A smaller, fresher, better breed of bank

Way back in a time where days were shorter and the weather colder (at least in the Southern Hemisphere) a report came out by the Altimeter Group entitled "The world's most valuable brands. Who's most engaged". In reality it was not that long ago, July 2009, but in virtual reality world, that was half a lifetime ago. The paper was, and still is, a valuable perspective of brands and industries and the correlation between profitability and social media presence.

What it did show was that perhaps one of the biggest, most significant and yet most vulnerable industries were the least engaged. There it sits, Financial services, right at the bottom of the quadrant.

The paper clearly demonstrated that those who engaged in the Social Media space were winning:

"While no one yet has the data to determine direct cause and effect, what we do find is a financial correlation between those who are deeply engaged and those who outperform their peers... Moreover, this correlation reflects more than just the state of various industries given the current economic conditions - industries are well represented across the spectrum of engagement profiles... To be specific, companies that are both deeply and widely engaged in social media surpass their peers in terms of both revenue and profit performance by a significant difference. In fact, these Mavens have sustained strong revenue and margin groth in spite of the current economy. Coincidence? Perhaps, but we're looking at statistical significance among the world's most valuable brands."

So what has happened since July 2009? Well the monster that is the finance industry has come through a huge shake up and are starting to realise that they need to embrace the new world. Many of our finance clients are testing the water to see where they should be and how they should be engaging with their customers. Around the world it is good to see that there are a number of institutions who are ranging from dipping their toes in the water to total reliance on 2.0 philosophy. Whilst having a look around for examples, I came across Christophe Langlois' blog that has referenced finance companies around the world and what they are doing in this space. Participation ranges from Youtube videos through to community banking.
In Australia, NAB's Ubank seems to have taken the lead from other players such as ING Direct. Where ING Direct simplified saving money back in the early part of this decade, Ubank have taken it to the next level by engaging customers through being able to customize their accounts and game playing - setting targets and encouraging customers to save. They also capture larger numbers of customers by offering a higher interest rate than other banks and then retain them by calculating interest monthly rather than daily and offering additional interest for regular deposits, but that is not exactly 2.0. Ubank also have videos simplifying money issues such as how the stock market works and the financial crisis...



Then there are financial companies that have taken it to the next level in transparency. Zopa and Community Lend introduce lenders and borrowers, allow them to decide what interest rates they want to earn or borrow on based on the amount of risk they are prepared to take. Zopa have run competitions for the public to create adverts for them... all these initiatives allow them to reduce expensive overheads and connect and engage with customers in a way that banks have traditionally failed at and develop a strong sense of community.
Whilst these new start-ups have hardly made a dent, the big banks are having to shift their ways of working and innovate quickly. Whilst it is true that customers dislike changing banks because of the hassles of paperwork and other reasons, there is a point at which they will say enough is enough and make that move.
There is still a way to go forward with financial organisations, but the shift is starting to occur. Many use the excuse of having to abide by laws, internal politics etc but as the Australian Tax Office said, if they can embrace social media, surely anyone can?