In my last post I introduced how the transformation within Internet Banking can be mapped to Maslow's hierarchy of needs model.In this section, I offer some thoughts on what banks can do to tap into the Psychological Needs of the customer. Psychological need can be defined as the need for assimilation and for differentiation.
Assimilation refers to the desire to feel ‘inclusion within larger collectives’, whereas differentiation refers to a desire to ‘distinguish [oneself] from any other persons in the social context’.
Well, in the financial services context, banks can achieve a lot of this by creating communities of consumers (My previous post on creating communities is a good start). Following are some thoughts on the various activities community members can engage in:
- Financial Planning: Members can offer each other support and advise to meet their financial goals. To make it simple, each member (say A) will be allowed to post their top 3 goals on their profile with a tracker to see how they are doing to meet their goals. Other members can offer tips and support to keep the member A on path to achieving her goal. To create more value, the banks can "lend" their financial planners to provide professional guidance to the community members. Members can pay the bank for more tailored or 1:1 advice, creating a revenue stream for the bank.
- Peer to Peer lending: Banks can offer peer to peer lending services by allowing their community members to lend to each other. Banks already have enough information about the customer to assign members a credit score (based on account balances, number of missed payments, number of times account was overdrawn etc.) and ascertain credit worthiness of the borrower. Banks can also compete with individual lenders to offer credit to the most worthy borrowers.
- Comparison Budgeting: Nothing gives us more satisfaction than finding out how we did relative to our neighbor or co-worker or friends. Extending that to that financial context, banks can allow community members to compare their spend on particular items (grocery, utilities, entertainment, dining etc) to the average spend in each category by their community.
- Test Platform: From a bank's perspective, they can use the different communities to test out new products and service ideas before rolling them out in the market. The community members being the more engaged customers are more likely to give the bank quick and honest feedback.
- Special Interest Communities: Banks can create communities around different themes and interest areas. One such community could be "How I got out of debt": Community members can share real life examples on how they got out of the debt hole and are staying on a path of financial freedom. Another example could be a small business community. Open Forum is a good example of a social community sponsored by American Express that targets small business owners and provides videos, articles, expert blogs, success stories and advice from other business owners and limited networking opportunities. It functions as a hybrid between a networking community and a conventional portal.
Banks can gain by offering customized products and services to such special interest communities, but more of that in the next post.
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These are all great ideas. Banks could potentially offer some incentive to test new products to the community members. But I wonder how many special interest communities a bank should develop...maybe 5-6 (to keep them manageable?)
ReplyDeleteDave,
ReplyDeleteMy suggestion would be to start with 4-5 communities (obvious one like 401k, student loan, small business, get out of debt) but then extend that to other groups as groups and needs emerge
Great Post!. One question I'd raise is can banks and financial institutions themselves effectively implement an online social community? Seems consumers may be hesitant to join a community where they know banks are watching over them. Perhaps an independent branded community site could be the way to go if a bank/financial institution wants to manage one.
ReplyDeleteJames,
ReplyDeleteThanks for your comment. My take is that the whole "the big brother is watching" philosophy is overrated.
People will share enough information if the bank can provide value added services. If the bank can help me reduce my credit card debt by lowering my APR or offer me some financial planning advice, I am all for it. But yes, if it leads to more spam and flooding my mailbox with offers I don't care about, I will cry out loud.
Look at Gmail. There was such a hue and cry made when Gmail announced they will offer targeted ads based on content in the body of the email. But with a better interface and features, Gmail is now the 3rd biggest email service used in the US. And Google is making money on the ads.
The crowd sourcing idea of point 1: financial planning can be seen implemented at smartypig.
ReplyDeleteIt is a great idea!
http://www.smartypig.com/about/how-it-works
Keep us posted Dave!
Thanks
Richard