Brett King

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The Total Disruption of Bank Distribution – Part 5

In Blogs, Customer Experience, Engagement Banking, Groundswell, Retail Banking, Social Networking, Twitter on August 1, 2011 at 11:09

Transparency challenges new revenue and friction

In September of 2009 Ann Minch, a customer of Bank of America, posted a video on YouTube called the “Debtor’s Revolt”. Ann detailed her case against BofA who had unilaterally increased her credit card APR (Annual Percentage Rate) to 30% from its historical 12.99% – quite a jump. She argued as a customer of 14 years, having never missed a payment, that such treatment was unjustified.  She contacted BofA and asked if they would discuss her situation or negotiate the rate change, but they referred her to a debt consolidation counselor.

BofA subsequently argued that the terms and conditions she had signed allowed them to make any adjustments of this nature without consultation with customers like Minch. If she didn’t like it, she was free to cancel her card and go to another bank. This wasn’t the end of the story.

Half a Million YouTube views later mainstream media started to pick up Ann Minch’s story. The pressure was suddenly on BofA to explain their actions, and the story that they were within their legal right to do so, just didn’t stand up to cross examination. All but BofA believed that their actions were unreasonable and extreme. The resultant pressure resulted in a complete reversal of BofA’s decision, a win for Ann Minch right?

Transparency wins

The Ann Minch story, and that of David Carroll with his YouTube-generated hit United Breaks Guitars, tells us that today consumers have extraordinary power afforded to them through social media. Consumers today have a voice, but increasingly that voice is becoming about choice, about rewarding organizations that listen to customers, and punishing those that think their decisions are immune from debate or dialogue. Prior to social media, Ann Minch wouldn’t have had a hope of getting a behemoth like BofA to change their policies or decisions based on her complaint. But it’s not just the voice of consumers on Twitter, Facebook, Google+ or social media more broadly.

A plethora of user driven recommendation apps and tools are coming to the fore in helping consumers choose organizations that respect customer involvement. There’s Nosh and Yelp apps that help consumers choose restaurants that they like, that provide great service or great food. There’s Trip Advisor that has become such a powerful force in the travel game that it gets 50 million unique visitors a month who use the site to select hotels for their family vacations. Then there are staples like iTunes and Amazon (who arguably pioneered the consumer product rating mechanism) who rank listings of their products based on consumer votes and reviews.  Today we’ve seen the launch of First Direct’s new FD Lab as a worthy attempt to engage customers in the future of the bank from a service and product perspective.

First Direct, who already has great customer advocacy, has launched a new crowdsourcing platform for engagement

Outdated processes are just friction

Today we live in a world where you can no longer provide poor service based on outdated rules, processes and policies and argue “hey, were a bank and that is the way we do it”. Today, if you are a bank and you have stupid rules and regulations that have been perpetuated by processes built around unwieldy mainframe transaction systems, or around KYC processes that are overkill for 95% of customers and their day-to-day interactions – you are setting yourself up for a fall.

Banking has been for the longest time built on the premise that you have to jump through a bunch of hoops to make yourself ‘worthy’ as a customer – you have to prove yourself before the bank will deem you suitable. As bankers, we argue that it’s not our fault, that we are saddled with regulations and requirements that force our hand, that require us to approach customer engagement in this way.

That kind of thinking is institutional laziness and denial – it creates friction that frustrates customers, is largely unnecessary and is generally costly and inefficient.

Let me illustrate. Take a long-term customer that walks into a branch (for the moment forget my post last week on the decline in branch visitation :)) and applies for a credit card or investment class product after say 10 years of a relationship with the institution. In by far the majority of cases he or she’s sat down in front of an officer of the bank, handed a blank application form and required to fill out details that the bank has had on record for a decade. Why?

There is no process, rule or regulation that can possibly justify that kind of inefficiency and poor service. If there is a requirement to get a signed consent or legal record of the customer’s acceptance of certain terms and conditions, then print out the required document with all his/her details pre-filled, ask them to initial to confirm their details have not changed, and sign the acceptance of the T&Cs. What is so hard about that?

Recently at my annual review with my relationship manager at a major brand bank, I was subjected to a 7 minute video on the risks of investing in Collateralized Debt Obligations (CDOs) and the fact that I might lose all my money if I invest in this asset class, when I was, in fact, applying for a product that was a low-risk Corporate Bond in a totally unrelated asset class. Why the video then? Because someone in legal and risk decided all customers should sit through this video to reduce risk to the bank. Stupid friction.

Take a customer who forgets his Internet Banking password today. How many banks require him to come to the branch or sign a convoluted document and fax it to the bank to unlock his online account? I know at least two of my bank relationships do.

Take a wealthy HNWI (High-Net Worth) customer that moves to the USA or UK from a foreign country and applies for a credit card, only to be rejected because he has no credit score – therefore doesn’t exist in the system so he can’t be assessed from a credit worthiness perspective.

None of these rules makes sense, and yet banking is choc-a-block full of such friction and opportunities for disenfranchising customers.  This is the perfect storm in today’s user advocated consumer world of open, transparent choice.

Friction kills advocacy

The problem with outdated rules, processes and procedures is that thinking “we’ve always done it this way” or “if you don’t like it you can leave” is simply no longer a viable argument to an increasingly well educated and informed customer. Already we’re starting to see customer advocacy as a key driver in choice of financial institution, and high visibility for customers who voice their dissatisfaction with such friction.

Have a look at a few sample tweets in recent weeks:

@DavidBThomas I’ve been with my bank for 30 years. They “thank” me by telemarketing me at dinnertime.
@NewsCut My bank — TCF — has a security question “What city is your vacation home in?” My bank really doesn’t understand REAL America.
@StevenValentino I hate my bank and I would happily shove what little money I have into my mattress if the FDIC would insure it.
@MadRainbowLtd Halifax bank are sh*t! They let someone clear out my bank account using an old cancelled debit card!
@clarecbarry Bank screwed up appointment for third time. Quite impressive. Now on way to work with meeting with Mr Douchebag

And this wonderful series of Tweets from @docbaty on 29 July

@docbaty Things my bank did wrong today:
1) that it would take two weeks to perform a simple account creation;
@docbaty 2) offered to expedite that process, which means it -can- happen faster, but they’re just not trying;
@docbaty 3) asked me if I banked with Bank Y at all; they do the same thing while you wait…
@docbaty 4) gave me a blank form to complete in sign, when every piece of info – other than signature – is already on file…
@docbaty 5) made an error on the processing fee, charging $2,180 instead of $218. I had to correct their calculations (she’d used a calculator)
@docbaty 6) checked new calculations with manager, while making me wait.
@docbaty 7) failed to apologize.

Now imagine the next generation of customers who are out there looking for a new institution to engage with right now. Where are they going to look before they decide on a life-long relationship with a financial institution? They’re going to ask their peers. They will search on a product or brand and find search engine results prioritized, not by some clever search-engine-optimization techniques, but by how their friends and networks have scored the performance of that bank or credit union. They’re going to ask for recommendations on Facebook, Twitter or Google Plus, and they’re increasingly going to choose new providers who think out of the box and who work on simplicity, great customer journeys and improving customer experience through better interactions.

What used to happen informally now is being hardwired into the brand selection process. What marketers used to call the ‘choice set’. We’re learning that this process can’t be gamed, manipulated or bought as a result of ad spend. We’re learning that the most effective mechanism is simply being great service businesses and listening to customers when they’re not happy. The process is brutal, it’s transparent, and it’s going to kill your brand unless you are honestly engaging customers, and you try your hardest to get rid of those pesky, stupid banking rules that only make sense to us as the bank – and even then, let’s be honest… they don’t really make sense to us either.

#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.

The 5 Stages of Social Media Grief

In Blogs, Customer Experience, Groundswell, Internet Banking, Retail Banking, Social Networking, Technology Innovation, Twitter on July 22, 2010 at 08:44

This week I’ve met with some very interesting people and the subject of social media has been high on the agenda. Yesterday, I met with Tom Cannon, who is leading the charge on the Internet Banking initiative that is part of HSBC’s “OneH” project – essentially their customer dashboard, single-view of the customer baseline technology. Earlier in the week with Sam Oakley from WolfStar, John Beck the Technology Editor for the Financial Times/The Banker magazine in London, and my good pal Christophe Langlois from Visible Banking, amongst others.  At these sessions we invariably repeated a discussion I’ve had 30 times in the last few months with innovators in the banking space the world over. The question simply being “when will the banking senior executives get social media?”

Facebook, Twitter, Foursquare – when will it end?

Facebook this week announced their 500 millionth active user. That number is pretty significant. Firstly, any corporation that can claim it’s customer base would make it the third largest country in the world (behind only China and India) has a case for celebration. Secondly, it doesn’t look as if its growth will slow any time soon. Lastly, their growth is not restricted by physical distribution or inventory constraints, their marketplace is anywhere you are.

Twitter is not far behind, with 190 million users as of June 2010, and 65 million tweets a day. Foursquare, the Geolocation Social Networking service is up there too – adding 100,000 new users every week at the moment.

When will it end? It’s won’t – that’s like asking when the internet and mobile phones will end. Which brings me to the realization that dealing with innovation in banking is a lot like dealing with grief.

So here are the 5 stages of Innovation Grief for Banks and Bankers (It probably works for most companies actually)

Stage 1 – Total ignorance

When a new innovation comes out banker’s simply ignore it because ‘banking has been around for centuries and it fundamentally doesn’t change…”

Stage 2 – It’s just a fad

“Visionaries see a future of telecommuting workers, interactive libraries and multimedia classrooms … Commerce and business will shift from offices and malls to networks and modems … Baloney. Do our computer pundits lack all common sense? The truth is no online database will replace your daily newspaper, no CD-ROM can take the place of a competent teacher and no computer network will change the way government works … Yet Nicholas Negroponte, director of the MIT Media Lab, predicts that we’ll soon buy books and newspapers straight over the Internet. Uh, sure.” – Clifford Stohl, Newsweek, 27 February, 1995

Ok so now it’s on our radar, but it’s just a fad – all the fuss will blow over soon.

Stage 3 – I still don’t get it, where’s the money?

Because of Stage 1 and Stage 2 banker’s are looking at social media’s incredible rise to fame and then looking at their competitors (who are mostly doing nothing) and saying, “well as an industry no one is making any money out of this, so let’s not bother just yet…”

How can you tell you are this stage? You have a Facebook page for the bank, but no one actively managing your social media listening post

Stage 4 – The Sonic Boom

Internet banking, mobile banking, social media is all the same for bankers. It’s like them sitting there watching the Concorde or an F15 doing a low-pass, fly-by and not yet registering what they are seeing as significant, until the Sonic Boom hits them and blows them off their feet. By then it is already too late because at Mach 1 or Mach 2 your competitors are already way, way in front of you. This is where the message finally breaks through the ignorance! BOOM!

This is the stage we are hitting for most banks today…

If you work in a bank how can you tell if you are at this stage – your bank has just hired a Head of Social Media.

Social Media is starting to hit banks like a Sonic Boom

Stage 5 – The Mad Scramble

Excuse the vernacular, but this is the “oh, crap” moment where bankers suddenly realize that they should have been heavily invested in this 3-4 years ago, and their lack of preparedness is highlighting to their customer base, employees and the world just how out of touch bankers are. The mad scramble may have occurred because of a PR disaster like those that BP has experienced with the Gulf Oil Spill, that Bank of America experience with Ann Minch’s Debtor revolt, or that Citibank experienced with the Fabulis debacle.

This is when the knee-jerk hiring spree starts with hit and miss initiatives occurring throughout the bank.

How do you know when you are at this stage? The CEO of the bank is talking about Social Media in press conferences and how the bank is committed to better reaching customers through this medium.

Getting out in front

So how do you stop the grief cycle within your organization? The first thing bankers need to do is rethink their organizational structure around customer. Social Media is a tool for reaching customers, for engaging customers. It is as important as investing in branches, it is just as critical as having a telephone number for customers to call, but more than that, it can help you transform your business internally too. To fix your organization to serve customers in the digital and social media age – you need to think independently of channels.

We talk about multi-channel alot these days, but clearly social media is showing us that new channels and ways of interacting can grow very fast. Who’s to say what will come after social media? Something will. The key is that channel complexity continues to grow, and no single channel should be singled out as more important. For customers branch is no more important than Internet, mobile than social media, call centre than ATM. These are tools to engage, and increasingly banks need to be more pervasive – everywhere the customer is.

So break the back of organization structure silos around channels. Think customer – think total channel engagement, and get moving on Social Media fast: BOOM!

Brett King: I’m on the move, therefore I am…HELP! (HuffPost)

In Blogs, Media, Mobile Banking, Retail Banking, Social Networking, Strategy, Technology Innovation, Twitter on April 26, 2010 at 09:45

See the original post here

Mobility is such a basic requirement for the connected, networked executive today. I travel about half of my time promoting my book, BANK 2.0, and working with clients around the globe. When I land in any country I’m visiting, the first thing I generally have to do once I get on the ground is ‘check-in’, and I’m not talking about FourSquare. When I get off the plane from a 6 or 7 hour commute, the need to quickly check my emails is pretty critical these days because alot of stuff I deal with is increasingly time sensitive. But the experience of such a simple task is often frustrated.

For Blackberry customers there is some network interconnectivity for data and email, but for other users of mobile devices it is down to data roaming or local WiFi connectivity. For laptop owners, it comes down to WiFi. At this point it is all a bit hit and miss depending on where you are.

Last week I checked into the Hard Rock Hotel in Sentosa in Singapore’s new resort district. The charge was S$35 per day (approximately US$25). This seems to be about the standard daily rate for internet connectivity in hotels – which is crazy given the connectivity costs likely means that the same hotel is paying around S$90 per month for 1Gbit line. That means a mark-up of around a Gazillion percent 🙂 However, Singapore is generally pretty advanced as far as roaming/tourist connectivity.

Right now I’m blogging this entry from a cafe in Singapore using the community Wireless@SG service provided FREE by the Singapore government (iDa – Infocomm Development Authority). To get access I just simply dial a local number (*186) on my mobile and it sends me a password I can use to access WiFi pretty much anywhere in Singapore for free during my stay – outstanding really.

When I land in Hong Kong, I can get a similar access at airports, etc although as a resident I’ve chosen to go with the Wirless Next-G solution where I get 21Mbps connection speeds, unlimited downloads all for around US$50 per month. Japan and Korea, I have similar connection options, but even faster connectivity and cheaper rates. Asia is really the place to be mobile and connected. Once I step on a plane, however, things start to move backwards in time.

In Australia local WiFi connectivity in coffee shops is almost unheard of. Recently in Melbourne I walked into a Hudson Coffee and was told by the local barrista that they wouldn’t provide wireless internet out of fear that University students might flood the coffee shop. Last week at Brisbane airport I couldn’t get wireless connectivity even if I was willing to pay for it, let alone a free service. There was access in the Qantas club, but being a Cathay and Emirates frequent flyer that was not an option for me. There was a local internet kiosk – but you had to use a desktop for access – no WiFi. The solution? I had to buy a pre-paid SIM, put it in my iPhone and use tethering. Loco loco!!

In the US unless you are a US citizen with a social security number, you are doomed to purchase expensive day-passes to get continued access. The UK offers a similar story. Because you are from “out of town”, your ability to get a cost-effective connectivity option is generally reduced. Anyone would think that we are living in a dial-up global economy with these kinds of crazy limitations in connectivity for mobile warriors.

I guess the thinking from local providers is that as a business traveller you can afford to pay a premium, but shouldn’t governments be thinking about attracting foreign and local business people to their city and offering incentives to do business in these locations?

Then there is the issue of effective commerce on the move.

Today I walked into a local HSBC branch in Singapore to pay a credit card bill. I have a HSBC credit card issued from both Dubai and Hong Kong where I am in the bank’s Premier segment. When I walked into the branch to make a credit to my card, however, I was told that because I didn’t have a local account making a payment to my HK or DXB card was not possible. The suggestion – “try doing a money order from Western Union to your Hong Kong account…”

Amazing! This is why I hate going into branches!

In this day and age to have a major global bank not have the sort of basic connectivity and capability for global movers like myself is a major issue. The visit to the branch was because I figured there was no other way I was going to be able to deposit the cash that I had received in Singapore. In the end, I got the cash converted into USD currency and will have to carry it with me until I return to Hong Kong, pay a premium to have a remittance provider handle it, or deposit in a friend’s local account and get him to transfer the cash.

A Philippine National working as a maid or domestic helper in Singapore can transfer money back home via her mobile phone, and yet me…a global, preferred status customer can’t because I don’t have a local account with the world’s “local” bank. Maybe that’s the problem – they are lots of local banks.

Once again I am stuck with finding a work around for outdated, outmoded processes that think like a bank stuck in the 20th Century. Don’t get me wrong – HSBC is an excellent bank when you are in your home town of the UK or Hong Kong and need anything done locally. I know the same situation applies for Citibank, BofA and just about every major bank these days. You exist as a customer for a profit centre – when you walk outside that profit centre you no longer carry any status or privilege.

Today all this is simply inexcusable. About the only thing that is going to keep me in one place long enough to do my banking by the old paradigm these days is a volcano. Otherwise, banks better get moving…

Now if this was a post regarding my Dell computer, I bet I could expect someone from Dell to contact me within the next few hours to help me fix my problem, because they are constantly monitoring blog posts and twitter feeds for such issues. Let’s see how long it takes HSBC shall we?

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 (http://www.internetevolution.com/)

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…