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Students vs. Startups Episode 9: Strategies for Improving Retail Banking Business

Students vs. Startups Episode 9: Strategies for Improving Retail Banking Business

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Featuring Next Branch Strategies

Welcome to episode 9 of Students vs. Startups! This week we are joined by Next Branch Strategies, a startup who is using technology to make experiences at bank branches simpler, quicker, more convenient.  Listen as David Faulkner explains how is background working with John Nordstrom inspired him to revolutionize customer experience in the banking world.

[audio src="https://easternfoundry.files.wordpress.com/2017/01/students_vs_startups_podcast_episode_9-final.mp3"][/audio]

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Transcript:

John Gilroy: Welcome to Students versus Startups Showdown on the Potomac. My name is John Gilroy and I'll be your moderator today. The structure for this podcast is quite simple. We put the leader of a tech Startup in the hot seat, students ask questions, we find another innovator and then do it again. The founding sponsor for Students versus Startups is the Radiant Group. If you enjoy solving problems and like to work with bright people, the Radiant Group is the place for you.

Contact Al Di Leonardo or Abe Usher at the RadiantGroup.com. Here we go ready for round one. Our students today have all studied at Georgetown University and they're trying to get the Master of professional studies in technology management from the School of Continuing Studies at Georgetown University and Madeline succeeded. We have three students, one who has finished the program completely. We're going to start off here with Erik. Erik, tells us about your background and maybe some experience with the PMI Group in town here.

Erik Laubacher: Thank you, I'll be happy to John. David, thank you for joining us, same with the rest of the panelists. My name is Erik Laubacher and my background is in software development and systems integration. Recently for the past five years I've been involved with industrial internet of things, both startups and established companies. As John mentioned, I am in the Master's of Technology Management program at Georgetown. I'm also involved with the Project Management Institute. I'm on the operational board of directors for the Project Management Institute of Washington, D.C. where I sit as the Vice-President of Technology.

 

img_7890 Erik Laubacher and Madeline Tomchick

 

I've just wrapped up of one year of my term of a two year term. The first year was focused on internal changes and process management. The second year is going to be focused on the external management and providing better services to our members.

John Gilroy: Great. Madeline, a little bit about your background please.

Madeline : I am the survivor from the Georgetown program for Technology Management. I currently work for AIS in Virginia. What we do is custom AppDev, basically all Microsoft systems.

John Gilroy: And you're an award winner. Let's brag a little.

Madeline : I am. I won the Tropaia award from Georgetown for outstanding women in technology.

John Gilroy: That's great to hear. Phil, about your background please.

Phil Crawford: Yeah. Hi. Hey David, hey everybody. My name is Phil Crawford. I'm a management consultant working for the federal government around IT trustability and disability inclusiveness. I am a first semester student in the technology management program and very excited to be here today.

John Gilroy: Those are the students and our startup is a company named Next Branch Strategies and the managing director is David Faulkner, kind of a famous name there, David. I don't know if you're related to any authors, but kind of a famous name. I went to look at his background, he's the got the best background of any guest we ever had. He's studied history. He's also studied architecture. He's involved in startups, he knows a lot about retail and business-to-business. What a great background for this interview today. David, tell us a little about your background that we can maybe set up this discussion.

nextbranch

David Faulkner: As you said I began as an architect. I graduated from architecture school and went out to California, where I started working on retail projects. Eventually I was able to work with John Nordstrom for about seven years when he was bringing that concept across the country. During that period, I became really fascinated with what about the customer experience, which is really what Nordstrom sells, helps build the bottom line for the company. What's the connection between business strategy and customer experience in the retail world? Then how can you fine tune that using my architectural skills, how can I develop different layouts or customer journeys that drive specific business results? Like categories sales or customer loyalty, really whatever you want to drive.

I went on to become director of corporate architecture for the GAP when they were doing a huge expansion and I could have used some of the project management institute's wisdom and really running, building about 600 new stores a year. I did really think about how do you use lean processes to develop a less expensive, quicker way to build the stores without the sacrificing the experience or the brand.

 

img_7902 David Faulkner,  Founder of Next Branch Strategies

 

Finally, Bank of America hired me to try to figure how to make the branch experience better. There's a lot of headroom there for me. The bank branch was a place people had to go for a long time and banks didn't really have to worry about bringing people in the door but as technology, which is the centerpiece of this discussion, started to develop online services and then finally with mobile, it really took off. It changed the way people bank forever.

Now I need to think about technology and how to leverage technologies to make the customer experience simpler, and quicker, and more convenient, but also look at the other side of the coin and say how do you develop trust and loyalty across banking customer group. Which used to be there because they had to go to the bank and now needs to be there in a stronger way to drive the bond with the customer that gives them a banking experience that's more relevant and more valuable.

John Gilroy: You know David, when Erik and I hear architecture when think enterprise architecture. But that's not what you're talking about. When I think of different concepts I think of Next Branch Strategies, I think of branching logic, no, we're not giving software developing here, we're talking about business problems and what your company solves. My question to you is, what basic business problem does your company solve?

David Faulkner: The basic business problem I solve is how to get the customer themselves to drive business results instead of trying to get the company to solve that problem.

What you say really strikes a chord with me. Having spent my early architectural career just outside Silicon Valley, I found there's a lot of similarities between the architecture that drives technology and the way that you create the underlying strategies for physical architecture, the way you go and assess needs, the way you diagram the whole journey or process and then the way you make the result happen, which is a lot more complex and has a lot more moving pieces that you have to make happen seamlessly.

Erik Laubacher: It's a great idea of helping these different companies and I'm curious about the name of your company, Next Branch.

How does it relate to your strategy and what you're trying to do for your customers?

David Faulkner: The real story is that the branch as we knew it 10 years ago is dead. But there is no new branch. We're in a space, we're at an inflection point in thinking about how you bank and how you use the interpersonal or the P2P as well as the technology to have that banking relationship. I'm really in search of that next branch and that varies for, I was talking to a mostly agricultural banker the other day and he has a whole different problem set in terms of maintaining a relationship where there may be a lot of distance. His clients don't have a lot of time to get off the farm and get in there and talk to their bankers.

We thought let's bring the branch to them. Let's use the fact that you can carry almost everything you need on a laptop and get the branch out there and then just bring them in once a year for a longer, more strategic meeting. That's a branch strategy that really doesn't involve a branch.

Madeline : Starting in California with all the great experience that you had there, what made you choose this area to fresh start that idea of your company?

David Faulkner: It's the corporate world so really what I have to leverage is my experience as a corporate executive. I'm trying to package that up and give that to smaller banks who couldn't afford to have someone in my position full-time. When I think about what I do or how I can add the most value, I think it's the thinking behind, so the pre-strategy almost or the pre-design because at the apex of the angle, you're going to change things much more than you are when you get down the road in a project.

 

img_7866 Phil Crawford

 

Phil Crawford: One of the things I'm very interested in hearing about, are what are some of the subtle architecture drivers that we might not be aware of? For instance, how these can be used by other organizations? I'm not trying to ask to give away all of your tips and tricks, but can you give us one that's a subtle one?

David Faulkner: The subtlest one, as I said, is defining the strategy as mapping your customer experience and aligning that with your business strategy.

"But in the physical world, lighting is probably one of the most forgotten tools, especially in banks."- David Faulkner, Founder, Next Branch Strategies

Restaurants tend to use it very effectively and retailers use it very effectively. But lighting is one of those things that you can help engineer an experience while letting the customer think they're navigating on their own.

Madeline : When you talk ... How do you market this to everybody? Is it something ... Because you do have great experience with retail Nordstrom, and knowing how to hit that customer. So how do you specifically take this?

David Faulkner: I do it very badly. So I rely on the kindness of a group of friends and contacts that I have, for the most part. But I think that earlier we talked about what I would  say to somebody who was starting out. I would say, "Build that marketing plan. Build that value proposition and test it, and hone it, and do that every day. First thing in the morning." But the primary tool I use is I speak at a lot of conferences. I just did a webinar. Before that I spoke at a national banking conference and that really is the best way for me to meet clients. Basic advertising techniques don't really work in a very niche and nuanced consulting role.

Erik Laubacher: So you work in an industry of experience. This is an interesting area. However, how do you quantify and measure your return on investment to your clients?

David Faulkner: You learn that hard lesson when you work on the inside of a corporation because you have to drive results that show up on the bottom line. You can't just be sucking off the top line and not have anything come out of it. In the retail industry where they know how much pants sold for at that hour, on that day, a year ago. It's pretty easy to follow and say I'm driving category sales. But you also survey customers and get Net Promoter scores, deltas. You look for anything you can measure. Absolutely, it makes no sense to develop a strategy without those kinds of metrics. I think one of the best parts of the Six Sigma discipline is the measure part. I'm very committed to that.

Phil Crawford: How long has Next Branch Strategies been around? What is your focus in the next five years in terms of focus areas for your work?

David Faulkner: We are about twenty years old. I'm sorry twenty months old. I've been in the industry for twenty years. About twenty months old.

"If I think about where I want to be five years from now, I would like to build it in a business that could deliver more than just a strategy, so that it would deliver the execution."- David Faulkner, Next Branch Strategies

I'm just working with design and branding company that has a global reach to do a joint venture. To see how we can put things together, because, for smaller banks, they don't want to cherry pick services. They really need the whole package. As one person told me, and maybe this is in the Project Management Institute. "The one throat to choke rule" is favored. I'd like to be able to be that. It'll take take me a little time to build up the infrastructure and the staffing. I need to do that.

and I'm just working with design and branding company that has a global reach to do a joint venture. To see how we can put things together, because, for smaller banks, they don't want to cherry pick services. They really need the whole package. As one person told me, and maybe this is in the Project Management Institute. "The one throat to choke rule" is favored. I'd like to be able to be that. It'll take take me a little time to build up the infrastructure and the staffing. I need to do that.

 I'm just working with design and branding company that has a global reach to do a joint venture. To see how we can put things together, because, for smaller banks, they don't want to cherry pick services. They really need the whole package. As one person told me, and maybe this is in the Project Management Institute. "The one throat to choke rule" is favored. I'd like to be able to be that. It'll take take me a little time to build up the infrastructure and the staffing. I need to do that.

John Gilroy: Good job students. David, we're going to hold you over here for another segment. But in the meantime, is there a website that people can go to to learn more about your company?

David Faulkner: There is. It's NextBranchStrategies.com. I'm also on LinkedIn under Next Branch Strategies, or you can follow me on Twitter @NextBranch.

John Gilroy: We are hosted by Eastern Foundry. A community of government contractors who are bringing innovative solutions to the government marketplace. For more information go to Eastern-Foundry.com.

Our monthly sponsor Acumen Solutions has been in business since 1999. Today they help the public sector streamline operations and improve productivity. For more information go to AcumenSolutions.com.

Welcome back to Students versus Startups Showdown in the Potomac. Round two.

You already know students, we have Erik Laubacher, Madeline Tomchick, and Phil Crawford. They're all students at Georgetown University, or graduates of Georgetown like Madeline is here. We are ready even know our startup.

Our Startup is David Faulkner and he's worked in all kinds of areas including the Gap, and worked in architecture, and enterprise architecture as well.

Got all kinds of questions. My first question, your last name Faulkner, you got to be related to the famous William Faulkner are you?

David Faulkner: Well, it depends on how many drinks I've had. We haven't found a direct link, although I haven't been on Ancestry.com lately, so maybe it's there.

John Gilroy: That's good. Students, any questions?

Erik Laubacher: Why did you pick Eastern Foundry?

 

img_7876 David Faulkner

 

David Faulkner: I ran into Eastern Foundry because my best friend, who I've known since 1967, happened to have an office in their other location. It seemed like a perfect place to go. I did initially start up in my basement of my house. But I found that the dog and the phone and everything was distracting me. This has been a fantastic place. It has a couple of unique benefits. First is some of the other joint office situations. Being amongst other startups, there are a lot of connections that you have and you can make and you learn from others about how to grow your business. The other thing is people here work really, really hard. I'm naturally competitive and I want to kind of beat that.

Erik Laubacher: Architecture has incorporated technology more and more. I was wondering if you could speak just a little bit of how you've seen this. Specifically one item that I've read about is where mannequins can now have behind and in the head facial recognition so they can actually see the amount of time that your eyes are on a particular display. How common do you see this and if you could just elaborate a bit.

David Faulkner: There are a lot of technologies like that. Started out with just heat mapping. Where they would put something in the ceiling and find out, what they called, "dwell time". Finding out in front of which displays and which products you were spending a little bit of extra time. I have followed ones where you can follow people's eyes. Not always good for the guys when you've run the video. You follow people's eyes and you see what attracts their eyes. Really what you're looking for is some indicator of whether they are paying attention to something or not. There's a whole ton of in-store marketing in every story and when you do intercepts after people visit a store, they remember almost none of it. Trying to figure out how to grab their attention, how to get them to stay in one place at one time is really important.

Madeline : You've been in the business for quite some time. You're naturally competitive as you just said. At what point do you think you're just going to get tired out from it and want to sell or buy out?

David Faulkner: I don't really think about that. Thinking about retirement is anathema to everything about me. I think that the world sort of solves that problems because it'll change. If you think about now and the way I mentioned technologies, changing really everything about us. You'll find okay, now everybody's almost getting on the train of mobile apps. That's plateauing. Mobile phone purchases have started to level off. I'm in the business of what's the next new thing. Trying to figure out what is the next disruptor before it happens is the most important thing. I don't think that will ever stop being interesting.

Madeline : Is there something that's too interesting to just let go of?

David Faulkner: I just don't know what it is yet.

Madeline : It could be something new tomorrow.

David Faulkner: Yup.

Phil Crawford: You've talked about your competitiveness. Who are your competitors?

David Faulkner: I'm in a really good niche in some sense because I don't have a lot of direct competitors. Typically the folks that compete for the customers that I get are focused more on the architecture and construction end of things, not so much on the strategy part. I haven't had that issue where I'm coming into a big field with a lot of competition. The issue I do run into, in a niche business and so does any start up, is that people don't understand what you do. It's harder to get people to ... You might meet them and interest a person in a company, but when they go to sell it, they can't describe it. They can't say, "Oh this is a lawyer, or a contractor, or a doctor." They're doing this very refined thing that they then have trouble explaining to others. It's kind of a double-edged sword. But as a small company you don't need a lot of business to do okay. As I grow that will become more of a challenge.

Erik Laubacher: Have you thought about building systems and processes that you could productize?

David Faulkner: I have thought about that a little. I think that's, in fact, a number of people have thought of it for me. "Can you create the equivalent of a software that you can do once and then sell to a lot of people." The problem that I have right now is my clients vary. There's that agricultural bank here, and there's the business bank who only does work with businesses. I haven't had a steady client profile where I can do it once and repeat it. But that's definitely my plan. I did that as a physical architect. I would warehouse ... I brought my firm to computer-aided design. One of the big competitive advantages is we could warehouse all the specifications and drawings that we done on one project and then use a lot of them on the next project making each project less and less expensive to produce.

Madeline : With the different banks that you do service with, agriculture and business, is there anything that a client would say "you know what I'm good, I don't think this is the right thing for me". Have you found anything, a way to address that in the future?

 

img_7861 Madeline Tomchick

 

David Faulkner: There are a lot of clients who feel that they are good. Maybe they are, maybe they aren't. There are a lot of smart people out there. Some people get it, and they're working on it. What I bring to the table in those cases is that I've done probably five thousand bank branch projects I've had involvement with. I converted the 3,240 Wachovias into Wells Fargo in thirty months. I can tell them all the mistakes not to make. But also I think there are folks who've got it and they want me to do a workshop for them. Then they feel like they'll figure it all out for themselves too. I might do it. Any help I can give them is good. But in any industry, you're going to walk into the office of somebody and they're saying, "Oh I am so much smarter than you." That's part of being in the start up mode. You have to be able to work through those and be able to narrow it down. I have a funnel in developing the best clients.

Erik Laubacher: With the volume levels you've said, such as five thousand banks, what do you need to see to plan it appropriately? Do you go into and site survey a certain number? Do you need architectural blueprints? That's a huge volume. How do you go through and determine a plan?

David Faulkner: Let's take the problem of doing three thousand some conversions in thirty months. You've got the three constraints. Your triple constraints. You've got cost, schedule, and ...

Phil Crawford: Time, cost, and money.

David Faulkner: Yeah, so basically when you look at that you say, "Okay, well how can I work within those?" Time was the biggest constraint. There's a required ... When you do a bank conversion, you're required to convert on a certain date for each bank branch. Then there's costs. When you do three thousand of anything, every thousand dollars starts to be some real walking around money. Then there's the schedule. There's orchestrating all of the different people.

I would take those buckets and I would say, "Okay, well how can we get consistency from location to location?" That's a project ... Construction project management problem. How can we ... In this case, we wanted to introduce a new brand to the east coast. How can we create a concept that's not just a sign on the door, but an ambassador for the new brand, to tell them why they got an upgrade. Not just a new bank.

The third thing is the cost. How do you manage the cost? How do you do deals and produce things off-site so they can be shipped in a kit of parts to the site? Then assembled very efficiently.

Erik Laubacher: I mentioned your work involves a bit of travel. What is a most remote location that your work has brought you to? Has Next Branch Strategies been in Alaska, or something like that?

 

img_7896 Erik Laubacher

 

David Faulkner: The furthest client that I've had in my career was in Kuala Lumpur. I've worked throughout Canada and thirty nine states. In some sense, the small towns in the U.S. can feel just as far away because not everything is New York City. You have to be sensitive to the fact that people are different and people have different needs. In New York City, everything is fast, fast, fast. But not so much in Topeka. Less so in the smaller towns.

Madeline : When you're helping these banks turn a ... With their customer experience, really, do you ever look at any other data, perhaps from the government because has an agency built around banks. The Consumer Financial Protection Bureau. Do you ever look at their database to say, "Hey this particular bank is lacking here, maybe this is what I need to go target."

David Faulkner: The Consumer Financial Protection Bureau is really looking for misbehavior. I try to stay away from that. But the FDIC-

Madeline : So not target in that case?

David Faulkner: The FDIC and the Census Bureau provide a tremendous amount of data, which is very useful.

John Gilroy: Years and years ago, Johnny Carson had a TV show called "Who Do You Trust?". What invokes trust? What imbues trust when people walk into a bank?

 

img_7869 David Faulkner

 

David Faulkner: I think that relationships are the thing that invoke trust. I've been working in banking for a dozen years, but I'd be hard pressed to say that I understand the terms and conditions of a checking account. However I do believe, maybe right, maybe wrong, that I can sit across from somebody and I can look into their eyes and I can discern whether they understand the terms and conditions and whether I believe they would tell me that there's anything I would need to look out for. When you're going to get a hundred thousand dollar loan, you put yourself at risk and you want somebody you can trust to make you feel sure that you're not going to run into a big fire somewhere down the line.

John Gilroy: If people want to have more information about your company David, how can they get that?

David Faulkner: They can go to NextBranchStrategies.com, or they can follow me on Twitter @NextBranch, or they can go on LinkedIn and find me there.

John Gilroy: I think we're running out of time here. I'd like to thank our founding sponsor, the Radiant Group; our host, Eastern Foundry; and our monthly sponsor, Acumen Solutions. If you'd like to see a transcript of this episode, please visit the blog at EasternFoundry.com. Signing off, from high atop a nondescript building in lovely downtown Rosslyn, Virginia. I am John Gilroy, thanks for listening to Students versus Startups Showdown on the Potomac.

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