Brett King

Posts Tagged ‘future’

The Prototype Bank

In Customer Experience, Retail Banking, Strategy on November 3, 2010 at 17:47

Getting to the bank of tomorrow seems daunting. For banks that are entrenched in physical elements such as branch distribution networks, long-held conventions around paper-led compliance procedures, embedded silos and P&L (that are more likely to collapse completely than change) – how can a change to a better bank be navigated? How are you going to issue credit cards when there is no plastic? What will checking accounts be called when you don’t issue check books anymore? The challenges facing the banking sector today are extreme…

Gaming and Silos that frustrate Banking

This problem of change is amplified by the tendency towards internal gaming in the institution.  As banks we compete department by department for precious budget dollars each year. We compete across product for customer, with no tangible connection between a customer who comes as a credit card account holder to a customer who has a mortgage with the exception of the brand. In this environment, how do we develop a culture of innovation, of unyielding focus on customer excellence?

Embedded silos and this type of internal gaming frustrates customer innovation and improvements in the customer experience. We fight annually to retain our silo’s budget for the coming year, without a greater goal considered around whether or not those budgets are actually accomplishing what we need for the customer. We have poor metrics that reinforce existing paradigms. We lack the ability to measure customer behavior and realistically assess how customers are working with us, thus as an industry we largely ignore the obvious massive changes around mobile, social media and Internet adoption.

Basically, forget the concept of any spontaneous change in organization strategy that creates an innovative bank, one that intuitively gets the customer behavioral shift – this is going to be very, very hard work.

Don’t bet the farm

The mantra of senior executives looking at social media, mobile banking and payments, next generation Internet banking, augmented reality or geo-location, and other such technology initiatives reminds us of the classic Jerry McGuire call to “Show Me The Money”! ROI is a massive focus, but the problem with living in a rapid adoption environment like we do today, is that if you wait to see how business models develop 2-3 years down the track to prove there is ROI, you are already going to be 4 years behind the competition.

So how do you innovate when you can’t demonstrate short-term ROI, but you know that you MUST be experimenting with different approaches? How do you foster a culture of break out strategies or approaches when existing silos and gaming leave you with minimal budget to try something new?

The trick is that you have to be ready to play with new ideas and test new approaches cheaper, faster and better than the traditional IT or channel deployment approaches of yester years. Your bank has to learn to prototype.

Playing with BANK 2.0 models

Although as a competency interaction design, usability, behavioral economics, prototyping and other such elements have been around for a couple of decades, the banking sector has largely remained immune from this type of thinking. Predominantly we’ve let bank process, policy, compliance and regulations define how we behave as a bank, and customers have had to yield to this environment. As Facebook credits, PayPal, NFC enabled iPhones and other such innovations continue to ‘bite’ we realize that as an industry we’re going to have to redesign customer journeys and improve engagement. Experimentation is a great model to help us get to where we need to go.

IDEO recently attacked the redesign of the humble ATM with BBVA. The project took almost 2 years to get from prototyping to finished product, but in bank terms, this is warp speed. The traditional design process would not have produced the same outcome as what you see is the end result, which is truly a revolution in ATM design. Check out the video that documents the project and the prototyping and the design process complete with vital “human“ input.

The Future of Self-Service Banking from IDEO on Vimeo.

Immersion as an observation technique

Experiential immersion and behavioral observation studies are increasingly powerful ways to understand how customers respond to prototype environments. Recently I visited NAB in Australia where I met with Mark Appleford’s team who have built an Immersion and Design Centre for the purpose of testing their NextGen approaches to engagement banking.

The Immersion and Design Centre allows for rapid configuration of physical spaces and interaction, without having to actually build a physical retail environment. A large video screen and configurable room enables NAB to create a simulated environment complete with visual feedback, portable signage, ambient sounds, mock-up screens and interfaces (like a cardboard box and touch screen that doubles as an ATM). In the images below you can see a mock-up of a bank shop environment complete with the video wall configured to show shoppers milling in the retail space, and you’ll see a NAB staffer sitting behind an ATM mock-up feeding mock currency through a slot to customers in a test of an ATM design iteration.

A retail shopping environment projected on the rear wall of the immersion space

The staffer here is manually feeding notes to customers through the ATM mock-up

Fail often, fail early, save big bucks…

The objective in building the prototype bank is to fail often, re-iterate and get the design of the customer interaction right, while it doesn’t cost you too much to change. If you’re already at User Acceptance Testing and you find a major customer hiccup, the cost of re-architecting the solution is prohibitive – so bad designs often go live just because they are too costly to change when testing reveals problems at the user-end of the journey.

If you are going to be a really innovative bank, you have to learn to experiment with different models of engagement in a cheap, but productive manner. Start thinking of ways to prototype the future of your bank.


Banks: KYC is Killing Your Customers (Huff Post)

In Retail Banking, Strategy, Technology Innovation on February 23, 2010 at 05:53

See the original blog entry on Huffington Post…

In my discussions with bankers about innovation, I often hear them tell me that perhaps in other industries innovation could be achieved, but due to heavy regulation and the compliance requirements of the banking sector that such is more difficult for financial institutions. This is part of the story, but I’m sure that it is fixable.

I met with a Private Banker from one of the dominant bank brands in Asia this week. In Central Hong Kong this bank has it’s own tower, of which three floors are dedicated to the Private Banking unit, but that’s only half true. Almost half of that office space is taken up by a team that is designed to reduce risk to the bank by ensuring that customers are accurately informed of the risks their investments will carry, and to ensure that the bank does not commit itself or their client to undue risks. The name of this team within the Private Bank – the Business Prevention unit – I jest ye not.

Has it come to this that regulation and risk aversion is such an important part of the bank that we now actively try to prevent business occurring? It would appear so.

This explains a great deal about the current state of our banking sector. If customers are a risky proposition, then how does the bank make money? Well they invest it in stuff where they know they have an element of control, or in the case of sub-prime they try to actively engineer it so that they make profit regardless of the underlying asset risk. Some banks have even been known to borrow money from the government and margin trade on it in recent times…

The point of this is that banks have become so myopic in respect to customer risk that as customer we’ve almost become an anathema. In fact, the compliance workload we as customers have to deal with these days is so offensive, that it is almost not worth engaging a bank for an investment deal or asking for a loan. To illustrate, in the mid 80’s I recall being a student and walking in to open an account with no identification, I filled out two cards with a specimen signature, my address and particulars, and that was it. Now that same bank requires a 100-point identification scorecard to be realized, and the basic current account application form is some 18 pages long. This is progress apparently.

Compliance procedures are Killing customer experience Figure 1 – Internal Compliance Procedures are bad for business

Now, I appreciate we have Anti-Money Laundering, we have identity theft, we have IRS and tax departments eager to know what we’re doing with our money, and we have regulators that are making it their job to ensure we don’t invest in a financial product that we don’t fully understand. Sometimes, just sometimes, however, we just want a decent banking experience. We just want it to work, and the more paperwork you throw at us, the more hoops you make us jump through – the worse our banking experience is.

The thing with this is, that although there are regulations and legal constraints, most of the work we have to do is due to internal bank policy and process. For example, let’s say an existing customer comes to the bank to ask for a loan – this is a customer we’ve known for 5 years, his salary gets paid every month on time, and he’s a low credit risk based on what we already know. Why then is it that this same customer has to fill out an application form with the same details he’s provided us with since day one?

There is absolutely no regulatory or legal requirement for the process to be handled in this way. Right now this is all about making it easier for the bank to mitigate risk for their brand. A customer-focused bank would either allow the customer to sign on with their Internet Banking credentials to agree to the loan, perhaps sign on a tablet or digital form or if absolutely necessary generate a paper application form based on existing customer records where all he had to do was sign. All of these solutions would produce exactly the same result from a regulator’s or compliance perspective as a hefty paper KYC process.

So why as banks don’t we do this way? Firstly, no one senior enough in the bank has sponsored such a move. Secondly, because the internal IT department would probably take 15,000 man days, and $184.63 m to enable this. And lastly, because at the end of the day as bank executives we get rewarded for mitigating bank risk, not for making customer experience better.

Regulators and bankers need to separate ‘customer’ risk from operational risk, and in this way innovation can still occur.

Would Google make a better bank? (HuffPost Blog)

In Media, Mobile Banking, Retail Banking, Social Networking, Strategy, Technology Innovation on February 1, 2010 at 11:05

As posted on Huffington Post by Brett King
See the original Post on Huffington…

This is not the first time this question has been asked. Jeff Jarvis started this discussion back in 2008, and covered the topic in his book entitled What Would Google Do? However, in recent times with the banking sector in so much turmoil and facing the ire of so many, the question probably is not whether a Google might come along and start a bank, but when will an Amazon, Google or Facebook weigh in to this space?

Unlikely? Sceptical? Let me challenge that thought with a simple fact. Google already has a banking license…

Yes. Since late 2007 Google has held a banking license issued by the Central Bank of the Netherlands- De Nederlandsche Bank. The license is nominated as being for digital banking services. They’re not the only ones looking at financial services to extend their brand. As of May of 2007 Pay Pal has held a banking license from Luxembourg. HP has banking licenses in a few countries, allowing it to issue loans and leasing agreements. The publisher of the online science-fiction game “Entropia Universe” has a banking license from the Swedish Financial Supervisory Authority and this enables it Entropia to encourage trade of their virtual currency used in their online world. What about Apple? Well as far as we know they don’t have one…yet.

What’s wrong with your bank?
Many feel today that the big banks have got too big, have lost touch with their customers. They seem more interested in speculating on the assets they hold to create profit, than basic banking services to their customer. The criticism is often levelled that these banks feel they are big enough that if you don’t like it, they’ll just ignore you.

The fundamental issues that customers face today, however, are relatively simple to fix. For example, when you go down to your bank to apply for a loan or a credit card, they ask you all the same questions they’ve already asked before a million times before. Banks have a habit of hiking up fees without any warning, and you can’t do anything about it. When you do need a new loan or changes to your mortgage, you feel like you have to beg just to get some consideration. No matter how many times you ring the bank, you have to repeat the same story you’ve already given to the last person you spoke to.

The question at hand, however, is Would Google build a better bank? The immediate answer might be – it couldn’t be worse than what we’ve got now. The question really is how could a Google or someone like them build a better bank?

Simplicity is a service in itself

“The perfect search engine,” says co-founder Larry Page, “would understand exactly what you mean and give back exactly what you want.” This was the power behind Google’s early success obviously, but we could easily paraphrase this for banking – the perfect bank would understand what you need and give you exactly what want…

Google has built its business around ten key business principles, what they like to call “Then things we know to be true”. A number of these principles would come into play in creating a different type of banking environment for customers Google Style. Focus on the user and all else will follow, fast is better than slow, you don’t need to be at your desk to need an answer, you can make money without doing evil, there’s always more information out there, you can be serious without a suit, and great just isn’t good enough. How would this manifest in a better bank?


Are you ready?
Whether it is Google, Apple or a fresh start-up, the likelihood of a new retail financial services organization stepping into the fray over the next few years is extremely high. As Google learned with its search engine opportunity for innovation is often borne out of either customer frustrations or simply a better way of doing things. Given our recent experiences with the big banks, is it unthinkable that someone might try to innovate your banking experience?

What DAVOS needs to do, but won’t

In Groundswell, Media, Retail Banking, Social Networking, Strategy on January 26, 2010 at 23:14

We’ve all read a great deal about DAVOS World Economic Forum (WEF) over the last few days discussing what the leaders of the planet will need to achieve. While the environment, and responses to crisis like Haiti will be sure to be a feature, the world in general will be looking for Davos to achieve is some progress on reforming the global financial system.

Considering the G20 and G7 and others have had a shot at this there is some indication that at DAVOS this year reform of the global financial system will continue to be the hot topic. The focus will likely be on the role of regulators, the flow of capital, interconnectedness of global capital markets and trade, and the way banks should work responsibly to free up capital and encourage liquidity. The forum is unlikely to get into specific discussions on the creation or structuring of financial instruments or speculative trading practices, rather sticking to the core principles of how the financial system can be better managed to prevent future problems.

The World Economic Forum is by invitation only and those that are invited are the undisputed world leaders in their fields. Typical participants include government representatives of the world’s top economies and fastest-growing small countries, heads of state like Vladimir Putin and Wen Jia Bao, government ministers for finance/economics, leaders from international NGOs, cultural and sports leaders such as U2’s Bono, and thought leaders like Bill Gates and Al Gore. The most influential voices and minds in the world today.

Wen Jiabao, Klaus Schwab - World Economic Forum Annual Meeting Davos 2009
DAVOS-KLOSTERS/SWITZERLAND, 28JAN09 – Wen Jiabao (L) , Premier of the People’s Republic of China and Klaus Schwab, Founder and Executive Chairman, World Economic Forum, captured during the session ‘Special Session with Wen Jiabao, Premier of the People’s Republic of China’ at the Annual Meeting 2009 of the World Economic Forum in Davos, Switzerland, January 28, 2009. Copyright by World Economic Forum by Monika Flueckiger

Looking through the World Economic Forum Programme for this coming weekend there are some incredible speakers and topics. James Cameron will be there to talk about directing Avatar. Reid Hoffman (Linkedin), Evan Williams (Twitter) and Owen Van Natta (MySpace) will be there to discuss the growing influence of social networks. Tim Brown (IDEO) and Gary Hamel (Author, MLab) will be there to discuss management innovation. Brian Moynihan, CEO of Bank of America, and others will be there to discuss redesigning capital markets. Bill and Melinda Gates will be there to discuss their foundation, and Melinda Gates will be discussing education for girls and how it effects economics in the developing world. This is just a small snapshot of the amazing depth to the forum, but something is missing.

The issue of customer advocacy and how input from customers is integrated into the strategy of an organization is completely absent from the forum. While management innovation, risk mitigation and big picture regulation and reform are being discussed, the voice of the customer is likely not to be heard this year at Davos. Why is that significant? When it comes to the financial crisis perhaps the most significant voices namely, the consumers who have been affected by the global financial crisis with job losses, foreclosures or mortgage repossessions and general economic challenges, are silent due to their absence. Interestingly while seeking to ‘fix the system’ the forum doesn’t actually appear to have any mechanism or sessions dedicated to these issues which are the primary outcome of the financial crisis.

While I agree that the system is broken, new thinking is required on how to ensure that the changes protect customers and not just reduce institutional risk and government exposure. There is no apparent discussion on innovation and compensation for financial institutions so that the massive profits that have been yielded, despite the financial crisis, can be injected back into the system in a more constructive way than through the bonus checks of bank senior executives. We should be seeing sessions that tie the financial system to economic improvement through corporate social responsibility and better initiatives for the disadvantaged, and sessions that motivate global financial brands to do more to support microfinance and give the unbanked more accessibility to finance in the developing world. These are all problems of which there are reasonably simple solutions if there is the will.

New Did You Know – BANK 2.0 Video uploaded

In Retail Banking on January 14, 2010 at 12:42

Check out the draft of the new promo video for the book which looks at some of the changes in banking, disruptive technologies, and some interesting facts you might not be aware of!

Stay tuned for more of BANK 2.0 very soon…