stgilesresident on digital banking!

Sell, sell, sell! The future of Digital Banking

Digital channels are all about sales. If they aren’t, then you’re doing something wrong.

First and foremost, banks are about creating wealth. To do that, banks need to help their customers articulate financial goals and identify financial needs. Once that has been done, banks can provide the products and services to enable customers to achieve those financial goals. This is all about helping customers to live the lives that they want to – and that comes back to selling products to customers.

In the past, the most effective distribution channel banks had to sell products were salespeople in branches. Even today, by and large, banks make most of their sales – and certainly most of their high value sales – through face-to-face interactions in branch. However the world is changing fast.

Today’s consumers are used to a 24/7 retail experience – with late night shopping on the high street, and 24 hour convenience stores. Scheduling banking around 9-5 branch opening hours is not what consumers want to be doing. They, or rather we (!), want to be able to use our digital devices, wherever and whenever we like, in order to get the information that we need in order to find the products that we want. The spotlight is moving onto digital channels as an effective distribution channel for products and services.

As customers migrate from branches, the spotlight is moving onto digital channels as an effective tool for delivering sales. Today’s digital channels are slowly becoming more evolved sales channels. It is usual to see a number of different marketing assets on a webpage. Some will be contextual, some will be personalised. Banks have started using in-site tagging to analyse sales pipelines and tweak sales processes. However there is still a long way to go.

Banks need to use digital channels applications to understand the needs of their customers better. With customers choosing to bypass human interaction by taking their banking online, the opportunity to gain customer insight and anecdotal lead generation is reduced. Digital channel applications will feed the bank with customer intelligence. Personal Financial Management tools or Gamification applications offer banks the opportunity to understand better what their customers are trying to achieve – and offer relevant, tailored products on that basis.

Digital channels must become an essential part of a genuinely multi-channel sales strategy for any bank. And by multi-channel – I don’t mean multiple channels operating in silos, side by side. I mean customer journeys that can pass back and forth between channels – as the customer wants. Customers should be able to start the research process online, create an application and then interact with a salesperson if they wish, be that face-to-face or via a video chat. That salesperson should be able to see the application that the customer has already started. The customer must be able to go back to their digital applications and continue in their channel of choice throughout the rest of purchase.

I believe using video chat to further integrate salespeople into the digital sales process will drive a significant improvement in digital sales – as banks can offer advice, identify other needs and… continue to up-sell in the customer’s channel of choice. It’s about creating a process that is convenient and effective for the customer – to ensure that they’re not lost mid-application.

Mobile banking is the least developed of the digital channels for sales. There are many products which could be sold in one touch that would be appropriate for a mobile device – overdrafts and credit cards are obvious examples. In addition, there are a range of native capabilities still to be explored. Location based services can be used to target products at customers in specific locations (for example vouchers based on credit card rewards). Augmented reality could animate adverts or bring product illustrations to life.

Savvy banks will focus on helping customers create wealth. To do this, they need to sell more products and enable customers to achieve their financial goals. Customers want convenience – so that means banks will need to focus on digital channels. Sell, sell, sell!

Augmented Reality in FS - got your goggles?

‘Mobile banking’ is not a very precise term. Today, we know it as meaning using your mobile phone for banking. However, back in the late 1990s, all that it meant was SMS banking. If your bank was particularly advanced, it may also have meant a WAP-based mobile banking service. It has only been since the launch of smartphones in the mid-2000s, that ‘mobile banking’ has come to mean a browser- or mobile app-based banking service.

But I predict that the term ‘mobile banking’ is about to undergo a major transformation, with some serious implications for retail banking. In the next 3-5 years, the meaning of mobile banking will become more literal – an umbrella term to refer to any banking on the go. I believe the catalyst for these changes will be wearable devices. The much heralded Google Glass (or one of the slew of alternatives from Vuzix or even China’s Baidu) have the potential to radically reshape customer behaviours – just as the iPhone has done since 2007.

With these new devices, customers will be able to see information in a whole new way. Printed advertisements or product illustrations will be animated or overlaid with supplementary information – yes, think Minority Report – providing customers with a clearer explanation of their options and helping them to identify any financial needs. Personal information displayed through the glasses cannot be overseen, offering users a higher level of security. Customers will be able to voice activate their devices whilst on the move. Directions to ATMs and branches can be overlaid onto a customer’s view of the world around them, making services easier to locate. These are just a few of the possibilities augmented reality glasses will open up to banks.  Other wearable devices, like the ‘iWatch’ bracelet design recently patented by Apple, hint at a yet another inventive approach to mobile banking.

To make the most of these opportunities and land grab through innovation, banks need to start thinking now about how to design customer experiences for the arrival of these technologies. Even at this early stage, it is possible to identify a potent customer value proposition based around enhanced convenience and security. At the same time, banks need to start thinking creatively about the ways in which these technologies can help customers to identify needs and ultimately select and buy products. Banks like Halifax in the UK and Commonwealth Bank in Australia have already demonstrated the potential to drive sales from augmented reality functionality with their home finder mortgage apps. Clearly there is much more that could be done.

There will be many who think this is all pie in the sky. I fervently disagree. iPhones went from revolutionary to commonplace in a matter of a few short years. I strongly expect the new wearable devices to complete this process even faster. Banks need to prepare now – or run the risk of being left behind.

What do you think? Will you be sporting Google Glass when it hits the high street? If you say no, I’ll hold you to it when I catch you.

Finextra Webinar on Mobile Payments

Biometrics and banking

The death of YourBank.com?

Bank services via Boo? Retail banks and the use of audio micro-blogs.

Getting to know you. Getting to know all about you.

Is it wrong for your bank to use your social graph - the personal data you generate within your various social media outpourings - to make decisions about you? Much as in the famous song from ‘The King & I’, banks hope that once they’ve got to know you, you’ll get to like them too. But it doesn’t end there. Social graph data can enable banks do much more besides. So, should banks be using this data?

Well - as with so many of these question - the answer is ‘yes’ and ‘no’ and ‘it depends’.

Banks need to tread carefully here. Research shows that younger customers are very happy to share their data with anyone (as Mark Zuckerberg said in 2010, ‘Privacy is dead’). But young customers tend not to be valuable customer and many older folks (above the ancient age of 30) are a lot more twitchy about their data. When we place our personal data into Facebook, Twitter and the like, we seldom pause to wonder if we are going to be assessed by the powers that be. Most social media is an unofficial and semi-private part of our lives that we share with a network of known and trusted contacts. So you may have clicked to follow your bank. You probably didn’t read the small print and have no idea that your off the cuff status updates, old college friends and list of random things you’ve liked may now have a material impact on how you are treated or your loan score. Having these factors used by a bank without your knowledge would feel intrusive and thus be unwanted. Research has showed that the safe keeping of personal data is one of the few areas where banks are still trusted by customers. Banks cannot afford to damage that trust in the current environment as the reputational and regulatory backlash would probably be severe.

With this huge risk, why would banks even consider using this data? Let me lay my cards on the table. I believe social graph data is the key to offering customers some really superb customer service. Just imagine, by checking your social graph data, your bank determines you have a deep passion for travel and they offer you a good rate on a credit card that offers AirMiles. Alternatively, your bank spots that you have uploaded a photo gallery called ‘my new car’ and offers you a great motor insurance deal. In both these situations - one driven by long held preferences and the other by a life event, a bank has the capacity to tailor its marketing to a segment of one. As long as this is done in a way that doesn’t feel creepy (so it needs to be transparent what data is used and why), I think this starts banks down a journey of building meaningful relationships with customers via social media. This is a good thing. American Express (as I have mentioned before) do this really well with the ‘Link, Like, Love’ functionality on their Facebook page in the US. They offer customers vouchers based on the things they or they friends have liked on Facebook.

Lenddo (www.lenddo.com), a start-up from the Philippines, also shows how much more can be done with social graph data. Lenddo evaluates a customer’s credit worthiness based on the strength and integrity of their social network. Lenddo assesses a customer’s reputation based on who their friends and family are - and how many people have trusted them to become a contact. Lenddo treats their friends and family as a form of collateral. If the customer fails to repay their loan, their credit score - and the scores of all their contacts could be reduced. In this way, a large group of people have an interest in making sure loans are repaid on time. So you can imagine a scenario in the UK. You’ve been turned down for a loan. Your bank offers you the chance for a revised decision, if you allow it to crawl your social graph data. It determines that you have wealthy and well connected friends who have been willing to vouch for you. Based on that data, your bank may reconsider, and decide to give you the loan.

So to conclude, I think it is a good idea for banks to use social graph data - but only in very clear scenarios. The use of any social graph data must be in the best interest of both the bank and the customer. Any use of social graph data must be transparent to customers - and those customers must feel in control of their data. To try an use social graph data on the sly will provoke a significant backlash - which in the current environment, banks would be wise to avoid.

If you are aware of other examples of social graph data being used by financial services companies - I’d love to hear from you!

I’m here to make social media boring

Over the last couple of months, I have presented to a lot of senior banking executives on the subject of social media. The parallels between these presentations have been fascinating.

At all these presentations, I tend to be the last presenter of the day. I am usually all that’s between 10 tired delegates and their commute home. Nevertheless the feedback I usually get afterwards is how exciting the discussion has been and how valuable it was to have an opportunity to discuss what social media can do for a bank.

Now, I would like to put this down to my own inimitable presenting style and effective influencing skills (and the fact my presentation often follows a long discussion on Basle 3 capital adequacy requirements or the impact of new regulatory frameworks - after which anything would be exciting). However, I suspect is it more to do with the way in which most bankers perceive ‘social media’. Social media is ‘fun’ and ‘cool’ and ‘interesting’. It’s is a nice way to round out a day of presentations. A tick in the box for strategic thinking. But, well… it’s just not that important right now.

I think that is really wrong. I want social media to be recognised for what it is (and increasingly will be): ‘integral’ and ‘important’ and ‘serious’.So I’m now here to make social media boring. I want people to groan at the thought of a social media presentation. Ok - maybe that takes it too far… But social media has to be placed in the mainstream of banking.

I want for bankers to see social media as an integral part of everything they do. Cutting the cost of customer administration? Enhancing sales? Reducing cycle times for product development? Building deep customer relationships? Social media is a fundamental part of the solution to these questions - and to many other serious challenges facing the banking industry today. Banks need to stop thinking of social media as existing within a bubble and integrate it to their business models. It needs to be treated in the same way risk management, customer satisfaction, staff training, etc., etc. 

Social media needs to be a factor in every decision because it has the capacity to drive tangible and significant benefits across the banking business model. So banks not only need to understand how social media fits across many aspects of their businesses - but also the importance of social media. Social media is a proven way to drive significant benefits by increasing income, cutting costs, improving retention and satisfaction and enabling innovation (internally and externally). The scale of the kinds of benefits that can be achieved is growing as organisations (from across many industries) develop and extend their social media schemes.

Once social media stops being exciting or gimmicky, banks will start to leverage the full opportunities that it presents. Social media has to be serious so that it becomes credible within a financial services organisation. Senior people need to buy in and spread that engagement through their teams. Social media cannot simply be the preserve of young digital managers or enthusiatic external recruits from beyond banking.

So for these reasons, I hope that we can all do our best to make social media as boring as possible - because once this happens, the banking industry will truly be able to deliver on the opportunities social media offers.

[Thanks to Justin Ablett for inspiring this topic.]

The ten year time-warp: Internet Banking for business

I think we can all agree that internet banking has proved itself to be a BIG thing! And yet, banks seem to be way off the pace in terms of quality of service and functionality provided to corporate and business customers online. In fact, I would say that internet banking for business is in a ten year time warp. It feels similar to where retail banks were back in 2000 – when they were still trying to understand what customers would do online and figure out if they could make money from that new-fangled ‘inter-web’.

It’s strange, really. These are the business accounts that are worth hundreds of millions – you would think banks would be lavishing money on them. However, business and corporate banking has remained a largely person to person relationship business. Internet banking has been a hygiene factor rather than a differentiator. This is especially as, by and large, it is small business people or junior finance clerks who most regularly use online services.

But I think this is all about to change – and for a few good reasons (and this list is not exhaustive):

1)      Banks are waking up to the fact they can save money:

a.       The cost of a person to person service is growing. As relationship managers have to care for larger and larger portfolios of customers, banks will have to beef up their online offerings to compensate

b.      Collaborative working tools will give banks the ability to work more efficiently with clients – which will save banks money and save customers time. For example, web-chat built in to internet banking will allow banks to share information with customers in real time – answering questions in one touch.

2)      It is becoming apparent that internet banking can differentiate service and  deepen relationships:

a.       Banks will be able to provide new functionality as a value add – particularly for top end users. By adding quality reporting functionality to online services and making it accessible via mobile / tablet devices, banks can deepen relationships with CFOs

b.      By offering broader ranges of functionality and more user friendly processes, banks will be able to help their business clients to save time and cut costs – particularly important in the current environment

3)      Customer expectations have grown. Online customer experience leaders like Apple and Amazon – as well as retail internet banks – have raised the bar. Customers are already becoming frustrated that they cannot do the things they expect to be standard.

I recent co-authored a white paper on the future of internet banking for businesses – spanning both the corporate and SME markets. (http://bit.ly/sq3362)  As part of that process, I spent time reviewing all the major business internet banks and talking to users – both small business owners and corporate users. This conclusively confirmed that users want a better service.

Users want banks to get the basics right – which many do not do today. Users want their internet bank to provide a decent user interface - with simple to follow processes, a convenient log in process and proper multi-signature functionality. SME customers want access to a greater range of functionality. Corporate customers want more configurability – and to be able to fulfil their foreign exchange and money market transactions for themselves. However to truly differentiate themselves, I think banks need to look to the future – to the services that customers don’t even know that they need yet – or that banks are too scared to offer (online corporate lending anyone?). As all the banks bring their online services up to the standard of retail banks, that is where I think the true differentiation will lie.

So internet banking for business is in a ten year time warp – but it is starting to fast forward. There are clear areas for immediate improvement (banks need to get the basics right) – but differentiation will be achieved through innovation. Banks need to move now, before they get left behind by their competitors and their customers.

So, what do you think? Do you agree? Drop me a comment now and give me your opinion…

Knocking the Froth off Social Media

Social media has exploded across the financial services industry. And like many a new craze before it, it has largely been driven by the perceived need to do something, compounded by a lack of industry consensus around what that something should be. Initiatives have been launched without clear objectives. They are not targeted at specific customer needs. Measures of success have not been identified or tracked. Long term strategies are not mapped out. To cap it all, I’ve even heard the worst harbinger of doom uttered from the lips of bankers. “Don’t worry about the RoI or NPV. We just need to launch something – and fast.” If ever there was a warning sign – it was that. Social media has become frothy.

This really matters, because social media needs to be taken seriously. In a world where customers spend more time online and visit branches less and less, social media sites represent the best opportunity for banks to maintain their relationships with customers. Frothiness will deter the more cynical members of the banking fraternity from believing in the potential of social media to drive value. And worse, it will distract bankers from really focusing on the hard questions of how they can drive value from social media for customers and banks.

The froth needs to be knocked off social media – and quickly!

So how can we measure the value of social media? I think there are a number of different ways – these are just a few examples:

1. Sales benefits: As well as simple measurements like click through rates and click to sale rates, more advanced measurements are being developed. Software vendors have developed tools which enable social media managers in banks to track which users have ‘liked’ their content – and also track how many people in that original user’s social network have also clicked ‘like’. These users can then be tracked through to purchase. This means content can be targeted to users – and the most influential users can also be targeted. This can be converted into a proper £ or $ figure.
2. Cost reduction: This is something that the telecoms industry has done really well. By getting customers to answer each others’ questions online, call volumes can be reduced. The numbers of questions answered online can be correlated with the number of calls received, and again this can be converted into a proper £ or $ figure.
3. Marketing benefits: Companies can learn from the social graph (that’s the information companies can get about a user from what they do on a social media site – who do they like, what do they like, etc) of their online users. American Express have done this really well in the US with their ‘Link, Like, Love’ promotion – where customers are given discounts for products that they or their friends have ‘liked’. Utilisation rates for these kinds of offers and the value of improved customer retention can be used as measure of success. Social graph data can also be used to refine marketing models and customer segments – which can be used to improve sales conversion across a whole bank.

Where banks fails to build a compelling benefit case, social media initiatives will quickly drop off the radar. This is well illustrated by the fact that many of the social media accounts set up by financial services companies are now inactive. This is a big mistake. However, until banks figure out how to apply the old maxim of ‘if it can’t be measured, it can’t be managed’ to social media initiatives, then banks will fail to exploit this enormous opportunity to build lasting, meaningful relationships with customers.