Influx Insights Tag Feed: banking

banks aren't trusted

Influx Insights — 2010-01-26T11:31:15Z

Edelman has just released it's annual survey and to prove it seems to be measuring the right things, the data it uncovered on banks is astonishing- their trust rating has plummeted like a stone- from the 3rd ranked sector in the US to the 9th and a rating drop in excess of 30 points.

Looking at this data, it provides some insight as to why the President acted as he did.

However, there's more to this story than meets the eye and more questions to ask.

- What type of banks don't people trust?
- What is it about banks that they don't trust?

I am sure Edelman have this data and it would be great to see it if they do.

Banks clearly have a huge issue that is in crisis proportions and something they need to devote a lot of energy towards. Simply ignoring the issue and hoping it will go away, isn't going help. These institutions need a whole way of thinking about how they need to relate to and communicate with their customers and beyond this need ideas that prove they are to be trusted.

Posted by Ed Cotton

the new american dream- a debt free life?

Influx Insights — 2010-01-20T18:49:34Z

It looks like Americans are becoming allergic to debt, the numbers had been accelerating upwards every single year, The Fed started records in 1979, now it looks like they are tumbling downwards. What defines a country when new homes, new cars and the debt financing of those material possessions are all in decline?

Posted by Ed Cotton

where's the economy really at?

Influx Insights — 2009-12-10T12:24:01Z

It's hard to keep track of the economic news these days with various divergent perspectives and points of view, but it pays to listen to the experts and in this case, Tim Geithner , who heads up the US Treasury.

Here's a quote from a testimony he gave to congress yesterday.

"However, the financial and economic recovery still faces significant headwinds. Unemployment remains high, along with foreclosure and delinquency rates. Although RealtyTrac's October report shows a third straight month of decreasing foreclosure activity, foreclosures are still up nearly 19 percent since October 2008. And delinquencies of subprime residential mortgages reached over 26 percent and conforming mortgages nearly seven percent in the third quarter. Further, according to First American CoreLogic, roughly one in four homeowners owed more on their mortgages than the properties were worth in the third quarter of 2009. These conditions place enormous pressure on American families and homeowners.

Bank lending continues to contract overall, although the pace of contraction has moderated and some categories of lending are growing again. For example, commercial and industrial loans contracted at an annual rate of 27 percent in the third quarter, but 16 percent since then. Such loans are particularly important for small businesses, which generally cannot raise money by issuing debt in securities markets. Meanwhile, residential mortgage loans from banks have increased at an annual rate of two percent since the third quarter.

The contraction in many categories of bank lending reflects a combination of persistent weak demand for credit and tight lending standards at the banks, amidst mounting bank failures and commercial mortgage losses. There have been 130 bank failures this year, compared with 41 over the decade that preceded the current recession. And the number of banks that the FDIC classifies as "problem institutions" has reached over 550 this year, compared with 76 in 2007 and 252 in 2008. Further, FDIC-insured commercial banks reported that net charge-offs--that is, losses that have occurred--increased to 2.9 percent as a share of loans and leases in the third quarter, up from 0.6 percent before the recession. And delinquencies of commercial real estate loans were nine percent in the third quarter and increasing.

Banks' willingness to lend also has a significant impact on consumer spending and, consequently, economic growth. Macroeconomic Advisors, a consulting firm, found that a 10-point increase in bank's willingness to make consumer installment loans yields a 0.3 percentage point increase in personal consumption expenditures."

So, what's he saying...

- Foreclosures are still around and bigger than they were in 2008, but activity is decreasing.

- A quarter of all homeowners owe more on their property than their property is worth.

- Mortgage loans are growing, but banks are not lending to business.

- Banks are still in trouble- 130 bank failures this year and 550 classified as "problem institutions".

While many are talking about recovery, these factors which don't even examine unemployment, suggest this is going to take time.

Posted by Ed Cotton

smoothies, banks and the trust gap

Influx Insights — 2009-12-10T12:27:39Z

Everyone knows that many banks are still in trouble and most people have a clear idea where the blame lies, with the banks themselves. Quite simply, there's no love lost between bank customers and the executives who are seen as part of a financial establishment that's taken advantage of exploitable opportunities, often at the expense of the customer and taxpayer.

A bank should only go begging to its customers for understanding if there was a well of support and a high degree of respect for the brand and the category. Anything short of a stellar reputation and it's going to end badly. Now is not the time for such a plea.

However, Westpac in Australia seem oblivious to current sentiment. The bank sent out an email film to its customers explaining in the most patronizing way how the financial system worked and why bank rates where heading higher.

Given what people have been through with banks and the endless press on bonuses and the stratospheric pay packages of banking's top level, it's impossible to understand how Westpac's customer base could be sympathetic to the plight of a bank who now faces higher costs for borrowing money.

One can just imagine how this film came to be, harried marketing executives believing that if only the ignorant public could understand the reasons why money now cost more, things could be better, taking this thought to their ad agency and getting them to make an "educational film". The problem here is that the voice is all wrong, there's no empathy, understanding or even a recognition of some intelligence on the part of their customers. The fact this made it though the system shows an institution with a very low EQ and one that fill find its little exercise in education ends up losing it a ton of valuable customers.

Banking still has a lot to learn from how to respond to the current crisis. It does not seem like any of them get it, most don't want to acknowledge the realities of a changed context and a changed relationship. Most of the recent marketing efforts fall short, they show a lack of an insight and an inherent desire to turn the clock back to the days of old.

Recent research data from Bloomberg shows that Americans are pretty angry with bankers.

"Two-thirds of Americans say they have an unfavorable view of financial executives. More than half say big financial companies, which are expected to pay record yearend bonuses, are out only to enrich themselves and also should not have received government aid. "

The incumbents failure to get it right, could leave the door open to a smart opportunist who gets exactly what the consumer is looking for now, doesn't show the same patronizing attitude of old and finds a way to provide superior services at a much lower cost.

Posted by Ed Cotton

there's a conference for everything, even loan modifications

Influx Insights — 2009-09-30T10:04:20Z

While money is tight and the world seems to be stuck trying to work out where it's heading next, the conference industry seems to move forward always looking for new opportunities to bring people together to network and discuss.

Despite the tight caps on travel and expense budgets, if the topic is right and there's money to be made, people will want to talk.

I just got this email about the Loan Modifications Conference, which seems like a deal at $595.

"As you know, the federal government has announced plans to do millions of loan modifications to help struggling homeowners stay in their homes and avoid foreclosure. You probably also know the ramp-up for the program has not been terribly fast or easy, as servicers struggle with capacity issues, program requirements, and mandatory test trial periods for all the modifications.

Is the government program with its stringent mandates the best way to do loan modifications? Or is best practice a mix of techniques, like increased loan terms, decreased interest rates and decreased principal? The rates of re-defaults on industry-generated loan mods have been extremely high, making getting this right an absolute imperative for all servicers."

The banking and finance industry has a lot on its plate, sorting out the home financing mess seems like it should be top of the agenda, so perhaps a conference isn't such a bad idea.

Posted by Ed Cotton

banks- what's next?

Influx Insights — 2009-09-25T10:13:55Z

Thanks to the FDIC, people don't have to worry about the security of their bank deposits, which in turn means banks don't really have to worry about their brands. Despite the events of the past 12 months and the lack of trust in Wall Street and banking, the bank brands don't really have to pay the ultimate price of losing customers.

It's clear moves are afoot to try and regulate the hyper money-making activities of the banks such as mortgage backed securities and the regulators seem to be taking a fast and critical look at Flash Trading and Dark Pools. These new moves by legislators are going to challenge the ability of banks to make serious money.

This journey therefore leads to retail banking, where banks need to find new ways to make money. Nothing wrong there, but the approach so far is typical for brands that don't have any accountability; charging fees for everything. This year, banks are on track to make close to $44 billion from these fees. However, Congress today, came down hard on this activity and forced a couple of the major players to make changes.

There's nothing wrong with adding new sources of revenue, but overdraft fees seem too easy.

As bank brands focus more on retail operations, perhaps one maverick banking brand will emerge, one that starts to look for new and interesting ways of adding services, that not only generate revenue, but unlike overdraft fees, add value to the consumer.

Posted by Ed Cotton

is this bank really any different?

Influx Insights — 2009-06-09T18:14:13Z

Of course, the time is right to launch a new bank complete with a new set of values, but importantly, a new way of doing things. Banks have been masters of trying to tell a story of change and doing very little about it.

Ally Bank is a new entity that's arisen out of the former GMAC. It should have been a chance to doing something very different, but it still looks like old banking.

Here's what they say on their website.

"We are Ally Bank, built on the foundation of GMAC Financial Services. And with that experience we’ve learned that these times demand change and a new way of doing business. So we’re taking banking in a new direction.

We’re a bank that values integrity as much as deposits. A bank that will always be open, accountable, and honest. Yes, honest. We won’t deal in half-truths, kindatruths, or truths only buried in fine print. That’s because we don’t have anything to hide. We’re always going to give it to you straight.

That means no monthly fees, no minimum deposits, and no minimum balances. It means developing new products that give you more options, like our No Penalty CD that lets you withdraw your money if you need to. And it means keeping our promise that our rates will always be among the top. It’s just the right thing to do."

Is this bank really doing anything different, it sounds good, but the promises and products seem fairly standard.

If the financial services industry is going to rebuild its reputation, it's going to need to invest in some serious product development. Without this, it's just going to be a series of hollow promises.

Posted by Ed Cotton

a crisis shouldn't stop innovative marketing

Influx Insights — 2009-03-11T16:19:48Z

Banks are obviously in the firing line at this moment in time and some are doing some pretty desperate things to try and maintain their credibility.

It's therefore refreshing to see Bank of America build on its "Keep The Change" program with "Add it Up"; a program that allows its customers to obtain discounts from online retailers and put those savings directly back into their bank accounts.

It's a great demonstration that BofA understand current consumer needs and is going above and beyond banking as usual to deliver a new service offering.

Posted by Ed Cotton

can virgin bring credibility to the banking sector?

Influx Insights — 2009-03-10T11:52:16Z

Richard Branson has just announced plans to launch a high street bank in the UK by 2011. It's likely Virgin will acquire a player to make this happen.

On the surface, it appears there could be a better time for Virgin to enter the banking sector. A time when the credibility of the established players is at a historic low and with Virgin having a legacy of taking on the established players and offering an alternative.

However, some big questions remain.

1. Does Virgin still have credible challenger DNA?
2. Is Virgin the brand that consumers would trust for their daily banking needs?
3. What's Virgin going to do that's different from banking as usual?

Clearly, Virgin can't rely on it's brand alone and is going to have to provide innovative products and hopefully, a lot of transparency to being a credible offer to this space.

Posted by Ed Cotton

how should banks talk to people now?

Influx Insights — 2009-01-22T12:37:46Z

It's a tough time for banks to go out and talk to people with all the negative attention focused upon them. Australian bank Ubank has taken a bold approach to getting noticed. It's gone out and produced a series of webisodes that explain the current situation in a pretty informative and a fairly entertaining way.

While their competitors might be struggling with what to say, at least Ubank is using the crisis as an opportunity, not only to get attention, but to educate at the same time.

Most bank communication is hyperbole, at least this is reasonably watchable.

Via Adverblog

Posted by Ed Cotton

vanishing money

Influx Insights — 2009-01-21T11:08:08Z

Nice visual from JP Morgan on current market caps for banks around the world.

Via Paul Kedrosky

Posted by Ed Cotton

brand utility for tough times

Influx Insights — 2008-12-09T16:19:07Z

Obviously, it's critical to make sure your brand and products are relevant to current consumer needs. The financial downturn has given banks and investment houses the opportunity to re-connect and show how they can be useful in challenging times. Wells Fargo has responded to this need by creating the Wells Debt Down Solution. It's a new product that allows consumers to consolidate their high interest debt and find a workable way of paying it off.

We are used to banks being slow and unresponsive when it comes to product development and it's therefore great to see Wells responding to real consumer needs and offering something useful to consumers.

Posted by Ed Cotton

top gear's clarkson on investing

Influx Insights — 2008-10-09T20:15:48Z

Top Gear presenter, Jeremy Clarkson- a wealth man made rich by celebrity vents his frustration at the banking system and the current crisis.

"As I sat there on that horrible Monday, watching the whole financial world on the brink of collapse, I thought back to all the midnight oil I’d burnt writing these columns, all the crappy hotels I’d stayed in while making various television shows. And how all of that revenue would be lost for a raft of reasons I simply didn’t understand.

Of course I made strenuous efforts to get my money out of AIG as soon as the scale of its problems became apparent. But it wasn’t possible. It had shut the fund in which I’d invested and it would remain closed for three months while it tried to sell the assets. “We need to do this in an orderly fashion,” said the man on the phone, calmly.

Inwardly I was screaming. I don’t give a shit about an orderly fashion, any more than a man in the trenches wants to look smart while running for his life. It’s my money. I gave it to you. You’ve squandered it on a Mexican’s house in San Diego and a stupid football team and that’s your problem. Not mine.

It turned out, however, that I was wrong. It was my problem, so I decided to try to understand banking. And what I’ve gleaned from a two-week crash course is that it is completely unfathomable. There isn’t a single person in the entire world who has the first idea how the system works."

Posted by Ed Cotton

the crazy chain of credit

Influx Insights — 2008-10-05T17:18:43Z

Here's a great visual from The Deal that explains the packaging and re-marketing of credit. Sort of explains how the badness was turned into goodness and everyone slept soundly at night until the day they realized the badness was real bad. It's also the system that propped up the consumer economy. An economy driven by cheap and easy credit isn't sustainable. For years, the US economy has been running on cheap credit. What happens when it goes away remains to be seen, but companies are need to get amazingly creative if they want to continue to sell in these tough times.

From Paul Kedrosky

Posted by Ed Cotton

jpmorganchasewamu

Influx Insights — 2008-09-26T15:57:11Z

Posted by Ed Cotton

barclays bank gets a redesign inspired by apple and the science museum

Influx Insights — 2008-06-29T21:49:57Z

Interesting article in the London Times about Barclays and its approach to branch re-design. It picks out Apple stores, The Science Museum and obviously, Tesco, as being inspirations for the project.

"At the beginning of last year, Ms Oppenheimer poached Helen Dodd, a retail design expert, from Tesco.

Ms Dodd, who has spent 20 years working out how to attract customers to shops and keep them there, trooped 250 Barclays customers and staff through the Northampton warehouse to test the new layout and technology.

Nothing was sacred, not even the good old British queue with the black tape barriers. The new Manchester branch is experimenting with a ying-yang-shaped queue, broken up by waist-height pillars housing computer games. The branch's space-age information desk is pure Apple store, while, according to Ms Dodd: “We're trialling a lot of different queueing methodologies - people do PhDs on this stuff.”

The childrens' play area is inspired by the Science Museum. There is no glass separating tellers from customers, to stop people from raising their voices, something that Ms Dodd believes makes banking more stressful.

Curves are used to make customers feel “warmer”, while the glass frontage will make women more inclined to enter. “At the moment, they don't feel welcomed into branches,” Ms Dodd said. Concierges, dressed in uniforms by the designer Jeff Banks, will issue customers with tickets telling them how long they must wait and even if they would be served more quickly if they went to another branch.

Getting the right doormat was key - customers like dry feet, so Ms Dodd found a mat that dried wet soles within four steps. The Manchester branch operates to the same timetable as other retailers, with late night and weekend opening."

Posted by Ed Cotton

the social network meets the bank

Influx Insights — 2008-03-07T12:52:33Z

This is a really nice idea.

Smarty Pig is a site that helps people save for specific goals and allows friends and family to contribute to those savings plans.

Traditional banks should look at this because the 2.0 companies are snapping at their heels with innovations like this.

Thanks to Colin

Posted by Ed Cotton

the power of brand voice

Influx Insights — 2007-10-04T23:59:45Z

Brand voice has the power to transform how people see your brand, especially if you use it in the right places.

In 2006, Barclays Bank in the UK undertook an interesting experiment to try and transform the branch experience.

While most typical branch enhancements revolve around design, this transformation was all about language.

The objective was to use the materials in branch to forge a new conversation based on new language. The goal was to move from the old world of bank as powerful, but patronizing to a bank that's more approachable and human.

The whole exercise was illustrated by the shift from chained black pens to free pens with slogans.

Posted by Ed Cotton

report from the uk- the run on the rock

Influx Insights — 2007-09-19T04:31:31Z

There are some very rare occasions when brand strength doesn’t matter because the an event comes along that's so huge it threatens the stability of your business and your brand.

Such an occasion happened last week to the Northern Rock bank. Media images of people lined up to withdraw their savings harkened back to stories we had heard from our grandparents about the 1929 depression, something we’ve never seen in our lifetime or expected to see.

Only an intervention by the British government saved the bank. At the last minute, it decided to step in and guarantee all the bank’s funds. They had to make a swift change because existing legislation guaranteed only 90% of funds up to 33,000 pounds ($70k) and nothing above and beyond that.

The announcement changed everything and the lines stopped forming at the bank and its share price started rising yesterday.

While the UK Government defended their action, which some critics had described as belated, it was clear from the government’s comments that the Northern Rock situation was something almost beyond their control and entirely symptomatic of the world of global finance.

In the wilds of global finance, it was almost as if the wolves had gathered around the weakest deer and were intent on killing it.

For the Northern Rock brand, it’s going to be a long hard journey back. While they have certainly gained infamy and awareness the fundamental element of brand trust that consumers need to have will need to be won back piece by piece.

It will be need to be open and honest and explain what went wrong and what they intend to do about it.

Here’s the start of the re-building campaign; a letter that’s running as full page ads and on the front page of the bank’s website.

May I begin by offering our customers my sincere apologies for the anxiety and inconvenience that we have caused you. I know how worried many of you must have been.

Today I want to make it emphatically clear to all Northern Rock customers that we are open for business as usual.

We remain a well-managed company and continue to be a safe place for your savings, loans and mortgages.

The simple fact now is that the Chancellor has made it clear that all existing deposits in Northern Rock are fully backed by The Bank of England and are totally secure during the current instability in the financial markets.

We are all working night and day to provide you with the service that you expect from us and deserve from us. And I would like to express my appreciation to our staff for their work and commitment over the last few difficult days.

Above all I would also like to thank all our customers for their support and understanding.

I am also pleased to announce that any customer who has paid a penalty for withdrawing their investment, will have the penalty refunded if they re-invest the same amount in the same type of account by 5th October 2007.

These have been troubled times but Northern Rock will prevail. We will not let you down.

Clearly, they have a lot more work to do.

Posted by Ed Cotton