Brett King

Posts Tagged ‘web’

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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Private Banking 2.0

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

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

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

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

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

The digital relationship

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

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

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

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

Maximizing the client interaction

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

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

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

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

Social Scoring

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

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

Conclusion

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

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

An organization structure that doesn’t match customer behavior

In Retail Banking, Strategy on October 26, 2009 at 13:11

Excerpt from Chapter 2 – Measuring the Customer Experience

By examining the behaviour of customers, the glaring realization is that institutions are essentially assuming that customers only ever use one channel at a time to interact with them. Hence, it is not unusual to find a web team that believes that it can take 30-40% of branch traffic and service it online. Likewise it is not unusual to hear proponents of Branch banking telling us “the branch is back” and that the winning strategy is to be investing in more real estate and variations of branch to retain customers. It’s also not unusual for customers to receive dozens of direct mail offers, email marketing offers or sms promotions from different ‘revenue centres’ within the bank independent of each other.

In 2008 90-95% of daily transactions are done electronically and in most cases the majority of transaction volume comes through direct channels namely ATM, Call Centre and Internet. By February of 2007, HSBC in Hong Kong reported in the South China Morning Post that 90% of their daily transactions were through phone, Internet or ATM, leaving the rest to branch. RaboBank, FirstDirect, INGDirect, and others have been able to successfully operate without any reliance on branch structures. This is not a criticism of branches, because we believe that branches will remain an essential part of the future of banking. However, look at the organization structure of most banks today and you’ll see a complete and total lack of understanding of customer behaviour inherit within the organization chart. It’s really quite appalling that the organization structure of many banks have not caught up with this reality.

When you examine the organization structure of most retail banks, the Head of Branch networks is second only to the Head of Retail, and in many cases is a direct report to the CEO. In comparison the manager responsible for Internet often sits under the IT or Marketing departments three or four levels below the organizational equivalent of the branch business unit lead. So let’s get this straight. 90% of the transactions go through channels that are managed by managers who have only a modicum of influence within the organization structure, while the head of Branches has the ear of the CEO and looks after just 5-10% of the daily traffic within the bank.

Figure - Partial Retail Banking Org Chart as it relates to channel priorities

Figure - Partial Retail Banking Org Chart as it relates to channel priorities

“Ah, but the branch generates all the revenue…” we’ve heard it argued. This is a really good justification for keeping traditional structures in place. Well let us really examine if that is the case.

Let us take credit card acquisitions as an example. How do we market credit cards? Currently we might use direct mail, newspaper advertisements, web and possibly promotional marketing offering a ‘free gift’ if clients sign up for a new Visa card or Mastercard. Customers are then faced with probably two or three choices of how to apply. The first option is that they can call the call centre, but the call centre refers them to the branch because they need to present proof of income and proof of identity to an officer of the bank. The same might be the case for the internet, where the application can be filled online, but we then call them and ask them to come into the branch to complete the application.

Who gets to record the revenue for the credit card application? Not the call centre, or the internet channel. Often it is the physical branch that executes the final signature on the application form and the KYC compliance check on the proof of income – so it happily records the revenue of the sale. But the branch has actually had practically zero involvement in the sale, and simply is just a ‘step’ in a required adherence to an outmoded compliance process. So does the branch actually generate the revenue, or is it merely an accounting treatment?

The attitude of many retail banking senior executives seems to be that the branch is a serious banking channel, whereas the remainder of “alternative” channels are just that – alternatives to the ‘real thing’. The problem is that customers simply don’t think like this. They don’t assign a higher value or priority to the branch; they just see it as one of the many channels they can choose to do their banking. In fact, many customers these days choose not to go the branch because they don’t want to stand in line, or they find it troublesome to get to the branch at times when they are open. Admittedly the branch is the premium service channel, but it is not the ONLY channel. So why don’t the banks think the way customers do?

The longer banks choose to reinforce a belief that the branch is superior within the organization structure, the longer it will take them to match the performance of the bank to the changing behaviour of retail customers.