Jeff Stephens

Introducing Tribed, and Wag: The Bank for Dog Fanatics

// October 17th, 2011 // 1 Comment » // Banking, Banking business models, Banking business strategy, Decommoditization, Engagement banking, Enthrallment banking, Entrepreneurial Lessons, Jeff Stephens, Tribed, Wag: The Bank for Dog Fanatics

Friends: I am very excited to share a new entrepreneurial venture with you that I’ve been working on for quite a while, albeit anonymously: Tribed, and Wag: The Bank for Dog Fanatics. Please take a moment to watch this video to learn more.

Tweet This Post

What if? Re-intermediation in banking

// April 8th, 2011 // No Comments » // Banking, Banking business models, Banking business strategy, Banks, Credit union business strategy, Innovation, New banking ideas, What if?

As I was sitting in the presentation by Terry Jones, founder of Travelocity.com yesterday at the EO Texas University, I was reflecting on the overall trend Terry pointed out about how we’ve seen such an emergency of do-it-yourself (DIY) culture in the past several years–thanks to the Internet. Travel agents are obviously just about obsolete now because of this DIY movement.

It’s similar in banking.Thanks to the Internet, consumers can shop for the best rates, products and services online, and then after making a selection, take action. They can do it all by themselves, without any real help from the individual banks they are considering.

So I got to thinking, “what if….”

(Note: as with all my “what if” ideas, I’m not saying the following is necessarily a good idea–I’m just saying it’s an idea that should at least be pondered for a few minutes if you advocate innovation in financial services)

What if there were a layer of “banking agents”? Would they be able to add any value to the consumer or the bank, and thus earn revenue? Is there money to be made stepping into the middle of what is otherwise a DIY situation? Here are a few quick ideas I had:

• Buyer’s Agent: There is a (small) market for car buying agents–people who have established relationships with car dealers, and can help consumers get the best prices, sourced from a large network of dealers, without price haggling. What if a banking agent could develop special relationships with banks and credit unions, and be able to offer special exclusive deals to consumers who worked with that agent? The consumer would be willing to pay a reasonable fee for that. This model would work if….
• …The agent could guarantee the delivery of a certain volume of business to the banks and credit unions. It would like being an independent sales rep for the bank and credit union, and the financial institution would be willing to pay a commission for those sales.
• Commercial Loan Participations. A banking agent could be a great resource for coordinating the funding of large loans that individual financial institutions couldn’t or wouldn’t want to fund.  It’s likely both the borrower and the lender would pay for this matchmaking and coordination.
• Continuous Evaluation: A banking agent could continuously evaluate his/her client’s banking relationships (for both deposits and loans), and proactively create better deals and arrangements with other banks, and then let the customer know when it was ready. The customer would find value in this and would pay accordingly.

What are your ideas? Let’s add to this list. Or, on the flip side, feel free to disagree!

Tweet This Post

Would banks change their business models even if they knew how?

// February 28th, 2011 // No Comments » // Banking business models, Banking business strategy, Entrepreneurial Lessons, Innovation, New banking ideas

I am currently reading Business Model Generation:  A Handbook for Visionaries, Game Changers, and Challengers by Alex Osterwalder and Yves Pigneur. I’m just at the beginning, but it’s a great book so far.

I’ve often pondered the need for a business model revolution in the banking industry. Until now, I always thought the problem was that bankers wouldn’t know how to evolve (or completely change their business model). But now, the book has me realizing this question is only half of the real issue.

The other half of the question is:  ”If a bank knew how to evolve or change its business model…would it?” In other words, would it have the guts? Would it have the resolve to stick out a painful transition? Would it be willing to go against the grain and be a champion of change?

This is an entirely different question. Deep thoughts.

Tweet This Post

Is Engagement Banking enough?

// February 4th, 2011 // 4 Comments » // Banking, Banking business strategy, Decommoditization, Engagement banking, Enthrallment banking, Jeff Stephens

First, let me be clear: I’m a big fan of the concept of “Engagement Banking.” I really like the Engagement Banking site from Sapient Nitro, and love what the guys at Geezeo are doing. The only thing I don’t like about the Twitter hashtag #engagementbanking is that I didn’t think of it. And if you’ve paid even a shred of attention to what CBC is all about, it’s got brand engagement written all over it.

But lately, I’ve got to wondering something: Is “engagement banking” enough? To have an engaged customer/member base is certainly an improvement from where most banks and credit unions are today…but does engagement banking go as far as we really need to take it in this industry? Will engagement alone help us break free from being commodity financial providers?

Or do we need a heavier dose than just mere engagement?

I’d like to suggest that what banks and credit union brands really need is “enthrallment banking.” As in, “I’m captivated with this brand because it resonates so strongly with me.” For instance, Apple loyalists aren’t engaged with Apple, they’re captivated by it.

You may be thinking, “one step at a time, Jeff–we have to walk before we can run.” And maybe that’s true. But it doesn’t hurt to ask ourselves today, “what is our real end goal: engagement or enthrallment?”

Tweet This Post

Differentiation is not a tool of persuasion

// September 20th, 2010 // 4 Comments » // Banking, Banking business strategy, Credit Unions, Decommoditization, Jeff Stephens, Non-technical innovation

Nearly every marketer and CEO talks of differentiation. They ask, “how can we set ourselves apart from the competition [so that we can be more successful]?” It’s an important question. But it’s also a misunderstood question, and one that needs to be understood if we are ever to decommoditize our banks and credit unions.

Differentiation isn’t actually something you do to help your own bank or credit union. Instead, it’s something you do for your customers/members. It’s a gift you give them, that helps them sort through all the options available to them. That means one very important thing:

Differentiation is not a tool of persuasion. It is a tool of clarification.

We tend to think of differentiation as a way of talking people into banking with us. But that’s not the real purpose at all. Instead, the real purpose is to help people understand their options and make an intelligent choice for them.  You see, your bank or credit union’s potential customers/members have tons of alternatives and options in front of them. They’re awash in a confusing sea of choices, almost all of which look extremely similar. It’s daunting for them to sort through all these options, because they have such a hard time telling them apart. They’re trying to make a smart choice for themselves, but it’s tough because they can’t see the differences between their options.

Differentiation is the gift you give them to make this process easier. It’s for them, not for you. But in the end, it comes back around to serve your bank or credit union very, very well. Why? Because it means you get BETTER customers/members–ones who chose you because they felt you were the best fit from them, rather than just having chosen you practically at random from a list of 10-20 options.

This principle, of course, exists in many forms outside the world of banking.  I’m reminded of a keynote presentation I saw at the Oregon Bankers Association conference this summer, from speaker and former NBA player Walter Bond.  Walter talked about how when he was being recruited by college coaches, he had a really hard time deciding where to go, because every coach showed up and it all looked the same.  They said the same things, made the same promises, and had the same approach.  In other words, Walter had no differentiators to help him sort through his options.

The same thing is happening to your customers/members as you are recruiting them. So what can you do to help them sort through those options?

Tweet This Post

Growth: Improving the quality of your customer base, not the size of it

// September 3rd, 2010 // 13 Comments » // Banking, Banking business strategy, Decommoditization, Innovation, Jeff Stephens

There’s one thing I’ve been trying to be more clear and upfront about with my clients who I consult with: my number one goal is not so much to grow the size your customer (or member) base, it’s to improve the quality of it. In my mind, when you improve the quality of it, you are growing:  growing stronger as a company and as a brand.

So how do you define “quality” of your customer base?  I’d like to propose two criteria, both of which are given equal weight:

1) Profitability–your ability to make money from the people you do business with

2) Engagement–the amount that people give a damn about your bank or credit union (and thus, the more they are likely to be loyal, advocate for you, generate WOM, etc.)

In my experience, community banks and credit unions have a great deal of progress to make on both of these criteria. We find ourselves with lots of unprofitable customers because we don’t have the guts, market positioning and focus to say no. We don’t communicate our profitability expectations to customers, and don’t really even enforce the unspoken expectations.

We also find ourselves with very very few–if any at all–engaged customers. We may have a few not-disengaged customers, but have very few people who are truly excited about who we are, what we do, and how we are aligned with them. We have very few customers who have chosen to bank with us because they feel we are the one and only true fit for them. Instead, they have chosen us because we were most convenient, best priced, or passively recommended by a friend.

Do you have what it takes to improve your customer base–or just make it bigger?

Tweet This Post

Warren Buffett on…Banking?

// August 17th, 2010 // No Comments » // Banking, Banking business strategy, Decommoditization, Entrepreneurial Lessons, Jeff Stephens, Non-technical innovation

Well, I don’t think Mr. Buffett was speaking specifically about banking when he made this comment, but boy oh boy does it ever apply.  Here’s my favorite new quote:

“Don’t try to be smarter than your competitors, because any competent competitor will be working just as hard to be smarter than you.  The trick is to have no competitors”

Warren Buffett

CEO, Berkshire Hathaway

Bankers tend to ask themselves “how can we make our bank better than the competition.” Entrepreneurs, rather, ask “how can we make our bank so different than it has no competition?” That’s a decommoditized company.

Tweet This Post

Customer Expectations in Banking

// August 14th, 2010 // 2 Comments » // Banking, Banking business strategy, Banks, Credit Unions, Decommoditization, Jeff Stephens

Every bank and credit union’s customers/members have expectations–expectations for service, quality and other criteria you must meet.

The question is: who set the customer’s expectations for YOUR bank or credit union?

Did you set those expectations? Or did the industry do it for you?

The industry did. Tradition helped out. And convention sealed the deal. You had nothing to do with it.  Welcome to yet another massive downside of being a commodity financial services provider.

See, when you’re a commodity, you’re selling the same stuff as everyone else, and doing it in just about the same way. So, your customers/members have a point of reference; they have something to compare you to, because there are so many other banks or credit unions doing the same thing, and years of conditioning and experience with your competitors have created those expectations for them.

When you break out of being a commodity, you have no competition–nobody else does what you do. As a result, it’s much harder for customers/members to have expectations, because they’ve never experienced anything like you before: what you provide, or how you do it. They have no point of reference, nothing to compare you to.

When you’re no longer a commodity, you get to set the customer expectations yourself. Wouldn’t that be nice?

Tweet This Post

#MoveYourMoney: Not As Good for Banks and Credit Unions As They Think It Is

// July 23rd, 2010 // 14 Comments » // Banking, Banking business strategy, Banks, Brands and Branding, Credit Unions

I suspect this might be a pretty unpopular perspective. I’m not trying to be a downer, rather a realist, entrepreneur and business strategist.

Over the last several months, the “move your money movement” has gotten a lot of attention, thanks to websites like http://moveyourmoney.info. On Twitter you’ll frequently see hashtags like #moveyourmoney and #banklocal.  More and more, I see links posted to articles all over the web talking about how credit unions and community banks are a great alternative to big banks.  Many seem to be hailing this as one of the best things to happen to community banks and credit unions.  Although I’m not studying market share numbers, it does seem rather undeniably true: consumers are moving their money from big banks to smaller, local banks and credit unions.

There’s just one problem. And it’s a big one, rendering this “movement” only mildly useful for any individual bank or credit union.

When a consumer opens an account at your bank or credit union because of #moveyourmoney, they are doing so because they DON’T want an account at a big bank. Furthermore, they’re opening an account at your bank or credit union simply because you are a smaller, local alternative…NOT a big bank.

Do you see the problem? They are not choosing you for who you are…they are choosing you for what you are NOT. And unfortunately, you are just one of thousands of banks and credit unions who are NOT big banks.  (Metaphor/Translation: “Honey, I’m not marrying you because I actually love YOU, you silly goose; I’m marrying you because you are NOT someone I hate…and you are available. Duh.”)

So what does this mean? It means that these new customers and members you’ve just acquired are not necessarily a good fit for you at all (just because they’re a bad fit for Chase doesn’t mean they’re a good fit for Acme Credit Union).  It means they will be just as fickle and transient as your other customers/members; just as price-sensitive and ready to “move their money” again when a better deal comes along.

You see, there’s one simple fact, and there’s unfortunately no way to get around it (not even with a grassroots effort like #moveyourmoney):

Long-term prosperity at your bank or credit union only happens when consumers proactively choose to bank with YOU for who YOU are:  because they feel you are the one and only fit for them, and they refuse to live without you.

The Bottom Line: If you are growing because of the “move your money” effect, you are the random and lucky recipient of a cultural shift outside your control…and you will become keenly aware of just how outside your control it truly is, once the effect starts wearing off. Instead, focus on attracting people who love YOU.

Tweet This Post