Massachusetts Banking Association

Andrea J. Simon PhD

March 1, 2012

Challenge for today

Reviewing research:

If you are selling insurance and investments,

only x% of your customers are participating.

How can you change that?

If you aren’t selling insurance or investments,

should you rethink your decisions?

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For Both Of You

For your customers, how can you find

innovative ways to provide these services so

you make it:

Easier and simpler for customers to buy

and use what they need

Less complicated and more attractive for

nonusers to get the services they need

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The Times They Are A 'Changing

Financial Services are changing, or ?

Should you think about changing

your culture

Customers are changing, and fast

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Is It A Time To Redefine Success?

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Why Crisis Drives Change

Change is literally

pain. Brain fights

change.

Could a Blue Ocean Strategy Help?

Find a new way to “see, feel, and

think” about what you are doing

Find a Blue Ocean Strategy

Find customers that want to use you

for Insurance, Investments and

Other services

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In a Blue Ocean…

Create a New Market Space

Find Non-Users

Create demand for your products

See and Feel things in ways not there before

Make it simpler, easier and less complex

HOW DO I DO THAT?

Interesting but,

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Classical Music in a Blue Ocean?

Andre Rieu

This is probably what you remember?

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What Did He Do? New Market Space

Classical Music

Traditional Setting

Dress in classic form

Conductor’s back

Disengaged

Focused on adults

Funeral

Pop Music

Untraditional setting

Colors, fashion

Conductor’s Personality

Face First

Totally engaged

Young and Old

Party

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Results? “A Maestro for the Masses”

WSJ: Friday, June 11, 2010

Dutch conductor and violinist André Rieu is the king of 'crossover'

classical music. Can his balloon-filled spectacles make it in the U.S.?

At concerts like this one at the Wiener Stadthalle, Mr. Rieu grossed about

$96 million on tour last year. That haul landed him at No. 6 among the

world's top touring acts, according to Billboard's 2009 tally—ranked just

below U2, Madonna and Bruce Springsteen, and above Britney Spears,

Coldplay and Metallica.

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A BLUE OCEAN STRATEGY

What did he create?

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In Times of Change You Need…

A Real Strategy

A well-defined, integrated,

cohesive approach

to a challenge and an

opportunity

A clear, simple story

What’s your

hook?

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All Strategies Ask…

Which customers or

markets will we target?

What distinguishes us?

What value proposition?

Why key processes give

us competitive advantage?

What are the human,

technological or

organizational enablers of

the strategy?

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Classic Strategic Thinking

Takes market structure

as a given.

Drives you to carve out a

position against the

competition

Trying to capture

segments among the

same set of users.

Reel in the

competition

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So, How Do You Win?

Grabbing a

bigger share of

the “red-ocean”

market is a zero-

sum game—

One wins, the

other loses.

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But in a Blue Ocean Strategy

Create a New Market Space

by

Creating Demand

Among Non-users

SHOULD YOU FIND A BLUE OCEAN STRATEGY?

What might this mean for you?

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Some Blue Ocean Strategies

Ford versus the Horse

Went after people

who drove horses

Completely Changed

our Mode of

Transportation

New culture for Ford

Yellow Tail®

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Went after non-wine drinkers

Only 15% of Americans drank wine-

Red Ocean

85% drank other things: Blue Ocean

Strategy: Turn non-drinkers into

frequent enjoyers.

Change the Culture: Retailers and

non-wine drinkers

Results: »Dominating the overseas

export market, [yellow tail]® is the

fastest growing imported wine in

US market history. »

Southwest

In Bankruptcy

Hubs

Business

Travelers

Union

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People who Drove between

Shorter Distances

Completely different culture

2010 Financial Statistics

• Net income: $459 million

• Total passengers carried: 88 million

• Total operating revenue: $12.1

billion

ING DIRECT

June 2011: Capital One Buys ING Direct, and

Customers Start to Freak Out (still pending)

Remember that in 2007 ING Direct paid 4.5% on a savings

account, while the average account gave 0.46%, according

to Bankrate.com

Then there was the fast-food aesthetic: simple,

inexpensive service.

ING Direct offered exactly one type of savings account and

one type of checking account. There were no fees and no

minimum balances

Blog post: Customer, “I’m going to stay with them until they

make changes, then bail for a local credit union”

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What about BankSimple?

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Simple and Easy

Built around a mobile app!

Why BankSimple?

Why BankSimple?

“Banks are lazy. They charge fees when no

fees are necessary. They make life hard

when it doesn't need to be. They don't

provide up-to-the-minute information to

customers about their own money. Banks

have become adversaries rather than

advocates for their customers.”

“Simple is not a bank. We replace your bank

and provide the clarity and sophistication

that you need to manage your finances.”

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Going Totally Mobile

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Fast Company: October 27, 2011

First Look: BankSimple’s iPhone App Aims To Reimagine

Your Money

Pattern Here: Still are the Same but…

CHALLENGE TARGETED NONUSERS ALTERNATIVES

ANDRE RIEU

NON-CONCERT

GOERS/YOUNGER

PEOPLE

ROCK, POP, JAZZ

EVERYTHING BUT

CLASSICAL MUSIC

FORD

NON-CAR DRIVERS HORSES

YELLOW TAIL

NON-WINE DRINKERS BEER/HARD LIQUOR

SOUTHWEST

NON-FLIERS DROVE DISTANCES

ING DIRECT/ BANKSIMPLE

SAVERS/MOBILE LOTS OF OPTIONS

WHAT ABOUT YOU? WHO ARE YOUR

NONUSERS

WHAT ARE THEIR

ALTERNATIVES?

IS THIS FOR ME? So you are a Bank

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Important trends for you

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65% of the children being raised by single

parents—What are you doing for them?

Women are going to be >50% dentists;

45% doctors—How are you targeting them?

All those savers of 401Ks are going to start to

live off them—How can you help them?

Young people think of careers in 4 year cycles—

What might you do for them?

93% of Valentine’s Day Purchases were being

done online—What could that mean for mobile

banking?

Let’s think about these trends

Who is using your bank today? Who could?

Who is buying investments and/or insurance

elsewhere, or not at all? What are those unmet

needs?

What kind of culture will make them trust you? How do

you tailor this for nonusers?

Create the right environment for them? Who are you

built for? Women or for men? Hi Touch or Hi Tec?

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SHIFT YOUR FOCUS Where do you find a Blue Ocean Opportunity?

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A Blue Ocean Focus

Focus on:

Adding Value + Innovation

Making the Competition Irrelevant

The Nonuser

Aligning your Organization

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Please, don’t ask them what they need

Henry Ford’s quote:

“If I had asked people

how I could improve

their transportation

they would have told

me to make their

horses go faster.”

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Can you find a Blue Ocean?

It could open up an entirely new

opportunity for you!

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Simon Associates Management Consultants

1905 Hunter Brook Road

Yorktown Heights, NY 10598

www.simonassociates.net

asimon@simonassociates.net

Skype andrea.j.simon

@simonandi

Phone 914-245-1641

Cell 914-261-1631