Introducing Tribed: Banking experiences for niche communities October 17, 2011
Posted by nichebanking in Bank customer segmentation, Banking business model, Future of banking, Niche banking, Niche banking examples, Nicheruptive, the Bank for Dog Fanatics, The Long Tail of Banking, Tribed.add a comment
After many anonymous, vague and philosophical blog posts and tweets over the last many, many months, I’m pleased to share with you what we’ve been working on.
First, let me introduce myself: I’m Jeff Stephens. Chances are, if you have been reading this blog, you may already know who I am. I’m founder and CEO of small brand consulting shop Creative Brand Communications, and its little buddy PSST! Word of Mouth Marketing for Banks and Credit Unions. I also blog a little bit about my ideas and entrepreneurship in general at www.jeff-stephens.com. In fact, I have posted a video message on that site today as well, if you’re interested.
I’m pleased to introduce my new business, Tribed: banking experiences for niche communities. We plan to develop an extensive series of small, highly targeted online-only ‘direct’ banks. Why? Because we want to make financial services more relevant to consumers. Our plan is to do this by providing banking member experiences that are tailored to extremely narrowly defined member segments, who share in a particular passion (“tribes”). You can read the official Tribed press release here.
As the first example of this concept, today we’ve also launched Wag, a new website aimed at the most avid dog fanatics, at www.dog-bank.com. The website is currently an online publication providing unique content about how personal finance topics intersect with and impact the lifestyle of the fanatical dog lover, and facilitating discussion with community members about these topics. Once we have completed the setup of our direct banking operations, the website will offer those services as well, while continuing to provide ongoing content. Currently accepting unlimited reservations for its service, Wag will cap initial membership at 1,500 members to maintain a high quality group of engaged dog fanatics. You can read the official press release for Wag here.
I hope you’ll take a few moments to poke around our sites and learn more about our concept. If you have questions, comments, etc., please be sure to share them. You can drop me a line at j@niche-banking.com.
Welcome to the long tail of banking!
It’s almost time to pull back the curtain September 9, 2011
Posted by nichebanking in Future of banking, Niche banking, Nicheruptive, The Long Tail of Banking.add a comment
So, as you may or may not have known or guessed, we’ve been working on a little something here. For a while. For many months, it was “slow and sometimes surely.” And for several recent months, it’s been “slowly but definitely surely.” And we’re very pleased to report that we will be sharing this with you in mid-October. Yes, that’s right. You will soon learn what our semi-cryptic tweets, and theoretical and philosophical blog posts have been all about.
That will be an exciting day for us. And hopefully for you banking innovation nerds too.
Stay tuned…and thanks for your ongoing interest!
Everyone’s passionate about something…and somehow, money relates April 29, 2011
Posted by nichebanking in Bank customer segmentation, Future of banking, Niche banking, Nicheruptive, The Long Tail of Banking.1 comment so far
We all have our own interests and passions. We all have one topic, that if we were at a party with a group of our civilian friends, we would be the most expert in. For some people, it’s Star Wars trivia. For others it’s guitars. And for some, it’s wine, or coffee, or beer.
Everybody is a geek about something.
And somehow, money intersects with that passion; that “geekdom.” In some way–whether major or slight–money is involved with the person’s pursuit of that passion. Money might:
- facilitate someone’s ability to pursue the passion (ex: funding the purchase of classic cars)
- fund their ability to attend events with others who share the passion (ex: funding a trip to Comic-Con)
- finance their dream to build a business around their passion (ex: funding a startup brewery)
- serve the unique needs someone has when they pursue their passion (ex: managing money during a year-long trip around the world)
Only one type of banking innovation matters March 27, 2011
Posted by nichebanking in Banking business model, Future of banking, Niche banking, Nicheruptive.5 comments
Recently, I was reading a blog post from Market Insights called The Problem With Innovation. It was a well-written post, discussing the challenges with innovation in banking, whether innovation should be incremental or radical, and more. I contributed a comment, which got my mind working even further. Consider this post like an elaboration on my comment.
There are lots of types of potential innovation in banking, and many existing and startup companies are working on them–especially the incremental ones. But I think there’s really only one kind of innovation that is truly important: complete business model innovation. In other words, the only game changer will be a complete rewriting of the very core of the banking industry: the way banks and credit unions make money. There is nothing more fundamental to the entire industry than how they do these two basic things:
1) Add value to someone, and
2) Get compensated for that added value
Obviously, currently the banking business model is based on arbitrage–the banks’ ability to buy and sell money at different rates, and pocket the margin. Phrased in the form of the two above-stated questions, banks:
1) Add value to borrowers by loaning them money, and housing their deposits
2) Charge customers to borrow that money, at a rate higher than their cost of goods sold (their deposit rates)
(Yes, I realize banks get a few bucks here and there from other sources like fee income, but overall this is an arbitrage industry.)
But are these answers the ONLY two available answers to our questions? Based on the history of the industry, you’d sure think so.
Surprise, surprise: we say no. And that is exactly what we are working on here at Nicheruptive. Finding new ways to add value to different customer groups, and developing new and interesting ways to get paid to do so. While it is still too early (sigh…this is taking a long time) to tell you much about it, suffice it to say our P&L will look fairly different than your traditional financial institutions’ income statement.
In the meantime, chew on this food for thought a bit: what if banks and credit unions adopted other common (but nonexistent in banking) business models such as:
- Subscription model: adding value in a way such that a customer would pay a monthly fee to maintain access to that value. Think Netflix.
- Membership model: similar to the subscription model, adding value in a way such that a customer would pay annually to continue being part of the inside circle (Note to Credit Unions: No offense, but using the word “member” doesn’t mean you’ve got a membership-based revenue model). Think Costco, or your country club.
- Advertising model: adding value to advertisers by providing them access to a huge number of eyeballs, in such a way that they would pay for the ability to put their messages in front of those eyeballs. Think NBC, or Google Adwords.
- Commission: adding value by facilitating a successful transaction of some type, and doing so in a way such that people would cut you a slice of the pie for your help. Think business brokers, or share-the-settlement attorneys.
How could build a bank using one of these models? We have at least one idea…
Who does your bank compete with? October 12, 2010
Posted by nichebanking in Commodity banking, Future of banking, Niche banking, The Long Tail of Banking.add a comment
If you are an existing traditional financial institution, who are your competitors? Other banks and credit unions, of course…right? Not to mention those pesky “alternative” banking sources such as LendingClub, Prosper, brokerages, and many others.
Our founders are famous for arguing that any financial institution’s biggest competitor is not any other financial company, but is rather apathy. Americans care about nothing more than their money it seems, but care about nothing less than their banking services. Apathy.
When you’re a niche bank, you don’t really compete with other financial companies. Instead, you compete with other sources of engagement for that customer segment. For instance, if you’re a fishing enthusiast, you have multiple resources you can turn to, to scratch your itch for needing to be part of that community. You can join an online social networking community, join a local fishermen’s group, join a trade association, or subscribe to a magazine. All of those channels are competing with each other for your engagement.
So when you’re a niche bank, you’re competing with other ways the customer can engage with their passion. Other banks? They are NOT a way the customer can engage with their passion. If you’re a bank for fisherman, your biggest competitor is other ways people can get their fish on.
The Easiest Part of Banking: The Banking July 26, 2010
Posted by nichebanking in Future of banking, Niche banking, Problems with traditional banking, The Long Tail of Banking.add a comment
Every industry, every business, has aspects that are challenging and difficult, and others that are easier. If your business is making movies, getting people excited about your product is relatively easy (because people love movies!). But crafting a unique and compelling story, and getting it funded, produced and distributed within budget, is the harder part.
In banking, it’s the exact opposite: ongoing banking operations are pretty easy, while attracting customers in a way that allows you to optimize your net margin and grow both sides of your balance sheet is the harder part. Most bank and credit union CEOs I know don’t spend much of their time on questions like “how are we going to get these transactions processed? or “how are we going to process these loan applications?” Instead, their focus is on issues like growth and management–the more truly challenging parts of the business.
Yet when bankers sit down to answer a question like “how are we going to grow?”, the solutions they arrive at are, ironically, all about improving the “banking” part of their business. Their answers tend to be things like “we will enhance our online service delivery,” “we will innovate our products and services,” and “we will provide the greatest customer service in delivering our products to customers.”
In other words, “we will improve the banking part of our banking.”
This is not where the energy should be focused.
The hard part of banking is not the banking itself–that’s the easy part. The hard part is creating something that people care about, breaking through apathy, and creating engagement that will drive the business forward.
That’s why the future of banking will be owned by banks that figure out how to address this hard part, and stop spending so much energy fixated on the same things the rest of the industry is obsessed with. They will understand the difference between “extreme customer satisfaction” (the typical goal) and “actually caring” about the bank (a yet-to-be-reached achievement, which should be the real goal). They will create huge separation between customers who can “gladly tolerate” doing business with them (like most community banks and credit unions), and customers who relate so strongly to the brand that they feel incomplete without it (like Apple’s customers).
A long tail bank is all about achieving exactly those goals: addressing the hard part.
