Archive for August, 2010

Third-Party Versus Bank PFMs

Friday, August 27th, 2010

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 tradeoff 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.

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.

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IT Services Companies Can Achieve Laserlike Focus With Marketable Items

Thursday, August 26th, 2010

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.

Examples of Marketable Items

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.

PIPL Digs Deeper And Delivers Richer Contact Information

Sunday, August 22nd, 2010

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.

pipl01_200Enter 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.

pipl03_450

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.

New Database Helps You Select The Right Credit Card. Sorta.

Sunday, August 15th, 2010

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.

fed01_250The 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.

pricefightCredit card comparison websites like CreditCards.comBankrate.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.

6digitssuffice_200As 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.

Indian Organized Retail Risks Losing Round 2 If It Ignores Shopping Experience

Monday, August 9th, 2010

pic01_300wIn 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.

Have Per Second Tariff Plans Started Showing Their True Colors?

Saturday, August 7th, 2010

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.