Quite a few folks found it difficult to keep up with our bloggerblast with Matt Colebrook, CEO of First Direct last Friday.
It was a blast, although a few folks found the conversation stream a bit garbled and confusing as there were at least seven people in the conversation.
Furthermore, I think Matt was a bit overwhelmed as some folks talk and type a lot faster than others (sorry, mea culpa). I did warn him though that he needs to ensure he has a fast typing PA on the chat that day 😉
Anyways, to try to assist in the process, here’s my heavily edited transcript to try to make sense of it all.
Matt Colebrook: Afternoon all
Chris Skinner: Hello Matt. Maybe I can ask the first question, which is around why First Direct seems to be the only BIG change in banking since 1989, e.g. no new bank or internet bank has made the same kind of impact. Why is that?
Matt Colebrook: Thanks. I suppose partly, this is because we were such a dramatic shift. It's hard to think of a bigger change. We were the first bank to put the customer in charge of when, where and how they banked.
Brett King: It's interesting that no bank has really attempted to duplicate First Direct's success – with the highest customer advocacy in the UK, and more a fan-base than customers, you'd have to wonder why – but most bankers in the UK you talk to don't necessarily perceive FD as a competitor still today because they lack branches – this demonstrates the psychology of banking hasn't shifted
Chris Skinner: That’s right Brett, and is why everyone still bangs on about branches. Nevertheless Matt, the internet also puts the customer in charge, and yet i haven't seen the same reaction to a new internet bank …
Christophe Langlois: you haven't see the same reaction to a new bank "in the UK". UBank in Australia has done a gr8 job in the last two years, listening, engaging with Australian people, and promoting transparency in banking. I believe we can agree on the fact that their brand is loved in Australia (cf the conversations on their facebook page and twitter account)
Brett King: I agree on UBank – hugely successful, now the 8th largest bank in Oz by deposit. I loved the fact that UBank let's people apply for a new account through Skype via the website – but most shy away from Skype because it's "not secure" – same issue for Social media – what bank data could be provided via SNS – for example, how would you feel about your bank DM'ing you account balance via Twitter?
Chris Skinner: that's why Commonwealth are following suit
Brett King: Interesting, however, re UBank and with FD that the parent companies (i.e. HSBC and NAB) don't adopt the more successful elements with their mainstream?? Back to that point about no internet site repeated FD’s success, it takes more than a website to build advocacy, but FD has – so what makes FD better than Egg and ING for example?
Chris Skinner: Humans
Brett King: Snap. I think the secret is overall service focus
Chris Skinner: it's the people thing. You find the top performing branches are run by great people and, as Matt said the other night at the FSClub, it's the human conversation on the phone and online via social media that shines through.
Christophe Langlois: This leads me to one of my most important questions: @Matt, according to you, what is "transparency" in banking? And what are the most transparent banks today?
Matt Colebrook: in answer to your question, transparency for us comes under a number of areas. Firstly there's always a balancing act. People need to feel secure and know that their money is protected, part of that is knowing what banks are doing with it. Secondly it's about the products, having simple fee structures that are easy to understand and helping people to make sure they know what they are signing up for
aden_76: Are banks ready for transparency demands of the socialweb that mean mediocre processes and services will no longer be tolerated?
Chris Skinner: who are you calling mediocre Aden? Guess my answer is that transparent or Naked Banking, has been a theme of mine for a while. Few get it except FD and USAA who host honest and open platforms for customers. Banks aren't ready for it though. the real question is: will we always have a chinese wall between the bank data and the social dialogue?
Brett King: social media is also exposing poor process and policy
Christophe Langlois: over the years FD have proved their commitment to provide the highest level of customer support. They are clearly the most social bank so far in the UK (cf my comments -> http://bit.ly/bXiI0i). How come you haven't leveraged social media from a customer support angle yet? On twitter for instance? I was surprised that Lloyds TSB, not exactly the most innovative banks in the UK, became the 1st major bank to launch a dedicated account -> http://bit.ly/9GwusJ
Brett King: the big thing that is driving retail banking is the 'behavior shift'. Social, mobile, internet are all progressively building on each other to create that demand and expectation of a different banking experience. BUT, it is also driving innovation in banking, but from non-bank innovators such as M-Pesa, Banksimple, Octopus, PayPal, etc
Matt Colebrook: Social media empowers customers in a way that means all institutions have to sit up and take notice. We're lucky in that customer service has been at the heart of everything we do so for us it's just a channel issue.
Brett King: Actually I think willingness to engage in open conversation on social media is really important to rebuild trust in brand today
Chris Skinner: great point Brett – rebuilding trust is a biggie and a major theme at banking conferences – @Matt – has your social position helped with trust
Matt Colebrook: Re where this is going longer term, the simple answer is we don't know. Social media is much more of a cultural shift than a technological one so really the question is where will the customer be in five years time. Wherever that is we'll be there.
William Simmons: do you see social media mostly as a service tool, or will it become a sales tool?
Chris Skinner: surely if you use social media well it sells by reinforcing your brand and trust
William Simmons: Yep definitely Chris, but what about as a direct sales channel?
Chris Skinner: social as a direct sales channel – I guess creating a social only online bank – like ASB are trying with the Facebook virtual branch – will prove whether this works one way or t'other
Brett King: social media will be a sales tool in the sense of retention mostly, but not acquisition I don't think
Christophe Langlois: I believe social media could act as an acquisition tool thanks to the level of customer advocacy generated. Of course, customer support is a big winner in terms of driving customer retention (and ROI!). Matt, when do you plan to support your customers on twitter or facebook? You have a gr8 brand, and I believe FD almost has "a responsibility to nail it" -> customer support via social media channels. Do you plan to go the extra mile and build / implement a proper social media outreach strategy within the next 6-12 months?
Matt Colebrook: the challenge is that we hold no data at all on our customer forums like talking point. Security is just too important for us. (http://www.interactive.firstdirect.com/talkingpoint.html)
As a client do I fully own my financial information? Should it be my
right to have the possibility to export it and use it in other services
(such as Mint, etc)?
Chris Skinner: Thing is that banks need to start breaking down barriers and opening up – back to point, e.g. how long before we see banks providing APIs alongside their online banking services?
Brett King: APIs are going to be essential to become more pervasive. Banking will be about ensuring the highest impact at the point of engagement, where the customer is. But banks can't build every possible technology, interface, etc in-house these days. So collaboration and partnership will become an essential skill to stay innovative. APIs are the interface for that
Matt Colebrook: API's / use of open standards is an interesting area and allowing people to customise their experience is obviously something the industry is looking at. We have to balance that in the context of a cast iron guarantee of security for our customers though…
Chris Skinner: security …. hmmm. Balance of security, people, conversation and social is difficult. Is that why you haven't got an iPhone app for FD yet?
Brett King: All the big banks face the problem with life-cycle development timeframes in-house for new initiatives (social/mobile app), and like many @first_direct probably thought their m-portal was enough. But customers just see the gap in the market – hence why inevitably the iPhone App is on its way. Same will happen now for Android
Matt Colebrook: we have an iphone optimised website and an app is very much in the works
Tek-fin: when will a bank have an app market?
Chris Skinner: I think banks like USAA, BoA are getting there
Brett King: should banks develop an app market? Good question. The fact is one App alone is really no longer enough – there are multiple Apps required moving forward, plus geo-location, A/R integration, etc
Chris Skinner: What this all says is that banking becomes deconstituted into functional apps for balances, payments etc – can't wait. I called it Banking-as-a-Service (BaaS) a year ago … still waiting.
Brett King: HTML 5 will be a big part of where banks go in terms of distributed banking capability.
Tek_fin: I mean have a market where external providers could propose apps to enhance the banking experience
Chris Skinner: isn't that what PayPal have done? see www.x.com. PayPal – the only x-rated bank LOL
Tek_fin: Yes, but it's a payment experience (so far….)
Brett King: a developer sandbox. Hmmm, perception for security issues is the hold up.
Highgate: Is it true that most of the innovation is happening in the US?
Chris Skinner: No … innovation is everywhere from Africa (M-PESA) to Asia (Jibun Bank) – least innovation is in some of EU although Spanish banks did some good stuff until crisis hit
Brett King: @Highgate – Innovation is happening in the VC space in the US, but in areas like mobile payments, etc is global
Christophe Langlois: Innovation is certainly not a "US patent" but the fact is that, in the social media space with an early take up of usage of services & communities provided by startups on the West Coast like facebook, youtube or twitter, US banks have proved the fastest to (try to) engage with their market, in an "innovative", unconventional, way.
* Wells Fargo launched their virtual island to provide financial education back in 2005, they started blogging back in March 2006,
* Bank of America has been providing customer reviews since 2007
* American Express had done a great job building B2C AND B2B communities
Chris Skinner: i think US banks 'get' the internet; they've been far slower, sluggish and useless on m-banking
William Simmons: do you think some banks are focusing too hard on innovation than just getting the basics right first?
Chris Skinner: i don't think some banks are doing either. They just want
cost at a minimum regardless of service and their customers don't care
too much about the rubbish service either. They just want transactions.
Christophe Langlois: your question about focusing too much on innovation is spot on! I believe the answer is more complicated than it seems though: yes, a bank must focus on providing the best financial products to their clients, and deliver a high quality of customer support. So being "innovative" for the sake of it, is not the answer. Moreover, embracing social media won't help you change your brand perception or increase your market share if your tone is not right, your products are not competitive, your customer support is appalling… Having said that, banks must recognize the world is moving faster than 21 years ago, customer expectations are higher and higher…
Moreover, I have a question for the people who say banks must focus on the basics, and doing innovation is a "nice thing" to do:
* how long have banks been working on their multi channel integration / single view of the customer?
* How long have they been working on their new, more flexible, internet platform (SOA)?
It is very much a "Live and Learn" process, and that is why it is hard for banks to adapt…
Brett King: Customers are demanding transparency on rates, management, policy, fees – social media is giving them a 'voice' to complain about the 'big bad banks' but not enough banks are actively engaged in the discussion
Chris Skinner: so who are the "big bad banks" and what makes FD, UBank et all the good guys?
Brett King: One of the reasons FD and UBank work so well is simplicity of engagement. The problem is when you have at your core the branch distribution system, everything else gets retrofitted around the traditional approach – with UBank and @First_Direct those constraints don't exist – so ergo, service levels improve
Chris Skinner: several banks have had core systems refreshes without constraints and are still getting it wrong
Superjeans: I see Metro bank has met its yearly target for account openings in first 3 months. Is Innovation in Social Media, Mobile etc.. alienating branch reliant customers?
Chris Skinner: customers will go where they have most comfort. many people want branch experiences, many others do not. If you can find a great remote service experience, then that's what FD's customers seek
Brett King: I think as customers realize that they can have the same service levels through non-branch, branch will lose a heap of support. Right now perception is you get better service through the branch, but the reality is most banks provide awful service in branch
Chris Skinner: I guess the issue therefore is where the social versus secure lines stop and start. Today is easy as FB and twitter are all stand-alone platforms but, as they morph into APIs and apps, the line is going to be really hard
Matt Colebrook: Guys it's been a pleasure talking. I have to head off now, on my way to Hamilton to continue our 21st birthday celebrations
Chris Skinner: Matt good luck and happy birthday btw
Brett King: Matt congrats – and keep up the good work. We love your customer advocacy!!
Chris Skinner: @Brett and @Christophe bet you wish you were 21 again 😉 … actually Brett, bet you wish you were 40 again ROTFL
Brett King: Boom boom