undaunted: how credit unions can thrive in the new financial services environment (credit union...

A PRESENTATION FROM DELUXE

PRESENTED BYHeather Vaughan

March 2012

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The Deluxe Collaborative

Why a Collaborative?

Members are smarter, stronger working together.

Collaboration generates creativity, problem solving and motivation.

Working with industry peers facilitates larger change.

ShapeTopic

ConductResearch

Ideate

Design&Test

Share

What is a Collaborative? A small group of financial services executives.

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The Rapid Attrition of New Customers in the First 90 Days

The Ailing Small Business Banking Experience

Artful Problem Resolution for Building Loyalty

Selling to Millennials and Boomers when Trust in Institutions Is Low

How do Banks and Credit Unions Thrive in the Increasingly Regulated Climate of Banking?

Collaborative Topics

2004:

2005:

2007:

2009:

2011:

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1ShapeTopic

2ConductResearch

4Design&Test

• Ethnography• Interviews• Co-creation• Observation

• Secondary research

• Excursions• Analogies

• Brainstorming• “And, also…”• Story boarding• Pitch and vote

• Focus Groups• Make it your own• Online research

• KQ • KE site• Expo• Associations

3Ideate

5Share

Deluxe Collaborative Process

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Share

DeluxeKnowledgeExchange.com

Knowledge Quarterly

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Deluxe Knowledge Expo

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2011 Collaborative Topic

How do banks and credit unions thrive in the increasingly regulated

climate of banking?

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Things to Challenge1.How you target customers and members

2.How you define and design products

3.How you charge for products

4.The language you use

Thrive Model

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How You Target Customers and Members

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Two Consumer Mindsets

Barrier

Elimination

Jobs to

be Done

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Mindset – Barrier Elimination

• Hold my money.• Don’t innovate on my behalf.• I want service and access.• Don’t mess with my spending.

“Give me my money, anywhere, anyhow, anyway. And, oh, don’t charge me.”

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Mindset – Jobs to be Done

• I am open to a deeper relationship.• Show me offers, discounts and smart

spending ideas.• Give me controls I can choose from.• I will pay for value.

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Motivation for Jobs to be Done

Time management“Life is so busy. It’s hard to keep up with the day-to-day requirements of managing my money well. I will accept valued help from my CU.”

Increased performance“I am willing to explore the possibility that by involving my CU, I will see improved progress toward the job I want to accomplish.”

Shared responsibility“If I involve my financial institution, I am more inclined to stay on track. I would value having a trusted partner in this journey.”

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Bridge to Profitability: Targeting

Old Thinking

New ThinkingBased on the size of the account

Based on attitudes toward accomplishing desired goals

• Understand new consumer mindsets• Segment on what “jobs” they want to get done• Know which members to keep and which to let go

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How You Define and Design Products

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The Promise We Made…

“We’ll hold your money for free.”

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The New Division

Barrier Elimination Jobs to be Done

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What Consumers Hear…

hold

free

“There’s no charge.”

“It’s yours and we are borrowing it.”

All of the industry efforts have been focused on eliminating free - not on changing the assumption that the CU holds their money.

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So, Now They Hear…

“We’ll hold your money for a fee.”

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Appeals to Neither Segment

Barrier Elimination Jobs to be Done

“You can

continue to simply

‘Hold’ my money.

But that should

be ‘free’.”

“I will forgo ‘free’ for something of

value.

‘Hold’ is not of value.”

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Product Design

What Consumers Care About:

Critically important:• Clear and honest explanation of the CU’s reasoning behind the

product• Fairness to members

Extremely important:• Products and services that are simple to use and

understand

Very important:• Products and services that anticipate new or

emerging needs• Timely products and services that allow the

CU to be at the forefront of innovations

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Two Products

We showed consumers two different products.

Traditional New

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Co-Creation: The New Product

1. Choose your focus.• Improve ST finances, manage spending, save, access, future

2. Set your controls to help you with your focus.• # of accounts, transfers, alerts, payment tools

3. We will pay attention to the way you bank, conduct “pattern analysis”, and give you suggestions to improve your money management.

For those who want to manage their day-to-day finances more effectively, without spending more time. One low monthly fee.

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Those Interested in New...

• Felt it was more relevant and wanted to learn more• Indicated a willingness to adopt• Felt that it was fair to charge for the new product • Indicated they would leave before they paid for their

traditional product

Indicated they would be more loyal:• satisfaction increased• bring more business • recommend their bank/CU to others

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Consumers Most Interested

• More educated• Perceived themselves to be busy• Age 27-40• Likely to set-up multiple accounts• Track financial goals• Less likely to keep extra money in their account as a buffer

Expressed strongest agreement with:“Innovations should help me accomplish my financial goals.” “I need tools to manage my money.”“I appreciate personal interaction.”

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Bridge to Profitability: Product

Old Thinking

New ThinkingAn account with features that holds your money

A set of controls that help the member accomplish desired goals

• Change the role of product• Re-engineer the way you develop product• Align products to the jobs to get done

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How You Charge for Products

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Three Models for Charging

1. Flexible 2. Subscription 3. Free with Ads

•Basics with a set price

•Choose additional features you

want

•Add optional services for

additional fees

•One low annual price

•Unlimited access to key features

•No fees for services, e.g., foreign

ATMs

•No minimum balance required

•No minimum balance required

•Robust set of features

•Relevant ads in online banking

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Pricing Scenario Findings

• All participants preferred “Free with Ads.”• Those who favored the New Product were more

open to all three pricing models.• Younger participants rated all three pricing models

higher.• Older participants rated Flexible and Subscription

pricing higher and almost identically, and Free with Ads as less appealing.

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Bridge to Profitability: Charging

Old Thinking

New ThinkingFees based on holding money

Price based on the value you create for the member

• Move away from a punitive-based fee model• Create new value for members• Teach employees to sell the value you create and think in

terms of new sources of revenue

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The Language You Use

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Language

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Language

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Consumer Reactions

• Don’t understand the difference between regulation and policy

• Believe all the “rules” are designed to punish them and restrict access to their money

• Don’t think the changes are fair• Question why and when they receive notices

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Language

We say…. They hear…

Free debit card with liability protection. Liability? What is going to happen?

Personalized voice and email alerts. Personalized? What other kind is there?

No fee for four ATM transactions per/mo. Why only four transactions?

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An account that holds my money A solution that helps me get jobs done

Mobile banking or online banking Access

Features and benefits Solutions

Free Unlimited

Categories or services Tools

Demographics/psychographics Job-based segmentation

Charge punitive fees Charge for the solution

Language

Moving away from… Moving to…

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F.I.T.S. Framework

Fair – Is it fair?Intentional – Is the intent clear?Timely – Does the communication occur at the right time?Simple – Is it easy to understand?

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Bridge to Profitability: Language

Old ThinkingNew ThinkingKey word:

FreeProducts described as a list of features

Key word: UnlimitedProducts described as a path forward

• Communicate the value you provide – effectively • Develop simple techniques for employees to use• Incorporate the FITS model to communicate change