Blue Ocean Strategy Innovation in Transactional Banking

Through one of my LinkedIn groups a fellow group member – Munib Karavdic raised a question as to whether a new St George product is an example of a Blue Ocean product. I originally set out to review the site in question and draft a quick response but ended up turning it into a blog post…

So I had a good look through the promo site. I can see a number of BOS principles reflected in this product.

Before I share my thoughts lets look at the existing Australian market space of transactional banking – largely a vacuum of innovation – bitter red oceans of competition. I suspect the last really innovative move was ING launching their internet only transaction accounts which has since been eroded into a red ocean. In reality it’s nothing more than poor tit for tat incremental changes. I think even NAB’s recent elimination of fees is simply a red ocean reaction.

Given the information at hand, I can see some clear elements of Blue Ocean thinking in this product; though some aspects of it might not qualify (i.e. the flat $5 fee per month – is that really lowering costs for the customer? If so, how is this communicated by presenting it as a flat fee when their competitors are promoting fee removal?).

What I find interesting is that I can see how they are appealing to their tiers of non-customers in a couple of interesting ways – primarily through 3 key strategies:

Savings Targets

Helping customers develop good savings habits

I see this as a really interesting attempt to move the idea of a transaction account away from being something you get in the mail every month to an interactive tool that you want to receive.

As we all know, setting up young people with good savings behaviours is important for their financial future. I think this is a reasonable attempt by St George to promote and support positive financial behaviour (as opposed to the disgraceful behaviour of some banks – ‘oh you’ve maxed your credit cards – let me give you more credit).

Budgeting Tools

Simple graphical tools for those customers who aren't numerically minded

This is the bit I think has real traction. This appears to be a legitimate attempt to help non-financially minded people make sense of the flows of money in and out of their lives. Whilst many of us might think it’s a simplistic representation of a financial situation – if it works for the customer then – it works. This isn’t new as some credit card companies already to this – but providing it as a service on a transaction account is. What I see here is the bank realising they have this data anyway to so why not aggregate and package the data so that their customers can use it and potentially modify their behaviours. What’s that you say? Banks and altruistic behaviour make strange bedfellows…

Round Up

An interesting approach to rounding...

I’m not sure what they are thinking with this feature. Whilst I get the virtual coin jar idea I’m not sure it’s solving a problem. But if this feature is another way of forced saving by stealth then in reality it’s a positive. Personally, I think there is more merit in rewarding account holders with bonus interest for every coin deposit they make over a certain amount.

Is this a Blue Ocean product?

Tough question to answer given the information provided – as I can’t help but feel they’ve missed some critical factors that (if included) would have created massive barriers for their competitors – chief amongst these is any form of measure of engagement and contribution. Deep down, this still smells like a bank product. I’m not quite seeing how they understand or recognise participation – and in my opinion – this is the holy grail

Have they really erected competitive barriers – I don’t have enough information to say yes or no. Maybe they have if you look at it in the context of their 3 peers. But I would argue not if you were to look into say the second tier of banks or more importantly the mutual sector (i.e. Credit Unions) where engagement measurement is more natural and intrinsic.

I think St George deserves praise for launching this initiative – but I can’t help but feel someone – more than likely a credit union is going to see this and really seize the day – particularly in terms of engagement that isn’t based on traditional bank metrics (i.e. share of wallet). I guess time will tell!

Drupal Content Management System Project Finished

We wrapped up another Drupal CMS project today for Brisbane customer – Mobicon Systems.

Tom Schults and his team had a good site that was doing an OK job for them but wasn’t built on a content management system.

We recommended they migrate their site to Drupal – the world’s leading open source CMS.

Mobicon Systems has developed a world leading mobile freight container lifter and handling vehicle – in other words a Straddle Carrier.

Wondering what a Mobicon Straddle Carrier is?

Here’s a picture

The new way to move freight containers

Basically these are a versatile, self-powered container handling machine that are changing the way shipping containers are managed in a variety of environments – including defence. The Mobicon units are a great example of Australian innovation – looking at a limitation with current container lifters and developing a cost effective alternative.

I’d argue that what Tom has developed is a great example of Blue Ocean Strategy thinking.

Blue Ocean Strategy – An Australian Case Study

Earlier this week I published a case study about how we used Blue Ocean Strategy for Smartpen here in Australia.

This was a really interesting project for us to undertake as it allowed us to utilise the skills we developed following our training with UCSI-BOSRC.

This presentation is the first in a series that we’re producing around this project and what we’ve learnt from it.

We’ve focused on the basics of Blue Ocean Strategy and how the core outcome of the work was the development and execution of a detailed social media strategy. The social media strategy is the key bit, as this underpins how we created the uncontested blue oceans.