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Posts Tagged ‘Strategy’

It’s A Mobile World

Apple recently released their third quarter earnings and the iPhone and iPad combined for 68% of all of Apple’s revenue.  The iPhone actually makes up 46.6% of the total revenue, which breaks down to over 20 million units and $13 billion.

In case you’ve been sitting on the fence about implementing that mobile strategy, it’s time to go all in.  Android device sales have been keeping pace with Apple devices.  In the near future, more people will access the web from their mobile device than their computer.  You can bet they’ll be looking for that cool mobile banking app also.

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Are You Uncomfortable?

I happened to catch part of an interview with Paul Azinger on ESPN’s “Jim Rome is Burning.”  They were discussing Tiger Wood’s decline and possible return to the PGA tour.  Paul mentioned that since Tiger became a professional, he only plays on familiar courses.  Now I understand why I never hear of him being at minor tournaments.  His whole game plan has been to master the few courses he plays on.

This sounds very similar to the banking industry.  Decisions are still being made based on what happened in the past.  Ron Shevlin posted a graphic on his blog recently about the declining branch channel.  Yet executives still have increasing branch goals as though branch traffic is going up, not down.  There also isn’t much emphasis on other channels that customers obviously seem to prefer.

Like Tiger, they just want to stick to what they know and what worked in the past.  Well, Tiger now has the lowest ranking he’s ever had in his career.  Banking is going through a similar struggle.

The question is, will executives actually start to make decisions based on the changes in the industry?  Telling the rank and file that “banking has changed” doesn’t mean much when your strategic plan is to do more of what you did in 2002.  Just like Tiger needs to heal and improve his fundamentals, bankers need to do the same.

I think playing new courses could help Tiger, and capitalizing on the changing environment can help bankers.  Going outside your comfort zone is how you grow and become better.

Categories: Strategy Tags: ,

Why I <3 My Big Bank

Steve Topper, over at Financial Marketing Insights, brought up an interesting question a few days ago: why would anyone with a lick of common sense continue having their checking account with any of the nation’s four largest banks?  Well, I happen to think that I’m smarter than the average bear, so I’d like to respond to that question.

First, let me say that I do understand where Steve is coming from.  I used to work for a large community bank and I’m also a fan of credit unions.  But I still do a majority of my banking with one of the big four.  There are really only two reasons that I stay there:

1. They have ATMs coast to coast
Years ago, I used to travel a lot.  Now, I anticipate traveling even more.  It’s nice to know that wherever I go in the US, I can find an ATM for my bank.  I do realize that credit unions actually have a larger network (which is something they DON’T play up enough, if you ask me.)  It all comes down to location, location, location. 

With my former employer, as soon as you left the coast (and I mean a county or two over), you were subject to ATM fees.  Actually, that’s no longer true.  There is just a perception that you have to pay a fee.  You can use an ATM if it’s in the MoneyPass network.  However, it’s not really advertised, so they are like credit unions in that regard.

2. Better technology

How many banks and credit unions have mobile banking through the mobile browser?  How many have an app?  How many have text banking?  Now, out of the ones have text banking, how many offer transaction alerts? Let’s be clear, mobile banking through the browser doesn’t have a big adoption rate for a reason.  The FIs that are really growing mobile banking faster than the industry rate have text banking with transaction alerts. 

With very little marketing, my former employee blew away Bank of America’s adoption rate because they had text alerts.  However, most FIs don’t offer this feature.  The big four all have text banking.  They also have apps for smart phones and have either launched or plan to launch a tablet app.  Here are some other services they offer:
– Online loan applications
– Online account opening
– External transfers
– Deposit through ATM
– RDC using a smart phone
– PFM

In customer segments, I think I fall into the “tech-savvy and prefer self-service” segment.  I want to perform my bank transactions through any channel that suits me.  I also want to be able to go an ATM without incurring a fee, no matter where I am.

The smaller banks and credit unions aren’t there yet.  Heck, I have a feeling that most of them are still trying to push through the business case for better technology to upper management.  But to most people, a checking account is a commodity.  Although my account doesn’t say “free”, it is free, provided I stay within the required conditions.  For the life of me, I don’t see what is so bad about this.

At the end of the day, customers just care about whether their money is safe or not.  Also, can they get to it any time/way they want?  I have never been charged a fee that I didn’t know about.  But then, I tend to read the fee schedule on my account.  For the times I was charged a fee, I was able to get it reversed most of the time.  For the times that I wasn’t, there was a lesson learned.

I think that as an industry, we need to get past this “no free checking” = “bad bank/credit union”.  There are a lot of happy customers that are willing to pay for peace of mind and multiple banking channels.  Odds are, these are the customers banks and credit unions would want. Offering a free checking account isn’t going to make them open an account.  That’s just one of the many bullet points they’ll be looking at.  They also know that “free” doesn’t necessarily mean better.

Categories: Marketing, Strategy Tags: ,

Are You Winning?

Lately I’ve seen a lot of posts bemoaning the lack of innovation in the bank and credit union industries.  I do agree that companies such as industry outsiders Apple, Google, Square and BankSimple seem to be leading the industry disruptions.  But there are companies, such as Ally, TD Bank and USAA, that are also innovation driven.

One thing that I’ve noticed about these three companies is, they all seem to be customer-centric.  While every bank and credit union talks about their great service, these three seem to back it up.  USAA and TD Bank especially seem to offer products that allow their customers to bank the way that is most comfortable to them.  Unlike their peers, these institutions don’t follow the crowd.  They lead the crowd and let everyone else pay catch up.

This follow the crowd mentality has always been something that has bothered me.  Especially when you realize that following everyone else is what brought us to this crisis in our industry.  But I think there are other issues at play here.  In the past, bankers were the ones that controlled the flow of money.  Without much work on their part, bankers could just wait for customers to come to them with requests.  Now, with disruptive technology, one does not have to rely on a bank to get access to capital.

I believe this “wait and see” approach is one reason there has been a lack of innovation in banking.  Here’s one example: everyone tends to agree that mobile banking will play an integral part in the future of banking.  But I’ve seen comments on blogs where executives were reluctant to offer mobile alerts because it will reduce NSF fees, so they were just holding off on mobile altogether.  Not very customer-centric is it?  Never mind that offering mobile alerts could drive up customer acquisitions and increase income.  They’re more focused on the “potential” loss of fee income.  But as competitors begin to offer mobile, they reluctantly look to add the service.

Now, the biggest reason for the lack of innovation?  That would be fear.  Particularly, the fear of losing entrenched power.  If you think about it, most bank and credit union executives view IT as a cost center.  Therefore, they don’t look at it as a competitive advantage.  Also, they don’t understand it, and really don’t want to understand it either.

Over the last few years, there have been articles about the purpose of physical branches changing.  Branch traffic has been steadily declining for years.  This means that the opportunities for cross-selling have gone down also.  But online usage is trending up.  Which means online account openings, bill pay, mobile, and other online services are also trending up.  Also, customer acquisitions are cheaper online.

So in order to survive, the people that currently have the power have to deal with those IT people.  Which means they’d have to give up power.  But more importantly, if the branch isn’t as important and online is, what will their future purpose be?  They don’t know that much about online banking, but they know a whole lot about branch banking.  Better to keep their head in ground and ignore the change that is happening around them.  Just maintain the status quo at all costs.

We all know that people that ignore change and try to stay the same are just spectators.  Spectators aren’t in the game.  If you’re not in the game, that means you can’t possibly be winning.  Which means you’re losing.