Do Banks Need Intelligence Officers?

“We know that communication is a problem, but the company is not going to discuss it with the employees.”
-AT&T Supervisor in a memo

Recently, I spent some time with one of my neighbors who, over the last 10 years, served several tours as an army intelligence officer in Iraq and Afghanistan. He described some of the steps he took to create and distribute “intelligence”:

• Daily review of multiple information sources – internal reports, newspapers, Web sites, blogs, e-mail and written communications (many not intended for him to read), reports from on-the-ground people, and several others;
• Sifting and sorting the information for themes, contradictions, trends, etc., and generally putting his spin on it;
• Determining the impact, both immediate and long-term, to many different groups in the military;
• Based on this, preparing summaries and recommendations specific to various units and operations in a delivery that was useful and relevant to them; and
• Distributing the information to the right people while the information and analysis were very fresh.

One thing he said was that much of what he distributed was reviewed and determined by front-line personnel to be interesting but not needing immediate action (although they very much valued it). However, every now and again there would be a “nugget” (as he described it) that would make a huge amount of difference, enough to change the plans in place, and justified all of his work and effort. Another point he made was that there was simply far too much information needing analysis for front-line people to even try and do what he did. His was a skill unto itself.

The first thing that struck me was the enormity of his dedication and the sacrifice he and his family made to do this for 10 years (that alone is worth more than one article). The second thing, though, was this: how does an institution create intelligence at a time when there are announcements made every day that could have big short- or long-term impacts?

One reason this question may be timely is the sheer pace of change and innovation occurring in the banking and payments space. Think about what was announced just in the month of February:

• The merchant option to pass on its credit card fees to consumers;
• New regulations on cross-border transfers were released;
• Fiserv acquired Open Solutions;
• FIS acquired mFoundry;
• ACI acquired ORCC;
• Somebody in your market area acquired somebody else;
• Peer-to-peer lender firm Prosper raised $20 million in capital funding;
• Iowa will allow residents pay their taxes using Dwolla;
• Apple filed a patent for an ATM application;
• Citibank begins deploying next-generation ATMs in Europe;
• Facebook launched a reusable gift card; and
• American Express will allow customers to sync cards with their Twitter accounts.

Man, that’s a huge amount of news. What’s more, that’s just half what I put together in about 30 minutes of looking around (well, maybe I guessed about your local acquisition). Imagine what we could be looking at if somebody was doing this with focus, purpose and some chops.

Sure, some of these bits of intel are yawners. Some may be interesting but have no short-term impact. But what if one is a “nugget”?

A more forward-thinking question: how is the management team kept current on new developments, and how should they be? Where does the responsibility for intelligence lie within the organization?

One answer is that this is the job of every line of business manager. The challenge to them is that their daily management responsibilities, and those of their staff, are so heavy that they just don’t have the time to devote to this on a regular basis with the effort required. Another challenge is that market trends and information may not obviously be in any group’s purview. Who should be analyzing Facebook stored value cards – marketing, the social media expert, retail, or cards/debit?

There is enough change going on and enough impact as a result that it might be time to assign the “intelligence” role to a specific person or group. However it is assigned in the organization, somebody needs to be looking at what’s going on and provide management briefs (yes, I’m still in military mode/jargon) that answer the questions that are bound come up. As an example:

1. Briefly, what is the news/event/announcement?
   Walmart has partnered with American Express to offer a stored value card called Bluebird.
2. What interesting banking features or capabilities are being used?
   Bluebird allows direct deposit, mobile deposit, free ATM access and online bill pay. Charges can apply.
3. What might be the short-term impact on our customers, revenues or costs?
   Our customers/members perform ___ debit transactions at Walmart right now that could be eliminated. They produce ___ in interchange revenue.
4. What might be the longer term impact?
   Will people in areas with a Walmart store opt for this instead of a checking account?
5. Are there any immediate steps we should take?
   Well, how about we use our business intelligence team to identify our customers/members who have used our debit card at Walmart and hit them up with an offer of some sort?
6. What don’t we know about this?
7. Who has the follow-up on this one if it’s needed?

There are several topics that are big enough every month for a management briefing, and probably hundreds that warrant a briefer look and alert to the team. Aside from finding the “nugget,” this discipline would also have the side benefit of simply raising the collective awareness levels of very busy managers who don’t have the time to do it themselves.

Whoever is responsible for this needs to combine several key traits – the curiosity and “digger” mentality to get to the heart of the story and the detail behind it, very strong research skills (especially online), deep enough knowledge of banking to understand and analyze business impact, the ability to articulate a unique and interesting spin, and the credibility to discuss it at the highest levels of the organization.

This will be a very important job and role going forward.

Sounds fun, too.
-tr 

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