Tuesday, December 27, 2011
- The regulatory environment is making it almost impossible for community banks to survive. In a recent article in The Baltimore Sun, Anita Newcomb, a noted community bank consultant, notes that regulatory changes may make it impossible for banks of less than $500 million in assets to survive. In my opinion, this is too low. I think banks need to be of a sufficient size, at least $1 billion in assets, to have the scale to compete and comply with the requirements.
- The primary competitors for many community banks, credit unions, have an unfair advantage. It used to be that credit unions served very specific groups of constituents, like a single employer for example, providing savings and loan products exclusively to them and enjoying the status of non-profits. Now, many CU's have no such restrictions and yet continue to pay no taxes and a much less stringent regulatory environment.
- I believe one of the biggest challenges they face is one of identity. What does a community bank mean, anyway? For customers, their local branch is their community bank. Just like the local Home Depot. Sure, the name over the door has changed a number of times, but many of the people who've waited on you are still there. And now, with all the electronic delivery options, how many people really need a local branch at all? Open your account, get your direct deposit set up and you are good to go.
With all that said, I do think there is a need for community banks. They need to focus on the value they bring to the community. During the recent financial crisis, many small businesses found themselves scrambling for financing when the large banks abruptly pulled their credit lines. A local banker, with roots in the community, is more inclined to work with these customers because they understand the market and know their customer. It's where having local decision makers can really make a big difference. So let's not write the obituary for the community bank just yet.
Tuesday, November 1, 2011
What is so fascinating is how much of an impact social media had on these decisions. For example, there was a young woman in D.C. who started a petition on a website, change.org, to "Tell Bank of America: No $5 Debit Card Fees." She's gathered over 300,000 signatures supporting her cause.
There have been thousands of Twitter comments and blog posts expressing outrage over the proposed fee from BOA. One recent post is a pretty good example (with a Halloween theme): ShooterOneSix "What's difference between a vampire & Bank of America? The vampire is only after your blood while BoA wants to suck your CASH too!#ows #p2." It has even spawned a Bank Transfer Day on November 5th when big bank customers are encouraged to move their accounts to a local credit union. Again, this has been spread through social media channels with incredible velocity.
So what's the lesson here? There are many, of course. One that immediately comes to mind is think before you act. While it may sound good sitting around a boardroom and crunching the numbers, this plan should never had made the light of day. If these banks had engaged their customers in a dialogue beforehand, I'm quite sure they would have seen the negative impact immediately. Remember, social media is a two way street. Now they have yet another publicity nightmare to clean up.
Wednesday, October 5, 2011
It was his legislation (the Durbin Amendment) capping the interchange fees on these transactions that started this whole mess in the first place. The legislation was, ostensibly, aimed at helping the consumer. Not quite. What it has done is lowerer what the retailers are paying and reduced the interchange income to the banks. I think it is safe to say that retailers are not going to pass on these savings to consumers. So, do you see any benefit to the consumer? I don't.
Now, according to Durbin, Bank of America is going to "push people away from debit cards into credit cards, which are not regulated..." to increase their interchange rate. What Durbin seems to dismiss is an alternative: using cash for their retail purchases. You see, if you are a BOA debit card holder, there is no monthly charge for using a BOA ATM machine. But that doesn't get mentioned in his grandstanding on the Senate floor.
So here's my personal message to Sen. Durbin. Consumers will make their own decisions about how to deal with this. Believe me, BOA is taking plenty of heat for this from their customers. Maybe, instead of the government getting more involved in everyday banking, they should focus on governing. Seems to be a pretty strong need for that these days.
Monday, September 19, 2011
- Be creative. Banking isn't the most engaging subject so look to reward customers for their engagement.
- Be willing to let go of some control. Your ability, as an organization, to control the message is limited. Be prepared to respond to both the good and the bad.
Tuesday, August 23, 2011
Tuesday, July 19, 2011
So what's this have to do with banking? Borders made the fatal mistake of sticking with it's strategy to expand through physical locations while ignoring the behavior of it's current (and future) customers. They ended up too late to the marketplace and were saddled with large retail locations and no customers.
Over the last couple of years, I've participated in a number of industry events, as either a speaker or panelist, on numerous topics including social media and mobile banking. I find it increasingly apparent that many of the community bankers I talk to are still in the "Borders" mode. While they see traffic declining at the branches, they are unsure if they should get involved in social media or provide a mobile banking solution. They are ignoring the societal trends and taking a "wait and see" attitude. Given the speed at which consumers adopt new technology (how many people even heard of Twitter in 2009?), bankers today won't survive with that attitude.
So here's a message to all my fellow community bankers: I encourage you to take some risks, try new things and stay relevant so you don't become the "Borders" of the banking industry. Your community and, most importantly, your customers, need you.
Monday, June 20, 2011
In addition to knowing her personally, I was friends with her on FaceBook. Which brings me to the title of this post. We continue to be "friends" on FaceBook even though she is no longer here. People continue to post remembrance's on her passing and tag her in pictures. In other instances, I've heard about people who go back to their friends page on the anniversary of their passing. It's a very interesting phenomena. It's almost a living memorial.
Suppose, however, you didn't want to live on forever on FaceBook or LinkedIn. As I think about this, I'm not sure I know what I'd want to do when I'm gone. Is it better, for those around you, to have a place that keeps your memory alive for them? Would you prefer to have it all wiped clean and let the memories fade away? Just another unintended consequence of this thing we call Social Media. Frankly, it makes my head hurt thinking about it.
Tuesday, June 7, 2011
- The economics of Mobile are compelling. Mobile transactions cost $.08 per transaction versus a branch cost of $4.00 per transaction.
- The expansion of the 4G network over the next 2 years will increase bandwidth equal to a cable modem at home.
- Mobility is driving convergence. The gap between the traditional web and related services is closing, with the increase in smart phones and the movement of the Gen Y's into the workforce.
Secil Tabli Watson, SVP of Internet and Mobile Banking from Wells Fargo discussed using ethnographic data to determine how and when customers are using their mobile services.The results will identified "convenience" as the driver of adoption and use. This will ultimately help them focus future enhancements around this approach.
Jennifer Wilson, SVP Internet Channel Director, BBVA Compass shared her experience with the introduction of ZashPay, a Person to Person payments service from Fiserv. From an adoption perspective, they found that building a web page with a simple enrollment process was key. When they looked at the user base, they found a surprising number of small business customers who were using as an alternative to more expensive ACH services. Given these pilot results, they may develop a mobile invoicing service for their business customers.
Mobile continues to be a hot topic among financial services providers and may prove to be the most signficant game changer in the next couple of years.
Wednesday, May 25, 2011
When I was there, I was fortunate enough to be part of a panel discussion on Personal Financial Management (PFM) along with Patrick Smith of Wells Fargo, Eric Connors of Yodlee, and Edward Chang of Strands.
We had a lively discussion about the benefits of PFM for our customers, the challenges of getting people to use it, and the pros and con's of aggregation services. While the benefits are pretty clear (better financial management) the biggest challenge, as noted by Patrick, is inertia. Managing your finances is certainly important, but not critical. Setting up goals and budgets falls somewhere around cleaning out the gutters on the "to do" list. The key, perhaps, is to help educate the consumers about the benefits to make it move up that list.
One of the classic differences between my organization, a smaller community bank, and Wells is the approach to aggregation. Wells provides tools that help manage those accounts that are with Wells while we offer a service to add all your accounts, even from other institutions. Perhaps this highlights the major difference between big and small banks. We see this as a service that is the right thing for the customer, while they look at it from an internal perspective of what is right for the organization. We (of course) think ours is the better approach.
Friday, May 13, 2011
Friday, April 22, 2011
Friday, April 15, 2011
Friday, March 25, 2011
- Online Banking and Bill Pay- This customer facing service was still in it's infancy in 2000 while limited bill pay services were only offered through the largest financial institutions. Today, that is a standard requirement for any bank, large or small.
- Online Account Opening- All deposit or loan accounts were opened through a traditional channel, a branch or perhaps a call center. Now, in addition to supporting these channels, an online application is required and, oh yeah, you better support it with a online chat feature so they can chat with you from your website.
- Mobile Banking- The most recent entry to the self service channel is now a requirement as well. With the proliferation of smart phones and other devices, customers expect to have access to their banking services anytime and anywhere.
As we meet with these vendors, it is no longer acceptable to provide functional systems. We are looking for partners who are following trends in the industry and spending money on new technologies, anticipating the next customer need. With the speed of change, we can't go it alone.
Thursday, March 10, 2011
- From The Financial Brand, an article outlining the results of a the Edelman survey on Trust in US Financial Services. Not surprisingly, consumers still showed little faith in their financial institutions. For those of you in social media, the good news is that consumers value "honest communication" and "open and transparent" as the most important factors affecting reputation. Isn't that what social media is really all about?
- On a related note, one of my co-workers shared an article on Financial Planning.com about the limited adoption of social media in financial services. There is one particular quote that was spot on, "The downside for many is compliance. 'It takes five minutes to sign up for Facebook, but three to four months to make a social media plan that makes your legal and compliance departments satisfied,' said Hadley Stern of Fidelity Investments." Sound all too familiar? I think this is one of the biggest hurdles many organizations face as they consider engaging in these channels.
- From the "How not to use Social Media in B2B Sales", I recently received a tweet from some random guy asking me if I wanted to see a demo of his company's "Actionable Alert" product. I had no idea who he is, where he's from, or even how he found me. This kind of approach is like asking a girl out on a first date when you haven't even been introduced. The least he could have done was provide some context for why I would even be interested. Not cool. He should talk to @Clagett from Geezeo about how to use social media to engage prospects.
Wednesday, March 2, 2011
Tuesday, February 8, 2011
As noted in the article, most of the policy is pretty benign. Where they got in hot water was the reference to "Inappropriate or disparaging content and information stored or posted by others..." and then specifically gave the example of a friend posting an inappropriate comment about the bank on a FaceBook page. In that event, it is incumbent on the employee to notify others in the bank or face the possibility of disciplinary action.
Our organization has a social media policy. Every organization should have one. However, it is a huge leap from managing employees and their social media presence to the actions of their "friends". I use the quotes intentionally because many "friends" in social media would not be considered friends in the true sense of the word. In this case, the organization has set unrealistic expectations and, quite frankly, an extremely difficult policy to monitor.