Don MacDonald, Executive VP & Chief Marketing Officer, Fiserv
Benny Higgins, CEO, Tesco Bank
Jonathan Carson, CEO Digital Nielsen – leads their digital business since they acquired his company, BuzzMetrics, in 2007.
Debra Hopkins, Chief Innovation Officer, Citi – has been CIO since 2008.
What can the financial industry learn from the transformational changes driven by the Internet?
The big thing that drives success in transformations is a relentless focus on the consumer, Carson argued. Industry leaders that subsequently failed ignored this concept. For example, the music industry was in love with their business model that relied on consumers having to repurchase their music with each change in media format. They used technological innovation to extract more money from their customers without corresponding improvements in the quality of their products, he noted.
The digital age taught consumers that they could have any music they wanted on any of their devices through peer-to-peer networks, Carson reminded us. It became a valid distribution model in their eyes because the industry didn’t provide a viable alternative. The television industry learned from these mistakes and decided not to be greedy. Instead they are experimenting with multiple distribution models in order to provide the “dream” scenario to the consumer, which is “I want to access any content, in any format, on any of my devices, at any time I choose”.
|Financial services consumer dream scenario: I can make any payment in any format, on any of my devices, at any time I choose.|
How important is design in a consumer-oriented world?
It’s all about letting go of preconceived notions and seeing everything from the customer’s point of view, Hopkins insisted. In 2010, she took their CEO, Vikram Pandit, to meet Steve Jobs. Steve asked them a fantastic rhetorical question, “Why do we need banks?” He meant that we should forget what we know about our business and approach everything in a very basic way. It forces you to focus on simplicity when creating design principles, she said.
Hopkins described how Citi has invested in a startup called ReadyForZero.com. The goal of this website is to help people get out of debt. They tell people to avoid retail debt counselors adviser users which loans to pay down first in order to reduce their overall debt.
How does the ever-increasing rate of technological change affect consumer adoption rates of new technology?
The rate of technological change has been increasing exponentially over the past few years, Carson proposed. This can be seen through the incredibly rapid adoption rates for new technology when compared to historic rates of prior devices that were considered to be revolutionary in their time. It took 23 years for the first fifty million color TVs to be sold, around 20 years for first fifty million personal computers to be sold, around 9 years for the first fifty million smart phones, 2 years and 9 months for the first fifty million iPhones, and around 2 years for first fifty million iPads.
These rapid adoption rates are appearing in services as well, Carson, noted. It took the social networking site Pinterest 18 months to get their first five million users and just two months to get their second five million users. We’re seeing a tremendous rate of adoption for new market entries, which can be very scary for incumbent firms. We see the rate of change building slowly over time and then exploding into market disrupting-sized numbers, he reported.
Research released by eMarketer confirms that there is a massive shift underway towards usage of mobile devices to consume Internet content:
… by 2014, 33.3% of the U.S. population will visit social networking sites using their mobile phones at least once per month. That’s up from 18.7% at the end of 2011. Most of those visits are expected to go to Facebook. In fact, eMarketer estimates that the number of mobile Facebook users in the U.S. will jump from 49.4 million at the end of 2011 to 93.9 million in 2014… In other words, not only will people consume more content via mobile devices in the coming years, but they’ll find much of that content through mobile social networking activities.
Citi does a lot of ethnographic research in order to better understand consumer behavior, Hopkins said. One thing they discovered was that people are very uncomfortable talking about their personal finances. In fact, people are more comfortable talking about their sex lives than their financial lives, she exclaimed.
Hopkins surmised that this level of discomfort is caused by how complicated the processes and paperwork are that the consumers have to deal with. According to Personal Finance for Dummies, this is due to people’s feelings of embarrassment that they’ve made mistakes with their finances.
What does BuzzMetrics measure that can help businesses gain an advantage in their markets?
One exciting aspect of web analytics is the huge amount of data on the Internet that is generated by consumer actions and can be mined to gain all sorts of insights. Analyzing social media allows us to better understand how ideas are formulated and exchanged. This is extremely powerful for industries.
The first big customers at BuzzMetrics were pharmaceutical customers that embraced their methodology due to their regulatory environment. The pharmaceutical industry isn’t allowed to have direct relationships with their customers. They can’t know who they are and aren’t allowed to interact with them. The ability to listen to their customers talk about their products is just as valuable to pharmaceutical companies as it is to any other company, so they needed a vendor who could tap into social media and monitor consumer sentiment.
|100 Billion isn’t what it used to be. McDonalds took 46 years to sell 100 billion hamburgers. Apple iOS app store took 5.6 years to reach 100 billion downloads, and the Android app store will take about 3.5 years to reach 100 billion downloads. Source: ZDNet.|
How do you build brand loyalty when more and more transactions are done through digital devices?
Citi regularly reaches out to their customers and asks them what they think the bank should be doing in order to establish an ongoing dialogue with them, Hopkins pointed out. This creates a steady stream of real-time, relevant, differentiated information from their customers, she said.
They also try to make all customer interactions more meaningful, Hopkins emphasized. Some types of transaction have a much higher rate of personal interaction such as getting a loan or setting up a trust. Most customers wouldn’t do either of those things over the Internet.
Hopkins’ team at Citi met with 600 startups last year and they’re partnering with some of them that have demonstrable potential to generate brand loyalty. She also told us that she has an upcoming meeting with Jack Dorsey, one of the founders of Twitter, and also the founder of Square. Both firms have large, loyal customer bases.
While Dorsey has revolutionized merchant accounts, he had to work within the existing banking infrastructure to do it. This is an issue for all startups that become successful. Their brand loyalty helps them to eventually grow large enough where they have to deal with regulators. This limits their growth and increases their cost of doing business. For example, m-Pesa, a money-transfer service, operated by Safaricom, Kenya’s largest mobile operator, has had to set transfer limits and is worried about drug traffickers using their service. The question is, how do firms make that leap from startup to established brand and still maintain customer loyalty, Hopkins asked?
How can business get more customers in this digital age?
Financial institutions have historically engaged with customers through the bank branch, Carson observed. But this model no longer works in a digital world. The business model of newspaper industry, where paper is printed at night with the previous day’s news, then distributed by hand only to be thrown away after the consumer reads it sounds ridiculous now. Companies need to embrace change but use the existing infrastructure as a platform. One example of a company trying to stay relevant is Best Buy. While they are struggling in the retail electronics market, they assigned hundreds of their employees to monitor Twitter in order to answer technical questions and interact with their customers on a regular basis, he said.
Businesses are defined by how they reward their employees, Higgins insisted. It takes courage to get people to do things that may not be popular, but are the right things to do because they’re in the customer’s best interest, he said.
You can read Part 1 of this article here.