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The BarCampBank Takeaways

By William Azaroff on July 25, 2007 8:53 PM | Comments (9)

BarCampBankSeattleThis past weekend, NetBanker sponsored an event called BarCampBank in Seattle. It's an unusual name for an unusual event. The name derives from an international network of events, which Wikipedia defines as "open, participatory workshop-events, whose content is provided by participants." It usually refers to "early-stage Web applications, and related open-source technologies and social protocols." In this case it was a loose, collaborative unconference about "innovation in banking, credit unions, social lending, or finance." It attracted close to 40 peoplecredit unions, banking experts, consultants and suppliers across the United States and Canada. It was unfortunate that there was no representation from actual banks.

The topics discussed included the use of social media, credit relief for third world countries, branching strategy, expectations of Gen Y and Millennials, mobile banking, and open-source core processors. Over the weekend, as discussions opened and progressed, the ideas were distilled down to a few themes.

  • Banks and credit unions don't really know what it means to be customer-centric.
  • The disintermediation that the industry has been seeing on the horizon for years seems to be occurring, and financial institutions had better get on board or lose market share.
  • AreĀ social media (blogs, social networks, wikis) an effective way to market and promote banks?
  • What would a bank look like if one was built from scratch today?

There was a lot of talk that banks and credit unions only look after their own needs and don't pay enough attention to serving their customers effectively. There is a lack of bravery and responsiveness to their customers' needs. To most consumers, banking is a chore like going to the grocery store or the post office (and in the worst examples, the dentist). People want easy access to their money and sound financial advice; in many cases, that is not what they receive.

There were some very interesting and disruptive ideas. One big one that kept coming up was the banking equivalent of local number portability. You get an account number the first time you create a bank account, and you can move it from bank to bank to bank. An amazingly customer-centric idea. You neither have to change your bill-pay info, nor your direct deposit or pre-authorized payments. This is one of the main factors that keep people where they are, and would force the banks to differentiate based on service and product innovation. The pain of switching would be eliminated and people could change banks when they found a better option for them and not wait until they get so frustrated with their existing bank that they overcome their inertia.

WesabeAnother theme that emerged, which will come as no surprise to NetBanker readers, is the brilliance of Wesabe.com's model. There is real passion in the way the founder and CEO Jason Knight describes the mission of his organization, which helps consumers make better decisions with their money. With a focus on showing consumers where their money can get them the most value, he doesn't see himself competing with banks at all, but offering a complimentary service. I wonder how many banks see the value Wesabe adds, and will work with it to give customers deeper insights into how they spend their money.

The people in the room were keenly aware of the echo-chamber effect created by being surrounded by those who feel similarly about social media. We were mostly proponents of the relevant use of social media to further the goals of a financial institution. But adoption of blogging, social networking tools and Web 2.0 technology by financial institutions is slow at best, and the number of successful implementations of these tools is few and far between. That honesty was refreshing.

There was an overwhelming feeling in the room that banking is ripe for a revolution. Interesting to come back from BarCampBank and see this insightful article on GonzoBanker about the demise of the banking industry as we know it. Many of these same themes were reflected in our dialogue. Money is too crucial in our lives to avoid big shifts ahead in the financial services sector. BarCampBank demonstrated that this is definitely an interesting time to be in banking.

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» My BarCamp Bank Topic Wish List from NetBanker
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Great post William, it was great to spend the weekend working with you!

Please feel free to link directly to the http://barcampbankseattle.pbwiki.com site.

-Jesse Robbins

Thanks Jesse. It was a great weekend. Thanks for adding the link to the wiki.

Note: Jesse Robbins, who made the prior comment, organized BarCampBankSeattle and did a fantastic job of providing just enough organization (and food) to create the intensely collaborative environment we all shared. I should have given him his due in my post itself. My oversight.

You couldn't say it better William. The phrase "differentiate based on service and product innovation" is exactly where all of us need to be and those that constrain FI's (3rd party suppliers) from doing that will also feel the backlash of this 'revolution'. I can only applaud Jason at Wesabe for bringing us to the drawbridge. Now it is up to us to let that drawbridge down.
PS full kudos to Jesse for a mind boggling weekend.

Re What is means to become become Customer Centric?
My thought lately is that is impossible. The only customer centric view is the customers.

We need a better question. Its got something to do with how can we be there for our customers when they need us, and leave them with an experience that exceeds their expectations.

Thanks Colin, such a great point. I think that banks can be more customer-centric by understanding that they're only going to meet some of a customers' needs and stop trying to grab the whole wallet. But that's not gonna happen.

So in lieu of that, you're right, we need a more honest term than customer-centricity. May I suggest customer-responsiveness?

William - excellent write up - planning on using some of it in my ongoing chats w/ my exec team - the focus on customer-centricity amd developing is innovations that truly ARE innovative is reverberating well internally as my FI deals with rapid growth in its future...

Thx for all your work on this!

Thanks Ted, good to hear from you. Ron Shevlin has a good conversation going about this very thing.

As a former "GonzoBanker" writer myself, I strongly support Cornerstone's view that there needs to be a serious paradigm shift in financial services. It's not so much 'customer centricity' that is required, but 'customer relevance'. Customers today face a myriad of offerings from non-banking entities not encumbered with a huge burden of overhead expense, punitive fees and archaic processes. Today's generation of bankers must recognize this reality and view it as both a threat and, more importantly, a real challenge to show their customers why they should stay with a 'traditional' bank...no small task!

Hi Michael. Your comment made me wonder how many banks are so used to looking at their traditional competitor set, that they're not even seeing the challenge of non-banking players gathering on the horizon. How many discuss it in the executive meetings? Are there even people in the middle layer of these companies sounding the alarm?

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