Bootstraps and the unbanked

boots-148047_1280I shall open this week’s post by quoting Neal deGrasse Tyson. Tyson is a bestselling author, director of the Hayden Planetarium (part of the Department of Astrophysics at the American Museum of Natural History in New York), and, according to People magazine, the sexiest astrophysicist alive. 

(One wonders why People felt the need to qualify “sexiest astrophysicist” with “alive.” It’s hard to imagine a sexy deceased astrophysicist. It’s remarkable enough that there’s a living one.)

But this post isn’t about astrophysics or sexiness. It’s about banking and bootstraps.

So, anyway, the quote. It’s from Tyson’s address to the University of Massachusetts graduating class of 2015:

It’s OK to encourage others to pull themselves up by their bootstraps. But just remember that some people have no boots.

What brought Tyson’s statement to mind this week was a recent Finextra article entitled, “HSBC offers homeless people bank accounts.” The article says that HSBC …

… is working with charities in the UK to help homeless people who do not have fixed addresses or photo IDs to open bank accounts, which can be managed in branches or online. 

More than a wonderful thing to do, it’s a needful thing to do. Finextra continues:

… there are an estimated 320,000 homeless people in the UK, many of whom face financial exclusion because they do not have a fixed address or the appropriate ID needed to open bank accounts.

Backing up that claim was Business Insider, which recently observed, “Financial inclusion has been seen as key for reducing poverty.”

Thing is, if you need a banking relationship to exit poverty and you can’t get a bank account because you’re poor, you’re trapped in a vicious circle. You’re doomed to remain unbanked. Bootless, if you will.

So kudos to HSBC. They might just be offering a bootstrap to the homeless and others struggling with poverty.

In the United States, according to a report by the White House Council of Economic Advisers:

Over half a million people go homeless on a single night in the United States. Approximately 65 percent are found in homeless shelters, and the other 35 percent—just under 200,000—are found unsheltered on our streets (in places not intended for human habitation, such as sidewalks, parks, cars, or abandoned buildings).

Their estimate may be low, for homelessness is a moving target. According to the Urban Institute:

… over the course of a year at least 2.3 million and probably as many as 3.5 million people experience homelessness at least for a short period.

Out of the total U.S. population of 327 million, a half-million or even 3.5 million—about 0.153 and 1.07 percent, respectively—may not seem significant if you view them as cold, hard numbers instead of as people. All I can say is that the moment you imagine yourself or a loved one a member of that population, the number becomes considerably more significant.

The HSBC’s UK program may provide the homeless with “boots.” I’ll be eager for news of the program’s results over time. If a number of homeless grab that strap and use it to begin pulling themselves out of poverty, we in the U.S., indeed, the world, may have a worthy model to follow.

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TBT: Digital customers shouldn’t have to navigate an obstacle course

Help Dept

TBT 2Originally posted December 17, 2014

 

Last week, a friend of mine, also in marketing, posted this after fighting his way to live chat on Adobe’s website:

“Adobe live chat is immensely helpful—once you get there. First you must prove your worthiness. You must navigate a maze, undergo a colonoscopy, pass a written exam on String Theory, run a gauntlet (blindfolded), sacrifice an unblemished lamb (hard to find this time of year), balance a tree stump on your left index finger, don ceremonial garb, fight off seven angry gorillas (lowland), flawlessly execute 100 consecutive jumping jacks, roll in mud, swear so as to make Quentin Tarantino blush, prove you weren’t born in Kenya, and hold your breath until you expire. Only then will Adobe provide you the chat link.”

Not exactly the sort of PR any company needs. It illustrates a paradox: as more customers demand digital services, the more you’d better be prepared to back them with live, easy-to-reach humans.

Most companies get the part about “live” and “humans.” Some, however, seem to have trouble with the “easy-to-reach” part.

No one knows better than I that ones and zeros have advantages over live bodies. Ones and zeros don’t expect a paycheck, go home at 5, take weekends off, expect overtime, unionize, gossip, call in sick, take vacations, request family leave, whine, stretch 15-minute breaks to 45 minutes, take personal calls when they should be working, crack their knuckles when their neighbor is trying to concentrate, waste time, or show up for work hung over.

So at first blush it might appear cost-efficient to hire fewer live bodies and drive customers to the likes of FAQs and forums.

Might. 

Appear. 

In reality, if you make it too hard to reach a live body, you will create frustration. If you create enough frustration, you will lose customers. You needn’t lose too many customers before you find that hiring a few extra bodies would have cost you less.

While all companies are well advised to clear away obstacles between customers and live help, I venture to say that it is even more important for financial institutions, where questions and problems tend to be urgent and time-sensitive. 

The best practice is to offer live help, and offer it early. When a customer clicks around the same feature one too many times or pauses for too long, provide a popup that says something like, “Need help? Click here to chat with a live representative.”

DIY resources are all well and good, but customers shouldn’t have to navigate an obstacle course before being given a link to live assistance. It is best to allay frustration before it has a chance to arise, much less escalate.

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Can’t come up with the right gift? These offbeat services probably won’t help. (But they’re funny.)

IMG_0951_1296xYou’ll recall that online merchants pulled in $7.4 billion in sales on the day following Thanksgiving. Biggest online Black Friday to date. 

Thanks to Fiserv’s 2019 SpendTrend® Holiday Snapshot, we now know a bit more. For instance, “…spending via mobile wallets increased more than 80%, as consumers continue adopting new payment methods.” Also: “Black Friday brick-and-mortar sales were up 4.2%, with the greatest increase over normal shopping activity seen across electronics and appliances, sporting goods, and clothing/shoe stores. Electronics and appliance stores saw the largest average ticket size at $214 per transaction.”

PYMTS.com tells us that about 20 percent of this year’s Black Friday shoppers shopped only online. And Millennials spent “… an average of $509.50 on Black Friday … compared to an average of just $382.40 in 2018.” It reported in a separate article, “Cyber Monday is tracking to break eCommerce records and possibly go down in history as the biggest day ever for online sales in the U.S., The Financial Times (FT) reported on Sunday (Dec. 1).”

Besides the fact that I make my living in the digital payments industry, I am deeply grateful for technology that spares my wife and me from having to visit store after store to shop for our three children.

In fact, thanks to creative digital entrepreneurs, now you don’t even have to take your kids to the mall to see Santa. They can FaceTime him with services like TalkToSanta.com and VideoChatWithSanta.com. “It’s basically a webinar for your preteens,” quipped “Wait Wait Don’t Tell Me” host Peter Sagal last week. (But I’m not necessarily recommending it, especially after hearing panelist Faith Salie reply, “I watched some of these online, and the quality of the Santas, let’s just say, is variable.”)

Virtual Santas made me wonder what other offbeat services the digital revolution has dropped at our feet of late. So I decided to dig a little. Here’s what I found, just in time for the holidays.

Listverse names “Top 10 Bizarre Services You Can Buy Online.” One such is breakupshop.com, which offers to handle a romantic breakup on your behalf via text or email. I give them branding props, for “breakupshop” certainly has more appeal than, say, “helpforwimps.” (Which—attention entrepreneurs—is still available as of this writing.)

Perhaps the antithesis is InvisibleGirlFriend.com, which lets you create your own, virtual, online girlfriend. “You can then interact with them via text message. And yes, we have real humans playing your girlfriend on the other side.”

Romance challenges seem to be a favorite. Dirty Rotten Flowers will send a bouquet of dead, rotting flowers to the person of your choice. I’m sure they’re nice people, but I’m not recommending that one, either.

It’s a wonder that humankind survived until now without a service like PotatoParcel.com, “… a Shark Tank-featured company that allows you to send a personalized message to anyone you like on a potato.”

Under “Get The Best Weird Services,” fiverr.com lists a number of curious services you can obtain online. For $10, you can have someone “… yell your name at a bunch of yuppie golfers.” One fellow offers to “eat a peeled lemon and send you a video of it.” And here’s a sure winner: “I will make a bad drawing for you.”

Planning on being raptured? Wired describes a service that for “… just $40 a year” lets believers “arrange for up to 62 people to get a final message exactly six days after the Rapture.”

Oddee lists “12 Strangest Services,” and “strangest” is no exaggeration. “I will eat a handful of dry cat food for $5,” offers one contender for your money. Hard as that may be to resist, perhaps you’d prefer to pay a fellow to do jumping jacks while wearing a chicken outfit. Or you might wish to retain the services of someone who will take your verbal abuse. “Here’s your chance to express your thoughts in the most vulgar, nasty, and unapologetic way possible,” says the seller. “Hit me where it hurts … for five minutes over the phone.”

If in your quest for the perfect, last-minute gift you resort to any of the above, please note that I cannot be responsible for any consequences.

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TBT: Caution for big guys, hope for little ones

TBTI posted this on October 11, 2016. I think it’s still a good reminder for giants and aspiring giants alike.

* * *

TODAY’S OBJECT LESSON begins in the mid 19th century, when a Minnesota jewelry store declined a shipment of watches.

Railroad agent Richard Sears purchased the shipment, peddled the watches, and ordered more. Knowing a good thing when he saw one, he quit the railroad and set up a mail order watch business. A year later, he moved to Chicago, partnered with Alvah Roebuck, expanded into farming equipment and supplies, and published what became a highly successful mail order catalog. That was in 1888. By the 1970s, Sears, Roebuck and Company, today simply known as Sears, had become the world’s largest retailer.

In time, Sears diversified into the financial services arena. They created Allstate Insurance Company in 1931. Later, Dean Witter and Coldwell Banker real estate fell under the Sears umbrella. Sears introduced the Discover card in 1985.

There simply was no catching Sears.

Which may come as a surprise to anyone who happens to know that things soon began going south for the once uncatchable Sears. So south that, in 2005, bankrupt Kmart was able to buy Sears outright.

Today the world’s largest retailer is a company by the name of Walmart. You may have heard of Walmart. It attained world’s-largest status in 1990.

Here I would add that there is simply no catching Walmart, except I know better. As I write, Amazon is fast catching up and may soon take over as the world’s largest retailer. [Added December 18, 2019: Amazon passed Walmart in May, 2019.]

Other instances of toppled business giants abound. If you haven’t heard of WordStar, you probably weren’t doing much writing in the mid 1980s. That’s when WordStar was the dominant player in the word processing software market. There simply was no catching them. Until, that is, WordPerfect took the world by storm, and there simply was no catching them. Until, that is, Microsoft Word came along and, like many things Microsoft, took over.

Or, take Prodigy (in which Sears was a partner), which gave way to AOL, which gave way to Netscape, which gave way to Explorer, which gave way to Google, which you may also have heard of. Likewise, there was no catching Kodak, once the world’s leading film marketer and, no less, the inventor of the digital camera. They filed for bankruptcy in 2012. There once was no catching DellBlockbuster, and Motorola, either.

Underlying all of this is a lesson of humility and caution for giant companies and one of hope for up and coming, scrappy ones.

For the former, the lesson of caution is never assume you’re safe, that you’re uncatchable. For the latter, the lesson of hope is, who says you can’t become the next world’s largest?

 

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These days, Uber (and just about everyone else) is playing bank.

uber compositeIt was a dreadful advertising campaign. 

I figure it’s safe to say that now, since the bank in question has long since been acquired by another bank, which was in turn acquired by another bank, and that one by another, and so forth. 

The tagline was “We want to be your bank.” They even set it to music, repeating the strain ad nauseam during commercials. Yet even if you liked the ditty, which is unimaginable, “We want to be your bank” gets the marketing backwards. Markets don’t give a hoot what you or I want. It’s our job to give a hoot about and deliver what they want.

So when I saw a PYMTS.com headline that said, “Uber Money Wants To Be The Bank Account For Uber Drivers,” I wondered if déjà vu was rearing its head. I was relieved to see that that’s PYMTS.com’s claim, not Uber’s. Uber is getting its marketing right: It gives a hoot about what its drivers want, and is now delivering it. And what Uber drivers want, in fact, is what all gig workers want: prompt payment. 

Which shouldn’t surprise. No one signs up to be an Uber driver with delusions of attaining riches. As CNBC reported, by and large the goal is to make ends meet. In that scenario, waiting weeks for pay can be counterproductive.

Another reason it shouldn’t surprise is that, per TechCrunch, …

… Uber has long been at odds with its drivers when it comes to pay. The last several years have been filled with lawsuits, protests and a legislative win for workers in California regarding how Uber classifies its drivers. 

Perhaps that’s why the company launched Uber Money, of which, according to Uber Newsroom, real-time earnings is a key feature:

Instead of waiting for weekly payments or cashing out through Instant Pay, drivers and couriers will have real-time access to their earnings after every trip through the Uber Debit account.

As you may have inferred from the words “through the Uber Debit account,” Uber Money comes with an Uber Debit account. It also comes with an Uber credit card, Uber Cash, and Uber Pay—all conveniently wrapped up in a product they’re calling Uber Wallet.

These days it’s almost trite to observe the number of tech companies starting to play bank. Perhaps you have heard of Facebook, Google, Apple, IBM, and more. 

As gig apps go, Uber’s stab at becoming banklike isn’t particularly unique; it’s just the latest to make headlines. Every gig app, from Airbnb to Wag! to DoorDash is arguably playing bank by virtue of collecting and distributing funds. Yet jumping on the bankwagon isn’t as simple as it may sound, as a number of non banks learned the hard way. The Financial Brand’s Jim Marous observed:

Despite the successes of many of these platforms, success is far from guaranteed. For instance, while Amazon and Airbnb have achieved extraordinary success with their platform strategies, Uber has been challenged to make money to date. Some of the reasons platform strategies can fail include: Getting the pricing wrong … Not establishing trust … Being late to the market … [and] Building platforms in low margin businesses.

Banks have long faced threats from Non-Banking Finance Companies (NBFCs), under which Investopedia lumps “insurance companies, money market funds, asset managers, hedge funds, private equity firms, mobile payment systems, micro-lenders, and peer-to-peer lenders.” The thin line separating NBFCs from banks is the former’s inability to offer demand accounts. Still, NBFCs quack a lot like banks, which has not a few bankers concerned, for NBFCs “are not subject to the banking regulations and oversight by federal and state authorities adhered to by traditional banks.”

But banks must now also contend with fintechs, which are highly skilled at quacking like ducks in their own right but are nothing like and not regulated like NBFCs. And, to the consternation of big banks, fintechs like Cambr are teaming up with and providing regulatory work-arounds to small banks. According to the Los Angeles Times:

A tech company or start-up might give Cambr as much as $100 billion of customers’ cash, and could then ask the service to spread the money around to potentially hundreds of different financial institutions. A result of spreading out the deposits is that more of the fintech’s cash is insured under the Federal Deposit Insurance Corp.’s $250,000-per-account guarantee, offering more coverage than if the money were deposited at a single institution … many community banks have embraced such partnerships, seeing them as a salve in times of digital disruption. More deposits can allow small banks to grow and make more local loans.

So, it’s true that Uber wants to be a bank. So does about everyone else and their dog. “Retail banks losing the race to challengers in the last mile,” Finextra recently trumpeted, citing Capgemini and Efma’s World Retail Banking Report (WRBR):

Capgemini surveyed over 7,900 retail banking customers from 20 countries and sought responses from more than 50 banks for the report, which found banks have the right products, but they are lagging behind and giving ground to non-traditional players in the last-mile customer experience, ie what customers see and remember … The WRBR notes that the top three reasons customers say they turn to financial products from non-traditional players include lower costs (70%), ease of use (68%), and faster service (54%).

The lesson from the WRBR and from Cambr, however, doesn’t seem to be that fintechs are a problem so much as a potential solution. Finextra continues:

The WRBR says banks can address these challenges by partnering with fintechs to focus on the customer overall financial wellness, rather than discrete banking products. Says Bose: “Banks that identify their top capabilities and then seek partnerships with FinTechs and other business sectors to enhance their offerings in other areas will be the most successful.”

I am by no means the first to point out that fintechs may offer banks as much if not more of a solution than threat. In his Financial Brand piece, “4 Myths Preventing More Fintech+Banking Partnerships,” CEO at StoneCastle Partners CEO Josh Siegel wrote:

Solutions exist that make it easier for both sides to participate in building the next generation of financial services. By serving each organization’s needs and simultaneously streamlining what each must accomplish, these partnerships help move innovative — and fully compliant — products to market.

Banker, know thine enemy. Maybe it’s not fintechs after all.

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