Money – The Great Equalizer

Please see the sidebar on the site’s home page for a song that came to mind while writing this article.

As we sort through the aftermath of financial excess one thing remains front and center in my mind.  It was brought home by a recent news paper article entitled For Annie Leibovitz, a Fuzzy Financial Picture and a quote therein:

“The mind that can take these extraordinary pictures is not necessarily the same mind that is a perfect money manager,” said Graydon Carter, the editor of Vanity Fair.”

Managing money is a skill.  Doing so does not necessarily come naturally.  But it has to be done with some level of proficiency and effectiveness.  No one is immune from this basic human need to “keep what you have”.

Unfortunately “we” make managing money sound scary, daunting and complicated by using words like like “managing” and implying that success requires perfection.

In its most simplest terms, what’s required is simple, easy, friendly, consumable financial literacy training, focussed on the basics, started at a young age, embedded and continually reinforced throughout key points in the consumer saving/spending life-cycle and executed on a global basis.  

Money is often the great divider.  But it is also the great equalizer.   Anyone – indeed the entire globe can be materially, adversely and similarly affected by inattention to the basics.  

We need a find better ways to teach the basics and to ensure the appropriate application thereof.

Heat and Satisfaction

One of the most startling moments to me during the coverage on how countries worldwide dealt with the Swine Flu breakout was the Chinese use of heat sensing technology at airports.

http://www.youtube.com/watch?v=8fgBLU35cM8

This got me to thinking about the wide array of new and emerging “sensing” technologies and the way these technologies are and will be used to drive the future of many businesses including banking.

One of the ways heat sending technology could be used to advance the future of banking is as follows.

Imagine if we could identify heat profiles that correspond to a customer’s satisfaction state and use that to predict and/or influence how they might approach a banking experience to ensure maximum satisfaction from the time the experience starts to the time it ends.  In the case of a branch based experience, from the time they enter until the team they leave. In the case of an online transaction, from the time they start, to the time they finish. And so on.

Imagine if we could measure customer happiness as a function of their heat signature prior to and immediately following a banking experience.

What if we could tell that they arrived happy and left happier – or less happy?

What if we could detect an irate (dare I say heated) customer as they walk in the door and could change their mood before they hit the teller window and/or during their interaction so they leave happier than they were when it all started.

Fun stuff.

Keep The Change – Provide A Meal

While having dinner out with a friend a few weeks back I noticed a postcard on the table which read that by rounding up the check I could donate those funds to Citymeals on wheels.  

Per the Citymeal website, businesses can partner with Citymeals-on-Wheels through a variety of established programs.  Round-Up is a way for New York supermarkets, restaurants, retailers and their customers to raise money for New York’s frail aged.  Customers “round up” their transaction $1, $3, $5 or more to support Citymeals. This easily implemented promotion links your company with our high profile cause.  According to the Citymeals web site, 100% of the gifts to Citymeals-on-Wheels will be used for the preparation and delivery of meals to homebound elderly New Yorkers—not to fundraising or administrative expenses.”

As I read the postcard a stream of questions went through my mind:

• Is this legit?
• How does it work?
• How can i be sure that the 100% of the money is going to be used for it’s stated purpose, etc?

I immediately began to imagine one way in which the concerns might be addressed.

• Imagine if the amount totalling the  round-up amount was a separate card transaction that resulted in funds being deposited into a separate master bank account.
• The charity in whose benefit the account exists would withdraw funds as needed and be required to provide specific details verifying how the funds were used.
• Contributors to the account would be able to log into the account (perhaps using the card they charged the meal to or any card associated with their banking relationships) and view total and detailed contributions to date as well as detailed information on who their and total contributions had been used. 
• The entire ecosystem could be turned into a product, administered and automated by a single financial institution.

How great would it be to a part of something like this? 

I like to call it “Innovation with a Heart.” TM.

Keep The Change – Help the Nation

This weekend I escaped the orbit of my beloved NYC and spent the weekend with a few friends in PA and DE.  We’re all current or former employees of banks at various levels of seniority, disciplines and/or life stages.  What we share in common is a love of laughter, not taking ourselves too seriously, and brainstorming about what can be done to help others. 

 

With regards to the latter, our conversations invariably include discussions of what banks can do to help the struggling and how we can influence moves in this direction. 

 

One idea from this weekend seemed particularly elegant and simple and builds on the success of existing programs such as Bank of America’s “Keep The Change”.

 

Just imagine IF…

 

·         “Keep the Change” became “Keep The Change – Help the Nation”?

 

·         Bank of America customers could go on line and direct from 0 -100% of the “change” to a community or charity of their choice?

 

·         Receiving organizations were required to report back on funds utilization?

 

·         Customers could track change collected, disbursed and how spent – and do so on-line and in real-time?

 

If you need convincing that the Nation needs help, take a few minutes to watch this 60 Minutes episode: http://www.cbsnews.com/video/watch/?id=4920557n

 

Let’s help the nation. 

 

Right here. 

 

Right now. 

 

One penny at a time. 

Banking is about managing a person’s relationship with their money.

I had the pleasure of hearing and meeting Center for Future Banking executive David Carter on Thursday evening March 19^th. 2009. Mr. Carter was the featured speaker at a Bank of America affinity group event in New York City.

 

 

Mr. Carter’s speech was insightful and thought provoking. It had a profound impact on how I think about the future of banking.

 

The business of banking is about managing a person’s relationship with their money. These relationships matter.

 

 

1.     They shape how banking is designed and built. The rise of the ATM is a perfect example. Consumers wanted anytime, anywhere access to their money. As easy as cash (there when you need it). But with lower risk (I only carry what I need).

 

2.     They are unpredictable. The proliferation of bank branches is a perfect example. During the internet boom consumers sought on-line access to everything. Banks obliged with on-line banking services. They went a step further. Believing that brick and mortar experiences were dead Banks began shuttering branches. That was a misfire as evidenced by the number and variety of bank branches that can now be found on any major corner of every major city in the world.

 

 

3.     They are more complex and powerful than before. The number of people continues to grow. The adoption rate of technology we now take for granted like cell phones continues to grow. With that comes a greater level of connectedness which influences how people want to relate to other people, places and things. Including their money.

 

 

4.     They can create new markets, competitors and barriers in an instant. Consider the viral mobile banking craze in Africa which is circumventing traditional banks who are scrambling to remain relevant. Or the rapid growth of prepaid cash cards which are essentially credit-less digital wallets which can be used anywhere.

 

 

The future of banking could mean the end of banking but only as we know it. Hard to imagine. But possible. What were the top three music labels that once dominated production and distribution? Who was Lehman Brothers?

 

The real question is how to ensure we remain relevant. Being attentive to change and being positioned to adapt quickly will be a key success factor. Investing in innovation is a key to being ready.

 

 

What do I now think about when I contemplate the future of banking? Three phrases: Think survival. Be adaptive. Move with a sense of urgency.

 

 

An Idea Whose Time May Have Come: “Buy the Stock”.

Here is an idea whose time may have come.

It’s intended to capitalize on the success of programs like Bank of America’s “Keep The Change”, low stock prices, and the need for capital and liquidity.

Each time you use a foreign ATM and are assessed a transaction fee, said fee would be used to buy a share of stock in your name.

Using Bank of America as an example, each time you use a WAMU or JP Morgan Chase or HSBC or generic “bodega based” ATM (all of which I do routinely because there are too few Bank locations in South Harlem – more on that later), the Bank would credit your brokerage account (held at the Bank) with a corresponding share of Bank stock. 

At current prices a person could amass quite a stockpile, which could (will) increase in value over time, and which the Bank could help store and manage.

On the surface it seems like a “win-win” proposition for everyone.

The End Of A Love Affair

I have always been an early adopter of and evangelist for on-line banking in all its emerging forms.

 

My love affair started with Prodigy which was one of the first vendors.  Later I moved to Checkfree software.  I was so smitten that I purchased stock in the fledgling company.  I later  became a enamored with Chase Bank’s on-line solution.  And for over a decade I have been an unshakeable admirer of Quicken software.

 

However this past weekend I realized that my love affair with pc-based bill payment software had changed.  You see, it dawned on me that I had not launched or downloaded data into Quicken since the 2008 Christmas holiday.  Over the last 6 months I took a number of steps to simplify my financial life. And without knowing or rather realizing it, I effectively eliminated my need for, interest in and/or dependence on desktop-based bill payment software.   Essentially all my bills are prescheduled either via direct-debit arrangement with the merchant or via on-line scheduled payments using Bank of America’s on-line banking solution.

 

Gone are the days of making sure the Quicken agent on the pc is scheduled to run.  That the software has downloaded the data automatically or having to initialize a manual download.  Worrying that the download occurred without error.  Manually reconciling  transactions.  Ensuring payments are scheduled within the “bill payment window”.  Paying for and upgrading the software.  Dealing with software glitches.  Transferring funds when/if possible.  Backing up the data.  Entering correct merchant addresses and account numbers.  Taking the software and data files with me on business trips just so I can be sure to my bills get paid on time. Keeping the data files in sync.  Dealing with corrupt data files, lost data.  Etc.

 

To be sure I have mixed emotions about the transition.  Old habits Dow hard.  But the liberation is gratifying. I worry less. And in this day and age that’s a relief.

 

Postscript.

 

As I was writing this column one of my favorite songs kept playing over and over. It’s what inspired the title. Which then inspired me to share the following iTunes link with you.  Join me in celebrating a classic artist singing a classic song as we say goodbye to the old and usher in the new.  Please see the corresponding title in the Sidebar to this blog.

 

 

Data Mining for the Masses

A recent New York Times article reveals how one major bank is using powerful tools to monitor customer spending and minimize bank losses.

“In recent months, American Express has gone far beyond simply checking your credit score and making sure you pay on time. The company has been looking at home prices in your area, the type of mortgagelender you’re using and whether small-business card customers work in an industry under siege. It has also been looking at how you spend your money, searching for patterns or similarities to other customers who have trouble paying their bills.

In some instances, if it didn’t like what it was seeing, the company has cut customer credit lines. It laid out this logic in letters that infuriated many of the cardholders who received them. “Other customers who have used their card at establishments where you recently shopped,” one of those letters said, “have a poor repayment history with American Express.”"

In doing so banks and customers see each other as the enemy.  Hostile.  Not to be trusted.   This is a loose-loose scenario.

Banks need to create a “win win” scenario. 
 
One approach is for banks to share these tools and the insights with everyday customers.  In a way that everday people can understand.  In a way that’s embedded in the way money flows through their lives.  A good example being the proverbial cookie jar and the digital equivalent “Keep The Change”.

The one card I need

The other day I had an experience with a debit card that took me completely and pleasantly by surprise.

I went to my neighborhood “big box” super-store to purchase a few items. I got to the counter and swiped my debit card. After a few moments the young girl at the register casked me for a second credit card. I asked if there was a problem with my card. She said “no” and explained that the first card was only valid for certain products and that a second card was needed for the balance of the items. She said so casually as though this had always been the case. I said “oh, ok” trying to sound as though this was nothing new to me.

I swiped a second card. A few seconds later I had a receipt, my purchases and I was walking out of the store. As soon as i stepped outside I examined the reciept and I’ve known for years that card issuers categorize payments. A number of card issuers first offered that service years ago for business and later individual customers. But I did not realize payment processing systems were offering my latest experience. What struck me the most was the ability to process a single purchase spanning several credit cards. Seamlessly. Automatically. Quickly.

I got me thinking. Why can’t I carry one card at the register. A “master card” of sorts. One that I can link to several other cards. Where I can specify what purchases are charged to which card. For example charge health care products to my health care spending card, magazines to my debit card for my primary savings account, and everything else to my checking account debit card. Where I can view reports letting me know what I’m spending where, across accounts?

Locavesting – Back to the Future

The future of banking is as much philosophical as it is technological.

I expect it to be return to the past as much as it will be a march into the future.

Banking originated as local. Simple. Familiar. Familial. Helpful. Compassionate. In the service of the individual and the institution.

In recent years it became complex. Remote. Inaccessible. Unfathomable. Focused on the needs of the institution rather than the customer. Unable to meet basic customer needs.

But now banking is changing in some interesting ways. Is some cases quietly. But with some profound implications and opportunities.

My favorite in recent months is the concept of Locavestors. People who invest only in local businesses within a designated radius. Much like Locavores who eat only foods that have been produced within a 100-mile radius. Locavestors invest in local businesses and earn profits while supporting their communities. And in some places regional stock exchanges are emerging to facilitate this new flow of capital.

I find this concept compelling on several levels. First, community focus. Second, the convergence of things we associated with big business (lending, investors, stock, exchanges) in the service of the everyday person. [It’s interestingly aligned with how technology makes its way from the rarified to the everyday courtesy in part to Moore’s Law]. Finally, the inherent opportunity for banks.

Banks have a natural advantage here. Knowledge and expertise. World class technology platforms. Ability to execute and sustain. Recognized brand. Local presence. Existing banking relationships and community investments. And associates who are also neighborhood residents.

So how great would it be for Bank of America to jump start locavesting in a few targeted communities across the country? Perhaps tapping into the renewed spirit of rebuilding America that is sweeping the nation in light of the recent transfer of governance, powered by the new generation. Banking from the ground up. The inside out. Turn banking on its head so to speak. From what it’s become to what it needs to be. To what it once was.

Additional reading.

http://dealbook.blogs.nytimes.com/2008/12/15/exchanges-look-to-encourage-locavestors/

Herve Jean-Baptiste