1066 Blog

Banking's Long Tail

Chris Skinner has a great post on the long tail of banking.

There is no question that as the barriers to distribution disappear (the penetration of mobile devices/infrastructure in emerging markets a key driver here) money will begin to operate a lot more like software. The destabilizing effects of this on "business as usual" banking will be profound (just ask people in the music business).

Banks are fortunate that they can reference the lessons learned by other industries as they formulate their strategy for dealing with this seismic change. In order to capitalize on the opportunity presented by the "long tail" in banking, banks will need to think differently about the markets that they serve and the companies with which they compete.

The pressure being placed on interchange fees today will be compounded as technology companies look to disintermediate the banks. Had Google bought PayPal rather than eBay, the payments market would look quite different today. As it stands, Google is making inroads with Google Checkout, Amazon is looking to expand its patented 1-Click technology and Microsoft has made no secret of its intention to get involved with payments. Apple's development push will no doubt result in a bevvy of smartphone-based payments applications...and the list goes on.

These technology-driven solutions will have certain advantages, and yet, the banks themselves have a major head start. The key will be to build systems flexible enough to meet the demands of a fragmented market. What has passed for product innovation in the payments space will simply not be enough.

 

Pin Down the Customer!

The hawkeyes over at PSFK spotted this hilarious window-dressing at the new CapitalOne Bank flagship on Union Square...."Let’s pin them down and close the sale".

No one said getting into retail banking was going to be easy!

HSBC makes a bundle?

HSBC has launched HSBC Premier, a new way of banking.

It's a bundle of financial services targeted, it appears, at those who may be in position to benefit from the bank's global presence.

But as I read the features and imagined myself being bundled off for a time to an expat assignment in Paris, London or Rio, I found myself thinking: "yeah, but as you are a global bank, shouldn't I be getting these things from my existing account anyway?" By which I mean: international recognition, worldwide assistance, investment options, privileges and rewards.

While I may benefit by avoiding lines at the branch or by talking to investment specialists in plush carpeted surroundings far from the bustling lobby, these features and the above seem table stakes for an offering the name implies is premium.

Innovation in financial services is a tough business to be sure. Tougher still if Marketing isn't aligned to make the most of combined capabilities and at least one somewhat unique strength: global ubiquity.

What HSBC has here is a missed opportunity to make a bundle.

Bank Brands and the Subprime Mess

In an article in this week's, American Banker (available to subscribers only), we address the effects of the sub-prime mess on bank brands. As the crisis continues to unfold--today's Journal, for example, highlights investor concerns that the crunch may expand to other forms of credit--we'll see banks struggling to shore up investor confidence. This obviously will require changes to processes, organization and so on. How these changes are marketed will bear close watching. How will this new wave of reputation branding play out? I'd be interested to hear your thoughts.

Virgin to Rock

The UK government's backing of Virgin Money to buy Northern Rock carries with it the potential for a much needed shake-up in the marketing of financial services.

Financial services firms these days focus on vague promises of "living richly" (as Citibank promised in its recent campaign in the US) or are reduced to competing on price through more competitive rates and free checking. A few, such as Commerce Bank, have been able to rise through the clutter by focusing on convenience and the Walmart-adapted strategy of simply greeting customers when they come through the door. These companies may know banking but, especially during this time of sub-prime turmoil, their brands are being hammered by bad publicity.

Enter Virgin which knows a thing or two about marketing and seems to have no fear about entering competitive and seemingly commoditized markets (witness Virgin America). Such markets are ripe with opportunity for a firm that focuses on creating unique value and marketing it effectively. Should be interesting to see whether Virgin can rock the market.