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July 9, 2014
Strategically Think, Plan, Communicate, Collaborate!
David L. Peterson
Chief Strategic Officer – i7strategies
Think About How You
Think!
Spell:
SILK
3
July 9, 2014
Exercise 1
Think!
July 9, 2014
Win as much as you can!
One Sheet for 2 players
4 in a row wins 1 point
Keep track of your own score
July 9, 2014
What’s in Common?
July 9, 2014
WHAT ARE THE CHANCES THAT YOUR
INSTITUTION WILL BE SUCCESSFUL BY
ACCIDENT?
July 9, 2014
WHAT IS YOUR STRATEGIC FOCUS?
July 9, 2014
Strategic Focus
strat·e·gy/ˈstratəjē/ - Noun:
A plan of action or policy designed to achieve a major
or overall aim …
What is Your Overall Aim???
July 9, 2014
What is Your Strategic Focus?
How would you define what it is your institution does?
• Community/Seg Credit Union?
• Retail / Commercial Oriented?
• Financial Services Provider?
• Catalyst of Economic Activity?
• Payments Gateway?
July 9, 2014
#
Get Prepared for Innovation
July 9, 2014
My Definition of Innovation
Creativity Expressed,
Manufactured, and Consumed
July 9, 2014
Creativity vs. Innovation
Go to edge of space and skydive Skydive from edge of space and live
July 9, 2014
• If innovation is not rampant in your organization, get it started
• If Innovation occurs, figure out how to fan the flames
• Make innovation a discussion topic w Sr Mgmt
Strategic Takeaway
July 9, 2014
#
Devices Are Not Channels,
Your Members Are Channels
July 9, 2014
Your members and their behaviors are changing
Why Innovate?
July 9, 2014
Why Change – Consumer Spending
Tablets sold in 2013
1 9 5 M 46% of Americans with mobile phones said
their monthly bill was $100 or more
32% Growth in smartphone shipments in 2013
372 Avg price for a smartphone in 2013
$ 3 0 % Of all U.S. households own a tablet
14 Avg monthly amount spent on apps
$
July 9, 2014
Why Change – Consumer Time
Spent on a smartphone daily
128min
Active LinkedIn users
2 2 5 M Spent on social networking weekly
6 hrs
32hrs Spent browsing the web weekly
1B Angry Birds apps sold
Smartphone owners shop on their
mobile device
79%
July 9, 2014
In savings
167 $
Annual FI savings per online banking user
Why Now – Savings
End users
6000 $ = 1M In savings
When you look at your
end users as a group:
End users
1500 $ = 250K In savings
July 9, 2014
Retail Segmentation (% of Deposits)
July 9, 2014
According to the Johnson Center for Philanthropy, 2012
July 9, 2014
Retail Segmentation (% of Deposits)
July 9, 2014
Your virtual branch is or is about to be your largest
branch!
Why Innovate?
July 9, 2014
• Make Mobility a priority • Add Mobile Banking to your Virtual
Branch
• Add Tablet banking to your short term plans
• Open account with a bank that has mobile
• Sign up for some type of mobile payment
Strategic Takeaway
July 9, 2014
#
You Will Have To Transform
Physical Branches
July 9, 2014
The Physical Branch Dilemma
Close Branches?
Shrink Square Footage?
Understaff?
Change focus to sales and education… like an Apple Store!
?
July 9, 2014
The “Apple Store” Branch
Could your physical branch act like the Apple Store?
• Sales and Demos
• Education
• “Genius” Bar
July 9, 2014
Wait a minute – the JC Penney’s CEO just got fired for trying to make JCP into an
Apple Store!
July 9, 2014
Why didn’t the new JCP work?
July 9, 2014
Yes, he made them “look” like Apple but they didn’t “act” like
Apple!
July 9, 2014
The Physical Branch Dilemma
Close Branches?
Shrink Square Footage?
Understaff?
Change focus to sales and education… like an Apple Store!
Share your retail space
?
July 9, 2014 38
July 9, 2014
Strategic Takeaway
• Configure your P&L to treat the virtual branch like a real branch
• Sr. Manager focus
• Fully staffed and funded
• Services that will exceed customer/member expectation!
July 9, 2014
Exercise 2
Plan!
July 9, 2014
Strategic Thinking Exercise
•Line up 14 quarters in a row with $1,000,000 bill at the end
41
$1
,00
0,0
00
Flip a coin to see who will go first
On your turn, pick up 1, 2, or 3 objects
(ie: coins or the bill)
Objective: Win the $1,000,000
42
Hint: If You Go First, You Should Never Lose!
43
July 9, 2014
Thinking Wrap-up
• Did you figure it out?
• Which coin must you control to win?
44
$1
,00
0,0
00
Planning early for success making winning guaranteed
(at least easier)!
July 9, 2014
#
Payments are Your
Franchise – Don’t Let 3rd
Parties Disintermediate You!
July 9, 2014
FIs Face Disintermediation
July 9, 2014
If BankSimple and Square can take market share from FIs …
… it can leave FIs as transaction silos
July 9, 2014
What makes you unique as a financial institution?
July 9, 2014
You Get to Initiate/Process
Payments!!
July 9, 2014
How Are We Defining - What is a Payment?
50 50
July 9, 2014
Payments: My Definition
Payment (n): a debit transaction that posts against an account at a
financial institution that reduces the balance
July 9, 2014
How Many Types of Payments Are There?
July 9, 2014
How People Pay
http://www.frbservices.org/files/communications/pdf/research/2013_payments_study_summary.pdf
July 9, 2014
Payment Types
Using my definition, payments include:
• Check (physical or image)
• ACH
• EFT (Debit)
• Internal (manual) Transfer
July 9, 2014
Credit Cards??
• Initiation of payment via credit card 21% of existing non-cash payments
• Is this a payment type?
• No – member executes a payment to reduce card balance
July 9, 2014
Payments:
Initiating vs Acquiring
July 9, 2014
Acquiring POS and Mobile
July 9, 2014
Transmission Methods
• Direct connect
• Internet • Ethernet
• Dial-up
• Mobile
• Near Field Communications
• Bluetooth
• Direct Input
58
July 9, 2014
P2P and Mobile Wallet Opportunity
Mobile driving P2P
Need to provide instant credit • Works great if both parties are on the
same processor
Its better to give than receive! • Receiver must register with processor
• Can take up to 48 hours (or more) to get your money
July 9, 2014
State of P2P
Multiple Options • Core Bill Pay Vendors
• Fiserv / FIS / JHA
Major Players • Google
• Paypal
• Amazon
• ClearXchange
Many other players!
July 9, 2014
State of P2P
Look Who’s Coming! • Square Cash
• iTunes
• Ripple
What if Facebook decides to offer P2P??
July 9, 2014
P2P Issues
Fees
Access to cash (recipients)
Use of prepaid cards • Breakage
Funds left in P2P account • FDIC Insurance
July 9, 2014
Mobile Wallet: Who’s Playing?
July 9, 2014
• Be more aggressive in origination • Don’t wait for customers to ask for it
• Don’t let perceived risk stop or slow you down
• Carefully examine payments initiatives
• Same-day ACH?
• Act like you own it!
Strategic Takeaway
July 9, 2014
#
Deploy Risk and Fraud
Analysis
July 9, 2014
Risk and Fraud
• FIs are in a strong position to innovate …
• .. but must convince customers on two key factors: • Trust
• Privacy
July 9, 2014
Dealing with Risk
• Internal employee fraud / theft
• Corporate Account Takeover
• Individual customer fraud
July 9, 2014
• Behavioral Analytics
• Systemic review of activity patterns for end-
users • Where they access
• When they access
• Volume of transactions
• Velocity of transactions
Risk and Fraud Alerts
July 9, 2014
• Deploy Fraud Analytics that tracks behavior
• Educate customers on use of alerts
• Enforce Dual Control!
• Don’t Auto Approve any Exceptions
Strategic Takeaway
July 9, 2014
15 Minute Break
July 9, 2014
Exercise 3
Collaborate
The Marshmallow challenge -
Build the tallest free standing
structure
July 9, 2014
Your Building Materials
20 sticks of spaghetti one yard tape one yard string one marshmallow+ + +
ChallengeThe
Monday, March 15, 2010
July 9, 2014
Instructions
1. Build the tallest “Freestanding Structure” • Cannot prop it up or suspend it from a taller
structure
2. The entire marshmallow must be on the top 3. Use as little or much of the kit as you like
• You cannot use the paper bag
20 sti
cks of
spag
hetti
one y
ard ta
peon
e yard
string
one m
arshm
allow
+
+
+
Chall
enge
The
Mond
ay, M
arch
15,
2010
July 9, 2014
Instructions
4. You can break the spaghetti, or cut the string / tape
5. The challenge last only 18 minutes • You need to plan and execute your design within the
18 minutes
6. When the challenge is over, you cannot touch your structure
20 sti
cks of
spag
hetti
one y
ard ta
peon
e yard
string
one m
arshm
allow
+
+
+
Chall
enge
The
Mond
ay, M
arch
15,
2010
July 9, 2014
Begin Now!
July 9, 2014
#
Marketing and Social Media
SoMe and Advertising
Source: MarketingSherpa
“You can’t just say it. You have to get people to say it to
each other” James Farley, CMO Ford Motor Company
25% of Ford’s marketing spend is on digital/social
July 9, 2014
The Problem
• Most FIs have only “brochure-ware” sites
• Not listening to SoMe conversations
• Not optimizing online footprint • Site importance
• Organic Search Placement
July 9, 2014
End User Marketing Vision Statement
Partner with members to deliver integrated, multi-
channel programs designed to help them
maximize the potential of the virtual
banking channel
July 9, 2014
CPM Cost per Mille or
cost per 1,000 impressions
Higher CPM
Qualified impressions
Targeted impressions
High net worth individuals | Life cycle | Transaction based
GEO mobile
Walled garden solutions = post authentication
Forms of Online & Mobile Advertising
July 9, 2014
CPA (Action)
IF a member clicks on the banner and buys the offer
(Disney Vacation)
Geared around transaction of 3rd party products/services
Website has no control of purchase funnel or content
CPC (click)
WHEN a member clicks the advertisement
Website has control of placement, but not content
Forms of Online & Mobile Advertising
July 9, 2014
Advertising Market Data = Q1 2013
AdSense Ad Network - $0.25-$1 CPM
• Low end, remnant advertising solution
Hulu in-stream ads = $25-$30 CPM
Homepage Takeover
• AOL - $400,000 / Day
• YouTube - $400,000 / Day
• Yahoo - $450,000 / Day
Forbes - $75 CPM
Fidelity - $90 CPM
• (ex. 10K Dashboard impressions per day = $27,000 per month)
July 9, 2014
Trusted Source
More trusted than almost any other
digital media
Ability to tie offers
End user behavior = transactions
End user desires = goals (PFA/PFM)
Theme/Group level targeting (UUX
Release)
High engagement of account
holders
High impressions per unique each
month
Why Your FI is Different than Traditional Channels
July 9, 2014
FI Could Offer Three Forms of FI Advertising
Bank
Products &
Services
Bank
Business
Partners
National
Products &
Services
July 9, 2014
Scenario
• Ella
• Age 12
• Opens her first share account
• Joined to her parents account with your CU
• Goes onto her ipad, and picks the princess kids theme
• Later, while exploring the app, she sets a goal
• ……let see what happens next
July 9, 2014
July 9, 2014
July 9, 2014
Scenario (cont)
• Her goal = New bike that costs $450
• Local bike shop is notified of goal
• Friends & Family crowdfund goal for next 10 months
• Reaches 90% of goal
• Same bike shop sends offer for $45 off, come buy it this week!
• Parents approve transfer of funds to retailer
• Thank you emails go to all friends and family that funded the goal
• Ella wins, Local Retailer wins, FI wins.
July 9, 2014
Decide if your institution would market
through digital channels to members
If so, can you create meaningful offers
that engage at appropriate times?
Members are going to buy, why not from
you?
Strategic Takeaway
July 9, 2014
#
Pay Attention to the Member
Experience
July 9, 2014
How Important is Customer Experience?
July 9, 2014
1
July 9, 2014
How Important is Customer Experience?
July 9, 2014
How Important is Customer Experience?
July 9, 2014
• Determine the usage of mobile/tablet for your customers
• Provide: • Integrated experience for online,
mobile and tablet
• Engaging experience
• Purchase tablets for Sr. Mgmt!
Strategic Takeaway
July 9, 2014
Exercise 4
Communicate and
Problem Solve
July 9, 2014
Communication Exercise
• Separate team into: • CEO (1)
• Manager (1)
• Workers (2-6)
• Workers separate out “Inventory” • Jr. Tinker Toy Set
• CEO and Manager leave the workers
July 9, 2014
Communication Exercise
• CEO chooses one of the pictures
• Explains to manager what to build
• Manager cannot look at the picture
• Manager goes to visit the workers
July 9, 2014
Communication Exercise
• Manager cannot speak except to say “yes” or “no”
• Workers ask questions to determine what to build
• Manager can have unlimited communication with CEO
• Workers must build what the CEO picked
July 9, 2014
#
Get Busy!
July 9, 2014
Sitting Out The Downturn?
July 9, 2014
Not Standing Still …
• Standing “pat” is moving backward
• Start small but move forward
• Be ready for the “big wave”
• Pick one new initiative and move forward
July 9, 2014
What Was in Common?
July 9, 2014
Success Rarely Happens By Chance, But it Never Comes to Find
You!
July 9, 2014
Summary
• Change your attitude on strategic focus
• Collaborate with peers
• Assign someone to pay attention to payments trends
• Mobile/Tablet will become primary computing device
• Pick one initiative and move forward!