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Jeff Howe, a contributor to Wired, coined the term "crowdsourcing" in June 2006. His book, Crowdsourcing: Why the Power of the Crowd is Driving the Future of Business, looks at the evolution of crowdsourcing and the industries and companies that benefit from the open call for ideas. He finds crowds have driven innovation at many companies, and could be particularly relevant for product development and Web 2.0 strategies.
December 1
What do customers really want from their bank? Commonwealth Bank of Australia is giving its customers a say via
The concept of gleaning customers' ideas through crowdsourcing has been used by shoe companies and online retailers for years, and is just now grabbing the attention of banks.
"Crowdsourcing as a formal program is practically unheard of in U.S. banks," says Nicole Sturgill, a research director at TowerGroup. "The capabilities of crowdsourcing are much greater than they've been used thus far."
CBA's IdeaBank, which went live earlier this month, uses licensed Salesforce.com software to accumulate ideas and analyze sentiment; and give those ideas weight based on positive feedback, allowing the best ideas to "bubble to the top." Salesforce.com recently purchased a crowdsourcing firm called Jigsaw, a company that uses crowdsourcing to build and maintain an online database of business contacts.
"It's a forum for people to express their banking needs and wants, so the bank can understand ways it can improve and simplify the lives of its customers," says Louisa Galligani, a CBA spokeswomen. "It's not solely about posting ideas with the hope that the bank will purchase and implement them, it's about inspiring people to participate in a discussion that could spark something."
Similar conceptually to Dell's
Ideas for the new CBA portal can be submitted by any user who registers by submitting his or her email address, creating a password and a display name. Once registered, users post ideas, vote on other people's ideas and have a dialogue in a forum-style area. Non-registered users can view the site and ideas, but cannot post or vote.
Ideas that are the most popular will make it into the Popular Ideas section, based on an algorithm that factors in the number of points (which are like votes or Facebook "likes") and comments and how recently a post has been made. Popular Ideas will be considered by executives at the bank who will make recommendations on whether to put an idea into action, and the best strategy to do so. The bank did not disclose details on how the IdeaBank will be integrated into other social networks such as Facebook and Twitter.
If CBA does decide to implement an idea, then the source of that idea, and anyone who contributed positively to its development along the way, receives a financial reward. In the case of a small suggestion that starts a thread that becomes something much larger due to contributions from other people, the bank's executives decide how to compensate the people involved. While the bank says there is a mechanism to safeguard intellectual property, with disqualifications for copying, it did not provide further details.
"It sounds like an online forum for ideas. If so, it's a little like a digital suggestion box, with a dash of social media, a sprinkle of prize money and maybe a hint of app store thinking, if they turn developers loose to build out the suggestions," says Mark Schwanhausser, a senior research analyst at Javelin, who likened the strategy to a dot-com-era practice that included an aggregation of requests, comments and actions to see how people vote with their feet by watching what targeted customers say and do in online forums.
Sturgill says examples of crowdsourcing at banks include PNC's obtaining feedback for its virtual wallet. "There are a number of banks using social networking sites like Facebook and Twitter in an informal version of crowdsourcing. In those cases, banks are getting feedback but they aren't directly seeking it or using a software program to track it."
The researcher also says HSBC web banking subsidiary First Direct polls its customers on a number of issues such as card design, then uses that feedback to make product and strategy decisions. "The difference between First Direct and PNC is that PNC keeps its crowdsoucing behind the virtual wallet firewall while First Direct makes it public."
Sturgill says most banks are afraid to do what First Direct has done, but there are two reasons to embrace the model. "The client feedback is invaluable, especially when combined with standard survey methods, and goodwill is generated by being so open," she says.
Other examples include DBS Bank in Singapore, which is crowdsourcing branch design through a "I Designed a Bank" contest, which the bank hopes will result in branches that are more appealing to its customers.
