One Stop Financial Shopping

Many ideas in business appear quite possible, reasonable, and profitable. Where others failed before them, business leaders swear they possess the knowledge to use better the resources needed to implement successfully these ideas. These often tried but never successful ideas include

• doing more with less
• cutting our way to profitability
• buying market share
• selling checking accounts and IRAs

Add Citigroup to the heap one stop financial shops, which is includes Shearson Lehman FleetBoston, Morgan Stanley, and US Bank. The failure occurs because these companies lack a key component of information: consumer behavior and consumer needs.

Can I interest you in some nice fat financing or a debit card?

The New York Times article correctly points out that investment bankers lack the desire to sell checking accounts. As Liar’s Poker and Wall Street amply demonstrate, investment bankers do not view cold calling as a ticket to their personal success. What investment banker wants to shill investment opportunities with returns of 10, 15, or 20 percent along side a CD paying a puny 4 percent?

These one stop shops may overlook consumers’ behaviors and needs. Consumers may view banking service as a way station for cash on its journey to other investment opportunities. Thanks to the internet, money gets zapped from account to account. Consumers can move their Citibank’s demand deposits to Citibank’s investment accounts as easily as another firm’s investment account. Thus, technology makes a one stop shop inefficient and ineffective.

As to behavior, Citigroup needs to conduct research using sound methodological design. The bank may learn how and why consumers use banks, savings, and investments. A one stop shop may only interest do it yourself investors. For example, E*trade offers investment options as well as banking services. ING, which long offered savings and CD accounts, added checking service. Last week, ING bought Sharebuilder. In both instances, these services appeal to do it yourself investors and not people who want a financial advisor, who collects more fees from selling IRA than checking accounts.

Citigroup may yet have the right idea but the wrong execution. To prove that hypothesis, though, Citigroup must conduct original qualitative and quantitative research, and not rely on table data.