Talk of Many Things

NEWS ITEM

Americans prefer to access PFM tools though bank sites – survey

Americans prefer to access personal finance management (PFM) tools through banking Web sites, with security concerns trumping the advantages, such as account aggregation, offered by third party providers, according to a survey.

OUR COMMENT

BofA and Wells Fargo are a couple of banks that provide fairly comprehensive P2FM/PFM capabilities on their own websites. However, the insight consumers can gain from them is restricted to their account(s) in the respective bank. This is obviously not too useful given that a person’s total financial position and his or her ability to control it is clearly a function of all their accounts – checking, savings, credit card, etc. – across multiple financial institutions. Besides, single bank PFMs are likely to push only their own products, thus making them a biased source of budgeting recommendations.

Cross-account aggregation and unbiased offers are two benefits provided by neutral, non-bank PFMs, and it’s difficult to image how banks can match up with them here.

Even if a single bank PFM seeks to provide cross-account aggregation, like HDFC in India does with its “OneView” service, consumers have to disclose Internet Banking credentials of the accounts they hold with other banks to the PFM-providing bank. But, this seems only slightly less skittish than doing so with neutral PFMs.

Surely, we don’t expect one bank to promote another bank’s product, so the benefit of unbiased offers is virtually impossible to get from a single bank PFM solution.

In PFM, we see an interesting trade off between trust and functionality. This might get resolved only by being more pragmatic about the expectations from a PFM (e.g. visibility versus budgeting) or by the entry of a bank-like trusted entity (e.g. retailer? telco?) into the role of a PFM provider.

Indian offshore-centric IT services firms have created a multi-billion dollar business from nothing in less than three decades. Companies, large and small, have accomplished this by riding the wave of lower costs to offer a broad range of services to overseas customers.

Now, according to this report, it looks like what got them here won’t get them there. For the first time, there seems to be a great divide between the giants and the others. While India’s top technology firms including TCS, Infosys, Wipro and Cognizant grew their revenues in double digits, Mastek, Patni, Tech Mahindra and many other Tier-2 and Tier-3 companies actually saw a sharp fall in their revenues and profits recently. Analysts find a negative surprise in the latest quarter results of midsized and small IT firms.

While the report covers the reasons for the divergence in performance between the top tier companies and the others, it’s interesting to look at the recommendation it offers to small and midsized companies to get back on their high growth trajectories. According to the leading IT analyst firm Forrester Research quoted in this report, “these firms need to focus and specialize instead of trying to mirror the multi-service offerings of the large players”.

This might appear to be somewhat counterintuitive besides sounding easier said than done.

For most companies, it won’t be easy to figure out where to put their focus: after all, they’ve come this far by demonstrating a spirit of “can do everything for everyone” for as long as they’ve been in existence. Besides, after reaching their present size by offering a very broad canvas of services, leaders in such companies might wonder how it’s even conceivable to grow their revenues by actually shrinking their offerings.

Both concerns are valid but GTM360 can help address them with what we call Marketable Items.

Marketable items package a company’s products and capabilities into compelling reasons to buy that resonate strongly with the target market’s pain areas and hot topics. If they don’t create gain, they must solve pain. A few examples of marketable items are given below.

Since marketable items are created around a company’s internal strengths and differentiators, they provide the ideal framework for specialization. By resonating strongly with the target market’s pain areas and hot topics, marketable items boost the effectiveness of a company’s marketing efforts to tap into a larger segment of the addressable market, thus helping them grow revenues.

The following success stories illustrate the effectiveness of marketable items in practice.

1. SAP SERVICES PARTNER Enters FORTUNE 500 Corporation: Marketable items appeal to C-Suite
2. American Widget Maker Grows Revenues Manifold: Frictionless online solutions convert browsers to buyers
3. Payments Solutions Provider Boosts Sales Pipeline: Marketable offerings give a shot in the arm to inside sales

With real-life examples from India and abroad serving as lighthouses, Indian IT services companies can use marketable items to focus and specialize, confident that they can achieve high growth despite shrinking their offerings.

Business development executives and inside salespersons crave for direct telephone numbers of contacts in potential buyer organizations so that they can reach them directly to pitch their products and services. However, they find that company websites, Google search, and, increasingly even Hoovers, Jigsaw and other specialized contact providers, seldom provide anything more than switchboard numbers. When they dial the board numbers, they typically encounter unwieldy directory trees, or have to contend with switchboard operators, secretaries and other “gatekeepers”, if not both.

On the one hand, since a contact’s business card has much more than a direct telephone number, they’re sure that such information can’t be confidential. One the other, since they’re not able to get hold of it through web search and other sources, they’re frustrated by not being able to reach the peak performance levels they deserve to.

Enter pipl, a vertical search engine specializing on contact information.

According to pipl, a lot of people-related information is stored in repositories and databases of websites – a little known but very important part of the web that pipl calls the “deep web”. Even if the information is publicly accessible, it’s beyond the reach of Google, Yahoo, Bing and other standard search engines that crawl only static web pages, and not repositories or databases. With its unique ability to reach the deep web, pipl claims to be “the most comprehensive people search on the web”.

When I recently put pipl to test with my own name, I was stunned by the results. To paraphrase Capt. Kirk of Star Trek, pipl boldly went where no other search engine has gone before. Its search results contained one entry that showed my mobile phone number.

While this information is present in my business card and email signature, it’s not publicly available and certainly not visible in the blog post to which this entry links.

This example convinces me that pipl can expose a piece of my contact information that business development executives and inside salespersons would find valuable but won’t be locate on my website or blog, access through Google search or find out even by subscribing to specialist contact providers’ databases. At the risk of generalizing from this single example, it does appear that pipl digs the web deeper in order to deliver contact information that’s richer than what’s available from other publicly-available sources.

PS: I’ve sort of figured out how pipl must’ve found out my mobile # but I’m letting readers take a guess. Hint: Deep dive into the linked blog post.

Frequent users of credit cards recognize that there’s much more than annual fees and APRs to distinguish one card from another. From their years of usage, they might’ve realized that their overall satisfaction with a credit card – and how strongly they’d recommend it others – depends upon late fees, payment allocation sequence, fees for exceeding credit limits, billing cycle, rewards expiry, and many other clauses buried in the fine print of the cardholder agreements.

With so much riding on them, you’d imagine that cardholders and card shoppers would have ready access to these agreements so that they could consult them at any time.

Unfortunately, you’d be wrong. Cardholders receive these agreements years earlier along with the welcome pack of their cards. Banks keep making changes to the clauses all along. As a result, I doubt if anyone other than the most organized of cardholders has ready access to their cardholder contracts.

The recently launched Federal Reserve Board database now makes it easy to locate all cardholder agreements in one place. You no longer have to search your files going back years to retrieve them. All you’ve to do is enter your credit card issuer’s name and out comes the PDF and TEXT versions of the cardholder agreement.

Now that all the information is available, can we expect cardholders to be able to quickly locate a specific clause in the agreement in order to validate a certain charge levied on their monthly statement? Will credit card shoppers be able to select the best card for their needs based not only on annual fees and APRs, but after a thorough evaluation of the fine print?

Unlikely – for two reasons.

For one, credit card agreements contain language that cannot be understood easily by an average credit card holder or shopper.

Two, when you search the FED database by credit card issuer, it outputs the agreements for all types of cards issued by that company. For large issuers, that exceeds a dozen agreements. So, the cardholder or shopper has no easy way to tell which one pertains to them. Worse still, an issuer may have more than one entry to search under. For example, Citibank is listed under both “Citibank N.A. Las Vegas NV” and “Citibank (South Dakota) N.A.” How many people know which one to select?

However, the FED database can be used as a good starting point by third-party service providers seeking to help cardholders and shoppers to locate the correct agreement and navigate the fine print before deciding on which credit card to apply for.

Credit card comparison websites like CreditCards.com, Bankrate.com and others could review all agreements in the FED database to arrive at a single, easy-to-understand rating of their user-friendliness. This will save the average shopper the trouble of going through all the legal mumbo-jumbo to figure out what’s best for their needs. Similar ratings are provided by a few comparison shopping websites that list the best consumer product deals not only on price but also on the basis of the online retailer’s reputation. For example, PriceFight has a feature called “People’s Choice” that incorporates non-price attributes valued by the shopping community, which include customer service, return policies, shipping, and security. Credit card comparison shopping services could attempt something similar by using the FED database.

As to difficulty of identifying the appropriate contract for a given card, third-party service providers could build an overlay on top of the FED database in such a way that the consumer / cardholder merely enters a few digits of their credit card and out comes the applicable agreement. As the website TRUE COST OF CREDIT shows, it is possible to uniquely identify a card issuer and the specific type of card – and hence retrieve the appropriate agreement for any given card – by using just the first six digits of the card number, which is called the Issuer Identification Number, or the “card bin”.

Hope one or more of the plethora of credit card comparison shopping sites takes the lead and builds features on top of the FED database so that shoppers find it easy to decide which credit card is best for them. As a matter of fact, I recently came across a little known one called nerdwallet which claims in this press release that it “currently indexes more than 600 of the cards in the Fed’s database, and condenses the pertinent information into a dead-simple interface”. I think nerdwallet has gone a little ahead of itself in its enthusiasm to leverage the buzz around the FED database to differentiate itself from the bigger players – when I visited its website, I couldn’t find any mention of its using the FED database nor any comparison result as intuitive as PriceFight’s People’s Choice.

In a recent “While You Were Out” column in the FORTUNE magazine, Stanley Bing says, “I put up with a lot of things on the job, like working. In return, I expect air-conditioning”.

Likewise, I put up with a lot of things with organized retail, like parking problems, and all I ask in return is air-conditioning. However, during my visits to these places in the last couple of months, I’ve almost always noticed the air-conditioning to be switched off. While this is probably a part of cost-cutting measures adopted by mall developers and retailers on the back of the recent recession, it seriously mucks up the shopping experience. Instead of encouraging people to spend more time browsing for goods and stoking unplanned purchases, the stuffy environment in these places is guaranteed to make shoppers split the scene at the earliest.

Over a year ago, I’d written about how Indian organized retail had lost Round 1 of the retail battle to kirana stores, which are the Indian version of mom-and-pop stores.

Unless it recognizes that better shopping experience is one of its USPs as compared to dingy and cramped kirana stores and does something to preserve it, the organized retail industry risks losing the next round as well.

At the neighborhood Bharti / Airtel customer center today, I heard a mobile phone customer complaining to the staff that her bills have shot up drastically after she switched to a per second tariff plan from a previous per minute plan. She was very upset about this and demanded to get back to her original plan immediately.

Not sure if this is a stray case or, as I’d warned in a previous post, per second billing plans have started showing their true colors and don’t necessarily deliver lower costs.

While other banks in America are fiercely resisting any caps being considered by regulators on their overdraft fees, ING Direct USA proclaims that it doesn’t charge any overdraft fee on its Electric Orange checking accounts. While it does admit to charging an interest on the overdrawn amount, this online calculator published on ING Direct’s website claims that “they charge dollars, we charge pennies”.    

For its default of $100 overdrawn amount for 10 days duration, the calculator shows that other banks charge $30 whereas ING Direct charges only 20 cents by way of total overdraft costs.

By permitting overdrafts without charging overdraft fees, ING Direct tries to convey the overall impression that its Electric Orange checking account lets you “have your overdraft and eat it too”.

However, the same online calculator tells a different story when you play around with the numbers, completely belying ING Direct’s claim that “they charge dollars, we charge pennies”.

According to this calculator, other banks charge a flat fee but no interest whereas ING Direct charges a flat rate of interest but no fee. Think about it, since interest is always charged on the principle and for the duration of a loan, it becomes obvious that ING Direct’s overdraft costs will increase proportionally with increase in overdraft amount and / or borrowing period. This is borne out by the calculator when you select an overdraft amount of $3,000 for a borrowing period of 30 days. For these figures, the calculator shows other banks’ charge to be $30 and ING Direct’s as $17.88.  ING Direct’s cost is no longer in the pennies.

If you keep increasing the numbers, you’ll notice that an overdraft of $5,000 for 30 days attracts almost the same cost from ING Direct ($29.79) as from other banks ($30).

It doesn’t take a PhD in mathematics to work out that ING Direct’s overdraft cost will actually overtake that from other banks if you go beyond these numbers. 

Curious to find out if the calculator actually admits to this, I tried out higher amounts and longer periods. Interestingly, it refuses to accept overdraft figures exceeding $5,000 or tenors crossing 30 days.

Hopefully, so does the Electric Orange checking account.

Otherwise, customers switching their accounts to ING Direct USA would suddenly find themselves incurring higher costs with ING Direct despite its policy of zero overdraft fees.

The marketable offerings are created, the email flyers, telescripts and other marketing collateral are ready. It’s now time for business development executives to reach out to the target market via email blasts and  telephone calls in order to create awareness and generate leads. This is when they need a Target Mailing List comprising of companies and contacts belonging to the addressable market of each of their outbound marketing campaigns.  

Maintained in Excel spreadsheets or CRM systems (e.g. SalesForce.com, ACT, etc.), a Target Mailing List would typically contain 2-3 contacts per target company and the following minimum contact info per contact: full name, title / designation, email, direct telephone number, and country.

Additional information like city, postal address, contact’s birthday, and so on, are useful at later stages of the sales cycle that involve face-to-face meetings and rapport-building, but are not mandatory at the time of kicking-off email- and telephone-based outbound marketing campaigns.

To accelerate the development of a Target Mailing List, marketers might choose to take up subscriptions to Jigsaw, onesource, Hoovers and other broadbased contact list providers or buy them outright from Glenbrook, GTM360, and other special-purpose mailing list providers.

The two key considerations in selecting a contact list provider are (1) Coverage, and (2) Quality.

Coverage refers to the breadth of contacts available for a given campaign. For example, if you’re planning to execute a campaign for SAP Add-on Solutions, you’d want a contact list provider who can provide contact information of decision-makers at a large number of SAP customers – not just any company.

Quality refers to the reliability of the given contact information e.g. Is the contact still working in the same company? Is his/her telephone number correct?

Before selecting a contact list provider, we urge marketers to define a sample target audience of around 100 companies per campaign and evaluate each provider on the coverage and quality of the contact information available with each of them. We say this because we’ve experienced significant differences in coverage and quality from one contact list provider to another across campaign dimensions like geography (e.g. USA, UK, Middle East), industry vertical (e.g. BFSI, Retail, Telecom), title (CEO, COO, CxO, SVP, Director), and domain (e.g. SAP, Payments).

Coverage percentage (i.e. the percentage of contacts from our sample list that we could source from a given contact list provider) varies from 8% to 30% across different contact list providers. In other words, you’d be able to get only one contact for every 12 you need with the “worst” contact list provider; and, even with the “best” provider, you’d have to look elsewhere for two out of every three contacts you need. Quality percentage (i.e. the percentage of accurate contact information) ranges between 40% and 70% from one contact list provider to another.

With coverage and quality differing so significantly across contact list providers, we recommend marketers to sign up for PAYG (pay as you go) plans with providers who don’t insist on upfront membership fee, and charge you only for contacts that you wish to buy. If you can’t find any PAYG plans, you can still protect your investments by seeking a moneyback guarantee – like the one we offer on our SAP Customer & Partner Mailing Lists - if the purchased contact information turns out to be inaccurate.

I’m especially happy with the new Rupee symbol because it is designed by an alma mater, D Udaya Kumar, from IIT Bombay. Hearty congratulations to him!

By rotating the symbol clockwise by around 30 degrees, you might be able to spot a certain resemblance to the hammer-and-sickle.

I wonder whether this is a relic from our past history with Russia.

By “our past history”, I’m not just referring to India’s traditional relationship with the former USSR and steadfast adherence to socialist principles before the big reforms of 1991.

I’m also talking about the past history of IIT Bombay.

During their formative years in the late ’50s and early ’60s, each IIT had some sort of affiliation with an overseas country e.g. IIT Kanpur with the USA, IIT Madras with the UK, and IIT Bombay with Russia.

There were traces of this affiliation with Russia even as late as 1985, which is the year I graduated from IIT Bombay. For example, there were many professors who’d earned their doctorates in Russia; the institute library had several Russian books, although we never actually found anyone actually reading or borrowing them!

And, above all, we had the notorious EC1030 mainframe computer that was made by a company called Robotron from East Germany, which, as readers would be aware, was a part of the former USSR until the Berlin Wall came down in 1989. Touted as an IBM360 clone, this mainframe used to make us students go back-and-forth several times a week between hostel and computer center with its unerring frequency of breaking down. One week, the central processing unit would fail. By the time it was fixed, it would be turn of the memory unit to conk out. Then, the Hollerith Card Reader would refuse to read, well, the Hollerith cards in which our programs were punched on a heavy-duty typewriter-like equipment.  Since the user and operations manuals were all in Russian, the aforesaid professors who’d studied in Russia and had a working knowledge of the language had to be called in to translate them so that repairs could be undertaken.

While it’s possible to look back at all this with nostalgia now, let me assure you that EC1030 used to be one of our biggest pain areas during those days.

Let me take this opportunity to wish Dr. D Udaya Kumar a successful career at IIT Guwahati.

Long unable to understand why banks are not anywhere as successful in the remittance business as money transfer operators (MTOs) like Western Union and MoneyGram, I found some clues in this recent article written by Charlie Corbett of Western Union.

According to Corbett, many banks still view remitters in developed countries as impoverished, nearly illiterate, and hence not worthy of selling checking accounts, credit cards, mortgages and other banking products. According to one former banker and remittance specialist quoted in this article, “not all banks will want the footflow into their branches on the sending side. They don’t want these guys coming into their branches and cluttering up their nice clean offices”.  Apparently, banks fear that putting remittance service stickers on their windows would dilute their brands.

Banks had better start worrying about dilution of their brands caused by their own staff before looking down on the stereotype remitter.

Banks offer remittance services based on the account-to-account model, which demands more information like account number, SWIFT BIC code, and so on. Agreed that such information is beyond the grasp of a typical remitter who finds the cash-to-cash remittance model offered by traditional money transfer operators like Western Union and MoneyGram much simpler. However, in my personal experience, banks’ own staff are clueless about the greater information needs of the account-to-account model.  

A couple of years ago, I was trying to remit some money from London to a leading bank in India. When I called the beneficiary bank’s call center to get their BIC code, I was told that it was ABCDINBBNNN. Since I knew a thing or two about BIC codes, I was able to instantly point out to them that the last three places had to be numerals and couldn’t be “NNN”. Only then did they check and got back with 005 as the right value. I shudder to think about the fate of my payment had I naively used the BIC code the bank had given to me in the first instance.

In another instance, another leading bank in India told me to use a BIC code that I noticed was only 8-digit long. I was looking for the 11-digit version because (a) the sending bank in the UK asked for a 11-digit beneficiary BIC code, and (b) because I knew that the 8-digit BIC code only pertained to the bank whereas my money had to go to a particular account in a particular branch of the bank, which could only be identified by a 11-digit BIC code.  When I insisted upon the 11-digit version, the bank staff had no clue. In the absence of this critical piece of information, I decided to abandon the transaction instead of risking my money floating around somewhere in the bank’s systems without a destination account available to be credited.

Banks surely know that their account-to-account remittance model calls for greater knowledge and sophistication not just from remitters but also from themselves. What they need to do is to train their staff so that they’re able to better respond to its greater information needs. Only then can they hope to make any dent on the towering market shares of money transfer operators using the far simpler cash-to-cash model.