Roger Denis at IdeaPort and Harm Joose at Mastering KnowledgeManagement have an interesting tete a tete going on regarding banks and the 2.0 customer. Harm has suggested that operational excellence and integrating innovation at the product engineering level is the response to these issues that Roger pointed out:

• The decrease in cash usage and complete dominance of plastic (debit and credit)
• Rise of the mortgage broker as a source of impartial financial information for the largest segment of the bankable population
• The perfectly informed consumer who can test the value proposition of his or her bank instantly by comparing rates online.

A perfect storm of trends indeed. Operation excellence is critical and by my estimate the minimum cost of entry. Innovators in the financial services arena need to be perfect customer managers as well as clever. The good news is that outsourcing, online distribution and other creative, low-cost business platforms have permeated the industry and have met customer expectations (more or less). The big-business applications of these technologies are retro-fits to old business models and do not take advantage of common 2.0 themes such as demand aggregation, network effect, etc.
I fully expect that Prosper and Zopa are the tip of a financial services innovation iceberg that entails business models built on fluid data, customer control and solutions that are shaped to meet needs rather than the other way around. The difficulty as I have blogged before, is that putting more innovative models around peoples money and wealth is a much riskier proposition than putting my family photo album on Flickr. However, with the evolution of Paypal, Zopa and Prosper, as well as new tech such as NFC payments and mobile phone payments and banking, expect more from your bank.

Innovation is a buzz word that has been gaining traction steadily on Corporate Earth for some time now. If you believe Google Trends the references in the news have increased by 50% or so in 3 years. The approaches to innovation are an interesting mashup of recent economic events and corporate hedge culture. When I was at a few startups the biggest thing we worried about was money. There are ideas ad nauseum, what we didn’t have was money. Just give us the cash man. Of course we did not know that we also lacked ability to run a business and grow it effectively, hence I work for a living still.

Of course VCs took a licking during the bubble and got some analytic religion as a result. The failures of that era gave us a clear distinction between quick ROI focused VCs and innovation focused VCs. Think the guys who backed text pager companies vs the ones who backed mobile phones as they began to emerge in the mainstream. The other product of the VC craze of the bubble was that corporates began to rely on this specialty area to develop innovative business that they could then grab and spin-in when appropriate. Well, that period ended with crash, and now the delta between good VCs and just money guys is becoming more and more apparent.

Two major trends emerged from this broken VC industry: First, the emergence of specialty consultant firms like Doblin, Ideo, Whatif?, as the discrete owners of innovation in business. Also, it forced corporations in non-R&D focused industries to look inwards to source ideas and innovations. Hence the transition from product development to innovation.
In the corporate innovation environment, there is no end to the business management expertise and in this new era of innovation as a necessary practice, CEOs are providing protected lab environments with dollars to boot. Venture funds (dollars and man hours) to develop and build out the next big thing are being analyzed with separate opportunity cost metrics.

This is a great, emergent business model, but it does have some distinct disadvantages to the real VC model. It will be quite interesting to see how the the VC vertical reacts to this emerging threats. If strategic theory holds, specialization should follow, which is what we are seeing from certain VCs who are ahead of the game.

Google enabled their Adsense program with video capabilities recently which allows their Adwords clients to use video (ah, the business model for Google Video emerges…) as a format for their advertisements.  This also, bodes well for Google’s intent to catalog um, the world.
Google Adwords distributes  marketing messages for over 600,000 advertisers on their network today.  Let’s try that last sentence again: Google Adwords syndicates content from over 600,000 providers today.  Google Adsense recruits and compensates web publishers to distribute said content to their audiences.
Right, that’s the ticket.

I mean really, why not just gather the best of the bloggers in your space, say financial advice because I’m a banker. Pay them to do what they do best. If you look at BlogShares, there are over 250 personal finance blogs with good traffic numbers. They are written from diverse perspectives ranging from poor folks trying to make it to cashed out .com entrepreneurs just dropping wisdom on the way to a publishing deal.

Buy them and host them and provide them a staff to make it better. They are already voluntarily evangelizing the product. You definitely don’t want a competitor to get at them.

We could all learn a thing or two from Oprah.

Collaborative search is a great 2.0 conceptual execution. Use the wisdom of the crowd to give more useful search results, prioritized by humans of similar attributes as the searcher. StumbleUpon poorly named but well intentioned player in this space. I gave it a whirl as a potential source of traffic for this site. Sign up was easy, nice site, good colors, lots of kitchy preloaded avatar images. What’s this? Download a toolbar? Something that goes all the way across my screen and contains your logo and writes things to my registry.

Edit: The Firefox Extension implementation of StumbleUpon with hotkey on/off is totally cool and no screen real estate is harmed so I am going to play around with it and see.
Alt+F4. See ya.