Here’s a macabre thought to start your day: Older customers will die sooner than younger ones.
It’s a fact of life that has many a financial institution concerned. Rightly so.
I wouldn’t dream of suggesting that bankers’ concern is only for the bottom line. Surely many wish their customers a long life out of pure altruism. Yet even the most altruistic understand that a bank’s life expectancy is tied to that of its customers. A bank that hopes to outlive older customers must attract younger ones.
The problem lies in how to go about trading the outdated image that appealed to prior generations for a new, more with-it image that appeals to younger ones.
CUT TO: THE BRAINSTORMING SESSION. “I have it!” someone says. “Let’s quit making tellers cover their tats!” (“What’s a tat?” asks the CEO.) Someone else suggests decorating branches à la the young person’s hangout. Another wonders aloud what it would cost to hire Justin Bieber or Miley Cyrus as a spokesperson. (“Who?” asks the CEO.) Yet another, who happens to be a Garage Band enthusiast and wannabe rock star, thinks a rockin’ jingle will do the trick. A techie suggests overhauling the website with state-of-the-art animation, games, great colors, hot music, and downloadable tunes and videos. The advertising manager wants to shoot commercials telling viewers that the bank has been misjudged, that in reality no one is more hep. (“What’s hep?” asks the youngest person in the room.)
Were I in the room—come to think of it, I have been, more than once—I would point out that the discussion started off on the wrong foot. Contrived cosmetics do not make a brand. Substance does. If you are cool—whatever that means—it will be manifest in your look and messaging. If you are not, pretending will only make you look pathetic, like a boor who thinks changing his shirt rather than his approach will make people like him.
If the rising generation favors a competitor, dig deep to find out why. Odds are you’ll discover an underlying philosophy, approach, and values that a younger market responds to. You will also find that the outward look and feel, far from contrived, are a natural expression of said underlying philosophy, approach, and values.
Only claim to be what the market wants if you first become what the market wants. Then the outward trappings will speak for themselves.
It is easier said than done. In most banks, “senior management” is no metaphor. Fortunately, neither is “junior people.” Now would be a good time to identify the brightest, most promising ones and hear them out.
When mine eyes behold what technology hath wrought upon today’s financial services industry, I cannot help but breathlessly marvel aloud, “What a mess.”
Ah, but a promising mess it is.
Estimote and JingIt want to feed product and pricing information to customers at point-of-sale while simultaneously feeding customer data back to merchants. PayPal Beacon promises to let shoppers leave plastic cards and smart phones tucked safely in a wallet or purse. Google Wallet lets people dispatch funds via email to anyone in the U.S., scan debit and credit cards for online purchases, store loyalty cards, and make retail purchases with participating merchants. VerifyValid and a host of others want to help businesses disburse, collect, and manage funds faster than a speeding bullet over tall buildings with a single bound. Kabbage, OnDeck, and—surprise, surprise—Amazon all want to make business loans. Visa hopes to fight back with V.me.
As for banks, they’re not exactly taking this lying down. Players like Chase, Bank of America, and others have been in the game all along. More than a matter of growth, it is a matter of survival. If non-banks succeed in taking over transaction services, banks risk becoming faceless depositories bookending the transactions. This would rather remove the “relationship” part from an industry that calls itself a “relationship business.” Rest assured that banks do not intend to settle for mere utility status.
Though there appears to be room for multiple players in the paperless-wireless-checkless-cardless game, appearances deceive. This is an arena where multiple players cannot win in any big way. Businesses are loath to commit to a system not universally used by customers; and customers are loath to commit to a system not universally accepted by businesses.
Some people describe this as a chicken-and-egg problem. That doesn’t quite work for me. (Besides, the egg was first.) Not to worry. Another, more apt analogy comes to mind:
About six decades ago, just about every major retail chain issued its own credit card. No merchant accepted any other merchant’s card. Consumer wallets were growing fat with myriad pieces of plastic. Various companies began experimenting with ideas for a single card accepted by all. Trouble was—this may sound familiar—businesses were loath to commit to a card not universally used by customers; and customers were loath to commit to a card not universally accepted by businesses.
Contenders began emerging: Diners Club, American Express, Master Charge (later to become MasterCard), and BankAmericard. The initial result was anything but the desired effect of consolidation and simplification. Rather than reducing credit cards, issuers had only succeeded in adding more.
But markets have a way of sorting things out. In 1958, Bank of America signed up 20,000 merchants in California and issued a staggering 2 million consumer cards. In time, it was BankAmericard that took off, later morphing into Visa, today’s near-universal card.
(Unwittingly, the universal credit card industry spawned another new industry: credit card fraud. That may also sound familiar. Today’s high tech industries have spawned high tech criminals. It’s an arms race.)
If, like me, you weren’t around see it happen in the 1950s, don’t despair. You’re about to see it happen all over again. I for one can’t wait to see how it all turns out.
Planning on attending the BAI Convention in Denver next month? Please grab me and say hello. On the afternoon of November 6, I’ll be joining AOL’s Paul Kadin and New Control’s Jim Marous to speak on “Leveraging Digital and Traditional Marketing to Drive Results.” I hope to see you there.
Readers with nothing better to think about may have been wondering about the last line in my prior post: “Speaking of which, stay tuned for a major announcement from yours truly …”
Wonder no longer; here is the promised announcement. I have accepted a position with Fiserv.
Whether or not you know Fiserv outright, you have likely interacted with them, and at that many a time. They are the thinking and execution behind payments, processing services, risk and compliance, customer and channel management, and business insights and optimization for financial institutions around the world.
I don’t envy the designer who has to fit my title onto a business card. It’s “Managing Director, Marketing Strategy and Innovation.” (We may have to wrap it onto the back of the card.) Officially I will “… guide the holistic marketing of Fiserv payment solutions, with a focus on those that support digital and emerging payments for consumers and small businesses … [and] oversee collaboration opportunities with Fiserv clients who are early adopters of emerging payments technologies and establish partnerships with other emerging technology companies.”
I’m delighted and honored. I cannot imagine a higher professional honor than to be joining Fiserv.
Wonderful as the opportunity is, leaving my position as a Senior Vice President at Zions Bank was by no means easy. I joined Zions Bank 14 years ago as a college intern. Since then, Zions Bank gave me one opportunity after another to learn, grow, and take on new responsibilities. Any value that Fiserv saw in me is thanks to Zions Bank CEO Scott Anderson, Executive Vice President Rob Brough, retired EVP George Hofmann — and others too numerous to list — for believing in me in the first place.
My new boss, Digital Payments Group President Rahul Gupta, had kind words for me: “With Matt overseeing the marketing of the broad set of Fiserv digital payments capabilities, we can show our clients how our solutions can work together to enable them to better serve their consumer and small business customers and compete successfully in a fast-changing marketplace.”
(A few colleagues have kidded that working for banks instead of a bank is tantamount to joining “the dark side.” All I can say is, never has a dark side been so illuminated.)
Onward and upward. I’m eager to continue championing innovation in financial services. I look forward to working with many different partners who are already doing great things to shape the industry. Meanwhile, my blog will continue to be a place you can turn for up-to-date, relevant and useful information.
ACCORDING TO a recent TBR survey, North American banks are planning to invest some $74 billion in IT improvements in 2014. That’s two percent more than they look to spend this year.
My only surprise is that banks won’t be spending more. It isn’t news that technology drives banking, nor that the extent to which it does will only increase.
In an earlier post I alluded to Moore’s Law, which essentially states that technological speed and capability grow geometrically. Banks that think they can prosper by doing things the old way are setting themselves up for a rude awakening.
Part of said rude awakening involves facing the fact that, at the current rate of technological advancement, “the old way” doesn’t refer to “the way you did a few years ago.” It refers to “the way you’re doing things right now.”
Banks that understand that are preparing for tomorrow by investing, right now, in infrastructure, business applications, databases and middleware, systems management, business intelligence and analytics, productivity applications … and in relationships with outside, expert firms that keep up on the state of the art in a way that no bank of any size can possibly do on its own.
Whoa, wait. Outside expert firms?
Indeed. Smart banks know they can’t do everything themselves. Not even the ones big enough to support their own mega technological development department.
Speaking of which, stay tuned for a major announcement from yours truly …