"When will Google launch a bank and what will it look like?" is a question I frequently hear from our banking clients. Google’s activities in digital wallets and payments, as well as its reputation as one of the most disruptive firms in the market, have obviously left many banking executives worried. Unfortunately, they’re asking the wrong question.
I’ll leave aside the issue of whether Google or perhaps Apple or Amazon should be the focus of this increased attention. Each of these players has its unique strengths and growth plans, and some of these correlate more or less closely with financial services. That’s not what makes the question so wrong. As I write in my new report, it’s the assumptions that are faulty here; assumptions that reveal precisely the type of legacy mindset that makes many retail banks so vulnerable to disruption.
Many retail financial firms still haven’t grasped the full potential of digital disruption. They think that new competitors will use their digital might to beat them at their own game, be that through more efficient processes, brilliant algorithms or better user experience. While these three things do matter, what matters most is the purpose which they serve. As I have written elsewhere, digital disruptors like Google are disruptive because they don’t play by the rules. Instead, they use digital technologies to deliver better or entirely new ways of meeting customer needs, often bypassing regulation and re-defining a given industry in the process.
Pundits’ take that Facebook has “solved” mobile advertising after its home run last week hid a bigger, behind-the-scenes story:
We’re finally seeing branding and direct response marketing merge in a meaningful and measurable way; Facebook is just one place where it’s happening most demonstrably.
Here’s important context: Facebook’s quarterly earnings beat projections last Thursday, driven by the 62% of its ad revenue that comes from mobile. Also note that Facebook’s only ad revenue from mobile is its in-feed ads (or native ads, or whatever you want to call them).
The in-feed ad is Facebook’s holy grail. If they can manage to position ads in users’ mobile feeds so that these ads: a) perform well, and b) don’t kill engagement with Facebook, then they can print money against their 1 billion-plus monthly active users.
Facebook knows they’ll need advertisers’ and their agencies’ help to achieve this. That’s why I want to draw your attention to a slightly less publicized study that came out of Facebook and two partners the week prior to its quarterly earnings announcement.
Working with the social ad platform Adaptly and Refinery29 (one of a new set of savvy content-driven eCommerce outlets), Facebook showed that social advertising that merges branding and direct response outperforms direct response ads alone, by a margin of about 70%.
I have just published a report that builds on Forrester's research on CMOs' technology spending plans, focusing on India's banking industry. The Indian banking industry emerged unscathed from the 2008 and 2009 global financial crises, but it will not be immune to the age of the customer. My report outlines how technology will play an increasingly crucial role in implementing differentiated revenue models, a superior customer experience, and an optimized cost structure for banks. The key findings from the report include:
Digitally enabled customers are demanding customer obsession from their banks. Indian banking CMOs' top three business priorities are addressing the rising expectations of customers, improving margins, and acquiring and retaining customers — priorities that are similar to those of their peers in other industries. The experience that other industries offer — such as the compelling content, interactions, and features that consumer product companies provide — are shaping customer expectations, and customers want similar experiences from their banks. And the entry of new players and the tough economic situation are driving CMOs to increase their focus on winning, serving, and retaining customers.
Does something like this sound familiar? "We need to find, fix, finish, exploit, analyze, & disseminate this intrusion set along the kill chain via force multipliers so we can observe, orient, decide, and act according to tactical, operational, and strategic priority intelligence requirements." I bet that part of it does.
I think that it is important to keep in mind that we aren't the military and don't have the resources of the military. While military concepts can be useful, buzzwords won't secure your environment; you could become distracted and utilize your limited resources in the wrong manner. As I was sorting out my Black Hat calendar tonight, I fortuitously saw a talk that is very applicable to this topic: "The Library of Sparta," with David Raymond, Greg Conti, and Tom Cross. Here is part of their abstract:
At my wedding reception (I will NOT be saying how many years ago), another couple and my husband and I took the dance floor when the cotton eyed joe began to play. I’ve actually seen it danced a few different ways but the way we danced it then involved a lot of going forwards and backwards, kicking and hopping to and fro in a circle as couples rather than traditional line dancing. How did we manage this dance in a very small circle with all the dress clothes including my poofy wedding dress (THAT probably dated me) to boot and still manage to laugh our way through it? Our partners made all the difference.
You are probably thinking – she just released the ITSM Implementation Service Providers Wave for North America a few weeks ago with a blog, why didn’t she bring up the partnership story then? Because picking the right partner for ITSM SaaS is just as important as picking an implementation service provider for success. Everyone knows that when you pick a SaaS provider, they are responsible for the delivery operations of that service. But I find clients who know very little about what the delivery capabilities are for the ITSM SaaS vendors and in the past we did not have a method of highlighting the differences between delivery capabilites. In the newly released Forrester Wave: ITSM SaaS Delivery Capabilities report, I take the 10 vendors we have classified as having an “established” client base in the Market Overview: IT Service Management SaaS Tools Update, 2014 report and applied 30 evaluation criteria to detail these differences.
(1) Rapidly improving their mobile services. Yes, this is now true of many banks around the world, but it's especially true in Australia. Following our reviews, CommBank announced updates to its app that would move the bank from 64 out of 100 to 69 out of 100, and up from 10th place globally, based on our reviews of 32 banks across 11 countries, to joint 6th. Westpac has already migrated 1.2 million customers to its new web based platform, which would move the bank from 62 to 77 out of 100, and 2nd place overall in our global reviews, up from 12th. These are dramatic positional swings in a very short period of time.
Pop Quiz: If your company has conquered North America and Western Europe and is now looking for the next big market, where should you go? The no-thinking, because it’s obvious, answer is of course China. But if you want low cost of entry and a rapid return on investment you might want to aim a bit further South - to Australia.
While it isn’t as big a market as China (or even India) and may have a higher cost of living, which can make establishing a beachhead there expensive, Australia has significant enough similarities to the western world — a well-educated populace, a high income citizenship and desire for new technologies and innovations — to make success here far easier. And if you are doing ROI calculations around this decision, it has a key advantage over its Asian peers: higher acceptance of cloud services.
The Wall Street Journal published an interesting article on Hilton’s plans to invest $550 million in technology solutions that will empower guests to use “smartphones to choose rooms, check in and even unlock doors.” From the customer’s perspective, such a system – if implemented properly – solves a number of problems: Ensuring the best available room choice (as with airline seat choosing apps); no more waiting in line just to check-in; no more lost (or demagnetized) hotel room key cards.
From Hilton’s perspective, the business benefits could be substantial: Driving loyalty and active preference for Hilton hotels; better customer satisfaction and customer experience scores; and up-sell to more services. For example, at check-in, promotions for room upgrades can be presented right on the user’s smartphone, potentially increasing the chance of acceptance.
Disney's MagicBand: A $1 Billion Technology Investment In Customer Experience
Yet it’s not just Hilton – nor just smartphones – at play here. Starwood is rolling out similar functionality in its apps for W Hotels and aloft. Other mobile solutions employ wearable technologies in “B2B2C” scenarios – i.e. instances in which the company provides the wearable tech to customers:
The following is an excerpt from The Mobile Mind Shift, Groundswell Press, 2014, pages 153-4. Click here for more on Forrester's mobile mind shift market imperative.
Steve Singh knows about the challenges of building technology platforms for great mobile moments. He learned them honestly by moving his entire company and its customers to a cloud technology platform.
Steve is CEO and co-founder of Concur Technologies. Concur helps businesses and government agencies manage their corporate travel bookings and expenses.
Concur’s technology platform, which Steve calls the Concur Travel and Expense Cloud, is designed for the demands of mobile moments: It supports applications that make it easy for travelers to focus on a few tasks and complete them quickly. Travel and expense (T&E) software is by its nature complex, but at Concur, the complexity remains behind the scenes in the servers, not in the user interface because busy travelers and business expense managers have no time to puzzle out complexity. To make this work, Concur invests 40% of its research and development budget in the applications and 60% in the cloud technology platform that provides the services.
The success of the strategy and technology platform is reflected in the rapid growth of his company, from a startup in 1993 to more than $540 million in revenues in 2013.
Concur’s cloud technology platform delivers four benefits.
First, because the Concur software running in the cloud is the same for every customer, developers working on it can fix problems continuously and roll out new services daily.
China faces a growing air pollution problem — one of the consequences of its significant economic growth over the past two decades. Surrounded by a large number of coal-burning factories in Hebei province, Beijing faces ever-worsening smog. To tackle this problem, city government has implemented new policies and laws, such as the Beijing Air Pollution Control Regulations, that provide guidance to technology vendors developing smog control solutions.
Optimized Energy Management Is The Key To Reducing Air Pollution
Beijing’s government is focusing on air quality monitoring and has invited tech vendors like Baidu, IZP Technologies, and Yonyou to develop solutions. The city wants to show the source of pollutants and how they will disperse across Beijing a couple of days in advance — but that doesn’t do anything to reduce the smog itself. Rather, the key to reducing air pollution is changing how China consumes energy. For example, the government could use big data analytics to:
Optimize factories’ energy consumption. Asset-intensive industries like steel, cement, and chemicals face challenges in analyzing the vast amounts of data generated by energy-monitoring sensors and devices. Tech vendors like Cisco and IBM could leverage their Internet of Things data analysis technology to help customers turn this data into actionable insights. For example, one steel factory in Hebei province is considering technology that identifies when an oxygen furnace is wasting energy because the temperature of the output smoke is too high.