The Occupy movement is about more than bank bailouts and executive bonuses, which bank technologists have no power to address. Yet technologists at financial institutions large and small can - and must - view the Occupy movement as a broader invitation to empower people with a greater sense of value and control over their personal financial affairs.
A somewhat humorous recent case demonstrates that the issues of underempowered consumers are more profound than both Occupiers and industry technologists understand: after receiving a $10,000 transfer from Occupy Wall Street, Occupy Oakland opened an account at (wait for it ... ) the second-largest U.S. bank, Wells Fargo. This may appear to represent naÃ¯vetÃ© or even hypocrisy on the part of Occupy Oakland, yet with Javelin research data proving that consumers are much more likely to fail in their attempts to open online accounts at small financial institutions than the likes of Wells Fargo or Citibank, we must consider the possibility that protesters may have felt they had no other choice.
While conducting interviews on-site at Occupy Boston, I had a surprising exchange with two siblings who typify what I call the Occupier's Dilemma. From inside their tent the brother first responded to my questions with animated determination to move his money to a credit union, while his sister firmly stated her commitment to stay at PNC because of specific technologies that provide her with the control and peace of mind she values. The Occupier's Dilemma is that small financial institutions have the love and large banks have the technology, yet neither provide the level of empowerment and control that Javelin expects to see in the future.
Occupy protesters fit the profile of consumers who generally adopt the forms of electronic self-service that are in short supply at small financial institutions, underscoring the dilemma that may be bank technologists' call to action. Occupiers are predominantly young and many are temporarily un- or underemployed, and like their counterparts behind the Arab Spring movements they also tend to be frequent users of social media and other advanced technology.
Javelin Benchmarking research of over 5,000 consumers illustrates how various factors influence the choice of a new provider in ways that are profoundly different at institutions that we categorized as national, community bank or credit union. Customer service was cited as a significant decision factor by 54% of new community banking customers, versus 44% by those joining credit unions and 39% by those who become a customer of a large national bank. In contrast, online services were cited as a major factor of new customers at 34% at nationals, in sharp contrast to just 20% of those opening a new account at a community bank. The same research shows that large banks are more likely to profit from punitive fees (such as those from overdrafts), suggesting that the myriad new technologies are not fully enabling people to move from a revenue-generation model that is more proactive and less punitive.
Steve Jobs became revered by the masses (while joining the wealthy 1%) because he used technology to deliver superior value, first in desktop computing and second through lucrative transaction fees as he revolutionized the electronic music industry. People cheerily line up to pay a premium for Apple products, which are priced with the greatest of simplicity and transparency. And while Occupiers average much lower income levels (and some have none at all at this point), a September Javelin survey of 3,180 consumers found that underbanked consumers use smartphones a rate that is 3% higher than the overall U.S. population and use their mobile device to pay bills at a higher rate.
Bank technologists have an opportunity to bridge the gap between today's jumble of electronic self-services and costly traditional delivery, by enabling individuals and small-business owners to take more proactive and coordinated control of their financial and payments assets. At a time when Javelin data shows plummeting levels of consumer mistrust of banks, technologists can help their organizations succeed by improving the account holder's ability to prosper. We've succeeded in providing many exciting new technologies, yet they haven't yet put the individual fully in control of their personal or business affairs. We need to empower account holders with a set of customizable, unified and simple notifications and controls. A customer-driven architecture could strengthen the reputation of financial institutions, by relying on new capabilities that primarily drive profit that is shared between financial institutions and their account holders.