Showing posts with label branches. Show all posts
Showing posts with label branches. Show all posts

Monday, March 31, 2014

10 Ways iBeacon Can Improve Banking Sales & Service

At a time when banks and credit unions are trying to improve the economics of branch banking, iBeacon could deliver a personalized digital sales experience as soon as the customer enters a branch office.


iBeacon, working in conjunction with Bluetooth Low Energy (BLE), can integrate the physical and mobile channels, enabling a bank's mobile app to deliver highly tailored digital promotions, coupons or offers directly to the consumer's smartphone when the customer is in the general vicinity of an office, at any specific location within an office or at an ATM.

There are already more than 200 million iBeacons in the form of phones in our pockets. Google has included BLE into the Android 4.3 and other recent phones. Apple has been including BLE in their devices since the iPhone 4, meaning that every iPhone from the past two years is an iBeacon in itself. More importantly, standalone low cost iBeacons (40ドル - 100ドル each) can be placed in physical branch locations, linking the bank branch with consumers' smartphones.
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iBeacon technology is designed to deliver continuous content based on the precise location of a customer within a branch, allowing for highly relevant messaging or special offers on products to be sent to smartphone users at the exact time and place they are most useful. This immediacy is a big advantage over other technology like NFC or QR codes that are either less accurate or require additional steps by the customer.

In order for iBeacon to work in banking, customers must first install the mobile app of the bank they are visiting and opt-in for personalized promotional alerts. By providing the bank access, the bank could track activities performed both online and in the branch in the past to customize both mobile and in-person communication the moment they step inside the branch.

Consumer Acceptance of In-Store Alerts


While there is virtually no research on the acceptance of in-store alerts by financial institutions due to the current lack of use by banks, there is positive response from consumers when in-store alerts are used by retailers. According to a study of 1,000 smartphone users commissioned by Swirl, 67 percent of consumers reported having received shopping-related push notifications on their smartphones during the previous six months. Of those, 81percent said they read or opened these alerts most of the time, and 79 percent made a purchase as a result.

The research also found that the alerts delivered must be both relevant and valuable from the customer's perspective. When asked what caused them to ignore mobile push notifications;

  • 41 percent said they were not relevant to their interests or location
  • 37 percent stated the offers did not provide enough value
  • 16 percent fount the alerts to be annoying
  • 6 percent did not opt-in to receive the notifications
It is clear that the lessons learned in the retail world apply also to the world of banking. While iBeacon technology can provide the power to deliver highly relevant digital content and offers personalized to the customers' location and banking relationship, the use of these alerts must be used judiciously. 

In both retail and banking, privacy remains an ongoing concern for consumers, especially when disclosing their smartphone's location. The good news is that 77 percent of consumers said they would be willing to share their location information, as long as they received enough value in return. An opt-in process helps to establish this trust and consent.

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Monday, March 24, 2014

Omnichannel Banking: More Than a Buzzword

As customers continue to change their channel usage patterns, banks and credit unions must focus on delivering a consistent and seamless experience across various touch points. More than just a buzzword, omnichannel banking is an opportunity to deliver bottom line results by gaining insight into customer's channel preferences and behavior.


Today's customers are becoming highly sophisticated and are accustomed to receiving seamless service and targeted offers from companies like Amazon regardless of the device in use. So, it should come as no surprise that these same customers are beginning to expect similar experiences from their banking partner(s). From researching new services, to opening an account, checking balances, conducting transactions or getting customer support, delivering an omnichannel experience has become table stakes in a highly competitive marketplace.

The Importance of Omnichannel Banking


Banks are in an unequalled position to understand their customers. They already can see product use, transaction patterns and demographic profiles. By leveraging channel usage insight, they can develop an even more detailed customer profile. Understanding not only what the customer looks like, but also how they conduct their banking can allow for improved product offers using their preferred channel.

Developing strategies to integrate disparate digital and physical channels into a single, seamless experience has to be a priority. By analyzing the activity and preferences of their client base, banks can tailor offerings to address the priorities of each individual customer. Mass, low profit segments can be serviced accordingly as can high margin services and clientele.

Streamlined, integrated systems, a single customer view and an optimal customer experience are all objectives to work towards. Banks that focus on these objectives will get the edge over the competition.

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Wednesday, February 5, 2014

Banks Can't Close Branches Fast Enough

BRANCH STRATEGIES


U.S. banks are closing branches in record numbers as customers are increasing their use of mobile and online banking. Yet, in conversations with seven of the nation's top ten banks, many more branches would be closed if there wasn't concern for public or governmental backlash.


Do banks have an obligation to keep branches open, or will the need to cut costs drive an accelerated wave of new closures?



According to SNL Financial, banks closed a net 1,487 branches last year. That's the highest number of net closures since the research firm began tracking the statistic in 2002. The majority of these closures have been attributed to the increasing use of online and mobile banking as technology enables consumers to manage their accounts, make remote deposits and shop for services more efficiently from desktops or smartphones.


Despite these closures, the number of bank branches in the U.S. still hovers above 80,000 according to the FDIC, making the U.S. one of the highest branched countries per capita in the world. That is why, in an era of sluggish revenue growth and heavy compliance costs, most bankers are trying to close or reconfigure underperforming branches as quickly as possible.


But closing branches involves more than just locking the doors and informing customers of other banking and branching options. In conversations with banking executives from seven of the largest banks in the country, I was told that between 50 percent and 80 percent of all branches that should be closed based on financial considerations are not closed due to potential regulatory or public relations repercussions. With many analysts saying that 25-30% of all branches are unprofitable, this could represent a 'backlog' of well over 10,000 branches nationwide.

In my discussions with these banks, it was mentioned that many of the branches that are not carrying their weight from a revenue perspective are either in lower income markets or in small rural areas where access to an alternative nearby physical location may be limited. This creates a unique dichotomy between a prudent financial decision and the desire to maintain trust and goodwill lost during the financial crisis.

When I asked whether reconfiguring these underperforming branches was an option, many of the executives I contacted said that they were even concerned about negative reaction to replacing tellers with automated kiosks or moving to smaller physical footprint locations. Said one banker, "We're caught between a rock and a hard place with many of the closings we would like to do. The decreasing number of transactions at many of these offices makes them highly unprofitable, but moving to an automated model brings its own issues."

The perceived obligation to keep branches open, and the real estate related costs of closing branches, may explain the rather conservative rate of branch closures to date despite branch transaction volumes that continue to plummet and costs that continue to rise. The same challenge is being faced by banks worldwide, evidenced by a recent U.K. article in The Telegraph asking, 'Do Banks Have a Duty to Keep Branches Open?' Interestingly, more than half the people who responded did not believe banks should be required to keep unprofitable branches open.

Telegraph (UK) Consumer Survey (2014)

Monday, December 16, 2013

Top 10 Retail Banking Trends and Predictions for 2014

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The Top 10 Retail Banking Trends and Predictions for 2014 are compiled from more than 60 global financial services leaders including bankers, credit union executives, industry analysts, advisors, publishers and editors, bloggers and fintech followers.

This year's list runs the gamut from a continuation of past trends to the introduction of new trends in delivery, payments, competition, operations, customer experience and marketing. Prioritization of these trends may differ by institution, but none should be ignored.


For the third year in a row, I have reached out to global leaders in the financial services industry to ask for their thoughts around upcoming banking and credit union trends and predictions. As in the past, the response was overwhelming, with more than 60 responses. The emphasis of this compilation is mostly North America, but most of the trends are global thanks to responders from the U.K. and the Asia Pacific region.

 While everyone had their 'favorite' trend, and some provided a personal top 10 list, I consolidated their thoughts and came up with trends that were considered the most important. Two significant trends that are not listed, but impact virtually every trend discussed, are the omnipresence of previous and upcoming regulations as well as the continued investment in new technologies to make this year's trends a reality. Two trends that may prove important, but got less than expected mentions were the underbanked and alternative currencies like BitCoin.

This year's Top 10 Retail Banking Trends and Predictions are:
All of the contributors did concur, however, that a guaranteed prediction for 2014 is that disruption will continue at an unprecedented pace and that the industry will look different this time next year.
        • Drive-to-Digital: Impacting delivery, marketing and service usage
        • Payment Disruption: New players, technologies and innovations
        • Increased Competition: Neobanks and non-traditional player pressures
        • Branch Optimization: Maybe not branchless, but certainly less branches
        • Focus on Customer 3.0: Digitally astute, social and yearning for insight
        • Breaking Down Silos: Product and data silos begin to crumble
        • Simplifying Engagement: Removal of friction and steps to engage
        • Improving Contextual Experiences: Leveraging data for improved service
        • Differentiating Brands: Avoiding commoditization in a digital world
        • Global Innovation Perspective: Expanding view of tomorrow's innovations
The following infographic is a graphical representation of top trend and prediction terms provided by the contributors to this year's report. The size of each word represents the prominence of terms from the industry leader submissions.

Wednesday, November 13, 2013

Traditional Banks At Risk Due to Digital Disruption

According to two recent reports from Accenture, 35 percent of banks' market share in North America could be in play by 2020 as traditional branch banking gives way to new digital players. The research also indicates that 15 to 25 percent of today's roughly 7,000 North American financial institutions could be gone as a result of consolidation before 2020.


To combat this shift, Accenture recommends that traditional providers take a radically new approach to distribution, combining a simpler yet more comprehensive branch offering with integrated digital services.


"Digital technology and rapid changes in customer preferences are threatening full-service banks that do business primarily through branches," said Wayne Busch, managing director of Accenture's North America banking practice and author of the report, A Critical Balancing Act: Retail Banking in the Digital Era . "Given the scale of these disruptions, traditional full-service banks, as a group, could lose significant market share by 2020 -- to banks that reorient around digital technologies and to new entrants from the retail and technology sectors."

Digital Disruption


New digital technologies, emerging digital competitors and the extremely rapid changes in customer preferences are threatening to dramatically impact those full-service banks that limit themselves to products and services that get distributed primarily through physical branch channels. The outside disruptors tend to be more agile and more innovative, while traditional banks are weighed down by unprofitable branches, legacy back offices and inefficient silos. 

Business as usual is no longer an option in an industry that could see up to 25 percent of U.S. banks disappear completely.

In conducting online interviews with more than 2,000 US retail banking customers of the 15 leading retail banks in the U.S., Accenture found that 71 percent said they were “satisfied” with their bank and 68 percent said they would be “extremely likely” to recommend their primary bank to a friend, family member or colleague. In addition, only 9 percent of those surveyed switched institutions over the past year.

This loyalty is fragile, however, since more than a quarter (26 percent) of bank customers who remain with their primary provider do so simply because they consider switching to be a hassle, while about half said they haven't seen a competing offer that was attractive enough to make them move. The survey also found that two-thirds of bank customers would consider a branch closure as inconvenient and nearly half would switch banks as a result.

Source: 2013 Accenture Retail Banking Survey

This not only exposes the tenuous relationship banks have with their customers. It also confirms that the right offering and approach can induce them to switch. "The core challenge for banks: how to build a seamless digital customer experience -- and optimize its power with a better and more cost-effective complimentary offering in the branches that customers find so attractive," concludes Accenture.

The Disruption Has Already Begun


According to Accenture, many banks have already begun losing their customers to digital disruptors. The survey showed that customers acquired 34 percent of traditional banking services such as CDs, money market accounts, personal and auto loans and even new checking and savings accounts from institutions other than their primary bank.
Source: 2013 Accenture Retail Banking Survey

While traditional players have the innate advantage of extensive branch networks that the customer still says they value (nearly 60 percent of new product sales are still closed in branches), these same players should be concerned about the the transition to an online sales environment.

The growth rates in online sales since 2012 are strong in several categories, with online auto loans growing from 11 percent to 21 percent in the past year, online sales of mortgages rising from 15 percent last year to 25 percent in 2013 and sales of personal loans through the online channels jumping from 8 percent to 24 percent in only one year.

Source: 2013 Accenture Retail Banking Survey

Saturday, September 7, 2013

From Free to Fee: Monetizing Mobile Deposits

Is your mobile banking channel a cost center or a profit center?

If your answer references that your mobile channel is 'saving you money' by diverting transactions from more costly channels, then I need to ask you how much you have reduced your CSR team, your teller staff and/or closed your branches as a result of mobile banking use?

You can generate revenue from your mobile channel, however, by building new pricing models that include fees for value-added services. As part of a new monthly series, 'From Free to Fee', I will be discussing revenue opportunities from several emerging financial services beginning with today's post on mobile deposits.


I am not the first to propose that banks and credit unions take a harder look at mobile banking from a revenue perspective. In fact, in May, 2011, Jim Bruene, publisher of the Online Banking Report and the NetBanker blog and founder of Finovate, proposed that new pricing models could propel online and mobile services to the next level in his Online Banking Report entitled, 'Creating Fee-Based Online Services'. He stated, "Unlike the 35ドル debit card overdraft fee, there are rational and understandable reasons for charging fees for value-added online and mobile services."

In his report, not only did Jim provide an historical perspective as to why and how banks and credit unions continually end up giving away their services, he provided 33 different services that could generate a fee and offered a perspective on the acceptance level by eight different customer segments.

In my post, I am going to try to tackle the opportunity for charging a fee for mobile deposits . . . even if your institution currently does not charge for the service. I will be referencing several research reports to provide rationale, especially a recently released pricing optimization study produced by Market Rates Insight entitled, Growth and Revenue Potential of Emerging Financial Services. This 168-page study covers 13 different emerging financial services, with insights into fee optimization, targeting, institutional differences and bundling options (I reviewed this study in a recent blog post).

I will also provide implementation and marketing recommendations based on my travels across the country and my work at New Control Direct and Digital. 
Note: A audio podcast of a 'Breaking Banks' interview by Brett King of Jim Marous and Dr. Dan Geller from Market Rates Insight around how and why banks should generate revenues from value added services is available for download here.

Thursday, July 11, 2013

Banking Leaders Discuss 2014 Strategic Planning Priorities

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As we enter the planning season with a marginally better economy than last year, banks and credit unions are faced with margin compression, high operating expenses, new competitors and channel disruption that challenge even the most efficiently run organizations.


To assist with this year's strategic planning process, I asked some of the foremost global leaders in the banking and credit union industry to provide thoughts on what they believe are the 2014 strategic planning priorities. This blog post is a companion to the post done at the beginning of the year regarding trends expected in 2013.



Understanding that each financial institution and market is different, it was interesting the uniformity of priorities offered to bank and credit union management by the more than 30 industry leaders I interviewed for this post. And while the ability to execute against these strategic priorities may be impacted by size of organization and other dynamics, there was a consensus among those who I spoke with that 2014 may be one of the most important planning cycles ever.

Enhance the Customer Experience


Improving the customer experience was the foundation of almost all of the responses I received around 2014 strategic priorities. Whether we are talking about branch reconfiguration, mobile banking applications, back office operations, etc. banking industry leaders believe an improved customer experience is the key to growth. 

 As was said by Mary Beth Sullivan and the team from Capital Performance Group in their May/June Newsletter, "Many banks have a long way to go to get the basics right, so banks and credit unions should focus first on the basics. Once the basics are humming, ask yourselves: What can we do to be sure that our customers are better off banking with us than with our competition? What will make our customers lives better? How can we help them solve specific problems they are dealing with? Answers to these questions will define the experience you seek to create."

 Beyond 'the basics', other specific strategic initiatives were recommended by Steven J. Ramirez, CEO of Beyond the Arc. "Developing a proactive complain management process that goes beyond regulatory requirements can drive new customer experience projects", says Ramirez. He also believes financial institutions need to determine how they can be a finger swipe away from providing guidance and support through mobile devices.

Financial industry futurist and blogger Scott Bales believes bankers need to get out of the office and talk to real customers, developing empathy for their problems, behaviors and desires if they want to develop offerings that align with the needs of the market. According to Bales, "The goal is to build experiences, not products".

Sankar Krishnan from Sutherland Global sees customer experience as the 'X factor' across all channels and interactions the customer has with their financial institution. Comparing what banks need to strive for with customer experience leaders Apple, Amazon and Quicken Loans, Krishman believes banks need to excel at aligning people, process and technology. 

 Sam Maule from Carlisle & Gallagher Consulting Group believes that recent start-upssuch as Moven and Simple (and perennial cx leader USAA) are the best at visual engagement and customer experience. He quoted one of his banking clients as saying, "I would pay 500ドルK for ONE great user experience designer. FSI's are horrible at this. We have massive data systems, huge BI tools, and more, but none of that means jack for consumers if there isn't an amazing user experience."

 Finally, best selling author and acclaimed management advisor Joe Pine  believes banks and credit unions must go beyond providing just checking accounts and loans.



Monday, June 24, 2013

Digital Shopping Has Transformed The Bank Purchase Funnel


Historically, customers came into a branch to research financial products prior to purchase. Today, the majority of customers have done significant online research before entering the lobby, transforming the bank and credit union purchase funnel. 


Unfortunately, these digital shoppers get confused as they try to navigate tedious web pages or become unimpressed when they encounter unprepared branch personnel, requiring financial institutions to develop an improved multichannel sales strategy.



When respondents to the Novantas 2012 Multi-Channel Sales Survey were asked to identify their preferred channels for product research, online was cited as the top avenue by 63 percent of respondents with only 13 percent of the respondents stating that the branch was their primary research source. A majority of these same respondents, however, preferred to open an account at a branch, with only 36 percent preferring to open an account online.



The Novantas research found that preferences differed based on the account the customer was researching, with customer using the online channel more when shopping for a new checking account (69%) than for a mortgage (57%) or investment product (55%). Again, the branch channel was not the first choice for initial research.


Tuesday, June 11, 2013

Online Banking Key To Satisfaction and Growth at Credit Unions

According to recently released research, credit unions continue to score higher than banks in six key areas that have been found to drive customer satisfaction.


Interestingly, however, while lower rates and fees are still a significant component of a positive member experience, the impact of improvements in the online/mobile channel delivery will have the greatest impact on increased customer satisfaction in the future.


CFI Group, a customer satisfaction technology and analytics firm, in an inaugural study entitled "2013 Credit Union Satisfaction Index," measured six primary drivers of customer satisfaction on a 0-100 point scale and found that credit unions consistently scored high in all categories, with each driver scoring in excess of 80 points. This score was higher than many other industries including retail banking. 

CUSI Satisfaction Driver Scores

Of the six drivers of satisfaction measured, however, the 2013 CUSI found that only four play a significant role in driving member satisfaction and, therefore, should be the focus of the industry. At the top of the list for primary drivers that could impact future satisfaction were "online banking," "branch staff," "branch convenience," and "information/communications." 

The chart below illustrates the contribution of each primary driver towards increasing member satisfaction. The two missing drivers of satisfaction ("rates and fees," and 'products and services") have already 'maxed out' as a driver of additional satisfaction according to the study, thereby limiting any the impact that an improvement in these two drivers would have on future member growth.

Driver Contribution to Increasing Satisfaction

Monday, May 20, 2013

Migrating Banking Customers to Digital Channels

Today's banking customer can interact with their financial institution through more channels than ever, and the channels selected can have a significant impact on bank revenues as well as customer satisfaction. 


Gone are the days when a customer did all of their business in a branch. Today, most customers use multiple channels to research products, open, use and manage their accounts, resolve issues and receive notifications.


The key for banks is to determine the optimal channel mix for each customer that will maximize revenue (or reduce costs) without significantly reducing customer satisfaction or engagement.



 To measure these impacts, the Gallup organization recently completed research on how customers prefer to interact with their bank for 14 of their most common needs. They also evaluated the difference between channel preference and actual channel use and the impact on satisfaction and engagement when a customer uses a channel they didn't prefer.

While this is some of the most detailed research on channel preference and use, Gallup only evaluated single channel preferences as opposed to researching how a customer may use multiple channels for some transactions (researching providers or services, opening an account, managing an account, receiving account information, etc.). Despite this weakness, the research is still helpful in determining how to best migrate customers to an optimal channel mix.

Financial Impact of Channel Use


Recent regulations that have impacted the ability for banks to generate fee income from retail customers has required banks to rethink their business models and even the customers they serve. In addition, banks and credit unions have had to reconsider the optimal mix of channels their customers use to interact with the institution and to transact their business due to the costs associated with different channels. 

According to a 2010 TowerGroup study, the costs of handling a customer transaction varies widely by channel, from as much as 3ドル.75 for a call agent interaction and 1ドル.34 for a branch transaction down to as low as $.60 for an ATM transaction and $.14 for a mobile transaction. Based on just these numbers, it would seem prudent to move as many customers as possible to automated or digital channels and away from branches and call centers. Unfortunately, it's not that easy.


Wednesday, February 13, 2013

Will The Power of Mobile Make Bank Branches Disappear?


The high rate of mobile banking penetration at Chase Bank, Bank of America and recently introduced direct banks such as Simple, GoBank, Bluebird and Moven could provide a significant business advantage as digital channels tend to build loyalty and provide the opportunity to reduce costs through transaction migration. 


A recent report from Bain & Company entitled, 'Customer Loyalty in Retail Banking' found that mobile banking is more likely to increase a customer's likelihood of recommending the bank than any other channel interaction and that features such as remote deposit and even the ability to check a balance impact loyalty. The research also found that once customers moved to mobile, roughly half stated they made fewer visits to the branch which can lower costs.

Digital Delight


As mobile banking use increases, banks have the opportunity to 'delight' customers with new applications and functionality. For instance, while remote deposit capture still represents just a small percentage of branch and ATM transactions (as shown by the size of the circles below), it is by far the most likely to 'wow' the customer (64%) and provide the opportunity to recommend the bank. 

Interestingly, even routine mobile transactions such as checking a balance or transferring between accounts has a likelihood to delight (44%) and is a strong influence on loyalty according to the Bain study.

Thursday, January 10, 2013

Banking Leaders Predict Major 2013 Trends

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Trying to predict what is going to happen in the banking industry is like trying to predict tomorrow's weather. While you may get the forecast right, it could be more a case of luck than skill. And what you see today could quickly change tomorrow.


With that as the backdrop, I asked almost fifty industry leaders who author blogs I read, post on Twitter, speak at industry trade shows or make banking a career for their thoughts on what may be the most important trends in retail banking in 2013.


The predictions ran the gamut from what may occur in payments to how bank distribution could begin to transform. While some focused on larger megatrends, others had a narrower scope. In all cases, however, the predictions provide food for thought for bankers and industry providers. It is clear the one forecast that is guaranteed to be accurate is that the industry will be different this time next year.

Battle For Payment Supremacy Will Continue


The past few years has seen a massive amount of change in the payments world, with a reduction of interchange fees, the infiltration of retailers and non-banks like Starbucks, PayPal, Square, MCX, etc. and the beginning of a shift from plastic to smartphones as the payment device of choice. While past predictions around NFC, an Apple mobile wallet and a cash-less society have not yet come to fruition, there are still no lack of industry luminaries placing bets on how we will transact in the future.

Tom Noyes, author of the mobile, payments and advertising blog, FinVentures, states, "Retailer friendly value propositions (MCX, Square, Levelup, Fishbowl, Google, Facebook, etc.) will get traction . . . but MCX will not deliver for another 2 years."

 Ron Shevlin, senior analyst from Aite Group and publisher of the Snarketing 2.0 blog believes the most significant trend in 2013 will be the evolution of the digital wallet concept. According to Shevlin, "The digital wallet will be the new battleground – for technology companies, financial services firms, and retailers/merchants. They say that politics makes strange bedfellows – but so will digital wallets. The evolution of the concept will involve a lot of interesting partnerships and joint ventures." 

Matt Wilcox, senior vice president of Zions Bank and financial industry blogger believes we will begin to see the separation of contenders from pretenders in the payments space. "While there will still be multiple players vying for position, I believe a few companies will begin to emerge as leaders in this space." Alex Bray, retail channel solutions director at Misys in London agrees, saying "I think we will see the market coalesce around a standard form of mobile payments - and contrary to what PayPal may say, I think this will involve NFC."

Friday, November 2, 2012

5 Banking Megatrends Impacting Consumers

This post originally appeared on Bankrate.com on November 1, 2012

How Americans bank is undergoing a lot of changes right now. Free checking as we know it is becoming an endangered species, people are doing a lot more of their banking online, and smartphones and prepaid debit cards are taking off. As we move towards 2013, with planning well underway at most banks, what are the megatrends that are impacting the way people bank?


Here is my take on the 5 key trends impacting consumers:

1. Banks' mobile and online banking features are more important than ever to your overall banking experience.  


 Not only are banks pushing them as a way to serve customers much more cheaply than they can in branches, but customers are getting much more comfortable with the technology, especially when it comes to mobile banking. You're definitely moving beyond the early adopters with mobile and online banking.

 That means that having a welcoming, easy-to-use, powerful suite of technology products will be important criteria for the way customers choose banks in the future. And, if a consumer is one who is banking online or on their smartphone, they will probably look over a bank's technology offerings before signing up.
Number of Top 100 Banks Offering Mobile Services
First Annapolis Group, 2012 Mobile Banking and Payments Study

Thursday, October 25, 2012

Are Bankers Ready For The Bank 3.0 Reality?



In an exclusive interview about his newest book, Bank 3.0, Brett King discusses how change occurring in the banking industry is inevitable, speeding up and disruptive. 


From the mobile wallet wars to the impact of social media, tablets and the 'de-banked' and digital consumer, Bank 3.0 shows why banking is no longer a place you go to, but something you do.

A great deal has happened since Brett King wrote Bank 2.0 in 2010. Two years ago, banks were under siege as the foundation of the banking system was close to collapse and the image of the industry as a safe and secure environment was being challenged. The impact of social media was just beginning to be understood by the financial services industry and mobile technology as we know it today was in its infancy. Heck, King even referenced his (now long gone) Blackberry in the first chapter of Bank 2.0.

 With Bank 3.0, King discusses how consumers are less likely to view their retail banking provider in terms of capital adequacy, branch network, products and rates. Instead, customers are more likely to determine their banking partners by how easily they can access their accounts when they need to, and how much they trust their provider to execute business on their behalf. For those who read Bank 2.0, King's new book retains some of the foundation and case studies, but updates several areas based on what has occurred (and will be occurring) relative to digital delivery, payments, social media, and the power of 'big data'.

On the eve of the introduction of Bank 3.0 in the U.K. (introduction in the U.S. is scheduled for early November), I interviewed Brett King about his new book and about how he views the banking industry today.

Tuesday, October 16, 2012

As Online Banking Acceptance Grows Is Mobile Banking Reaching the Tipping Point With Millenials?


A new survey by the American Bankers Association (ABA) found that for the fourth year in a row, consumers named the Internet as their favorite way of conducting banking business, with 39 percent of respondents saying it is the method they 'use most often to manage (their) bank account(s).'  The second most popular way to bank – visiting a branch – continued its downward trend to 18 percent from 30 percent in 2008.

 In addition, this year’s survey showed a sharp increase in the popularity of mobile banking, driven mainly by customers in the 18 to 34-year-old age group. Use of the mobile channel by millennials escalated from 4 percent in 2010 to 15 percent this year. Conversely, the use of branches by this age group during the four-year period dropped from 20 percent to 11 percent, with ATM use also dropping from 32 percent to 14 percent. Overall, mobile banking is now preferred by six percent of customers, a 100 percent increase from 2010.

 The distribution of primary channel use this year was as follows:

      • Internet Banking (laptop or PC) – 39% (36% in 2010)
      • Branches – 18% (25% in 2010)
      • ATMs – 12% (15% in 2010)
      • Mail – 8% (8% in 2010)
      • Telephone - 9% (6% in 2010)
      • Mobile (cell phone, Blackberry, PDA, I-Pad, etc.) – 6% (3% in 2010)

Tuesday, October 2, 2012

Bank Brand Loyalty Tested With Every Move

When it comes to lifestage marketing events, new movers have always represented a significant opportunity and risk. This is because consumers who move tend to significantly increase spending in a variety of categories while also changing their brand loyalties as to where they shop, eat, buy personal services and even bank. 

 But, with new home sales in 2011 being 80 percent below the peak in 2005 (making the number of existing and new home sales the lowest in almost two decades), should bank marketers still invest in this target audience? Do consumers still spend at the same rate as in the past? Is this target audience even scaleable?

Interestingly, despite the ongoing reduction in home sales, the number of people moving has steadily increased since mid 2009, indicating that consumers in transition still represent both a risk and opportunity for marketers. In fact, the New Mover Report 2012  from Epsilon found that consumers continue to spend thousands of dollars in the months following a move, representing a valuable opportunity for those marketers who can identify and effectively communicate to new movers. 

The study also found three major themes when they looked at consumer spending habits, brand affinity and channel preferences associated with a move from one location to another:
    • Consumer brand loyalty is tested during a move, with new movers being twice as likely to change brands or service providers than non-movers.
    • New movers have an interest in changing and/or upgrading services such as banking, credit cards and insurance after a move.
    • Direct mail continues to be a highly valued channel for receiving information during a move, and is even highly valued by Gen Y consumers.

Thursday, September 20, 2012

Banks Transforming Branch Networks to Improve Efficiencies

A lot has been written lately around the desire for banks to transform their branch networks given the consumer acceptance of alternative channels and the need to reduce distribution costs. In the past week, there has been coverage in both the American Banker as well as in BAI's Banking Strategies publication (see links to recent articles and white papers below).

One such report, published by the financial market research firm Fitch Ratings entitled, U.S. Banks: Rationalizing the Branch Network, expects that both fewer numbers of branches and different types of branches will be serving customers in the future. According to the report, the continuously increasing cost structure of banking, accompanied by a challenging revenue environment and higher capital requirements is prompting banks to evaluate all expense categories — especially their branch distribution system, which is one of the most significant expenses.

Past Branch Growth

For the past 30 years, branch growth continued unabated while the number of financial institutions declined by more than 50%. The growth occurred largely through consolidation and de-novo expansion, with the objective being to expand a bank's footprint and customer base and therefore low cost deposits and loans.

Tuesday, September 18, 2012

The Changing Definition of Convenience in Banking

Historically, one of the reasons people have chosen big banks has been their large network of branches and ATMs. Especially for people like myself, who travel across the country frequently, finding a place to conduct basic transactions without a fee was a competitive advantage for those institutions with a wide distribution network.

 Recently, however, small institutions have been working on ways to erode this advantage, closing the gap through expanded ATM networks, improved online banking and now mobile banking services. In short, technology is quickly changing the definition of convenience for bank customers.

 A recent study, The New Banking Value Proposition , from market research firm Chadwick Martin Bailey, finds that credit unions and smaller banks are maintaining their perception of having high levels of personalized service while also catching up with their larger competitors in terms of banking convenience. For those smaller institutions who are focusing on new technologies, this can allow them to more effectively compete for the increasing number of accounts in motion. Additional findings include:


Thursday, March 1, 2012

Banks Need to Collect More Insights to Communicate Effectively


By Bob Williams, Director of Marketing Technologies at Harland Clarke and author of the blog, The Merchant Stand .
A friend and colleague Jim Marous shared an article from American Banker on Googe+ entitled Banks Underuse Mobile for Communication. The article discusses challenges that financial institutions have with communicating with their customers through mobile devices. While mobile device applications and mobile optimized sites are becoming more common, and expected by account holders, financial institutions are not using the mobile channel for proactive communication. Kael Kelly, senior director at Varolii is quoted in the article “Banks don’t have the data that they need. A lot of the phone number data doesn’t easily distinguish between a mobile number and a land-line.”
So the idea that banks don’t know what data they have made me think about some other data that Jim Marous shared about financial institutions and customer data. Like this tweet about banks not having email addresses for their account holders.
The challenge I see is missing or unintelligible customer profile data. That problem expands beyond the boundary of the financial services industry. It’s really a common need for any type of business. Another challenge is the misuse (or lack of use) of the data that an organization has. Another conversation with Jim last week revealed that he noticed his bank mention that online banking was 'down' using Twitter. While admirable that they used a more modern social media tool for this notification, there probably aren't many people following Twitter the way Jim does. Making matters worse, they didn't use either his email address (which is tied to his online banking account) or SMS (the bank has his cell phone) to make this notification. In other words, the bank had the tools, but didn't use what was at their disposal.

Thursday, November 3, 2011

Banking Industry Leaders Discuss Findings of Intuit Financial Management Survey

In conjunction with the release of Intuit Financial Services' 4th Annual Financial Management Survey, Banking.com hosted a Twitter Town Hall yesterday, bringing together financial industry leaders to discuss loyalty and channel migration as well as some of the challenges and opportunities facing the banking industry. The following is a recap of the very robust one hour dialogue. (the complete transcript can be found using #IFSsurvey on Twitter)

The Town Hall discussion began around the issue of customer loyalty and the finding that many consumers thought their financial provider was not 'in touch' with their needs. Given the events of the past week, where many large banks reversed decisions around the implementation of fees due to highly vocal negative sentiment amplified by social media and credit union trade group support, most participants believed that banks are not leveraging current insight and technology to make better decisions and provide value added service. 

Tobin Lee (@Tobin_Lee), Intuit Financial Services spokesperson stated, "It is time for a banker mindset shift; cultivating deeper relationships, more meaningful engagement and stronger advocacy for growth". Campbell Edlund from EMI (@EMI_mktg4sales) added, "These findings provide a very strong argument for a communications plan around the customer lifecycle". 
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