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!
Putting it all together: niche banking in practice October 11, 2011
Posted by nichebanking in Niche banking, Niche banking examples, Nicheruptive, The Long Tail of Banking.add a comment
It’s finally almost time to put everything together that we’ve been talking about, working on, and kicking around. As I look back at our posts and headlines over the past couple years, I see the evolution of our idea and our plans. I reflect on these posts, and in hindsight it was like dropping a trail of crumbs toward the launch of our concept:
- Everyone’s passionate about something…and somehow, money relates
- Only one type of banking innovation matters: business model innovation
- Niche banks will build relevant banking services into a social community
- Being a terrible fit for most people
I’m pleased to report that we’ll finally be introducing our ideas and plans to you on Monday, October 17, 2011. We’ll show you what we’ve been working on, how we envision this business functioning, give you a nice concrete example of what we’re talking about, and let you put a face with this anonymous name.
Counting down the days…
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…
Letting customers outgrow niche banks October 22, 2010
Posted by nichebanking in Niche banking, Nicheruptive, Problems with traditional banking, The Long Tail of Banking.add a comment
One of the traps that most traditional banks and credit unions fall into is feeling the need (maybe even the duty?) to have products and services that serve customers throughout their entire lives. The thought of losing a customer because they have evolved or outgrown the company is terrifying to the bank. And it doesn’t take a rocket scientist to see how this feeling leads to the overly long product menus we see at today’s financial institutions, and the “we can be–and WANT TO BE–everything to everyone” mentality that is so pervasive.
So let’s go ahead and get one thing straight right now: Customers will frequently outgrow Nicheruptive‘s niche banks. They will move on when we no longer fit them. And not only is that totally OK, it’s critical.
Here’s they key: The wider range of customers and/or needs you try to serve, the less you can possibly truly tailor your experience to a niche group of people. The more you stretch to accommodate more breadth, the more you stray from your vision. Instead, our banks will be boutiques.
Nobody goes to In-N-Out because of the wide range of food choices to fit any lifestyle. Nobody goes to ING Direct for full-service banking. And those aren’t even niche companies…just companies with a commitment to their strategies. Just imagine the focus a true niche bank will have.
Examples of Themes, Not Niches March 19, 2010
Posted by nichebanking in Bank customer segmentation, Niche banking, Niche banking examples, Nicheruptive.2 comments
To continue the conversation from our previous post, Themes vs. Niches, and to help understand the difference between themes and niches, let’s take a look at some examples of themes. Then, by comparison, when we look at niches, it will be clear how they differ.
A good example of themes can be found in Sin City. Take, for instance, the Paris casino and the Venetian casino in Las Vegas. These are essentially exactly the same product, just with different motifs. They are both still casino/hotel/resorts with the same business model.
Some people may incorrectly argue they are niches. That’s not the case for these companies–here’s why:
- They make money the same way: they sell hospitality experiences, provide gambling, shopping and other activities. Their revenue and expense categories are very similar.
- The experience they deliver is the same. Sure, things “look” like Paris or Venice at either venue, but the experience they are selling is the same.
- The experience is not authentic–it’s cosmetic and faux.
- The experience is not engineered specifically for customers of a certain segment. People don’t come to The Venetian because they have a common love for Venice; they come because they want a fun Las Vegas experience…which is the same as what the Paris sells.
There are existing theme banks. Take Redneck Bank for instance. Catchy, funny and gets attention. But does it create a true experience tailored to a certain group of people who align with being rednecks? And does it make money in a unique way that is centered around this redneck service? Nope. It’s just like any other bank, but it comes in a different flavor.
The world deserves true niche banks. That’s where Nicheruptive comes in.
Themes vs. Niche Concepts March 12, 2010
Posted by nichebanking in Niche banking, Nicheruptive.1 comment so far
As we ponder the big roadblocks (most of which are mental blocks on the part of the industry itself, not the customers, by the way) in the adoption of the niche banking paradigm, one of the big points we see being hard for bankers to grasp is the difference between a theme and a true niche concept. This will be the first in a series of a posts to discuss the key differences between themes and niche concepts, and why themes are insufficient to achieve the niche banking movement.
Today, let’s discuss the differences and establish some definition:
Theme
A theme is like a motif. A creative idea that ties multiple parts of something together. Most importantly, it’s decoration. It’s a costume. It’s a flavor. It doesn’t change the core item itself, it just adorns it in a consistent and thematic way that is meant to attract certain people. “Under the hood,” a theme bank is the same as any other bank, it’s just dressed up differently to be more interesting to certain target audience members. The bank’s business model is still the same; it just has a consistent and unique aesthetic, cosmetic layer. Any existing bank could convert itself to a theme bank by simply putting on a new costume.
Niche Concepts
A true niche concept is not decoration, a flavor, a costume or any other type of cosmetic layer. Instead, a niche concept alters the item itself, so that the item is built differently to better serve a specific audience. “Under the hood,” a niche concept bank is not necessarily like other banks at all. It might not make money in the same way as others. It might not be organized the same way, staffed the same way, or provide the same products or services. Its business model is different. As a result, it does look and act cosmetically different on the outside…but it’s also different on the inside.
It’s important for us to gain a common understanding of the differences between themes and niche concepts. Those who don’t understand the difference will perceive the niche banking movement as a new marketing gimmick. Those who get it will see it’s a revolution that will change the industry’s DNA.
Stay tuned for more discussion on themes vs. niche concepts.
Ciao for now, PFI December 17, 2009
Posted by nichebanking in Niche banking, Nicheruptive, Problems with traditional banking, The Long Tail of Banking.add a comment
In my approaching-a-decade of working in banking, I’ve only come across one or two banks or credit unions who didn’t claim they wanted to be their customer/member’s primary financial institution (PFI). And to a certain extent, that’s a big “duh”, right? I mean, who wouldn’t want their customers to engage in financial monogamy?
I think we need to say goodbye to expectations of PFI status, and hello to role player status. The migration of certain (not all, I realize) customers to online-only direct banks and alternative financing resources (peer-to-peer lending, for instance) has created this wallet splintering even more. You might have your high-yield checking account at the local community bank, have a CD through Ally and then a personal loan through Lending Club. Each company plays a role in the customer’s life, but doesn’t have all the business, nor does it try to be all things to that customer.
Instead, it has that one piece of the business that it does really, really well.
This is really the same premise as with niche banks. Instead of trying to be everything to all types of customers, the niche banks we are building here at Nicheruptive are focused on doing what they can do really, really well: creating unique, social customer experiences that are 110% about that niche’s passion. The banking is secondary.
So will Nicheruptive banks not want to be their customers’ PFI? It’s not critical, and we don’t expect that we will be PFI for most of our customers. But the irony is this: we’re confident that our long tail approach to banking is going to create much more passionate customers than any other bank or credit union…meaning we just may get more of their business after all.
