It’s A Good Thing I Wasn’t At BarCampBank

logobarcampbank2.pngA good thing for those who did go, that is. I would have drank all the coffee and tried to dominate the conversation. But, considering the issues and topics that were discussed (according to William Azaroff’s guest blog on NetBanker), I would like to have been there. Here’s what I would have contributed to some of the core themes:

What does it mean to be customer-centric? The group concluded that banks and credit unions don’t really know what that means, and they’re right. But bankers could sit around and argue all day and night about what it means to be customer-centric and not get anywhere. Until they reframe the question, that is. What banks should be asking is:

What business model could we create or adopt that would benefit us and our customers?”

The fundamental barrier to becoming customer-centric is not defining what it is. It’s overcoming the fact that the way many banks make money today — through punitive fees, and by maximizing profits from the sale of individual products — is perceived by customers as profits made at their expense.

Do you hear about people complaining to Washington about the high price of iPods and iPhones? The only difference is that we perceive those products to provide a higher value than we do the $30 we pay for bouncing checks. But to the bank, that’s a service they provide, and want to get paid for. And you know what? It’s not the bank’s fault when we bounce the check (usually).

So what does it mean to be customer-centric? It means being perceived as not making money at the expense of the customer. It means helping customers make the right financial decisions for them, not just the company. Will a bank lose a sale because of that? Possibly. But that might be good. If Sprint hadn’t taken on those 1000 customers in the first place, they might not have had to fire them after spending all that time and money supporting them.

And by the way — banks will not become customer-centric by simply asking customers if they’ll refer the bank to their family and friends. They’ll start the journey by figuring out which customers they want to be “centric” to in the first place. And then finding out if those customers believe the bank acts in their best interest, and not just the bank’s.

Is social media an effective way to market and promote banks?
This is the wrong question to ask. (Are you beginning to see why it was a good thing that I wasn’t in Seattle last weekend?) Instead, FIs should be asking “how can we use social media to develop and grow our customer relationships?”

More ways “to market and promote” the bank should be low on the list of priorities a bank has. Marketing has invaded every aspect of what we see and do (I won’t be surprised when the pastor at church starts off one morning by announcing that today’s service is sponsored by Fred Smith Insurance on Main Street in Andover). If bank marketers don’t find some boundaries to respect, prospects and customers will adjust. Which means they won’t communicate with banks through social media.

But the potential to engage customers in conversations — which leads to stronger relationships — which reduces the need to “market and promote” the bank — is something that, if I were the CMO of a bank, I’d be testing right now.

What would a bank look like if one was built from scratch today? Why would anyone want to do THAT? Who’d be that crazy? (At which point, I would have been kicked out the door, and sent back to Boston).

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13 thoughts on “It’s A Good Thing I Wasn’t At BarCampBank

  1. You’re too funny, Ron… I don’t think the point of a BarCamp is for everyone to agree.

    And where did question number two come from? Was that a question at the BarCamp? I agree that it’s completely the wrong question. The right question is “how can we, as an organization, use web 2.0 to enhance our relationship with our members? How can we involve them?” I’ve answered that question in a couple of different ways for a CU client of mine in Spokane. And the answer should be unique to every institution… no one-size-fits-all solutions belong here.

    Question number three is a great one…. because that is effectively what happens every morning when the employees walk in the door to start a new day of helping their customers/members.

    P.S. Shall we see if there is any interest in BankBarCampBoston?

  2. Hah! …. BarCamp is so not ready for you Ron … but they need you 🙂

    Love your comment on customer centric. I think you have nailed it actually. Thats something thats been bothering me for years, while inside a Bank, and we spoke of “how do we become customer centric”.
    Now my thought is that its impossible… only people can be customer centric. Banks can’t .. we need a better question, and I like yours.

  3. Thanks Ron. The dialogue in Seattle was incredible, and you would’ve fit right in. In fact your name was mentioned several times (all positive don’t worry).

    We all beat ourselves up over customer-centricity. I like the way you’ve framed it a lot. The main customer-centric thing banks can do is to provide good products and services at a price that’s fair for the consumer and ensures the long-term viability of the company (no one wants their bank to go under). If we all found that balance, we’d have met our goals, and would attract more customers to centre ourselves around…

  4. I, for one, could be interested by a bank built from scratch. For example, why do I have to pay outrageous fees when I exchange money with fellow barcampbankers, or any friend I have across the world. I can understand the bank’s problem, why don’t they understand mine? OK, I’m in this tiny fringe of the market that no-one wants, except customers belonging to it. And with the Internet there are so many new fringes materializing everyday. Then there is this bank that was built from scratch no long ago: PayPal.

    I would complement Colin, BarCampBank needs you, Colin and everyone with a desire to see things change in the banking and finance industry. Hope we all meet soon on a future BarCampBank edition. Maybe as Morriss suggested, at a BarCampBankBoston (anyone can contact me if they need info on the organization process).

  5. William, I have to disagree with you that no one wants their bank to go under… Depositors don’t want their bank to go under — borrowers would dance in the streets if their bank went under…… 😉 he, he, kidding!

  6. Interesting that no banks were there. But on your last point you answered a question with a question. Why should this question be considered? Because the current structure doesn’t seem to allow customer centric business models to be built. If they can’t build it now maybe we need to build a new model. Wesabe has a very good way to look at an individual’s transactions. But it is not built by a bank so what will happen? Will they endorse Wesabe or try to emulate it. Wesabe should be endorsed and FIs should work with them. But who will lower the drawbridge and start something that is truly customer centric?

  7. Thanks, everyone, for your comments.

    Morriss: I would sign up in a heartbeat for BarCampBank Boston (assuming my wife lets me go, of course). But like Seattle, I’d bet we’d see a lot more CU folks than bankers.

    Fredric: Your comment re: PayPal really uncovers the difficulty in answering the question of what a bank build from scratch would look like — you have to first answer the question “what is a bank?” At a conference not too long ago, a sr exec from IBM (who is now the CEO of some other organization) commented in his speech that a bank was “just a payments mechanism”. Using that definition, then yes, PayPal is a bank. However, I spoke to a LOT of bankers that day who violently disagreed with the speakers’ definition.

    Gene: Your comment that “the current structure doesn’t allow customer centric models to be built” warrants a response that won’t fit in this little box. I think I’ll address that in a separate post.

  8. Actually, I was referring to the fact that PayPal has become a licensed bank here in Europe. My main point is that throughout history, communities repeatedly created new financial institutions to handle their financial exchanges. Just like settlers created many new forms of banks in the 19th century in the US, the new communities we see on the Internet may just need new financial institutions created from scratch to serve their needs.

    Maybe, we’ll have the opportunity to discuss all this at a future BarCampBankBoston. On my side, I raised the subjet with my wife and it looks I should get permission to participate.

  9. I like the definition of a bank as “just a payments mechanism”. No surprise the bankers in the crowd didn’t like that. So easy to forget whose money it is we’re holding, ours or the customers’.

    I think one way to keep thinking about the customer in the right way is to keep reminding ourselves that it’s the customer’s money, we’re just doing things well enough to win the privilege of holding it.

  10. Well you’ve really got a great discussion going here. I’m curious what your answer would be to your question (“how can we use social media to develop and grow our customer relationships?”) for those that use it most (18-24 yr olds). Could FIs build stronger relationships by using blogs, word-of-mouth, video, etc to educate this age group on how to manage their finances, getting the right loan, etc? Would it be a good idea to have peers contribute to these blogs that are not employees of the FI?

  11. What a great post. Made me laugh out load (my son was wondering what’s so funny…don’t think he’d understand).

    We DEFINITELY needed Ron at that meeting. Matter of fact, I’ll pay his way to the next one just to get some serious debate going. Too many of us were nodding in agreement on many of the topics….needed someone to reframe the question, and reboot the debate, as Ron did in his post.

    And I’ve heard from a number of banks this week that said they would have attended, but didn’t know about it until they saw it on my blog a few days prior. I’ll be happy to market it much more heavily next time.

    I’m organizing a 1-day new product demo conference in October in Manhattan (more on that later). Maybe we could organize BarCamp Bank Seattle (Eastern edition) around that.

  12. Thanks, Jim.

    Trust me, it wasn’t the money that kept me from attending. And I’m willing to bet that if I do attend the next one, the consensus of the group will be “we would have been better off if Ron just stayed home, and commented on his blog after the fact.”

    “Cranky” is not a persona I play on TV.

    Funny side story: I was meeting with a colleague (who has never read this blog) the other day, at the end of the meeting, we were chatting about something, and she started talking about her husband (who is about same age as me). She said “he’s just cranky — you know what I mean when I say cranky?” Uh, yes, I do.

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