Four Lessons Digital Banking Vendors Can Learn From Rick Wilson & Politics
Rick Wilson’s book Running Against the Devil is not on any business or fintech or future of banking reading lists, but I think it’s one of the best books about disruption I’ve ever
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As a long time Gartner analyst, I covered the breadth of banking technologies from check processing to digital banking platforms, legacy back office to API-driven delivery. After 19 years, I left Gartner last year, and it turns out, I still have things to say. If you follow me on twitter, you know my interests are wide-ranging -- from fintech to digital innovation, leadership, to women in tech to AgTech. I plan to use this newsletter to test out new ideas, perspectives about these topics and many others. Some tech, some not. You can expect a different tone than the research I’ve published in the past.
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Four Lessons Digital Banking Vendors Can Learn From Rick Wilson & Politics
I recently read Rick Wilson’s book Running Against the Devil. It’s not on any business or fintech or future of banking reading lists, but I think it’s one of the best books about disruption I’ve ever read.
Once I stepped back from the book, I realized that Wilson provides a prescription for banks and banking software vendors working in an environment they find unfamiliar, illogical, and chaotic.
The crux of the book is Wilson’s argument that to adapt to the current political environment in the US, Democrats must change how they’ve always approached every aspect of the Presidential election cycle. I think digital banking vendors seeking differentiation similarly must take a radical new approach. Digital banking vendors – and their bank customers – can learn 4 lessons from Rick Wilson:
1. Discover hidden tribes
2. Focus on Who Votes
3. Think Digital Everything, Not Digital First
4. Stop Flying by Seat of Your Pants
Let’s get started!
1. Discover Hidden Tribes
Wilson refers to The Hidden Tribes of America project (1) to reveal the mulitple segmentations (or “hidden tribes”) of voters that challenge traditional assumptions. The specific hidden tribes that Wilson discusses about are not important to banking but you can read more about them (2).
What is important is that these hidden tribes are not discovered by campaign analysts re-jiggering old voter segmentations. Why are these hidden tribes so critical to success in today’s environment? Wilson points out that voter segmentation that once worked in the past, in a traditional political environment will fail in the disrupted political environment.
Discovery of hidden tribes is driven and revealed by data. This data identifies tribe segmentations based on data that identifies what motivates specific types of voters beyond the traditional “Democrat,” “Republican” or “Independent” labels. It’s not enough to want new customers; digital banking solutions have to help bankers identify them.
This point hits at the heart of the challenges banks face in reaching new customers and expanding the products owned by existing customers: Continuing to hold assumptions about customers based on traditional (that is, pre-digital) segmentation: consumers, Millennials, Baby Boomers, Gen X, High Net Worth, Young Marrieds, Small Businesses – is dangerous. Holding on to these assumptions leaves banks – and the digital banking solutions driving them - vulnerable to disintermediation by challengers who do understand data and how to use it to identify hidden customer segments.
Wilson’s message about hidden tribes translates easily to the digital banking world: Change your thinking about who your customers are — or lose customers, revenue, differentiation, and competitive advantage. The ability to use data to dig into “hidden” customer niches will enable banks to identify their specific customers’ needs. Without this ability, your digital banking software will fail to differentiate itself.
Here are some of the questions that hidden tribes force digital banking vendors to ask themselves:
Are you willing to do the work to uncover hidden tribes? Hidden tribes is not marketing spin; it’s a new way of understanding your banks’ customers.
Do you have the data to uncover hidden segments? If you don’t have data, what partnerships do you need to get it? Can you work with providers outside your traditional sources?
Do you have the agility and processes in place to create functionality in your digital banking solution that can support needs of hidden segments?
What capabilities of your digital banking solution enable your bank customers to create new value for hidden segments?
Differentiating your solutions requires your organization to have the ability to find and use data that identifies hidden customer tribes and to give a similar capability to your digital banking solution.
Subscribe & stay tuned. I’m going to dig into the next 3 lessons in the next newsletter.
My intent is to publish weekly – some ideas and thoughts may not be fully fleshed out. I may reject earlier ideas in future newsletters. I may expand one idea into a longer piece here or elsewhere. For now, this newsletter is free.
Who is this newsletter for? This newsletter is for anyone who works for a banking software vendor that wants to differentiate their banking software in an increasingly competitive market. It’s also for people who work at vendors that want to move vertically into the banking market.
Want to talk? Get in touch stessa@pivotassets.co I may expand one idea into a longer piece here or elsewhere.
Stessa Cohen
Notes:
1 - Rick Wilson, Running Against the Devil, pp. 100-101, 2020.
2 - The Hidden Tribes of America is a project More in Common. The goal of this project is to understand the the forces of political polarization and tribalism in the United States.
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