How Banks Can Abdicate The Bad Guy Throne

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[Note: I can’t decide if I’m serious about some of the recommendations included here or not. I’ll decide after I get some feedback]

I’ve been an industry analyst for 13 of the past 15 years. During that time, I’ve sat through more vendor briefings than I could possibly count. Many of those sessions were with start-up firms, and many of those start-ups no longer exist.

A common question to vendors in those briefings was “Who do you compete with?”

I’m going to out on a limb here and assert that there is no better predictor of technology start-up failure than a “we don’t have any competition” answer from the start-up.

If you don’t have competition, then there is no market. If there is no market, you have no future.

Every firm needs competition, and knowing exactly who — or what — you’re competing against can be an incredibly focusing thing for firms.

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Rolling the clock forward to 2012, and focusing the lens on the financial services industry:

Banks and credit unions don’t know who their primary competitor is.

It’s not the same for both type of financial institution.

Creditunionistas seem to believe that big banks are their primary competition. At a micro-market, tactical level, sure, that might be true. But associating with the Occupy Wall Street, MoveYourMoney, and Bank Transfer Day efforts will do little to produce sustainable, long-term gains in market awareness and new member growth.

Credit unions’ biggest enemy, or primary competitor, is: Apathy.

People just don’t care enough about their choice of financial providers to choose a credit union over a bank, and this apathy is often driven by the fact that — although money is really really important to us — managing money is a chore that many of us choose to spend as little time as possible on.

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And as long as creditunionistas mis-focus their competitive energies bashing big banks, big banks have little to worry about (in the scheme of things) in terms of a competitive threat from credit unions.

So what is the big banks’ biggest competitor? In a word (OK, two): Public opinion.

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Just as every firm has — and needs — competition (or an “enemy”), so do we as a society. We like to have a bad guy to blame stuff on.

The media, in particular, needs these “bad guys” because it helps to sell papers and attract viewers (or, at least, it used to).

Do you remember Gary Condit? He was accused of doing something evil to an intern of his. The story was in the news every day. Well, every day, until something else came along (which might have been 9/11, if my memory serves me correctly).

A couple of summers ago, BP was in the news every day because of the oil spill in the gulf. As far as people in the US were concerned, BP was the most evil corporation on the planet.

But, thank God (from the perspective of BP, that is), the financial crisis hit, and with it, a new enemy. A new”bad guy” to blame all of our woes and troubles on. The “TBTF” big banks.

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It’s been a couple of years into this already, and I wouldn’t be surprised if bank execs think to themselves “Damn! Isn’t there someone or something else that can come along and be the Bad Guy for a while?”

Well, if something isn’t going to come along by itself, the banking industry needs to make it happen.

This might sound underhanded or sneaky, but the banking industry needs to launch a well-crafted PR campaign to create a new Enemy of the State, and pass the Bad Guy throne on to somebody else.

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If I were crafting this campaign, I know exactly who I’d go after to put on the Bad Guy throne: Telcos.

It boggles my mind that people would complain that their bank eliminated a free checking account and wants to charge them $5 a month to provide all the services they get from that account….and not say Boo! about the bills they get from their wireless providers, which cost something closer to 20 times more than the $5 a month that banks want to charge.

And you think banks have “hidden fees”? They pale in comparison to the fees on my cell phone bill.

Sure, it might cost be $35 if I overdraw on my checking account. But do you know what it costs me if I go over my monthly minutes or data limits? Yeah,  a LOT.

And while the process of switching banks might not be as smooth and easy as some people would like it to be, at least I don’t have a two-year contract (that somehow gets extended every time I do something) with my bank that would be cost me hundreds of dollars to get out of.

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Look, I don’t have anything against the telcos. I’m just trying to give the banking industry some ideas on how to get out of the mess it’s in.

Yes, there are a lot of things from an internal policies, procedures, and pricing perspective that big banks could — and should — do to restore consumer trust. 

I’m just saying that a well-crafted, well-executed PR campaign might speed things up a bit. 

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