Banks Need to Start Thinking Like SaaS Companies 

As we roll down the digital banking tracks further and further, banking customers are increasingly relying upon banking software to meet their everyday needs.  Increasingly, that means banks are becoming software as a service (SaaS) vendors with the objective to get their customers to renew or enhance their subscriptions.  That's a big mental shift for bank executives to think of themselves as a SaaS vendor, but an important one.  People pay for digital subscriptions of all kinds: newspapers, magazines, movie services — why not electronic banking?  Which would you rather pay, a fee or a subscription?  With all this talk about fee generation, we should instead shift the discussion to subscription renewal or enhancement.

In the Winter 2004 issue of the MITSloan Management Review, Glen Urban wrote an article on the Emerging Era of Customer advocacy in which he cited some early examples of customer advocacy at work.  I think there are some important lessons in what has happened since Dr. Urban started this work more than a decade ago.

Both have obvious solutions that are “hard to get done.”

On November 15th, about 60 start-up software executives were invited to hear Todd Park, the U.S.'s chief technology officer, speak – and to provide feedback on his work. The meeting was held at the Cambridge Innovation Center in Cambridge, Mass.

Merryn Somerset Webb of the financial times writes, “…36 per cent of Americans believe in UFOs, but only 22 per cent feel they can trust their banks.”  Maybe, but, according to Gina Sverdlov of Forrester Research – USAA, ING Direct (Now CapitalOne 360), and PNC/National City are way ahead of other financial institutions, and UFO sightings, on the trustworthiness dimension.  The Forrester report goes onto say that the most important attribute in cross-selling, or deepening customer relationships, is trustworthiness.  And deep customer relationships are key to long-term enterprise value growth as can be seen in the commanding market capitalization of Wells Fargo – the most cross-sell focused large bank.          

Suze Orman took the stage at the Money2020 conference in Las Vegas this week and admonished 70% of the crowd first for failing to take care of their own financial affairs (e.g. "Stand up only if you have in place an advanced directive and durable power of attorney for health care, a revocable trust, a will and a financial power of attorney"). She also admonished companies for calling their customers "consumers."

Our company introduced and demonstrated a new product at last week's BAI show that no one asked for. That's right, not a single customer asked us for a product that could conduct cross-sell interviews on smartphones. 

Pretend you’re at a meet and greet when someone introduces themselves as John David Robertson from Newport Beach, Rhode Island, with a PHD in mechanical engineering who now specializes in computational biomechanics. Clearly, this is an impressive guy, but your first thought is: how did he get through all of that in one breath? Your second thought: hopefully he has a name tag. Conversely, when Joe, a professional soccer player, introduces himself and says he plays soccer, there’s actually a chance you might remember him. Joe plays soccer.

I attended the Fiserv forum in April featuring former President Bill Clinton, Fareed Zakaria, and even Huey Lewis And The News.  Clinton has aged but still has an amazing control of fact, figures, and arguments.  Zakaria laid-out a solid case for his decidedly bullish view on the future of the U.S. economy, and Huey Lewis was surprisingly good, igniting a sea of toe-tapping bankers. Overall, the forum was brilliantly planned and executed.

There has been a lot of debate about the usefulness of the branch bank recently. Although branch locations cost quite a bit for banks to operate, I think the banks are far less willing to see them go than the customer is.