiveness. Just like dating services, social networks will be able to match bank’s relationship managers with clients based on their expertise, location, and their ranking amongst peers.

When we search for Private Banks on Google or YouTube, what results will we see? We won’t any longer see the most popular brands, but the most respected brands amongst our peer group based on your social score. Unless you have a strong connection digitally with your clients, your social score is going to hurt you on the acquisition side of the business. After all, Private Banking is first and foremost about trust in your advisor – if my friends don’t trust and recommend you, how can I trust you?

Conclusion

Once thought immune to the changes in multi-channel engagement, it turns out that perhaps the most important clients in the retail banking marketplace need to be highly connected, to provide the required service levels. For most private banks, this is an epiphany and hence, we’re seeing aggressive investment in this space today.

If you want to be the trusted advisor – it is clear you need to be connected and recommended. Engagement is no longer limited to a phone or face-to-face, the private banker must extend his reach to clients at every opportunity. A deeper relationship, depends on context and connection – not just a brand and asset management capability.

UK Olympics to trial new RFID biochips embedded under athletes skin

In Mobile Banking on April 1, 2011 at 05:00

In the latest attempt to capitalize on the NFC and RFID hype, the rumor mill has exploded with news that the IOC and the team behind the London Olympics is trialing new RFID bio-chips. The micro RFID chips that will be injected under the skin of the shoulder of professional athletes, will be used for everything from entry to secure venues, payment for meals and beverages in the Olympic village, and even linked to personal bank accounts for payments.

This is not new technology. As far back as 2004 it was reported that the Baha Beach Club in Barcelona was injecting VIP patrons with RFID chips to replace credit cards and membership ID cards. Athletes will have the option of either the traditional contactless NFC card, or opting in for the RFID chip. However, officials from the London Organising Committee Of The Olympic Games were quick to explain the benefits of the embedded technology including the fact that athletes themselves would not have to carry a physical card to gain access to secure venues, accommodation or to pay for meals, services and souvenirs.

Mary Coleman-Brace, the spokesperson for the LOCOG said of the technology:

“While some may consider this invasive, it is a tried and tested technology and we hope to incentivize athletes by offering them discounts on a range of Olympic village services, also offering spot prizes for those that participate in the program. We believe that this sets the tone for future Olympic village constructs by defining a truly innovative security and payments device that the athlete can carry with them at all times. It also enables us to track the athletes and we’re looking at trialing the integration of the RFID technology in respect to performance measurement for elements like track-and-field race timings also.”

Visa is said to be considering a rival technology where an embedded chip is not required, but a temporary athletes tattoo placed on the skin would be used in a similar manner to the RFID chip. The tattoo design, incorporating a hybrid of the Visa and London Olympics logo, would incorporate a micro-NFC device that was low irritant and could survive contact on the skin.

RFID chips in use at the Cebu Marathon in 2010

While this is the first time that technology under the skin is being considered for an Olympic event, there has been the use of RFID technology already in many sporting events. In January, 2010 at the Cebu marathon, athletes wore RFID tags that measured their performance and times over the 42k race. LOCOG officials pointed out that in recent years there has been rapid improvement in the miniaturization of the technology, allowing it to be less invasive.

So what do you think? If you were an athlete would you be up for the RFID technology? Or would you realize that stories like this on April the 1st carry some risk?