What Products and Services Are You Retiring This Year?
Google recently announced a second round of “spring cleaning”, shutting down a number of older features and services. As mentioned in their blog post on the subject, they have now closed 70 such products in the last two years. One of the more noteworthy items on the closure list is Google Reader, the once popular web feed aggregator which purportedly allows users to stay up to date with their favorite websites and blogs all in one place. While Google recognizes that there is a loyal group of Reader users, the devotion is apparently not enough to overcome the declining usage and they will officially retire the product on July 1, 2013.
As expected, the reaction from the aforementioned loyal user base has been loud and negative, with more than 40,000 users signing a petition urging Google to reconsider. Whether Google has a change of heart remains to be seen, but for now they seem content with focusing on fewer products while phasing out some of their older technology. To classify Google Reader as “old” is of course relative considering the application was first introduced in 2005, but in today’s fast-moving tech world it is probably more appropriate to measure things in dog years (just think, web dinosaur YouTube first launched in 2005 as well¹).
Google’s spring cleaning begs the question of why most financial institutions can’t bear to part with old products and technology in a similar manner. Ok, maybe we don’t have 70 products or services to sunset, but surely there are some things that we can live without, right? Can you retire services such as VRU (voice response unit)? How about paper statements? What about underperforming branches? Are you processing checks and balancing teller drawers the same way as you did 20 years ago?
The answers to each of these questions are of course unique for every financial institution, and largely dependent on the needs of the customers you serve in addition to the goals of the organization. In other words, there’s no universally correct answer. But here’s the problem as I see it: Financial institutions are product/service hoarders, and want to be all things to all people. In tandem, these two things are economically unsustainable.
When looking to retire a service, the easy answer is “we can’t get rid of it because we still have some customers that use and value it.” If that is your base criteria, you will always continue to be a hoarder and your bank will eventually end up on some A&E show where they rummage through your warehouse full of old passbook savings accounts. Yes, you are going to tick off some customers. Some might even be so upset that they take their business across the street. Sun-setting services does not mean ignoring these risks, but rather looking at ways to minimize the disruption. In some cases, this may be as simple as explaining the benefits of other channels that are available. For example, could a virtual mobile assistant similar to the one recently rolled out by USAA be a viable alternative for traditional AVRU disciples?
Less likely, nothing you say or do will help win back that customer (but at least they’re not likely to launch an online petition to save paper statements). Are you prepared to let these customers walk if it’s for the greater good of the organization? Will closing the service allow you to focus resources (hard dollars as well as people) in areas that may be more beneficial to a wider net of customers?
If you are not prepared to shut down a service completely, can you become more aggressive in influencing customers to gravitate away from less efficient services? In simpler terms, pay a fee. We know that consumers are adverse to paying for things they are accustomed to getting for free (being humans and all), and the industry has done a great job of teaching consumers to expect most new technology for free as well (see mobile remote deposit capture). In fact, when we asked consumers about mobile photo bill-pay in Raddon’s most recent National Consumer Research, 28% expressed some interest in using the technology that enables them to just snap a picture of a bill to initiate the bill pay process, but only 1.1% said the added convenience was worth paying a fee for.
So rather than charging for newer channels, would it be more beneficial to charge for the older service instead? If customers truly find value in the service, they may be willing to pay a nominal fee to utilize it. For others, it might serve as the gentle nudge needed to transition to the current decade. Going back to the Google example, The Financial Brand recently posted an article lamenting apparent changes in Google Alerts, causing the number of hits to diminish significantly over the last several years. As noted in the footnotes and comments following the article, the author is more than willing to pay for the service if that is necessary to keep it functioning properly. Would loyal users of some of your older banking channels be willing to pay-to-play to keep it afloat? In this era of slim margins, rising costs, and non-interest income threats, the question of value-based pricing will be even more pertinent in the coming years.
At the other end of the spectrum, how should you roll out new technology that may appeal to a small segment of the population at first? The answer may be more complex than just looking at usage statistics, and often becomes a perception issue. Will you be perceived as not being tech savvy and risk not winning new business if you lack tools being marketed by other organizations?
As an aside, Google’s willingness to bid adieu to “old” features is also part of what makes them dangerous as a potential competitor in the payments space. They are very willing to ditch old stuff and take a risk with new endeavors if they feel it has legs. Some will hit and some will miss, but they always seem to be looking ahead instead of backwards. Can you say the same?
Note¹: Unlike Google Reader, YouTube will be sticking around for a while, but that didn’t stop Google from having a little fun about shutting it down as part of their traditional April Fool’s Day prank. If you haven’t seen it, their video announcing the closure is well worth 3 minutes of your time.
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