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Mining Online Gold

Watching the keynote from yesterday’s Apple WWDC gave me a whole lot of ideas for cool banking apps.  One thing that stood out to me was the $2.5 billion that had been paid out to developers since the launch of the App Store.

One reason that developers have stayed on the Apple bandwagon is that they make it so easy to get paid.  Apple tries to make everything is simple as possible.  Giving developers tools that help them get paid quickly and view reports about sales is one way to keep them happy.  If only banks and credit unions did the same.

Lately I’ve been working on my secret project, code phrase “Rice Krispie Treat.”  With some of the planned features, I have need of a merchant account.  Every single bank and credit union that I viewed online offers business services.  Unfortunately, I have to call someone and set up an appointment to get started.

Compare this with companies such as PintPay, Chargify, Recurly and CheddarGetter.  In about thirty minutes, I can sign up and be ready to accept payments on my website, all from the comfort of my couch at home.  Actually, it would take that long if I wanted to fully integrate their gateway into my site.  For basics, it’s less time than it would take to open a checking account.

Commercial customers are the lifeblood of a financial institution.  Giving them tools that help them run their business better should be a higher priority.  They need more than online banking.  Besides, if I can sign up my business for online banking while online, I should be able to obtain other services online also.

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Mmmm…Gingerbread

November 17, 2010 1 comment

Mobile payments are about to get a serious toe-hold in the US.  In case you haven’t heard, Google is about to release the newest version of Android, Gingerbread, which will support NFC.  Once Apple releases their next iPhone in 2011, you can expect adoption to increase exponentially.

So what does this mean to banks and credit unions?  Most won’t be affected for a while.  But the big boys like Bank of America, Wells Fargo, Citibank and JP Morgan will really start to feel the pain sooner rather than later.  Mobile payments will allow users to connect their credit and debit cards to their phone.  But that’s only if Google and Apple decide to play nice.  They could set themselves up like PayPal, which means that everything would flow through ACH.  If that happens, you can kiss interchange fees goodbye.  The bigger banks would feel this first because their customers are among the early adopters.

Now, you can stick your head in the sand and hope that adoption doesn’t happen for another 10 years, or you can start planning your strategy today.  One thing I’d look at is charging a fee for any ACH withdrawal.  The second is getting familiar with iOS and Android.  Because if you aren’t planning to adapt, others are.

The Elephant (Banker) In The Room

November 3, 2010 6 comments

Last week I had the opportunity to attend the CU Water Cooler Symposium. When Matt Davis invited me, I was very hesitant. “You actually want a banker to attend?”, I asked.  “Sure, why not?”, was the response. “You can bring a different perspective.”

So off to Fishers, IN I went. Let me tell you, this had to be the best conference I’ve ever attended. There were two days of great speakers and a wealth of information. As someone commented, if you didn’t get a ticket because you thought it would just be about social media, bad mistake.

The tweets from the event are only a sample of a information we received. You can find an archive here.

While the symposium as a whole was great, I’d just like to highlight a few sessions:

Robbie Wright, from CU Innovators, spoke about using social media to discuss the hard topics.  He said that instead of just talking about marketing fluff, we should try solving the hard problems.  Credit unions need to focus on the non-sexy to stand out for their customers.  At the end of the day, credit unions are a business, not a charity.  They can’t just focus on “being on Twitter and Facebook”. Social media needs to add value to customers and the credit union.  You should build a business case to use these tools and income is a good thing.

Rebecca Corliss, from Hubspot, gave a presentation on inbound marketing.  I’m a big fan of Hubspot and have always wanted to meet someone from the company. Hubspot really helps you leverage your online presence to generate leads. Old school marketing is interruption based while the new school is permission based.  Some advice Rebecca gave was to think of inbound marketing as an ecosystem, not a cubicle.  You need to target your keywords in order to build your rank.  Inbound marketing is an investment and can build down the cost of leads.  Another piece of advice was to have more than one “contact” form.  The forms on your website should have a “call to action”, not just ask for generic information.

Ed Brett, from Westminster Savings, would probably get the vote for best speaker.  No slides, just straight talk.  Ed explained that although his credit union was much smaller than the competition, they were able to compete because they take advantage of their small size.  Smaller companies are able to be much more agile so there are less levels to go through to get to a decision.  At larger companies, there are more politics, agendas, and decision makers.  Also, credit unions need to be better bankers than the bankers.  This is a business and they need to help people do their banking better.  There should be less emphasis on social media and more on simplifying banking.  If you want to be agile, you should partner with agile vendors.  At the end of the day, you need to bring value to your members.  Ed also gave three statements that really stood out to me:

1. I challenge you to find other industries that are seeking to model their service after credit unions (banks).
2. The only innovation in financial services over the last 50 years has been in ‘access’
3. Your job is not to use technology, but to apply it.

Maya Bourdeau, from Attune, spoke about Psychology in Marketing.  She talked about how her company discovered that small sample sizes gave as good results as large pools of participants.  But, of course you have to be very discriminate in selecting your small sample.  Another thing they discovered through their marketing development was credit unions need to show two times the value to get members to switch from a bank.  They also said to keep it simple and explain the personal benefit.  For example, instead of saying “we helped people save over $7 billion”, say “we can help YOU save $200”.

In addition, I had the opportunity to be on the expert panel about credit union branding.  One recurring theme was credit unions really need to sit down and decide what they want to be.  I mentioned that credit unions need to play to their strengths and explain how they’re different from banks.  Most people don’t know what the difference between the two is.  I also stated that “credit unions can’t out bank a bank, we’ve got that down”.

All in all, this was a great conference and I’m looking forward to going back next year.  One question I was continually asked was, “why don’t you work for a credit union?”.  My response was, “I believe I’m a credit union person trapped in a banker’s body.”  As Morriss Partee said, that statement is “an instant classic”.

You can find more summaries here:
CU Times
unCUlturers
Committed to Memory
Currency Marketing
The 2020 Vision of Marketing
Video of Presentations

First ODP, Next Interchange

October 19, 2010 1 comment

Brett King, of Bank 2.0 fame, has a post over on Finextra titled The iPhone 5 Debit Card – coming soon.  In the article he discusses the potential impact of Apple’s iPhone 5.0 that will most likely be released next fall.  One highly anticipated feature is contactless payments, which is something I wrote about here.

Brett poses a question of “how will banks compete against Apple, Google, Microsoft and the carriers in the credit card space?”  Apple already has customers that setup their credit cards to use for iTunes.  You can bet that Google and Microsoft will do the same.  Google is better positioned than Microsoft, with their Google Checkout.  But I think Brett missed one important area.

For most banks and credit unions, credit cards aren’t a huge revenue source.  I’m willing to bet that those interchange fees they get from debit transactions has way more income.  I happen to use PayPal for a lot of online transactions.  One thing I recently noticed was, my PayPal account currently has $0 in it.  However, PayPal is able to directly transfer from my checking account to pay for any transactions.  This means that PayPal gets a percentage, but my bank gets nothing.  As far as my bank is concerned, it’s just an ACH transfer.

So, when mobile payments finally take off, it won’t necessarily be banks and credit unions that benefit.  With electronic transactions being the dominate form factor for payments, losing the credit card market isn’t what should keep executives up at night.  It’s losing the debit card transaction market.

We Don’t Need No Stinkin’ Cash

September 6, 2010 Leave a comment

I am SO looking forward to the day when I no longer need to carry cash around.  With the advancement of smart phones, mobile payments and companies like Square, the day may be here sooner than we think.  Somaliland, a small country in the horn of Africa, just may be leading the way.

Somaliland could very well become the world’s first cashless society.  Given the fact that cash pretty much doesn’t work there (17,000 shillings = $1 US and the highest denomination is 500 Shillings) and the advancement of their mobile banking industry, getting away from cash is becoming a necessity.  Carrying wheelbarrows of money around isn’t that feasible.  However, using such services as Dahabshiil is.

Now, who thought that a small African nation would be the catalyst in changing the world to a pure electronic format?

You can read more over at TechCrunch.

Location, Location, Location

Lately there’s been a lot of buzz in the mainstream about location games from companies like foursquare, brightkite, GoWalla and Booyah’s MyTown. Facebook is also getting into the space with their new Locations feature and Google has Google Latititude. The question is, how can banks and credit unions get in on the game? TDECU and North Shore Bank are two financial institutions that give rewards to the mayors of their branches. But does this really fit into a FI’s strategy, as most have driven customers to online, self service channels? The Financial Brand gives a great breakdown of why may not the best approach.

We’ve also been kicking around some ideas of incorporating location games into promotions. Giving a reward to only the mayors of our branches didn’t seem a good idea long term. We too see that our branch traffic is down and most people only check-in there to earn a badge. Earning badges that are specific to our bank was another idea, but customers would still only be trying to earn a badge.

While updating my locations on Foursquare the other day, the light bulb came on. Why not use the Promotions and To Do features of Foursquare? For example, get a gift certificate if you come in and sit with a FSR/CSR to make a personal financial plan. Or you can make a To Do of signing up for your new mobile banking or PFM service. The trick is to help your customers do more than just check-in for a badge. By giving them a task, you both can come away with something positive.

Simple Banking

May 27, 2010 5 comments

There was a Twitter conversation earlier today about a Fast Company article that discussed Mint.com and BankSimple.  The article centered on “banking that doesn’t suck”.  Ron Shevlin’s post Banking Is Not A Technology Business is a great response to that article.  I’d also like to add my $1.25 banker’s fee.

Ron makes a great point that banking is a service business that leverages technology.  Working in IT for a bank, I can definitely confirm that.  But I really took offense to Alex Payne’s quote in the article:

“Imagine, for a moment, a bank that doesn’t suck, a bank that doesn’t gouge you with fees. A bank that doesn’t treat you like crap. A bank that cares about design, but gets out of your way. A bank that puts your money to work automatically. A bank that’s building a platform for the future of personal finance.”

Now, why in the world would you do business with someone that sucks?  Since most of us live in an area with plenty of banks and credit unions, moving our money isn’t that much of a problem.  As for fees, those are completely avoidable.  Banks will typically waive the occasional “oops” on an overdraft.  You can also avoid those pesky ATM fees by using an in network ATM.  As for design and platforms, unfortunately banks are at the mercy of their vendors.  They just don’t have the expertise in-house, unless they’re typically a top 50 bank.

That being said, I think BankSimple has the potential of being very successful.  They will really appeal to people that embrace online tools for managing their money.  And honestly, if I were starting a bank, I’d go the same route of leveraging technology and building from the ground up.  Not having to worry about the extra expense of branches is one less major headache.  Whether they can pull it off remains to be seen.  Like Ron said, at the end of the day, it’s all about service.