Rick!  What does financial reform have to do with customer experience?  Well quite a bit according to a talk I attended put on by Novantas that was led by Iain Anderson and Tim Gieles of Cicero.

The European Commission is moving forward with a combo version of Basel 3 and the Euro Dodd-Frank financial overhaul response.  I am going to simplify this to some high level implications that could become policy later this year or early next year.

First, the regulatory structure of financial services will change to have more dedicated oversight by the European Systemic Risk Board (ESRB) and new sub-boards for banking, insurance, and asset management.

Second, there are two major capital implications which have the potential to change the relative global competitiveness between European Union and non-EU financial services.  These are providing capital for “cyclicality”; in my words ensure you have beefed up capital in advance of the need for it and the potential for doubling up capital requirements for banks that also have insurance offered.

While I could delve into the all the legal stuff, my key take aways were about how the changes might impact a global customer (i.e. of HSBC, Santander, Chase, or Bank of America) or a customer who had the option of where to have a specific financial service provided.

In banking, the provisions are mainly about capital, therefore impacting balance sheet management and in the short-term the need for profits.  There are also provisions that increase transparency of underlying securitization risks.

Insurance provisions will also add insolvency tests requiring banks with insurance product a potential capital raising nightmare depending on the solvency test requirements and the outcome of quantitative studies.  The potential impact could go beyond capital to unbundling solution sets for banks such as Santander that will have to decide whether or not insurance in a higher solvency standard environment stays or goes.

The biggest game changers are potentially in the asset management area.  Still under discussion are whether the “passport” provisions making it easier for foreign fund managers will be maintained or reduced.  There are also provisions for a European collective investment in transferable products improving within EU fund management competitiveness.  Additional provisions are also in the pipeline for significantly improved fund manager transparency (also called the Bernie Madoff prevent provisions).  Additional reforms are likely to stop “dark pool” investments by requiring all derivative activity to go through central counterparty clearing.  Credit default swaps and short selling are also likely to get added controls and limits.

I’ve simplified a very complex discussion, but hope you can read between the lines and ask the Service Profit Chain question.  How will the magnitude of these changes impact our customers and the ability of employees to engage with them in a no hassle way? I personally suspect the challenge will be greatest with the higher profit per unit customer in wealth management and commercial and result in some level of EU/non-EU competitive differentiation.

It’s time to be proactive and understand the execution implications as the story unfolds the rest of this year.

If you need get in touch with Cicero.

PS.  A special thanks to Kevin Travis at Novantas for hosting this event.

I’m absolutely serious.  I did some mystery shopping in NYC today and what I realized was whether it was Citi’s make-your-eyes-pop white and blue Bauhaus inspired merchandising or Bank of America’s ubiquitous brand-popping you-can’t miss them red-white-and-blue flagscape signage the in-store experience did not match the promise of the merchandising.  I mentioned quite a few posts back that I went in to get a small business account at several banks and gave up because it really was too much hassle.

My first passion is relationship banking (B-to-B or affluent segments) but I have lots of fun with retail/store banking.  The two models I loved in the Banking 2.0 world were Wachovia (dang – I still think they should never have gone down) and surprisingly, the old North Fork Bank for the way the bankers served “local”, even though it was a middle market commercial bank in disguise.

I’ve been pitching a mantra of late that that while traditional branch banking of the first decade of 2000 is dead, Banking 3.0 branch banking is not (dead).  However, I have yet to see any major bank (above $10B in assets) get serious about reshaping their branch models to get tightly focused on a bank retailing model that starts to put payments and online distribution at the core and re-craft the branch to become more the complex experience-oriented solutions centers for prospects and servicing the total customer financial services life-cycle effectively.

So it was with keen interest that I read the Fortune article tonight about my favorite shopping experience store – Trader Joe’s.  As I deconstructed the article I realized that Trader Joe’s does almost everything that I believe to be true about where branch banking needs to go…

• Employee engagement based on the service profit chain
• Simple, easy-to-understand products
• Emotionally connecting products and services with value
• Clearly understanding their target segments
• Devastatingly local marketing (Word of Mouth marketing to the max)
• Massive customer loyalty , and
• Strong community support and engagement

I could go on, but here is the challenge to you, yes you!  Are you really looking for new ways to reshape the customer experience and employee engagement by taking a hard look – not just within your industry – but the best thinking in any industry…

Trader Joe’s has it.  If you are a banker or any stale big box retailer… visit a Trader Joe’s and then your place and ask…what’s different?

That’s my opinion and I’m sticking to it!

PS.  The one chain that beat Trader Joe’s in Consumer Reports ranking was Wegmans.  They are big service profit chain institute advocates – after all – there is a method to doing it right!

Being a marketer that focuses on customer experience is something I grew into.  It started when I had the great fortune to be part of DuPont’s Stainmaster(TM) brand launch team and more recently in work to better tie the profit relationship for customer experience improvement from brand through service delivery and risk management.   At the core of this work are a few key  frameworks – the service profit chain, servqual, an adaptation of Maslow hierarchy of needs called the Scottsdale model (developed at DuPont), and Krone’s Singular Integrated Developmental Business Organization model for culture change.

One gap is having a portfolio of case studies to help accelerate building the enterprise metrics that assess customer experience in a way that connects them to operational delivery and then to profitability.  A few companies – such as WhyData and the Service Profit Chain Institute – are advancing the understanding and science and creating enabling frameworks and software.

I have been a big fan of the Chartered Institute of Marketing (CIM) ever since the late 90′s, when I was locked in a heated market share battle in the global airbag industry.  We partnered with CIM to reshape our strategy and tactics and upgrade my marketing and sales team’s training.   Until then I had been US centric  in my marketing orientation.  They helped me quickly get a really different world view.  Some outcomes were that we shifted our agency management from a big NYC based agency to “local” agencies in Germany and Tokyo and our US partner and made the German agency the marketing communications architect.  When I left the business, we had come back to #1 globally and achieved significant market entry in the European and Asian markets.

The point here, is that its easy to get in a rut and we all need a creative kick every now and then.

So I was perusing CIM’s research papers today and ran across a great paper about setting up enterprise customer experience metrics in the health industry.  While I deal primarily in financial services industry, the paper is an excellent case study for anyone starting to consider the experience metrics system in any industry.

The paper reviews the notion of an the overarching marketing strategy, the metrics, and a bit of how to on implementation.  The metrics are divided into:

• Financial metrics – revenue and surplus
• Qualitative metrics – loyalty and satisfaction
• Value metrics – perception and comparative measurement

The metrics are driven to a more tactical level in areas of:

• Revenue and surplus
• Segmentation
• Pricing
• Awareness, attitudes and usage
• Market share
• Loyalty
• Satisfaction
• Communications

There are two clear gaps that I wish had been addressed.  First, the front end connection of brand to the metrics system could have been strengthened by adapting elements of the Experience Economy.  Second, I am a proponent that marketers in roles where B-B and B-C face-to-face selling occurs really should apply service profit chain concepts to better connect employee engagement and feedback.  Both elements were lacking in this research paper and only touched on briefly in the context of using a balanced scorecard.

If you are a marketer and not a member of Chartered Institute of Marketing you should be!  If you have other thoughts on case studies to help train marketers and business leaders to become effective at total customer experience engagement please drop me a note.

Cheers!

The quote, from Joshua Reich, a BankSimple founder, say it all.  Banking should not be as hard as it is today.   I personally have 6 different financial service providers.  Why, because I am not a checking nor a lending centric customer, I am a payment centric customer (aka transactor in credit card lingo).  I’ve written 6 checks since the beginning of the year and have never gone into my #1 payment transactor bank except to try to open a small business account (it seemed way too tedious after my 3:30 minute account opening at USAA bank so I didn’t bother).

A true story.  During a Frankenstein set of mergers I was dealing with it was clear that lack of customer-back, simple thinking in how the merger was approached left us with too many products and policies.  Our bank’s strategy executive said, “You know, if we could just get to average that might be enough to win.”  Banking is going through its next round of consolidation and while the race to mediocrity seems ambivalent, the race to customer simplicity is not.

Whatever part of financial services we are in, the reality is the legacy infrastructure – and perhaps mindset – is a barrier to making it simple.  BankSimple is taking the approach of starting over – so to speak – with Twitterfied processing and apps enabled work flows.  Frankly, I’m a fan and hope that somewhere between BankSimple’s approach and the Infosys Finacle platform is a next generation technology that will enable simple hub and spoke payments and complimentary transparent and elegantly simple add-on lending and savings solutions.

I am hoping Rylan Barnes, a fellow Aggie, and the team over at “Big in Japan” come up with it first… then we’ll piggyback off the Amazon cloud servers and one touch ordering and we will be good to go!  It’s with keen interest I watch the innovation in payments – from outside the industry by telecom and Apple.  It could be the next gold rush… “there’s money in that transaction volume!”

Dang!  I forgot those little things like FDIC, AML, KYC…  We can dream!

What started this was a thought provoker article on “Making banking easy isn’t easy” over at Financial Brand.

As banks get bigger the opportunity is to get spit-flying, mouth foaming, passionate about making the Rubik’s cube of the matrix easier for customers and employees to navigate.  Maybe its time for some serious “less is more” … what do you think?

I wanted to get a quick post up to remind you that the highlights from the Center for Financial Services Innovation’s 2010 Underbanked Financial Services Forum are now up. I believe this is one of the 5 major opportunity areas in retail financial services.

Happy innovating!

Well at least it’s new to me!

One of the challenges I am finding is that the social media tool spectrum is exploding. So rather than get hung up on a specific tool, it’s probably more important to conceptualize a social media category (i.e. microblog vs. Twitter; social document vs. Slideshare).  Then with those categories in hand I feel you can overlay your broad bank or business strategy, your segmentation model, and product and service value propositions and ask two critical questions.  First, relative to each strategy area, “How can I take advantage of each social media category?”  Second, “What are the business risks from competition and community by not engaging in a specific area”.  Once this initial high-low is done you can build a multi-generation plan (albeit in months, not years) and build a rough business case.

I feel there are three waves of innovation driving the social media revolution.

• Innovation and miniaturization of the technology and platforms for mobile and tablet computing and related cloud computing capability.
• Innovation of the ASP architecture and ease of application development.
• Innovation and segmentation of the types of social media and the user-centered design (even more niche social media offerings).

Keeping up with all this requires a “what is happening now” framework. There are MANY out there – as it seems like social media and marketing consulting have become the new consulting gold rush.  More often folks start with something reasonably simple, such as the seven categories recommended by Patrick Dailey:

1. Social Networks (Linked In/Facebook)
2. Blogs (personal,corporate, or niche)
3. Wikis (community knowledge data bases)
4. Podcasts ( audio/video)
5. Forums (Yahoo groups)
6. Content Sharing (Flickr, YouTube, & Digg)
7. Microblogs (Twitter & Pownce)

Then there are several more complex frameworks (aka visualizations) out there.  The one I like is the conversation prism.  This was developed Brian Solis and Jesse Thomas. You can find the latest version here or by clicking the picture to see the largest version.

Here’s why I like it.

I can take a general category area, then understand the current state of available applications, sites, and more, and then do some quick test and learns (days or weeks not months).    In some case, particularly some more customer information sensitive areas, I may not be able to use an approach because of confidentiality or Series license restrictions.  However, that may point to innovation opportunities or development alliances.

Brian and Jesse….

Thanks, well done guys!

I’m about ready to wrap up my research on the intersection of social media, customer experience, and relationship banking.   As I was doing a bit more to polish it off I ran across a gold mine – IDEO’s “Business in Beta”.  As I investigated further I realized that the Patterns site is a gold mine of future trends that every product and service manager should be tracking and asking, “How can I use these concepts to drive my marketing innovation”.

Have fun!

In my continued pursuit of the great customer experience and how to get financial services growing again, I picked up Marketing 3.0 by Philip Kotler, Hermawan Kartajaya, and Iwan Setiawan. I also refreshed myself on the earlier social marketing bible from the folks at Forrester, Groundswell by Charlene Li and Josh Bernoff.

Marketing 3.0 was not what I expected.

First, it had several new frameworks including “the evolution of marketing concepts”; the “3i model” of brand integrity, image, and identity; and, the Values-Based Matrix Model (VBM).  All of these are reviewed in a shorter white paper about Marketing 3.0.  The VBM framework, shown in the picture, can be quite useful from a marketing perspective.  How?   In helping you consider a more emotionally intelligent approach to brand building which would be a great input into building a social media strategy.

Second, the book is not structured as a cohesive build but rather a series of almost academic papers.  Theses “papers” are connected by the backbone of creating a more values driven business or socially driven enterprise.  The authors highlight DuPont (where I worked prior to becoming a banker) as one of their case studies.

It’s absolutely true that several of the more recent DuPont CEO’s – starting with Ed Woolard – started a journey putting DuPont on a mission with society at the core.  It was really Chad Holliday, then CEO of DuPont, that took it up a notch by making it a core business strategy.  My recollection is that Chad was influenced by Paul Hawken’s Natural Capitalism and the organization development approaches developed by Charles Krone.

In a nutshell, Marketing 3.0 was less about social media and more about being socially engaged to build society driven businesses.  Approach it in that context and it’s great.

The two foundation books I would recommend to anyone getting started on getting serious about a social media strategy are Groundswell and The Influentials by Ed Keller and John Berry.  Groundswell provides a great backbone understanding of how social media influences relationship building and marketing, and still stands the test of time (albeit 2 years) of thinking through the underlying logic of a social media strategy.  The Influentials provides context for the what and how of an influence strategy (which should be at the heart of an overall social media strategy).

Here’s the good news.  Gen 2 of Groundswell is out – Empowered by Josh Bernoff and Ted Shadler and their blog is a treasure trove of ideas and constructs for all business strategists and marketers.

Have fun!

I’m still working through crafting a Social Media Guide for Financial Services, but I had a totally awesome day of research today and wanted to share a few items with you.

First, for you CMO’s out there, here is the CMO’s guide to the Social Landscape.  The one page guide lays out key social media websites and how to consider them for customer communication, brand exposure, traffic building, and search engine optimization.

Second,  Todd Defren of Shift Communications has put together a highly effective mid “A Social Media Guide from the Edge“.  Additionally, the Shift Communication web site and the individual team member blogs are also great “learn in real time” tools.

Third, for those “dive in deep folks” – here are 27 of the most comprehensively complied social media guides.

Have fun!

I’ve been doing some research figuring out how to set up advanced Internet capabilities in an emerging economy country and preparing an article on social media when I ran across not one but three FREE thought provokers on how to up your social media game.  If you are a CMO or CXO get ready, because the shift in marketing communications is move quickly away from traditional media.

The first though provoker is a pro and con about social interactions on the web from Pew Research entitled “The Future of Social Relations.” I think many marketers will have to shift from the easier forms of segmentation to understand segmentation approaches base more on psychographics and usability.  The pro and con points of view raised in this paper are great at showing the range of divergent views – and interaction styles – marketers must consider.  There is much more to find at Pew Internet & The American Life Project.

The second is a cornucopia of  ideas from the 360i Social Marketing Playbook.  Here’s an excerpt:

• Social media are highly effective in the middle of the purchase funnel, to improve brand or product consideration during the period when consumers are gathering opinions and listening to word of mouth. Social media endorsements have been a great influence on purchase intent.
• The value of social media is best measured by the frequency or depth of engagement with consumers, rather than by impressions delivery or by conventional direct responses, such as clicks. As the IAB noted in our just-released “Social Media Ad Metrics Definitions”, “For marketers, endorsement by consumers in the form of friending/following/subscribing validates their efforts and activates a viral distribution of their brand across channels.”
• Traditional “click here now” banner ads are not always appropriate in social environments. Marketers and agencies need to develop creative that incorporates social elements and engages consumers in a chain of activities, as do Facebook’s “Engagement Ads,” MySpace’s “Interaction Ads,” and the other formats showcased in the IAB’s newly released “Social Advertising Best Practices” whitepaper.
• Because social media cut across conventional marketing organizational silos and budgets – PR, marketing, customer service, etc. – all these groups need to be brought into the development and optimization of social media campaigns.
  Social media can help square the circle around bought, owned and earned media. Paid advertising, public relations efforts and a marketer’s own sites can be joined together virtually and virtuously to create a satisfying and valuable experience for the consumer that profits the marketer.
• Authenticity reigns. Conversations cannot be controlled, they can only be joined, so marketers have to be willing to listen and learn from the consumers they engage through social media.

I’m a big fan of Kristin Dziadul’s blog – A New Generation (and for the record, who says you can’t teach an old dog new tricks).   As one of the up and coming social media marketers, she offers great insights from strategy to execution.  One great find on the site is her thesis paper,“From Outbound Marketing to Inbound Marketing: What 2010 Web 2.0 Means for Marketers”.  Wow!

Have fun!