Brett King

Posts Tagged ‘Ann Minch’

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.

Social Media and Bank Compliance Departments – Eternal Enemies?

In Retail Banking, Social Networking, Strategy, Technology Innovation on July 6, 2010 at 22:50

A consistent theme keeps popping up as I discuss social media innovations with bankers these days. It is increasingly frustrating for innovators who want to use mobile, social media, the web and other such tools to get these past hyper-risk-adverse compliance specialists. It seems as if many of the banker’s I’m meeting are saying that the favorite word of the compliance officer of today is simply “No”.

That needs to change…

Compliance holding up social media adoption

In a recent American Banker’s Association survey they reported that 74% of participating banks confirmed that all ‘social media efforts were to be vetted by compliance first’. In an environment where minutes matter, and the response is key, such a logjam to social media participation is a frustrating mismatch with the realities of dealing with customers in todays uber-connected world.

On Sunday I enjoyed brunch with Matt Dooley who heads up Direct Customer Experience for HSBC’s Commercial team in Asia, and his wife Maria Sit who runs Heath Wallace’s Asia division. Over lunch the issue of culture, compliance, philosophy and the reluctance to experiment to broadly with social media, mobile engagement and other such issues came up.

Matt used a brilliant illustration to identify the problematic compliance hurdles we face today as bank innovators. He asked me whether or not a compliance department of a major financial institution would approve “snail mail” as a new initiative if it was proposed today? Let me explain. If snail mail did not exist today, what would your average compliance officer think if you came along and explained you wanted to use this great new technology for distribution of bank material like statements, new credit cards, PIN #’s, etc. You’d have your PowerPoint deck ready to go explain the process where you stuff an envelope, hand it on to someone you don’t know in the bank (likely a very junior staff member), he then puts it in a bag which is picked up by a truck with another person you don’t know, they take it to a large warehouse and sort it according to Geography, etc, etc…

There just ain’t no way that snail mail would make it through the compliance check list of today’s modern financial institution. The compliance officers would no doubt quote scenarios like this to justify why it would be absolutely impossible for the bank to consider using this new ‘snail mail’ technology.

This is the dilemma. Today there are those of us trying to improve customer experience, knowing full well that compliance departments are citing risk mitigation, regulations and laws, bank policy and procedures, and other such issues as reasons why innovators can’t release a new mobile app, engage in social media conversations in real-time with customers, and so forth. In the meantime, there are existing processes, procedures and systems that are far more riskier than things like social media, but they are immune to the compliance department’s gaze because they are already in place.

Is it riskier to do nothing?

Let’s take Twitter as an example. Today it’s rudimentary to do a Twitter search on major FI brands to see topics trending that in the old days if they were carried by mainstream media would turn a banker’s hair on end. In many cases, however, such interactions are simply ignored because there are no dedicated resources listening and responding to such social media conversations. The processes internally around getting compliance approval for a formal response simply make any such response useless by the time it is approved.

But aren’t social media free form responses risky?

Take for example the very public Twitter faux pas recently committed by a Westpac employee who stated “Oh so very over it today…”. Honestly, this is probably about the worst that it could get on Twitter – and it just isn’t that bad. I hear Compliance departments the world over rejoicing and justifying their stance at the next Social Media strategy review meetings – saying, ‘See, see – we told you so!”. The reality is, that this particular faux pas actually ended up humanizing the Westpac team and probably won them new supporters more than anything else…

It is far more likely that a serious breach of customer trust, a poor service or policy decision, or some other very public social media trending topic could do far worse brand damage if left unanswered out in the social media conversation.

Classic examples are those of Ann Minch with Bank of America and Citibank with the Fabulis debacle. In observing the Facebook and Twitter effect of such PR nightmares, the lack of timely response by the bank across the social media landscape made these issues far more impactful and damaging than they needed to be. So the real risk is in not responding quickly enough.

The reality is that banks are increasingly likely to face a major PR disaster and have it escalated more rapidly than they can every imagine through social media networks. Take the example of BP and the recent Gulf Oil Spill – their lack of maturity in handling PR issues over social media has absolutely punished their brand. The spill is bad enough, but BP’s response to the social media conversation has simply made it much worse than it had to be.

No amount of brand advertising and traditional PR can ever undo the sort of reputation damage that is possible to your brand in the social media landscape.

Compliance as an enabler

Compliance needs to understand the negative risk of increasing workload on the frontline in respect of customer service perception, and decreasing the ability of the organization to respond to social media events in real time. They need to start thinking about their function as an enabler of the core business with customers, rather than just risk mitigation. They can also be lobbying regulators to help regulators adapt and make their processes more user-friendly, while retaining security of identity and the assets of the customer.

Customer experience is being hampered by compliance heavy processes that look to reduce risk, but make the engagement unnecessarily complex. Translating the Terms and Conditions from a paper application form onto the first 7 pages of a web-based application process might seem legally sound, but is quite ridiculous from a Usability and Customer Experience perspective.

Compliance departments need to learn to stop saying no, and be embedded within social media, customer advocacy and customer experience teams so they understand the implications of ‘risk’ and ‘legal’ decisions that actually hamper the organizations ability to respond to customer needs.

Forget greater regulation, social media will force transparency (HuffPost)

In Retail Banking, Social Networking, Strategy on May 10, 2010 at 09:53

See the original post on Huffington here

As President Obama was gearing up last month to push further reforms for the finance sector through congress, the sector lobbyists were also gearing up for a battle of PR wits to try to prevent changes that threaten the status quo.  Senior industry players like Jamie Dimon were extremely vocal in challenging the president’s push for greater regulation.

The mantra of “too big to fail” was the protection the big banks were all hoping to fall back on, and this call was certainly an underlying foundation of the bailout and TARP initiative in the US. The fear that if the biggest banks fail, the economic repercussions would be so serious that it is less costly and more economically prudent to bailout big banks so the economy didn’t get hurt further. Such sector lobbying and grandstanding is a fairly standard reaction to such government intervention, as we’ve seen time and time again.

But there is something more powerful than regulation or reform which looks like it will be a much more powerful force for creating change that even politicians will learn to fear – social media. In the recent UK elections, voter turnout was at the highest level in 13 years, largely due to the influence of social media in creating interest and driving participation in the election.

We’ve seen social media act as a force for small business and consumers in breaking the back of long held bank policies that have been unyielding even in the most regulated markets, with active ombudsmen or watchdogs. In February of this year Citibank was forced to very publicly back down from a policy-based decision on blocking the business account of a web start-up called Fabulis. In September of 2009 Ann Minch, a long and faithful BofA customer, posted a YouTube video documenting the interest rate increase on her BofA credit card from 12 to 30%. In the video Minch comments that she “could get a better rate from a loan shark”. Bank of America was unmoved by her social media efforts, at least initially. But after more than half a million views in just a few weeks, BofA was forced to reverse their interest rate increase and in doing so set a very public precedent for other customers.

Corporations are under the watchful eye of social media

This is a trend more and more questions by customers, more reversals in policy decisions that were once held as sacred and unmovable by the biggest corporations globally – basically they were too big to be challenged.

The largest corporate bankruptcies in history (see great infographic) largely occurred due to either lack of adherence to existing regulations (Lehman Bros), unbridled greed (Enron), lack of innovative thinking (GM) or just poor management. Even though Enron and Worldcom’s collapse resulted in the creation of the Sarbanes-Oxley act, it is generally believed that it is not lack of regulation that resulted in what were the biggest bankruptcies in US history at the time, but the intent of the management to circumvent existing regulations to create ‘arbitrage’ opportunities.

Great infographic on largest corporate bankruptcies (Source:www.good.is)

Goldman Sachs is being targeted for similar practices, this time around CDOs and the sub-prime crisis. Calls for Lloyd Blankfein’s resignation are sounding around Wall Street as Goldman’s shares have plummeted 19% since April 15, knocking $15 billion from Goldman’s market cap. The issue at hand is Goldman’s active strategy to make money from the collapsing sub-prime market, such as the so-called “Big Short”.

We saw the same shenanigans during the Enron debacle with empowered traders coming up with trading strategies they gave nicknames such as “Get Shorty”, “Fat Boy”, “Death Star”. This represents an institutional, wall street embraced, increased appetite for driving speculative bubbles or exploiting regulatory weaknesses to make extraordinary profits. Traders argue that arbitrage is just an ability to read risk and hedge appropriately, but when the traders have enough clout to create the bubble that generates the arbitrage opportunity, it takes on a different life – and creates lots of ethical questions.

We are coming to a point in time where such speculative, hedging and arbitrage strategies, or even outright fraud, are going to be a lot more difficult to execute because of the force of public opinion powered by social media.

We have come to an age where those organizations who are transparent, open and engaging with their customers will be rewarded. Those who don’t understand social media, refuse to participate in the conversation, and who don’t easily integrate customer needs, opinions and issues into their organization, will be punished – publicly and without mercy.

We often talk about the privacy implications of social media, but when it comes to large corporations – you most private, sacred issues will be played out on the public stage unless you are on top of social media and it’s impact on the voice of your customer.

Get ready for open, transparent customer engagement, 2.0 style!