Brett King

Archive for the ‘Offer Management’ Category

Your online marketing and website are broken

In Customer Experience, Internet Banking, Media, Offer Management, Social Networking, Strategy on November 9, 2011 at 12:42

There’s generally a very poor understanding of the dynamics of the role of the website in retail financial services interactions today. There is an acceptance that ‘some’ customers use the web, when deciding on a new financial services relationship, but not of the critical nature of the web in that choice. Let me explain how things are different from a behavioral perspective.

The inertia assumptions

Historically the majority of acquisition in the financial services space was either from brand marketing and/or campaign activity that drove a potential customer to purchase or apply for a Retail FS product/service.  There is an assumption that the web, social media, mobile and other e-channels support that goal as marketing channels where we can extend the brand and campaign paradigm. That is, we can broadcast more messages, perhaps with a tighter demographic or psychographic focus, to an audience that is more diverse in their message consumption.

The problem is that the Internet has been responsible for a significant process shift in buying behavior, namely that the dynamics of buyer response has significantly flattened. In the past marketing stimuli was used to create first awareness, then interest that led to the buyer mentally listing your ‘brand’ on a sort of short-list of providers, and then finally based on further marketing stimuli (promotion, pricing, location, features) the consumer engages with your brand for your product or service. This approach to marketing is all based on the premise that consumer behavior is latent or responds to a marketing message over a defined period of time.

Now with digital interactions being what they are, a consumer can go straight from research to purchase or need to application instantly. So the ‘stimuli’ works differently today, it needs to be a ‘live’ interaction strategy, not a message strategy that waits for a latent response. The loser in this context is the traditional marketing campaign mechanism, because a campaign is a latent stimuli tool, not an interaction tool.

The new engagement model

So in this new world, buying behavior is very different. Assume a customer needs a retail financial services product like a mortgage, a new bank account, a credit card or a personal loan – what does he or she do?

The overwhelming behavior today is to think about how they will apply for that product or service, with the least fuss. They will probably be largely ambivalent to their choice of financial services provider, in that, the fact that they have a bank account with you does not automatically mean they’ll come to you for another product necessarily. What the majority of customers will do is start by looking at their options – and for that they use Google (or perhaps YouTube) as their starting point.

This research phase is critical, because it is the empowerment of the customer. Them matching your product to their needs set. What’s critical in this stage is not the features of the product generally, but the utility of the product. Take a mortgage – how quickly can they buy their house, how much do they need to pay each month and how quickly will they own their  home? They don’t start by asking what are the early pay out fees, what’s the rate, and can they change their payment terms or habits midstream.

The concept that this research needs to happen at ‘your bank’ is a holdover from our traditional branch approach to FI product sales. In fact, we build our Internet banking sites just like a branch – assuming that you’ll come, ask some questions and then apply for a product. Most of the time, we won’t let you apply for a product seamlessly through our Internet branch, and we’re aiming to push you to a ‘real’ branch. This is inertia talking and it is counter-intuitive based on behavior today.

The easiest thing to do is simply shift me straight from research to a buying action once I have you online, but the more complex that is, the more chance that I’ll simply leave your Internet branch and go looking online for a faster path to the solution. What won’t happen is that I’ll suddenly be inspired to walk into your branch and start talking to a person after reading your website.

What the new web looks like

The new web we need to build right now is a set of tools to empower customers and help them complete the buying task they are looking for as seamlessly and as frictionlessly as possible. In that environment, the rolling promotions and offers we see dominating many retail FI websites today will be largely gone, relegated to simple landing pages connected to those dying campaigns.

The new website will be rich in imagery and process workflow for the engagement process, heavily personalized around what I already know about you, either through cookies, login or something like your facebook connected profile.

Additionally, the new website will be built from the ground up to be browser agnostic. It will work on a tablet, on a mobile phone, on a laptop with a whole range of resolutions and screen sizes – seamlessly. You won’t build buttons that require a mouse click, you can use your finger. You won’t populate with lots of text or links, when big images or stories will accomplish the same stimuli to an engagement.

Apple's website works as well on Tablet and Mobile, as it does online

Coming out of all of this will be a fundamental shift in marketing budgets and team structures. In just 3 years, 30% of your website visitors will be using a non-PC screen. Social media will represent 25% of your marketing budget driving brand advocacy and participation, and 50% will be on engagement and journeys, and the rest on a supporting framework of traditional media to build broader brand awareness.

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When PFM is no longer enough…

In Customer Experience, Internet Banking, Offer Management, Retail Banking on February 8, 2011 at 13:13

At Finovate Europe last week we saw a lot of what I would generally classify as “me too” PFM efforts. While there were a few stand out examples, such as Meniga and Linxo, I don’t think these platforms are robust enough for where we are going. This says a lot I know, because most banks are still not at this basic stage of having PFM deployed and I’m already talking about what comes next, but if you’re a bank about to invest in PFM – then think about whether it goes far enough.

The fact that there is a lot of activity in the PFM space shows that the time is very quickly coming for some sort of customer relationship footprint aggregation/mobilization. But, it’s going to take more than a few fancy pie charts, a drag and drop goal function, and seeing your account usage on a timeline to pimp out my Internet banking.

The information deluge and filtering

One of the challenges I see moving forward is that a pie chart of your portfolio, or a pie chart of spend patterns, or a fancy presentation of your account statement is only going part of the way. Increasingly I need to be able to filter information quickly and understand the context and relevance of that information to me at a glance. While a pie chart is potentially an effective tool to show me some of that, and might even be central in some scenarios, there is a lot of other relevant information that might be prioritized.

Mint Screenshot

There's always a pie chart in there somewhere...

The following information, for example, is not going to be important everyday, but at certain times, it could be quite useful:

  1. You just got paid your salary
  2. Your mortgage account doesn’t have enough money in it for the next payment
  3. Your phone bill is due tomorrow but you haven’t set up a payment
  4. The $25k you have deposited in a savings account should be deployed in a CD or other instrument to be getting better interest
  5. Your wife just maxed out her credit card (ok, I’m told that she’s allowed to do that…)
  6. A retailer you visited 3 times in the last 3 weeks will give you a 15% discount if you use your bank visa card this month
  7. Houses in your neighborhood have just been revalued upwards
  8. Your anniversary is a week away, and here is a special offer for a romantic night away

Then there is statistical information that is useful:

  1. Spending habits that are good/bad
  2. Progress towards a goal
  3. More efficient use of your money
  4. Spending mix
  5. Portfolio rebalancing based on Risk Profile
  6. Available balance on your credit card
  7. Loan refinancing options

This is a lot of information to show on a pie chart or a single screen, so either the bank will cram this information into a ‘dashboard’, or just not show it at all. The capability to filter this information and give direct, relevant feedback to the customer is essentially missing in most banks today.

Seriously, the key to transforming the relationship of the client of today is firstly to demonstrate your value as a bank in the relationship, and second, to anticipate the client’s needs. At the moment, Internet Banking as a platform probably does neither of those well. PFM is a step in the right direction, but it has a way to go, purely because of the volume of information we’ll need processed and the need for relevance.

Digital Relationship as the new metric

Today I received an email from my relationship manager asking me if I would be happy to recommend her. It went something like this (sanitized to protect the bank):

You may have recently received a letter inviting you to ‘Share your Experience’, and I want to take this opportunity to further highlight the features and benefits of this programme. If you know someone, a friend, family member or colleague who would benefit from having a <bank> relationship, I would really appreciate your referral. By introducing someone to <bank>, you open the door for them to the same high level of attention, international services and financial opportunities that you currently enjoy as a <bank> client.
Email Note from my Relationship Manager

I actually have no problem recommending my RM (Relationship Manager) because she has done an excellent job. But there are a few issues I take with the above communication.

Firstly they sent me a letter…seriously?

Secondly, the assumption is that I perceive their service as they do, i.e. “the same high level of attention”, especially given the fact that their digital presence is significantly sub-par.

I’m logging in to Internet banking, and would be logging into mobile banking (if they had it), something like 5-10 times a week. The average customer is doing something similar each month. I visit their ATMs 2-3 times a week, and I visit their branch about twice a year, if I have no other choice.

So their best place to build a relationship with me is online, but they honestly don’t understand that based on their current platform. That relationship will be built through connecting with me through understanding me, and personalizing the dashboard that interfaces me to the bank.

Data visualization is a great start

Infographics are a great benchmark for customer data visualization

Unless you’ve been living under a digital rock these last couple of years, you may have noticed the very interesting trend to represent data and statistical information in a form called Infographics. These graphical representation of data are an excellent method of taking complex graphs, statistics, and information and filtering it for general consumption. Banks, and others, can learn a thing or two about filtering and data visualization from this trend.

Another great approach is that of the iPad app flipboard which aggregates streams of information in an easy to consume format. Could you provide a more interesting way to display account and credit card usage information, perhaps linked back to offers from specific retailers too?

The last step will be all about management. This is the ability to respond to a trigger, an event or a critical piece of information and proactively suggest a response to the customer that builds trust and the service relationship.

Get these right and you’ll have a relationship dashboard that connects you to the customer in a way that no bank does today…

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.

Conclusion

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.

Does your Internet Banking suck?

In Customer Experience, Internet Banking, Offer Management, Retail Banking on August 25, 2010 at 07:44

Is it just me or have you noticed that the pages behind the login for your bank haven’t changed much in the last 5 or 6 years?

According to the omnipresent Wikipedia, Stanford Federal Credit Union was the first financial institution to offer online internet banking services to all of its members in October 1994. Interestingly, while the Gramm-Leach-Bliley Act introduced some important elements to support internet banking, it wasn’t until 2002 that the The Office of the Comptroller of the Currency issued final regulations on the use of Electronic Banking for US-based banks. This informs another key innovator’s dilemma. That of trailing regulation. In fact, it’s also indicative more broadly of the speed at which the banking industry adapts to changes of the significance of the introduction of the Internet. Far too slow for the rate of change that is occurring these days.

Excuse me sir, your Internet banking is looking a little tattered…

I wrote recently on The Finanser’s Blog about the problem of lack of investment in Internet banking by the mainstream banks. The issue is that when you categorize Internet banking internally as a channel where you migrate customers to reduce cost, the initial impetus for investment in Internet banking is just getting the required functionality in place – once in place, and cost savings on-track, it’s hard to get further investment in the customer experience behind the login because it’s already doing its job.

The problem is – it isn’t doing its job.

The assumption that internet banking behind the login is about transactional costs savings for the bank is a very bad assumption. It assumes that customers are using the channel to save the bank money, when customers are actually using the channel for convenience and to increasingly engage the bank on the fundamentals of day-to-day banking. The increase of online banking usage just doesn’t want to slow down because of this behavioral shift, and unless banks understand and adapt to this shift, their internet banking platforms will increasingly isolate customers who want more convenience and control. Here’s how comScore, who has been measuring this since 2006, characterizes the relentless take-up of internet banking:

Since the inaugural comScore online banking report in 2006, the number of DDA customers visiting the top 10 online banking sites has increased from approximately 40 million people to more than 58 million people. In any given quarter, nearly 60 percent of the total U.S. Internet population visits at least one of the top 20 financial institution (FIs) sites.
Comscore: 2010 State of Online Banking Report

This is played out across the world. In looking at data on major website and internet banking redesigns, the fact is that since the launch of Internet banking in the last 90s and early 2000’s most banks update their public website’s look and feel every couple of years, whereas they’ve only updated behind the login capability every 3-5 years at most and in general the last round of updates was largely cosmetic. And yet, the growth keeps coming…Look at the statistics for Commonwealth Bank of Australia for monthly logins between 2007-2010 as reported in The Age of August 12th, 2010.

Year CBA Monthly Logins
2007 18.5mil
2008 22.9mil
2009 29.3mil
2010 35.6mil

See more details at CommBank Investors site

That’s a 92% increase in usage between 2007-2010. This trend is borne out the world over. Internet banking usage is increasingly not only in that a larger portion of the population is logging in, but that existing customers are logging in more frequently. So if Internet banking needs more than just a facelift, what exactly does Internet banking need to become to capture the behavioral needs of the customers who are using it?

More than bill pay – my financial control tower

What I need more than a transaction dashboard, more than pure functionality is something that helps me manage my finances. Right now Internet Banking is to intelligence, what an old mainframe dumb terminal is to an iPad. Extremely primitive. There are some solutions out there right now that do an admirable job of personal financial management, I’d rank Geezeo’s and Yodlee’s toolset and Mint as solutions every bank should be looking at. Geezeo has taken it once step further of recent times with their customizable widget/dashboard approach.

The thing is most banks are not yet using PFM and many claim the jury is out on whether or not PFM really generates strong ROI. Intuit certainly sees differently, their acquisition of Mint late last year for US$170m is telling – they see the future in managing the finances of individuals.

The top three activities within Internet banking are still checking account balances, transfers and bill payment. But just adding PFM functionality is not necessarily going to be the answer to solve the flagging, lagging development of the world behind the login. More is needed.

The future of the login

What customers will be looking for from their Internet banking portal moving forward is more control. More than just offering the ability to pay bills, customers will be looking for integrated bill management – this is not just direct debit services. Customers will be looking to see a consolidated view of their billing relationships, and have their internet banking dashboard help manage bill payments automatically. This will require banks to be integrated in respect to data with utility companies, telecomms network operators, cable companies, and the usual suspects. The Internet banking dashboard will become the place I go to see my aggregated monthly expenses, drill down on individual accounts and statements, and setup rules for automated bill management.

On the products side, banks are going to have to start to get a lot more proactive. For example, if I have a lump sum sitting in my savings or deposit account, the bank could show me how much interest I could be earning if I invested that in either a term deposit, CD or in something more exotic like an equity-linked investment. On my credit card statement, that large ticket item purchase you made last month…the bank could offer to put that on a 12-month payment plan at a lower interest rate. Observing that you do a lot of travel, the bank could proactively upgrade your credit card to a deal that gets you free air miles with your favorite airline.

In addition to those more obvious elements, the whole multi-channel thing will start to come into play here too. For example, the dashboard will also let me manage alerts. Increasingly we’ll have to handle of whole lot of messages in respect to ingoing and outgoing payments, warnings about upcoming bills where your balance is short, location-based offers for retailers that you frequent and where you get a discount for using your NFC mobile enabled credit card, and other trigger-based alerts or offers that you subscribe to.

Mobile has to become one of the primary acquisition tools that banks will use in the future, but to ensure that this channel is not abused by overeager marketers, we’ll need a filter mechanism. That means that you’ll need somewhere to tell the bank what you will and won’t accept being sent either by SMS or to the the apps that you utilize on your smartphone. The Internet banking dashboard will need to manage all of this – it will be a critical tool in managing the multi-channel relationship.

If you’re a bank you better get serious about investing behind the login – you’ve got a long way to go.

If you are on the corporate banking side, stay tuned…I’ll talk about corporate Internet banking dashboards next