Talk about shooting yourself in the foot!
The Commonwealth Bank of Australia [ASX:CBA] has potentially just turned its free ATM withdrawals announcement into a marketing disaster.
That’s if the grumblings among my advertising industry contacts are anything to go by.
Over the week I’ve had not one, not two, but three separate cases of people griping about the same thing.
One was just an elderly lady I happened to overhear as I walked by…
I’ll get to this story shortly.
But first, does such ‘scuttlebutt’ matter? And what even is scuttlebutt?
Scuttlebutt refers to gossip and information from those in the know. These are the insights you can’t get from the numbers in the annual reports. It includes the personal observations you get by going out and ‘kicking the tyres’.
Use of such information was pioneered by an investor named Phil Fisher in the 1950s. Fisher was an inspiration to later investing legends such as Warren Buffet and Peter Lynch.
Lynch was convinced of the importance of tapping into his own and others’ personal experiences of the companies he invested in:
‘Every time you shop in a store, eat a hamburger or buy new sunglasses you’re getting valuable input. By browsing around, you can see what’s selling and what isn’t.’
Modern day scuttlebutt is a bit different in some ways. It’s often found online, in social media sentiment, in app ratings. But the principles are the same. And the old methods still work too.
Which brings me to the week’s CBA scuttlebutt…
If you are CBA shareholder, don’t panic. It’s unlikely this story will have any short-term effect on the share price.
But to me it’s a further sign that the big banks struggle to do innovation right. Mainly because they haven’t had to!
They’re not like some technology company that are only one innovative, two-man, garage start-up away from impending irrelevance.
That lack of technological competition has been a strength. But as possibilities change, it’s now become a weakness. A growing weakness, which fintech companies are keen to exploit…
I’ll come back to this point shortly. But first I’ll tell you the story of what’s gone wrong this time with CBA’s ATMs.
Commonwealth Bank needs a new ATM designer
On Saturday I was walking down the street with a friend in the advertising industry when we passed a queue for the CBA ATM.
An old lady seemed to be struggling to work it out.
As we passed she turned to the growing line and said ‘Sorry, I couldn’t see properly.’
My friend snorted ‘these new ATM’s are ridiculous!’
I asked him what he meant.
Apparently, they have converted ATMs to touch screens now. But with a black background, it’s very hard to see what you are doing if the sun is shining on them.
And even though it’s now touchscreen only, the old side button is still there — you just can’t use them to do anything.
A confusing and difficult to use customer interface. Strike one!
The next day my wife’s friend came around to our house so our toddlers could have a play together. I was in the study working on some ideas for the week, but popped my head out to say hello.
‘What are you working on Ryan?’ she asked me.
I told her I was thinking of writing something about the CBA ATMs and the deposit debacle from a few weeks ago.
Now this lady is in the advertising game as a graphic designer.
Out of the blue she said…
‘Oh, you should write about how terrible the graphics on the new ATMs are. It’s like something out of clip-art!’
Later that day I was at soccer and was thinking about this new CBA ATM vibe I was hearing. A mate at soccer was also a graphic designer, so I thought I’d ask him straight out.
‘Hey Ritchie, what do you think of the design of the new CBA ATMs?’
‘Haha funny you say that. We were all laughing about them the other day at work. It looks like they got the work experience guy to design the icons.’
Now I’m no UX professional.
But if this scuttlebutt is to be believed then the new ATM rollout is pretty underwhelming to a lot of people. And just at the time when customers from other banks can now freely use your ATMs for withdrawals. It’s not a good incentive for people to think of switching banks to the CBA!
The younger generation are used to attractive, easy-to-use design as part of the product. Think about the sleekness of Apple [NASDAQ:AAPL] products. My sister even keeps the boxes their products come in, so good is even the packaging design!
Innovation doesn’t come easy
On Monday I talked about the disruption of old media. The technology companies have plundered the former giants’ ‘rivers of gold’, and old media can’t do anything about it.
It’s the same story now with Australia’s big banks.
The Australian Competition and Consumer Commission says it is time for a serious look at the ‘four pillars’ policy, which has been accepted by Labor and Coalition governments since the early 1990s.
Decades of stifled competition might generate steady profits. But when the competition eventually comes, it leaves the effected organisations bereft of any ideas on what to do.
And Innovation doesn’t come from some committee you can just appoint.
Data and technology are transforming banks around the world.
In the UK digital banking start-ups are getting strong traction. Fintech companies like Ripple are transforming the banks’ back-end operations. Fee-free share trading start-ups like Robin Hood have millions of users signed up before they even launch.
And then there is the great advances in cryptocurrencies, which could disrupt the entire financial system from the ground up. Maybe even the system of currency as we know it.
Can the banks fight back? As the recent debacle over CBA ATMs shows — and maybe also my little bit of scuttlebutt today — they struggle with innovation.
This is not something you can fix overnight.
And the barbarians at the gate have always been living in the new reality.
I know who my money is on.
Editor, Money Morning
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