A Second Life for Financial Services

By Benjamin Wheeler

Zack Henderson jumped at the chance to work out of his vintage Colonial in New Canaan, Conn. The virtual career position at New Rock Financial, allowed him real growth potential and the opportunity to leave his daily two-and-a-half hour Manhattan commute behind.

He’s now much more productive and meets with more than twice as many clients than he ever did before. Never mind the lifestyle change of working in his flip-flops from his laptop next to the swimming pool. This time around he’s there for his kids’ Little League games on warm summer afternoons, while other dads are sweating out their commute.

Zack’s clients in his community know him mainly through his kids and casual community events. But when they meet with his avatar online, they meet a younger, better looking version of Zack. Just what is an avatar? It is a virtual representation of a human on computer games like Second Life and The Simms. A little explaining needs to be done for these clients who know Zack in his real life identity, but that’s usually done with tongue in cheek. What they really notice is the attention they are getting with extraordinary customer service that comes across fresh and new through the virtual interactive experience only New Rock provides. This includes not just his polished appearance, the Kenzo tie and Cartier cufflinks, but the whole package.

In earlier times, customers had to interface with a gruff support staff. Now they connect with an attentive staff of sharp, experienced, professionals whose avatars are dressed to the nines, and project the kind of uncompromising image that gives Zack and New Rock an edge over the competition.

Instead of being put to sleep with sales pitches about unknown financial products, they are thoughtfully walked through an engaging experience that puts vivid, life-changing situations in front of them in an intelligent virtual-life framework that transforms these products into “must haves”. They see themselves through their avatars’ eyes 20 years from now. They might be going through a financial crises like “losing a job”, or other difficult situations, such as death or divorce. In this environment, they create their own customized plan that is truly unique and comprehensible, long before the attention wanes.

Most of Zack’s clients are spread throughout the U.S., in wealthy enclaves like Manhattan, Brentwood, Palm Beach, Chappaqua and Chestnut Hill. Carol and Jack Haymes for example have their main residence in Bedford, N.Y., just a few miles from Zack's home. They’ve never met Zack in person, but were particularly interested in the New Rock Smart Funds with low management fees designed for growth, which automatically become more conservative and wealth preserving as the working couple comes closer to retirement. Having experienced the most amazing customer service they had ever encountered in any financial institution, let alone one they just accessed from the veranda of their beach house at seven in the morning, they instantly knew this was for them and signed on as new clients. A month later they came back to refinance their mortgage. Although the transactions involved millions of dollars, not one face-to-face meeting with Zack ever took place. It’s these kinds of positive customer experiences that helped Zack build a national base of clients with more than a billion dollars under his management. Not bad for a guy who commutes in his slippers!

 

A New Business Model

In this scenario, New Rock Financial saw the future first as one of the pioneering new global firms to break loose from the traditional financial services business model. It sold a significant portion of it's real estate assets. With large investments in technology and a merger with online broker iTrade, New Rock positioned itself for megagrowth, but with none of the traditional costs of doing business.

With the digitization of money and France's Societé Generale fiasco in 2007, digital security and monitoring became much more of an industry focus, so it was a great solution. The New Rock business model did essentially what the ATM did for the banking business, but with technology that leveraged human assets instead of replacing them.

Rob Darling was one of these workers who commuted two-and-a-half hours a day for 20 years from his home in Petaluma, Calif., to his little cubicle in the financial district of San Francisco. It wasn’t so bad when gas was under $4.00 a gallon, but to endure the excruciating Bay Area traffic with gas prices rocketing to $10.00 a gallon and dressed in an uncomfortable business suit all day long made no sense.

He saw his bank’s brand withering away as more and more of his colleagues were eliminated or replaced with cheaper workers in a foreign country who had no real sense of American vocabulary or American culture. The bank was good at cutting costs, but awful at retaining quality. The customer service approval ratings kept going down, but still the bank continued to reduce expenses. As soon as Rob heard what New Rock was doing, he applied for a position. It radically changed his work week.

“At my old job, I did kind of the same thing, serving customers’ needs over the phone. I was wearing these suits everyday and I wasn’t even meeting in person with key clients. I was just window dressing for the office. Like a mannequin, I just showed up everyday to do my part in ‘dressing the windows’ for the occasional client who walked in.

“The difference now is that people actually see my avatar in a professional environment. I have an office that’s a lot more impressive than my cubicle ever was and I’m a lot more comfortable working from my kitchen table when I talk with them. This makes the experience more personal. It took a few months for the whole thing to sink in. Then I finally realized a crazy fantasy I had been dreaming of for years: I made a giant bonfire in my back yard and burned all but a few of those uncomfortable suits.”

Michelle Smith fell in love with the idea as soon her headhunter described the new position.

“This isn’t just another way to cut costs,” she thought. “This is what people in the financial services industry have been dreaming of.” She saw the first demonstrations from New Rock and immediately after being hired, she got a former colleague to sign on as head of human relations.

“We had security issues that could be addressed more efficiently with this

technology. Every transaction and interaction is recorded, monitored and backed up on a remote server. Our people could be better trained with best practices taught by watching and learning from our top performers in action. I couldn’t believe this hadn’t already been done -- A financial institution that’s open 24/7 with exceptional customer service and better profit margins. We also had significant real estate holdings that we could have unloaded and used to augment our cash reserves for further growth investment.”

Financial Services 2.0

If there was ever a business model where “one stop shopping” for financial services could actually work, this would be it. Much has been written about virtual worlds like The Simms, Club Penguin, and to a larger extent Second Life. These worlds exist today in cyberspace, where residents from real world places across the globe give birth to avatars, name them, dress them and design environments in which they can exist.

As a result people can create distinct identities and lifestyles for their creations. They buy virtual real estate and virtual material goods and live their second lives in front of a computer screen. Second Life has had some success, and there is a real Second Life economy, with a financial monetary system in place, but in my opinion the current Second Life in it’s current state is a bit flawed. It’s not just that the technology is a little unstable, it’s a little more fundamental than that. Most people would much rather spend a week on a real island than buy a virtual one.

The virtual world will never be a place to replace the things we really love to do in the real world, like going skiing, to the beach or going out for a night on the town and having a real relationship with someone

we want to be with in real life. Perhaps a better use for virtual worlds like that can be Second Life could be to enjoy more of our quality time in

the real world.

With current advances in real time networked technology, a long commute can be diminished or even eliminated, a board meeting can be made easier to coordinate and shopping for financial products and expertise online can go to the next level and be a deeper, more engaging experience.

There are many reasons a virtual experience can be compelling, but staying relevant and competitive to the next generation of financial consumers are the two most attractive ones.

For Generation X, and to a larger extent Generation Y, the web and the world of networked gaming is a native experience they grew up with and one they are actually more comfortable with than the experiences baby boomers are more accustomed to, (such as walking into a financial institution).

This next generation of financial consumers are more familiar with iPhones and Wii’s. Walking into a financial institution is something they probably wouldn’t do if given a choice. They would rather spend more time doing the things they really want to do in the real world and be done with the things they don’t by doing them quickly and efficiently in their own time, when it’s convenient.

While some financial institutions have ventured into Second Life with real marketing dollars, it may not be the audience they were expecting. On a recent investigative journey into Second Life, I made an important discovery. I expected to run into people who, like their avatars where of a certain age group and demographic. In Second Life, everyone appears to be 18-30, but because this is more of a fantasy world, the reality is that most of the individuals appear to be either younger or older.

Surprisingly, many appear to be Baby Boomers or recent retirees who now have lots of time on their hands and would rather experience the world as it was when they were young teens. However, they

are old enough to want more freedom in their real life and use it to live-out fantasies (albeit more adult ones) in the same way previous generations used Barbie and GI Joe dolls.

Second Life is probably not the ideal environment as it currently exists to launch a financial enterprise. A visually more realistic approach is more likely, but Second Life is worth experiencing to get a feel for avatar interface and virtual environments.

It’s hard to imagine one of these institutions making such a strategic move without tremendous internal challenges. But then again it’s also hard to imagine these same institutions continuing on their current courses. The overall downtrend of quality customer service is a real issue. There are highly qualified people at most of these institutions, but their potential is not being fully utilized with a workable infrastructure. There has to be a better approach and it’s probably not going to be a traditional model that thrives in the coming years.

 

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Benjamin Wheeler is president of Wheeler & Co., LLC, a strategic branding & design firm in Stamford, Connecticut. He can be contacted at bw@wheelerandco.com

 

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Editor's Note: The scenarios depicted in this article are completely fictitious (including all people listed and all their companies), but they are based on a need for a better approach to the current financial services model. Whether you can imagine a big global financial services firm as a possible way to adopt this model is up for debate, but it's certainly an interesting alternative worth consideration.

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