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The death of the media as we know it. Can banks be saved by diversifying into media operations and monetizing their user data by providing the most relevant advertising?
6 Aug2009
I woke up one morning last week with an intriguing idea…
Here is a PREAMBLE FOR THE IDEA…
Banks are one of the influencers on overall economical position of each country and they are in a deep… we all know what.
Accordingly to the FE Report:
“Private commercial banks were the main source of revenue earning for the government from among the largest ten income taxpayers in the just concluded fiscal. The Large Taxpayers’ Unit (LTU) of the income tax wing has collected nearly Tk 49 billion as taxes last fiscal. Banks alone contributed 52 per cent of total income tax collections — nearly Tk 25 billion — from large taxpayers, out of 281 companies in the LTU. All of the country’s 48 banks — four state-owned commercial banks, 30 local private commercial banks and 12 foreign banks — are enlisted with LTU who paid taxes last fiscal at the highest rate of corporate income taxes — 45 per cent. Apart from taxes on profits out of their own operations, banks also deposited Tk 13.26 billion as advance income taxes (AIT) last fiscal, collecting the same from their depositors at source at the time of making interest payments on deposits of their clients. The amount was Tk 2.33 billion higher than that of the previous fiscal.”
So how on the earth can we revitalize our economy if the industry is so week? And reflecting on the nearest future of the banking industry, is there anything banking system can do in a short period of time to turn itself around and gain a better financial position? What kind of miracle should happen?
An interesting answer came to mind – yes, the turnaround solution may be discovered with complete change of a definition of the bank and its business model.
May be I am the first one who came with this sort of utopia, or may be there were other crazy people before me who thought of it, but here is my stream of consciousness and complete execution plan.
THE IDEA:
What if major banks add media divisions to its operations and turn into major media companies with fully automated performance marketing model – something traditional media do not provide yet? Wait, don’t hurry pushing “crazy” button just yet. Bare with me here….
Here are Q&A that I put together to defend this vision:
Q. What assets banks have to add 50 billions in revenue by becoming media companies?
A. Banks all together have billions of online and offline (ATM) banking users. Very precise data about user demographics is collected by each bank, including household income, main purchasing decisions within timeframe, current account balance, employment history etc. Can even the largest media company ever brag about ability to achieve the same level of personalization?
Q. What advantages banks might have comparing to other media companies?
A. In addition to the one specified above?
Look, don’t you get annoyed when you see an ad that offers you to buy a Lamborghini when all you can afford is a used Ford Focus? Or if you have 2 Lamborghinis already parked at your little garage? Wouldn’t you rather want to be addressed as “John, who just purchased a new house (or lost one on foreclosure) and therefore would you like to look at such and such product that actually can add to your lifestyle and can mach your account balance”? Aren’t you fed up of intrusive irrelevant ads that only irritate you when they offer something you can’t even afford?
Banks can bank on their data, becoming Data Congregation And Relevant Offer Allocation Media Companies vs traditional semi-targeted advertising driven companies.
And I am not suggesting just another media company here, I am suggesting an added value division that not just pushes ads in front of your face and charges for impressions (CPM is dead, remember?), but a bank’s wing that acts as advertisers’ partner and shares the stake in each deal that it helps clients to close with bank’s assistance.
Basically for now banks provide to businesses assistance with financing and financial transactions. What we are adding here is a “virtual sales agent” that also helps to pay those loans back by driving revenue to banks’ clients.
Here is a scenario that describes deficiencies of the current system:
John Smith is a founder of a startup software development house that designs the inventory management software for retail industry. John came to his bank and asked for a loan. The loan was declined – no assets to support the financing.
Result: John Smith is unhappy – the bank makes no money.
Jane Gray is an owner of a furniture retail store. She needed expansion funds, could not get enough funding in a bank.
Result: The lady is unhappy – the bank makes no money.
Jim Tale is a CEO of a furniture manufacturing company. He got a loan. Yey!
Result: He is happy – the bank is miserable. Jim is a lousy marketer and can’t sell his product.
And here is the scenario as it will be tomorrow:
Jim gets the loan, he manufactures his product.
The media division of the bank helps to market it utilizing our performance marketing model.
Next Time Jane pays he bills she sees Jim’s ad and buys his furniture items. The bank helps her to market it to local buyers who have just bought a house.
Then Jane sees John’s ad and buys his software that helps her to reduce operational expenses. Now her financials are in a good shape, she can go and get an expansion loan from the bank, opens new stores and successfully pays off the loan interest later on, as a result of more successful sales that the bank drives to her.
The beautiful thing – none of them made any initial marketing investment. It was purely profit sharing deal with the bank. The entrepreneurs made few millions here and there and pays few hundreds of thousands of dollars to the bank in sales commission.
Yes, I hear you are saying “But it is not what banks do!”. You are right, it’s not. But doesn’t it look to you as win-win model for the bank and its clients? See, at some point horses didn’t have wheals also, nowadays you don’t commute on a horse to your office do you? It’s all about evolution, baby! 
It’s almost entertaining to things that distressed banks can be bought by major media companies simple to turn banks in better media assets. Hm… might happen too. I am not fond of this idea thou… due to political reasons.
Q. Banks are conservative entities. Can the idea die if not executed in 2009 – 2010?
A. I believe it can not happen. I believe that this shift is inevitable. If decision will be withheld in next few years, it will be conceived again in one way or another within the next decade or two, when the industry will be seeking ways to outgrow the old models and expand beyond. It’s an emergence that seem to me unavoidable. I am not always quick on the execution of my ideas due to restrictions in resources, but I am rarely wrong with my predictions; I have to “modestly” confess.
Q. OK, but wouldn’t it take forever to execute upon the vision?
A. No, wanna bet? I accept your bet and guarantee that with green light form a bank we can execute it within few months – design the process, integrate IT solutions, provide inventory and ad inventory management tools. (Yes, bureaucracy of the banking organizations might be on the way, but I am talking about net time here).
Our Pay Per Deal advertising model can monetize any banks’ asserts in no time, marketing relevant offers from one bank client to millions of other clients the bank…while they are banking where they are banking. No, banks don’t have to become a social media and have clients interacting with each other, even thou yes, it could happen in the future.
For now what we offer is an extravagant vision, simple scalable solutions and unique assets monetization model for any bank to tap into unpaped and uncapped revenue potentials. They can successfully compete with some major media while partnering with other… If strategic acquisitions will be needed for beyond-organic growth of the media divisions, to assure rapid scalability, we will be happy to assist in structuring and pitching deals with any media players that might add value. At this very moment we are negotiating the opportunities with few major media companies that might be a value added partners in this deal. We ideate, creatively structure and execute. With insignificant investment banking industry can capitalize on our solutions and its assets.
I invite everybody who is interested to participate in this project of revolutionizing the banking industry in USA and Europe to contact me. Join us in any capacity to help and make this vision a reality. Help the economy, be a part of the revolution! It’s not about the banking trends and the future on the banking system anymore; it might just be about future of small businesses and, let’s face it, our future. The amount of taxes paid from this project can fully fund our health system and make it available, due to government funding, at no or minimum cost to every resident of United States.
The experiment has no other alternative but succeed. Weather it brings 1 billion dollar in additional revenue to a bank or 50 billion, that’s another question, but that would depend on the bank size, its assets and the program execution.
I would be happy to present to any bank executive that is open to out-of-the-box ideas, and share a 50 slides presentation on how this program can see the light.
If you are an executive of one of the banks listed below or any other international bank, if your hold stock in them, of if just have banking contacts… What are you waiting for? The opportunities are there to be explored. Get in touch.
We invite to the discussion:
Bank of America
JPMorgan Chase Bank
Wachovia Bank
Wells Fargo Bank
Citibank
Washington Mutual Bank
SunTrust Bank
U.S. Bank
Regions Bank
Branch Banking and Trust Company
National City Bank
HSBC Bank USA
World Savings Bank, FSB
Countrywide Bank
PNC Bank
Keybank
ING Bank, fsb
Merrill Lynch Bank USA
Sovereign Bank
Comerica Bank
Union Bank of California
Commerce Bank
North Fork Bank
Fifth Third Bank
LaSalle Bank National Association
E*TRADE Bank
Bank of the West
Citibank (South Dakota) N.A.
Manufacturers and Traders Trust Company
Harris National Association
The Bank of New York
Chase Bank USA
Marshall and Ilsley Bank
TD BankNorth
Fifth Third Bank
USAA Federal Savings Bank
Citizens Bank of Pennsylvania
The Huntington National Bank
Citizens Bank of Massachusetts
LaSalle Bank Midwest
Compass Bank
First Tennessee Bank
Charter One Bank
Capital One
Discover Bank
UBSBank
Morgan Stanley Bank
Colonial Bank, National Association
Banco Popular de Puerto Rico
TD Bank USA, National Association
and any other banking organization worldwide.
The clock starts ticket, gentlemen!
The web 3.0 is around the corner, so banking 3.0
Please share your thoughts by commenting. Forward this discussion to anyone for whom the future of the banking industry might matter and to those whose opinion can be relevant to the debate.
…
by Olga Kostrova, CEO of IdeaMama Group | IdeaMama Ad Network | IdeaMamaClub.com |
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7 Responses to The death of the media as we know it. Can banks be saved by diversifying into media operations and monetizing their user data by providing the most relevant advertising?
Stephen Morgan
August 7th, 2009 at 7:09 am
Sure, it’s a great idea. And one the banks have wanted to exploit since day one. The problem is we are forced to divulge this information to the banks, and do so only because that info is supposedly protected. The banks can pitch me their own loan products and insurance all they like, but the second they start pitching products beyond their purpose is the minute the Banks have too much power and individual privacy and government controls are threatened. It’s a nice ideal, but overlooks the exploitation fact and human greed. Granting this kind of access to the banks would be great for business only in that it opens the market to new banks that ensure privacy for your information.
ideamama
August 7th, 2009 at 7:25 am
Yes, Steve, privacy issue was my concern, and that’s why acquisition of distressed banks by major media companies would make me a bit uncomfortable, if that’s to happen. Nevertheless, the evolution of the media can not be interrupted and all media theses days strive for more relevant ad serving and therefore depth in data gathering. Let’s look at Facebooks and Twitters of 2010. They are already collecting quite a bit of data about your friends, their purchasing decisions, what you talk about while twitting etc. Twitter doesn’t even intend to monetize their traffic with ads yet, they want to become a data mining company and monetize on data itself. So, as I see it, weather we want it or not, our private data will become more and more transparent, and no models that based on withholding can stop the wheal spinning… It will spin beyond one’s control, just by different companies. So, the real issue is to design procedure for ethical handling of this data and making sure that it used to deliver value, not to abuse it. How? Well, that’s the question, isn’t it?
Dan Cadieux
August 7th, 2009 at 7:40 am
Olga, interesting idea. However, I agree with Stephen’s comments regarding privacy. In Europe and Canada privacy laws already exist that restrict Banks from doing what you propose (I suspect the same may be true in the US). So implementation would require changing Government laws – that will be far more challenging that shifting Bank executives perspectives. Part of the plan will have to be the time involved for Banks to lobby government, good luck with that!
ideamama
August 7th, 2009 at 8:05 am
Totally hear you. The governments currently are coming up with all sorts of unexecutable strategies regarding federal/provincial debts recovery. Lobbying in this circumstances might be an undertaking, but not the one with low probability of success. Will some banking organization have balls to give it a try in the nearest feature? I think so… If all parties see dollar number in everybody’s pocket increasing, it might just be a step everybody are willing to take.
Our new president aim for the change… it might just be one of the bricks… I see tremendous value for small businesses in this deal (no, it’s not banks that I am so concerned about). My main concern is a scalability for true performance marketing model due to benefits it offers for businesses that can not afford growth. Amount of small to mid size enterprises that go out of business is unbelievable. And who wins there besides nobody?
The questions are, if it’s executable, who are all parties that will benefit from it, how to make sure that with data transparency consumers don’t encounter any loses, and who will jump on a bandwagon and with what resources.
Mark Laudi
August 11th, 2009 at 8:14 am
Olga, congrats on another thought-provoking piece.
The question is: how can banks go about doing this? Privacy concerns aside, should banks BUY OVER existing traditional media companies, or create their own media companies?
What you’ve hit on – apologies if this is already patently obvious to everyone – is that by definition, the media are really just “mediums” through which a message travels from sender to receiver. Well, we no longer need such mediums because the internet puts senders and receivers in direct contact. The media are being disintermediated.
So, if the idea is to make banks BUY OVER traditional media companies, I would refer you to Warren Buffett’s comment: “How do you become a millionaire? – Start as a billionaire and buy an airline”. Banks are already doing it tough. Making them buy over traditional media organisations will be the last nail in their coffins.
However, banks becoming their own media organisations – I can totally see that happening. And not just banks, but virtually every type of company.
ideamama
August 11th, 2009 at 8:38 am
Yes, Mark, I agree with your point. From my point of view, acquisitions of media companies is not something that is needed for banks to build their own media empires. They might need though to acquire certain technologies, and know how (intellectual properties) to compete with each other by offering better processes, better solutions. That’s something they cannot develop internally due to absence of necessary media and technology expertise. Plus timing is always a critical factor in go-to-market strategy for any new concept and new product/ser5vice offering. The relationships with vendors in this case can be structured either as IP transfer, licensing plus consulting contracts, or micro-acquisitions.
Sam Kumar
August 14th, 2009 at 10:31 am
This is what I expected the account aggregation companies to do. (The most prominent examples are yodlee.com and mint.com). At present, banks use customer data only to push their own products rather than other people’s products, but a supermarket approach (anonymized for privacy) makes a lot of sense. But this requires the support of a visionary banking executive.