Showing posts with label checking. Show all posts
Showing posts with label checking. Show all posts

Wednesday, February 12, 2014

Tomorrow's Checking: Built For The Mobile-First Consumer

PRODUCT STRATEGIES


The checking account is the foundation of a customer relationship and has withstood the test of time even as electronic payments and debit cards have replaced checks, online banking has eliminated the need for paper statements and remote deposit capture has made a trip to the branch a rare occurrence.


But all that we have become accustomed to is about to change as we enter the era of the downloadable bank account.


The downloadable bank account differs from today's checking account because it is built specifically for Customer 3.0. This customer manages much of their life on the go from their smartphone, wants access to real-time information about their finances and wants the ability to transact business without checks or plastic. They are the type of customer who pays for their coffee with their Starbucks mobile app, and uses mobile deposit capture instead of going into the bank or credit union branch.

Tomorrow's checking is not just having mobile access to a traditional checking account. It is a bank account built for mobile.

It is a downloadable mobile banking application that provides the basic money storage and money management capabilities of today's checking as well as integrated payments, contextual insight and an overall customer experience not being provided by traditional financial institutions today. It is easy to open and manage using a mobile device, and is similar to the products offered by Moven, Simple GoBank, Bluebird in the U.S. and mBank, Fidor, Hello, CommBank and Soon overseas. Tomorrow's checking may not have any associated plastic card, but may be able to store alternative currencies as was recently announced by Standard Bank.

Both Moven and Simple Provide Exceptional
Mobile Banking Contextual Insights

While the traditional checking account may not completely go away anytime soon, the risk of not meeting the needs of the mobile-first customer is increasing. This is because more new players are entering the marketplace such as T-Mobile's Mobile Money, with the potential of providing a downloadable bank account to a much broader audience than just the underbanked, unbanked and debanked. With either an already established physical presence or no bricks and mortar, these services can be provided at a lower cost than traditional banks.

Combining the attributes of a prepaid card and a traditional checking account, new checking disruptors can provide FDIC insurance, the ability to make direct deposits and electronic payments, accessibility to nationwide surcharge-free ATMs, mobile deposit capture and even branch access, checks and integrated rewards.

Attacking on a different front, players such as Google, PayPal, Amazon, Apple, Isis and others are hoping to control the digital wallet processing component of the payments ecosystem, leaving traditional banks with only depository functions.

Wednesday, January 22, 2014

7 Reasons Mobile Money From T-Mobile Should Worry Bankers

MOBILE STRATEGIES


The cellular company that promised to shake up the wireless industry, has now disrupted the banking industry by introducing a free way for customers (and non-customers) to keep money in a checking account, make direct and mobile deposits, pay bills and get fee-free ATM access to cash with a Visa debit card.


Not to be mistaken for the future Isis mobile wallet (backed by AT&T, Verizon and others), the T-Mobile Mobile Money solution is the latest in a wave of neobank competitors such as Simple, Moven, GoBank and Amex's Serve. The major difference is that this offering comes with a vast distribution network, an established customer base, significant marketing muscle and more.


When I heard about this newest banking solution, I immediately imagined the buzz in the halls of banks and credit unions across the country. Some financial executives would be acting like it is the end of the world as we knew it, while others would immediately fall into the trap of saying, "It's no big deal". The reality is probably somewhere in between. But there is cause for concern. 

While this is not the same as turning smartphones into mobile wallets, it is a solution offered by a wireless provider that has distinct advantages over traditional banks and credit unions. I would also caution those who see this as "just a solution for the 'underbanked' (definition still under discussion)". I think it could be much more. 

In fact, in some parts of the world, mobile phones have become the de facto way for people to handle day-to-day financial transactions (as opposed to banks). The best known example would probably be Kenya’s M-PESA which is currently used by 20 million people and includes loans and savings products.

So, why should Mobile Money from T-Mobile worry U.S. bankers (in no particular order) . . ?

1. T-Mobile Has an Established Customer Base


Unlike the majority of previous neobank entrants in the market, T-Mobile already has an established customer base to draw from. T-Mobile US provides services through its subsidiaries and operates its flagship brands, T-Mobile and MetroPCS, serving approximately 46.7 million wireless subscribers (Bank of America has 55 million customers).

T-Mobile also isn't new to the personal finance arena. By separating the costs of wireless services and devices, T-Mobile already provides customers the option of financing smartphone purchases. According to T-Mobile, they have facilitated billions of dollars in loans for customer phones (all without charging a penny in interest).

"One of the main reasons we're doing this is to deepen our relationship with our customers," said T-Mobile marketing executive Andrew Sherrard.

T-Mobile's cellular pricing strategy (cheap and with no contracts) should correlate well with the demographics they are initially trying to reach. While there are definitely mass affluent and affluent customers who use T-Mobile phones, an above average segment of their customer base probably includes customers without access to traditional financial services and who are looking for lower prices.

Notice in the website marketing, that the term 'prepaid debit card' is deemphasized in exchange for references to a checking account.

Source: T-Mobile Customer Mobile Money Web Page

Monday, October 28, 2013

Bank Product Proliferation: Too Much of a Good Thing


When someone walks into your bank or credit union branch or visits online to open a new account, how many options are available to choose from? More importantly, how many different legacy products exist that are no longer offered, but still need customized maintenance, specialized communication and integration with your new digital offerings?


Has our desire to provide the best products for everyone resulted in product clutter, complexity, confusion, and additional costs? Now, there's new evidence that customers will reward us for reducing choice and for helping them move to the right product.


Beyond just reducing the current number of products we promote, it is also important to close the books on outdated product portfolios, consolidating legacy products into a more refined, less complex set of offerings. By doing so, your institution will reduce costs, generate new revenue, simplify your customers' lives and provide the foundation for future growth.

In a recent research paper from A.T. Kearney entitled, Reducing Complexity in Retail Banking: Simple Wins Every Time , it was found that the origin of banking's product proliferation challenge is the industry’s product-centric view and the lack of a traditional product lifecycle. By remaining siloed and focusing on the impact of individual products, there had been little internal incentive to reduce complexity for the customer’s benefit.

And unlike other industries, where customers are proactively shifted to the next generation of products when a new product is introduced and an old product is retired (i.e. Apple), A.T. Kearney found that most financial institutions maintain retired product portfolios forever, avoiding the risks and challenges of product migration. As a result, they found that some of their clients had more than 500 products, with two-thirds representing outdated offerings.

"One of our clients had more than 15 different savings products, with just three accounting for 90 percent of new product sales," states Torsten Eistert, partner at A.T. Kearney and co-author of the report. "Some products were being used by no more than 200 customers."

 Beyond ongoing new product introduction, the product proliferation challenge is amplified by the impact of mergers, short duration specialty products, multiple branding, etc. This doesn't even take into account the impact of different behind-the-scene pricing algorithms or customer level customization (waivers, bonus rates, etc.) that is commonplace in banking.

 As an industry, we can no longer equate variety of offerings with customer centricity. While customers say they want a variety of products and services, recent research by Filene Research Institute entitled, The Psychology of Choice Overload: Implications for Retail Financial Services  found that the assumption that consumers always benefit from more options does not always hold, and in some cases, the consumers (and the bank) benefits from fewer, rather than more, options.

Sunday, February 17, 2013

Moven: From Mobile Banking to Mobile Money

February is definitely a pivotal month for the start-up previously known as Movenbank, having changed it's name to Moven, winning the best of show honors at Finovate Europe and gearing up for a February 25 closed beta launch of its mobile-optimized financial services application. 


Founded by Bank 3.0 author Brett King, with 2ドル.4 million in seed funding, Moven is the latest but not the last in a plethora of unique banking alternatives including Simple™, GoBank™ and Bluebird™.


So what sets Moven apart from not only traditional banking organizations, but also the less traditional financial intermediaries that are entering the banking battlefield? 

First of all, Moven is not a bank. Similar to Simple, while not having a banking charter, Moven provides a unique customer experience interface with a traditional banking organization working in the background (with banking licenses, FDIC insurance, etc.). The focus of Moven from the beginning of development has been to 'help customers spend, save and live smarter' using mobile technology.

According to Brett King, "With Moven, we're not talking about downsizing an Internet banking portal onto a mobile screen or downloading a debit card onto a mobile wallet. Instead, we are creating an entirely new way of thinking about a bank account, giving the customer mobile insight and control every time they make a decision that could impact their financial health."

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, October 20, 2011

Is Bank Transfer Day a Small Bank Trojan Horse?

"A Good Day to be a Credit Union" is the headline of an article from Myriam Digiovanni in the October 19 Credit Union Times discussing the upcoming November 5 "Bank Transfer Day".

REALLY??

According to numerous news articles and coverage in both mainstream and social media, community banks and credit unions across the country are rallying around the anti-bank sentiment that has germinated from the announcement of a 5ドル debit card fee by Bank of America on September 29 and the increase in fees by other large banks. Not only have new account openings reportedly increased at several large credit unions, but social media traffic on the official Bank Transfer Day Facebook page and on other national credit union sites such as www.ASmarterChoice.org and www.CULookup.com have also seen spikes.

But is all this attention and potential new business a fortuitous gift or a potential threat to the well being and revenues of community banks and credit unions? It may just depend on who you ask and how the financial institutions on the receiving end of the disgruntled customer exodus handle their new customers and members.

Wednesday, May 4, 2011

Revenue Replacement in a New Regulatory Environment

In my travels over the past 18-24 months, a single unifying theme seems to be of primary importance for all of the banks I visit . . . the need to find new sources of revenue to help offset the impact of environmental, competitive and regulatory changes that have occurred in our industry. With the potential of the Durbin Interchange Amendment hanging over our heads, lost overdraft fees from Reg E in our rear view mirror, the ability to pay interest on business deposits and the implications of the Card Act just 18 months ago, bank earnings are being squeezed from all directions.

According to Novantas, the regulatory changes alone have slashed retail banking revenues by more than 50ドル billion per year compared to pre-crisis levels. To make this number even more staggering, Novantas estimates that the equivalent cost savings needed to offset these lost revenues would entail closing 50,000 branches or would require a 1500% increase in maintenance fees. Neither of these options are feasible.

Thursday, March 10, 2011

DDA Under Siege

As part of the planning committee for this year's BAI PaymentsConnect 2011, I would love to take credit for the great title of this program track, but I am not sure even the great minds at the BAI could have foreseen how apropos "DDA Under Siege" would be for bankers attending this year's conference that wraped up today in Phoenix.

If there was a unifying theme from the many sessions I participated in this week, it was that revenue lost from last year's Reg. E and this year's Durbin amendment can not be completely recaptured through repricing. Instead there needs to be a stronger focus on targeted customer acquisition, share of wallet growth strategies, retention, product innovation and cost containment. While everyone at the event seemed to be interested in what others were going to do around checking repricing, the energy was definitely focused on building a stronger platform for the future.

Friday, March 4, 2011

Checking Changes Make Onboarding and Cross-Selling More Important

Over the past several weeks, many of the larger banks across the country have announced significant changes to their checking account continuum, including elimination of traditional Free Checking, discontinuation of rewards programs, ceasing reimbursement of foreign ATM fees, as well as potential fees and transaction limits on debit cards.

While each of these strategies are intended to reduce costs or generate revenue in response to Reg E and the Durbin Amendment, these changes could also present a challenge to banks as they seek to increase engagement and gain share of wallet. This is because debit card use and rewards program enrollment were two of the more important account engagement criteria and basis for a broader relationship growth.

Monday, February 21, 2011

Minimizing the Impact of 'Unintended Consequences'

At the BAI Retail Delivery Conference in Boston in November of 2009, the overriding theme from major bank leaders, industry pundits and vendor partners to the financial services industry was the risk of 'unintended consequences' as a result of the yet to be implemented Reg E. There was the belief that, while the government was trying to protect people from excessive fees from overdrafts, there would be many consumers who would be negatively impacted as debit card transactions or ATM withdrawals were rejected. Based on a recent straw poll of many of the bankers I work with across the country, some of the same people the regulation was intended to 'protect' have been negatively impacted the most.

It has been almost 9 months since the implementation of Reg E, and the government has again created legislation that will have unintended consequences for a majority of bank customers. The still debated, but most likely to be implemented, Durbin Amendment to the Dodd-Frank banking bill will significantly lower the interchange income that banks can earn from debit transactions. In fact, many believe the impact could cause a reduction of 60-80% or more to this important non-interest income source.

Friday, August 27, 2010

Post Financial Reform Checking: Fee, Free or Wait and See?

With August 15 in the rear view mirror, the impact of the new regulations around overdraft protection (Reg E) are beginning to be played out in the marketplace. While most of the larger banks, such as Bank of America, Chase and Wells Fargo have declared an end to free checking without stipulations, most small and some regional banks such as US Bank, Suntrust and Capital One have left the product unchanged while many of the large regionals such as PNC, KeyBank and others appear to be adopting a wait and see approach.

In fact, according to research released this week from Moebs Services, only 63.6 percent of the largest banks currently offer free checking compared to 92.6 percent in 2009, while community banks’ use of free checking declined only declined from 78.3 percent to 71.7 percent.

Friday, June 4, 2010

Chase Introduces Instant Action Text Alerts to Allow Customers to Avoid OD's Immediately

In the February 2010 Javelin Strategy and Research report on financial alerts, some of the major flaws of current alerts included difficulty of setting alerts up, lack of timeliness, not actionable enough and poorly marketed. In addition, the research found that one of the highest utility features from both a customer and bank perspective is the ability to alert and respond to potentially insufficient funds.

Expanding on their very popular low balance alert mobile banking feature, Chase Bank just introduced a new feature that addresses many of these flaws by allowing customers to easily respond to a low balance alert from the bank by immediately transferring funds through text messaging.

Wednesday, June 2, 2010

Alternatives to Online Bill Payment May Drive Stronger Engagement

Research has shown that one of the strongest engagement tools for new and existing checking customers is to have the customer set up online bill payment. Unfortunately, even with aggressive 'switch' programs, the success banks have had trying to get customers to sign up for online bill payment has been less than overwhelming.

To try to simplify the signing up for online bill pay (and reduce first year attrition), some banks have moved to promoting the payment of bills using debit and credit cards. In the case of using a debit card, the payment still is taken from a customer's checking account and the process for signing up can actually be easier than with a traditional biller. In addition, using a debit card for bill payment can generate interchange income for the bank, rewards for the customer, and if the payment is recurring, it will not be subject to the new Reg E stipulations.

Sunday, May 2, 2010

Is Cash Really King?


The competition is again heating up in the checking account cash wars. In addition to banks that have traditionally offered cash incentives to open checking accounts such as JPMorgan Chase, Capital One, Fifth Third and PNC Bank, banks that in the past have offered premiums for the opening of new accounts like KeyBank are now also joining the money for checking acquisition game.

While incentives with some institutions are still 50ドル-75,ドル many of the more aggressive institutions are offering rewards of 150ドル-200ドル to new customers that open accounts and meet some qualifying stipulations such as signing up for direct deposit, online billpay or a minimum number of signature debits. A recent program by Capital One offering 300ドル for a new account was the highest premium seen in years.

Tuesday, April 20, 2010

BAI Checking 2.0 Executive Forum Recap

I just finished presenting at the second BAI Checking 2.0 Executive Forum in Chicago where close to 50 financial institutions learned about legislative changes, customer perceptions, new product development and marketing opportunities around the checking account. While only a month has passed since the first Checking 2.0 Executive Forum held in Atlanta, it is obvious that there are a number of changes occurring in the marketplace.

There was consensus among the participants that while consumer trust and confidence in banks has been negatively impacted by the events of the past two years, there may be some uptick in these measures over the next few months if financial results continue to improve and if banks continue to focus on the customer experience.

Sunday, March 28, 2010

Don't Forget Small Businesses With Your Reg E Communication

While small businesses are not impacted directly by Regulation E, many of the banks at the Atlanta BAI Checking 2.0 Executive Forum where I spoke last week indicated that they will be reaching out to their small business customers to explain the law and the potential impact on their retail business.

Not only do many smaller businesses use consumer checking accounts for their small business transactions (with the potential for debit card rejected transactions), but with the potential for so many customers of small businesses having payments for goods and services rejected after the implementation of Reg E, banks are communicating details around this consumer legislation and options as to how to deal with transactions that are rejected.

Sunday, March 14, 2010

Checking 2.0 Executive Forum to Discuss Reg E Strategies and Economics

On March 23 in Atlanta and April 20 in Chicago, I will be presenting along with leaders from Novantas, the Federal Reserve and others at BAI's Checking 2.0 Executive Forum. This one day session in two cities will allow senior banking executives to receive proprietary research and interact with peers in discussions around the best ways to respond to changing legislation impacting checking accounts. My lunchtime presentation will leverage the findings of research presented by BAI and Novantas, discussing ways banks are approaching the communication of Reg E changes with their customers and how future marketing initiatives will be impacted by this new legislation.

Thursday, March 4, 2010

Free Checking Obituary

Seeing that a lot of industry writers seem to be already announcing the death of Free Checking as a likely outcome of Reg E, I thought it would be appropriate to write an obituary for this product that saw such an active and successful life.

While many may claim to be the father of this service, paternity tests will most likely point to Ralph Haberfeld as the individual who most nurtured this service during the formative years and who was the strongest proponent of the benefits of the fee income associated with Free Checking. Ten years ago, when some banks (and consultants) began "pushing" free checking, there was concern about losing the meaningful income of monthly fees associated with traditional checking accounts.

Saturday, February 13, 2010

Mobile Banking Popular Among Smart Phone Users

According to the "Mobile Money Study" published last month by Data Innovation Network almost 70% of US smartphone users had used at least one mobile banking and/or payment service on their phone in the previous three months.

As has been found in previous studies and reinforced by Doug Brown from Bank of America at last year's BAI Retail Delivery Conference in Boston, the Mobile Money Study found that checking account balances was the most popular banking application (82%) followed by looking for posted transactions (62%). Account alert features were also popular (46%), with roughly 40% of those surveyed transferring money between accounts.

Wednesday, February 10, 2010

Targeting New Movers for Enhanced Growth

According to the U.S. Census Bureau, the national mover rate declined from 13.2% in 2007 to 11.9% in 2008 - the lowest rate of moves on record. Still, over 30 million people changed residences during this one year period, representing a powerful opportunity for new customer growth. In fact, even though the demographics of movers has skewed younger, with a higher percentage of renters moving, this segment continues to outperform all other prospect universes from a new customer acquisition perspective.

While many of my clients continue to focus on checking offers for the new mover segment, more banks are realizing the benefits of promoting products such as money market accounts and even equity credit and investment services.
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