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Banks, big data and doing the right thing

July 21, 2013 Leave a comment

How comfortable are we about our banks mining personal data?

Banks around the world are wrestling with the complexity and the opportunity around big data as a way to deepen their relationship with customers online.

According to a study earlier this month by Infosys nine out of 10 people would be happy sharing some data with their bank if they received more customisable offers or experiences.

The study compared consumers attitudes to sharing data with retailers, banks and doctors and, probably predictably, banks came out as slightly behind the other two sectors when it came to data trades.

However, despite the finding above the study clearly shows consumers are in some conflict over the benefits and drawbacks of banks using big data.

Almost half  (49%) also say they do not want their purchase and transaction data used to offer new services based on their habits but, almost in the same breath, 48% of bank customers would be happy for the bank to use email or social media to provide them with updates or insights.

The study also finds consumers are more concerned with their account security. Around four fifths (82%) want their banks and financial providers to mine their data to detect anomalies from identity thieves, with the same amount (82%) expecting their banks to already be doing this.”

It is such an important issue that just over three quarters (76%) agree that they would consider changing banks if one offered assurances that their data and money would be safer in their systems.

Financial services futurist – and co-founder of MovenScott Bales has an interesting theory that following Edward Snowden’s revelations the strength of feeling around how our data is used could create a new social and political movement around transparency.

Digital natives will come to demand complete transparency on how their data is being used not just by governments, but by corporates as well.

He says: “The reality of the modern world is that if your doing something wrong behind closed doors. The Facebook Generation will find out,  they will share what your doing, and you will be held accountable.”

The Infosys study shows consumers expect better deals from retailers in return for sharing personal information and better attention from their doctor’s office for a similar trade. But banks don’t have a great track record in utilising what they know about the customer: e.g. “Would you like insurance with that?”

Post-GFC, trust in banks generally is going to take some time to recover – particularly in Europe and the US where bank failures have destroyed consumer confidence. One UK survey predicts it will take a generation before banks are trusted again.

How banks use big data to interact with their customers online (and by online I really mean mobile) in the next few years is going to be critical to the relevance of banking and the securing of trust in the minds of a new generation of customers.

There is an amazing opportunity for banks to use the data opportunity to transform their customers online experiences for the better. Instead of going down the retail route of using the data just to flog more products what if banks decided their focus would be purely on using insight to create ways to make customers richer; safer and happier?

But above all there is an incredible opportunity for banking to use big data in a way that embraces openness. That combination of deep insight and transparency could be the difference between banks continuing to be relevant to a new generation of consumers. Or not.

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Flabby finances and fit bodies

April 15, 2013 3 comments

You would think personal finance management – the art of managing your money and achieving goals – would be the easiest thing to provide an online solution for.

That was certainly the thinking three or four years ago when every bank worth its salt started developing online tools that allowed customers to get a rich and useful picture of their overall finances – Kiwibank’s Heaps is an example.

heaps logo

Heaps! personal finance management

I mean it makes perfect logical sense – every bank has a wealth of transactional information that, when packaged right, can provide a huge amount of insight into where a customer’s money is going and also through automation take out all the hard work of having to manually pull together a budget.

This was the topic of a great cubicle conversation with one of my colleagues this week. D and I have been working together for the past five years on a number of major online projects – including online personal finance management.

Now D is probably one of the fittest and strongest men I know as he puts his body through a regular gym/cross fitness regime every week – and has done so as long as I’ve been working with him. His physical and mental discipline have given him a toned and hard-muscled body that would put most of us to shame. That’s his thing and even through major life interventions such as children, injury, work pressure he has kept at the training and never stopped.

My thing is Aikido. I’ve been training three times a week for as long as D and I have been working together – so it’s a good common bond that can set off some good conversations about the physical and mental sacrifices and rewards you get from long-term, dedication to doing something positive with your body.

And that’s how we got to talking about the similarities between personal finance management and physical body management – whether that be the cross-training gym, the dojo or even an organisation like Weightwatchers or Jenny Craig.

“Never be too rich…”

I don’t think there’s one person I know who wouldn’t have just a little sympathy for Wallace Simpson’s notorious quote that: “One can’t be too rich or too thin”.  By that I mean probably 95% of us would love to be a few kilograms lighter and a few thousand dollars richer. Not obsessively thinner or richer – just in control of both.

The trouble is 95 per cent of people who attempt to lose weight fail. This year it’s estimated in the US  100 million people are dieting trying to achieve the latter part of Mrs Simpson’s edict. It’s a billion dollar industry but for most it is a cyclical pattern of joining a gym or weight-loss program in January and abandonment sometime after.

With trying to get your finances into shape it’s a similar pattern – even with tools that take out all the hard work. Some people do stick at it religiously – but they are the people who were running a budget on a spreadsheet before they got these great online tools.

Finance writer Amanda Morrall says the trick is not to treat personal finances as something separate from the rest of your life. In her latest book Money Matters: Get Your Life and $$$ Sorted, Morrall looks at how average people, with ordinary  jobs, have achieved financial management, and indeed wealth, through actually connecting with their true selves. It’s a powerful insight and a great book that combines solutions with motivating tips to get people living the life they should be living.

A quote in the book has been resounding in my head since reading it. Morrall quotes the Dalai Lama responding to a question about what surprised him most about humanity:

“Man. Because he sacrifices his health in order to make money. Then he sacrifices his money to recuperate his health. And then he is so anxious about the future that he does not enjoy the present; the result being that he does not live in the present or the future; he lives as if he is never going to die; and then dies having never really lived.”

I think that describes too many of us.

Common link

But back to my cubicle conversation with D. After a bit we found a common link between building physical strength and muscle; mastering a martial art; losing weight and keeping it off or spending less than you earn and building wealth. What’s the secret?

I think it’s a mixture of truly understanding what your life’s purpose is and, as Morrall writes, building your life around that. Otherwise you end up risking falling “into the trap of consumption where financial vampires are only too willing to take advantage of your vulnerability and exploit your financial weaknesses”.

Joining a gym or a dojo or a weightloss programme are pretty much in the same vein as opening up a tool like Heaps, Xero or Sorted. They are all capable of enabling a life-changing action – but only if they can be coupled with some internal motivation to make a life-changing action.

True it may only take one small step to begin the journey – and online can be a powerful source of sparks of inspiration – but the first step must be followed by many others heading in the same direction to get somewhere meaningful.

Sync your Visa, MasterCard or American Express to your iPhone

April 30, 2012 1 comment

Apple’s recently awarded patent for “an electronic device that will be able to deliver real-time authorization of cardholder-not-present transactions” should be setting off alarm bells throughout financial institutions.

The patent applications reveal the world’s most successful company has mobile payments firmly in its sites – by using NFC on an iPhone that facilitates contactless and remote payments via credit cards synced on iTunes.

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How iTunes will sync cards

Financial institutes only need to look back 11 years and replace cardless payments with digital music to appreciate the enormity of what’s coming. Here is the company that reinvented computing; the music industry; the mobile phone and the tablet announcing the time is right to reinvent how society transacts.

20120430-220743.jpg

A commentator for Forbes.com succinctly put it: “If past is the prologue, Apple will implement electronic wallet better than existing players and Apple stock will rocket to $1000.”

Banks may look at closed-loop payment failures – the most recent of which appears to be Google Wallet – and believe time is on their side. It was a similar scenario in 2002 as music company executives bickered over a common standard for copy-protecting digital music while CD sales were heading south.

In 2003 in it’s first six days iTunes sold a million songs and within 18 months had 74% of the portable music player market.

Time is not on our side.

The online customer advocacy revolution

February 8, 2012 Leave a comment

Two weeks back at work with annual planning time kicking off and it really feels like the year has well and truly underway. But I’ve still got a few hazy memories of our sunny Coromandel holiday and a couple of things from that have stuck in my mind: One was just how much better the weather is up there than windy, rainy Wellington; and the second was more related to my day job – and that was how much our family holiday relied on online.

Cathedral Cove, Coromandel

Sun kissed Coromandel beach

Just about every place we stayed in or ate at we had checked out via apps like Trip Advisor and based our decisions on user comments and reviews; I navigated the entire way with Google maps (it only led me slightly off track once near the Kaimai Range…); days out were governed by weather or tide updates; at Napier Aquarium we used an interactive video tour; and we even received updates on the how the cat and the rabbits were doing back home thanks to PetAngels.co.nz!

I could understand some thinking that the above list sounds a bit like technology overload on a holiday – but in fact it made our holiday one of the best ever.  None of it got in the way of tramping, sightseeing; snorkelling, swimming or just snoozing on the beach. Instead it was like travelling with a native of each place we visited – who knew all the best beaches, routes; restaurants; local history or holiday houses. Yeah, the weather helped too – and I haven’t found an app for recreating that in Wellington…

My holiday made me wonder – with the increasing adoption of smartphones – how long before this online advocacy becomes a truly mass-market activity. It doesn’t take much of a mental leap to move from trusting other vacationers about holidays to trusting bank, insurance, investor customers about what organisation has the best deal – or more importantly – who has the best service.

Online forums such as Trade Me are more and more asking questions like “Which is the best bank?” and people are making big decisions based on what others say. We have always asked others for advice but now online, particularly online in the palm of your hand, makes this so much easier and faster to get an aggregate view of an organisation or a brand.

Google now includes reviews and ratings in many search results – so an organisation can say what they like on their website, but their search results will contain the real truth that potential customers want to know. As the thought leader in banking innovation Brett King says: You can’t game this. It’s a massive challenge to traditional online marketing.

At Kiwibank we haven’t been idle while this online customer advocacy has been evolving. We’re out there engaging and supporting customers on Facebook and Twitter.

And we’ve also started rolling out our own online customer advocate – an Online Relationship Manager to customers.

Kiwibank Online Relationship Manager

Online Relationship Manager

The idea behind the Online Relationship Manager is to create a customer champion within the bank who combines the convenience of an internet service with the benefits of a real person – putting the person back into online personal banking.

The Online Relationship Manager is available through internet banking secure mail. They take the time to get to know and understand customers, and help them achieve their short and long-term goals. Contact is as hands on or off as customers wish.

The Online Relationship Manager has the authority to make things happen quickly. If they can’t help, they make the resources and expertise of Kiwibank specialists – such as in home loans and lending – available to meet the customer’s need.

The online customer advocacy revolution means the customer is in control now more than ever before. The risks for businesses that don’t get this are clear – but the opportunities to those who get it right are massive and exciting.

Traversing the Uncanny Valley

July 11, 2011 Leave a comment

The Uncanny Valley is a place that exits in robotic and animation theory that when humans observe a replicant that can look and act almost, but not perfectly, like a real human they feel revulsion. It interests me because the work to overcome this in robotics, and digitally, I think offers possibilities for creating online relationships.

I want to explore the non-online world of robotics and the Uncanny Valley for a moment. The valley doesn’t exist obviously, it is theoretical and was coined by Japanese robotics expert Masahiro Mori. I like Mori for a number of reasons, not the least that he believes, as do I, that the best ideas are born in the bed, the toilet or the bath.

According to Wikipedia Mori’s original hypothesis in a 1970 paper argues a robot that is too human-like can veer into unsettling territory, tripping the same psychological alarms associated with a dead or unhealthy human. Or, as Mori puts it: “There’s a fine line between cute and scary.”

This area of repulsive response aroused by a robot with appearance and motion between a “barely human” and “fully human” entity is called the uncanny valley. The name captures the idea that an almost human-looking robot will seem overly “strange” to a human being and thus will fail to evoke the empathic response required for productive human-robot interaction.

The “valley” in question is a dip in a proposed graph of the positivity of human reaction as a function of a robot’s human likeness.

Mori's Uncanny Valley

Mori's Uncanny Valley

There’s some rebuttal of this theory of human-to-non-human revulsion – particularly in this article in Popular Mechanics. The writer argues that the creepiness of replicants – “the humanoid robots with taut, rubber faces constantly evolving from Asian labs, and Hollywood’s computer-generated stand-ins, their eyes darting and glassy and corpse-like” – is heightened by remote viewing. That once you meet the android: “most robots, particularly ones designed to interact with humans, are simply not scary“.

Real-life robots being showcased in Japan now, such as Repliee Q1 may still veer towards the Uncanny Valley.  Like her slightly creepy brothers and sisters, she doesn’t look like she gets out of a chair much so probably have limited application in helping around the house. Possibly you could envisage a retail Repliee Q1 in a front-desk role in a business – but she’d never be able to leave her post to, say, guide someone to another area of the store.

An admission – my first online job was giving the world’s first digital news presenter, Ananova her daily voice via a text-to-speech engine way back at the end of the first dot-com bubble. So I have a certain fondness for digital 3D avatars. Looking back, Ananova was such a Y2K girl with her endearing glottal stop and slightly unnerving twitches – that I guess she was always clearly perceived as just a 3D head tragically born too soon for 3G. A D waiting for the G.

Ananova

Ananova - the world's first digital newsreader

But she looked great.

Outside of thumbnail pictures on social media sites, avatars haven’t really caught on in a big way in the online world. And this is despite their potential to deal with customers 24/7 without all the downsides of humans, such as pay; sickness; sleep; Mondays etc. Only two large corporations using digital avatars currently spring to mind – NAB and Ikea. According to the NAB, in 2008, their online assistant was proving successful . Ikea also use an automated online assistant, Anna. Anna and NAB’s online assistant hardly create a stampede to the Uncanny Valley – they’re too, well, obviously cartoony and unreal for that.

But the technology around 3D animation is now really moving apace. I’m talking about the amazing, but closed, 3D virtual worlds such as Second Life, as well as the innovations in 3D gaming. This year’s hit action-adventure game L.A. Noir should have us fleeing, screaming to the Uncanny Valley – or is it just too realistic to be Unheimliche? The technology behind the game animation is extraordinary:

It makes me wonder how close we could get in the online world to crossing the Uncanny Valley into a new place, where the interface between humanity and technology becomes actually attractive.

Why our social media strategy is just wrong

June 6, 2011 2 comments
Role of social media

Why businesses do social media

The chart above articulates, for me, the reasons why businesses, particularly financial institutions, are involved in social media. Right now we are primarily there for customer service reasons. And that’s because our customers are already there – they beat us to social media sites like Facebook and Twitter a long time ago, and we followed because we had to. We can’t not be where our customers are, and we’re reacting to their needs as best we can.

We try to gauge sentiment but, as I discussed in my previous post, the tools aren’t around at the moment to meaningfully allow us to really gauge sentiment  based on social media activity. The data is there, for sure, but it’s so vast and unstructured we struggle to make sense of it.

Most of us use social media to support our brands. Some do this really well – but most of the time we’re so pre-occupied with trying to service customers in social media we don’t step out of the reactive space and move into the leadership space. And to really support your brand well you need to be leading, not reacting.

Some of us try sales and marketing but in social media channels we generally end up giving our recipients blunt-force trauma. Standard CRM or, even worse, DM marketing techniques don’t go down overly well in social media. It’s all just too obvious and crude – like a desperate pick-up line before the slow finale at the school dance.

Current to future state Social Media

Our social media strategies need to evolve

The vast majority of business activity in social media currently is supporting customer service. And this is an unsustainable strategy based on reactivity which needs to change, fast. We need to start leading.

Businesses (and banks in particular) operate social media channels like an online drop-in centre where unauthenticated people raise issues publicly that we move to a voice channel after authentication. It’s like a front-desk where you ring a bell and get your issue rapidly dealt with as they get a not too dissimilar priority as escalations to the CEO office.

But because most of us need to authenticate customers to be able to solve their problems, dealing with a customer in Facebook or Twitter is very hard for businesses. We need to move them into an authenticated channel – “e.g. DM me your number” where we can better meet their needs.

Someone who knows this only too well is Esteban Kolsky . In this video interview (10 minutes of pretty spot on commentary) Kolsky makes some incisive statements around the conundrum of dealing with customers in social media channels.

He cites that less than 4% of complaints are resolved via Twitter.  

I paraphrase him, but his argument is: “(In Twitter) You find customers who want to complain, they would do it anyway, they just get better escalation by doing it in Twitter. I never met a customer in my life that could explain the situation in 140 characters, let alone have the problem resolved in 140 characters.”

This resonates with me and it’s a situation where a lot of us find ourselves. And I don’t believe it’s sustainable at all.

Banks, in particular,  should be leveraging the golden opportunity of social media around data and shifting the focus from 1-2-1 customer support to brand and sales supporting and gauging customer sentiment. We should be putting our business information and knowledge management teams onto this right now.

Because the biggest issue today with social media strategy is that organisations either don’t get it (admittedly less and less of them) or are managing it in a completely unsustainable way – and I think that’s most of us.