tag:blogger.com,1999:blog-89301531019884416602024-03-05T19:41:04.470-05:00Bank Marketing StrategyAnonymoushttp://www.blogger.com/profile/05424097007271218756noreply@blogger.comBlogger242125tag:blogger.com,1999:blog-8930153101988441660.post-54632196358244372352014-04-08T22:06:00.000-04:002014-04-08T22:06:42.034-04:00For The Best In Bank Marketing Strategies, Go To The Financial Brand<div class="separator" style="clear: both; text-align: center;">
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<h2>
Effective immediately, all articles from Jim Marous appear in the <a href="http://thefinancialbrand.com/retail/" target="_blank">Retail Banking Strategies</a> section of <a href="http://thefinancialbrand.com/" target="_blank">The Financial Brand</a>. </h2>
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Many of the most popular articles written for Bank Marketing Strategy in the past are already migrated to the new location. By late June 2014, all of the remaining content from Bank Marketing Strategy will be available at the new location. </h2>
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If you are a subscriber to Bank Marketing Strategy, you will be receiving an email newsletter every other week containing all of the articles I have written over the previous 14-day period (eventually this will be a weekly newsletter). </h2>
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If you are not a current subscriber, but would like to become one, go <a href="http://thefinancialbrand.com/subscribe/" target="_blank">here</a>.</h2>
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Anonymoushttp://www.blogger.com/profile/05424097007271218756noreply@blogger.com0tag:blogger.com,1999:blog-8930153101988441660.post-81302056541103254022014-04-04T00:00:00.000-04:002014-04-06T12:21:25.392-04:00Bank Marketing Strategy Joins The Financial Brand<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjJisQVUPCo_mb3Eg4tzIgWxcKgZBppThcJosW5Ja4lIj2xWqcAvtYc3J0bNhwvmv8_s1G40Pp9FhBGLyqTzdcXoEbnXbeSQAf-L6Jfk5RpCw4KzMOQnkQT5PgQOqZbHQPr-ekmiedN7_0/s1600/RBS+Logo.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjJisQVUPCo_mb3Eg4tzIgWxcKgZBppThcJosW5Ja4lIj2xWqcAvtYc3J0bNhwvmv8_s1G40Pp9FhBGLyqTzdcXoEbnXbeSQAf-L6Jfk5RpCw4KzMOQnkQT5PgQOqZbHQPr-ekmiedN7_0/s1600/RBS+Logo.jpg" /></a></div>
<h3>
Beginning today, <b>Bank Marketing Strategy</b> will be known as Retail Banking Strategies and will become part of <a href="http://www.thefinancialbrand.com/retail" target="_blank">The Financial Brand</a>.</h3>
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Go to the <a href="http://www.thefinancialbrand.com/retail" target="_blank">new site</a>. </h3>
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When I launched Bank Marketing Strategy over four years ago, the financial services industry was a lot different than it is today. We were in the middle of a huge financial crisis, the first iPad was just introduced, and banking customers were still more likely to go to branches than to bank on mobile devices.</div>
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My website began as a quest to better understand social media and content creation, with early posts generating less than 100 page views. Today, most articles published are viewed by more than 5,000 people, with the most popular article generating more than 35,000 page views. Boy, have times changed. And my website has evolved as well.<br />
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For the last two years, I’ve been talking with Jeffry Pilcher, publisher/founder of The Financial Brand about ways we could partner and work together. After careful planning and months of preparation, I’m pleased to announce that The Financial Brand will be my new publishing home.<br />
<br />
<a href="http://thefinancialbrand.com/subscribe" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img alt="Subscribe Today" class="alignright" src="http://thefinancialbrand.com/wp-content/themes/wp-prolific-prem/images/subscribe_today.gif" title="Subscribe to The Financial Brand via email for FREE!" /></a>Effective today, I’ll be sharing my insights at the Retail Banking Strategies section of The Financial Brand. Articles from my this site will be moved to the new location as quickly as possible (it is a manual process). The most popular articles have already been migrated, with the complete transition expected by June 1. Until articles are migrated, they will still be available on Bank Marketing Strategy.<br />
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<span style="font-family: inherit;">By combining forces, we will be able to dig deeper into the opportunities and challenges banks and credit unions face. While The Financial Brand will continue to deliver the marketing, branding and advertising coverage you’ve come to expect, my Retail Banking Strategies section will provide a deeper level of analysis and perspectives into the issues confronting CEOs, CMOs, COOs and retail bankers at financial institutions around the world such as:</span><br />
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<ul>
<li><span style="font-weight: normal;"><span style="font-family: inherit; font-size: small;">Distribution strategies</span></span></li>
<li><span style="font-family: inherit; font-size: small; font-weight: normal;">Customer experience management</span></li>
<li><span style="font-family: inherit; font-size: small; font-weight: normal;">Online and mobile strategies</span></li>
<li><span style="font-family: inherit; font-size: small; font-weight: normal;">Payments</span></li>
<li><span style="font-family: inherit; font-size: small; font-weight: normal;">Retail banking technology</span></li>
<li><span style="font-family: inherit; font-size: small; font-weight: normal;">Product development</span></li>
<li><span style="font-family: inherit; font-size: small; font-weight: normal;">Innovation</span></li>
<li><span style="font-family: inherit; font-size: small; font-weight: normal;">Sales/marketing strategies</span></li>
</ul>
<span style="font-family: inherit; font-size: small;"><span style="font-weight: normal;">As in the past, my Retail Banking Strategies section will combine my personal views and analysis with guest posts from some of the brightest minds in the industry. I will also continue to include crowdsourcing articles that provide views from dozens of financial industry followers worldwide.</span><span style="font-weight: normal;"><br />
</span></span><br />
<span style="font-family: inherit; font-size: small;"><span style="font-weight: normal;">I want to thank all those who have read and shared the hundreds of posts I’ve written over the last four years. Your loyalty and readership has transformed my modest website with humble beginnings into one of the most popular digital publications in the industry, with over 1 million pageviews annually. </span></span><span style="font-family: inherit; font-size: small; font-weight: normal;">Without your continued support, the opportunity to launch Retail Banking Strategies at The Financial Brand would not have been possible.</span><br />
<span style="font-family: inherit; font-size: small; font-weight: normal;"><br /></span>
<span style="font-family: inherit; font-size: small; font-weight: normal;">I also want to thank the many people who have been instrumental in my growth. </span><span style="font-family: inherit; font-size: small; font-weight: normal;">To </span><a href="http://www.linkedin.com/in/brettking" style="font-family: inherit; font-size: medium; font-weight: normal;" target="_blank">Brett King</a><span style="font-family: inherit; font-size: small; font-weight: normal;">, </span><a href="http://www.linkedin.com/pub/ron-shevlin/3/4a1/822" style="font-family: inherit; font-size: medium; font-weight: normal;" target="_blank">Ron Shevlin</a><span style="font-family: inherit; font-size: small; font-weight: normal;">, </span><a href="http://www.uk.linkedin.com/in/cmskinner" style="font-family: inherit; font-size: medium; font-weight: normal;" target="_blank">Chris Skinner</a><span style="font-family: inherit; font-size: small; font-weight: normal;">, </span><a href="http://www.linkedin.com/in/matthewwilcox" style="font-family: inherit; font-size: medium; font-weight: normal;" target="_blank">Matt Wilcox</a><span style="font-family: inherit; font-size: small; font-weight: normal;">, </span><a href="http://www.linkedin.com/in/devaannamalai" style="font-family: inherit; font-size: medium; font-weight: normal;" target="_blank">Deva Annamalai</a><span style="font-family: inherit; font-size: small; font-weight: normal;">, </span><a href="http://www.sg.linkedin.com/in/robfindlay" style="font-family: inherit; font-size: medium; font-weight: normal;" target="_blank">Rob Findlay</a><span style="font-family: inherit; font-size: small; font-weight: normal;"> and </span><a href="http://www.sg.linkedin.com/in/scottbales" style="font-family: inherit; font-size: medium; font-weight: normal;" target="_blank">Scott Bales</a><span style="font-family: inherit; font-size: small; font-weight: normal;">, and </span><a href="http://www.linkedin.com/in/leimer" style="font-family: inherit; font-size: medium; font-weight: normal;" target="_blank">Bradley Leimer</a><span style="font-family: inherit; font-size: small; font-weight: normal;">, I offer you my deepest gratitude. You are some of the foremost visionaries in the financial industry, and I consider myself the fortunate beneficiary of your insight and friendship.</span><br />
<span style="font-family: inherit; font-size: small;"><span style="font-weight: normal;"><br /></span></span>
<span style="font-family: inherit; font-size: small;"><span style="font-weight: normal;">
To the many bloggers and tweeters who I communicate with regularly, your continuous support and insight is also valued beyond measure.</span><span style="font-weight: normal;"><br />
</span></span><br />
<span style="font-family: inherit; font-size: small;"><span style="font-weight: normal;">And most of all I’d like to thank my wife, son and the rest of my family. If it weren’t for their patience as I write on weekends and late at night, their confidence in me and their ongoing encouragement, I wouldn’t be where I am today.</span></span><br />
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Anonymoushttp://www.blogger.com/profile/05424097007271218756noreply@blogger.com7tag:blogger.com,1999:blog-8930153101988441660.post-46619171846342224522014-03-31T00:00:00.000-04:002014-04-06T12:23:30.763-04:0010 Ways iBeacon Can Improve Banking Sales & Service<h3>
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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.</h3>
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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.<br />
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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 - $100 each) can be placed in physical branch locations, linking the bank branch with consumers' smartphones.<br />
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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.<br />
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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.<br />
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Consumer Acceptance of In-Store Alerts</h3>
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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 <a href="http://venturebeat.com/2014/01/15/ibeacon-retailers/" target="_blank">commissioned by Swirl</a>, 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.</div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiLEzCoHmCRCiUQ0rk_sRXBNB-afiNWrhyT0_zHavXSf2R8k5pxAI23jt2qZSCgNHgxlRIGl1dyN77vez-ZRy4Umt8Y3pG-7uIQ7L3e4KxDHHjp7v3bSP6KZwTJg1i__ChHEu2QyiZAxQM/s1600/Alert+Acceptance.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiLEzCoHmCRCiUQ0rk_sRXBNB-afiNWrhyT0_zHavXSf2R8k5pxAI23jt2qZSCgNHgxlRIGl1dyN77vez-ZRy4Umt8Y3pG-7uIQ7L3e4KxDHHjp7v3bSP6KZwTJg1i__ChHEu2QyiZAxQM/s1600/Alert+Acceptance.png" height="280" width="640" /></a></div>
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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;<br />
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<li>41 percent said they were not relevant to their interests or location</li>
<li>37 percent stated the offers did not provide enough value</li>
<li>16 percent fount the alerts to be annoying</li>
<li>6 percent did not opt-in to receive the notifications</li>
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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. </div>
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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.</div>
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<a href="http://jimmarous.blogspot.com/p/subscribe-via-email.html"><img alt="Subscribe to Bank Marketing Strategies" border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgwfJ0lGJpnhnYRFh6RvZSP7OXYxR3y2dxiLVK7rOBsdutfAYPaMQ2Gdh_vbhZpdUB7ZzxaKWM7E3Ej-_8rhOqCEAv1W8K5dJ1JYeZd0LHl5hUWMW7lcs-HsPVrEAX-hcbIMP8vi5glZhQ/s1600/subscribe_now.jpg" title="Subscribe to Bank Marketing Strategies" /></a><br />
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<a name='more'></a>iBeacon Banking Applications</h3>
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Announced in February 2014, Australian bank <a href="http://www.zdnet.com/westpac-new-zealand-to-test-google-glass-and-apples-ibeacon-7000025903/" target="_blank">Westpac is planning to trial the technology</a> in selected branches over the coming months. iBeacon will work with both iPhone and Android devices and will be used to send customers special offers and other incentives on their device when they are in a branch or walking past the office. It'll also give bank staff full details of a customer's business with Westpac when they enter a branch.<br />
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It'll be an opt-in service, fully integrated into Westpac's mobile app.<br />
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Some potential ways banks and credit unions could leverage the potential of iBeacon technology include:<br />
<ol>
<li><b>Welcome Communication</b>: As customers pass or enter a branch, the bank can deliver a welcome message to the customer and a summary of services available at the branch. This could include a personalized map of the office and the available specialists currently at the office. Any special offers can also be highlighted.</li>
<li><b>Customer Recognition</b>: When a customer enters a branch, branch personnel can be alerted and can be provided transaction history and sales prompts for interacting with the customer based on their value. This enhanced recognition can improve service and loyalty.</li>
<li><b>Availability and Wait Times</b>: Much like at an Apple store, a customer could be provided the wait times for specific services/specialists as well as a way to set an appointment using their smartphone app.</li>
<li><b>Personalized Product Offers</b>: Offers based on previous customer activity, account ownership and even demographics and credit score can be sent to the customer's smartphone upon entering the branch. This could allow for dynamic pricing of services or rewards offers based on the customer's current relationship or relationship potential.</li>
<li><b>Location Specific Offers</b>: If a customer is standing at a deposit slip counter, they could receive a notification (along with introductory video) related to remote deposit capture services.</li>
<li><b>Education</b>: When a customer is waiting for a teller or platform officer, highly relevant short form educational videos can be delivered to the customer's smartphone for viewing. These could include direct links to already partially completed application/authorization forms.</li>
<li><b>Surveying</b>: iBeacon can provide a way to solicit customer opinions and service ratings when the customer visits or leaves the branch.</li>
<li><b>Branch Analytics</b>: With iBeacon, banks will be able to understand which customers are using branches, what are the busiest days and times, how long on average are customers spending in branches and what type of transactions customers are completing. This data can assist in optimizing the branch experience for customers in the future. This data can also assist in cross-channel attribution tracking.</li>
<li><b>Beacon Enabled ATMs</b>: For customers who have authorized communication via their mobile device, personalized offers can be delivered to the phone after an ATM visit based on the customer's relationship. This technology could also potentially replace the need to use a card to access the ATM.</li>
<li><b>Post Visit Retargeting</b>: The ability to communicate with the customer via mobile, online, phone, etc. after a branch or ATM visit is possible applying the learnings collected during the visit.</li>
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Financial institution marketers should be excited about the opportunity to target customers as they walk past or enter a branch or use an ATM. It remains to be seen, however, how consumers will react to the growing number of retailers and other organization that track customer locations and push out offers.<br />
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Privacy advocates have already raised concerns about the use of iBeacon to deliver messages and offers. Until privacy laws and guidelines are updated to account for advances in technology like iBeacon, the onus will be on the bank or credit union to implement clear opt-in processes and focus on delivering value to customers as opposed to simply pushing out a series of offers.<br />
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The good news for banks is that locational alerts could turbocharge the activation and utilization of bank and credit union mobile apps. In retail, 80 percent of consumers surveyed said that they would use their mobile app more often if the apps delivered sales and promotion alerts. This can support the goal of transforming current mobile banking apps into indispensable financial applications that can deliver relevant and timely digital content.Anonymoushttp://www.blogger.com/profile/05424097007271218756noreply@blogger.com4tag:blogger.com,1999:blog-8930153101988441660.post-74315814123245940222014-03-26T00:00:00.000-04:002014-04-06T12:25:52.526-04:00How to Become Your Customers' Everyday Bank<h3>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj9QbP-YDcddzEcTOWGCo6_P6JfsoyHN635GtM9qFgrPhdiPwX2UA2jum8q2vVwxJ6sfZNsSD4e3R2mQWJicYl47bW0K083U4IAy0CcZ8KXjKFMJUCFKB6ktGi7guwpyx444OKAkjVb34c/s1600/everydaybank-hero-mobile.png" imageanchor="1" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj9QbP-YDcddzEcTOWGCo6_P6JfsoyHN635GtM9qFgrPhdiPwX2UA2jum8q2vVwxJ6sfZNsSD4e3R2mQWJicYl47bW0K083U4IAy0CcZ8KXjKFMJUCFKB6ktGi7guwpyx444OKAkjVb34c/s1600/everydaybank-hero-mobile.png" height="200" width="153" /></a></div>
Banks have a unique opportunity to capitalize on the vast amounts of customer insight they hold to go beyond simply facilitating payments. They can reinvent themselves as an Everyday Bank, helping customers reach decisions about what to buy, when and where to purchase, and even helping to negotiate the best deals in a ubiquitous format.</h3>
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Non-banks are capturing more and more of the banking value chain, providing services such as payments, checking and even savings accounts that could erode as much as one-third of traditional bank revenues by 2020 according to Accenture. These new entrants pose a threat to banks by raising service expectations and coming between banks and their customers.</div>
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According to a new report from <b><a href="http://www.accenture.com/" target="_blank">Accenture</a></b>, entitled "<i><a href="http://www.accenture.com/microsites/everydaybank/Pages/index.aspx" target="_blank">The Everyday Bank</a>,</i>" the response is not just about closing branches, improving online and mobile banking offerings or making current products and services "more digital." Instead, banks need to move further into the daily lives of customers, providing assistance before, during and after the financial transaction.</div>
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Customer behaviors and expectations are quickly adjusting to a world where products and services are recommended based on past behaviors and where location-based offers are provided instantaneously on their mobile device. Customers want information to be fingertip-ready. </div>
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The Everyday Bank</h3>
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<a href="http://thefinancialbrand.com/subscribe" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img alt="Subscribe Today" class="alignright" src="http://thefinancialbrand.com/wp-content/themes/wp-prolific-prem/images/subscribe_today.gif" title="Subscribe to The Financial Brand via email for FREE!" /></a>
According to Accenture, an Everyday Bank leverages the vast amount of insight it possesses to become central to a customer's financial and non-financial digital ecosystem. The Everyday Bank reinvents itself as a value aggregator, advice provider and access facilitator, acting proactively on the customer's behalf, improving reputation and trust. </div>
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An Everyday Bank drives continuous daily interaction by building partnerships and connections with provider partners who offer goods and services in every area of area of consumption, including retail, home services, health and security, travel and leisure, communication and transportation. By tapping its wealth of transactional data, without ever sharing analytic information outside of its four walls, the bank reaches out to the right third-party providers and other key players to build a digital customer experience combining mobile, big data, analytics, digital marketing coupling, ticketing capabilities (at ATMs?) and more.<br />
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The Everyday Bank uses its digital engine to automate front- and back-office processes to optimize for speed, efficiency and scalability. According to Accenture, a highly functioning Everyday Bank can:</div>
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<ul>
<li>Slash back-office effort by as much as 80 percent</li>
<li>Reduce its managed applications portfolio by 70 percent</li>
<li>Cut time to market by 40-50 percent</li>
<li>Increase operating income by 25-30 percent</li>
</ul>
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In a real-life example, an Everyday Bank has the rich customer data to know when a customer may want to purchase a car (based on the age of current vehicle, family structure, etc.). After offering the customer assistance if they agree that a car purchase is in order, the bank can recommend vehicle models that might fit their lifestyle, personal preferences and budget. </div>
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Next, because the bank is in a position to negotiate thousands of car deals on behalf of their customers, they can get a price that meets both the customer's and dealers needs. After bundling in insurance and any other after-market products, the bank then recommends a payment plan that is best for the customer.<br />
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According to Accenture, the five critical elements of an Everyday Bank include:<br />
<ol>
<li>Provides services that are digitally optimized across a variety of platforms</li>
<li>An omnichannel approach</li>
<li>Uses big data and predictive analytics to help anticipate customer financial and non-financial needs</li>
<li>Offers a human touch for high value interactions</li>
<li>Is attuned to their customers' moments of truth</li>
</ol>
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The Everyday Bank also brings pricing transparency, trusted advice, social recommendations and transactions - as easy as one click.</div>
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<h3>
Benefits of Becoming an Everyday Bank</h3>
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For banks that build the capabilities of an Everyday Bank, the rewards are significant. According to Accenture, banks that exploit their rich customer purchasing data and secure data management capabilities can increase customer interactions by 250 percent.</div>
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Most importantly, the bank's customers enjoy the benefits of a financial partner who can anticipate their needs, looks out for them and rewards them for their loyalty by recommending ideal providers. They enjoy an improved experience that saves them time and money with a much more personalized relationship. Merchants and service providers also benefit from the bank's customer insights through improved targeting driven by the bank and increased sales volumes.</div>
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By acting as a digital value aggregator, the bank is rewarded with deeper relationships, increased loyalty and improved profitability due to a higher volume of lower-cost transactions and additional service fees.<br />
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It is important for banks to act quickly to become the indispensable Everyday Bank, moving customers from doing occasional interactions to being embedded into their digital lives with daily interactions. Banks need to develop the digital partnerships with merchants, suppliers, small and medium size businesses, telcos and other digital companies to deliver new products and enhanced service for the customer.</div>
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By collaborating with these partners as opposed to competing, the bank can be repositioned at the center of the customer's everyday life, becoming integral to both financial and non-financial needs. The Everyday Bank has the opportunity to acquire <i>all</i> segments of customers at an efficient cost (including underbanked, unbanked or unhappily-banked populations), using the number of interactions with these customers to offset the lower income per transaction.<br />
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<h3>
Everyday Banking in Action</h3>
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Below are examples provided by Accenture where banks have leveraged their customer insight and extended beyond traditional banking services to provide value to customers.</div>
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<b>The Commonwealth Bank of Australia</b></div>
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Using augmented reality in a mobile application, The Commonwealth Bank of Australia helps its customers looking to buy a new house. The mobile app provides details on 95 percent of the residential properties available for sale throughout the country.</div>
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Included is data related to recent sales and prices, information about the neighborhood, and the location of each property in relation to where the customer is at any time. Integrating financial services into the application, the bank offers details about mortgage loans and insurance that can be purchased through the bank's website.</div>
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<b>BBVA</b></div>
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BBVA of Spain supports its customers when they purchase a new car by equipping the customer with information on both the list price and selling price of the car. The app also offers loan and insurance information. The bank's goal is to ensure that its customers can negotiate the best deal.</div>
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To become an Everyday Bank, BBVA could expand this partnership with the customer by anticipating when the customer may be in the market for a car. This could be achieved by using outside insight into the age of the car owned by the customer and recent purchase cadence (the customer has shown a history of purchases every 3 years), upcoming auto loan final payments, or change in household structure (marriage, birth).</div>
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The bank could also build relationships with several dealers, allowing itself to negotiate prices on behalf of the customer and even provide offers related to after sale service, etc.<br />
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The Everyday Bank Challenge</h3>
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To be a profitable industry, banks cannot simply rely on providing accounts and access to funds. Competitors are eating away at significant parts of the banking value chain with the potential of limiting banks to becoming nothing more than utilities.<br />
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The future of the industry will depend on its ability to leverage the power of customer insight and digital technology to provide services that help today's tech-savvy customers save and better manage their everyday lives. If banks don't move quickly, however, competitors will insert themselves into the buying process, gaining the valuable purchase insight that is the domain of the banking industry today.</div>
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Anonymoushttp://www.blogger.com/profile/05424097007271218756noreply@blogger.com3tag:blogger.com,1999:blog-8930153101988441660.post-86409060043900185012014-03-24T00:00:00.000-04:002014-03-24T00:00:01.238-04:00Omnichannel Banking: More Than a Buzzword<h3>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhTbixrj8Z73_JuddOgUBPiIS8VggEo55Qn3Jy8njQ7AvO1ODiZjFPb30GIJP_srm9PFWE-YQIPK8O4BX6yOU0zPJK7Of3v_MjR0BVqzyB7TXsLvLU4J-B-O_1coGbRl8HBCq8L5SLCJ_w/s1600/omnichannel.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><span style="color: black;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhTbixrj8Z73_JuddOgUBPiIS8VggEo55Qn3Jy8njQ7AvO1ODiZjFPb30GIJP_srm9PFWE-YQIPK8O4BX6yOU0zPJK7Of3v_MjR0BVqzyB7TXsLvLU4J-B-O_1coGbRl8HBCq8L5SLCJ_w/s1600/omnichannel.jpg" /></span></a></div>
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.</h3>
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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.</div>
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<h3>
The Importance of Omnichannel Banking</h3>
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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.<br />
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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.<br />
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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.<br />
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Channel Use Shifts <i>and </i>Increases</h3>
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It shouldn't come as a surprise that branch transaction volumes are slowly trending downward or that online and especially mobile banking usage are quickly trending up. What is less clear is whether call center usage will decline as more transactions migrate to digital platforms, or will it, in fact, increase as customers use call centers as their digital help desk? Finally, will Facebook, Twitter, and other social media platforms become banking channels in the future?<br />
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According to the channel usage component of the latest <i><a href="http://thegallupblog.gallup.com/2014/02/bratmo-mobile-and-social-latest-stats.html" target="_blank">U.S. Retail Banking Study</a></i> from <b><a href="http://www.gallup.com/strategicconsulting/en-us/banking.aspx" target="_blank">Gallup</a></b>, three different themes are emerging:<br />
<ul>
<li><b style="font-weight: bold;">The branch-ATM-online trifecta still defines the core of day-to-day banking</b><b style="font-weight: bold;">.
</b>The core banking needs of most customers are being handled by branches, ATMs and online banking. In fact, nearly half (46%) of customers have used all three of these channels over the past six months. While it may cost a bank more to serve these customers (compared, for example, to those who use mainly digital or phone channels) these core customers keep an average of 4% more of their deposits and investments with their primary bank and generate an estimated $155 more in profit per year to their primary bank than people who don’t use all three of these channels. So while it may be commonplace to talk digital-first, banks can’t alienate a significant portion of the customer base in the process.</li>
</ul>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgi0yDzzm3z1CMXVjUldBEE9nH2Kc48nQ6S_sEfgoJsrdZK2L1YzKQERP8_ExbGPVH9dnAyEaU97w7lCcNDU0GAVG35bt4TcoWOqq_nyYWkGJMwbBUa-Wnd_4Hzs3L1Nu_C9zasXdx_bIg/s1600/contactchannel_GEN_graph_sd-01.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"></a><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgi0yDzzm3z1CMXVjUldBEE9nH2Kc48nQ6S_sEfgoJsrdZK2L1YzKQERP8_ExbGPVH9dnAyEaU97w7lCcNDU0GAVG35bt4TcoWOqq_nyYWkGJMwbBUa-Wnd_4Hzs3L1Nu_C9zasXdx_bIg/s1600/contactchannel_GEN_graph_sd-01.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgi0yDzzm3z1CMXVjUldBEE9nH2Kc48nQ6S_sEfgoJsrdZK2L1YzKQERP8_ExbGPVH9dnAyEaU97w7lCcNDU0GAVG35bt4TcoWOqq_nyYWkGJMwbBUa-Wnd_4Hzs3L1Nu_C9zasXdx_bIg/s1600/contactchannel_GEN_graph_sd-01.jpg" height="381" width="400" /></a></div>
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<ul>
<li><b style="font-weight: bold;">Mobile banking usage is on the rise, but it is adding to, not replacing, other channels</b><b style="font-weight: bold;">.
</b>Among the largest U.S. banks that Gallup studied in both 2012 and 2013, heavy users (at least once per week) of mobile banking increased by 11 percent (more than in any other channel). Not surprisingly, 57% of Millennials/Gen Y customers have gone mobile for their banking. That percentage falls to 37% for Gen X customers, 16% for baby boomers, and less than 10% for seniors. <br /><br />Interestingly, this increased mobile usage has not led to a significant reduction in customers’ use of other channels. The Gallup research shows that customers that use mobile banking also use other channels more frequently than the average customer. Among mobile banking users:</li>
<ul>
<li>79% have also used a branch in the last six months</li>
<li>84% have gone to an ATM</li>
<li>95% have used online banking</li>
<li>58% have spoken to a call center agent</li>
<li>15% have contacted their bank via Twitter</li>
<li>19% have contacted their bank via Facebook (compared to only 1% and 2%, respectively, among non-mobile users)</li>
</ul>
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Below is the breakdown of channel use based on branch type/size:</div>
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<ul>
<li><b>Social media customers are valuable</b>. Slightly less than 9% of customers contacted their bank via Facebook or Twitter during the six months of the Gallup study, and roughly half of those have done both. These socially engaged customers are both younger (91% are either Gen X or Gen Y) and more affluent. These customers are 12% more likely to be mass affluent ($100K to less than $1M in investible assets) and 18% more likely to be emerging affluent (age 35 or under with incomes over $75K/year.)
These customers also are more engaged with their bank and hold much more positive feelings toward their bank than the typical customer. </li>
</ul>
Given the strong “AAA” status (age, affluence, and attitudes) of these customers, banks should continue to develop, refine, and strengthen their social media focus where feasible based on other priorities.<br />
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While more and more customers are moving to digital channels to conduct their routine banking, they aren't abandoning traditional channels at the same pace. This may be caused by banks not providing easy-to-use digital new account opening options or even simple mobile apps.</div>
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The Gallup research found that, even among those who visited a branch less than once a month, 80% chose to initiate their account opening in a branch and only 8% started by opening their account online. When customers did open their account online, they were far less satisfied with the account opening experience (nearly 20 percentage points less) than were those who opened their account in a branch.<br />
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So, while the industry and more consumers are trying to embrace the omnichannel perspective, the vast majority of new accounts are still initiated in the branch. This is because digital channels don’t offer customers the kind of experience they desire for more complex, important interactions like opening an account.<br />
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Building a positive omnichannel experience remains a work in progress for most banks and credit unions. Research shows that when done well, an omnichannel experience can strengthen relationships streamline the experience and increase profitability. Unfortunately, most banks, and many customers haven't completely bought in.Anonymoushttp://www.blogger.com/profile/05424097007271218756noreply@blogger.com1tag:blogger.com,1999:blog-8930153101988441660.post-8732910234117258362014-03-18T00:00:00.000-04:002014-03-18T00:00:06.381-04:00Retail Bankers Unprepared For The Future<h3>
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At a time when powerful forces are disrupting the retail banking industry, financial services executives agree that a transformation of the banking landscape is inevitable. Unfortunately, while they agree on the priorities that are integral to success in 2020, fewer than 20 percent feel prepared to address these priorities.</h3>
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In a survey of 560 executives from leading financial institutions across 17 markets entitled, "<a href="http://www.pwc.com/gx/en/banking-capital-markets/banking-2020/download-and-read-the-report.jhtml" target="_blank">Retail Banking 2020: Evolution or Revolution</a>," <a href="http://www.pwc.com/" target="_blank">PwC</a> found that 90 percent of financial services executives agree on the priorities that are the foundation for success in 2020, yet only a fifth (20 percent) feel well-prepared to address these priorities despite the fact that nearly all (96 percent) believe that a fundamental transformation of the banking industry is inevitable.<br />
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"Growth remains elusive, costs are proving hard to contain, returns remain stubbornly low and regulation is impacting business models and economics," said <a href="http://www.linkedin.com/pub/john-garvey/0/887/96">John Garvey</a>, U.S. banking and capital markets leader at PwC. "Simultaneously, the evolution of technology and heightened customer expectations combined with the emergence of disruptive competitors creates new pressure to deliver higher levels of service at a time when value and trust in the sector is at an all-time low. Surviving and succeeding in this environment may require a fundamental rethink in approach."<br />
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<h3>
Today's Challenges</h3>
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The impact of growing and changing regulations is the primary challenge for retail banks in the U.S. (47 percent) and Europe (40 percent), where banks are trying to stop seeing regulations as a burden and hoping to weave compliance into the fabric of their operations.<br />
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In the U.S., attracting new customers (35 percent) and increasing profitability (33 percent) ranked second and third respectively, aligning with the hierarchy of investment priorities (56 percent regulatory compliance, 46 percent enhancing customer service and 30 percent implementing new technology).<br />
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<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiYoZgSAyPddRzZA8mysxoionUfXnZ66Q9VTCERtFhJLaFEbi7c5smo8ZY_04p4EjzCjcBhRBIqAn3O8RYX2v3UEb0a6-lDxuSJgexKBEGNPnTXwzg0hOc0-SV-eAy6dJFMfUjLteLefB4/s1600/Challenges+and+Priorities.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiYoZgSAyPddRzZA8mysxoionUfXnZ66Q9VTCERtFhJLaFEbi7c5smo8ZY_04p4EjzCjcBhRBIqAn3O8RYX2v3UEb0a6-lDxuSJgexKBEGNPnTXwzg0hOc0-SV-eAy6dJFMfUjLteLefB4/s1600/Challenges+and+Priorities.png" height="368" width="640" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">Source: PwC Banking 2020 Survey</td></tr>
</tbody></table>
Nearly all respondents (97 percent) view innovation as a critical driver of growth – with companies who consider themselves innovative predicting 62 percent growth over the next five years, nearly double the market average of 35 percent and triple the 21 percent for the least innovative companies.<br />
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Despite understanding the importance, only 10% of CEOs view their organizations as innovation leaders. Further, 64% of CEOs agree that neither innovation nor operational effectiveness are dominant – and are looking to succeed at both.<br />
<br />
PwC believes executives recognize they need to do things differently. According to the study, over 50% are planning to enhance their internal capabilities to foster innovation, and to create innovation management teams across business units. There is also a recognition that
partnerships and third-party relationships may be the best way for banks to reap the benefits of innovation.
<br />
<br />
In the U.S., the primary areas mentioned for innovation were products (43 percent), customer interfaces/channels (60 percent), core platforms (50 percent) and customer need identifications (40 percent).<br />
<br />
Finally, nearly three quarters (71 percent) of U.S. retail banking executives consider non-traditional competitors a threat, significantly higher than executives in Asia (42 percent), where more view them as an opportunity for partnering. <br />
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<h3>
</h3>
<h3>
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<a name='more'></a><br />Gap Between Priorities and Preparedness</h3>
<br />
According to the research, 90 percent of the executives agree that the six key priorities for success in 2020 were:<br />
<ol>
<li>Developing a customer centric business model</li>
<li>Optimizing distribution by evolving multichannel capabilities and reshaping the traditional branch model</li>
<li>Simplifying business and operating models</li>
<li>Harnessing data to deliver customer, risk management and financial advantages</li>
<li>Fostering agility and innovation</li>
<li>Proactively managing risk, regulation and capital</li>
</ol>
<div>
Banking executives agree that the priorities above are very important, with each of them scoring between 4.3 and 4.5 (out of 5) in the PwC survey. However, there was a striking gap between those ranking these priorities as ‘Very important’ (46%–64%) and those stating that they saw themselves as ‘Very prepared’ (11%–17%) and/or that they were making a ‘Significant investment’(18%–25%) in these areas. Technological, organizational, talent and cost constraints were viewed as the greatest obstacles to success.<br />
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According to PwC, each bank needs to develop a clear strategy to deal with the industry's transforming landscape. They need to decide whether to lead, to follow fast, or to manage defensively, putting off change. They need to create agility and optionality, to adapt to rapid change and future uncertainty. Yet, whatever the chosen strategy, success will come from successfully executing the right balance across the six priorities identified.<br />
<br />
"Banks universally agree that they are hindered from addressing top priorities such as innovation by financial, talent, technology and organizational constraints, said Dave Hoffman, U.S. financial services management consulting leader at PwC. "Banks should take aggressive action to overcome these constraints to enable innovation and transformation, while preserving their ability to capitalize on market opportunities and address unexpected challenges."<br />
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Whether this is this a revolution, evolution or both is yet to be seen. Many players globally are innovating and experimenting with new products, delivery channels and analytics. The industry has historically changed very slowly – yet the pace of change is increasing rapidly.<br />
<br />
According to PwC, the challenges in the future are clear, and but each institution's response will be unique based on their current capabilities, markets, capital strength, aspirations, etc. The key is to leverage knowledge from the industry and from outside the industry to succeed.<br />
<br />
The biggest challenge is that banks that fail to shift gears risk being left behind.<br />
<br />
<br />
Note: "<i><a href="http://www.pwc.com/gx/en/banking-capital-markets/banking-2020/index.jhtml" target="_blank">Retail Banking 2020: Evolution or Revolution?</a></i>" from PwC is a great report with an enormous amount of detail by geography, size of institution and role of respondent. It digs deeply into the challenges faced by the financial services industry and the ways different institutions are responding to these challenges.Anonymoushttp://www.blogger.com/profile/05424097007271218756noreply@blogger.com1tag:blogger.com,1999:blog-8930153101988441660.post-70333116561516944572014-03-17T00:00:00.000-04:002014-03-17T00:00:00.943-04:00Bank Switching Increases As Consumers Look For Better Mobile Capabilities<h3>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjRu1kC-nkx7Pduaer1e8h9qSltE29E8-_Up2gpKQyUs6ywqcrcBLLLMiEQ35liCU_0WH9JLwkngqx2RvwK9YkQMWfa-0w9VfooNKR90oBqDMhUdTCsLETlSSCkFb60LnCQmjxrnTNQsI8/s1600/bigstock-Customer-Attrition-Words-On-Di-42884419.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjRu1kC-nkx7Pduaer1e8h9qSltE29E8-_Up2gpKQyUs6ywqcrcBLLLMiEQ35liCU_0WH9JLwkngqx2RvwK9YkQMWfa-0w9VfooNKR90oBqDMhUdTCsLETlSSCkFb60LnCQmjxrnTNQsI8/s1600/bigstock-Customer-Attrition-Words-On-Di-42884419.jpg" height="200" width="200" /></a></div>
After a period of relative stability, the primary bank switching rate increased by more than 40 percent in late 2013, with 60 percent of smartphone/tablet users reporting mobile banking capabilities as being either "important" or "extremely important" in their decision to switch.</h3>
<div>
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<div>
<br />
After relatively stable switching rates since the financial crisis, the number of consumers switching primary banks jumped from 7.1% in the first half of 2013 to 10% in the fourth quarter of 2013 according to the "<i><a href="http://www.alixpartners.com/en/MediaCenter/PressReleases/tabid/821/articleType/ArticleView/articleId/1060/As-Consumer-Banking-Behavior-Continues-to-Evolve-Mobile-Is-Now-Mainstream-Says-AlixPartners-Study.aspx#sthash.QN7iEvgD.dpbs">Mobile Financial Services Tracking Study</a></i>" from <a href="http://www.alixpartners.com/EN/"><b>AlixPartners</b></a>. This is the highest rate of switching since the end of 2008.</div>
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<div>
The highest incidence of primary bank switching was evident among millennials, where the annual switch rate approached 20 percent. The rate of switching quickly drops for older segments of the population, with baby boomers and seniors switching primary banks at low single figure annual rates. </div>
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<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiyrlV271YScHKmaW8OFjfgZZjvzDexsfF2hZDwQ1ECC6H_Ht0ZHBde3BYTeoIhpxm5k-JNH_PhyQg7iCioWHgwJQvBcjPXUxkLd5Hyk65iDJ1ArSMvyRaRKJ6_QLNNSA3UYr9JH7mY6aU/s1600/Bank+Switching+Over+Time.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiyrlV271YScHKmaW8OFjfgZZjvzDexsfF2hZDwQ1ECC6H_Ht0ZHBde3BYTeoIhpxm5k-JNH_PhyQg7iCioWHgwJQvBcjPXUxkLd5Hyk65iDJ1ArSMvyRaRKJ6_QLNNSA3UYr9JH7mY6aU/s1600/Bank+Switching+Over+Time.png" height="282" width="640" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">% Who Switch Primary Bank in Past Year<br />
Source: AlixPartners (March, 2014)</td></tr>
</tbody></table>
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<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi3tJeGPA7bxx7ypHLd2m5E8OtMEqC6AnJD7o36f1VOIhJxXDI-M-NfDKHqotvTUHdbhqet-LvXGLRv-BSPu9etWnCkkw5bKoZB1t-8_pWSAEO5JtWYVA6uZEuBC1IufURktJHIFYytnb8/s1600/Switch+Rates+by+Age.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi3tJeGPA7bxx7ypHLd2m5E8OtMEqC6AnJD7o36f1VOIhJxXDI-M-NfDKHqotvTUHdbhqet-LvXGLRv-BSPu9etWnCkkw5bKoZB1t-8_pWSAEO5JtWYVA6uZEuBC1IufURktJHIFYytnb8/s1600/Switch+Rates+by+Age.png" height="331" width="400" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">% Who Switched Primary Banks in Past Year by Age<br />
Source: AlixPartners (March, 2014)</td></tr>
</tbody></table>
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<div>
Among younger consumers, technology and innovation was of greatest importance, with the reasons for switching primary banks including:</div>
<div>
<ul>
<li>"My previous bank didn't offer the level of technology/innovation that I wanted"</li>
<li>"My previous bank didn't offer the online services that I needed"</li>
<li>"My previous bank didn't offer the mobile services that I needed"</li>
</ul>
<div>
For older consumers, the primary reasons for switching were because of a bad customer experience or because of a move, new job, etc.</div>
</div>
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<h3>
</h3>
<h3>
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<a name='more'></a><br />
Impact of Mobile Banking on Decision to Switch</h3>
<div>
<br /></div>
<div>
Mobile banking is playing an increasingly important role in primary bank switching decisions, with 60 percent of smartphone and tablet users reporting that mobile banking capabilities are "important" or "extremely important" in the decision to switch. This compared to an already high 48 percent in a similar survey in the first half of 2013.</div>
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<div>
"The availability of mobile banking features plays an increasingly critical role in the consumer's decision to switch primary banks," according to <a href="http://www.linkedin.com/profile/view?id=141707636">Bob Hedges</a>, managing director in AlixPartners' Financial Services Practice. "Consumers are demanding, expecting, and shopping for mobile capabilities. Banks who fail to innovate run the risk of losing customers and face real challenges in attracting new customers."</div>
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The importance of mobile banking capabilities in the decision to switch banks correlates with a strong growth in adoption of mobile services overall. According to the AlixPartners study, mobile banking is being used by 28 percent of U.S. banking consumers, up four percentage points from the survey in the first half of 2013, and up nine percentage points from the end of 2012.</div>
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<div>
As penetration of smartphones and tablet continue to rise and consumer adoption of mobile banking increases, the consumer's use of higher cost banking channels, such as traditional branches and live customer service call centers, appears to be declining. According to the study, mobile banking users reported visiting a bank branch 39 percent fewer times per month after adopting mobile banking services.</div>
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"The behavior and decision making of consumers who have adopted mobile is making the business case for mobile innovation and promotion by financial services institutions," added Hedges.</div>
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<h3>
Digital Engagement Extends to Account Opening and Service Use</h3>
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<div>
Consumer engagement with smartphones and other digital channels goes beyond the decision to switch primary banks. According to AlixPartners, 51 percent of younger switchers used online or telephone channels to open their new account in the second half of 2013, with only 35 percent using the branch for the entire account opening process (compared to 46 percent in the first half of 2013). </div>
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“Given today’s margin-compressed environment, it becomes critical for financial services providers to address mobile-oriented consumers -- who prefer lower cost-to-serve channels and have a more attractive financial profile,” said <a href="http://www.linkedin.com/pub/teresa-epperson/4/2b6/a8b">Teresa Epperson</a>, managing director in the Financial Services Practice at AlixPartners. “Our research continues to highlight the attractiveness of consumers who use mobile services and the importance for banks to focus on attracting and retaining those consumers.”
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<div>
Further spotlighting the importance of digital innovation, mobile remote deposit capture (RDC) adoption is also growing steadily, with 22 percent of smartphone/tablet owners using the service compared to 18 percent in the first half of 2013. These users tend to be younger, wealthier and use more services at their primary bank than non-adopters.</div>
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"We will increasingly see banks developing and rolling out capabilities aimed at addressing specific consumer pain points and opportunities to add value. If mobile RDC is viewed as the current 'big attraction' in the ongoing wave of industry innovations on behalf of consumers, <a href="http://thefinancialbrand.com/26950/mitek-mobile-photo-bill-pay-makes-bank-switching-a-snap/">mobile photo bill pay</a> could be the next big thing," says Epperson. "In the fourth quarter of 2013, 28 percent of consumers between the ages of 26 and 34 reported themselves to be likely to change banks to gain access to mobile photo bill pay," continued Epperson.</div>
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<h3>
The Future of Digital Banking</h3>
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All recent research studies point to a future of increasing mobile banking use and engagement. As sales of more technologically advanced mobile devices increase, consumers will become more comfortable with new applications that simplify daily life and provide tangible benefits. </div>
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In the future, consumers' mobile banking behavior and expectations will evolve rapidly. As a result, banks and credit unions will need to recognize the importance of rapid development and deployment cycles for mobile offerings in response to these expectations and understand that other industries, such as retail, may be setting the standard for new mobile offerings.</div>
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“As banks and other financial services providers explore new offerings that deliver value-added services to consumers, the growing importance of mobile capabilities in the lives of consumers should be viewed as both ‘table stakes’ and an opportunity for differentiation,” said Hedges. “Clearly, these devices’ extraordinary value to consumers has raised the bar on what consumers expect from their financial services providers and place greater importance on the role of mobile banking in bank selection. Those financial services providers that focus on mobile offerings as competitive differentiators will be winners in the future.”</div>
Anonymoushttp://www.blogger.com/profile/05424097007271218756noreply@blogger.com2tag:blogger.com,1999:blog-8930153101988441660.post-35916306759069888212014-03-13T06:51:00.001-04:002014-03-13T06:51:37.221-04:00Millennials Find Banks Irrelevant<div class="separator" style="clear: both; text-align: center;">
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<h3>
A three-year study from Scratch, an in-house unit of Viacom, found that a third of millennials believed they won't need a bank in the future. These millennials, defined as those between ages 18 to 33, also ranked the top four banks in the "ten least loved brands" and would rather go to the dentist than to their bank.</h3>
<br />
Is this surprising? This segment of the population has grown up in an era that saw trust in banking erode due to the financial crisis and a near stagnant economy. This is also a period when new technology has enabled firms like Simple, Moven, Square and PayPal to be more relevant with a generation that would rather handle finances on their phone than in a branch.<br />
<br />
Here are some of the findings from the <a href="http://www.millennialdisruptionindex.com/">Millennial Disruption Index</a>:<br />
<br />
<ul>
<li>53% don't think their bank offers anything different than other banks</li>
<li>1 in 3 say they are switching banks in the next 90 days</li>
<li>71% would rather go to the dentist than listen to what their banks are saying</li>
<li>33% believe they won't need a bank at all in the future</li>
<li>Nearly half are looking for tech start-ups to overhaul banking</li>
<li>73% would be more excited about a new offering from Google, Amazon, Apple, Paypal or Square than from their own bank</li>
</ul>
<div>
These beliefs are coming from the largest generation in the U.S. (84 millions) with a new found purchasing power of over $1.3 trillion that represent the vast majority of new home buyers. They are far more tech savvy than previous generations, use their mobile devices continuously, look for deals in every buying category and are connected through multiple social networks.</div>
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According to the TD Bank Financial Education Survey, many millennials look to their parents and friends for advice on financial services and many still rely on their banks. Ninety percent use online or mobile tools for everyday banking activities, with 57 percent saying they used mobile banking more frequently than last year.</div>
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It is clear, however, that banks are having a difficult time keeping up with the needs of this segment. While banks spent time improving the online banking experience, millennials had already moved to mobile devices for communication, transacting, entertainment and information. The industry's response, for the most part, has been to provide mobile access to online banking platforms. Only banks built for the mobile device like Simple, Moven, GoBank, Fidor, mBank, Soon and Hello seem to see the future.</div>
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<h3>
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<a name='more'></a><br />
How Do Banks Need to Respond</h3>
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<div>
As talk has shifted to the Internet of Things, banks need to become part of this talk. An entire industry needs to reimagine what banking means to consumers and determine the best way to leverage new technology to integrate banking into consumers' daily activities. Downloadable banking accounts need to replace checks and potentially even plastic.</div>
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<div>
While branches may not disappear, they need to integrate new processes and technology so that the transition from mobile to physical is seamless. Banks also need to find better ways to differentiate, since millennials view all banks as being the same. New products or services aren't the answer ... enhanced experiences will provide the foundation for differentiation in the future.</div>
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<div>
The banking industry is reaching a tipping point. The millennial consumers (as well as older generations) are using other industries as a point of reference for what they expect from their financial services partner. If they don't receive the experience they want, the results from this survey make it clear they will look elsewhere (outside traditional providers) to meet their needs.</div>
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<div>
This should serve as a wake-up call to the entire industry. While banks are not becoming obsolete, they appear to be unresponsive to an entire generation. It's time for disruption to come from within the industry. </div>
<div>
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<div>
BBVA may have heard the call when they purchased Simple. They bypassed legacy systems, legacy processes and legacy thinking to leapfrog the rest of the large banks in delivering a better version of mobile banking.</div>
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Will other banks follow the lead of BBVA?</div>
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Anonymoushttp://www.blogger.com/profile/05424097007271218756noreply@blogger.com0tag:blogger.com,1999:blog-8930153101988441660.post-16628510144842871082014-03-11T09:36:00.000-04:002014-03-11T09:38:45.197-04:009 Secrets to Building Customer Engagement in Banking<div class="separator" style="clear: both; text-align: center;">
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiVYOdQJBK0jyjfAQZXPj8pJxRBsoU0CUM1Rk446FfXiOqheTmWbJXNEWvHzbGVJnL0Vw69VG6tGbPb0k7-8r5su139V650yiyf3mzUwaIxAcmNytVQ9VY5GYBP2vMdUGgZRv4uzEHOkKg/s1600/9_secrets.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiVYOdQJBK0jyjfAQZXPj8pJxRBsoU0CUM1Rk446FfXiOqheTmWbJXNEWvHzbGVJnL0Vw69VG6tGbPb0k7-8r5su139V650yiyf3mzUwaIxAcmNytVQ9VY5GYBP2vMdUGgZRv4uzEHOkKg/s1600/9_secrets.jpg" /></a></div>
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Virtually every bank and credit union has the acquisition of new customers as a top priority for 2014. But generating a new account is only the beginning. To generate near-term profitability and long-term relationships, the new customer must become fully engaged. </h3>
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Customer engagement can not be achieved in a day, week or a month. It is the foundation of a relationship that includes trust, dialogue, a steady growth in service ownership and a growth in share of wallet if done correctly. The alternative to focusing on building customer engagement is a relationship that does not meet its full potential or customer attrition.<br />
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According to Gallup research entitled, <i><a href="http://thegallupblog.gallup.com/2014/03/the-financial-and-emotional-benefits-of.html">The Financial and Emotional Benefits of Fully Engaged Bank Customers</a></i>, the tangible benefits of a fully engaged customer that is both attitudinally loyal and emotionally attached to the bank include the following:<br />
<ul>
<li><b>Increased Revenues, Wallet Share and Product Penetration</b>: Customers who are fully engaged bring $402 in additional revenue per year to their primary bank compared with those who are actively disengaged, 10% greater wallet share in deposit balances and 14% greater wallet share in investments. Fully engaged customers also average 1.14 additional product categories with their primary bank than do customers who are 'actively disengaged'.</li>
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<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiVeTkJEQD1SUX3ndC8mYy7qaYfd7BCix7QNs2PDVy765yY-s0j6WiqjRF066nl1VkvxPqeIGeQ7AmTjmWm9kzojeBIT_fs5Xuil-hOdV4sUhUJ8UNTfZ-NGmikQyLP9_lvrvTgYmwmt1I/s1600/Engagement+-+Products+Gallup.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiVeTkJEQD1SUX3ndC8mYy7qaYfd7BCix7QNs2PDVy765yY-s0j6WiqjRF066nl1VkvxPqeIGeQ7AmTjmWm9kzojeBIT_fs5Xuil-hOdV4sUhUJ8UNTfZ-NGmikQyLP9_lvrvTgYmwmt1I/s1600/Engagement+-+Products+Gallup.png" height="325" width="400" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">Source: Gallup (2014)</td></tr>
</tbody></table>
<ul>
<li><b>Greater Purchase Intent and Consideration</b>: An engaged customer not only holds more accounts at their primary bank, they also look to that same bank when considering future needs. At a time when so much of the shopping process is done online, improving your bank's chances of being in the customer's consideration set is important.</li>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEifLpLRW309SOJ4STrntbcSj1wYfWH3-OrQ0ooF4CTR58az8DN9C7zhK_nFiA2z0pVsapifS-8BAoWotjjrFxEwG5u78ITX6sCO3GdUIXC1HZaicOl-Zta61skbxP2FjfzzI2kKsS6IZlw/s1600/Engagement+Account+Opening.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEifLpLRW309SOJ4STrntbcSj1wYfWH3-OrQ0ooF4CTR58az8DN9C7zhK_nFiA2z0pVsapifS-8BAoWotjjrFxEwG5u78ITX6sCO3GdUIXC1HZaicOl-Zta61skbxP2FjfzzI2kKsS6IZlw/s1600/Engagement+Account+Opening.png" height="400" width="326" /></a></div>
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<ul>
<li><b>Becoming a Financial Partner</b>: Less tangible, but no less important, the Gallup research showed that an engaged customer builds a bond with their bank or credit union that every financial institution would covet. According to the research 54 percent of engaged customers strongly agree that their bank helps their financial dreams come true and a similar percentage believe their bank makes their life more enjoyable. Most importantly, 71 percent of engaged customers say they will use their current bank for the rest of their life.</li>
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Here are the secrets to setting the foundation for strong customer engagement:</div>
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<h3>
1. Improve Acquisition Targeting</h3>
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Customer engagement begins before a new customer even opens an account. With today's depth of data and processing capability, it is possible to find new prospects that are similar to the best customers who already have accounts at a financial institution. By building acquisition models that look at product usage, financial behavior and relationship profitability, opening accounts that have limited potential for engagement or growth is reduced.</div>
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Beyond demographic, financial behavior and product use modeling, geographic modeling is also important since the strongest potential trade areas are not always clearly defined by branch radius mapping. </div>
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2. Change the Conversation</h3>
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One of the key elements of building an engaged customer relationship begins with the conversation during the initial account opening process. To build trust, the conversation must focus on making sure the customer believes that you are genuinely interested in getting to know them, are willing to look out for them and that, over time, you will reward them for their business/loyalty.</div>
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This early conversation needs to focus more on capturing insight from the customer and discussing the value different products and services will have from the customer perspective as opposed to simply discussing features. The goal is to illustrate to the customer that the products and services being sold will meet their unique financial and non-financial needs. </div>
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Some of the insight that should be collected (beyond the basics) includes:</div>
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<ul>
<li>Financial objectives</li>
<li>Primary financial decision maker in the household (it is often the wife)</li>
<li>Communication channel preference(s) </li>
<li>Accounts held elsewhere (balance details are not as important as knowing the category)</li>
</ul>
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Unfortunately, research studies indicate that the majority of branch personnel have difficulty having in-depth conversations with customers around needs and the value of an organization's services. In other words, having a firm grasp of product knowledge is no longer enough. The initial focus should also be on sales quality as opposed to sales quantity. </div>
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Interestingly, some financial institutions have begun utilizing iPads to collect insight directly from the customer. While seeming less personal, an iPad new account questionnaire standardizes the collection process and usually is able to collect far more personal information than the bank or credit union employee is comfortable collecting.</div>
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3. Communicate Early and Often</h3>
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It is interesting how banks and credit unions set objectives for expanding a customer relationship and engagement and then establish arbitrary rules around communication frequency and cadence. It is not uncommon for a bank to limit the number of 'touches' to one a month or less despite the fact that a new customer has been shown to desire significantly more interaction as part of their new </div>
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relationship.<br />
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In fact, research from J.D. Power has found that the optimum number of communication messages during the first 90 day period from both a customer satisfaction and relationship growth perspective is seven 'touches' across various communication channels.<br />
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An example of an onboarding engagement communications plan is shown below. The contacts below don't include additional media such as online and mobile banking messaging, ATM messaging, digital retargeting, etc. It is important to remember that at the very least, an engagement communications plan should include a 'thank you' message within the first 5 days of the account opening (from either as new or existing customer).<br />
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<table border="1" data-mce-style="text-align: center; height: 42px;" style="cursor: default; font-family: Georgia, 'Times New Roman', 'Bitstream Charter', Times, serif; height: 42px; text-align: center; width: 565px;"><tbody>
<tr><th style="cursor: text;"></th><th style="cursor: text;"><span data-mce-style="color: #003366;" style="color: #003366;">Focus</span></th><th style="cursor: text;"><span data-mce-style="color: #003366;" style="color: #003366;">Messages Sent</span></th><th style="cursor: text;"><span data-mce-style="color: #003366;" style="color: #003366;">Email</span></th><th style="cursor: text;"><span data-mce-style="color: #003366;" style="color: #003366;">Mobile</span></th></tr>
<tr><td style="cursor: text; font-family: Verdana, Arial, Helvetica, sans-serif; font-size: 11px; margin: 8px;"><span data-mce-style="color: #003366;" style="color: #003366;"><strong>Day 1</strong></span></td><td style="cursor: text; font-family: Verdana, Arial, Helvetica, sans-serif; font-size: 11px; margin: 8px;">Welcome<br />
& Activation</td><td style="cursor: text; font-family: Verdana, Arial, Helvetica, sans-serif; font-size: 11px; margin: 8px;">Welcome Kit<br />
Preapproved Offer</td><td style="cursor: text; font-family: Verdana, Arial, Helvetica, sans-serif; font-size: 11px; margin: 8px;">Email Capture</td><td style="cursor: text; font-family: Verdana, Arial, Helvetica, sans-serif; font-size: 11px; margin: 8px;">Mobile Capture</td></tr>
<tr><td style="cursor: text; font-family: Verdana, Arial, Helvetica, sans-serif; font-size: 11px; margin: 8px;"><span data-mce-style="color: #003366;" style="color: #003366;"><strong>Day 2</strong></span></td><td style="cursor: text; font-family: Verdana, Arial, Helvetica, sans-serif; font-size: 11px; margin: 8px;">Thank You</td><td style="cursor: text; font-family: Verdana, Arial, Helvetica, sans-serif; font-size: 11px; margin: 8px;"></td><td style="cursor: text; font-family: Verdana, Arial, Helvetica, sans-serif; font-size: 11px; margin: 8px;">Welcome Email</td><td style="cursor: text; font-family: Verdana, Arial, Helvetica, sans-serif; font-size: 11px; margin: 8px;">Welcome Text</td></tr>
<tr><td style="cursor: text; font-family: Verdana, Arial, Helvetica, sans-serif; font-size: 11px; margin: 8px;"><span data-mce-style="color: #003366;" style="color: #003366;"><strong>Day 5</strong></span></td><td style="cursor: text; font-family: Verdana, Arial, Helvetica, sans-serif; font-size: 11px; margin: 8px;">Utilization</td><td style="cursor: text; font-family: Verdana, Arial, Helvetica, sans-serif; font-size: 11px; margin: 8px;">New Account Follow-Up<br />
'Go With' Service Discussion</td><td style="cursor: text; font-family: Verdana, Arial, Helvetica, sans-serif; font-size: 11px; margin: 8px;">Alert Notification<br />
Sign-Up </td><td style="cursor: text; font-family: Verdana, Arial, Helvetica, sans-serif; font-size: 11px; margin: 8px;">Alert Notification<br />
Text </td></tr>
<tr><td style="cursor: text; font-family: Verdana, Arial, Helvetica, sans-serif; font-size: 11px; margin: 8px;"><span data-mce-style="color: #003366;" style="color: #003366;"><strong>Days<br />7-30</strong></span></td><td style="cursor: text; font-family: Verdana, Arial, Helvetica, sans-serif; font-size: 11px; margin: 8px;">Utilization<br />
& Engagement</td><td style="cursor: text; font-family: Verdana, Arial, Helvetica, sans-serif; font-size: 11px; margin: 8px;">Branch Phone Check-In<br />
Engagement Letter</td><td style="cursor: text; font-family: Verdana, Arial, Helvetica, sans-serif; font-size: 11px; margin: 8px;">Engagement Email<br />
(Direct Deposit/Online BillPay)</td><td style="cursor: text; font-family: Verdana, Arial, Helvetica, sans-serif; font-size: 11px; margin: 8px;">Engagement Text<br />
(Direct Deposit)</td></tr>
<tr><td style="cursor: text; font-family: Verdana, Arial, Helvetica, sans-serif; font-size: 11px; margin: 8px;"><span data-mce-style="color: #003366;" style="color: #003366;"><strong>Days<br />30-60</strong></span></td><td style="cursor: text; font-family: Verdana, Arial, Helvetica, sans-serif; font-size: 11px; margin: 8px;">Utilization<br />
& Engagement</td><td style="cursor: text; font-family: Verdana, Arial, Helvetica, sans-serif; font-size: 11px; margin: 8px;">Branch<br />
Engagement Call</td><td style="cursor: text; font-family: Verdana, Arial, Helvetica, sans-serif; font-size: 11px; margin: 8px;">Day 30<br />
Engagement Email<br />
Day 45<br />
Utilization Email</td><td style="cursor: text; font-family: Verdana, Arial, Helvetica, sans-serif; font-size: 11px; margin: 8px;">Engagement Text<br />
(Mobile Deposit) </td></tr>
<tr><td style="cursor: text; font-family: Verdana, Arial, Helvetica, sans-serif; font-size: 11px; margin: 8px;"><span data-mce-style="color: #003366;" style="color: #003366;"><strong>Days<br />60-90</strong></span></td><td style="cursor: text; font-family: Verdana, Arial, Helvetica, sans-serif; font-size: 11px; margin: 8px;">Engagement<br />
&<br />
Cross-Sell</td><td style="cursor: text; font-family: Verdana, Arial, Helvetica, sans-serif; font-size: 11px; margin: 8px;">Call Center<br />
Relationship Expansion</td><td style="cursor: text; font-family: Verdana, Arial, Helvetica, sans-serif; font-size: 11px; margin: 8px;">Modeled Engagement<br />
Service Email</td><td style="cursor: text; font-family: Verdana, Arial, Helvetica, sans-serif; font-size: 11px; margin: 8px;">Engagement Text<br />
Rewards Offer </td></tr>
<tr><td style="cursor: text; font-family: Verdana, Arial, Helvetica, sans-serif; font-size: 11px; margin: 8px;"><span data-mce-style="color: #003366;" style="color: #003366;"><strong>Days<br />90-180</strong></span></td><td style="cursor: text; font-family: Verdana, Arial, Helvetica, sans-serif; font-size: 11px; margin: 8px;">Cross-Sell</td><td style="cursor: text; font-family: Verdana, Arial, Helvetica, sans-serif; font-size: 11px; margin: 8px;">Call Center<br />
Relationship Expansions</td><td style="cursor: text; font-family: Verdana, Arial, Helvetica, sans-serif; font-size: 11px; margin: 8px;">Modeled Service<br />
Cross-Sell </td><td style="cursor: text; font-family: Verdana, Arial, Helvetica, sans-serif; font-size: 11px; margin: 8px;">Modeled Service<br />
Cross-Sell </td></tr>
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<h3 style="text-align: left;">
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4. Personalize The Message</h3>
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Despite the amount of insight that we collect on a new customer and the processing power most financial institutions have at their disposal, recent research studies show that more than 50 percent of engaged customers get mistargeted communication. This includes communication about a product/service the customer already owns or about a service that is not in alignment with the insight that the customer shared with the institution.</div>
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Today's consumer has come to expect well targeted and personalized communication. Anything less and trust already achieved is lost. This is especially true with financial services, where the customer has provided very personal information and expects this insight to be used for their advantage.</div>
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To build engagement, it is best to build an engagement service sales grid that indicates what services should be emphasized in communication given current product ownership. Engagement communication is not a 'one size fits all' dialogue. It should reflect the relationship in real-time.</div>
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5. Build Trust Before Selling</h3>
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As in any relationship, it is imperative that a strong foundation of trust is established before moving the relationship forward. In banking, this equates to providing the necessary information required to best use the service opened before trying to sell another product or service. </div>
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If a customer opens a new checking account, the services that should be discussed include:</div>
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<ul>
<li>Direct Deposit</li>
<li>Online BillPay</li>
<li>Online Banking</li>
<li>Mobile Banking</li>
<li>Privacy Protection/Security Services</li>
</ul>
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Education around additional enhancements to a checking account that can further build an engaging relationship include:</div>
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<ul>
<li>Mobile Deposit Capture</li>
<li>Rewards Program</li>
<li>Account to Account Transfers</li>
<li>P2P Transfers</li>
<li>Electronic Statements</li>
<li>Notification Alerts</li>
</ul>
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During this relationship growth process, additional insight into the customer's needs should be collected whenever possible with personalized communication reflecting this new insight.</div>
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6. Reward Engagement</h3>
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Unfortunately, the adage "If you build it, they will come" doesn't usually apply in banking. While we may build great products and provide new, innovative services, customers often require additional encouragement to use a product optimally and for engagement to grow the way we would desire.</div>
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As a result, offers are often required to stimulate the desired behavior. In the development of offers, banks and credit unions should keep in mind that the offer should be built on the product(s) already held as opposed to the product or service being sold. This is because, especially in financial services, a customer doesn't completely understand the benefits of the new service. Therefore, if the new account is a checking account, the offer should be one that reduces the cost of the checking, provides an added benefit to the checking or reinforces the checking relationship.</div>
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Potential offers could include waived fees or optimally enhanced level(s) of rewards for a specific action or limited duration. The benefit of using rewards would be that a reward program is a strong engagement tool itself.</div>
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7. Gear To The Mobile Customer</h3>
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While direct mail and phone are highly effective in building an engaging relationship, the use of email and SMS texting can significantly improve results because of mobile communication consumption patterns. The reading of email on mobile devices recently surpassed desktop consumption indicating that most messages should be geared to a person who is either on the go or multi-tasking (or both).</div>
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To communicate with the mobile customer, email and SMS texting should be direct and to the point. The customer does not want to know everything about the account, they want to know what's in it for them and how do they respond. While links should be used to provide additional product information if needed, a 'single click' option should be available to say "yes."</div>
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With regard to links, many financial institutions have found that using short form videos is the best way to generate understanding and response. Excellent videos around online bill pay, mobile deposit capture and A2A/P2P transfers can not only educate, but immediately link to the "yes" button to close the sale.</div>
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When using educational sales videos, it is important to remember that the video should be short (under 30 seconds) and built for mobile consumption first. While a video built for mobile will always play well on larger devices, the opposite is usually not true.</div>
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8. Keep The Dialogue Going</h3>
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A customer usually doesn't react to the first message you send. Instead, they may need several alternative forms of encouragement to take action and to expand their relationship. As a result, the use of digital retargeting and sequential communication becomes important. </div>
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Digital retargeting could include reaching out to people who visited (and left) your website or did not respond to a landing page message. Retargeting can also be done for people who open emails but don't respond, click online sales banners or are wandering the web shopping for services you provide.</div>
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Some of the most interesting forms of retargeting today include the ability to retarget customers or prospects who you have sent postal mail but want to reach them either on their computer or their phone as well. While only available on about 30-40% of households currently, response rates can be increased significantly by combining both online and offline messaging.</div>
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<h3>
9. Test and Learn</h3>
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Unfortunately, there is no single formula for success for customer engagement in banking. Because of the difference in market areas, competition, product lines and customer profiles, all of the above secrets of engagement can take on different forms for different institutions. The key is to continue to test your engagement process for optimal efficiency and effectiveness.</div>
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Some of the primary variables to test as you build your communications plan include:</div>
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<ul>
<li>Cadence of communication (how much)</li>
<li>Sequence of communication (when)</li>
<li>Channel of communication (how)</li>
<li>Target audiences (to whom)</li>
<li>Products marketed (what)</li>
<li>Offers</li>
</ul>
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The most important lesson for an agile test and learn process is that perfect insight usually takes too long in today's quickly changing environment. As a result, it is sometimes best to make a quick 'go/no go' decision as opposed to a highly detailed analysis that may not yield significantly better results given the expense.<br />
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In an era of reduced fee income, increasing competition and a more demanding customer, the benefit of selling a standalone checking accounts will only get an organization so far in terms of revenue growth. It is no longer enough for bankers to be knowledgeable about product options; they need to help customers understand how each option will fit into their overall lifestyle. Banks need to invest in the personnel, support systems and communication process that will allow them to have the continued dialogue they need to build long-term, profitable customer relationships.<br />
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The benefits of this communication are real and imperative for success.</div>
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Anonymoushttp://www.blogger.com/profile/05424097007271218756noreply@blogger.com1tag:blogger.com,1999:blog-8930153101988441660.post-84800710699410570812014-02-25T06:17:00.001-05:002014-03-11T09:32:48.284-04:0043 Retail Banking Myths<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhG6743GNez6MsG87LC7IA5JTsm1LwruK1vnB2O94fMcEg56DIrl0Aouoqk8Qvyb_L5NvQ6EoxbCvDxqzWqesf2ODAxbio8NS0d3lh5AhiVFoi_suBkPYjk8Su2-CkLtZfGUFW5wXtihws/s1600/big_myths-2.jpg" imageanchor="1" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhG6743GNez6MsG87LC7IA5JTsm1LwruK1vnB2O94fMcEg56DIrl0Aouoqk8Qvyb_L5NvQ6EoxbCvDxqzWqesf2ODAxbio8NS0d3lh5AhiVFoi_suBkPYjk8Su2-CkLtZfGUFW5wXtihws/s1600/big_myths-2.jpg" /></a></div>
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<span style="color: blue; font-family: inherit;">CROWDSOURCING SERIES</span></h3>
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<span style="font-family: inherit; text-align: justify;"><br /></span></h3>
<h3>
<span style="font-family: inherit; text-align: justify;">With the financial services industry changing so quickly, it should come as no surprise that many assumptions banks and credit unions believed to be true for years could actually be rendered obsolete. To uncover retail banking myths and provide new realities, I reached out to more than 40 global financial services leaders including bankers, credit union executives, industry analysts, advisors, publishers and editors, bloggers and fintech followers and got 43 myths.</span></h3>
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<b>Myth 1. Banks must embrace big data to be successful</b><br />
Reality: Most banks and credit unions have not fully leveraged insight that is currently available within their firewalls. Account ownership, demographics, product use and other behavior data should be used for offers and communication before adding unstructured data from outside the organization.<br />
<i>Data analyst from $20 billion bank</i><br />
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<b>Myth 2. The majority of consumers prefer to open "important" accounts in the branch.</b><br />
Reality: When deciding what channel to use, consumers weigh a number of factors (eg. reliability, speed, safety, convenience, time of day, cost, previous experience, brand perceptions, etc. etc.)<br />
<i>Jim Bruene, Editor & Founder
The Finovate Group | Online Banking Report | Netbanker blog</i><br />
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<b>Myth 3. New market entrant competition is limited to deposits and payments but lending is safe.</b><br />
Reality: Over the past five years, emerging Online and Independent lenders, many of whom did not exist during the depths of the Credit Crisis, have stolen 10% market share away from primarily the midsize / regional banks in the US.<br />
<i>Wayne Busch, managing director of Accenture's North America Banking practice</i><br />
<i><br /></i>
<b>Myth 4. </b><b>The branch is dead. </b><br />
Reality: It's not even on life support. There is a place for a brick and mortar experience albeit with fewer bricks and less mortar. We need to rethink the branch model and experience, but bankers will be offering a strong physical (and digital) presence for decades to come.<br />
<i>Bryan Clagett, CMO, Geezeo</i><br />
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<b>Myth 5. </b><b>We need to excel in omnichannel banking</b><br />
Reality: There is no such thing as a channel. Our objective should be to ensure a consistent digital approach across the whole customer engagement without thinking about channels. Channels should be considered as digital platforms that provide customer touchpoints.<br />
<i>Chris Skinner, Chairman, The Financial Services Club </i><br />
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<b>Myth 6. Boomers like the touch of paper.</b><br />
Reality: While this was true in the past, it is now a myth based on <a href="http://celent.com/reports/myths-misconceptions-and-enduring-truths-survey-digitally-directed-consumers">recent research</a> from Celent.<br />
<i>Bob Meara Senior Analyst, Banking Group, Celent </i><br />
<br />
<b>Myth 7. </b><b>If you don't cross-sell a new customer within the first three months of the relationship, you've lost the chance to cross-sell.</b><br />
Reality: It is better to focus on engagement (go with) services in the early days of a relationship, but selling additional products is best done later in the relationship when more is known about customer activity, product use, financial goals, etc.<br />
<i>Ron Shevlin, Senior Analyst, Aite Group</i><br />
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<b>Myth 8. </b><b>Bankers need to at least sell 6+ (or 10+) products to customers to remain profitable.</b><br />
Reality: More products doesn't mean guaranteed profitability or engagement. More importantly, the focus should be on customer needs and an improved experience as opposed to the bank or credit union's goals of 'more products sold'.<br />
<i>Deva Annamalai, Bank Marketing Technologist, Salt Lake City</i><br />
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<b>Myth 9. Customers are not willing to pay for mobile remote deposit capture.</b><br />
Reality: Several banks have started to charge for this service without impact to their adoption/usage targets.<br />
<i>Matthew Wilcox, Managing Director of Marketing Strategy and Innovation, Digital Payment Solutions , Fiserv</i><br />
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<b>Myth 10. To purchase a complex banking product, the face to face relationship with an expert is irreplaceable.</b><br />
Reality: The same was said for selling shoes. However, this does not mean you will not need any more experts, in combining face to face rendez-vous and remote access or to describe the rules of artificial intelligence software.<br />
<i>Raphael Krivine, Director AXA BANQUE</i><br />
<br />
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<b>Myth 11. Banking should be innovative.</b><br />
Reality: Based on research done at our bank, we found that being innovative is about
doing the right things for customers in the areas of simplifying products and delivery and improving the customer experience.<br />
<i>Jin Zwicky, VP Experience Design, OCBC Bank</i><br />
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<b>Myth 12. Mobile banking doesn't support product sales.</b><br />
Reality: Many niche players - like Wonga, a lender in the UK, have proved that mobile devices are indeed effective for selling financial services products. Banks just need to design their sales processes efficiently.<br />
<i>Alex Bray, Retail Channels Director, Misys Banking Systems</i><br />
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<b>Myth 13. Gamification is just for kids and not for finance.</b><br />
Reality: Gamification is just another way of thinking about user engagement, interface design and loyalty. These factors can and should be applied in different ways for all age groups.<br />
<i>Alex Bray, Retail Channels Director, Misys Banking Systems</i><br />
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<b>Myth 14. Nobody wants to go to the bank branch anymore.</b><br />
Reality: For most people this is true, especially for transactions and things that customers can do on their mobile. But not all customers want to do everything remotely and not everyone is in financial control of their lives. Some people want local advisory services.<br />
<i>Chris Skinner, Chairman, The Financial Services Club </i><br />
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<b>Myth 15. </b><b>Customer Service (JD Power Scores, Net Promoter Scores) is a successful customer acquisition strategy and a focus on customer service will lead to higher profits.</b><br />
Reality: Real or perceived levels of service far underperforms a strong value proposition for new customer acquisition (a better rate, a lower fee, or a more innovative product, etc.). Service can be valuable if reinforced with existing customers and can marginally aid in retention. In addition, banks with the highest JD power customer scores have historically had an inverse correlation to profitability.<br />
<i>P. Andy Will, Consultant and former super-regional bank executive</i><br />
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<b>Myth 16. Outsourcing customer care will negatively impact the customer experience. </b><br />
Reality: Outsource providers underpin their service with the most advanced technology, providing higher levels of automated functionality that enhances the customer experience<br />
<i>Beth Merle, Director of Business Development, Banking and Financial Services, Sutherland Global</i><br />
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<b>Myth 17. Banks are eager to innovate.</b><br />
Reality: More often than not, innovation within a bank represent non-disruptive incremental initiatives as opposed to true innovation. To keep up with customer needs, banks need to step well beyond their comfort zone.<br />
<i>Duena Blomstrom, VP of Sales, Meniga</i><br />
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<b>Myth 18. </b><b>Paper application forms help reduce risk</b><br />
Reality: Traditional forms (even if used digitally) provide a false sense of security (unacceptable level of risk) in a world where much more reliable insight can be found through social channels and other sources.<br />
<i>Brett King, Founder of Moven</i><br />
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<b>Myth 19. If you build it, they will come.</b><br />
Reality: Adding new solutions, like mobile banking, online account opening, or personal finance management tools, will not automatically drive engagement or applications. New technology needs to be supported by marketing campaigns to raise awareness and communicate the benefit to consumers.<br />
<i>Melanie Friedrichs, Analyst, Andera </i><br />
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<b>Myth 20. </b><b>You can’t build a business case for PFM.</b><br />
Reality: Because of the power of retention and the potential of cross-selling additional services, well conceived and delivered PFM programs can deepen share of wallet, build loyalty and incase customer profitability.<br />
<i>Matt West, Vice President of Sales, MoneyDesktop</i><br />
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<b>Myth 21. Upgrading to latest the most advanced technology will make customers happy. </b><br />
Reality: The culture within the organization will make it successful, not the strategy. As Peter Drucker said, "Culture eats strategy for breakfast".<br />
<i>Deva Annamalai, Bank Marketing Technologist, Salt Lake City</i><br />
<i><br /></i>
<b>Myth 22. Digital and Social Media are Replacing Traditional Marketing Channels</b><br />
Reality: While more consumers are doing their shopping using digital and mobile channels and social media marketing can be effective, these channels serve to compliment and supplement traditional channels as opposed to replacing them<br />
<i>Financial Institution Marketer, $200 billion bank</i><br />
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<b>Myth 23. Everyone is our target audience or we want everyone to be our member/customer. </b><br />
Reality: When everyone is targeted, nobody is targeted. Marketing is most effective when you focus on serving a narrower range of consumers you can serve better than anyone else.<br />
<i>John Mathes, Director of Brand Strategy, Weber Marketing Group</i><br />
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<b>Myth 24. </b><b>Gen Y consumers trust online security. </b><br />
Reality: Security concerns remain the #1 adoption barrier among all age groups.<br />
<i>Bob Meara Senior Analyst, Banking Group, Celent </i><br />
<br />
<b>Myth 25. Surveying the customer will give insight to design the best mobile/online banking apps. </b><br />
Reality: Customers don't know what's possible until you show it to them. An example might be photo bill pay. A few years ago, few customers would have thought of that, they wouldn't have known what it was (and many still don't). As it's demonstrated to them and they're encouraged to try it, they gradually see the usefulness of new tools like this. Customer feedback is great for telling you what's not working, and it's extremely important to fix problems customer identify quickly. But the innovative ideas are not likely to come from customers. They're more likely to come from creative staff members who are given the time, room and encouragement to conceive of and test new ideas.<br />
<i>Penny Crosman, Editor, Bank Technology News and American Banker</i><br />
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<b>Myth 26. Credit unions offer better service than banks.</b><br />
Reality: Credit union execs need to shop banks they compete against (or find out where your employees banked before you hired them). More than half banked at, or worked for, a bank. Philosophy and tax exemption does not make a credit union better; consumer experience makes the difference.<br />
<i>Bryan Clagett, CMO, Geezeo</i><br />
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<b>Myth 27. </b><b>All consumers will want to use mobile devices as their primary devices to perform banking transactions.</b><br />
Reality: Consumer choice based on location and context will remain key to the means by which consumers do their banking. Pushing all consumers to mobile is just as restrictive as pushing them all to the branch or online banking. People use diverse means based on what suits their life and needs.<br />
<i>Stessa Cohen, research Director Gartner</i><br />
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<b>Myth 28. </b><b>You cannot digitize everything.</b><br />
Reality: Everything except flesh and blood can be digitized. The focus should be upon humanizing the digital relationship rather than digitizing the human relationship.<br />
<i>Chris Skinner, Chairman, The Financial Services Club </i><br />
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<b>Myth 29. Silo'd product areas are superior to non-silo'd product areas.</b><br />
Reality: There is great value and synergy in understanding the relative revenue and profit contributions of the various product teams at a single reporting point, where politicizing is reduced and budgeting is centralized. Without silos, better service/product packages can be developed that can better serve the customer.<br />
<i>P. Andy Will, Consultant and former super-regional bank executive</i><br />
<br />
<b>Myth 30. I already know my customers, I don’t need to do much to understand their financial needs or how those needs may be evolving.</b><br />
Reality: Most banks do a terrible job of collecting (and using) customer insight. As a result, poorly timed and poorly structured offers are promoted, disenfranchising customers.<br />
<i>Steven Ramirez, CEO Beyond The Arc Consulting</i><br />
<br />
<b>Myth 31. Online banking penetration of 60% or mobile banking penetration of 50% is good.</b><br />
Reality: Don't mix up registered users with active users. A successful digital engagement strategy shouldn't be about channels, but about being focused on driving simplicity and client delight at every interaction.<br />
<i>Bradley G. Leimer, Mechanics Bank</i><br />
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<b>Myth 32. </b><b>Banks are getting into Digital.</b><br />
Reality: Most banks look at digital like another technology, completely missing the fact that digital (and mobile) are about new behaviors, in new contexts, and a different utility value.<br />
<i>Scott Bales, Director, User Strategy </i><br />
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<b>Myth 33. Customers don't like to be bothered by bank offers. </b><br />
Reality: Bank offers that are well targeted to the individual at just the right time, and offer a compelling value exchange, are accepted at a much greater rate than typical offers.<br />
<i>Bob Palmer, Global Industry Marketing Leader, Banking and Financial Markets, IBM</i><br />
<br />
<b>Myth 34:
Banks have built trust and a strong value proposition that is valued by customers. </b><br />
Reality:
Customers trust banks to safeguard their money, but that is not to say that they trust banks. Too many Banks operate under stale me-too tactics that are not relevant to the current and future needs of the customer base as demonstrated by embarrassing cross-sale results, weak wallet-share and customer profitability. As a result, many Banks desperately deploy products and services, but most fail to capture consumers’ interest due to lack of a cohesive strategy, focus and clear value proposition.<br />
<i>Serge Milman, Principal, SFO Consultants and Founder of Optirate</i><br />
<br />
<b>Myth 35. In digital, it’s all about account opening and getting a higher share of accounts opened online.</b><br />
Reality: Given the multi-channel way people shop and buy, digital’s contribution to sales can’t be measured in online account openings, but in overall sales. Digital channels are critical to help drive ‘perceptual scale’ and drive higher overall sales that may ultimately be fulfilled in branches or other channels.<br />
Sherief Meleis, Managing Director, Novantas<br />
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<b>Myth 36. Retail banking is a profitable business.</b><br />
Reality: Most banks probably lose money in retail banking and could generate funding more efficiently without all the costs inherent in the business. If a bank is going to make money in retail banking, it has to be very focused on serving specific segments efficiently and profitably.<br />
<i>Mary Beth Sullivan
Managing Partner, Capital Performance Group</i><br />
<br />
<b>Myth 37. </b><b>Legacy IT systems, regulation and security are the enemies of customer centricity and innovation.</b><br />
Reality: This myth serves more as an excuse than a reality. While more difficult with outdated systems, many banks have created market leading products, services and experiences working around these challenges.<br />
<i>Duena Blomstrom, VP of Sales, Meniga</i><br />
<br />
<b>Myth 38. Signature cards are a required form for opening a new account</b><br />
Reality: While it is required to know your customer for many reasons, a signature card is not a regulated part of that requirement.<br />
<i>Brett King, Founder of Moven</i><br />
<i><br /></i>
<b>Myth 39. Banks need to decide carefully where to invest in mobile payments, as there will be “one wallet to rule them all.</b><br />
Reality: Banks must look for ways to ensure their issued payment credentials can be securely used as widely as possible in a variety of contexts.<br />
<i>Zilivinas Bareisis, Senior Analyst, Celent </i><br />
<i><br /></i>
<b>Myth 40. Despite A Host of New Players, Traditional Banks Will Prevail in the End</b><br />
Reality: The past is no guarantee of the future. The recent purchase of Simple by BBVA should be a lesson that many of the new players in the business are making inroads into how consumers prefer to do banking. While Simple is relatively small by banking standards, players like USAA, T-Mobile, Google, Amazon, Paypal, Square, and Apple can all grab significant portions of our business that generate much needed revenue streams.<br />
<i>Retail Banker at $50 billion financial institution</i><br />
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<b>Myth 41. The traditional bank marketing and lead generation model will continue to work as it has for decades, even in a humanized digital economy. </b><br />
Reality: Many credit unions and community banks have adopted a variety of digital tools with no unified digital marketing strategy leaving them grossly unprepared for the continued consumer shift to digital.<br />
<i>James Robert Lay, CEO, CU Grow</i><br />
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<b>Myth 42. Customers like being served by bankers in polo shirts.</b><br />
Reality: Many people still prefer the feeling that the bank takes the role of 'money handler' as seriously as they do.<br />
<i>Steve Cocheo
Executive Editor and Digital Content Mgr., ABA Banking Journal</i><br />
<br />
<b>Myth 43. </b><b>Mobile banking should be a paired down version of online banking. </b><br />
Reality: Mobile should be built from mobile experiences outward, potentially leveraging a downloadable app. The goal should not be to provide access to all customer account information, it is to become the Primary Financial Application the customer accesses.<br />
<i>Bradley G. Leimer, Mechanics Bank</i><br />
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Provide Your Myths</h3>
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In receiving these great ideas from across the globe, it was amazing to me that there were only two duplicates (around data and cross-selling). What that tells me is that we probably have several dozen or more myths in the marketplace that need busting.</div>
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If you have another myth (or a comment on the myths I have provided above), share it with others in the comment section below. In addition, feel free to share your ideas on Twitter using #RBMyths.</div>
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Thanks to everyone who helped build this impressive (and rather frightening) list.</div>
Anonymoushttp://www.blogger.com/profile/05424097007271218756noreply@blogger.com6tag:blogger.com,1999:blog-8930153101988441660.post-17178218796566137772014-02-24T01:22:00.000-05:002014-02-27T01:53:22.623-05:00Wearable Banking Still Not Ready for Prime Time<div class="separator" style="clear: both; text-align: center;">
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In the past year, wearable technology has emerged as the next big consumer electronics market category, particularly in the areas of health and wellness. To capitalize on this growth opportunity, banks and payments firms are investing in wearable product innovation to expand their mobile banking platform. The question remains whether mainstream consumers will find an advantage to adding yet another device to do their banking.</h3>
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There have been a number of studies conducted on the potential penetration of wearable devices and the acceptance of these devices by consumers. Speculation is a confusing mix of skepticism and hype, as can be expected with any new technology where there is low overall awareness and where viable uses are still being developed.</div>
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One of the most interesting studies done on wearables has been done by TNS showing that awareness of both smart watch and headset wearable technology over the past several months is increasing rather rapidly. Unfortunately, during the same period, usage remains almost non-existent and desire to use the technology is actually <i>decreasing</i>.</div>
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<span style="text-align: center;">The decrease in desire to use wearable technology could be caused by the high cost of early wearable technology introductions combined with the lack of strong, unique capabilities of the devices introduced to date.</span></div>
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These findings are similar to a late 2013 study by <a href="http://www.harrisinteractive.com/vault/Harris%20Poll%2079%20-%20Wearable%20Tech_11.6.13.pdf">Harris Interactive</a>, that showed that despite a lack of understanding on potential uses, nearly half of Americans (46 percent) are at least a little interested in owning a wristband or watch device with over one-quarter (27 percent) saying that they would be somewhat or very interested. Fewer were interested in an eyewear device (36 percent at least a little, 20 percent somewhat or very).<br />
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An Accenture study entitled, <a href="http://newsroom.accenture.com/news/accenture-consumer-survey-reveals-market-opportunities-in-wearable-technologies.htm">2014 Digital Consumer Tech Survey</a> also found 52 percent of consumers in six countries were interested in buying wearable technology, particularly for health and fitness reasons, with 46 percent potentially wanting smart watches and 42 percent seem interested in web connected glasses.<br />
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As would be expected, younger consumers, males and households with children under 18 were the most interested. Interestingly, there was no significant difference is level of interest based on income, despite the potential high cost of the technology.<br />
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The overall sentiment today is that there is still skepticism around the technology, with close to half of those surveyed by Harris believing the devices are just a fad (49%). Slightly fewer than four in ten Americans said they would only be interested in the technology if it could replace something they already use. However, one other finding of the poll is interesting: 48% admitted that they’d like to be able to access smartphone functions without having to dig in their pocket or bag.</div>
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Paypal and Several Banks Building Wearable Apps</h3>
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While still rather early in development, several banks and payments providers have announced innovations in wearable banking awaiting final release of hardware still in development. Almost all allow a customer to do basic transactions such as checking balances and receiving alerts. Others have gone even further.<br />
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<b><a href="http://www.paypal.com/">PayPal</a></b> will be the first payment provider on the new Samsung Gear 2 wearable devices according to an announcement at the Mobile World Congress. “The PayPal app will allow Gear 2 owners to check-in to pay at local stores, save and redeem offers, send money to a friend instantly, and receive payment notifications while on the go,” PayPal’s Vice President of Global Product Hill Ferguson wrote in a <a href="https://www.paypal-forward.com/mobile/mobile-world-congress-paypal-app-allows-samsung-gear-2-owners-to-shop-and-pay/">blog post</a>.
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Last year, <b><a href="http://blog.ebay.com/samsung-launches-galaxy-gear-smartwatch-with-ebay-app/">eBay</a></b> launched an app allowing Gear users to buy and sell their favorite items on the go. The PayPal app allows consumers to shop across more merchants. Consumers will be able to use the eBay and PayPal apps on the new Gear 2 watches beginning in April.
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<b><a href="https://www.grupbancsabadell.com/en/">Banco Sabadell</a></b> will allow users to carry out basic transactions with voice commands. Moreover, a customer will be able to connect with the bank's contact center, allowing the bank’s customer service agent to see the same thing the user is seeing on their device. Using augmented reality combined with the device's GPS, the app will also help the customer find the nearest ATM or branch office. According to <a href="http://www.thefinancialbrand.com/">The Financial Brand</a>, Banco Sabadell is also working on a way to use Google Glass for mobile deposit capture.<br />
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<b><a href="http://www.caixabank.com/home/homev1_en.html">CaixaBank</a></b> has become the first bank to design an application for smart watches. The service, which is already available for the SmartWatch 2, allows customers to follow the stock markets via their watches. The watch will display recent price information for each stock and index, as well as fluctuations since the start of the market session.<br />
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As well as the smart watch application, CaixaBank has also prepared a service designed specifically for Google Glass. The application provides a branch finder based on augmented reality and a currency convertor.
The CaixaBank application will show Google Glass users, superimposed on the screen, where to find the nearest CaixaBank branch, the direction they need to travel, how far away it is and the branch telephone number in case they need to call ahead. Customers can also use voice commands. The CaixaBank branch finder and currency converter applications are ready for use, and will be launched once Google officially opens the Google Glass application market in the United States.<br />
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Australia and New Zealand-based <b><a href="http://www.westpac.com.au/">Westpac</a></b> is testing Google Glass in both countries. In New Zealand, the bank is testing Google Glass with its Cash Tank mobile application that lets customers check their balances without logging on to their accounts. The New Zealand unit already has a Cash Tank app for the Sony SmartWatch and plans to deploy Apple iBeacon Bluetooth Low Energy (BLE) technology in some branches by the end of the month.<br />
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The iBeacon technology will transmit special offers to customers' phones as they pass branches. "By the end of this year, our customers will be able to walk into a shop wearing their Google Glasses, see something they like and instantly check their bank balance which will be displayed in their peripheral vision--that's pretty cool," says Simon Pomeroy, the bank's chief digital officer in New Zealand.<br />
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Westpac's will also extend the functionality to offer customers transfers between their bank accounts, the ability to receive account alerts and also find the nearest ATM or Westpac branch.<br />
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According to an <a href="http://blogs.wsj.com/cio/2013/12/06/google-glass-half-empty-for-wells-fargo-beta-testers/">interview with CIO Journal</a>, <a href="http://www.wellsfargo.com/"><b>Wells Fargo</b></a> is testing Google Glass because it’s likely to be popular, at least with some of its customers. To date, however, wearable banking has not generated much traction with the testing group. According to executives of Wells Fargo, the principal issue seems to be that the real estate for apps on Google Glass is fairly limited.<br />
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Although Google Glass has not launched to the general public, several other companies are testing payments apps on the device. <b><a href="http://www.mastercard.com/">MasterCard Inc</a></b>. is building applications that combine the wearable technology with its MasterPass digital wallet and its mobile application, QkR, which reads QR codes. <b><a href="https://www.thelevelup.com/">LevelUp</a></b> is also testing an app that allows Google Glass to be used by a store clerk to scan a QR code displayed on the shopper's phone. Finally, <b><a href="http://www.intuit.com/">Intuit</a></b> is experimenting with payments applications for Google Glass, smartwatches and fitness bands, adapting its GoPayment mobile card reader. Intuit is also building a version of its Mint personal finance management software for Google Glass.<br />
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Finally, much like phone-based mobile applications that have been developed outside the financial services industry by Starbucks and others, <b>Disney </b>has introduced personalized wristbands that allow customers to unlock their hotel room, gain entrance to attractions, track guest movements within the park and make payments within on the property. Instead of using a debit or credit card, a guest only needs to wave their wristband under a scanner to make payments.<br />
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While the marketplace as a whole may still be slow to embrace the potential of wearable banking, Customer 3.0 (who is digital, social and educated) shows an interest in using wearable technology to manage their finances, despite never seeing or testing a working prototype. Therefore, banks and payments companies interested in serving this segment will need a clear strategy for extending their current mobile banking experience to wearable technology.<br />
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Developed correctly, wearable banking applications should bridge the gap between the physical and digital world, allowing users to integrate photos, videos, contact lists, texting, and financial transactions using both touch controls and voice recognition (like WhatsApp for banking).<br />
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<h3>
The Eight Myths of Wearable Technology</h3>
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Despite a ton of activity by both manufacturers and application developers, wearable technology continues to generate more questions than answers. In their research, Accenture found eight misconceptions that all industries, including banking, must consider before making significant investments in this technology:<br />
<ol>
<li><b>Wearable devices are just another form factor for smartphones</b>. The wearable device market extends well beyond smartphones and smart watches to include clothing, sports/activity trackers, wearable cameras, and even insertable devices beneath the skin and in teeth. </li>
<li><b>Consumers will quickly embrace wearable tech</b>. Accenture believes consumers will warm up to wearable technology at a gradual pace. For the public to embrace wearable devices, they must be educated about the value these products can deliver and convinced the associated applications will bring benefits that can't be obtained with other solutions that exist today. The industry is also dealing with aesthetic issues as evidenced by the term 'Glassholes' (a person who continuously talks to their Google Glass, ignoring the outside world). </li>
<li><b>Wearable devices are standalone products</b>. Similar to successful mobile banking executions, wearable solutions need to built for the device but be able to work seamlessly with other channels. A pivotal market driver will be when the devices do new things in new ways, remaining interconnected with current solutions.</li>
<li><b>The wearable market is new</b>. Wearable devices have been around for decades, especially in healthcare (pace makers). Watch-based computing was actually introduced in the mid-1970s.</li>
<li><b>The wearable market will remain a niche</b>. Accenture believes the market for wearable technology is going to include a broad set of products and applications across multiple industries. The most interesting development to watch will be the partnerships that could develop between the healthcare, insurance and potentially banking industries. Beyond consumer uses, there is also a vast opportunity for growth in manufacturing.</li>
<li><b>First to market is a can't-miss winning formula</b>. When designing wearable applications for the consumer, function and fashion will be big considerations. As with the early smartphone, bulky designs, less-than-compelling functions, and impractical applications that don't justify their high costs may rule the day. The key will be to combine the best functionality within the device with a design the consumer will feel comfortable wearing and using. </li>
<li><b>Power consumption and batteries will not be big issues</b>. As the miniaturization of technology and expansion of functionality continues, devices become more power hungry. Manufacturers and application developers will need to compromise, doing their best to balance functionality with battery life.</li>
<li><b>Wearable devices are secure</b>. Security and privacy are, and will continue to be, major concerns with wearable devices, particularly with regard to 24/7 video recording, personal data collection, and highly targeted ads. To prepare for this, manufacturers and application developers need to develop security protocols in anticipation of legal restraints and consumer concerns.</li>
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<h3 style="text-align: left;">
The Future of Wearable Banking</h3>
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<br />
Can the banking industry innovation leaders go beyond current wearable technology applications that simply replicate what is already available on other mobile devices? Can we learn from the painful lessons of smartphone and tablet banking and build for the device as opposed to using the device to simply access what already exists?<br />
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At a recent banking conference, I sat on a panel discussion with Bradley Leimer, VP at Mechanics Bank who made a good point when he said that banks need to determine if development of wearable applications is the best place to focus resources at this time. “There are still a number banks that do not have mobile banking apps or resident tablet applications,” Leimer said. “Should these banks be considering looking at wearables when they haven’t developed the basics of mobile banking that customers want today?”<br />
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Understandably, when the room full of bankers were asked whether wearables would have any impact on payments or banking in the next three years, close to none raised their hands. For those few banks who are testing the waters, early applications have mostly been limited to balance inquiries, alerts, real-time receipts and other functions currently handled quite well with other mobile devices.<br />
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Successful wearable technology applications in banking will most likely require the following:<br />
<ul>
<li><b>Contextual experience</b>. Leveraging data that is uniquely collected with a wearable device</li>
<li><b>Financial insight</b>. Insight that is better delivered with wearable technology than with current devices (alerts, offers, etc.)</li>
<li><b>Functional fashion</b>. Devices that 'make sense' (do I really want to wear glasses over my glasses or start wearing a watch again)</li>
<li><b>Seamless integration</b>. Integration with a new payments capability (iBeacon), partnering industry (healthcare, entertainment, automotive, insurance) and/or device manufacturer (Apple, Google)</li>
<li><b>Intuitive simplicity</b>. Best solutions will need a minimal level of involvement</li>
<li><b>Secondary functionality</b>. Willingness to accept that banking functionality may become part of a vastly broader solution (Internet of Everything (IoE))</li>
<li><b>New pricing model</b>. Justifying the value proposition for manufacturers <i>and</i> the consumer</li>
<li><b>Improved security and privacy</b>. Needs to reassure both consumers and regulators</li>
</ul>
Even with the above challenges, I have always been a believer that banks can't sit on the sideline as others are testing and learning. Much like betting on roulette, it is better to place smaller bets on several alternative solutions than to play 'wait and see'. While other priorities must we addressed, it is still possible to build new mobile banking capabilities with an eye on the potential impact on wearable banking.<br />
<br />
And while wearable banking may not yet be ready for prime time, it is still important to understand and participate in the development of new technologies that eventually will bring together people, process, data, and things to make networked connections more relevant and valuable, creating new capabilities and richer experiences for consumers, businesses and financial institutions.<br />
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Additional Resources</h3>
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<span style="font-family: inherit;"><a href="http://newsroom.accenture.com/news/accenture-consumer-survey-reveals-market-opportunities-in-wearable-technologies.htm" style="color: #555555;" target="_blank"><br class="Apple-interchange-newline" /></a><a href="http://www.accenture.com/us-en/Pages/insight-digital-consumer-tech-survey-2014.aspx"><i style="-webkit-transform: translateZ(0px); text-decoration: none;">D</i><i>igital Consumer Tech Survey</i></a> - Accenture (Jan 2014)</span></div>
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<span style="color: black; font-family: inherit;"><i><a href="http://newsroom.accenture.com/news/accenture-consumer-survey-reveals-market-opportunities-in-wearable-technologies.htm">Accenture Consumer Survey Reveals Market Opportunities in Wearable Technologies</a> </i>- Accenture (Jan 2014)</span></div>
<div style="margin-bottom: 1.5em; margin-top: 0.5em;">
<span style="-webkit-transform: translateZ(0px); color: black; font-family: inherit; text-decoration: none;"><i><a href="http://thefinancialbrand.com/34773/wearable-banking-google-glass-applications/">Wearable Banking: Banks Roll Out First Apps for Google Glass</a></i> - The Financial Brand (Oct 2014)</span></div>
<div style="margin-bottom: 1.5em; margin-top: 0.5em;">
<span style="-webkit-transform: translateZ(0px); color: black; font-family: inherit; text-decoration: none;"><a href="http://www.intelligentenvironments.com/knowledge/blog/300513-google-glass-your-wearable-bank/"><i>Google Glass: The Wearable Bank</i></a> - Intelligent Environments (May 2014)</span></div>
<div style="margin-bottom: 1.5em; margin-top: 0.5em;">
<span style="color: black; font-family: inherit;"><a href="https://www.credit-suisse.com/us/en/news-and-expertise/news/economy/sectors-and-companies.article.html/article/pwp/news-and-expertise/2013/07/en/the-future-of-wearable-technology.html"><i>The Future of Wearable Technology</i></a> - Credit Suisse (Apr 2013)</span></div>
<div style="margin-bottom: 1.5em; margin-top: 0.5em;">
<a href="http://www.juniperresearch.com/viewpressrelease.php?pr=411"><i>Wearable Smart Glasses Shipments to Reach 10 Million Globally by 2018</i></a> - Juniper Research (Nov 2013)</div>
<div style="margin-bottom: 1.5em; margin-top: 0.5em;">
<span style="color: black; font-family: inherit;"><i><a href="http://www.harrisinteractive.com/vault/Harris%20Poll%2079%20-%20Wearable%20Tech_11.6.13.pdf">Are Americans Ready to Sport Wearable Tech?</a></i> - Harris Interactive (Nov 2013)</span></div>
<div style="margin-bottom: 1.5em; margin-top: 0.5em;">
<span style="color: black; font-family: inherit;"><a href="http://www.harrisinteractive.com/NewsRoom/HarrisPolls/tabid/447/mid/1508/articleId/1350/ctl/ReadCustom%20Default/Default.aspx"><i>What Is Wearable Tech, and What Can it Do for Me?</i></a> - Harris Interactive (Nov 2013)</span></div>
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Anonymoushttp://www.blogger.com/profile/05424097007271218756noreply@blogger.com0tag:blogger.com,1999:blog-8930153101988441660.post-56608795725662491592014-02-21T00:45:00.001-05:002014-02-25T06:05:16.131-05:005 Lessons Bankers Can Learn From WhatsApp<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjdY6BZa8_JizDfP6psO8Wzu4CCVYJ9T74CGR-r0WViSEUEg0Z78eXZa_SiMBUspG9u-AaZPK5gR4hEIgEe1LB2xCvo6c6WK7_V3cNgn2gW9Mln9d2KcqYPsXRSU1OV1r7ehPRNkB9-CAY/s1600/whatsapp.jpg" imageanchor="1" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjdY6BZa8_JizDfP6psO8Wzu4CCVYJ9T74CGR-r0WViSEUEg0Z78eXZa_SiMBUspG9u-AaZPK5gR4hEIgEe1LB2xCvo6c6WK7_V3cNgn2gW9Mln9d2KcqYPsXRSU1OV1r7ehPRNkB9-CAY/s1600/whatsapp.jpg" height="150" width="200" /></a></div>
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<span style="color: blue;">MOBILE STRATEGIES</span></h3>
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<h3 style="text-align: justify;">
On the surface, the purchase of WhatsApp by Facebook for $19 billion seems to have little to do with retail banking. Digging deeper, however, the transaction illustrates the most important consumer trends today that bankers must understand or risk becoming irrelevant in the future.</h3>
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Interestingly, these trends were also important to the sale of Simple to BBVA a day later.</h3>
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Is WhatsApp worth $19 billion? By traditional financial metrics, the consensus is no. But Facebook is justifying the price by citing WhatsApp’s startling growth, which has been even faster than Facebook’s early years.<br />
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In discussions with analysts, David Ebersman, Facebook’s chief financial officer, compared WhatsApp to companies with the potential to grow to 1 billion users. “The primary thing we focused on was how healthy this network is and the pace at which it was growing,” he said. “We looked at other networks that have achieved this kind of scale and that helped provide a framework", Mr. Ebersman said. More than just raw growth, WhatsApp has grown in the key demographic that many believe Facebook has been losing as of late...the Millennials.<br />
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So, what lessons can retail bankers learn from WhatsApp...especially when our industry is surrounded by traditional thinkers and legacy systems?<br />
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<h3>
The Shift to Mobile is Seismic</h3>
<div>
<br /></div>
The shift to mobile is unprecedented, with combined smartphone and tablet usage rapidly overtaking the desktop. This mobile trend is driven by increased application-based actions (e.g., communicating on social networks, posting photos, tweeting) and task-oriented web usage (e.g., location-based searches). While Facebook was built for the desktop and migrated to mobile, WhatsApp was built for mobile first, giving the network an advantage in today's marketplace.<br />
<br />
This shift presents strategic challenges to banks that also until now have built mobile banking apps starting with the desktop experience. As more users are accessing their banking relationship from mobile devices, it makes more sense to begin development with the form and function of mobile. By doing so, the design and flow of the mobile banking application improves as the user-experience becomes more narrowly defined.<br />
<br />
In todays mobile-first ecosystem, we should be developing downloadable mobile banking apps. When we do so, we enable the customer to access their address book, bypassing the need to enter information to make payments, etc. We also can allow access to mobile photo libraries instead of uploading photos from different websites. Finally, the app can more easily push alert notifications directly instead of relying on emails or requiring the customer to check a website.<br />
<br />
A well built mobile banking app is just two taps away, while accessing and using online banking via a mobile device is far more cumbersome. If built correctly, the mobile banking app will also get a prominent icon on the home screen (the mobile version of share of wallet).<br />
<br />
Going forward, it is much better to scale the mobile experience to the desktop as has been done by Moven, GoBank and Simple. By doing so, instead of removing online banking functionality for mobile (or developing a separate but parallel mobile site), additional elements can be added if needed to supplement and enhance the user experience on the desktop/tablet.<br />
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<div>
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<h3 style="text-align: left;">
Mobile Requires Contextual Engagement</h3>
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<div>
<br /></div>
<div>
For WhatsApp, the size of their user base was impressive (450 million), but the level of engagement (72 percent active on a given day) was what made the deal happen. As shown below, users of WhatsApp did far more than just communicate via text. They shared videos, voice messages and photos...lots of photos.</div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh_c4-cIAvyjzwOpuD2tlpRBEoH8ZHtiBKNy0zEyJeYw8vhJ5E_HwdyqLnvLotag0DacBsCE8jvtjFlSROt1s4bWtnxGGsj9MUFbzd4iPz0XL_gI4jJrUzNAWp0qPVYYBIU7ab7y9NjJ74/s1600/WHATSAPP_chart_21.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh_c4-cIAvyjzwOpuD2tlpRBEoH8ZHtiBKNy0zEyJeYw8vhJ5E_HwdyqLnvLotag0DacBsCE8jvtjFlSROt1s4bWtnxGGsj9MUFbzd4iPz0XL_gI4jJrUzNAWp0qPVYYBIU7ab7y9NjJ74/s1600/WHATSAPP_chart_21.png" height="387" width="640" /></a></div>
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<div>
Nothing tells a story or connects people more than visual engagement. Much like Facebook, Instagram and Snapchat, the primary engagement mechanism for WhatsApp is photos. Processing 600 million images per day, the acquisition of WhatsApp by Facebook cemented their position as the world’s most dominant social network (for now) by ensuring that it “owned” the mobile sharing of photos.</div>
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<br /></div>
<div>
“WhatsApp is the only app we’ve ever seen with higher engagement than Facebook itself,” admitted Zuckerberg in a conference call to journalists after the WhatsApp deal was announced. As in any business (including banking), it wasn’t just users Facebook wanted to acquire, it was <i>engaged</i> users that used the mobile app regularly.</div>
<div>
<br /></div>
<div>
As the mobile downloading of photos and videos continues to escalate, it is important for banks and credit unions to also stimulate engagement by fully leveraging the camera functionality of the smartphone. This has already occurred with mobile deposit capture, photo bill pay, and the use of photos to facilitate the opening and onboarding of new accounts.</div>
<div>
<br /></div>
<div>
Beyond these uses of photos, banks can encourage engagement and social sharing by linking purchases with photos and videos. Simple allows customers to attach photos to transactions much like customers used to complete the memo line on a check. By doing so, Simple make spending data more dynamic, more organized and easier to share.<br />
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<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgMIkXGPFO-7_H9XwuEiDdD7E9mB8My3PoGi8pWpV8o5yC7Es6fSc5XkGOK8s6qiqcHhvBIsM7HU6bXHvOResRpNdSgvoTvQ0-MaS0SdeG6z89RAwCBUZepprUB6TYq5T9C-V3mYkg6HhE/s1600/Transaction+Phone.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgMIkXGPFO-7_H9XwuEiDdD7E9mB8My3PoGi8pWpV8o5yC7Es6fSc5XkGOK8s6qiqcHhvBIsM7HU6bXHvOResRpNdSgvoTvQ0-MaS0SdeG6z89RAwCBUZepprUB6TYq5T9C-V3mYkg6HhE/s1600/Transaction+Phone.png" height="400" width="205" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">Simple Allows Customers to Assign Photos to Transactions</td></tr>
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<br />
Progressive banks and credit unions are also using videos to guide customers on how to better optimize their relationships resulting in expanded share of wallet. When built for the mobile device, and linked to other forms of communication like email, video increases the effectiveness of communication.<br />
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<h3>
Consumers Want Social Connection</h3>
<div>
<br /></div>
<div>
WhatsApp differs from many other social media apps because of the focus on one-to-one or very small group communication as opposed to sharing information more widely. The application connects with those MIPs (most important people) in the user's mobile address book. Being developed mobile-first, it does not ask the user to spend time building a new graph of relationships; instead, it taps the ones that are already on the device.</div>
<div>
<br /></div>
<div>
Similarly, banks need to understand the desire for customers to use their devices to transact seamlessly with those who are closest to them. While not wanting to share their financial dealings through vast networks, customers want to easily execute P2P payments and even collect money using their mobile device. The recent introduction of Square Cash Request and Payment functionality is a great example of how engagement can be facilitated between individuals or small groups.<br />
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<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhKqABgp3KdNWnUnaSz8HmN2dbu1WIdDhvJxbfOWN3tzce3QZGfJ80h2rCjehbcQm9wlwcDoJcib9A5iv5so8WC12ecBhEeWih5ZZLRezAP3CkuZg5fcEsCsoRAx6Uso_rILtgOT9BMjg4/s1600/square_cash_request_large_verge_medium_landscape.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhKqABgp3KdNWnUnaSz8HmN2dbu1WIdDhvJxbfOWN3tzce3QZGfJ80h2rCjehbcQm9wlwcDoJcib9A5iv5so8WC12ecBhEeWih5ZZLRezAP3CkuZg5fcEsCsoRAx6Uso_rILtgOT9BMjg4/s1600/square_cash_request_large_verge_medium_landscape.png" height="213" width="320" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">Square Cash App</td></tr>
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<br />
Simple also allows customers to instantly move money between accounts of friends and family with no holds, no checks, no fees and no delays. Adding a contacts requires just an email address and phone number. Two-factor authentication during confirmation adds an extra layer of security without slowing down the process.
Simple even allows for shared financial goals and provides a way for friends and co-workers to quickly settle up for shared bills (lunch, night out, party, etc.).<br />
<br />
The key for banks in the future is to provide the capability for customers to connect financially and socially with those people in their MIP circle of friends...without requiring extensive data input.</div>
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<h3>
Simple Design and Functionality Wins</h3>
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<div>
One of WhatsApp's keys to success is its simplicity. WhatsApp became the SMS of the future by being lean internally and simple externally. With only 32 engineers, one WhatsApp developer supports 14 million active users, a ratio unheard of in the industry. Despite the low number of employees, WhatsApp still maintains greater than 99.9% uptime (referred to as dial-tone reliability). <br />
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The focus of WhatsApp was to be able to add features without making the product more complicated. Instead of responding to every customer request (desktop version, email capability, etc.) they focused on the utility of the app, its simplicity, the quality of the service.<br />
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When WhatsApp adds new features, it is only after it is determined that execution will simplify rather bloat the service. For example, the recent push-to-talk voice messaging functionality only takes a single tap to record and send a voice message. To play a message, a phone will automatically switch from speaker-mode to soft volume when its proximity sensor detects that it's being held near an ear.<br />
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For a bank to better understand what a simplified mobile banking app looks like and how it functions, they should look at the beauty of Simple, Moven and GoBank. They mobile-first providers support all of the functionality of the most important banking service (checking/current account) without the complexity and 'noise' associated with traditional bank mobile delivery of the same service.<br />
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It is this simplification of delivery that is thought to be the reason BBVA not only acquired the customers of Simple, but also wanted the Simple team to remain. It is difficult for traditional bankers to understand how to deliver an exceptionally simple design when surrounded by so much legacy complexity.<br />
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<h3>
Buying Experience Trumps Building From Scratch</h3>
</div>
<div>
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<div>
Both Facebook and BBVA could have taken a route of building the services they acquired when purchasing WhatsApp and Simple respectively. They could also have immediately absorbed the acquired organizations and placed a Facebook or BBVA logo on the acquisition for worldwide consumption.<br />
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Instead, both firms decided it was more prudent to buy the customers and associated talent, but to leave the organizations relatively intact as autonomously functioning units. This allows them to not compromise the attributes that made their acquisitions unique.<br />
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This is usually a faster route to success for industries that are in a state of continuous disruption. Benefiting from the learning curve of others, and bringing additional financial and human resources to the table, there is the potential for greater success in the future.<br />
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In an interview with the American Banker, Jacob Jegher, senior analyst at Celent said, "I think it's a really interesting deal. Simple is a disrupter in the industry and BBVA is a highly innovative bank. It sounds like a good match...Simple can't be replicated overnight."<br />
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According to the American Banker, Jegher believes consumers will care less about the bank behind the interface and more about the experience and receiving stellar service. "Any step like this pushes the industry forward," says Jegher. "It's part of building a culture of innovation in the bank."<br />
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In a separate interview with the American Banker, Stessa Cohen, a research director at Gartner, said BBVA's acquisition of Simple and partnership with SmartyPig is another sign of its customer focus. "It's not oriented around transactions but around what the consumer wants and needs," Cohen says. "It's a whole new customer experience that really puts customers at the center of their own money."
<br />
<br />
What may be most telling about the value of WhatsApp to the marketplace is that the company achieved their growth without investing a penny in marketing. Unlike most competitors in the industry, they never spent anything on user acquisition. The company doesn’t even employ a marketing or PR person.<br />
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Instead, WhatsApp created a strong connection with consumers by understanding the shift to mobile, the importance of contextual engagement, the dynamics of social and the power of simplicity. By doing so, WhatsApp benefited from word of mouth marketing and social media to grow at an unprecedented rate.<br />
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The question is whether the banking industry can learn from these lessons and move away from tradition, developing products and services that reflect the digital transformation of today's mobile consumer.</div>
Anonymoushttp://www.blogger.com/profile/05424097007271218756noreply@blogger.com0tag:blogger.com,1999:blog-8930153101988441660.post-30736103086120099902014-02-17T17:36:00.002-05:002014-02-22T16:00:14.966-05:00Payments Innovations Replace Debit and Credit Cards<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiboazZ5UkXSiBdAX1a8oJgqv6Op5mQTxyH_jAii5Des_Kb3PNwpJVyRvzzVAlg4ASG_Hb0LUmZHS9iOo88eOHJLYfC9s509KV6r7vgO71RaVYbhT2pu8vhjiXiWwMqeXom9nSSizC2QoI/s1600/bigstock-E-money-6391621.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiboazZ5UkXSiBdAX1a8oJgqv6Op5mQTxyH_jAii5Des_Kb3PNwpJVyRvzzVAlg4ASG_Hb0LUmZHS9iOo88eOHJLYfC9s509KV6r7vgO71RaVYbhT2pu8vhjiXiWwMqeXom9nSSizC2QoI/s1600/bigstock-E-money-6391621.jpg" height="240" width="320" /></a></div>
<h3>
<span style="color: blue;">PAYMENTS STRATEGY</span></h3>
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<h3>
At a time when payment innovation seems like an everyday occurrence, it is exciting when new ideas come along that embrace both mobility and simplicity. In separate personal user tests, <a href="http://www.looppay.com/">LoopPay</a> allows me to make contactless payments at virtually every retail point-of-sale terminal while <a href="https://square.com/cash">Square Cash</a> enables me to collect money from friends with an email.</h3>
<h3>
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<h3>
Here's why I no longer need a wallet filled with plastic.</h3>
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<br />
When I initially covered these payments innovations in late 2013, both <a href="http://jimmarous.blogspot.com/2013/12/loop-mobile-payments-wallet-innovation.html">LoopPay</a> and <a href="http://jimmarous.blogspot.com/2013/10/square-cash-mobile-payments-deposit-debit-paypal-google-venmo.html">Square Cash</a> drew my attention because of their unique strategies to impact the way people make payments. LoopPay promised to deliver a device that would 'trick' a traditional POS terminal into thinking a card was being used, making virtually every transaction contactless. Square Cash provided a secure method of making P2P payments via email. LoopPay's value proposition was to provide an easier and more secure way to pay merchants while Square Cash aimed to simplify P2P transactions.<br />
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<h3>
Loop Wallet</h3>
<br />
Several weeks ago, I received my Loop Fob, the first in a series of Loop Wallet 'AppCessories' that would allow me to securely store and organize my payment, loyalty and gift cards in my iPhone while making contactless payments at more than 90% of today's terminals worldwide.</div>
<br />
My first impression when I received my Loop Fob was that, while the packaging was very well done and provided a clear overview of what was needed to use the device, the device was larger than I anticipated. Once I began to use the device, however, I found the fob to be convenient while serving to whet my appetite for the soon to be released iPhone ChargeCase.<br />
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<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjXY8OHqHKIJ0Qb1Dni36pzymsAfnyOPE94uhDwOoGciD-1j5AX1UKQkPdYeH9eDJF-rQVB1Sf2IOemUYzba3PMJfHnZfYTx_RMlpkShvzLi6ypnxmQZ2YPAuPi7cf-zOYQU_KgFoFcxjk/s1600/Loop+Fob+Packaging.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjXY8OHqHKIJ0Qb1Dni36pzymsAfnyOPE94uhDwOoGciD-1j5AX1UKQkPdYeH9eDJF-rQVB1Sf2IOemUYzba3PMJfHnZfYTx_RMlpkShvzLi6ypnxmQZ2YPAuPi7cf-zOYQU_KgFoFcxjk/s1600/Loop+Fob+Packaging.png" height="293" width="400" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">The Loop Fob Wallet AppCessory Packaging</td></tr>
</tbody></table>
<br />
<b>Loop Wallet Set-Up</b><br />
<br />
Once I downloaded the <a href="https://itunes.apple.com/us/app/loopwallet/id780872059?mt=8">LoopWallet application</a> from the iPhone store (Android version to be introduced shortly), I simply signed-up for the service and answered a series of security questions within the app. The securitization was complete after I entered an activation token that was sent to my connected email account.<br />
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<div>
Loading my cards was done using the card reading component of the fob while the fob was connected to my iPhone. A nice feature of the scanning process was the optional feature of adding a picture of my cards, the customer service phone numbers for for each card and an example of my signature. I could also add gift and loyalty cards as well as my drivers license to be part of my Loop Wallet. </div>
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The last step of the initialization process was to designate a default card that would be used when the fob is disconnected from my phone (the majority of my transactions have been with the fob disconnected). The default card can be changed at any time when the fob is connected to the phone. The tutorial below was a great way to understand the application process and usage of the Loop Fob.</div>
<div>
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<div style="text-align: center;">
<br /></div>
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<div style="text-align: center;">
<iframe allowfullscreen="" frameborder="0" height="315" src="//www.youtube.com/embed/0hBAa0iWFgw" width="560"></iframe>
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<div style="text-align: center;">
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<div style="text-align: center;">
<span style="font-family: inherit; font-size: x-small;">Loop Wallet Application Introduction Tutorial</span></div>
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<b>Loop Wallet Use</b></div>
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During several weeks of testing, I found the Loop Wallet to be better than expected. Except for gas station pumps and ATMs that are not currently supported by the app, I did not run into an instance that my Loop Fob didn't work. It was also nice that I could access all of my payment, loyalty and gift cards within the app as opposed to being limited to a specific number of cards (such as with the <a href="https://onlycoin.com/support/faq/">Coin mobile device</a>).</div>
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<br /></div>
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That said, I did realize some of the challenges associated with any contactless payments process in the U.S., especially at sit down restaurants. In these locations, the card reading POS device is usually located either at a waitress station or in the kitchen. While I initially asked to walk back with the waiter, I quickly realized that doing quick training on the use of the fob was sufficient. </div>
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<br /></div>
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Overall, the best part of using the Loop Wallet was that virtually all POS terminals become contactless devices. So, while I am severely limited with the number of PayPass locations around my house, the number of traditional card readers (including PayPass locations) are virtually limitless.</div>
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<b>The Future of Loop Wallet</b></div>
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<b><br /></b>
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According to Damien Balsan, EVP of LoopPay, the future of the Loop Wallet includes the introduction of an Android version of the LoopWallet application as well as the introduction of new payment devices including a phone case that will eliminate the need for the separate fob. Ultimately, LoopPay would like to partner with a financial institution, mobile carrier, etc. that would bring the benefits of the Loop Wallet within the phone itself.</div>
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<br /></div>
<div style="text-align: left;">
When asked about the future of Loop Wallet in a world of NFC or EMV, Balsan said, "The industry is moving toward EMV, which will provide
substantial security for cards. It will take several years to build the necessary
infrastructure, however. Loop's secure technology can be implemented today. It is
security and mobile payments at zero cost to retailers."</div>
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<br /></div>
<div style="text-align: left;">
<b>Loop Wallet Security</b></div>
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<br />
A key feature of Loop's technology is that it adds substantial security to transactions. The security is based on tokenization, which makes part of the card data seemingly random and unusable to anyone else but the intended recipient. Stolen tokenized card data is useless for creating working counterfeit cards or transactions.<br />
<br />
Called Partial Tokenization, it creates a new cryptographically generated token for each
transaction. Since the key needed to create a valid token is not known, a counterfeiter is unable to create tokens for fraudulent cards or transactions. When loaded into the Loop Mobile Wallet, any existing magnetic stripe card can become enabled for secure tokenized transactions, provided the card issuer supports Partial Tokenization.<br />
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Because retailers do not need to upgrade their systems to support Loop, they can immediately benefit from its security features as can the consumer.<br />
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<h3>
Square Cash</h3>
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<br /></div>
<div>
The second new payment application I tested was the new Square Cash request function. I have been an avid Square Cash user since it was introduced last year, paying family members, friends and service providers using email as opposed to writing checks. The immediacy and simplicity of this P2P solution is second to none, and each person who has received payment from me with this application has commented on how easy it is to use.</div>
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<br /></div>
<div>
Building on the success of the initial Square Cash solution, Square recently expanded the capabilities of the application to include the capability to request funds in addition to sending cash. Similar to the process used to send money, I can now use an email to request funds from one or more people.</div>
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<br /></div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEihHXoSintVVVPNv32Qd20k6N8V1Ulb4TTKIcy4mEwQVmhWuZvTPrFfdeqLkRYS9mfm8HcfI4yacNOuqFM5W2nqeHicNsJMYFw4ncjSjCM0Wf07ZciXxGPaJ1WzZ6ToSRUR8vzvxPyfqYI/s1600/square_cash_request_large_verge_medium_landscape.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEihHXoSintVVVPNv32Qd20k6N8V1Ulb4TTKIcy4mEwQVmhWuZvTPrFfdeqLkRYS9mfm8HcfI4yacNOuqFM5W2nqeHicNsJMYFw4ncjSjCM0Wf07ZciXxGPaJ1WzZ6ToSRUR8vzvxPyfqYI/s1600/square_cash_request_large_verge_medium_landscape.png" height="213" width="320" /></a></div>
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<div class="separator" style="clear: both; text-align: left;">
In my tests, I simply determined the amount of money I wanted to request from a friend, family member, etc. and used the app the same way I did when I sent money, except that I used the 'request' button (above). When I wanted to split a bill for a group gift, I entered the amount and multiple email addresses (the amounts need to be the same for a group email request).</div>
<div>
<br /></div>
<div>
Similar to a Square Cash payment, a Square Cash request sent an email to the designated people I wanted payment from and they made the payment using their debit card number. When they completed the payment, I was notified of the payment via email.</div>
<div>
<br /></div>
<div>
One great additional feature of the Square Cash request solution is a new page on the Square Cash website that tracked which of my friends or family had made a payment to me. This is great, especially for a person who already receives too many emails, making it difficult to remember who may be a deadbeat.<br />
<br />
Beyond group gifts and meals, I can see this as a great application for those who regularly collect money for events, teams, etc. Square definitely makes the bookkeeping and anxiety of the collection process easier (reduced phone calls). The immediacy and ease of use makes this great for everyone.</div>
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<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjz8jGHf3sP2RLwSmAzmEEA4-sXRH1Bbm0vA8dTTYlMu_eENAet_3pSqjk0EjHfM5t0LACwDH_k0Mmu3_z5G32lX9y7pVGE1rvUBEq8PW2EF1EecP0gKwb7IzOoFlsIuKLIY4o33P6gJAk/s1600/square_cash_request_people.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjz8jGHf3sP2RLwSmAzmEEA4-sXRH1Bbm0vA8dTTYlMu_eENAet_3pSqjk0EjHfM5t0LACwDH_k0Mmu3_z5G32lX9y7pVGE1rvUBEq8PW2EF1EecP0gKwb7IzOoFlsIuKLIY4o33P6gJAk/s1600/square_cash_request_people.png" height="480" width="640" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">Square Cash Request Status Page</td></tr>
</tbody></table>
<div>
<br /></div>
As always, Square Cash is free to send and receive, and there is no signup process (which makes it easier than either Google Wallet or PayPal where a sign-up process is required). Funds are directly deposited into the recipient's bank account as opposed to being held in a stored balance account. Square Cash is also available for both Android and iOS and works for anyone with an email account in the U.S.<br />
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Dave Pogue from Yahoo discusses both the LoopPay device.<br />
<br />
<iframe allowfullscreen="true" allowtransparency="true" frameborder="0" height="360" mozallowfullscreen="true" scrolling="no" src="https://screen.yahoo.com/embed/popular/pogue-review-loop-165036017.html" webkitallowfullscreen="true" width="640"></iframe>
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<h3>
Additional Resources</h3>
<div>
<br /></div>
<div>
<a href="http://techcrunch.com/2013/10/19/loop-the-future-of-mobile-payments-or-a-temporary-fix/">Loop: The Future of Mobile Payments or a Temporary Fix?</a> - Tech Crunch (Oct. 2013)<br />
<br />
<i><a href="http://www.zdnet.com/square-cash-challenges-gmail-with-new-email-request-option-7000026323/">Square Cash Challenges Gmail With New Email Request Option</a></i> - ZD Net (Feb 2014)<br />
<br />
<i><a href="http://www.mobilepaymentstoday.com/article/228019/Square-turns-on-money-request-app">Square Turns On Money Request App</a></i> - Mobile Payments Today (Feb 2014)</div>
</div>
</div>
</div>
</div>
Anonymoushttp://www.blogger.com/profile/05424097007271218756noreply@blogger.com1tag:blogger.com,1999:blog-8930153101988441660.post-12699770185180592932014-02-12T10:22:00.000-05:002014-02-17T17:33:50.759-05:00Tomorrow's Checking: Built For The Mobile-First Consumer<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiuUJazDdGTXgoDIsP-aDrdPTA7uH6WID-pAtfU2468Gl1muqLyQvkCEWrc0TEcpf7_86WWadSbbrYFaNpNggErTFIcQlmeOxmj6zXacrM-tWNdu11VO2sdm6ZwUzpaRPLPB7HcaozAyIU/s1600/bigstock-Wallet-And-Mobile-Phone-51854737-3.jpg" imageanchor="1" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiuUJazDdGTXgoDIsP-aDrdPTA7uH6WID-pAtfU2468Gl1muqLyQvkCEWrc0TEcpf7_86WWadSbbrYFaNpNggErTFIcQlmeOxmj6zXacrM-tWNdu11VO2sdm6ZwUzpaRPLPB7HcaozAyIU/s1600/bigstock-Wallet-And-Mobile-Phone-51854737-3.jpg" height="209" width="320" /></a></div>
<h3 style="text-align: justify;">
<span style="color: blue;">PRODUCT STRATEGIES</span></h3>
<h3 style="text-align: justify;">
<br /></h3>
<h3 style="text-align: justify;">
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.</h3>
<h3 style="text-align: justify;">
<br /></h3>
<h3 style="text-align: justify;">
But all that we have become accustomed to is about to change as we enter the era of the downloadable bank account.</h3>
<div style="text-align: justify;">
<br /></div>
The downloadable bank account differs from today's checking account because it is built specifically for <a href="http://jimmarous.blogspot.com/2013/11/customer-30-how-banks-must-leverage-digital-mobile-media.html">Customer 3.0</a>. 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 <a href="http://www.starbucks.com/coffeehouse/mobile-apps">Starbucks mobile app</a>, and uses mobile deposit capture instead of going into the bank or credit union branch.<br />
<br />
Tomorrow's checking is not just having mobile access to a traditional checking account. It is a bank account built for mobile.<br />
<br />
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 <a href="http://www.moven.com/">Moven</a>, <a href="http://www.simple.com/">Simple</a> <a href="http://www.gobank.com/">GoBank</a>, <a href="http://www.bluebird.com/">Bluebird</a> in the U.S. and <a href="http://www.mbank.pl/">mBank</a>, <a href="http://www.fidor.de/">Fidor</a>, <a href="http://www.hellobank.com/">Hello</a>, <a href="https://www.commbank.com.au/personal/tools/mobile-apps.html">CommBank</a> and <a href="http://www.soon.fr/">Soon</a> overseas. Tomorrow's checking may not have any associated plastic card, but may be able to store alternative currencies as was <a href="http://www.finextra.com/news/fullstory.aspx?newsitemid=25714&topic=payments">recently announced by Standard Bank</a>.<br />
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<div class="separator" style="clear: both; text-align: center;">
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<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEheJOxt8ckwWfKqnHQtskkllHEbmdwD6R8WjnJnIrEUSPcBiqXT49bCWXxKomL1rNo9WYzho6jzH9J_ebHgPOPFThxjz_uHbUYNA9pV4ZFYQQEMjPeg4_kHK44KhuajdekgZE9qgaXJPEc/s1600/Moven+and+Simple+Screen+Shots.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEheJOxt8ckwWfKqnHQtskkllHEbmdwD6R8WjnJnIrEUSPcBiqXT49bCWXxKomL1rNo9WYzho6jzH9J_ebHgPOPFThxjz_uHbUYNA9pV4ZFYQQEMjPeg4_kHK44KhuajdekgZE9qgaXJPEc/s1600/Moven+and+Simple+Screen+Shots.png" height="362" width="400" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;"><span style="font-size: small;">Both Moven and Simple Provide Exceptional <br />Mobile Banking Contextual Insights</span></td></tr>
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<br />
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 <a href="http://jimmarous.blogspot.com/2014/01/mobile-banking-prepaid-checking-underbanked-competition.html">T-Mobile's Mobile Money</a>, 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.<br />
<br />
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.<br />
<br />
Attacking on a different front, players such as <a href="http://www.google.com/wallet/">Google</a>, <a href="http://www.paypal.com/">PayPal</a>, <a href="http://www.banktech.com/payments-cards/amazon-planning-new-p2p-payments-and-kin/240165790">Amazon</a>, <a href="http://jimmarous.blogspot.com/2014/01/apple-payments-mobile-wallet-banking-strategy.html">Apple</a>, <a href="https://www.paywithisis.com/">Isis</a> and others are hoping to control the digital wallet processing component of the payments ecosystem, leaving traditional banks with only depository functions.<br />
<br />
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<h3>
Demand for a Downloadable Bank Account</h3>
<div>
<br /></div>
<div>
There is already a demand for a low cost, easy access checking alternative as has been seen from the explosive growth of prepaid debit cards. According to <a href="http://www.pewstates.org/research/reports/consumers-continue-to-load-up-on-prepaid-cards-85899537459">PEW Research</a>, the amount of money loaded onto prepaid cards has more than doubled in just three years, suggesting that more consumers are turning to them. As more prepaid cards have recently come into the market, the defining lines between traditional checking accounts and prepaid cards are beginning to blur. This is especially the case with those providers that offer mobile access to these accounts. </div>
<div>
<br /></div>
<div>
While prepaid cards to date have been primarily targeted to the lower demographic segments who are less likely to use traditional banking services, the segment is still large and the banking needs are not significantly different from those of Customer 3.0.</div>
<div>
<br /></div>
<div>
According to the research:</div>
<div>
<ul>
<li>5 percent of adults, or about 12 million people, use prepaid cards at least once a month.</li>
<li>A large majority of prepaid card users are experienced with other financial products: 7 in 8 have or previously had a checking account, and 2 in 3 have or previously had a credit card.</li>
<li>Most customers’ primary motivation for using prepaid cards is to gain control over their finances. The top four specific reasons they use the cards are to:</li>
<ul>
<li>Buy things online.</li>
<li>Avoid credit card debt.</li>
<li>Avoid spending more money than they have.</li>
<li>Avoid overdrafts.</li>
</ul>
<li>2 in 3 prepaid card users would welcome features that make it easier for them to save money.</li>
</ul>
</div>
<div>
Several recent research studies indicate that consumers overall would prefer to use a traditional financial institution (bank or credit union) for their primary financial relationship. There are many reasons for this affinity including trust, familiarity, local availability (yes, branches) and security. Additional studies show that consumers would also prefer to use their current bank for mobile payments.</div>
<div>
<br /></div>
<div>
<a href="http://www.celent.com/reports/rise-new-bank-account">Celent research</a> found that 75 percent of consumers would like to view all of their finances within a mobile application and 63 percent would like to pay merchants directly from their bank account. Other features of a downloadable bank account desired by the respondents to the Celent research include mobile deposit capture (63%), the integration of rewards (55%), direct payment capability (52%) and photo bill pay (43%).</div>
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgWlzLNacDdxFQX-A-qj8_pC7374dK7aJh0f34xYJuy0Fz6EW01-zOnU1-FhVaoVy1KmFNIxmOGjxsDYEUOpI9YtPq3hwnflk5tR6UovizoBEjPuW7_IAAkxeJaqTx59FyRHjoqoMuq6as/s1600/What+People+Want+from+Checking.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgWlzLNacDdxFQX-A-qj8_pC7374dK7aJh0f34xYJuy0Fz6EW01-zOnU1-FhVaoVy1KmFNIxmOGjxsDYEUOpI9YtPq3hwnflk5tR6UovizoBEjPuW7_IAAkxeJaqTx59FyRHjoqoMuq6as/s1600/What+People+Want+from+Checking.png" height="324" width="640" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;"><span style="font-family: inherit; font-size: x-small;">Source: Celent Research on U.S. Mobile App Preferences, July 2013</span></td></tr>
</tbody></table>
<div>
<br />
Based on the consumer requirements discussed above and the offerings of competing organizations, it is clear the checking account of the future (the downloadable bank account) will need to have the following features:<br />
<br />
<ul>
<li><b>Simple Design</b>: From being able to open a new account using the camera functionality of a smartphone to being able to make payments, transfer funds, deposit checks and make purchases, the focus of tomorrow's checking will be on simple design, ease of use, and a focus on the customer experience. </li>
<li><b>Contextual</b>: Using real-time transaction data combined with customer behavioral insight, tomorrow's checking will seamlessly integrate personal financial management (PFM) within the mobile application, providing a look into the future as well as into the past.</li>
<li><b>Transactional</b>: As opposed to relying on apps from outside providers or being reliant on specific merchant technology, tomorrow's checking will allow customers to conduct transactions anywhere with their mobile device. Further down the road, there may need to be the possibility to fund purchases from multiple currencies.</li>
<li><b>Rewarding</b>: Related to the contextual nature of tomorrow's checking account, personalized rewards will need to be provided to the customer based on their demographics, transaction activity and even their location.</li>
</ul>
<div>
It is clear that the checking account must evolve to remain relevant in today's digital world. One benefit to the bank or credit union for building a new downloadable banking account is the ability to retain the primary relationship with the customer at a time when competition is attacking from several fronts. </div>
<div>
<br /></div>
<div>
More importantly, however, may be the ability for the financial institution to collect and act on behavioral insight that is associated with payment transactions. This insight is the Holy Grail of the entire banking relationship and the key to future growth (or existence).</div>
<div>
<br /></div>
<h3>
Challenges to Providing Tomorrow's Checking</h3>
<div>
<br /></div>
<div>
Beyond building the actual application, the primary challenge for traditional banks are the back office systems that support all banking services. Large banks usually lack the flexibility and innovativeness of a virtual-only start-up, according to Dan Latimore, senior vice president of Celent's banking group. "Big banks aren't as nimble as the start-ups," he said. "An incumbent bank offering virtual banking has to integrate the channel into a lot of legacy back-end systems and processes, which is cumbersome and expensive."</div>
<div>
<br /></div>
<div>
Another challenge to moving to a mobile-first downloadable bank account is that customer service issues arise that are foreign to most banks. "With today's checking account, customer service usually involves relatively simple issues such as account balances, status of a payment or deposit and address changes," says <a href="http://www.linkedin.com/in/bethmerle">Beth Merle</a>, director of business development for banking and financial services at Sutherland Global Services, an experienced provider of mobile wallet customer care. </div>
<div>
<br /></div>
<div>
Merle continues, "If a bank is going to be offering a mobile-first bank account, the customer service calls could include questions about the mobile device or mobile application itself, which is usually significantly more complex, especially when dealing with different mobile devices. The call type is not a traditional one for the bank customer call agent. Banks entering into this space need to recognize this and consider the best way to assure the highest level of customer care may be to utilize a provider with expertise in these calls."</div>
</div>
<div>
<br /></div>
According to Celent, banks will most likely need to rethink the value proposition of the checking account and the interrelationships of current stakeholders within the organization. “Banks have to consider many issues before building these new capabilities, such as, how to manage tensions between new and old sources of value, and what would happen if mobile payments were to lead to fragmentation and re-emergence of the domestic payment solutions,” says Zilvinas Bareisis, Senior Analyst with Celent’s Banking Group. “However, we strongly believe that the core bank account must evolve to maintain its relevance in the digital world.”<br />
<br />
One advantage the traditional banks have on their side is a huge consumer inertia when it comes to switching bank accounts. Even as banks have tried to improve switching processes in the U.S. and the U.K., a surprisingly few customers ever move their bank account.
“Despite switching services of various forms over the last 10 years, switching rates have never fallen below 2% but have never exceeded 3% during that time", according to Gareth Lodge from Celent. "Hundreds of thousands of dollars have been spent on improving switching processes by many banks, with heavy advertising across all mediums used to promote the use of it. The result? Switching peaked at just over 4%.”<br />
<br />
A challenge faced by the upstart 'neobanks' is that it has been notoriously difficult to make money from a basic current/checking account proposition. And with interchange pressures everywhere, the challenge is not getting easier. "It is no secret that many banks cross-subsidise checking account customers and try to sell them additional products, such as savings, loans, credit cards, mortgages, and the like", says Bareisis from Celent. "I appreciate that the cost structure for the new competitors is very different, but finding alternative revenue sources is likely to be important for them in order for them to succeed as a business in the long term."
<br />
<h3>
My Personal Experience</h3>
<div>
<br /></div>
<div>
For more than a year, I have been actively using mobile banking accounts from Simple, GoBank and Moven. During this time, I have become a fan of many of the features and functions of each of these accounts, most of which I don't have with my traditional checking account at Wells Fargo. The customer interface with each of these accounts is far superior to what I have with my Wells account and each is actually fun to use.</div>
<div>
<br /></div>
<div>
What is probably most interesting is that there is virtually no difference between how I view these accounts compared to my traditional checking account despite the fact that each of the newer accounts is actually built upon a reloadable prepaid debit card. How soon will it be before other mobile-first consumers also realize there is almost no difference?</div>
<div>
<br /></div>
<div>
In the past two weeks, each of my accounts has been tied to my new <a href="http://jimmarous.blogspot.com/2013/12/loop-mobile-payments-wallet-innovation.html">LoopWallet FOB</a>. This has allowed me to do cardless transactions at EVERY merchant terminal that would normally require a card swipe. This has made an already excellent customer experience with my Moven, Simple and GoBank account (and even my Wells checking account) that much better. It provides me a glimpse of what is possible in a world where I can do all of my banking with a mobile device.</div>
<br />
Nobody knows what exactly what the future holds for checking accounts or payments. However, it seems clear that the traditional checking account — which until now has been the foundation of a bank’s relationship with its customers — will soon evolve to maintain its relevance in the digital world. The major question will be...who will own this relationship?<br />
<div>
<br />
<h3>
Additional Resources</h3>
<div>
<br /></div>
<div>
<span style="font-family: inherit;"><i><a href="http://www.celent.com/reports/rise-new-bank-account">The Rise of the New Bank Account?</a> </i>- Celent Research (Sept. 2013)</span><br />
<span style="font-family: inherit;"><br /></span>
<span style="font-family: inherit;"><i><a href="http://www.pewstates.org/research/reports/why-americans-use-prepaid-cards-85899538660">Why Americans Use Prepaid Cards</a></i> - PEW Research (Feb. 2014)</span><br />
<span style="font-family: inherit;"><br /></span>
<span style="font-family: inherit;"><a href="http://www.pewstates.org/research/reports/consumers-continue-to-load-up-on-prepaid-cards-85899537459"><i>Consumers Continue to Load Up on Prepaid Cards</i></a> - PEW Research (Feb. 2014)</span><br />
<span style="font-family: inherit;"><br /></span>
<span style="font-family: inherit;"><i><a href="http://www.fdic.gov/about/comein/2013/2013-05-16_presentation_wilk.pdf">Jon Wilk Presentation of Chase Liquid Account Customer Base</a></i> - Chase Bank (May 2013)</span><br />
<span style="font-family: inherit;"><br /></span></div>
<span style="font-family: inherit;"><a href="http://www.fdic.gov/householdsurvey/" style="font-style: italic;">2011 FDIC National Survey of Unbanked and Underbanked Households</a> - FDIC (June 2011)</span></div>
Anonymoushttp://www.blogger.com/profile/05424097007271218756noreply@blogger.com4tag:blogger.com,1999:blog-8930153101988441660.post-8598527378895741462014-02-05T10:45:00.001-05:002014-02-12T10:20:18.213-05:00Banks Can't Close Branches Fast Enough<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjSr2p1tEt28c3fNdjDuIcvMoMYQFVj3yXVU7HarjPwOMJbp8R3e9G_h2QNDpZgrbQ9dzC3mHDV_uqFBgcmj4Yf-T31ZRoNkuVVKV2tW1Bailm3dY2hAW_p0mcL0dA0m7HFr_8afHvriio/s1600/bigstock-Closed-sign-35951839.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjSr2p1tEt28c3fNdjDuIcvMoMYQFVj3yXVU7HarjPwOMJbp8R3e9G_h2QNDpZgrbQ9dzC3mHDV_uqFBgcmj4Yf-T31ZRoNkuVVKV2tW1Bailm3dY2hAW_p0mcL0dA0m7HFr_8afHvriio/s1600/bigstock-Closed-sign-35951839.jpg" height="240" width="320" /></a></div>
<h3 style="text-align: justify;">
<span style="color: blue;">BRANCH STRATEGIES</span></h3>
<h3 style="text-align: justify;">
<br /></h3>
<h3 style="text-align: justify;">
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.</h3>
<h3 style="text-align: justify;">
<br /></h3>
<h3 style="text-align: justify;">
Do banks have an obligation to keep branches open, or will the need to cut costs drive an accelerated wave of new closures?</h3>
<div style="text-align: justify;">
<br /></div>
<br />
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.<br />
<br />
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh9Xcly4XpEA1YHq1PUV5o5ySJWPd9Y2BsReANEkFDxB1QDdDGxJibLy8h-O_DxhbH3RoMS5jKYzEGJDP108WK1JrcArJIwWrUInZ-darmV87xHNMc5o2WT2MaM5d08XFdxH87N8PztuKM/s1600/Bank+Branch+Closures+2010+-+2013.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh9Xcly4XpEA1YHq1PUV5o5ySJWPd9Y2BsReANEkFDxB1QDdDGxJibLy8h-O_DxhbH3RoMS5jKYzEGJDP108WK1JrcArJIwWrUInZ-darmV87xHNMc5o2WT2MaM5d08XFdxH87N8PztuKM/s1600/Bank+Branch+Closures+2010+-+2013.jpg" height="155" width="400" /></a></div>
<br />
<div class="separator" style="clear: both; text-align: center;">
</div>
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.<br />
<br />
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgV8pEU2SKtMYtQyi8wDrcAmUvTtJtla4khBoU7-EjhPZSAjG9ONx9GFn2H5ypmZjTVbA1rkMcKMjd2zb_EAhW3Vy7jr7YN0BArFulbPzvpYW62Xu9wVglfcNpGT6Hnek2M33eS-ZO0ucA/s1600/State+by+state+branch+closings.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgV8pEU2SKtMYtQyi8wDrcAmUvTtJtla4khBoU7-EjhPZSAjG9ONx9GFn2H5ypmZjTVbA1rkMcKMjd2zb_EAhW3Vy7jr7YN0BArFulbPzvpYW62Xu9wVglfcNpGT6Hnek2M33eS-ZO0ucA/s1600/State+by+state+branch+closings.png" height="267" width="400" /></a></div>
<br />
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 <b>50 percent and 80 percent of all branches that <i>should</i> be closed based on financial considerations are not closed</b> 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.<br />
<br />
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.<br />
<br />
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."<br />
<br />
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, '<i><a href="http://www.telegraph.co.uk/finance/personalfinance/consumertips/banking/10604175/Do-banks-have-a-duty-to-keep-branches-open.html">Do Banks Have a Duty to Keep Branches Open</a>?' </i>Interestingly, more than half the people who responded did not believe banks should be required to keep unprofitable branches open.<br />
<br />
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjn9BA-kN9AiIQX-dm62kXhol5x1rhqT5pVaWGy7O82-1mBuJObA6GKbqplHGlv-ndtLmkh6G-cwTW_JycOgY6HKQWCfK0vaXA-R_L7JhkGrcpGRN5W1QfyZ-L7KzH44G4cx-epDH3o1QU/s1600/Screenshot+2014-02-05+15.21.59.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjn9BA-kN9AiIQX-dm62kXhol5x1rhqT5pVaWGy7O82-1mBuJObA6GKbqplHGlv-ndtLmkh6G-cwTW_JycOgY6HKQWCfK0vaXA-R_L7JhkGrcpGRN5W1QfyZ-L7KzH44G4cx-epDH3o1QU/s1600/Screenshot+2014-02-05+15.21.59.png" height="310" width="400" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">Telegraph (UK) Consumer Survey (2014)</td></tr>
</tbody></table>
<br />
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<h3>
Closing Branches in Lower Income Areas</h3>
<br />
The <a href="http://www.federalreserve.gov/communitydev/cra_about.htm">Community Reinvestment Act</a>, signed into law in 1977, was an effort to combat discrimination and encourage banks to serve local communities. The CRA also required financial institutions to notify federal regulators of branch closings. But most industry followers say the CRA provides a great deal of leeway for banks wanting to close offices, and that the impact is usually only felt when a bank wants to make an acquisition of another institution. In addition, the law has not been updated to reflect the impact of online or mobile banking, making it even more difficult to enforce.
<br />
<br />
"There is ample evidence that banks have disproportionately closed branches in low to moderate income areas, despite the CRA", stated Steven Reider from <a href="http://www.bancography.com/">Bancography</a>. "There are few cases where CRA impedes closures and in fact, the regulators have no authority to stop a closing, only the ability to downgrade a CRA rating in a subsequent year’s review."
<br />
<br />
To this point, analysis from various sources shows that there are still disparities in how closures over the past several years have occurred, with a significantly higher number of closures in low and moderate income areas and a small growth in branch locations in more affluent neighborhoods. But this doesn't mean that there are not still a significant number of additional branches that should be closed.<br />
<br />
Simply walk into any of the mostly oversized inner city branches and you'll realize that there is a tremendous overcapacity in most branches. The problem is...how to close these offices with the least amount of community impact?<br />
<br />
<h3>
Closing Rural Branches</h3>
<br />
While a bank branch serves as the public face of banks and provides an important marketing function in high-traffic neighborhoods, bank branches also play an economic and emotional role in smaller markets, where low transaction volumes make the majority of traditional branches unprofitable. "Bank branches are a symbol of economic health and a vibrant community," says Jennifer Tescher, head of the <a href="http://www.cfsinnovation.com/">Center for Financial Services Innovation</a>, a research group that focuses on people without a banking relationship.<br />
<br />
According to Joe Sullivan, CEO of <a href="http://formarketinsights.com/">Market Insights</a>, "Banks and credit unions need rooftops and businesses to make the economics of the ‘traditional” branch model work, and unfortunately, this makes some of the smaller towns unable to profitably support large (or many) bank branches. Therefore, you will continue to see a decrease in traditional branch formats in small towns, especially with populations under 10,000 people."
<br />
<br />
Adding to the difficulty of closing a branch in a rural market is the fact that the next closest branch may be dozens miles away and the availability of high speed internet and even a strong mobile signal may negatively impact the conversion to online and mobile banking alternatives. Finally, selling an existing bank branch is also more difficult in a rural market, where the commercial real estate market may already be depressed.<br />
<br />
<br />
<blockquote class="twitter-tweet tw-align-center" lang="en">
<a href="https://twitter.com/PhiloCook">@PhiloCook</a> <a href="https://twitter.com/JimMarous">@JimMarous</a> <a href="https://twitter.com/brettking">@brettking</a> <a href="https://twitter.com/shukla">@shukla</a> <a href="https://twitter.com/Chris_Skinner">@Chris_Skinner</a> <a href="https://twitter.com/sammaule">@sammaule</a> The absence of branches does NOT mean losing access to people.<br />
— rshevlin (@rshevlin) <a href="https://twitter.com/rshevlin/statuses/428913036402106368">January 30, 2014</a></blockquote>
<br />
<h3>
Cost of Closing Branches</h3>
<div>
<br /></div>
<div>
As mentioned, despite the estimate that as many as 25 to 30 percent of branches are unprofitable, many banks are holding on to branches because of expensive, long-term leases or because past renovations have not been fully depreciated. In addition, it is estimated that the cost of closing a branch is as much as $500,000.<br />
<br />
"The biggest barrier to closure we see is not CRA or community pressure; it’s the unwillingness to take the fixed asset write down that the bank would incur when trying to dispose of the facility. Charge against current period earnings = unhappy shareholders." stated Reider from Bancography.<br />
<br />
Kevin Travis, managing director at Novantas in an <a href="http://www.americanbanker.com/issues/178_90/more-banks-plan-to-add-not-subtract-branches-1058982-1.html">interview with the American Banker</a>, agreed saying, "Many banks are waiting for the interest rate curve to turn, thinking they will become more profitable and can take the charges when margins are rising. But the flip side is that interest rate relief from widening spreads will lessen the financial pressure to cut costs. And hope is not a strategy."<br />
<br />
<h3>
Branch Configuration Will Continue to Evolve
</h3>
<br /></div>
<div>
While branches will not soon vanish as a transaction and business channel, they will definitely continue to evolve. “Branch closures might slow down or speed up, but as mobile technology continues to become more available, we expect the need to use branches to conduct routine transactions to decrease,” says Tahir Ali, research analyst for SNL Financial. </div>
<br />
Ali believes the branch will continue to evolve into spaces used more as marketing centers or consultation spaces.
“There will always be transactions people want to conduct face to face,” Ali said, either because of their complications or because they need an immediate result. He also noted that many people still feel more comfortable discussing loan options and filling out loan applications in person than they might at a kiosk or over the phone.<br />
<br />
Rather than providing a full-service experience, branches of the future will probably be much more self-service, with automated devices provided as a compliment/supplement to customers’ current mobile and online banking experiences. Banks will offer self-service kiosks where customers can conduct basic transactions, learn about and apply for products, and even meet with specialists via video connections.<br />
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An example of this transformation is best illustrated by PNC, where branch closures and significant modifications of branches was discussed as part of the bank's most recent analyst call. PNC Chief Executive William Demchak told investors that the bank will close branches and turn as many as two-thirds of his 2,700 company’s branches into smaller, more automated locations within the next five years. "We'll drop the operating costs out of it, and it will deliver a service that tomorrow's bank client expects," Demchak said.<br />
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“Banks and credit unions need to implement creative strategies that enable their institution to remain economically viable", said Serge Milman, principal consultant for SFO Consultants. "CRA requirements can be met through efforts other than physical branches…such as with ‘branches on wheels’ or with a ‘pop-up branch’ like has been done by PNC.
Fundamentally, the vast majority of consumers do not need / want services delivered in and by a traditional branch. Maintaining such infrastructure is a dis-service to customers (as it raises overall costs for various services), and a breach of fiduciary duty to the Bank’s shareholders."<br />
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Post Office Banking Alternative</h3>
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Making news recently, the Post Office could serve as an alternative to traditional banks, especially in lower income and rural areas. While a bit of a stretch for many inside and outside the industry, it would not be the first time this has been done in the U.S. Beginning in 1911 and lasting several decades, as many as 4 million people had postal savings accounts with the USPS. In addition, the model would be similar to one used overseas still today.<br />
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One advantage would be that the overhead costs would be covered since the USPS already has 35,000 offices, branches, and other locations across the country, with almost 60 percent of post offices are in Zip Codes that have one or zero bank branches. In addition, the agency already handles monetary transactions.<br />
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Beyond serving the underbanked/unbanked/debanked, the agency could fill the gap when bank branches need to close either providing basic services themselves or potentially partnering with banks. Not intended to provide loans or business services, current proposals include the possibility of the USPS offering basic banking services such as bill paying, check cashing and making small loans.<br />
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There is no doubt that there will be a great deal more discussion around the pros and cons of this idea, but it could alleviate a great deal of the pressure banks are feeling around closing or shrinking unprofitable branches.<br />
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The Future of Branches</h3>
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Rather than being the hub of all banking, branches are destined to become the alternate channel for customers to conduct their banking, integrating with both mobile and online banking experiences. Personalized service will be provided in a different manner, leveraging digital technology to drive a better shopping and buying experience.<br />
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Moving to this model will not be easy and will require customer engagement. Hurdles that now exist to closing branches will need to be addressed since the negative financial impact to not closing underperforming branches is significant. "It is broadly recognized now that it isn't the 1990s anymore and that things need to change," says Bob Meara, senior banking analyst at consulting firm Celent. "The competitive advantage of having branch density is a huge cost disadvantage."<br />
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Dave Martin, Executive Vice President and Chief Development Officer with Financial Supermarkets, Inc. (FSI) says, "The truth of the matter is that the banking industry does not need the amount of space it currently has anymore. Downsizing traditional branches, trimming networks and testing newer, smaller "alternative" locations is going to happen. The banks who find the most efficient ways for their people to still have face to face contact with customers will be at an advantage."<br />
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He continues, "I don't think the argument is really 'if', but 'when'. That said, this industry isn't exactly known for speedy transformation. It's probably easier to predict what things will look like in 10 years than in 2 years."<br />
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I believe the rate of closures is due to accelerate in the near term. The foundation for these closures has begun, as many banks discussed both closings and branch reconfigurations as part of their recent earnings calls. The challenge, as with many changes in other industries, will be how we can 'sell' it to the public at large.<br />
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Additional Resources</h3>
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<i><a href="http://online.wsj.com/news/interactive/branchesB012720140127?ref=SB10001424052702303277704579347223157745640">Branch Openings and Closings in 2013, by State and Territory</a></i> - Wall Street Journal (Jan. 2014)</div>
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<i><a href="http://bradleyleimer.com/2014/01/29/whos-right-about-the-future-model-of-banking-maybe-everyone-is-at-least-for-now/">Who's Right About the Future Model of Banking? Maybe Everyone Is. At Least For Now.</a></i> - Discerning Technologist/Bradley Leimer (Jan. 2014)<br />
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<i><a href="http://www.telegraph.co.uk/finance/personalfinance/consumertips/banking/10604175/Do-banks-have-a-duty-to-keep-branches-open.html">Do Banks Have a Duty to Keep Branches Open?</a></i> - The Telegraph (Jan. 2014)<br />
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<i><a href="http://www.stltoday.com/business/local/study-finds-latest-bank-branch-closings-strike-hardest-in-poor/article_b33a4103-280f-5b3c-9754-3086de4b0070.html">Study Finds Latest Branch Closings Strike Hardest in Poor Neighborhoods</a></i> - St. Louis Post Dispatch (May 2013)<br />
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<i><a href="http://online.wsj.com/news/articles/SB10001424127887323699704578326894146325274">After Years of Growth, Banks Are Pruning Their Branches</a></i> - Wall Street Journal (Mar. 2013)<br />
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<i><a href="http://www.nytimes.com/2011/02/23/business/23banks.html?pagewanted=all">Bank Closings Tilt Toward Poor Areas</a></i> - New York Times (Feb. 2011)<br />
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<i><a href="http://www.americanbanker.com/issues/178_90/more-banks-plan-to-add-not-subtract-branches-1058982-1.html">More Banks Plan to Add, Not Subtract, Branches</a></i> - American Banker (May 2013)</div>
Anonymoushttp://www.blogger.com/profile/05424097007271218756noreply@blogger.com9tag:blogger.com,1999:blog-8930153101988441660.post-63964325213052891942014-01-29T10:17:00.000-05:002014-02-05T10:42:00.538-05:00Simplicity In Banking Is Anything But Simple<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEge3ToSgDyJ7s_o_ZThmQt4C7YgqsgoVC0yZrcT_UiZxbYAuvqU17pMSqHaK5sioyN0ixCEanCw2BAQE9kxSlZHNcLVKGv_ooDPFn0N3rmYndnudkDwZHWtbwTZiW7i5qlT8wA9Rbm6brc/s1600/bigstock-Direction-Solutions-46826278-2.jpg" imageanchor="1" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEge3ToSgDyJ7s_o_ZThmQt4C7YgqsgoVC0yZrcT_UiZxbYAuvqU17pMSqHaK5sioyN0ixCEanCw2BAQE9kxSlZHNcLVKGv_ooDPFn0N3rmYndnudkDwZHWtbwTZiW7i5qlT8wA9Rbm6brc/s1600/bigstock-Direction-Solutions-46826278-2.jpg" height="200" width="196" /></a></div>
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<span style="color: blue;">CUSTOMER EXPERIENCE</span></h3>
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It's time to build your simplicity capability.</h3>
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Financial institutions are starting to realize that simplicity does not only improve the customer experience, resulting in trust and loyalty, but also reduces operational costs from redundant products, processes and dealing with customer complaints.</h3>
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By <a href="http://sg.linkedin.com/in/jinzwicky">Jin Zwicky</a>, VP Experience Design, <a href="http://www.ocbc.com/group/Group-Home.html">OCBC Bank</a>, Singapore</h3>
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How can banks achieve simplicity?<br />
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We can find great lessons from smart banking alternatives such as <a href="http://www.simple.com/">Simple</a>, <a href="http://www.moven.com/">Moven</a>, <a href="http://www.gobank.com/">GoBank</a> and <a href="http://www.bluebird.com/">Bluebird</a>. What is less discussed is how to achieve simplicity in traditional banks that deal with a legacy of old processes, infrastructure and often don’t have luxury of starting afresh. Translating the big intent to achieve simplicity into realization is not easy.<br />
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The good news is that realizing simplicity is possible in any bank. As a design practitioner in one of the largest banks in Singapore, I’ve been leading a broad range of ‘Simplicity’ initiatives in the bank, such as website design, mobile banking, advisory tools, investment product communications as well as redesigning physical spaces. All of these initiatives have reaped measurable success in bottom line results and operational efficiency.<br />
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We saw double-digit increases in sales in investment and insurance products when we simplified the communications material. We saw 100% adoption rate in using the digital needs analysis tool in our top branches after we simplified the tool. We increased customers’ satisfaction in our account opening experience by simplifying the system. Finally, our simplified website was not only listed as <a href="http://thefinancialbrand.com/34529/30-beautiful-banking-website-homepage-designs/2/">The More Gorgeous and Simple Banking Website</a>, but also we could save about 0.5 million dollars per year by reducing the number of pages in the website.<br />
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From years of my simplicity journey, I came to believe that ‘simplicity’ is not just a project. It is not just a team of simplicity specialists. It is a capability that we have to cultivate! Furthermore, it is an organizational culture that we have to create in order to achieve simplicity.<br />
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I came up with the following framework to illustrate this point.<br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiHr_xde-cjn4PFSQqcezFpwKMUWU6fs_MQKOKKx4Lm0tgkTJI6uLYkp-Mb63zCd_R9pFp0xGnlHeSihqpppXw1vtuiKL2uDI-ySaqJqGTW75BIkGNF6rDrD1h2dnIzbjxMCSvWBKJG4Js/s1600/Simplicity+Chart+1.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiHr_xde-cjn4PFSQqcezFpwKMUWU6fs_MQKOKKx4Lm0tgkTJI6uLYkp-Mb63zCd_R9pFp0xGnlHeSihqpppXw1vtuiKL2uDI-ySaqJqGTW75BIkGNF6rDrD1h2dnIzbjxMCSvWBKJG4Js/s1600/Simplicity+Chart+1.png" height="280" width="400" /></a></div>
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Simplicity Resources</h3>
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Most banks understand the importance of simplicity, and have programs or projects to execute simplicity whether it is with customer touch points or internal processes or systems. This requires gathering resources such as a team of specialists / designers to deliver the project.</div>
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Simplicity Capabilities </h3>
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However achieving simplicity is not done, unless the organization builds a strong foundation to make simplicity sustainable. After all the hard work, it is also prone to be eroded by the flood of complexity over time, as living things are bound to become complex. It is more so in the banking industry due to changes in legislation, compliance requirements as well as technology. Simplicity is hard to achieve.</div>
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Simplicity capability means the ability of bankers to understand and make decisions that achieve simplicity. Bankers can learn key simplicity skills, just as they learn communication or management skills. How simple would the online banking experience be if the project team in your bank understood the power of effective visual design? How confident would a customer feel in buying an investment product if bankers were dedicated to write the communication clearly without any banking jargon? When more bankers are equipped with those knowledge or skills, this became your organizational capability to achieve and sustain simplicity.
I suggest the 3 most fundamental steps to cultivate the simplicity capability.</div>
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<li>Understand definition of simplicity in banking</li>
<li>Increase design sensitivity</li>
<li>Master user-centered design process</li>
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<iframe allowfullscreen="" frameborder="0" height="355" marginheight="0" marginwidth="0" scrolling="no" src="http://www.slideshare.net/slideshow/embed_code/30605097?rel=0" style="border-width: 1px 1px 0; border: 1px solid #CCC; margin-bottom: 5px; max-width: 100%;" width="425"> </iframe> </div>
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<span style="font-family: inherit; font-size: x-small;"><i> <a href="https://www.slideshare.net/jinzwicky/simplicity-as-orgnizational-capabilityjinzwickynov212013" target="_blank" title="Simplicity as a Bank's Capability _JinZwicky_nov21_2013">Simplicity as a Bank's Capability _JinZwicky_nov21_2013</a> from <a href="http://www.slideshare.net/jinzwicky" target="_blank">Jin Zwicky</a></i></span> </div>
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Definition of Simplicity in Banking</h3>
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Based on my research on simplicity, the most fundamental definition of simplicity for banking industry is this: “Simplicity is based on human nature and common sense.”
I illustrated this definition as following.</div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiFFgxD8K9SxbrKSiMzNkiaQrXQCWS2KMsNIpdAgVes215oPNjhCtLWFEIlySO-CvBlIQuY-U6tuNgicNvIFqNW-F_apUbt34ftRd-qCAH4e8z_2MJikRIKMgNkBlTI3v4pQpgic9DgjBo/s1600/Simplicity+chart+2.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiFFgxD8K9SxbrKSiMzNkiaQrXQCWS2KMsNIpdAgVes215oPNjhCtLWFEIlySO-CvBlIQuY-U6tuNgicNvIFqNW-F_apUbt34ftRd-qCAH4e8z_2MJikRIKMgNkBlTI3v4pQpgic9DgjBo/s1600/Simplicity+chart+2.png" height="289" width="640" /></a></div>
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The pink circle signified one’s mental model, red circle signifies the knowledge required to understand something. The bigger the overlap is the simpler people perceive. That’s the nature of simplicity. This means banks must understand customers’ mental model first. This means banks must design the experience closer to their mental model. Understanding this definition gives valuable clues to embarking on a simplicity journey in your bank.</div>
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Increase Design Sensitivity</h3>
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Design is a noun - 'the look and feel of a final object'. Often bankers think a great look and feel is nice to have. When it comes to simplicity, it is not true - the look is the message itself. The look matters because it is not only what is there to read / understand, but also what you take - a feeling of confidence and a feeling of trust. This is how your mobile banking looks, and how easy customers feel when they use it. This is how product communications material look, and how confident customers feel about them.</div>
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Therefore, how to assess a good visual design is a critical capability for banks. Design is too important to leave only at the hands of external experts. It is everyone's job to appreciate, care and obsess with the value of design to the business.</div>
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Master User-Centered Design Process</div>
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Design is also a verb. Design as a verb means 'the process of creating the object or experience'. Here, the important point is that <a href="http://designfulcompany.com/2013/01/08/design-as-a-noun-as-a-verb/">the quality of the process has a direct impact on the quality of the output</a>. In fact, great design is an outcome of the right design process. Banks’ design crimes such as complex product fact sheets and a complex banking system are the direct result of a bad design process.</div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiAZSAg8dJV5hoqFyBtyOdsSYpPGw3GdGXpn5DT_vgnKOO9c9Zk9aGCNZfCZSgFYYr2UDLoc9dTcdd9Idgu99keTdgm6lqm1AsV-AY5IslbMPOv6bkMbW_DuTkOlv_hgGJjGlq_SGWjHsg/s1600/Simplicity+3.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiAZSAg8dJV5hoqFyBtyOdsSYpPGw3GdGXpn5DT_vgnKOO9c9Zk9aGCNZfCZSgFYYr2UDLoc9dTcdd9Idgu99keTdgm6lqm1AsV-AY5IslbMPOv6bkMbW_DuTkOlv_hgGJjGlq_SGWjHsg/s1600/Simplicity+3.png" height="261" width="400" /></a></div>
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Then what is the right design process in achieving simplicity?
The definition of simplicity gives the answer - it is to understand customers’ mental model and design backwards to close on their mental model. This is why a <a href="http://designfulcompany.com/2011/10/24/why-simplicity-needs-a-user-centered-design-process/">‘user-centered design process’ is key in achieving simplicity</a>. User-centred design process largely consists of three stages:<br />
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<b><span style="color: #073763;">Understand Customers - Prototype - Test</span></b></h4>
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While the illustration looks like a straight line process, this is by no means linear in reality. The key here is the ‘iteration’ until we reach simplicity. This sounds so common sense, but it's often not commonly practiced in banks. Establishing the user-centered process in everything you do is the heart that pumps out simplicity throughout your organization.</div>
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OCBC Bank in Singapore started teaching 'design' to product managers in the bank. They learn the importance of design process and how to apply simplicity thinking in their projects. They learn the basics of visual design to better appreciate and assess effective design solutions. They learn how to write a clear communication that speaks human, not that speaks bank. When these learnings and skills are cultivated as your organizational capability, your bank is building a stronger ground to fight against complexity and be more competitive in the market.</div>
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Simplicity Culture</h3>
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The highest business impact can be achieved by cultivating ‘simplicity as culture’. To ignite the simplicity culture, ‘The law of conservation of mass’ sets the scene.<br />
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‘<a href="http://en.wikipedia.org/wiki/Conservation_of_mass">The law of conservation of mass</a>’ is a theory in physics, which states that the mass of the system must remain constant over time, as system mass cannot change quantity if it is not added or removed.<br />
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Apply this theory by replace the word ‘system’ with ‘pain’. The mass of pain - bad customer experiences in banking such as complexity in communications, hard to use touch points - will remain constant, the quantity cannot be added or removed. This means the amount of pain will be there. It’s either for the bank to absorb, or for the customer to absorb. <a href="http://designfulcompany.com/2013/11/10/be-a-pain-sponge-to-build-simplicity-culture/">The more pain you absorb, the less pain there is left for the customer</a>. There is no magic like removing the pain. Customer pain is in inverse proportion to the pain companies go through when designing customer experience. How much work do you put into the design process to absorb as much as pain as possible for your customer?<br />
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Acknowledging the amount of work to achieve simplicity, and willingness to absorb the pain to deliver simple customer experience...this is the mindset banks need to cultivate as the organizational culture.<br />
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As the headline to this posts say, simplicity in banking is anything but simple.
We need intelligence from experts, but that is not enough. It requires your organization’s discipline and dedication and internal intelligence in cutting through complexity.<br />
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Take a step to cultivate simplicity as your organisational capability and culture.
Understand the definitions of simplicity.
Teach your bankers design as a noun and as a verb.
Absorb customers’ pain.
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The rewards are real.<br />
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<iframe allowfullscreen="" frameborder="0" height="375" mozallowfullscreen="" src="//player.vimeo.com/video/80967043" webkitallowfullscreen="" width="500"></iframe> </div>
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<span style="font-family: inherit; font-size: x-small;"><i><a href="http://vimeo.com/80967043">JinZwicky OCBC</a> from <a href="http://vimeo.com/nextbank">NextBank</a> on <a href="https://vimeo.com/">Vimeo</a>.</i></span></div>
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About the Author</h3>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj2AsNEIfVQobil8BKGkpxWRR5Lao7hPoSbJOL3o1gdZy1heuG-O_ipJNdbk5bcXidnKetP7Zvr1jVl_uoji1KfJk-n8Ve3UBlwrE723xmI6kSSGsne_hi0GVIHs7opzuunbaPFVLYpfks/s1600/Jin+Zwicky+Photo.png" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj2AsNEIfVQobil8BKGkpxWRR5Lao7hPoSbJOL3o1gdZy1heuG-O_ipJNdbk5bcXidnKetP7Zvr1jVl_uoji1KfJk-n8Ve3UBlwrE723xmI6kSSGsne_hi0GVIHs7opzuunbaPFVLYpfks/s1600/Jin+Zwicky+Photo.png" /></a></div>
Jin Zwicky is the vice president, Experience Design, Group Customer Experience for OCBC Bank. She lead the bank's top priority customer experience design initiatives for retail, premier and private banking businesses. In her role, she establishes customer-centric design processes and fosters customer-centric organizational culture, cultivating 'Simplicity' as the organizational capability through training bankers and product managers. She also is the author/publisher of her own blog, Designful Co.
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<i><a href="http://designfulcompany.com/">Designful Co. : Simplicity and Beauty for Financial Services</a> </i>- Blog by Jin Zwicky</div>
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<i><a href="http://simplicity.siegelgale.com/wp-content/uploads/2013/10/Global-Brand-Simplicity-Index-2013-eBook-spreads-FINAL.pdf">Global Brand Simplicity Index: 2013</a> </i>- Siegel and Gale</div>
Anonymoushttp://www.blogger.com/profile/05424097007271218756noreply@blogger.com2tag:blogger.com,1999:blog-8930153101988441660.post-46081817976916039322014-01-26T17:41:00.000-05:002014-01-28T05:04:31.081-05:00How Will Banks Respond if Apple Becomes Mobile Payments Player<h3>
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<span class="Apple-style-span" style="color: blue;">MOBILE STRATEGIES</span><br />
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According to a <a href="http://online.wsj.com/news/articles/SB10001424052702303448204579341290395762338?mg=reno64-wsj&url=http%3A%2F%2Fonline.wsj.com%2Farticle%2FSB10001424052702303448204579341290395762338.html&fpid=2,7,121,122,201,401,641,1009">report in the Wall Street Journal</a>, <a href="http://www.apple.com/">Apple</a> is gearing up to roll out a new payments system for physical goods and services beyond the walls of it's Apple stores.<br />
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If true, Apple would leverage the iTunes payments system, credit card data already on file for more than a half million consumers, and recent patents to become a big player overnight.<br />
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How will banks or credit unions respond? </div>
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A new report claims that Apple’s senior vice president of Internet Software and Services, Eddy Cue, “<i>has met with industry executives to discuss Apple’s interest in handling payments for physical goods and services on its devices, according to people familiar with the situation.</i>” The paper also said that online store boss Jennifer Bailey has been re-assigned to a new role where she’s tasked with growing a payment service at Apple.<br />
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According to the Wall Street Journal, Apple also spoke to at least five other well-known executives in the payment industry about the position before tapping Ms. Bailey.
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These moves come just months after Apple installed new iBeacon payments technology in their stores and allowed for the payment of smaller ticket store items using the iPhone app and without the need to interact with a store employee.</div>
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Obviously, if Apple does enter the mobile payments space, they would not be alone. Mobile payments is a highly competitive industry which has yet to develop a uniform standard due to the lack of tangible benefits to the consumer, the processor and the merchant. This hasn't deterred the likes of PayPal, Google, Square, Stripe, Visa, Mastercard and American Express from developing their own mobile payment platforms however.
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While a solution from Apple may not require major changes from the customer or merchant as NFC or EMV does, Apple would still need to improve their position as a 'trusted payments partner' beyond what was found in a 2013 Oglivy and Mather's Mobile Shopper survey shown below.
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjnxMDxBorw5a80k3S2wa-OeSc9NtkSYgvRcPZoK_dAauJt0o4cx-zOQg71vtd47XocDIdflBLZHrpNgXOrJK2pnMBvBi9yjTrywwoal35q7Hn5mLQq8btyY_83hACiZlHtiWMZQvEoPFY/s1600/8-8-2011-MobileTrust640b.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjnxMDxBorw5a80k3S2wa-OeSc9NtkSYgvRcPZoK_dAauJt0o4cx-zOQg71vtd47XocDIdflBLZHrpNgXOrJK2pnMBvBi9yjTrywwoal35q7Hn5mLQq8btyY_83hACiZlHtiWMZQvEoPFY/s1600/8-8-2011-MobileTrust640b.jpg" height="231" width="400" /></a></div>
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<i>Note: 'Trust' of Apple as a payments provider was much higher for current Apple customers and many consumers didn't view Apple as a payments player at the time of the research.</i><br />
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According to <a href="http://www.linkedin.com/in/dcarrington">Denee Carrington</a>, analyst at <a href="http://www.forrester.com/">Forrester Research</a>, "Apple is absolutely the sleeping giant in the payments world. They have the capability... they just haven't tied it all together."<br />
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<h3>
Why Enter Mobile Payments</h3>
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Why would Apple enter the mobile payments battlefield?<br />
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First of all, mobile payments is BIG business. According to Forrester Research, 31% of US online consumers who own a mobile phone are interested in or already use mobile payments for in-store purchases, up from 18% in 2011. However, while 61% of US consumers have heard of a digital wallet, only 11% use one.<br />
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But that is expected to change. Americans are expected to spend $90 billion through mobile payments by 2017, up from $12.8 billion in 2012, according to Forrester.
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Secondly, current payments infrastructure is outdated. As can be seen from the recent data hacking done at Target, Neiman Marcus, Michael's and probably elsewhere, debit and credit cards are inherently insecure. And since most cards in the U.S. still use outdated magnetic stripes as opposed to EMV technology, personal data is relatively easy to steal.<br />
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Thirdly, each card in your wallet represents access to an account without real time insight or interface. A mobile-first payment application similar to what is offered by progressive financial institutions like <a href="http://www.moven.com/">Moven</a>, <a href="http://www.simple.com/">Simple</a>, and several banks overseas is a much better way to make payments. They allow you to see what is happening with your account in real time, provide instantaneous receipts, allow for interactive money management and have the potential to be more secure.<br />
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Lastly, similar to what banks do today, processing payments with a mobile device could enable Apple to charge a nominal processing fee, but more importantly, gather deep payments and behavioral data from customers and build even more brand loyalty.<br />
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<h3>
<span class="Apple-style-span" style="font-family: inherit;">Apple Mobile Payment Advantages</span></h3>
<span class="Apple-style-span" style="font-family: inherit;"><br /></span>
<span class="Apple-style-span" style="font-family: inherit;">For anyone who has been following Apple through the years, it should come as no surprise that Apple has a number of advantages already in place should they decide to enter the hyper-competitive payments space. A short review of these advantages</span> include:<br />
<ul>
<li><b>Credit Card Access</b>: The company said last year it had <a href="http://appleinsider.com/articles/13/06/14/apple-now-adding-500000-new-itunes-accounts-per-day">575 million registered users</a> with its iTunes store and that the customer base was growing at a pace of 500,000 per day. In addition, it has sold roughly 375 million iPhones over the past five years and about 155 million iPads since its 2010 debut. As a result, the size of Apple's customer base easily eclipses both <a href="http://www.paypal.com/">PayPal</a> (137M active accounts) and <a href="http://www.amazon.com/">Amazon</a> (<a href="http://www.businessinsider.com/amazon-prime-10-million-members-morningstar-2013-3">182M customers</a>)</li>
</ul>
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<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi73xinNOj0zDx02wfL9BB3rT6WcDifyFc_NjlRRn7D9rzPtcK66SMDGN1gelv3Numb1Jq1l-Fj8Kdkt3OmaRm9dazlGcy_UTYVb-5zxTj6dzVUgArbdLGEN6WpWoKFEkqRp2Ce0CTqasc/s1600/Amazon+vs.+Apple+Customers.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi73xinNOj0zDx02wfL9BB3rT6WcDifyFc_NjlRRn7D9rzPtcK66SMDGN1gelv3Numb1Jq1l-Fj8Kdkt3OmaRm9dazlGcy_UTYVb-5zxTj6dzVUgArbdLGEN6WpWoKFEkqRp2Ce0CTqasc/s1600/Amazon+vs.+Apple+Customers.png" height="287" width="400" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">Source: Horace Dediu (@asymco)</td></tr>
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<ul>
<li><b>Trusted App Integration</b>: Current iPhone apps already have a relatively seamless integration of contacts, payment options, loyalty applications as well as GPS functionality. Should Apple enter the payments battlefield, there is little doubt the customer experience would be priority one.</li>
</ul>
<ul>
<li><b>Familiar Digital Payment Process</b>: Similar to Amazon, the online and even the store-level mobile purchase process is familiar to the vast majority of Apple customers worldwide. The mobile payments learning curve is one of the hurdles with today's mobile payment solutions.</li>
</ul>
<ul>
<li><b>Mobile Wallet Platform</b>: The very popular <a href="http://support.apple.com/kb/HT5483">Apple Passbook</a> app, while not positioned for payments at this time, already allows users to access gift/loyalty cards for use at various retail and restaurant chains. This could be the foundation for an eventual iWallet (a term used by the industry and not yet by Apple).</li>
</ul>
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh2TVgFMY7_Mk0d7u7Fjkakums1tBUS5qdUEIUYNhP6ETadWw_cnP3qWVjppP0OiCRY2_T7Z6Ncaio9hv0543nGrnkdTuhiNnt87GX-8c_9-63Jv68biWp8BcOjVduZNog11P5eGInhUZY/s1600/passbook.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh2TVgFMY7_Mk0d7u7Fjkakums1tBUS5qdUEIUYNhP6ETadWw_cnP3qWVjppP0OiCRY2_T7Z6Ncaio9hv0543nGrnkdTuhiNnt87GX-8c_9-63Jv68biWp8BcOjVduZNog11P5eGInhUZY/s1600/passbook.png" height="272" width="320" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">Apple Passbook Application</td></tr>
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<ul>
<li><b>Security</b>: Apple's <a href="http://support.apple.com/kb/ht5949">Touch ID</a> fingerprint sensor on the new iPhone 5S provides would provide smartphone payments users with a strong security feature for ID authentication and to protect payment information. The sapphire technology associated with the Touch ID system provides Apple with a significant head start in ease of use authentication. Consumers mention security as the most significant reason for not using mobile payments.</li>
</ul>
<ul>
<li><b>Cloud Interface</b>: Apple recently introduced the <a href="http://www.apple.com/support/icloud/keychain/">iCloud keychain</a> which stores passwords, credit cards, and all the information needed to automatically fill in billing information on desktop and mobile e-commerce platforms.</li>
</ul>
<ul>
<li><b>P2P Platform</b>: Apple <a href="http://support.apple.com/kb/ht5887">AirDrop</a> lets you connect with other AirDrop devices nearby using Bluetooth and to exchange information. This will make it easier for iPhones to connect to iPads and other AirDrop devices, laying the foundation for P2P or even merchant POS interface.</li>
</ul>
<ul>
<li><b>Merchant Advantage</b>: The new <a href="http://www.knowyourmobile.com/apple/apple-iphone-5s/21276/ibeacon-apples-nfc-alternative-explained">Bluetooth (BLE) powered iBeacon feature</a>, available with iOS 7, could be paired with user accounts to facilitate in-store shopping, including mobile in-store payments and in-store offer distribution. A payments solution using this technology may not require merchants to buy new point-of-sale hardware which is a tremendous advantage. Finally, over 200 million active iPhones have Apple's iBeacon technology already installed. (<a href="http://www.businessinsider.com/apple-has-all-the-pieces-it-needs-to-become-a-powerful-force-in-payments-in-2014-2013-12">Business Insider, 2013</a>)</li>
</ul>
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjic4p_R0d1CGMTl38OMmss-tjT7HcjYEYLoO1ejhVi3vBhPtDH1WwE6oQwqew-vOcfdSV64H06A3GsSKeCxkbs-4M2jAC_Z1Bm9pgtZ4_pnEZSG16QKNEOVpxiOjml_amUNEaXPVySrro/s1600/Apple+Payments+Screen.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjic4p_R0d1CGMTl38OMmss-tjT7HcjYEYLoO1ejhVi3vBhPtDH1WwE6oQwqew-vOcfdSV64H06A3GsSKeCxkbs-4M2jAC_Z1Bm9pgtZ4_pnEZSG16QKNEOVpxiOjml_amUNEaXPVySrro/s1600/Apple+Payments+Screen.png" height="320" width="158" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">Apple iBeacon BLE Interface</td></tr>
</tbody></table>
<ul>
<li><b>Link to Alternative Payments Technology</b>: Recent patents indicate that Apple may be building a platform for payments that could pair up with NFC or other near range payments alternatives. In other words, it may not be an either/or proposition, but a partnership.</li>
</ul>
<ul>
<li><b>Scalability</b>: Apple has always been the 'elephant in the room' for payments industry observers. While solutions like Google Wallet, Isis, PayPal, MCX and others have tried, the inability to gain significant share of mind is a hurdle. This is obviously not a problem for Apple.</li>
</ul>
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As you can see, Apple has a vast array of the pieces to the payments puzzle, but they have yet to be put together as a complete picture. How big of a leap is it for Apple to develop a viable mobile payments solution?<br />
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"The Apple 'wallet' has already been released in the form of Passbook," says <a href="http://www.linkedin.com/in/devaannamalai">Deva Annamalai</a>, bank marketing technologist out of Salt Lake City. "Once you start using Passbook, you get hooked on how easy it is to pay for Starbucks, get your boarding passes, movie tickets, and even alerts when you spend. You wonder why every other service you use is not integrated to passbook."<br />
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Annamalai goes on to say, "If you can pay for your coffee using a Starbucks prepaid using passbook, how hard would it be to hook up a similar scheme with the iTunes card on file? With BLE providing the offers and loyalty rails, this space is going to get interesting ... and crowded."
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When asked about Apple's potential for success, <a href="http://www.linkedin.com/in/sammaule">Sam Maul</a>, Managing Consultant for <a href="http://www.cgcginc.com/">Carlisle and Gallagher Consulting Group, Inc.</a> said, "Steve Jobs once stated '<i>Details matter so it's worth waiting to get it right</i>.' This has never been more applicable than in entering the payments arena. Multiple contenders have tried to crack this space with varying degrees of mild success. Do I believe Apple can (finally) convince consumers to trust, and more importantly adopt mobile payments? I’ll let Apple answer that: '<i>Here's to the crazy ones…. the people who are crazy enough to think they can change the world, are the ones who do.</i>' As an Apple fanboy let me state – About damn time!"
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<h3>
<span class="Apple-style-span" style="font-family: inherit;">What Are The Mobile Wallet Strategy Options</span></h3>
<span class="Apple-style-span" style="font-family: inherit;"><br /></span><span class="Apple-style-span" style="font-family: inherit;">To date, the majority of financial institutions have followed a 'wait and see' strategy when it comes to mobile wallets (assuming a formal strategy has been set at all). Given the potential move by Apple and others over the past 12 months, it is d</span>efinitely time to for banks and credit unions to develop a road map for the future along with a timeline for implementation.<br />
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With many of the first movers in payments and mobile wallets having tested a variety of options, it is expected that we will now begin to see 'fast followers' use the learnings of the past to double down their efforts in the space. Apple is a good example of an organization that has watched and learned from what others have done.</div>
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Consumers may also quickly start to accept mobile payments as smartphone adoption continues to increase, offerings improve from the perspective of both the end consumer and merchant, and security issues are addressed.</div>
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The question is whether financial institutions will leverage the trust and insight they already have into customer demographics, financial holdings and payment behavior? Banks and credit unions also have the ability to provide either bank-based and/or merchant-funded rewards based on buying patterns.</div>
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According to a recent Forrester research report entitled, "<a href="http://www.forrester.com/Craft+The+Right+Digital+Wallet+Strategy+For+Your+Financial+Institution/fulltext/-/E-RES99583">Craft the Right Digital Strategy for Your Financial Institution</a>", there are four broad options available to financial institutions as they craft their digital wallet strategy. Banks and credit unions can select one or multiple approaches as they prepare for the future.</div>
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<ul>
<li><b>Do Nothing (for now)</b>: While not recommended, this may be the only option for firms with limited resources available. That said, the risk associated with this approach only increases with time.</li>
</ul>
<ul>
<li><b>Be a Deliberate Follower</b>: Not to be confused with a passive 'wait and see' strategy, this approach involves a deliberate, action-oriented strategy of assessing the marketplace and building a knowledge of what would work and not work with an eventual entry into the mobile wallet competition.</li>
</ul>
<ul>
<li><b>Introduce a Partner-Branded Wallet</b>: With this approach, a bank or credit union would partner with a brand that already has built the infrastructure (and potentially a customer base) that can shorten the speed to market. The array of partners continues to grow including <a href="http://www.fisglobal.com/">FIS</a>, <a href="http://www.fiserv.com/">Fiserv</a>, <a href="http://www.monitise.com/">Monitise</a> and others. Institutions that have partnered with <a href="https://www.paywithisis.com/">Isis</a>, <a href="https://masterpass.com/">MasterPass</a> and <a href="http://V.me/">V.me</a> are also pursuing this strategy.</li>
</ul>
<ul>
<li><b>Build Your Own</b>: While providing the greatest flexibility and control, building a proprietary mobile wallet solution is obviously the most resource intensive. <a href="https://www.cibc.com/ca/features/mobile-payment.html">CIBC</a>, <a href="http://www.bpaymobile.com/">Barclaycard</a> and <a href="https://www.commbank.com.au/mobile/commbank-kaching/kaching-support.html">CommBank Kaching</a> in Australia have used this approach to date.</li>
</ul>
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While the news of a potential Apple payments solution may not have been a surprise to anyone following the payments industry, it is clear that Apple is in an enviable position to be a dominant player in mobile payments in the U.S. and in other markets around the world. In addition to scalability, Apple also has a preferred demographic of higher income, digitally engaged customers. This certainly won't hurt them when/if they reach out to retailers.</div>
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<div>
But Apple has already demonstrated a willingness to wait for the right time to introduce any new innovation. And, while all the pieces seem to be in place for Apple to make a payments play (including consumer anguish around card payments as a result of the Target data breach), Apple still needs to address what has kept people from making payments with their phone in the past -- security, trust and a value beyond what they are getting from using plastic today.<br />
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According to <a href="http://www.linkedin.com/in/leimer">Bradley Leimer</a>, vice president of digital strategy at <a href="https://www.mechanicsbank.com/">Mechanics Bank</a>, "Apple doesn't have to become a payments player to disrupt payments. Just as it's now iconic iTunes Store has disrupted both music and movie consumption forever, the addition of Passbook and BLE has initiated a challenge to the way the average person will soon pay for goods and services. With six hundred million active accounts attached to a payment card, Apple has a head start on Amazon and most of the payment players. Banks should be watching their payment revenue stream as it's likely to disappear as quickly as Blockbuster."<br />
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<div>
<span class="Apple-style-span" style="font-family: inherit;">As mentioned above, the worst strategy is to sit on the sidelines as financial and non-financial competitors continue to play more aggressively. Like a game of payments roulette, you can't win if you don't play. Using the same analogy, it may make sense to place bets on multiple options, realizing that while some of your bets may not pan out, the potential to have a 'big win' improves.</span><br />
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When CEO/founder of Moven, <a href="http://www.linkedin.com/in/brettking">Brett King</a>, was asked about the potential for Apple entering the payments business, he said, “The era of the downloadable bank account is upon us, and any banker that still thinks opening an account in a branch is the right idea needs their head examined!<br />
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<h3>
<span class="Apple-style-span" style="color: red; font-family: inherit;">Update</span></h3>
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<span class="Apple-style-span" style="font-family: inherit;"><br /></span></div>
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<span class="Apple-style-span" style="font-family: inherit;">After the Wall Street Journal report discussed above, Apple Chief Executive Tim Cook w</span><span class="Apple-style-span" style="font-size: small; font-weight: normal;"><span class="Apple-style-span" style="font-size: small; font-weight: normal;">as asked about mobile payments by an analyst on a conference call. At that time, he talked up the company’s potential for doing more in this area. Without giving much detail, Cook alluded to the fact that Apple could leverage its fingerprint scanning technology for payments beyond their Apple stores. </span></span></div>
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<blockquote class="tr_bq">
<i>"We are seeing that people love being able to buy content, whether it’s music or movies or books, from their iPhone using Touch ID. It’s incredibly simple and easy and elegant and it’s clear there’s a lot of opportunity there. The mobile payment area in general is one that we’ve been intrigued with. That was one of the thoughts behind Touch ID. … You can tell by looking at the demographics of our customers and the amount of commerce that goes through iOS devices versus the competition that it’s a big opportunity." </i></blockquote>
This is the first time anyone at Apple has publically acknowledged the potential of Apple entering the payments space. In fact, last year Cook told investors that mobile-payment technology was “in its infancy.”<br />
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Stay tuned… </div>
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<h3>
Additional Research</h3>
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<div>
<i><a href="http://www.businessinsider.com/apple-has-all-the-pieces-it-needs-to-become-a-powerful-force-in-payments-in-2014-2013-12">Apple Has All The Pieces It Needs To Become A Powerful Force In Payments in 2014</a></i> - Business Insider (Dec. 2013)<br />
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<i><a href="http://www.forrester.com/Craft+The+Right+Digital+Wallet+Strategy+For+Your+Financial+Institution/fulltext/-/E-RES99583">Craft the Right Digital Strategy for Your Financial Institution</a> </i>- Forrester Research (Dec. 2013)</div>
Anonymoushttp://www.blogger.com/profile/05424097007271218756noreply@blogger.com10tag:blogger.com,1999:blog-8930153101988441660.post-68890381497422414552014-01-22T21:16:00.001-05:002014-01-24T15:45:21.096-05:007 Reasons Mobile Money From T-Mobile Should Worry Bankers<div class="separator" style="clear: both; text-align: center;">
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<span class="Apple-style-span" style="color: blue; font-family: inherit;">MOBILE STRATEGIES</span></h3>
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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.</h3>
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Not to be mistaken for the future Isis mobile wallet (backed by AT&T, Verizon and others), the <a href="http://www.t-mobile.com/landing/moneyservices.html">T-Mobile Mobile Money</a> solution is the latest in a wave of neobank competitors such as <a href="http://www.simple.com/">Simple</a>, <a href="http://www.moven.com/">Moven</a>, <a href="http://www.gobank.com/">GoBank</a> and <a href="https://www.serve.com/">Amex's Serve</a>. The major difference is that this offering comes with a vast distribution network, an established customer base, significant marketing muscle and more.</h3>
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<span class="Apple-style-span" style="font-family: inherit;">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. </span><br />
<span class="Apple-style-span" style="font-family: inherit;"><br /></span><span class="Apple-style-span" style="font-family: inherit;">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. </span><br />
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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 <a href="http://www.businessweek.com/articles/2013-03-06/what-africa-can-teach-us-about-the-future-of-banking">Kenya’s M-PESA</a> which is currently used by 20 million people and includes loans and savings products.<br />
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<span class="Apple-style-span" style="font-family: inherit;">So, why should Mobile Money from T-Mobile worry U.S. bankers (in no particular order) . . ?</span><br />
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<span class="Apple-style-span" style="font-family: inherit;">1. T-Mobile Has an Established Customer Base</span></h3>
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<span class="Apple-style-span" style="font-family: inherit;">Unlike the </span>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).<br />
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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).<br />
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"One of the main reasons we're doing this is to deepen our relationship with our customers," said T-Mobile marketing executive Andrew Sherrard.</div>
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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.<br />
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Notice in the website marketing, that the term 'prepaid debit card' is deemphasized in exchange for references to a checking account.</div>
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Source: T-Mobile Customer Mobile Money Web Page</div>
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<span class="Apple-style-span" style="font-family: inherit;">2. T-Mobile is Using a Low Cost Pricing Strategy</span></h3>
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In today's announcement, T-Mobile emphasized that T-Mobile customers will incur no charges for activation, monthly maintenance, in-network ATM withdrawals, minimum balances or for replacing lost or stolen cards. The company also said there are no overdraft fees.<br />
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When discussing fees on the T-Mobile Mobile Money web site, there is no reference to the term 'prepaid debit card' emphasizing the comparison to a checking account instead.</div>
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<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjmVKyB6NN5JiRhdrlIaCN-RCGPStXQxLzZZYtkHA34vw1odoLIh-ESx9RJ_inM9wn6Iot8-VezFfLjMmmPfgoKS7uKEJgeiBMUc8B8keDI1G3RoBH7M-bcTj5NbDAn8NrYR4L7GsnEhDk/s1600/Fees+Screenshot.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjmVKyB6NN5JiRhdrlIaCN-RCGPStXQxLzZZYtkHA34vw1odoLIh-ESx9RJ_inM9wn6Iot8-VezFfLjMmmPfgoKS7uKEJgeiBMUc8B8keDI1G3RoBH7M-bcTj5NbDAn8NrYR4L7GsnEhDk/s1600/Fees+Screenshot.png" height="276" width="640" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">Source: T-Mobile Mobile Money Web Page</td></tr>
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It should be noted that Wal-Mart offers a prepaid card with virtually no fees as well, but charges $3 to cash checks up to $1,000 in its stores. T-Mobile’s service does take a fee of 1 percent of the value of government or payroll checks and 4 percent of the value of all other checks, making T-Mobile <i>more</i> expensive for any check over $300 and for personal checks over $75 (these fees are not easy to find on the site or promotion).<br />
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A non-T-Mobile customer can sign up for Mobile Money, but would have to pay significantly more traditional fees (allowing for a wireless sales opportunity).<br />
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Taking a consumerism positioning (much like has been done by GoBank, Moven, Simple and Bluebird, a comparison to current fees was made today at the introduction of the new product.<br />
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<i><span class="Apple-style-span" style="color: blue;">“It’s ridiculous that families, especially those who can least afford it, have to pay so much for basic check cashing services that many of us take for granted. Mobile Money levels the playing field to put money back in consumers’ pockets for important things – like bills, groceries or vacations. The typical household using a check casher to cash their paychecks could save about $1,500 per year, and customers tired of getting hit with overdraft fees can switch and save an average of $225 a year.”</span></i> - Mike Sievert, chief marketing officer for T-Mobile.</div>
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While the T-Mobile offering may take a while to gain traction (since consumers hate to transfer accounts), the emphasis on price, easy availability, mobile functionality, etc. will definitely make customers of all financial institutions aware of what is available in the marketplace. This could put pressure on revenues and require a ramping up of mobile banking innovation. <br />
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<span class="Apple-style-span" style="font-family: inherit;">3. T-Mobile Understands Mobile Money</span></h3>
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T-Mobile's Mobile Money has inked a deal with The Bancorp similar to its other private-label banking arrangements (including one done with Simple). The deal has The Bancorp using its bank charter to support T-Mobile’s new Mobile Money service that the company introduced. Like done with Simple, the agreement centers on a Visa prepaid card issued by The Bancorp and produced by Blackhawk Network Inc. but the Mobile Money product itself is definitely mobile-first.<br />
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It is assumed that the back office operations would be similar to what has been associated with Simple, eliminating much of the early testing and trial and error done by Simple and other earlier entrants. In addition, unlike the majority of the neobanks, T-Mobile made no mention of 'waiting lists' or a staged introduction.<br />
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<span class="Apple-style-span" style="font-family: inherit;">As mentioned, in addition to the debit card, a customer can use their new Mobile Money app on an <a href="https://itunes.apple.com/us/app/mobile-money-by-t-mobile/id744641020?mt=8">iPhone</a> or <a href="https://play.google.com/store/apps/details?id=com.blackhawknetwork.tmobile.mobilemoney">Android</a> smartph</span>one to take photos of checks, make a deposit into an account, pay bills, add funds, view transactions, transfer funds, and find ATMs.
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While there doesn't appear to be any ability to search or sort transactions, budget or access a 'safe-to-spend' functionality at this time, the app still appears to have the simplicity in design and ease of use associated with a neobank offering.<br />
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Some of the available screen shots appear below:<br />
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A drawback to T-Mobile’s service at this time is that it only lets you send money to other T-Mobile card holders and you’ll need to know their phone number and last four digits of their card number. While this may change in the future, it does limit the functionality compared to traditional banks.
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4. T-Mobile Is An Aggressive Marketer</h3>
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T-Mobile is anything but a wallflower in the mobile industry, so we should expect nothing less as they enter financial services. Known for their cheap rates, lack of binding contracts and aggressive marketing, even <a href="http://newsroom.t-mobile.com/phoenix.zhtml?c=251624&p=irol-newsArticle&ID=1892476&highlight=">today's press release</a> took on the highly competitive personality of T-Mobile's president and chief executive office, John Legere.<br />
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In fact, the headline of the press release read, "T-Mobile Frees Consumers From Outrageous Check Cashing Fees With Innovative New Smartphone Solution." My favorite quote in the press release was:<br />
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<i style="color: blue;">“We’ve already transformed how Americans use and pay for phones, tablets and wireless service; why stop there? Millions of Americans pay outrageous fees to check cashers, payday lenders and other predatory businesses – just for the right to use their own money. Mobile Money shifts the balance of power for T-Mobile customers and keeps more money in their pockets.” </i>- John Legere, president and chief executive officer of T-Mobile</blockquote>
Not only should bankers expect a no holds barred, in your face, marketing campaign emphasizing T-Mobile's 'Un-Carrier' (or Un-Bank) theme and <a href="http://www.businessweek.com/articles/2014-01-22/t-mobiles-picks-a-new-villain-to-attack-banks">positioning banks as villains</a>, we should expect a lot of money being allocated to this newest expansion of T-Mobile's business model. This is because success with their Mobile Money solution can expand their cellular customer base and can also position them advantageously for a future with Isis.<br />
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Finally, and potentially most important, T-Mobile <i>owns</i> a marketing channel . . . the phone. They have the ability to reach their entire customer base at a very low cost through the phones their customers already carry. While they need to be careful about any outbound effort, strong linked video content can help with the marketing efforts either through text or email messages.<br />
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5. T-Mobile Has A Physical Distribution Network</h3>
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It is believed that many of the innovators in the mobile and prepaid space could be negatively impacted by the lack of a physical distribution network. While several may argue that physical presence should not be a major concern for a mobile-first offering, the fact that Mobile Money from T-Mobile is supported by a fee-free ATM network of more than 42,000 machines (compared to 18,000 Bank of America machines) and from 70,000 points of distribution (Bank of America has 6,100 offices) can't hurt.<br />
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Interestingly, while T-Mobile is making a big deal about their ATM network, Simple actually has more locations, with 55,000 Allpoint ATMs, the country’s largest surcharge-free network.
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T-Mobile customers can take out cash through retailers, just like customers can now do with any bank debit card and can reload their account at any retailer that supports Reloadit, MoneyGram and Visa ReadyLink as well as at any T-Mobile store or at Safeway markets (other locations will become available).<br />
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6. Mobile Money Is Not Just For The Underbanked</h3>
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Let's not lull ourselves into a state of complacency. While the format of the service offered by T-Mobile is structured as a prepaid card, customers who sign up for Mobile Money are essentially getting a traditional checking account.<br />
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Customers can have money deposited directly to their Mobile Money account or deposit checks by taking a picture with their smartphone.
Mobile Money customers also get a Visa debit card that they can use to make purchases, pay bills or withdraw cash from a network of 42,000 ATMs scattered throughout the nation.<br />
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In other words, while the talk initially is that the product is for those who have been 'left behind by the banking system', the reality is that the target audience could expand well beyond it's already surprisingly large 'underbanked' base to include the digital natives that every bank wants to serve.<br />
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In an <a href="http://www.paymentssource.com/news/can-carriers-do-prepaid-better-than-banks-3016726-1.html">interview with John Adams from PaymentsSource's</a>, <a href="http://uk.linkedin.com/in/garethlodge">Gareth Lodge</a>, a senior analyst at <a href="http://www.celent.com/">Celent</a>'s banking group stated, "The U.S., for a country of its level of development, has a pretty high level of underbanking," Lodge says, adding the U.S. has an unbanked population of about 12%, compared to about 3% in the U.K. "When you add in the underbanked, the number for the U.S. is estimated to be nearly to 30%."<br />
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That said, T-Mobile noted that they did a pilot in Miami and saw better-than-expected success beyond the original target audience. While it was assumed prepaid customers would primarily be interested in Mobile Money, they were surprised to see 40 percent of the users were more credit-worthy post-paid customers.<br />
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How does a traditional bank open the doors to let the 'lower third' of their customers leave without having a large number of digital customers leave with them?<br />
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<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEimeT0QSbBKi48Af333ONlzyVZd1Ux6I9M3pLHeTYS6nI_JQfLvU2CiIsFwApiYIPxDDrH51vSdcliLZ0fzufJ0dp2EEYR_yRMOMF77cpgJ2VkXKIkXD_ih5vajkuMO5TYu3xNcdh_NF2k/s1600/Intro+page+screenshot.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEimeT0QSbBKi48Af333ONlzyVZd1Ux6I9M3pLHeTYS6nI_JQfLvU2CiIsFwApiYIPxDDrH51vSdcliLZ0fzufJ0dp2EEYR_yRMOMF77cpgJ2VkXKIkXD_ih5vajkuMO5TYu3xNcdh_NF2k/s1600/Intro+page+screenshot.png" height="237" width="400" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">Source: T-Mobile Mobile Money Web Page</td></tr>
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7. Timing</h3>
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Finally, T-Mobile’s timing comes when trust in traditional banks is still low, consumers are becoming more digital and comfortable with their mobile devices, and when more and more innovators in the financial services space are finding better ways to do basic banking.<br />
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Companies like <a href="http://www.square.com/">Square</a>, <a href="http://www.paypal.com/">PayPal</a>, <a href="http://www.google.com/wallet">Google</a>, the neobanks mentioned above and others have benefitted from banks and credit unions falling asleep at the wheel.
As long as innovation and product development within traditional banks continues to lag, and there is a market for simplification and improved utilization of new technologies, more entrants will emerge nipping at the edges of what was once the domain of rather staid banks and credit unions.
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Unfortunately, while many of these entrants were not considered formidable enough to capture the 'best' customers, some believe the proverbial horse is out of the barn and it may be difficult to reign the positioning of trusted financial advisor back again with many households. And, how easy will it be to win back customers lost to mobile-first players when a traditional bank's offering doesn't look or function the way a neobank's mobile banking does.<br />
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<i>Note: If you want to 'kick the tires' of the new T-Mobile Mobile Money prepaid product, they are already available in participating T-Mobile retail locations and online. Beginning in February, they will also be available in Safeway stores in the United States.
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Additional Resources</h3>
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<i><a href="http://www.paymentssource.com/news/can-carriers-do-prepaid-better-than-banks-3016726-1.html">Can Carriers Do Prepaid Better Than Banks</a> </i>- PaymentsSource (Jan. 2014)<br />
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<i><a href="http://www.businessweek.com/articles/2014-01-22/t-mobiles-picks-a-new-villain-to-attack-banks">T-Mobile Picks Another Villain to Attack: Banks</a> </i>- Bloomberg Business Week (Jan. 2014)<br />
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<i><a href="http://blog.starpointllp.com/blog/?p=3616">T-Mobile: Great Move Into Banking</a></i> - Tom Noyes Blog (Jan. 2014)<br />
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<i><a href="http://www.bankrate.com/financing/banking/t-mobile-gets-into-checking-business/?ic_id=News3">T-Mobile Gets Into Checking Business</a></i> - Bankrate (January 2014)<br />
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<a href="http://www.scribd.com/doc/201525203/Fee-comparison-chart">TechCrunch Neobank Comparison Chart</a></h3>
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Anonymoushttp://www.blogger.com/profile/05424097007271218756noreply@blogger.com0tag:blogger.com,1999:blog-8930153101988441660.post-81075768405578905572014-01-22T06:41:00.003-05:002014-01-22T21:13:36.624-05:00Bank Innovation Through Collaboration<div class="separator" style="clear: both; text-align: center;">
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<h3>
<span class="Apple-style-span" style="color: blue; font-family: inherit;">INNOVATION </span></h3>
<h3>
<br /></h3>
<h3>
Established by two former bankers, the <a href="http://www.bankinnovatorscouncil.org/">Bank Innovators Council</a> was developed to help financial institutions that may lack internal resources come together to brainstorm and test new ideas that could eventually be shared. Partnerships with <a href="http://www.finovate.com/">Finovate</a>, <a href="http://www.nextbank.org/">NextBank</a>, <a href="http://www.bankershub.com/">BankersHub</a> and <a href="http://www.innovationagency.com/">Innovation Agency</a> will hopefully provide additional momentum. </h3>
<h3>
<br /></h3>
<h3>
<br /></h3>
<h3>
By <a href="http://www.linkedin.com/in/jpnicols">JP Nicols<span class="Apple-style-span"><sup>®</sup></span></a>, founder and CEO of the research and innovation firm <a href="http://clientific.net/">Clientific</a>, a partner at <a href="http://www.banksolutionsgroup.com/">Bank Solutions Group</a> and co-founder of the <a href="http://www.bankinnovatorscouncil.com/">Bank Innovators Council</a>.</h3>
<span class="Apple-style-span" style="font-family: inherit;"><br /></span>
<span class="Apple-style-span" style="font-family: inherit;"><span class="Apple-style-span" style="font-family: inherit;">
Bankers and credit union executives have l</span>ong sought a competitive advantage in a vast sea of largely
undifferentiated competitors. For most players, and for most of the industry’s
long history, the chief weapons in this war have been scale and localization.
Either growing large enough to create economies of scale and/or scope, or
trying to corner one or more local markets by being more, well, “local”. A few
have even tried to accomplish both strategies simultaneously.</span><br />
<br />
<br />
But how will
those strategies play out in this new era of financial services? Regulators
will not let the very biggest banks get a whole lot bigger any time soon. The
top 100 banks in the U.S.— less than 1.5% of the 7,000 or so still around—
already control 81% of the loans and 75% of the deposits. Well-capitalized and
well-run small and midsize banks and credit unions will certainly swallow up weaker competitors
as this quickening consolidation phase that we have all been predicting
inevitably becomes a reality sooner or later. But will this truly create any
new competitive advantages beyond survival of the (relatively) fittest?<br />
<span class="Apple-style-span" style="font-family: inherit;"><br /></span>
<br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjm_pnfRBg6EV3NEMh7tBkrh1oiacColWPr1sHnTQR4gzn06AQ0WxTuT4pMa_tuj3PgPrlCJRn5XMBJw1ob0uOkO5e74yLHS7Co1Isx1cBmkQvxHmY8Rzcl01hojbUCxtX4zhC-EHH2hvg/s1600/Bank+consolidation.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><span class="Apple-style-span" style="font-family: inherit;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjm_pnfRBg6EV3NEMh7tBkrh1oiacColWPr1sHnTQR4gzn06AQ0WxTuT4pMa_tuj3PgPrlCJRn5XMBJw1ob0uOkO5e74yLHS7Co1Isx1cBmkQvxHmY8Rzcl01hojbUCxtX4zhC-EHH2hvg/s1600/Bank+consolidation.jpg" height="317" width="400" /></span></a></div>
<span class="Apple-style-span" style="font-family: inherit;"><br /></span>
<span class="Apple-style-span" style="font-family: inherit;">How about
the localization strategy of being '<i style="mso-bidi-font-style: normal;">the </i>bank or credit union of '<any town="">? Let’s set aside the fact that most organizations that proclaimed
to be <i style="mso-bidi-font-style: normal;">the </i>bank of XYZ were
probably not really <i style="mso-bidi-font-style: normal;">the</i> bank or credit union of
anything outside of their own imagination. In this hyper-connected,
hyper-globalized world, being merely local is meaningful to only a steadily
dwindled segment of consumers. </any></span><br />
<span class="Apple-style-span" style="font-family: inherit;"><br />Sure, there
are kernels of truth to each of these strategies. Having the scale to spread
out increasing infrastructure costs is important, up to a point. And I chose
the words 'merely local' for a reason. I think the real word the localists are
looking for is 'relevant'. Being headquartered in my hometown is fine, I guess.
More jobs for the local economy. But as a customer, what I really want is for
you to be relevant to me — and many of the behaviors of the banking behemoths
did little to make me feel that way.</span><br />
<span class="Apple-style-span" style="font-family: inherit;"><br /></span>
<br />
<h3>
<span class="Apple-style-span" style="font-family: inherit;">Why It’s Different Now</span></h3>
<span class="Apple-style-span" style="font-family: inherit;"><br /></span>
<span class="Apple-style-span" style="font-family: inherit;">Those basic
strategies worked well enough for the last few hundred years, but until
recently, the industry was basically undefeated because it won all of its games
by default. Sure, we had large banks and small banks, and credit unions, and
for a time, S&Ls and Savings Banks; but these were all just slightly
different flavors of the same basic model.</span><br />
<span class="Apple-style-span" style="font-family: inherit;"><br />
Banking as a
product and as a service had no real threat of substitution. But during just
the last 5 to 10 years, the proliferation of smartphones, tablets, broadband
connectivity and connected networks of all kinds have changed the nature of the
game. Forever. Just as radio and movie theaters were disrupted by television,
which was disrupted by videotapes, which were disrupted by DVDs, which were
disrupted by streaming video, the disruption in banking has only just begun.</span><br />
<span class="Apple-style-span" style="font-family: inherit;"><br />
</span><br />
<span class="Apple-style-span" style="font-family: inherit;">You can now
live your entire financial life off the grid of traditional financial
institutions — at least in your direct interactions. They still play a role
behind the scenes, but the nameless, faceless utility that merely holds your
insured deposits and ensures an efficient transfer of your funds from Point A
to Point B is the very definition of a commodity trap.</span><br />
<a name='more'></a><br />
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<h3>
<span class="Apple-style-span" style="font-family: inherit;">The Commodity Trap</span></h3>
<span class="Apple-style-span" style="font-size: small; font-weight: normal;"><span class="Apple-style-span" style="font-family: inherit;"><br /></span></span>
<span class="Apple-style-span" style="font-family: inherit;"><span class="Apple-style-span" style="font-size: small; font-weight: normal;">The concept
of “The Commodity Trap” was created by <a href="http://www.linkedin.com/pub/richard-d-aveni/9/974/516">Richard D’Aveni</a> in his 2010 book </span><span class="Apple-style-span" style="font-size: small; font-weight: normal;"><i style="mso-bidi-font-style: normal;"><span style="color: #042eee;"><a href="http://www.amazon.com/Beating-Commodity-Trap-Maximize-Competitive/dp/1422103153">Beating the Commodity Trap</a></span></i></span><span class="Apple-style-span" style="font-size: small; font-weight: normal;">, and explored further in <a href="http://www.linkedin.com/in/henrychesbrough">Henry Chesbrough</a>’s 2011
book </span><span class="Apple-style-span" style="font-size: small; font-weight: normal;"><i style="mso-bidi-font-style: normal;"><span style="color: #042eee;"><a href="http://www.amazon.com/Open-Services-Innovation-Rethinking-Business/dp/0470905743">Open Services Innovation: Rethinking Your Business to Grow and Compete in a New Era</a></span></i></span><span class="Apple-style-span" style="font-size: small; font-weight: normal;">.
The fundamental characteristics of the Commodity Trap according to Chesbrough
are that:</span></span><br />
<br />
<span class="Apple-style-span" style="font-family: inherit;">
</span>
<br />
<ul>
<li><span class="Apple-style-span" style="font-family: inherit;">Business
process knowledge and insights are widely distributed</span></li>
<li><span class="Apple-style-span" style="font-family: inherit;">Manufacturing
of products is moving producers with very low costs</span></li>
<li><span class="Apple-style-span" style="font-family: inherit;">The
shrinking amount of time a product lasts in the market before a new and
improved one takes its place</span></li>
</ul>
<span class="Apple-style-span" style="font-family: inherit;">Check, check
and check for the financial services industry, and scale or localization alone are not
sufficient weapons in this battle.</span><br />
<span class="Apple-style-span" style="font-family: inherit;"><br /></span>
<br />
<h3>
<span class="Apple-style-span" style="font-family: inherit;">The Collaborative Advantage</span></h3>
<span class="Apple-style-span" style="font-family: inherit;"><br /></span>
<span class="Apple-style-span" style="font-family: inherit;">Winners in
this new era have to collaborate with customers, vendors, and even other banks
to find new ways to be relevant to their customers and avoid becoming victims of the commodity trap.
There is always a bias for established firms to protect existing revenue
streams and manage for past results rather than future outcomes, and this is
exacerbated in the banking industry.</span><br />
<span class="Apple-style-span" style="font-family: inherit;">
<br />
Think about
the behaviors that are sought, encouraged and rewarded in banking. They’re all
about avoiding risk. You’re praised and eventually promoted if you’re the
person who always thinks up new ways ideas could fail. The regulators certainly
reinforce those behaviors, and they are more than appropriate for things like
capital management and credit underwriting.<br />
</span><br />
<span class="Apple-style-span" style="font-family: inherit;">
But bankers
make hundreds of decisions every day, both large and small, that will never run
the risk of putting the shareholders in harm’s way. Those decisions should include innovating new products, services, and experiences, if they are managed
properly. Yes, innovation is about taking risks, but they should be small,
calculated risks that lead to real learning and real improvement.</span><br />
<span class="Apple-style-span" style="font-family: inherit;"><br /></span>
<br />
<h3>
<span class="Apple-style-span" style="font-family: inherit;">It’s Better Together</span></h3>
<span class="Apple-style-span" style="font-family: inherit;"><br /></span>
<span class="Apple-style-span" style="font-family: inherit;">Innovation
has to be expanded beyond a single product group or business line, and even
more importantly, innovation has to be more than brainstorming new ideas inside
the bank. Today, an increasing number of bankers have “innovation” somewhere in
their job description, and they get to spend time at cool events put on by the
likes of <u><span style="color: #042eee;"><a href="http://www.finovate.com/">Finovate</a></span></u>, <u><span style="color: #042eee;"><a href="http://www.innotribe.com/">Innotribe</a></span></u>, <u><span style="color: #042eee;"><a href="http://www.bankinnovation.net/">Bank Innovation</a></span></u>, <a href="http://www.money2020.com/">Money2020</a> and <u><span style="color: #042eee;"><a href="http://www.nextbank.org/">NextBank</a></span></u>,
seeing new ideas from all over the globe.</span><br />
<span class="Apple-style-span" style="font-family: inherit;"><br /></span>
<span class="Apple-style-span" style="font-family: inherit;">I’ve
attended plenty of these events myself, and I love seeing the perspective of
startups with no legacy business model to protect and defend, and more research
and development spending is coming from smaller firms now. According to the
National Science Foundation’s Business Research and Development Survey, firms
with greater than 25,000 employees accounted for only 40% of R&D spending
in 2008, down from 70% in 1981.</span><br />
<br />
Bank
innovators are always energized to meet each other at these events, too. It
gets pretty lonely being surrounded by the “business prevention department”
back at the office.<br />
<span class="Apple-style-span" style="font-family: inherit;"><br /></span>
<span class="Apple-style-span" style="font-family: inherit;">We started
the <a href="http://www.bankinnovatorscouncil.org/">Bank Innovators Council</a> based on the idea that the “FinTech” entrepreneurs
had incubators, accelerators and venture capitalists to support their
innovation, but bankers were on their own. We believed that even banks that can’t afford their
own dedicated innovation teams can’t afford not to innovate.</span><br />
<br />
<blockquote class="tr_bq">
<span class="Apple-style-span" style="font-family: inherit;"><span class="Apple-style-span" style="color: blue;"><i>If you want
to go quickly, you walk fast and you walk alone. </i><i style="mso-bidi-font-style: normal;"><span style="mso-bidi-font-size: 18.0pt;">But if you
want to go far, walk with others.</span></i></span><span style="mso-bidi-font-size: 18.0pt;"> - </span>African proverb</span></blockquote>
<span class="Apple-style-span" style="font-family: inherit;">Researchers
Eoin Whelan, Salvatore Parise, Jasper de Valk and Rick Aalbers published a
paper in the MIT Sloan Management Review called <u><span style="color: #042eee;"><a href="http://sloanreview.mit.edu/article/creating-employee-networks-that-deliver-open-innovation/">Creating Employee Networks that Deliver Open Innovation</a></span></u> in
2011, and they cite the importance of so-called “network brokers” in bring
new ideas to fruition in organizations. These roles have become important today
because of the explosion of data dissemination from online forums, blogs,
search engines and wikis, and these “in-house connectors are needed to complete
the circuit.”</span><br />
<span class="Apple-style-span" style="font-family: inherit;"><br /></span>
<span class="Apple-style-span" style="font-family: inherit;">The paper
suggested that internal “Idea Connectors” should be encouraged to have more "networking activities through
involvement in cross-functional projects and job rotations”, and that their
counterpart 'Idea Scouts' should be given “priority
to attend external networking events such as conferences or trade shows. This
is not only a way to create alternative channels for ideation; it also allows
management to demonstrate its commitment to the front-runner role that these
employees play in sparking innovation.”</span><br />
<span class="Apple-style-span" style="font-family: inherit;"><br /></span>
<br />
<h3>
<span class="Apple-style-span" style="font-family: inherit;">From the “I” Word to the
“R” Word</span></h3>
<span class="Apple-style-span" style="font-family: inherit;"><br /></span>
<span class="Apple-style-span" style="font-family: inherit;">Ultimately,
this coalition of the willing has to expand to include people who don’t
currently have the word “innovation” in their job description. For those of us
at these industry events, we embrace the word, thrill at the very sound of it.
But it’s actually a scary word for entrenched bankers. It sounds too much like
“risk”. <a href="http://www.linkedin.com/in/philswisher">Phil Swisher</a>, Head of Innovation at Brown Brothers Harriman, and a
charter member of the Bank Innovators Council talks about shifting the
conversation with these people from the “I” word (innovation) to the “R” word
(revenue).</span><br />
<span class="Apple-style-span" style="font-family: inherit;"><br /></span>
<span class="Apple-style-span" style="font-family: inherit;">"That’s
why we help members focus on <i style="mso-bidi-font-style: normal;">why</i> they
want to come up with new ideas—what problem are they trying to solve, and for
whom?—and <i style="mso-bidi-font-style: normal;">what</i> happens after they
come up with them. After all, if those new ideas don’t eventually lead to new
revenue, how valuable are they?", says Swisher.</span><br />
<span style="font-family: inherit; mso-bidi-font-size: 18.0pt;"><br /></span>
<span class="Apple-style-span" style="font-family: inherit;"><span style="mso-bidi-font-size: 18.0pt;">Maybe
innovation is a scary word for you too, but I’ll bet you’re looking for new
ways to generate revenue and better ways to interact with your customers. It’s
hard to innovate in banks. It’s even harder doing it alone. Banks can walk farther
if they walk together. Which is why the Bank Innovators Council was created.</span></span><br />
<span class="Apple-style-span" style="font-family: inherit;"><span style="mso-bidi-font-size: 18.0pt;"><br /></span></span>
<br />
<div class="MsoNormal">
<span class="Apple-style-span" style="font-family: inherit;">Besides,
we are a whole lot more fun than the business prevention department.</span><br />
<span class="Apple-style-span" style="font-family: inherit;"><br /></span>
<br />
<h3>
<span class="Apple-style-span" style="font-family: inherit;">About the Author</span></h3>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg2rmkUfFumnbvOm-xbui1KtnBLuruq4HqH6TGHJGPlBgfQkWTPi1-PCKzUBeT2rYPp388mnRmiOKBJijAJqL8Lxa_G-9iFrvkQnL4rVYKEE2MOFQX5x9lm5kniduGBkavPWJ2Ae6R0mFI/s1600/JP+Nicols+Rev.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg2rmkUfFumnbvOm-xbui1KtnBLuruq4HqH6TGHJGPlBgfQkWTPi1-PCKzUBeT2rYPp388mnRmiOKBJijAJqL8Lxa_G-9iFrvkQnL4rVYKEE2MOFQX5x9lm5kniduGBkavPWJ2Ae6R0mFI/s1600/JP+Nicols+Rev.jpg" /></a></div>
<span class="Apple-style-span" style="font-family: inherit;"><span class="Apple-style-span" style="font-family: inherit;"><a href="http://www.linkedin.com/in/jpnicols">JP Nicols, CFP<sup>®</sup></a>
is a former bank executive and the cofounder of the <a href="http://www.bankinnovatorscouncil.com/">Bank Innovators Council</a>, a membership organization that helps support, promote,
and facilitate innovation within and amongst its member banks. His work has
been featured in leading industry publications and on his blog at <a href="http://jpnicols.com/">jpnicols.com</a></span><i style="mso-bidi-font-style: normal;"><span style="font-family: Georgia; mso-bidi-font-size: 18.0pt;"><o:p></o:p></span></i></span></div>
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Anonymoushttp://www.blogger.com/profile/05424097007271218756noreply@blogger.com6tag:blogger.com,1999:blog-8930153101988441660.post-86627989754250270332014-01-20T10:38:00.002-05:002014-01-29T09:46:32.102-05:00Target Data Breach Can Be Opportunity for Banks<div class="separator" style="clear: both; text-align: center;">
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhbAQyk-YcfKbXDxN4xD0snxBaWFz5_Bf42VA36x1gbwAMUULOy-tZg1MrOPt6wFOP75h0SzV7lCqA5iJ5kL-LnX6lYAw48xzwd_VmEHKLdTOt5iB3vg7Z9k3Z3bkn0G6Kqh-I-Jxzy66c/s1600/Target_Data_Breach_Photo.jpg" imageanchor="1" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhbAQyk-YcfKbXDxN4xD0snxBaWFz5_Bf42VA36x1gbwAMUULOy-tZg1MrOPt6wFOP75h0SzV7lCqA5iJ5kL-LnX6lYAw48xzwd_VmEHKLdTOt5iB3vg7Z9k3Z3bkn0G6Kqh-I-Jxzy66c/s1600/Target_Data_Breach_Photo.jpg" height="240" width="320" /></a></div>
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</h3>
<h3>
</h3>
<h3>
<span class="Apple-style-span" style="color: blue;">
COMMUNICATION STRATEGIES</span></h3>
<h3>
<br /></h3>
<h3>
Banks and credit unions are taking differing approaches to dealing with the recent security breach involving credit cards and debit cards used at
<a href="http://www.target.com/">Target</a> stores over the holidays. Some banks are identifying compromised debit or credit cards and issuing fresh cards immediately while other banks are taking a watch-and-wait stance, taking action on a case-by-case basis if fraud is detected.</h3>
<h3>
<br /></h3>
<h3>
Either way, many banks are using a proactive, multichannel approach for keeping customers informed which can build much sought after loyalty and trust.</h3>
<h3>
<span class="Apple-style-span" style="font-size: small; font-weight: normal;"><br /></span></h3>
<h3>
<span class="Apple-style-span" style="font-size: small; font-weight: normal;">In what may turn out to be the largest data breach of its kind, Target reported in December that hackers had stolen credit card and debit card information connected to as many as 40 million customers who shopped at Target stores between Nov. 27 and Dec. 15. Since then, Target has issued additional information that another 70 million customers may have had personal information compromised, including names, phone numbers and email addresses. </span></h3>
<br />
Subsequently, <a href="http://www.neimanmarcus.com/">Neiman Marcus</a> revealed it too had been the victim of a security breach, and there are some reporting that the POS system hacking could extend to additional retailers.<br />
<br />
The full magnitude of the damage will not likely be known until later in January, when customers receive and examine their monthly statements and call their banks, security experts have said. In past cases, it has taken 30 to 45 days for the vast majority of bad charges to surface. Unfortunately, in a scenario with so much publicity, the impact of the breach may be felt for months . . . or longer.<br />
<br />
So, the question is - What is the best way to communicate around a data breach of this nature? In working with a leading communications tracking firm, <a href="http://www.competiscan.com/index.php">Competiscan</a>, I was able to see a variety of communication strategies involving multiple channels and a variety of resolutions to the Target data breach.<br />
<blockquote class="tr_bq">
<span class="Apple-style-span" style="font-family: inherit;"><span class="Apple-style-span" style="color: blue; font-family: inherit;"><i>"In today's environment, it's not a matter of if a data breach will occur, but when it will occur, and how well you respond. Do everything you can to prevent data breaches, but also fully plan out how you will respond if a breach occurs. Today's media and consumer demands that two-pronged approach."</i> - Brian Lapidus, COO, Kroll Fraud Solutions </span></span></blockquote>
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Target Communication</h3>
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<span class="Apple-style-span" style="font-family: inherit;"><span class="Apple-style-span" style="font-family: inherit;">The one thing that should be part of any crisis plan is the reality that you might have to be in communication with hundreds of thousands of customers instantly. Unfortunately, while Target <a href="https://corporate.target.com/discover/article/Important-Notice-Unauthorized-access-to-payment-ca">did 'go public' almost immediately</a> after becoming aware of the situation, they were not prepared to handle the volume of calls or visits to their website/Facebook page that occurred. For instance, Target's initial notification post garnered over 3,500 comments and 1,600 shares in the first few days from customers concerned about their card security.</span></span><br />
<span class="Apple-style-span" style="font-family: inherit;"><span class="Apple-style-span" style="font-family: inherit;"><br /></span></span>
<span class="Apple-style-span" style="font-family: inherit;"><span class="Apple-style-span" style="font-family: inherit;">The same is true for the financial institutions that have been tracked. While some communicated with customer as early as December 20th (the day after the initial discovery), some organizations have not yet reached out to all customers to explain what has occurred, what precautions can be taken and how the bank is working on their behalf.</span></span><br />
<span class="Apple-style-span" style="font-family: inherit;"><span class="Apple-style-span" style="font-family: inherit;"><br /></span></span>
<span class="Apple-style-span" style="font-family: inherit;"><span class="Apple-style-span" style="font-family: inherit;">According to a Reuters/Ipsos poll conducted from January 2 to January 10, 40 per cent of people who shopped at Target during the period of the data breach had not been notified about the incident. Thirty-one per cent said they had been notified by Target and 28 per cent said they had been notified by their bank or credit card company.</span></span><br />
<span class="Apple-style-span" style="font-family: inherit;"><span class="Apple-style-span" style="font-family: inherit;"><br /></span></span>
<span class="Apple-style-span" style="font-family: inherit;"><span class="Apple-style-span" style="font-family: inherit;">This is an opportunity lost at a time when trust between customers and their financial institution is still fragile from the past financial crisis.</span></span></div>
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<span class="Apple-style-span" style="font-family: inherit;"><span class="Apple-style-span" style="color: blue; font-family: inherit;"><i>"More than 55 percent of respondents said the notification about a data breach occurred more than one month after the incident, and more than 50 percent of respondents rated the timeliness, clarity and quality of the notification as either fair or poor." </i>- The Consumer's Report on Data Breach Notification</span></span></blockquote>
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<span class="Apple-style-span">The day after the initial reports surfaced, </span>Target emailed millions of customers it thought were affected, and for whom it had email addresses. It has done the same for the additional customers it's now found to be involved. </div>
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The company also created a dedicated page on its website for the data breach, including resources about identity theft and credit reports. Target has said that it plans to offer a year of free credit monitoring and identity theft protection to anyone who shopped in Target stores in the United States. <span class="Apple-style-span"> </span></div>
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<span class="Apple-style-span">Finally, Target also sent postal letters and <a href="http://www.abullseyeview.com/2013/12/ceomessage/">posted a series of short YouTube videos</a> to explain details around the security breach, what the company was doing about the situation, and a discount offer to customers. It also provided the first set of steps a customer could take to protect themselves and where they could go for additional information.</span></div>
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<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEir0cGH6zgy2sQ1PpCd4mfiZYGBbstezy_cGu1IMGeSPDIQWBq7FmnfskJcq2TXv_U807sySndFHRIkt-hh5Bb7OGR7-wdGc4PerMDGbCve28lFiRDV4mcKWURsCxzHEj1pKzsoYBOV6sI/s1600/Target+Letter.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEir0cGH6zgy2sQ1PpCd4mfiZYGBbstezy_cGu1IMGeSPDIQWBq7FmnfskJcq2TXv_U807sySndFHRIkt-hh5Bb7OGR7-wdGc4PerMDGbCve28lFiRDV4mcKWURsCxzHEj1pKzsoYBOV6sI/s1600/Target+Letter.png" height="640" width="334" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">Target Letter to Customers</td></tr>
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<span class="Apple-style-span" style="font-size: x-small;">One of a series of YouTube videos from Target CEO to customers</span></div>
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<h3>
Bank Communications</h3>
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As mentioned, the timing, format, message and channel of communications from banks in response to the Target data breach have definitely been varied. The first responses, before the holidays, came from all sizes of banks and credit unions. One of the first (shown below) was an email from <a href="https://www.consumerscu.org/">Consumers Credit Union</a> on December 19.</div>
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<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhRSKQ9_JpZHUQyGgOxv2tyemEu9p_vHChyV1P3iK-JxG-uLw0Z8Dm0U6xTHm4NrXquAbsLa6q6SKkgeSj_e0ZmJIwnF5ZmktNtqqgwUhUKBSAax4zrU6nVJ1qobgtzgYIRuj48Jat01wI/s1600/Consumers+Credit+Unions+December+19.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhRSKQ9_JpZHUQyGgOxv2tyemEu9p_vHChyV1P3iK-JxG-uLw0Z8Dm0U6xTHm4NrXquAbsLa6q6SKkgeSj_e0ZmJIwnF5ZmktNtqqgwUhUKBSAax4zrU6nVJ1qobgtzgYIRuj48Jat01wI/s1600/Consumers+Credit+Unions+December+19.png" height="400" width="341" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">Consumers Credit Union Customer Communication (Dec. 19)<br />
Source: <a href="http://www.competiscan.com/">Competiscan</a></td></tr>
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<a href="http://www.chase.com/">Chase</a> and <a href="http://www.pnc.com/">PNC Bank</a> were also very quick to respond using email to inform customers that a data breach had occurred even though little or no detailed information was available at this time. Chase assured customers that they would monitor their accounts while PNC referenced their Security Assurance Pledge and linked to a continuously updated FAQ page.<br />
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<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhVdmpjc-j96NUlYaNaRsKLmPKC9rfix5UwFsB482osz0dMHFKEmSCCBqitjVGxJR__97KE-rF1OFLTUwF2i7CFs7YlC1G4UlgKREaO_ay1rUuzObu40Bm4op2Cd6E6c_zX189o_9ksMTY/s1600/First+Chase+eMail.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhVdmpjc-j96NUlYaNaRsKLmPKC9rfix5UwFsB482osz0dMHFKEmSCCBqitjVGxJR__97KE-rF1OFLTUwF2i7CFs7YlC1G4UlgKREaO_ay1rUuzObu40Bm4op2Cd6E6c_zX189o_9ksMTY/s1600/First+Chase+eMail.png" height="400" width="320" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">Chase eMail Communication (Dec. 20)<br />
Source: <a href="http://www.competiscan.com/">Competiscan</a></td></tr>
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<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg9uIP8DJKiPrDJD9hEOS8ZgF6ifa__PcE7wxzXjyVB6qmiocbOO0MPbYW0__pG9UoW3WA-aDBCjAdvfBkrhHoZq0OL6NGB1FVgxMT3LpTI_lIoHCvxYC3hcBdjOkZ5DKn-EtBeIzyGfrs/s1600/PNC+12:20.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg9uIP8DJKiPrDJD9hEOS8ZgF6ifa__PcE7wxzXjyVB6qmiocbOO0MPbYW0__pG9UoW3WA-aDBCjAdvfBkrhHoZq0OL6NGB1FVgxMT3LpTI_lIoHCvxYC3hcBdjOkZ5DKn-EtBeIzyGfrs/s1600/PNC+12:20.png" height="256" width="400" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">PNC eMail Communication (Dec. 20)<br />
Source: <a href="http://www.competiscan.com/">Competiscan</a></td></tr>
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Due to the sketchy information available during the first few days after the data breach was discovered and the need to proactively communicate to as many customers as possible, organizations like <a href="http://www.usaa.com/">USAA</a>, <a href="http://www.firstmerit.com/">FirstMerit</a> and <a href="http://www.peoplesunited.com/">Peoples United</a> leveraged social media to help expand the scope of communication.<br />
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<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh37WVp_ojTPz2fhZXe8iwd3b5Uvgg-AWwmOBx_0V9tyKVfVSex_2shwqd8HYjV8ynwTthPKSJujoDCr2vAiWoqynROjry6NWg8qY_nVlRDlvVkbMsVAPohMX_P1GQkIK6-oGZK0KI3ZYA/s1600/USAA+Facebook+Dec+20.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh37WVp_ojTPz2fhZXe8iwd3b5Uvgg-AWwmOBx_0V9tyKVfVSex_2shwqd8HYjV8ynwTthPKSJujoDCr2vAiWoqynROjry6NWg8qY_nVlRDlvVkbMsVAPohMX_P1GQkIK6-oGZK0KI3ZYA/s1600/USAA+Facebook+Dec+20.png" height="381" width="400" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">USAA Facebook Notification (Dec. 20)<br />
Source: <a href="http://www.competiscan.com/">Competiscan</a></td></tr>
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<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhgPN7vRKOihsYW7jlIxalbOCly_5E704MijsRYcBvofENm1esvB46lS2jzX5Zk8lXgoOj6YKXpe-YJO7xz_pRWFm7EC7qDk2uspoqYJ-5OQH0mvyLInhyvaRficvTPE161ePO3lYZ0IcU/s1600/FirstMerit+Dec+20.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhgPN7vRKOihsYW7jlIxalbOCly_5E704MijsRYcBvofENm1esvB46lS2jzX5Zk8lXgoOj6YKXpe-YJO7xz_pRWFm7EC7qDk2uspoqYJ-5OQH0mvyLInhyvaRficvTPE161ePO3lYZ0IcU/s1600/FirstMerit+Dec+20.png" height="112" width="400" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">FirstMerit Twitter Communication (Dec. 20)<br />
Source: <a href="http://www.competiscan.com/">Competiscan</a></td></tr>
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<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiKZYM9isEf6QBwZbMZuUEkojTfAccr3iU7AuB5yIgKJZv2XRuOlYJ3GDCJOR-7gAin1BzI1wxjMOWCeEAw4BbhjalsAec8hEhIOhS22mCeJlU8da-g10W09yn5aLdnz9qsSpXUEHMNFFU/s1600/Peoples+Twitter.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiKZYM9isEf6QBwZbMZuUEkojTfAccr3iU7AuB5yIgKJZv2XRuOlYJ3GDCJOR-7gAin1BzI1wxjMOWCeEAw4BbhjalsAec8hEhIOhS22mCeJlU8da-g10W09yn5aLdnz9qsSpXUEHMNFFU/s1600/Peoples+Twitter.png" height="97" width="400" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;"><div style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px;">
People's United Twitter Communication (Dec. 20)</div>
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Source: <a href="http://www.competiscan.com/">Competiscan</a></div>
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<span class="Apple-style-span" style="font-family: inherit;"><span class="Apple-style-span" style="font-family: inherit;"><a href="http://www.chase.com/">Chase</a> made a rather dramatic move right before the holidays, limiting both purchase and ATM transactions at a time when customers were most likely to need access to funds for the holiday.</span></span><br />
<span class="Apple-style-span" style="font-family: inherit;"><span class="Apple-style-span" style="font-family: inherit;"><br /></span></span>
<span class="Apple-style-span" style="font-family: inherit;"><span class="Apple-style-span" style="font-family: inherit;">JPMorgan Chase was also the first major bank to announce a plan to</span> ultimately replace millions of its 23 million debit cards. While not conducting a wholesale reissue of credit cards, which are harder to defraud quickly, the reissue of debit cards provided both a safety net for the bank as well as a bit of 'surprise and delight' to the customers who may have been worried about the risk of using their cards.</span><br />
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<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjUdw5j3nHzECexDlCRSF9X4uup2cOtt6SzbtnxEbLz-igWEy7JAwaptp5UbUfmlcxw6woLMQjXOpm0Oy34ptZ_81eQcYjkHo_0tlV7QySBkEXqICEJLD5a8saiODtXLrwUrB-MAf1EYcE/s1600/Chase+2.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjUdw5j3nHzECexDlCRSF9X4uup2cOtt6SzbtnxEbLz-igWEy7JAwaptp5UbUfmlcxw6woLMQjXOpm0Oy34ptZ_81eQcYjkHo_0tlV7QySBkEXqICEJLD5a8saiODtXLrwUrB-MAf1EYcE/s1600/Chase+2.png" height="640" width="443" /></a></td></tr>
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Chase eMail Communication (Dec. 23)</div>
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Source: <a href="http://www.competiscan.com/">Competiscan</a></div>
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<span class="Apple-style-span" style="font-family: inherit;"><a href="http://www.citibank.com/">Citibank</a> also recently announced plans to reissue all customer debit cards involved in the data breach at Target. </span>The bank said it did not replace the debit cards sooner because it wanted to minimize disruptions during the holiday shopping season, according to a person briefed on the company’s decision who spoke on the condition of anonymity. It will begin sending out new cards soon. </div>
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<span class="Apple-style-span" style="font-family: inherit;">Citi’s move highlighted the potential for continuing damage to consumers, banks and Target as data stolen in the breach may keep leaking into the black market. It also provided some goodwill to customers that was beyond what Target was doing (free credit monitoring, etc.)</span><br />
<span class="Apple-style-span" style="font-family: inherit;"><br /></span>
<span class="Apple-style-span" style="font-family: inherit;">The major consumer banks have been taking slightly different approaches in their responses to the Target breach. The other three consumer banks among the nation’s five largest — <a href="http://www.bankofamerica.com/">Bank of America</a>, <a href="http://www.wellsfargo.com/">Wells Fargo</a> and <a href="http://www.usbank.com/">U.S. Bank</a> — have said they are carefully watching cards for signs of fraud, but they have not broadly reissued debit or credit cards.</span><br />
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<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjXIA4WQYO-yz4R74piYm9vXv1lhpXKoH4A-2o7vCmMFI5FG12rdCBDfcnOQS9DpV-wtybTDnsekcX_uIDM99Fd7LoXo9t5_26xTi-9OuVoA5-kXzocOmAtjBS-aOa671jula-uBo3rMZM/s1600/Citi.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjXIA4WQYO-yz4R74piYm9vXv1lhpXKoH4A-2o7vCmMFI5FG12rdCBDfcnOQS9DpV-wtybTDnsekcX_uIDM99Fd7LoXo9t5_26xTi-9OuVoA5-kXzocOmAtjBS-aOa671jula-uBo3rMZM/s1600/Citi.png" height="640" width="416" /></a></td></tr>
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Chase eMail Communication (Jan. 13)</div>
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Source: <a href="http://www.competiscan.com/">Competiscan</a></div>
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<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhpC1t1PI5LLbr7j3UsqwU3nfrcoUa6LL2OiPf-AgjZ_dOWHrhiIbl-TZSsjsHPTUQcTL_xDLymfPDwQ96R43dgRoq2j2fJcp5nADBW3gyKDLIzL_7gNYd0HxBq9xhnsxnGi8VnnhYsbBM/s1600/Captial+One.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhpC1t1PI5LLbr7j3UsqwU3nfrcoUa6LL2OiPf-AgjZ_dOWHrhiIbl-TZSsjsHPTUQcTL_xDLymfPDwQ96R43dgRoq2j2fJcp5nADBW3gyKDLIzL_7gNYd0HxBq9xhnsxnGi8VnnhYsbBM/s1600/Captial+One.png" height="400" width="377" /></a></td></tr>
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Capital One eMail Communication (Jan. 14)</div>
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Source: <a href="http://www.competiscan.com/">Competiscan</a></div>
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Additional communication beyond what Target did is important for customers since banks are generally responsible for charges made on stolen <i>credit</i> cards, but <i>debit</i> card users do not have the same protections and can be responsible for up to $500 in losses depending on when they report the fraud. </div>
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<span class="Apple-style-span" style="color: blue; font-family: inherit;"><i>"Sixty-Three percent of respondents said notification letters received after breaches offer no direction on the steps consumers should take to protect their personal information. Fifty-seven percent said they lost trust and confidence in the organization." </i>- The Consumer's Report Card on Data Breach Notification</span></div>
<div>
<span class="Apple-style-span" style="color: blue; font-family: inherit;"><br /></span></div>
</blockquote>
</div>
<div class="separator" style="clear: both; text-align: left;">
One of the clearest and most direct communications came from <a href="http://www.discover.com/">Discover Card</a>, who replaced cards, provided very direct guidance as to what their customer can do to further protect themselves and provided a link for more information. </div>
<div class="separator" style="clear: both; text-align: left;">
<br /></div>
<div class="separator" style="clear: both; text-align: left;">
Of all of the communication reviewed, <a href="http://www.discover.com/">Discover</a> appeared to be the only communication that could be easily viewed and responded to via a mobile device. Seeing that recent research indicates that close to 50% of all emails are viewed on a mobile device, it would be wise for more institutions to take this into account as they develop email communications.</div>
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<br /></div>
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjKo9nYb2KErPtM-c4l75LTaPcms-hzuS8UxwmZLe8RV91PJvTGzikYb8i0fBsvRHbc3iDO08ho0C_ojVDK11euDxMYdz-w1jp_EFrNT8H7SQAd_oDILLmlenWwkw-_JwAgeVtnnK12H8o/s1600/Discover.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjKo9nYb2KErPtM-c4l75LTaPcms-hzuS8UxwmZLe8RV91PJvTGzikYb8i0fBsvRHbc3iDO08ho0C_ojVDK11euDxMYdz-w1jp_EFrNT8H7SQAd_oDILLmlenWwkw-_JwAgeVtnnK12H8o/s1600/Discover.png" height="400" width="383" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">Discover Email Communication (Jan.10)<br />
Source: <a href="http://www.competiscan.com/">Competiscan</a></td></tr>
</tbody></table>
In recent years, banks have given customers more tools than ever to help monitor accounts. Many consumers monitor their transactions daily on their smart phones, even getting text alerts for transactions in almost real
time. All these tools help manage and stop fraud before it gets to far out of control. Communications from banks and credit unions should include a reference to these tools for the next several months.<br />
<br />
<h3>
Communications Master Plan</h3>
<div>
<br /></div>
<div>
There are a number of resources available to assist with communications to customers in the event of fraud or a data breach. Most of the professionals in the communications business agree on the key components of a good emergency communications plan. All of them also agree that good communications is not just a good protection against financial loss, but also provides the potential for goodwill and loyalty going forward if done well.</div>
<div>
<br /></div>
<div>
The keys are:</div>
<ul>
<li><b>Prepare in advance </b>- Consider a data breach likely and plan accordingly, designating a breach response team and developing a comprehensive and detailed plan. According to the communications agency <a href="http://www.mlinc.com/">Media Logic</a>, this plan should include:</li>
<ul>
<li>Contact information for key executives (and their assistants)</li>
<li>Responsibility list (including identified official spokesperson and team heads)</li>
<li>Social media resources and access credentials</li>
<li>List of media contacts</li>
<li>Style guide specific to breach communications</li>
<li>Approved templates to provide a starting point</li>
</ul>
</ul>
<ul>
<li><b>Be accurate and timely</b> - Speed is of utmost importance. Understand the details and scope of breach and identify all impacted customers while determining appropriate message.</li>
<ul>
<li>Keep message brief, but complete</li>
<li>Avoid unnecessary information that could cloud the issue</li>
<li>Keep message consistent across channels</li>
<li>Remember foreign translations</li>
</ul>
</ul>
<ul>
<li><b>Keep communication lines open</b> - In addition to direct communication to customers through direct mail and email, social channels can provide an excellent means to update customers on an ongoing basis. Allow for social sharing of updates.</li>
</ul>
<ul>
<li><b>Be open, honest and transparent</b> - In a data breach situation, the details are important. Communicate as thoroughly as possible:</li>
<ul>
<li>The cause, date(s) and extent of the occurrence</li>
<li>Steps being taken to fix the problem and avoid a reoccurrence</li>
<li>Be specific regarding the quantity of damage</li>
<li>Provide resources (phone numbers, web addresses and links) so customers can find out more</li>
<li>Continue the communication as more details emerge</li>
</ul>
</ul>
<ul>
<li><b>Provide next step solutions</b> - Communicate remediation and/or mitigation processes and provide customers ways to feel more secure going forward.</li>
<ul>
<li>Make it easy to understand what you want them to do</li>
<li>Provide reassurance if possible and if valid</li>
</ul>
</ul>
<span class="Apple-style-span" style="font-family: inherit;">In the case of the Target breach and any retail industry breach that may be uncovered in the future, the communication should not be a one and done thing. It should be ongoing as new information is uncovered and should assume the customer is looking for guidance and security on an ongoing basis.</span><br />
<span class="Apple-style-span" style="font-family: inherit;"><br /></span>
<br />
<h3>
<span class="Apple-style-span" style="font-family: inherit;">Marketing Opportunity</span></h3>
<div>
<span class="Apple-style-span" style="font-family: inherit;"><br /></span></div>
<div>
<span class="Apple-style-span" style="font-family: inherit;">Beyond the public relations and trust-building opportunity discussed above, a dat breach of this nature also provides the opportunity to discuss and promote ID protection and credit monitoring services. While in this case, credit monitoring is being offered by Target, many customers may not 'trust' target with any service that will access their personal information (even though not connected with Target). </span></div>
<div>
<span class="Apple-style-span" style="font-family: inherit;"><br /></span></div>
<div>
<span class="Apple-style-span" style="font-family: inherit;">Many banks and credit unions provide these services either for a fee or free. Now would be an excellent time to reach out to customers via email, online ads, phone calls and/or 1:1 branch selling to improve cross-sell ratios.</span></div>
<span class="Apple-style-span" style="font-family: inherit;"><br /></span>
<br />
<h3>
<span class="Apple-style-span" style="font-family: inherit;">Additional Resources</span></h3>
<div>
<span class="Apple-style-span" style="font-family: inherit;"><br /></span></div>
<div>
<span class="Apple-style-span" style="font-family: inherit;"><a href="https://corporate.target.com/about/payment-card-issue.aspx"><i>Responses and Resources Related to Target's Data Breach</i></a> - Target Corporation Web Site</span></div>
<div>
<span class="Apple-style-span" style="font-family: inherit;"><br /></span></div>
<div>
<span class="Apple-style-span" style="font-family: inherit;"><i><a href="https://corporate.target.com/_media/TargetCorp/global/PDF/Website-Notice-to-Guest-v2.pdf">Initial Target Website Notice to Guests</a></i> - Target Corporation Web Site</span></div>
<div>
<span class="Apple-style-span" style="font-family: inherit;"><br /></span></div>
<div>
<span class="Apple-style-span" style="font-family: inherit;"><a href="https://corporate.target.com/_media/TargetCorp/global/PDF/GreggLetter-ad-version04.pdf"><i>Letter From Target CEO Published in National Press</i></a> - Target Corporation</span><br />
<span class="Apple-style-span" style="font-family: inherit;"><br /></span>
<span class="Apple-style-span" style="line-height: 19px;"><span class="Apple-style-span" style="font-family: inherit;"><i><a href="http://blog.mlinc.com/financial-services-2/are-you-breach-ready-what-financial-institutions-can-learn-from-targets-recent-data-loss/">Are You Breach Ready? What Financial Institutions Can Learn from Target’s Recent Data Loss</a> </i>- Media Logic (Jan. 2014)</span></span></div>
<div>
<span class="Apple-style-span" style="font-family: inherit;"><br /></span></div>
<div>
<span class="Apple-style-span" style="font-family: inherit;"><a href="https://corporate.target.com/_media/TargetCorp/global/PDF/ImpactedGuestEmail-12-19-updated.pdf"><i><span class="Apple-style-span" style="font-family: inherit;">First </span>Email to Guests: 12/19/13</i></a> - Target Corporation</span></div>
<div>
<span class="Apple-style-span" style="font-family: inherit;"><br /></span></div>
<div>
<span class="Apple-style-span" style="font-family: inherit;"><a href="https://corporate.target.com/_media/TargetCorp/global/PDF/GreggEmailToGuests-1-15-14.pdf"><i>Email to Guests: 1/15/14</i></a> - Target Corporation </span></div>
</div>
Anonymoushttp://www.blogger.com/profile/05424097007271218756noreply@blogger.com2tag:blogger.com,1999:blog-8930153101988441660.post-29678868285245225812014-01-17T09:45:00.000-05:002014-01-20T09:35:18.008-05:00It's Time For Personalization in Financial Services<span class="Apple-style-span" style="font-family: inherit;"></span><br />
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgbl_WC692znPs-o5B5I3BEjUasbQyQAVyQ_we_Lcg5-bc04dK3bsiMH9Xo-YejnilFyeAVIyB1CiX9YvECA5RdaZmxZZ4NVCQIz47gPWROYHrGtOh7BNQ2LrBv0W_ZqPerw7NgmCgv-_k/s1600/bigstock-Human-Resources-47885924.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgbl_WC692znPs-o5B5I3BEjUasbQyQAVyQ_we_Lcg5-bc04dK3bsiMH9Xo-YejnilFyeAVIyB1CiX9YvECA5RdaZmxZZ4NVCQIz47gPWROYHrGtOh7BNQ2LrBv0W_ZqPerw7NgmCgv-_k/s1600/bigstock-Human-Resources-47885924.jpg" height="212" width="320" /></a></div>
<h3>
In a post-crisis financial environment, customers are demanding solutions to satisfy their unique needs for money management. Additionally, they are showing preference for simpler products where benefits and risks are easy to understand and the feeling of control over the product increases their loyalty.</h3>
<h3>
<br /></h3>
<h3>
Therefore, banks and credit unions are facing a crossroads: acknowledge and embrace the demands of customers wanting more personalized and simplified services or try to push customers into a dated mass production model.</h3>
<b><br /></b>
<b>By <a href="http://www.linkedin.com/in/matthewlifshotz">Matthew Lifshotz</a>, Director of Global Business Development for <a href="http://www.choicefs.com/">Choice Financial Solutions</a></b><br />
<span class="Apple-style-span" style="font-family: inherit;"><br /></span>
<!--StartFragment-->
<br />
<h3>
<span class="Apple-style-span" style="font-family: inherit;">From Cookie Cutter to Papering Over the Cracks </span></h3>
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<span class="Apple-style-span" style="font-family: inherit;"><br /></span></div>
<div class="MsoNormal" style="mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<span class="Apple-style-span" style="font-family: inherit;">Taking a look back in history, consumer products used to be built on a made-to-order basis, using expensive highly labor-intensive processes. To make things
more affordable, companies began to adopt mass production technologies and
techniques, creating a one-size-fits-all product line. <o:p></o:p></span></div>
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<br /></div>
<div class="MsoNormal" style="mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<span class="Apple-style-span" style="font-family: inherit;">When Henry Ford moved automobile production to the
assembly-line model, revolutionizing manufacturing, he divided labor into
standardized tasks that were put together on a moving line. The individual
creation processes and unique personalization of previous years moved towards a
repetitive blueprint that was now centered on the product, not the customer.
The result of this innovative change was standardized production that had lower
costs per vehicle for both the manufacturer and customer.<o:p></o:p></span></div>
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<span class="Apple-style-span" style="font-family: inherit;"><br /></span></div>
<div class="MsoNormal" style="mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<span class="Apple-style-span" style="font-family: inherit;">Ford realized, very quickly, that mass production
allowed him to achieve economies of scale, a key to keeping prices low and
gaining an edge on competition. As a result of this success, all types of
companies (including financial services) have been utilizing this model of mass
production: focused on building the most popular products at the most
economical cost, assuming that customers will choose the options they are
presented with.<o:p></o:p></span></div>
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<span class="Apple-style-span" style="font-family: inherit;"><br /></span></div>
<div class="MsoNormal" style="mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<span class="Apple-style-span" style="font-family: inherit;">However, over time, competition has become more
intense and companies have started to offer a more diverse selection. As a
result of this variety, customers realized that they could find solutions in
the market closer to addressing their specific needs if they shopped around and paid
less attention to traditional concepts such as brand loyalty.<o:p></o:p></span></div>
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<span class="Apple-style-span" style="font-family: inherit;"><br /></span></div>
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<span class="Apple-style-span" style="font-family: inherit;">As a consequence of this customer attitude and
shift, companies are being forced to abandon the take-it-or-leave-it approach of
mass production, focusing instead on a more robust product offering that would
aid in their efforts to meet customer demands.<o:p></o:p></span></div>
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<span class="Apple-style-span" style="font-family: inherit;"><br /></span></div>
<div class="MsoNormal" style="mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<span class="Apple-style-span" style="font-family: inherit;">In today’s age, consumers are provided — some may
say overwhelmed — by an ever-expanding variety of goods and services in many
industries. For example, since 1970:</span></div>
<div class="MsoNormal" style="mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
</div>
<ul>
<li>The number of new vehicle models has risen from 140 to 270.</li>
<li>The number of TV channels has gone from 5 to over 200.</li>
<li>The U.S. market makes available to consumers more than 145
over-the-counter pain relievers.</li>
<li>There are more than 7,500 different prescription drugs.</li>
<li>Consumers can find over 3,000 types of beers and 50 different brands of
bottled water in the market place.</li>
<li>There are
more than 350 breakfast cereals. </li>
</ul>
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<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj4Sx1mO-z-AUxrS_1IEJGC-tdr36IYDMXtRUgTGuAgMiZ8IB-cdiLeQ_fs9zNK5JeoJo6sJE8K7ws6WTgLaP8P_aA0WQi0NDrHU0yCtP_cIioNt6J1JIoKLRpLG0GFwB3rF6EYDiwKTLc/s1600/Transition.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj4Sx1mO-z-AUxrS_1IEJGC-tdr36IYDMXtRUgTGuAgMiZ8IB-cdiLeQ_fs9zNK5JeoJo6sJE8K7ws6WTgLaP8P_aA0WQi0NDrHU0yCtP_cIioNt6J1JIoKLRpLG0GFwB3rF6EYDiwKTLc/s1600/Transition.png" height="187" width="640" /></a><a href="https://www.blogger.com/blogger.g?blogID=8930153101988441660" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"></a></div>
<br />
A lot has changed since Henry Ford and the assembly
line production of the Model T and I am comfortable in saying that the
mass-production model will no longer satisfy the overall customer demand. While
customization is a recognized strategy in many business-to-business models,
today’s retail consumer markets are also motivating companies to increasingly
offer personalized solutions.</div>
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<span class="Apple-style-span" style="font-family: inherit;"><br /></span></div>
<div class="MsoNormal" style="mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<span class="Apple-style-span" style="font-family: inherit;">It’s important to note that personalization is not
jargon for variety. Variety represents a producer’s best guess about what
consumers will buy and offering quantity. Companies that personalize wait until
they know precisely what the customer wants to create quality.<o:p></o:p></span></div>
<blockquote class="tr_bq">
<span class="Apple-style-span" style="color: blue; font-family: inherit;"><i>“Brand Keys, a research firm that
studies customer loyalty, found that personalization is 30 percent of what
draws a person to a brand today, as opposed to only six percent in 1997.”</i></span></blockquote>
<div class="MsoNormal" style="mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
A paradigm shift is taking place, from a product
centric approach (off-the-rack) to a customer centric approach (made-to-order),
where customer involvement shifts from just purchase to the development as
well. It’s become more important than ever for companies, especially those in
financial services, to be nimble and respond quickly to this market demand.</div>
<br />
<a name='more'></a><br />
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<h3>
<span class="Apple-style-span" style="font-family: inherit;">Banking is Far From
Personalized</span></h3>
<div class="MsoNormal" style="text-align: left;">
<span class="Apple-style-span" style="font-family: inherit;"><br /></span></div>
<div class="MsoNormal" style="mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<span class="Apple-style-span" style="font-family: inherit;">As customers have grown accustomed to personalized
solutions in other industries, the demand has begun to receive the same
attention from their financial services providers. With all the innovation in
other sectors, the financial world, still has a long way to catch up.<o:p></o:p></span></div>
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<span class="Apple-style-span" style="font-family: inherit;"><br /></span></div>
<div class="MsoNormal" style="mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<span class="Apple-style-span" style="font-family: inherit;">Traditional mass production techniques and
commoditized products may result in getting new customers in the door, but
research has shown that a key to retain customers, especially profitable ones,
is through personalized solutions that drive loyalty to the brand. Furthermore,
high levels of customer satisfaction result in a powerful competitive advantage
and less likelihood to stray to rival banks.<o:p></o:p></span></div>
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<span class="Apple-style-span" style="font-family: inherit;"><br /></span></div>
<blockquote class="tr_bq">
<span class="Apple-style-span" style="color: blue; font-family: inherit;"><i>In market research conducted by GfK
which obtained results from consumers with over $10,000 in deposits,
over 40% surveyed said they would be more inclined to continue their
relationship with their primary bank if they offered products where the
economics of the product could be personalized.</i></span></blockquote>
<div class="MsoNormal" style="mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<span class="Apple-style-span" style="font-family: inherit;">Unfortunately for customers, only a few financial
services companies have implemented true personalization for the broad retail
segment. Banking products and services are usually categorized by one of two
things; a high-degree of personal service with product personalization
delivered to a small segment of wealthy individuals or standardized offerings
to the broad consumer retail and mass affluent segments.<o:p></o:p></span></div>
<div class="MsoNormal" style="mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<span class="Apple-style-span" style="font-family: inherit;"><br /></span></div>
<div class="MsoNormal" style="mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<span class="Apple-style-span" style="font-family: inherit;">Many financial institutions have done a very
nice job of drastically improving the customer experience by adding layers in
the account opening flow for perceived personalization. However, a
closer look at the underlying offerings uncovers no more than a “standard”
product catalog behind the scenes.<o:p></o:p></span></div>
<div class="MsoNormal" style="mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<span class="Apple-style-span" style="font-family: inherit;"><br /></span></div>
<div class="MsoNormal" style="mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<span class="Apple-style-span" style="font-family: inherit;">A next and logical step is to allow customers the
ability to actually build and develop their own products, and choose the
economic conditions of the same, helping meet individual saving or investing
needs. Now, we start to truly change from a product-centric to a
customer-centric mindset.</span></div>
<blockquote class="tr_bq">
<span class="Apple-style-span" style="color: blue;"><span class="Apple-style-span" style="font-family: inherit;"><i>An example of a degree of personalization
is Spanish Novagalicia´s Personalized Deposit:</i></span><span class="Apple-style-span" style="font-family: inherit;"><i>It lets the depositor make a key
decision such as the amount to invest, the interest to earn and the deposit
term. The customer can decide the interest rate he wants to earn, how much to
invest and for how long just by introducing the number. Once the numbers are
introduced, the customer will be offered a variety of mixed deposits in which a
part goes to a time saving and another part goes to an investment fund. A
higher interest rate, leads to a larger allocation to investment funds and a
lower portion in the fixed term interest deposit. This new combined deposit is
a big step in the right direction towards personalization.</i></span></span></blockquote>
<div class="MsoNormal" style="mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<span class="Apple-style-span" style="font-family: inherit;">Today, customers are putting a high value on being
treated and recognized as individuals, while demanding personalized solutions
from the financial industry similar to the ones they are receiving from other
retail offerings.<o:p></o:p></span></div>
<div class="MsoNormal" style="mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<span class="Apple-style-span" style="font-family: inherit;"><br /></span></div>
<div class="MsoNormal" style="mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<span class="Apple-style-span" style="font-family: inherit;">Customers are not asking for the traditional
financial/banking products. What customers are asking for now are solutions
that help them with their objective of saving for specific purchases (a new
car, family vacations, etc.) or planning their personal finances to be able to
meet future expenses (tuition fees, home projects, etc.).<o:p></o:p></span></div>
<div class="MsoNormal" style="mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<span class="Apple-style-span" style="font-family: inherit;"><br /></span></div>
<div class="MsoNormal" style="mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<span class="Apple-style-span" style="font-family: inherit;">FIs need to become the solution providers for the
new generations and not just a product variety shop. Credit cards, loans,
deposits, retirement plans, insurance plan…they all can be personalized and
everything should be personalized to meet customers´ specific demands.<o:p></o:p></span></div>
<div class="MsoNormal" style="mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<span class="Apple-style-span" style="font-family: inherit;"><br /></span></div>
<div class="MsoNormal" style="mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<span class="Apple-style-span" style="font-family: inherit;">However, personalizing an offering to satisfy each
customer´s specific needs can be a significant challenge with existing internal
legacy systems.<o:p></o:p></span></div>
<blockquote class="tr_bq">
<span class="Apple-style-span" style="color: blue;"><span class="Apple-style-span" style="font-family: inherit;"><i>Another good example of applying the
ideas of personalization to the banking industry is Turkey’s Garanti Bank with
its ‘Flexi Card’. </i></span><span class="Apple-style-span" style="font-family: inherit;"><i>It lets the cardholder make a few key
decisions, allowing them to set over ten parameters. When applying for a card,
customers can manipulate variables like reward rates and types, interest rate
and card fee. The rewards system is especially flexible, not only letting
customers determine reward ratio and type (cash or points), but also enabling
them to choose which payments will earn them extra rewards: whether it’s broad
categories like restaurants, or specific stores like Zara.</i></span> </span></blockquote>
<blockquote class="tr_bq">
<span class="Apple-style-span" style="color: blue;"><span class="Apple-style-span" style="font-family: inherit;"><i>Interest rate, bonus rate and card
fees are selected by sliding bars that render various combinations of rates and
fees. Card fees, for example, can be pushed back to zero by committing to a
monthly spending minimum. A lower interest rate leads to a lower bonus rate,
etc. Lastly, after making serious decisions about financial terms, customers
can design their own card, choosing from different colors and a gallery of
images, or uploading their own image. There’s even the option of picking a
vertical card, which is a world’s first for Visa.</i></span> </span></blockquote>
<blockquote class="tr_bq">
<span class="Apple-style-span" style="color: blue;"><span class="Apple-style-span" style="font-family: inherit;"><i></i></span><span class="Apple-style-span" style="font-family: inherit;"><i>With its flexi Card Garanti has
been able to offer added value to their customers and
adjust credit card to each customers´ lifestyle and needs.</i></span></span></blockquote>
<br />
<h3>
<span class="Apple-style-span" style="font-family: inherit;">New Generations</span></h3>
<div class="MsoNormal" style="text-align: left;">
<span class="Apple-style-span" style="font-family: inherit;"><br /></span></div>
<div class="MsoNormal" style="mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<span class="Apple-style-span" style="font-family: inherit;">Baby Boomers are currently nearing the end of their
wealth accumulation stage and banks are, in general, meeting their most basic
needs. However, this generation is soon approaching retirement with a dramatic
demographic shift and change in demand within the next decade worldwide. </span>Banks should be, and are, aware that this new
generation is knocking loudly at their doors and they cannot be ignored.</div>
<div class="MsoNormal" style="mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<span class="Apple-style-span" style="font-family: inherit;"><br /></span></div>
<div class="MsoNormal" style="mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<span class="Apple-style-span" style="font-family: inherit;">The Gen Y and Millenials express their
individuality differently than previous generations. They do it through
their clothes, their music and how they stream it, their smart-phone choice,
their preferred social network, on what devices they watch TV and any other
number of ways that previous generations were not able to. They like
personalized products that express their own uniqueness.<o:p></o:p></span></div>
<div class="MsoNormal" style="mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<span class="Apple-style-span" style="font-family: inherit;"><br /></span></div>
<div class="MsoNormal" style="mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<span class="Apple-style-span" style="font-family: inherit;">FIs will need to use a different approach than what
was used in the past. As the economic power of this demographic grows, its
members will change, and influence how business is conducted, together with
patterns of spending, saving and investing.<o:p></o:p></span></div>
<div class="MsoNormal" style="mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<span class="Apple-style-span" style="font-family: inherit;"><br /></span></div>
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi0bEcuq2GoWJDzX4tJ8ZY7VXci2xsH0slXMUMi1Kj_RhHYhMQzMia5Zp_OrFlcxvXg89JmbfhoTeUMF3vSiNd8G5jsNbrLEyCybTspPjpMaDCd5QXEgyGaQALcVrzjm405etXAg0IGGmw/s1600/Personalized+Demographics.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi0bEcuq2GoWJDzX4tJ8ZY7VXci2xsH0slXMUMi1Kj_RhHYhMQzMia5Zp_OrFlcxvXg89JmbfhoTeUMF3vSiNd8G5jsNbrLEyCybTspPjpMaDCd5QXEgyGaQALcVrzjm405etXAg0IGGmw/s1600/Personalized+Demographics.png" height="307" width="640" /></a></div>
<div class="MsoNormal" style="mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<o:p><span class="Apple-style-span" style="font-family: inherit;"> </span></o:p> </div>
<h3>
<span class="Apple-style-span" style="font-family: inherit;">Why Personalize?</span></h3>
<div class="MsoNormal" style="text-align: left;">
<span class="Apple-style-span" style="font-family: inherit;"><br /></span></div>
<div class="MsoNormal" style="mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<span class="Apple-style-span" style="font-family: inherit;">By allowing consumers to tailor products to better
fit their needs, FIs will have the opportunity to gain loyalty in several ways.</span></div>
<div class="MsoNormal" style="mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
</div>
<ul>
<li>Personalization will improve customer satisfaction, a primary driver of
loyalty. Services that meet customers’ specific needs should naturally be more
satisfactory than a one-size-fits-all offering.</li>
<li>Personalized services will help the customer believe a firm is
appreciative towards him or her, increasing trust, another loyalty driver.
Additionally, trust is also impacted when the customer can create their own
product with a more transparent risk/reward understanding.</li>
<li>Personalization
also increases stickiness as consumers will view these services as difficult to
replace with another provider. Once a personalized product has been created at
their existing FI, customers are less willing to try and replicate the solution
at another institution.</li>
</ul>
<blockquote class="tr_bq">
<span class="Apple-style-span" style="color: blue; font-family: inherit;"><i>“We need to create a positive
interaction dialog with customers. Customers do not want to be sold to,
customers want to buy” - </i><b>Howard Putnam,
ex-CEO of Southwest Airlines</b></span></blockquote>
<div class="MsoNormal" style="mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<span class="Apple-style-span" style="font-family: inherit;">Companies are using personalization to create a
competitive advantage for themselves. By offering consumers personalized
options, they can differentiate themselves from competitors as well as:</span></div>
<div class="MsoNormal" style="mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
</div>
<ul>
<li>Retain existing customers through added value perception and brand
strength.</li>
<li>Attract new customers as word of mouth marketing is a highly effective
tool and satisfied customers will recommend a preferred FI.</li>
<li>Better
understand customer demands and needs by collecting and aggregating information
from a segment of customers (Big Data). As a result, new products for the mass
market segment can be planned more efficiently utilizing this non-biased
research.</li>
</ul>
<blockquote class="tr_bq">
<span class="Apple-style-span" style="color: blue; font-family: inherit;"><i>In market research conducted by GfK
which obtained results from consumers with over $10,000 in savings products
over 1 in 5 savers said they would switch their primary banking relationship in
order to access personalized savings products.</i></span></blockquote>
<h3>
<span class="Apple-style-span" style="font-family: inherit;">Risks and Barriers</span></h3>
<div class="MsoNormal" style="text-align: left;">
<span class="Apple-style-span" style="font-family: inherit;"><br /></span></div>
<div class="MsoNormal" style="mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<span class="Apple-style-span" style="font-family: inherit;">When properly implemented, personalization has the
potential to add many benefits for a FI. However, there are critical factors
which need to be considered when deciding to move to this exciting concept.<o:p></o:p></span></div>
<div class="MsoNormal" style="mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<span class="Apple-style-span" style="font-family: inherit;"><br /></span></div>
<div class="MsoNormal" style="mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<span class="Apple-style-span" style="font-family: inherit;">Personalization may lead to new complexities from a
customer’s perspective. Financial services customers, and now regulators, look
for simplicity and transparency in product offerings. Satisfaction may not only
plateau after a certain degree of personalization, but also decrease because of
the overwhelming feeling a customer may have due to excessive choice or
variety. When facing so much choice, customers may tend to avoid making
decisions, paralyzed by indecisiveness. Thus, setting the right degree of
personalization and carefully selecting the way FIs offer personalization is
crucial for success.<o:p></o:p></span></div>
<div class="MsoNormal" style="mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<span class="Apple-style-span" style="font-family: inherit;"><br /></span></div>
<div class="MsoNormal" style="mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<span class="Apple-style-span" style="font-family: inherit;">FIs must be aware that not all customers want
personalized products or the same degree of personalization. An FI should be
able to segment customers appropriately to allow more personalization
capabilities to those that want it and offer less or zero to those who do
not. </span>FIs may also find other barriers that make
personalization challenging:<br />
<br /></div>
<div class="MsoNormal" style="mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
</div>
<ul>
<li><b>Production Cost</b>: If an automated process is not
available and utilized, personalization will be more expensive than mass
production. This is why many FIs have limited personalization to only the
highest value customer segment levels.</li>
<li><b>Timely Delivery</b>: It is necessary to have a flexible
system that allows FIs to create new products quickly and without high upfront
costs.</li>
</ul>
<br />
<div class="MsoNormal" style="mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<span class="Apple-style-span" style="font-family: inherit;">Despite the perceived barriers in producing and
delivering personalized products, some leading FIs have found success by
developing in-house technologies or implementing third party solutions, which
is usually less time consuming and more cost effective.<o:p></o:p></span></div>
<div class="MsoNormal" style="mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<span class="Apple-style-span" style="font-family: inherit;"><br /></span></div>
<h3>
<span class="Apple-style-span" style="font-family: inherit;">Final Thoughts</span></h3>
<div class="MsoNormal" style="text-align: left;">
<span class="Apple-style-span" style="font-family: inherit;"><br /></span></div>
<div class="MsoNormal" style="mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<span class="Apple-style-span" style="font-family: inherit;">We are witnessing nearly a full circle approach to
how companies are now focusing on satisfying customers. Many years ago we
started with a made-to-order approach with a result of higher costs to
customers. Henry Ford used technology and innovation to divide labor into
standardized tasks that were put together on the assembly line, resulting in a
standardized product but lower costs for both companies and consumers.<span style="color: #181617;"> </span></span></div>
<div class="MsoNormal" style="mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<span class="Apple-style-span" style="font-family: inherit;"><span style="color: #181617;"><br /></span></span></div>
<div class="MsoNormal" style="mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<span class="Apple-style-span" style="font-family: inherit;"><span style="color: #181617;">Today we see another technology and innovation
revolution. This time, pieces are being put together to create bespoke options
coupled with low costs. As mentioned, some companies are trying to take
advantage of this new opportunity, undertaking significant efforts to offer
affordable tailor-made products.</span></span></div>
<div class="MsoNormal" style="mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<span class="Apple-style-span" style="font-family: inherit;"><br /></span></div>
<div class="MsoNormal" style="mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<span class="Apple-style-span" style="font-family: inherit;">When properly implemented, personalization will
result in a greater sensation of comfort and higher satisfaction for customers.
If customers are able to tailor-make solutions to their specific needs, product
features and behavior are more easily understood than when explained by a sales
representative.<o:p></o:p></span></div>
<div class="MsoNormal" style="mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<span class="Apple-style-span" style="font-family: inherit;"><br /></span></div>
<div class="MsoNormal" style="mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<span class="Apple-style-span" style="font-family: inherit;">Additionally, in today´s markets, where
competition is fierce, offering added value to customers represents a
significant and distinctive advantage for customers when selecting their FI. An
effective personalization implementation hinges on a company’s ability to
leverage new technology and innovation. FIs need to be able to develop or
outsource flexible and automated systems that address this growing trend.<o:p></o:p></span></div>
<div class="MsoNormal" style="mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<span class="Apple-style-span" style="font-family: inherit;"><br /></span></div>
<div class="MsoNormal" style="mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<span class="Apple-style-span" style="font-family: inherit;">The choice at this crossroads seems clear but let
us wait to see which road the financial institutions take.<o:p></o:p></span><br />
<span class="Apple-style-span" style="font-family: inherit;"><br /></span>
<span class="Apple-style-span" style="font-family: inherit;"></span><br />
<h3>
<span class="Apple-style-span" style="font-family: inherit;">About the Author:</span></h3>
<div>
<div style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px;">
<span class="Apple-style-span" style="font-family: inherit;"><br /></span></div>
</div>
<div class="separator" style="clear: both; margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px; text-align: center;">
</div>
<div>
<div style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px;">
<span class="Apple-style-span" style="font-family: inherit;"><br /></span></div>
<div class="separator" style="clear: both; text-align: center;">
<span class="Apple-style-span" style="font-family: inherit;"></span></div>
<div style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px;">
<div class="separator" style="clear: both; text-align: center;">
</div>
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgda0pbphiMHt4KUrI8EMoLzKbE7hgvZG5stey_5qcuf85Wrmy51Jxt9Thdobl1l3RA0zroRoZ6JFHgQX9W_ve_076j5duksUy8TCU6WqHNPY2qfDN8yo6z2tfTPwWlC92WYEDarOuQiUM/s1600/Lifshotz+2.png" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgda0pbphiMHt4KUrI8EMoLzKbE7hgvZG5stey_5qcuf85Wrmy51Jxt9Thdobl1l3RA0zroRoZ6JFHgQX9W_ve_076j5duksUy8TCU6WqHNPY2qfDN8yo6z2tfTPwWlC92WYEDarOuQiUM/s1600/Lifshotz+2.png" /></a></div>
<span class="Apple-style-span" style="font-family: inherit;"><a href="http://www.linkedin.com/in/matthewlifshotz">Matthew Lifshotz</a> is the director of global business development for financial services and technology for <a href="http://www.choicefs.com/en/index.html">Choice Financial Solutions</a>.</span></div>
<div style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px;">
<span class="Apple-style-span" style="font-family: inherit;"><br /></span></div>
<div style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px;">
<span class="Apple-style-span" style="font-family: inherit;">Before this, Lifshotz was a wealth advisor at Merrill Lynch and led business development efforts for the Financial Campus division of SmartPros. Today, he works with banks to develop innovative product solutions to drive profitability and improve competitive positioning.</span><br />
<span class="Apple-style-span" style="font-family: inherit;"><br /></span></div>
</div>
</div>
<h3>
<span class="Apple-style-span" style="font-family: inherit;"><br /></span></h3>
<h3>
<span class="Apple-style-span" style="font-family: inherit;">Additional Resources and References</span></h3>
<div class="MsoNormal" style="mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<span class="Apple-style-span" style="font-family: inherit;"><br /></span></div>
<div class="MsoNormal" style="mso-layout-grid-align: none; mso-pagination: none; text-autospace: none; text-indent: -24.0pt;">
<span class="Apple-style-span" style="font-family: inherit;"><span style="color: #181617;">1)</span><span style="color: #181617;"> 1) </span><span style="color: #181617;">Dellaert, B. G. C., and S. Stremersch, 2005, “Marketing mass
customized products:</span> </span><span class="Apple-style-span" style="color: #181617;">Striking the balance between utility
and complexity,” Journal of Marketing Research</span></div>
<div class="MsoNormal" style="mso-layout-grid-align: none; mso-pagination: none; text-autospace: none; text-indent: -24.0pt;">
<span class="Apple-style-span" style="font-family: inherit;"><span style="color: #181617;">2)</span><span style="color: #181617;"> 2) </span><span style="color: #181617;">Piller, Frank and Kumar, Ashok, 2006, “Mass customization:
Providing custom products and services with mass production efficiency"</span><o:p></o:p></span></div>
<div class="MsoNormal">
<span class="Apple-style-span" style="font-family: inherit;"><span style="color: #181617;">3)</span><span style="color: #181617;"> </span><span style="color: #181617;">GfK-Ideon Market
Research Report on Personalized Savings Products, Feb 8</span><sup><span style="color: #181617;">th</span></sup><span style="color: #181617;"> 2011</span></span><o:p></o:p></div>
<!--EndFragment-->Anonymoushttp://www.blogger.com/profile/05424097007271218756noreply@blogger.com0tag:blogger.com,1999:blog-8930153101988441660.post-32743707109456682452014-01-13T16:42:00.001-05:002014-01-22T06:09:22.152-05:00Customer Experience Innovation in Financial Services<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgEHwKd7Y_6wmLyDZ-lexX4w-LzyUEiwz8-lz49tfuVBpaUoApenaortGvrkeL8sNvKNSIkowF9r2EYB_xKSc06VtehETWNICqzDVkKuXp129KoiXi6Q6dOv6A5DCXGg1SlPPkoAZByShM/s1600/bigstock-Social-Media-Button-Concept-37904248.jpg" imageanchor="1" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgEHwKd7Y_6wmLyDZ-lexX4w-LzyUEiwz8-lz49tfuVBpaUoApenaortGvrkeL8sNvKNSIkowF9r2EYB_xKSc06VtehETWNICqzDVkKuXp129KoiXi6Q6dOv6A5DCXGg1SlPPkoAZByShM/s200/bigstock-Social-Media-Button-Concept-37904248.jpg" height="133" width="200" /></a></div>
<h3>
<span class="Apple-style-span" style="color: blue;">INNOVATION</span></h3>
<h3>
<br /></h3>
<h3>
Expectations from today's consumer are outpacing the ability for banks and credit unions to keep up. The digital consumer is hyper-connected, highly informed and demands a highly personalized approach with regards to communication, product development and customer service.</h3>
<h3>
<br /></h3>
<h3>
On January 13, 2014, I was the featured guest for a global Twitter chat hosted by <a href="https://twitter.com/IBMbigdata">@IBMbigdata</a> entitled, "Customer Experience Innovation in Banking". During the hour, there were 158 participants, 1,095 posts and over 6M impressions!</h3>
<h3>
<br /></h3>
<h3>
Below is a sampling of the interchange (including my responses)</h3>
<div>
<blockquote class="twitter-tweet tw-align-center" lang="en">
More than half <a href="https://twitter.com/search?q=%23bank&src=hash">#bank</a> customers’ interactions on avg took place through online or mobile channels ~ <a href="https://twitter.com/BainAlerts">@BainAlerts</a> so Q1 >> <a href="https://twitter.com/search?q=%23CXO&src=hash">#CXO</a><br />
— IBM big data (@IBMbigdata) <a href="https://twitter.com/IBMbigdata/statuses/422775878838284289">January 13, 2014</a></blockquote>
<br />
<script async="" charset="utf-8" src="//platform.twitter.com/widgets.js"></script>
</div>
<div>
<h3>
<span class="Apple-style-span" style="font-family: inherit;">Q1: How does today's customer behavior and expectations in a constantly changing technological world impact banks?</span></h3>
<blockquote class="twitter-tweet tw-align-center" lang="en">
<div style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px;">
<span class="Apple-style-span" style="font-family: inherit;">A1: Customer 3.0 banking expectations based on verticals like retail. Wants mobile money mgt. not just access to accounts. <a href="https://twitter.com/search?q=%23CXO&src=hash">#CXO</a></span></div>
<div style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px;">
<span class="Apple-style-span" style="font-family: inherit;">— Jim Marous (@JimMarous) <a href="https://twitter.com/JimMarous/statuses/422776008019046400">January 13, 2014</a></span></div>
</blockquote>
<br />
<div style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px;">
</div>
<blockquote class="twitter-tweet tw-align-center" lang="en">
<div style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px;">
<span class="Apple-style-span" style="font-family: inherit;">We’re in age where customers are armed w/ info & dictate service – 2 them service w/o instant = lacking A1 <a href="https://twitter.com/search?q=%23cxo&src=hash">#cxo</a> <a href="https://twitter.com/search?q=%23banking&src=hash">#banking</a></span></div>
<div style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px;">
<span class="Apple-style-span" style="font-family: inherit;">— Natasha Bishop (@Natasha_D_G) <a href="https://twitter.com/Natasha_D_G/statuses/422776210049867776">January 13, 2014</a></span></div>
</blockquote>
<br />
<div style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px;">
</div>
<blockquote class="twitter-tweet tw-align-center" lang="en">
<div style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px;">
<span class="Apple-style-span" style="font-family: inherit;">A1: Like Netflix and Amazon, bank consumers want their needs anticipated. <a href="https://twitter.com/search?q=%23bigdata&src=hash">#bigdata</a> <a href="https://twitter.com/search?q=%23banking&src=hash">#banking</a> <a href="https://twitter.com/search?q=%23CXO&src=hash">#CXO</a></span></div>
<div style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px;">
<span class="Apple-style-span" style="font-family: inherit;">— Bob Palmer (@bigdatabusiness) <a href="https://twitter.com/bigdatabusiness/statuses/422776370029412352">January 13, 2014</a></span></div>
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<blockquote class="twitter-tweet tw-align-center" lang="en">
<span class="Apple-style-span" style="font-family: inherit;">A1: Biggest challenge for traditional banks is . . . tradition. Legacy systems, processes and mindsets <a href="https://twitter.com/search?q=%23CXO&src=hash">#CXO</a></span><br />
<span class="Apple-style-span" style="font-family: inherit;">— Jim Marous (@JimMarous) <a href="https://twitter.com/JimMarous/statuses/422776161010466816">January 13, 2014</a></span></blockquote>
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<blockquote class="twitter-tweet tw-align-center" lang="en">
A1: <a href="https://twitter.com/search?q=%23CXO&src=hash">#CXO</a> Customers expect online commerce--facilitated by e-banking--to become core of all transactions.<br />
— jameskobielus (@jameskobielus) <a href="https://twitter.com/jameskobielus/statuses/422776691845382144">January 13, 2014</a></blockquote>
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<blockquote class="twitter-tweet tw-align-center" lang="en">
Not only seamless online transactions but also seamless online SECURITY. <a href="https://twitter.com/search?q=%23cxo&src=hash">#cxo</a> A1<br />
— Lois Martin (@LoisMarketing) <a href="https://twitter.com/LoisMarketing/statuses/422776884225511424">January 13, 2014</a></blockquote>
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<h3>
Q2: How can FIs improve the customer experience as customers move from the branch to digital channels?</h3>
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<blockquote class="twitter-tweet tw-align-center" lang="en">
A2: Moving from branches to digital in banking must include contextual engagement. Who/where am I. <a href="https://twitter.com/search?q=%23CXO&src=hash">#CXO</a><br />
— Jim Marous (@JimMarous) <a href="https://twitter.com/JimMarous/statuses/422777775117053953">January 13, 2014</a></blockquote>
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<blockquote class="twitter-tweet tw-align-center" lang="en">
A2 Banks need to build relationships with customers using digital, It's not just about tools to transact, but tools to communicate. <a href="https://twitter.com/search?q=%23CXO&src=hash">#CXO</a><br />
— Ben Pankonin (@benpankonin) <a href="https://twitter.com/benpankonin/statuses/422778015903260672">January 13, 2014</a></blockquote>
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<blockquote class="twitter-tweet tw-align-center" lang="en">
A2: Need to move from today's branch-based banking COMPLEXITY to mobile money management SIMPLICITY <a href="https://twitter.com/search?q=%23CXO&src=hash">#CXO</a><br />
— Jim Marous (@JimMarous) <a href="https://twitter.com/JimMarous/statuses/422778027203100672">January 13, 2014</a></blockquote>
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<blockquote class="twitter-tweet tw-align-center" lang="en">
A2: <a href="https://twitter.com/search?q=%23CXO&src=hash">#CXO</a> FIs can improve <a href="https://twitter.com/search?q=%23CX&src=hash">#CX</a> in switch to <a href="https://twitter.com/search?q=%23digital&src=hash">#digital</a> channels by fine-tuning mobile app <a href="https://twitter.com/search?q=%23UX&src=hash">#UX</a> to be intuitive, simple, reliable.<br />
— jameskobielus (@jameskobielus) <a href="https://twitter.com/jameskobielus/statuses/422778087332278272">January 13, 2014</a></blockquote>
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<blockquote class="twitter-tweet tw-align-center" lang="en">
A2: Banking would be best served to start from scratch on what they think customers want & focus on todays <a href="https://twitter.com/search?q=%23Mobile&src=hash">#Mobile</a> connected UI <a href="https://twitter.com/search?q=%23CXO&src=hash">#CXO</a><br />
— Brian Fanzo (@iSocial_Fanz) <a href="https://twitter.com/iSocial_Fanz/statuses/422778262666760193">January 13, 2014</a></blockquote>
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<blockquote class="twitter-tweet tw-align-center" lang="en">
A2 real winners communicate effectively across all channels but let consumers have a role based on preferences <a href="https://twitter.com/search?q=%23cxo&src=hash">#cxo</a><br />
— Joseph Ruiz (@SMSJOE) <a href="https://twitter.com/SMSJOE/statuses/422778322347905024">January 13, 2014</a></blockquote>
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Consumers demand more than balances & products online. They expect banks 2 know them & their needs on all channels. <a href="https://twitter.com/search?q=%23CXO&src=hash">#CXO</a> <a href="https://twitter.com/search?q=%23bigdata&src=hash">#bigdata</a> <a href="https://twitter.com/search?q=%23banking&src=hash">#banking</a><br />
— Bob Palmer (@bigdatabusiness) <a href="https://twitter.com/bigdatabusiness/statuses/422778940068200448">January 13, 2014</a></blockquote>
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<h3>
Q3: How do banks, steeped in traditions, established product lines and culture, innovate?</h3>
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<blockquote class="twitter-tweet tw-align-center" lang="en">
All biz including <a href="https://twitter.com/search?q=%23banks&src=hash">#banks</a> must be able to shift and bend with mrkt changes or be left behind A3: <a href="https://twitter.com/search?q=%23cxo&src=hash">#cxo</a> <a href="https://twitter.com/search?q=%23innovation&src=hash">#innovation</a><br />
— Natasha Bishop (@Natasha_D_G) <a href="https://twitter.com/Natasha_D_G/statuses/422779887770820609">January 13, 2014</a></blockquote>
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<blockquote class="twitter-tweet tw-align-center" lang="en">
A3 It takes a *really* strong C-level commitment to assign resources + give air cover for innovation + change. <a href="https://twitter.com/search?q=%23CXO&src=hash">#CXO</a><br />
— Stephanie Thum (@stephaniethum) <a href="https://twitter.com/stephaniethum/statuses/422779949712302080">January 13, 2014</a></blockquote>
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A3: Biggest anchor to innovation in banking is legacy back office. Second anchor is legacy management. <a href="https://twitter.com/search?q=%23CXO&src=hash">#CXO</a><br />
— Jim Marous (@JimMarous) <a href="https://twitter.com/JimMarous/statuses/422779951830822912">January 13, 2014</a></blockquote>
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<blockquote class="twitter-tweet tw-align-center" lang="en">
A3 Often innovation in <a href="https://twitter.com/search?q=%23banking&src=hash">#banking</a> starts with not being limited by restricted PoV of "being a bank" <a href="https://twitter.com/search?q=%23CXO&src=hash">#CXO</a><br />
— Jenni Palocsik (@jpalocsik) <a href="https://twitter.com/jpalocsik/statuses/422780025793167360">January 13, 2014</a></blockquote>
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<blockquote class="twitter-tweet tw-align-center" lang="en">
<a href="https://twitter.com/search?q=%23CXO&src=hash">#CXO</a> A3: Successful big data means you hear what you listen for and act on it in real time. Context, currency, consistency are key outcomes.<br />
— Ben Watson (@bitpakkit) <a href="https://twitter.com/bitpakkit/statuses/422779727128969217">January 13, 2014</a></blockquote>
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<blockquote class="twitter-tweet tw-align-center" lang="en">
A3: Would be interesting to know how many banks have a customer experience map to illustrate the cust. view. I'm guessing few/none <a href="https://twitter.com/search?q=%23CXO&src=hash">#CXO</a><br />
— David Mitzenmacher (@davemitz) <a href="https://twitter.com/davemitz/statuses/422780890452742144">January 13, 2014</a></blockquote>
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<blockquote class="twitter-tweet tw-align-center" lang="en">
A3: Banks can use customer data to provide more contextually relevant offerings to their customers based upon demographic/patterns | <a href="https://twitter.com/search?q=%23CXO&src=hash">#CXO</a><br />
— Brian Vickery (@dbvickery) <a href="https://twitter.com/dbvickery/statuses/422781078886445056">January 13, 2014</a></blockquote>
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<h3>
Q4: What steps should banks take to utilize all information assets for a comprehensive understanding of markets and customers?</h3>
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<blockquote class="twitter-tweet tw-align-center" lang="en">
A4: Banks should start with 1) Demographic 2) Account level 3) Transactional 4) Behavioral before moving to 5) Social <a href="https://twitter.com/search?q=%23CXO&src=hash">#CXO</a><br />
— Jim Marous (@JimMarous) <a href="https://twitter.com/JimMarous/statuses/422781610589945856">January 13, 2014</a></blockquote>
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<blockquote class="twitter-tweet tw-align-center" lang="en">
A4 good engagement strategy educates as part of the communications process <a href="https://twitter.com/search?q=%23cxo&src=hash">#cxo</a><br />
— Joseph Ruiz (@SMSJOE) <a href="https://twitter.com/SMSJOE/statuses/422781574900641793">January 13, 2014</a></blockquote>
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<blockquote class="twitter-tweet tw-align-center" lang="en">
A4: Most important - get the information in a useful manner onto the frontlines. Enable staff. Empower experiences. <a href="https://twitter.com/search?q=%23cxo&src=hash">#cxo</a><br />
— Ben Watson (@bitpakkit) <a href="https://twitter.com/bitpakkit/statuses/422781693053792257">January 13, 2014</a></blockquote>
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<blockquote class="twitter-tweet tw-align-center" lang="en">
While new tech can be disrupting, smart banks will adopt big data tech in a measured way for better analytics and efficiency. <a href="https://twitter.com/search?q=%23CXO&src=hash">#CXO</a> <a href="https://twitter.com/search?q=%23bigdata&src=hash">#bigdata</a><br />
— Bob Palmer (@bigdatabusiness) <a href="https://twitter.com/bigdatabusiness/statuses/422782005684994048">January 13, 2014</a></blockquote>
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<blockquote class="twitter-tweet tw-align-center" lang="en">
A4 Biggest need is very basic--a full-on mindset shift is required. Must consider new ways of doing biz. Not everybody "gets" it. <a href="https://twitter.com/search?q=%23CXO&src=hash">#CXO</a><br />
— Stephanie Thum (@stephaniethum) <a href="https://twitter.com/stephaniethum/statuses/422782184219344897">January 13, 2014</a></blockquote>
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<blockquote class="twitter-tweet tw-align-center" lang="en">
<a href="https://twitter.com/search?q=%23cxo&src=hash">#cxo</a> <a href="https://twitter.com/search?q=%23innovation&src=hash">#innovation</a> A4: Agile is not simply an option, its a matter of survival.<br />
— Ben Watson (@bitpakkit) <a href="https://twitter.com/bitpakkit/statuses/422782387567595520">January 13, 2014</a></blockquote>
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<blockquote class="twitter-tweet tw-align-center" lang="en">
A4: <a href="https://twitter.com/search?q=%23CXO&src=hash">#CXO</a> Banks need to incorporate customer survey data into their <a href="https://twitter.com/search?q=%23CX&src=hash">#CX</a> strategy--e.g., prompt agents & tellers to solicit/record it.<br />
— jameskobielus (@jameskobielus) <a href="https://twitter.com/jameskobielus/statuses/422783066185015297">January 13, 2014</a></blockquote>
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<h3>
Q5: How can banks leverage data from empowered customers to uncover innovative ideas?</h3>
<div>
<blockquote class="twitter-tweet tw-align-center" lang="en">
A5: Many banks have developed 'innovation labs' with help from customers. <a href="https://twitter.com/BBVACompass">@BBVACompass</a> <a href="https://twitter.com/Chase">@Chase</a> <a href="https://twitter.com/search?q=%23CXO&src=hash">#CXO</a><br />
— Jim Marous (@JimMarous) <a href="https://twitter.com/JimMarous/statuses/422783229406744576">January 13, 2014</a></blockquote>
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<blockquote class="twitter-tweet tw-align-center" lang="en">
A5 - Consumers are bank’s best source of innovative ideas. Listen to them. Engage them. <a href="https://twitter.com/search?q=%23CXO&src=hash">#CXO</a> <a href="https://twitter.com/search?q=%23bigdata&src=hash">#bigdata</a> <a href="https://twitter.com/search?q=%23banking&src=hash">#banking</a><br />
— Bob Palmer (@bigdatabusiness) <a href="https://twitter.com/bigdatabusiness/statuses/422783400928628737">January 13, 2014</a></blockquote>
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<blockquote class="twitter-tweet tw-align-center" lang="en">
A5: Third party organizations can also assist in innovation <a href="https://twitter.com/BankInnovators">@BankInnovators</a> <a href="https://twitter.com/FinTechInnoLab">@FinTechInnoLab</a> <a href="https://twitter.com/IBMBanking">@IBMBanking</a> (shameless plug) <a href="https://twitter.com/search?q=%23CXO&src=hash">#CXO</a><br />
— Jim Marous (@JimMarous) <a href="https://twitter.com/JimMarous/statuses/422783437062545408">January 13, 2014</a></blockquote>
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<blockquote class="twitter-tweet tw-align-center" lang="en">
A5: Banks should monitor social channels, and app reviews, to see what consumers are ASKING for - of them AND their competitors <a href="https://twitter.com/search?q=%23CXO&src=hash">#CXO</a><br />
— Brian Vickery (@dbvickery) <a href="https://twitter.com/dbvickery/statuses/422783614620033024">January 13, 2014</a></blockquote>
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<blockquote class="twitter-tweet tw-align-center" lang="en">
A5: <a href="https://twitter.com/search?q=%23CXO&src=hash">#CXO</a> <a href="https://twitter.com/search?q=%23Banks&src=hash">#Banks</a> need to tap customer data to profile/respond to life-milestone financial needs (eg retirement) well in advance.<br />
— jameskobielus (@jameskobielus) <a href="https://twitter.com/jameskobielus/statuses/422783948427493376">January 13, 2014</a></blockquote>
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<blockquote class="twitter-tweet tw-align-center" lang="en">
A5 Enable customers and get out of the way <a href="https://twitter.com/search?q=%23CXO&src=hash">#CXO</a> <a href="https://twitter.com/search?q=%23Platform&src=hash">#Platform</a><br />
— Marcio Rodrigues (@MarcioOnTW) <a href="https://twitter.com/MarcioOnTW/statuses/422784177545560064">January 13, 2014</a></blockquote>
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<blockquote class="twitter-tweet tw-align-center" lang="en">
A5: Innovative banking ideas are all around us. My Digital Banking Nirvana <a href="http://t.co/zuoYWlbUtr">http://t.co/zuoYWlbUtr</a> <a href="https://twitter.com/search?q=%23CXO&src=hash">#CXO</a><br />
— Jim Marous (@JimMarous) <a href="https://twitter.com/JimMarous/statuses/422784465950474240">January 13, 2014</a></blockquote>
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<h3>
Q6: Should banks use tools from other industries such as instant mobile video support?</h3>
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<blockquote class="twitter-tweet tw-align-center" lang="en">
A6: <a href="https://twitter.com/amazon">@Amazon</a>'s <a href="https://twitter.com/search?q=%23Mayday&src=hash">#Mayday</a> live video customer support could revolutionize banking <a href="http://t.co/1YCkpJ1FcY">http://t.co/1YCkpJ1FcY</a> <a href="https://twitter.com/search?q=%23CXO&src=hash">#CXO</a><br />
— Jim Marous (@JimMarous) <a href="https://twitter.com/JimMarous/statuses/422784864266772481">January 13, 2014</a></blockquote>
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<blockquote class="twitter-tweet tw-align-center" lang="en">
<a href="https://twitter.com/search?q=%23cxo&src=hash">#cxo</a> <a href="https://twitter.com/search?q=%23innovation&src=hash">#innovation</a> Noted that the regulatory/compliance card is being played as an excuse for not innovating too often by tired, old marketers<br />
— Ben Watson (@bitpakkit) <a href="https://twitter.com/bitpakkit/statuses/422785170681233408">January 13, 2014</a></blockquote>
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<blockquote class="twitter-tweet tw-align-center" lang="en">
<a href="https://twitter.com/search?q=%23Banks&src=hash">#Banks</a> should def look at other industries so they veer from staid to innovative. A6 <a href="https://twitter.com/search?q=%23CXO&src=hash">#CXO</a><br />
— Natasha Bishop (@Natasha_D_G) <a href="https://twitter.com/Natasha_D_G/statuses/422785147675496448">January 13, 2014</a></blockquote>
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<blockquote class="twitter-tweet tw-align-center" lang="en">
A6: <a href="https://twitter.com/search?q=%23CXO&src=hash">#CXO</a> Banks SHOULD NOT offer instant mobile video interactions. Video adds no value to FI B2C relationship mgt.<br />
— jameskobielus (@jameskobielus) <a href="https://twitter.com/jameskobielus/statuses/422785249731293184">January 13, 2014</a></blockquote>
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<blockquote class="twitter-tweet tw-align-center" lang="en">
A6 FTR, we should *all* be looking at best practices in other industries. Not just banks. Just saying. <a href="https://twitter.com/search?q=%23CXO&src=hash">#CXO</a><br />
— Stephanie Thum (@stephaniethum) <a href="https://twitter.com/stephaniethum/statuses/422785575112818689">January 13, 2014</a></blockquote>
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<blockquote class="twitter-tweet tw-align-center" lang="en">
A6 most customers have a screen - mobile, pc, tablet - why not use it to interact with customers, wherever they are? <a href="https://twitter.com/search?q=%23CXO&src=hash">#CXO</a><br />
— Marcio Rodrigues (@MarcioOnTW) <a href="https://twitter.com/MarcioOnTW/statuses/422786476858822656">January 13, 2014</a></blockquote>
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<h3>
Q7: What specific innovations can assist with improving the customer experience within banks?</h3>
<div>
<blockquote class="twitter-tweet tw-align-center" lang="en">
A7: Bank customers are not looking for added innovations but reduced steps to interact <a href="https://twitter.com/search?q=%23Simplicity&src=hash">#Simplicity</a> <a href="https://twitter.com/search?q=%23CXO&src=hash">#CXO</a><br />
— Jim Marous (@JimMarous) <a href="https://twitter.com/JimMarous/statuses/422786637589147648">January 13, 2014</a></blockquote>
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<blockquote class="twitter-tweet tw-align-center" lang="en">
A6: <a href="https://twitter.com/search?q=%23CXO&src=hash">#CXO</a> There's point beyond which consumer trust begins 2 fray if bank innov8s TOO MUCH (eg video). FI value in its stability<br />
— jameskobielus (@jameskobielus) <a href="https://twitter.com/jameskobielus/statuses/422786806166212608">January 13, 2014</a></blockquote>
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<blockquote class="twitter-tweet tw-align-center" lang="en">
A7: Great examples of <a href="https://twitter.com/search?q=%23simplicity&src=hash">#simplicity</a> in banking include use of mobile photo capabilities by <a href="https://twitter.com/miteksystems">@miteksystems</a> and <a href="https://twitter.com/Kofax">@Kofax</a> <a href="https://twitter.com/search?q=%23CXO&src=hash">#CXO</a><br />
— Jim Marous (@JimMarous) <a href="https://twitter.com/JimMarous/statuses/422786860784820224">January 13, 2014</a></blockquote>
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<blockquote class="twitter-tweet tw-align-center" lang="en">
<a href="https://twitter.com/search?q=%23cxo&src=hash">#cxo</a> <a href="https://twitter.com/search?q=%23innovation&src=hash">#innovation</a> A7: Multi-channel/cross-channel experience handoffs e.g. in-branch connected experience, digital -> human escalation paths<br />
— Ben Watson (@bitpakkit) <a href="https://twitter.com/bitpakkit/statuses/422787957532016641">January 13, 2014</a></blockquote>
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<blockquote class="twitter-tweet tw-align-center" lang="en">
A7: Its time to completely reinvent mobile banking as it is offered today. <a href="https://twitter.com/Moven">@Moven</a> <a href="https://twitter.com/simple">@Simple</a> <a href="https://twitter.com/soon">@soon</a> get it. <a href="http://t.co/CZCZ5jjWPF">http://t.co/CZCZ5jjWPF</a> <a href="https://twitter.com/search?q=%23CXO&src=hash">#CXO</a><br />
— Jim Marous (@JimMarous) <a href="https://twitter.com/JimMarous/statuses/422787957846974464">January 13, 2014</a></blockquote>
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<blockquote class="twitter-tweet tw-align-center" lang="en">
A7: Contextual assistance that leverages a customer's actions. <a href="https://twitter.com/search?q=%23CXO&src=hash">#CXO</a><br />
— WhatsNexx Moments (@whatsnexx) <a href="https://twitter.com/whatsnexx/statuses/422788219651231744">January 13, 2014</a></blockquote>
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<h3>
Q8: How can banks master Customer 3.0 and prepare for Customer2020?</h3>
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<blockquote class="twitter-tweet tw-align-center" lang="en">
A8: Immediate <a href="https://twitter.com/search?q=%23CX&src=hash">#CX</a> needs for banking: 1) Interaction simplicity 2) Contextual engagement 3) Seamless channel integration <a href="https://twitter.com/search?q=%23CXO&src=hash">#CXO</a><br />
— Jim Marous (@JimMarous) <a href="https://twitter.com/JimMarous/statuses/422788387029151744">January 13, 2014</a></blockquote>
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<blockquote class="twitter-tweet tw-align-center" lang="en">
A8: Immediate <a href="https://twitter.com/search?q=%23CX&src=hash">#CX</a> needs for banking: 1) Interaction simplicity 2) Contextual engagement 3) Seamless channel integration <a href="https://twitter.com/search?q=%23CXO&src=hash">#CXO</a><br />
— Jim Marous (@JimMarous) <a href="https://twitter.com/JimMarous/statuses/422788387029151744">January 13, 2014</a></blockquote>
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<blockquote class="twitter-tweet tw-align-center" lang="en">
A8 Get a Chief Cusotmer Officer who will keep pushing ahead/pushing buttons. <a href="https://twitter.com/search?q=%23CXO&src=hash">#CXO</a><br />
— Stephanie Thum (@stephaniethum) <a href="https://twitter.com/stephaniethum/statuses/422788812498931712">January 13, 2014</a></blockquote>
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<blockquote class="twitter-tweet tw-align-center" lang="en">
A8: <a href="https://twitter.com/search?q=%23CXO&src=hash">#CXO</a> The typical <a href="https://twitter.com/search?q=%23bank&src=hash">#bank</a> customer of 2020 will be a Millennial who has never set foot in a physical bank branch.<br />
— jameskobielus (@jameskobielus) <a href="https://twitter.com/jameskobielus/statuses/422788854966280193">January 13, 2014</a></blockquote>
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<blockquote class="twitter-tweet tw-align-center" lang="en">
A8: <a href="https://twitter.com/search?q=%23Customer2020&src=hash">#Customer2020</a> - No wallets, no bank visits, instant access to account and banker 24/7/365. Always on money management. <a href="https://twitter.com/search?q=%23CXO&src=hash">#CXO</a><br />
— Jim Marous (@JimMarous) <a href="https://twitter.com/JimMarous/statuses/422789416151961600">January 13, 2014</a></blockquote>
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<blockquote class="twitter-tweet tw-align-center" lang="en">
A8 <a href="https://twitter.com/search?q=%23CXO&src=hash">#CXO</a> bank is something <a href="https://twitter.com/search?q=%23Customer2020&src=hash">#Customer2020</a> does, not somewhere they go.<br />
— Mike King (@bankwide) <a href="https://twitter.com/bankwide/statuses/422789830792474624">January 13, 2014</a></blockquote>
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<blockquote class="twitter-tweet tw-align-center" lang="en">
A8: Place the 'branch experience' in settings where it is convenient and practical for banks and consumers. <a href="https://twitter.com/search?q=%23CXO&src=hash">#CXO</a><br />
— Mark Salke (@marksalke) <a href="https://twitter.com/marksalke/statuses/422790095666556928">January 13, 2014</a></blockquote>
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<h3>
Additional Resources</h3>
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<div>
<i><a href="http://jimmarous.blogspot.com/2013/11/customer-30-how-banks-must-leverage-digital-mobile-media.html">Is Your Bank Ready for Customer 3.0?</a></i> - Bank Marketing Strategy (Nov 2013)</div>
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<i><a href="http://public.dhe.ibm.com/common/ssi/ecm/en/bkw03012usen/BKW03012USEN.PDF">Banking on the Future</a></i> - IBM (2013)</div>
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<i><a href="http://www.jimmarous.blogspot.com/2014/01/amazon-mayday-mobile-banking-customer-experience-support.html">Amazon's Mayday Button Could Revolutionize Banking</a> </i>- Bank Marketing Strategy (Jan. 2014)</div>
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Anonymoushttp://www.blogger.com/profile/05424097007271218756noreply@blogger.com0tag:blogger.com,1999:blog-8930153101988441660.post-22441987363040530992014-01-12T04:16:00.000-05:002014-01-21T16:26:46.709-05:00It's Time to Reinvent Mobile Banking<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjp_4eLGB-JUkBWshpqu-kVCKOPQxjxU27cKVvN2vXTPn0Bqb0ohaWF_hN13UmljqttkmA2hceMYBIvWh9QlWCRbm-BVLehgyVJN7CyKQ6TJcIwkaljSbrjMhII5XJso6qDfLHvf-i1h_A/s1600/bigstock-Locked-phone-11727812.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjp_4eLGB-JUkBWshpqu-kVCKOPQxjxU27cKVvN2vXTPn0Bqb0ohaWF_hN13UmljqttkmA2hceMYBIvWh9QlWCRbm-BVLehgyVJN7CyKQ6TJcIwkaljSbrjMhII5XJso6qDfLHvf-i1h_A/s1600/bigstock-Locked-phone-11727812.jpg" height="200" width="170" /></a></div>
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MOBILE STRATEGIES</span></h3>
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It's time to shut down the mobile banking operations at most banks. I say this after watching the development of mobile banking sites worldwide and realizing that most traditional banks don't understand the needs of the consumers they serve or the competition they face.</h3>
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Mobile banking should <i>not</i> be a delivery channel for branch-based banking. It should be a contextual experience, with a clean design, simple interface and engaging platform to manage money. Unfortunately, most mobile banking sites look like miniaturized online banking websites. This is a problem as we try to serve <a href="http://jimmarous.blogspot.com/2013/11/customer-30-how-banks-must-leverage-digital-mobile-media.html">Customer 3.0</a>.</h3>
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Last week, <a href="http://translate.google.com/translate?hl=en&sl=fr&u=http://www.axabanque.fr/&prev=/search%3Fq%3Daxa%2Bbanque%26client%3Dsafari%26rls%3Den">AXA Banque</a> in France launched a new 'mobile-first' offering called <a href="http://soon.fr/">Soon</a> (<a href="http://translate.google.com/translate?hl=en&sl=fr&u=http://soon.fr/&prev=/search%3Fq%3DAXA%2BSoon%26client%3Dsafari%26rls%3Den">website translated to English</a>). Similar to other pure-play mobile banks worldwide like <a href="http://www.moven.com/">Moven</a>, <a href="http://www.simple.com/">Simple</a>, <a href="http://www.gobank.com/">GoBank</a>, <a href="http://www.fidor.de/">Fidor</a>, <a href="http://www.hellobank.com/en/">Hello</a>, etc., Soon was initially introduced using a registration/invite model to allow for <span class="Apple-style-span" style="font-family: inherit;">orderly scalability. Not a bank as such, Soon is a set of services accessible via a mobile application and backed by AXA Bank.</span><br />
<span class="Apple-style-span" style="font-family: inherit;"><br /></span>
<span class="Apple-style-span" style="font-family: inherit;">In an exclu<span class="Apple-style-span" style="font-family: inherit;">sive interview with </span><a href="http://fr.linkedin.com/in/raphaelkrivine">Raphaël Krivine</a>, head of direct banking for AXA Banque, "We started to engage with users in mid-2013, presenting the concept of the offer and the main functionalities to get feedback and comments (especially via our introduction video). It was very useful for us to validate the overall concept and to finalize developments in the right direction." He continued, "The offer is now available for the people who registered last year as a way to thank them for having bee</span>n supportive from the very beginning.</div>
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<span class="Apple-style-span" style="font-family: inherit;">Unlike virtually all traditional mobile banking sites, Soon (and the neo-banks mentioned above) rethinks the way mobile banking is done by designing a bank for the sm</span>artphone as opposed to simply providing access to banking products through a mobile device. This was done at AXA by creating an entirely different brand and mobile platform within the bank. This allowed for an alternative digital infrastructure, a lean start-up mode, open architecture and the ability to view banking from the customer's (as opposed to the bank's) perspective.</div>
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With a significantly lower cost structure, the emergence of pure-play mobile banks feels like a similar trend in the 1990s when direct online banks were in vogue. Some of these banks still exist such as <a href="http://www.firstdirect.com/">First Direct</a> and <a href="http://www.ing.com/Our-Company.htm">ING</a> overseas and <a href="https://home.capitalone360.com/">Capital One 360</a> (originally ING Direct US), <a href="http://www.usaa.com/">USAA</a>, <a href="http://www.ally.com/">Ally</a> and <a href="http://www.discoverbank.com/">Discover Bank</a> in the U.S.<br />
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While many traditional banks have imitated some of the direct bank advantages, deposits at the top four direct banks have grown at three times the industry average according to <a href="http://www.tnsglobal.com/other-news/direct-banks-and-future-consumer-banking">TNS Global</a>. Interestingly, while once having a pricing advantage compared to traditional banks, consumers also rate these direct organizations as 'more convenient' than traditional bricks and mortar banks.<br />
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The question is, will traditional banks ever fully embrace the process of managing money through mobile as opposed to simply providing mobile access to accounts? Will they lose the 'convenience advantage' with the mobile channel also?<br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh90k2ES5t4GIwwrKb4Dnj81M2PuY4hyphenhyphenzApTFZe0KbIH9P_OMW4rn8qPUqfTdFVCnYAYvb3iWpfzTD2Uo6IDDQ4f83ozmq4UgKUFsmzGobE1vRCPPgFvycLLCqURPiPRQ866F4tVYkA9nQ/s1600/Banking+Distribution+Progression.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh90k2ES5t4GIwwrKb4Dnj81M2PuY4hyphenhyphenzApTFZe0KbIH9P_OMW4rn8qPUqfTdFVCnYAYvb3iWpfzTD2Uo6IDDQ4f83ozmq4UgKUFsmzGobE1vRCPPgFvycLLCqURPiPRQ866F4tVYkA9nQ/s640/Banking+Distribution+Progression.png" height="267" width="640" /></a></div>
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<h3>
The Soon Difference</h3>
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As with other pure-play mobile banks, Soon provides an entirely different user experience than traditional mobile banking. You can see it immediately in the simplicity of the design, the ease of interaction and the approach of the application. In fact, you can see it on the mobile banking sign-in <span class="Apple-style-span" style="font-family: inherit;">page where the interaction is personalized (can even be seen in the French version).</span><br />
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<span class="Apple-style-span" style="font-family: inherit;">"Soon has got the same mindset as Moven, GoBank or Simple because it aims to totally change the way to do banking, with a strong focus on UX," said Krivine in our interview. "Unlike some of the new mobile banks in the U.S., however, Soon is launched by an existing bank, with the strength of existing business processes and potential access to our wide range of products (i.e loans, mortgage)."</span></div>
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<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj7guBRbOggLASnvSpnWA9O1xor3pueB4Iio9GeKXyE5wDGZ9dI1wQ9OAwz9fDuqA3DdIsR2lYzGkU6l6GsgXPT-I_1KJTRu1vf_u6hLKRstHJN9K_yQ2wsVRHZz6Z59vwzsONZdDVm8vo/s1600/Home+Page+Comparison.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj7guBRbOggLASnvSpnWA9O1xor3pueB4Iio9GeKXyE5wDGZ9dI1wQ9OAwz9fDuqA3DdIsR2lYzGkU6l6GsgXPT-I_1KJTRu1vf_u6hLKRstHJN9K_yQ2wsVRHZz6Z59vwzsONZdDVm8vo/s320/Home+Page+Comparison.png" height="320" width="309" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;"><span class="Apple-style-span" style="font-size: small;"><i>Comparison between sign-in page of Soon and Wells Fargo</i></span><br />
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<span class="Apple-style-span" style="font-size: small;">Opening an account is as simple as snapping a picture. No more long forms or extended account opening process. With Soon, a new customer simply takes a picture of their identification, proof of residence (a bill sent to their home) and a evidentiary signature and the account is opened. Opening of associated savings account and a credit card is just as easy.</span></div>
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<span class="Apple-style-span" style="font-size: small;">Once an account is opened, the experience leverages many of the unique benefits of a pure-play mobile application. If the customer wants to save for a project or future expenditure, Soon uses a 'nudge' behavioral science approach, which encourages a customer to behave responsibly with encouragement provided along the way. Not only does the application help a customer save, but it looks at future planned expenses and upcoming revenue to determine if a current purchase should be made.</span></div>
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<span class="Apple-style-span" style="font-size: small;">The dynamic vision of providing a projection of purchasing power in real time is similar to the </span><span class="Apple-style-span" style="font-size: small;"><a href="http://thefinancialbrand.com/30428/7-reasons-to-love-gobank-jm/">GoBank 'fortune teller'</a></span><span class="Apple-style-span" style="font-size: small;"> and </span><span class="Apple-style-span" style="font-size: small;"><a href="https://www.simple.com/goals/">Simple's Safe-to-Spend</a></span><span class="Apple-style-span" style="font-size: small;"> features and very unlike a traditional mobile banking application that simply shows balances based on cleared items. An analogy would be the difference between looking out a front window to the future as opposed to the rearview mirror.</span></div>
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</tbody></table>
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<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgYtNphYheNDcwfro6Ib2y1_E-rqgGQbnB2RFWfN2JdFW04QMz7DCZZ5d7n7JWrD7HIzML0f6GyoVR3BKrQaW_jKvWlBfsDOv3aiC7JCcN1w_pWyBwHAYE_vAnGXLOr9y5XjpNcUgaWeRg/s1600/Soon+Safe-to-Spend.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgYtNphYheNDcwfro6Ib2y1_E-rqgGQbnB2RFWfN2JdFW04QMz7DCZZ5d7n7JWrD7HIzML0f6GyoVR3BKrQaW_jKvWlBfsDOv3aiC7JCcN1w_pWyBwHAYE_vAnGXLOr9y5XjpNcUgaWeRg/s320/Soon+Safe-to-Spend.png" height="320" width="176" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;"><span class="Apple-style-span" style="font-size: small;">As opposed to simply a current balance, Soon provides a Safe-to-Spend value</span></td></tr>
</tbody></table>
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Each transaction or project can be associated with a document or an image for better record-keeping and security. The simplicity of using the photo capability on a mobile phone adds to the convenience. Moreover, each purchase can also be associated with a comment, geolocation or even a 'mood' (smiley face or frown). Unlike many mobile banking applications, the Soon mobile app allows a customer to find previous expenses using natural language search.<br />
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<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhw_qgXJNGETwhnn7GOviX4sqoXS9xu9BGaa4qrY2W8qY1HF-swQrU4ZraXBpdh8GLV3wx8pCqDFZ45LXQtm0ZAPc-8lOV_9Mk6-xJ0OK5mTq7xOE5ccze2d5qjABdxhaOsXbgHFGjyWME/s1600/Soon+Spending.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhw_qgXJNGETwhnn7GOviX4sqoXS9xu9BGaa4qrY2W8qY1HF-swQrU4ZraXBpdh8GLV3wx8pCqDFZ45LXQtm0ZAPc-8lOV_9Mk6-xJ0OK5mTq7xOE5ccze2d5qjABdxhaOsXbgHFGjyWME/s320/Soon+Spending.png" height="320" width="154" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;"><span class="Apple-style-span" style="font-family: inherit; font-size: small;">Transactions can be associated with pictures, comments and even emotions</span></td></tr>
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Similar to <a href="http://www.bluebird.com/">Bluebird</a> from American Express, Soon provides its customers with both a checkbook and Visa card (debit) with an NFC functionality. P2P transfers between individuals can be done via PayPal automatically within the application for ease of payment (a partnership avoided by almost all U.S. banks).<br />
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<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg_qg9PE8vs0DkNxfdp9NtfT2Q84pqsYWhYmcWScU2-vssf5zV-i3j5sVKY6m3RsQFywlPIE2SnDYl6Y5QHLitLbOIlpFmBu9enHkD1ggk7qzUYo214RFSXk7aV7J_HrlWhPfmONmMkAxQ/s1600/Soon+Payments.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg_qg9PE8vs0DkNxfdp9NtfT2Q84pqsYWhYmcWScU2-vssf5zV-i3j5sVKY6m3RsQFywlPIE2SnDYl6Y5QHLitLbOIlpFmBu9enHkD1ggk7qzUYo214RFSXk7aV7J_HrlWhPfmONmMkAxQ/s320/Soon+Payments.png" height="320" width="169" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;"><span class="Apple-style-span" style="font-family: inherit; font-size: small;">P2P is made easy with the PayPal integration</span></td></tr>
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Customer support is one area I believe Soon falls a bit short from a mobile app perspective. Soon will provide support via advisors 24/6 by chat and 24/7 by email, but will not support calls or live chat (<a href="http://jimmarous.blogspot.com/2014/01/amazon-mayday-mobile-banking-customer-experience-support.html">like Amazon's Mayday</a>).<br />
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<h3>
Mobile-First Target Audience</h3>
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<span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;">As with most pure-play mobile banks, Soon is targeting smartphone users, (which is to say nearly everybody as the smartphone market continues t<span class="Apple-style-span">o expand rapidly). There may be a challenge for Soon, however, since recent research suggests that the </span>French seem to still be attached to the proximity of their physical bank, even if the general craze
for online and mobile seems to increase.</span><br />
<span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;"><span class="Apple-style-span"><br /></span></span><span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;"><span class="Apple-style-span">The benefit of being a division of AXA is clear in the Soon offer. "We expect our first customers to be among the digital nati</span></span>ves, because they are used to do anything with their smartphone, including banking," stated Krivine. "Nevertheless, we know that especially for the young people, it is very important to receive advice and support (for instance for loans), so Soon customers will benefit from the expertise of AXA branches (our core business model relies on insurance tied agents that choose to diversify their business with banking in order to develop customer loyalty). This is a fall-back option, but customers will have an option<span class="Apple-style-span" style="font-family: inherit;"> to go to a branch (using Soon apps that will integrate geolocalisation to find an agent)."</span><br />
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<iframe allowfullscreen="" class="aligncenter" frameborder="0" height="281" mozallowfullscreen="" src="//player.vimeo.com/video/75005085" webkitallowfullscreen="" width="500"></iframe> </div>
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<a href="http://vimeo.com/75005085">Soon - English subtitles</a> from <a href="http://vimeo.com/revolusoon">Soon</a> on <a href="https://vimeo.com/">Vimeo</a>.</div>
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<span class="Apple-style-span" style="font-family: inherit;">The Reinvention of Mobile Banking</span></h3>
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<span class="Apple-style-span" style="font-family: inherit;">Customer's behaviors are changing as they become more comfortable with the web and mobile devices. They are looking for simplicity, availability, real-time insight, contextual engagement and the ability to leverage social networks and enjoy gamification. They expect far greater transparency with the type of personalization they receive as they interact with other industries.</span></div>
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<span class="Apple-style-span" style="font-family: inherit;">Smartphones provide the technology and contextualization never before available. These devices open the door to a completely new way to manage money on the go. Instead of providing mobile access to an array of branch-based banking services, there is the potential to provide advice and real-time financial insight.</span></div>
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<span class="Apple-style-span" style="font-family: inherit;">Soon is not the first, but it is the latest in a string of mobile banking offerings where the design, functionality and customer experience is central to the offering. The question is whether traditional banks globally will embrace the potential of the mobile device to deliver much more than just balances and a narrow span of capabilities.</span></div>
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<span class="Apple-style-span" style="font-family: inherit;">Best selling author, speaker and founder of Moven, <a href="http://www.linkedin.com/in/brettking">Brett King</a> wonders if traditional banks can meet this challenge. "</span>US Banks are avoiding the digital trend worryingly. We have the BIG banks who are too big and too fragmented to come up <span class="Apple-style-span" style="font-family: inherit;">with a pure-play digital brand that might cannibalize their main brands. We have regional players who are too traditional in their approach. And we have smaller players who might be too small to think they can do this." "The U.S. right now is really slipping behind the Asia Pacific region and much of the rest of the world in terms of industry-wide innovation."</span></div>
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<span class="Apple-style-span" style="font-family: inherit;">With regard to the introduction of another mobile-first offering, King adds, "It is great to see that organizations like AXA are embracing digital engagement of customers. I think Soon is another great example of why simple, easy to use user experience is still a strong differentiator in retail banking today. While some might think that Soon.fr is a competitor to Moven, the reality is that we are part of an exclusive new club of disruptors creating an entirely new category of banking experience. We stick together, because it is the other banks who still insist on account opening in a branch, or think that mobile is about putting internet banking on a smaller screen who are the guys we're trying to unseat."</span></div>
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<span class="Apple-style-span" style="font-family: inherit;">Marketing Opportunity</span></h3>
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<span class="Apple-style-span" style="font-family: inherit;">Marketing needs a seat at the mobile banking design table. You need to have input as to whether your organization is going to continue to deliver mobile banking as an access tool or a money management tool. </span></div>
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<span class="Apple-style-span" style="font-family: inherit;">In the meantime, it is marketing's responsibility to promote mobile banking sign-up and usage whenever (and wherever) possible. Mobile banking customers are more engaged, own more services and are more loyal than customers without mobile banking.</span></div>
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<span class="Apple-style-span" style="font-family: inherit;">Additional Resources</span></h3>
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<span class="Apple-style-span" style="font-family: inherit;"><i><a href="http://www.tnsglobal.com/other-news/direct-banks-and-future-consumer-banking">Direct Banks and the Future of Consumer Banking</a></i> - TNS Global (Apr. 2013)</span><br />
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<i><a href="https://www.atkearney.com/paper/-/asset_publisher/dVxv4Hz2h8bS/content/id/3054977">Banking in a Digital World</a></i> - AT Kearney (Aug 2013)<br />
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Anonymoushttp://www.blogger.com/profile/05424097007271218756noreply@blogger.com1tag:blogger.com,1999:blog-8930153101988441660.post-52234297224724207952014-01-06T09:34:00.000-05:002014-01-13T03:05:24.029-05:00Top 8 Financial Marketing Resolutions For a Successful 2014<div class="separator" style="clear: both; text-align: center;">
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For the past three years, I have published an article on resolutions bank and credit union marketers should make for the upcoming year. While these posts have always been extremely popular and well read, many marketers still have difficulty achieving some of the most important resolutions.</h3>
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Despite this lack of success by some, I am again providing suggested resolutions for financial marketers since <a href="http://www.statisticbrain.com/new-years-resolution-statistics/">research</a> shows that people who make resolutions are ten times more likely to attain their goals.</h3>
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When I published my first financial marketing resolution post in 2011(<a href="http://jimmarous.blogspot.com/2011/01/ten-bank-marketer-resolutions-for-2011.html"><i>Ten Bank Marketer Resolutions for 2011</i></a>), the primary emphasis was on replacing lost fee income caused by the Card Act, Reg. E and the Durbin Amendment. Most of the other resolutions addressed ways to either generate new revenues or reduce costs. I did discuss the need to test social media marketing, deliver on the mobile banking promise and reconfigure the branch model, but these were not the highest priorities in 2011.<br />
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My resolution post for 2012 (<i><a href="http://jimmarous.blogspot.com/2012/01/10-resolutions-bank-marketers-cant.html">10 Resolutions Bank Marketers Can't Ignore in 2012</a></i>) enlisted the support of more than 20 global banking industry leaders to help develop suggested strategies for the upcoming year. While the focus of many of the resolutions were similar to the prior year (communication channel mix, customer centricity, social media testing and building share of wallet), discussion expanded to include the importance of leveraging big data and embracing innovation.<br />
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As with any list of resolutions, last year's banking industry leader crowdsourcing post (<i><a href="http://jimmarous.blogspot.com/2013/01/2013-bank-marketing-resolutions.html">22 Industry Leaders Provide New Years Resolutions for Bank Marketers</a></i>) included several resolutions from prior years that still presented a challenge, such as enhancing the customer experience, improving measurement of results, integrating the mobile channel and continuing to innovate. The major difference last year was the increasing importance of focus and grabbing the lower hanging fruit due to all of the distractions caused by new regulations and compliance initiatives.<br />
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This year, I again collected ideas from some of the most prominent names in the banking industry in the development of my top resolutions for financial marketers. I also researched trends in other industries that are served by my firm, <a href="http://www.newcontrol.com/">New Control</a>. While some of the suggested resolutions are similar to those in the past, the impact of digital shopping, big data, the mobile channel and a contextual customer experience is evident.<br />
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Resolutions are intended to represent major transformational shifts in behavior that will impact personal or professional success in the future. With that in mind, the following resolutions are what some of the best global marketers believe are important for financial institution marketers in 2014.<br />
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1. I will move some budget from offline channels to digital channels.</h3>
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With limited budgets and reduced response rates for almost all traditional marketing channels, there has never been a greater need to optimize marketing spend for bank and credit union marketers. One way to improve results is to supplement your investment in offline channels like direct mail, email and mass media with online tools that can improve results while decreasing costs.<br />
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One highly effective way to take advantage of the shift in the consumer's purchase funnel, where they begin their shopping experience online as opposed to in the branch, is to leverage digital retargeting. First discussed in a Bank Marketing Strategy article entitled, '<i><a href="https://www.blogger.com/9%20Marketing%20Resolutions%20for%202014%20by%20Amanda%20Batista%20on%20January%201,%202014%20in%20Marketing%20Efficiency%20%20Happy%20New%20Year!%20%20Now%20that%20you%E2%80%99re%20back%20at%20your%20desk%20and%20ready%20to%20put%202014%20marketing%20plans%20to%20work,%20here%20are%20some%20inspirational%20%E2%80%98resolutions%E2%80%99%20to%20help%20you%20recharge%20your%20strategy:%20%20Get%20to%20know%20your%20cohorts.%20While%20you%E2%80%99re%20already%20well%20acquainted%20with%20your%20fellow%20marketers,%20and%20even%20reps%20from%20your%20sales%20team,%20getting%20to%20know%20your%20other%20organizational%20counterparts%20can%20help%20you%20work%20a%20whole%20lot%20smarter.%20Aim%20to%20become%20versed%20in%20other%20areas%20of%20the%20business%20and%20leverage%20that%20insight%20in%20your%20customer%20experience%20optimization%20initiatives.%20Personalize%20at%20every%20possible%20touch%20point.%20In%20our%20lives%20as%20consumers%20we%E2%80%99ve%20come%20to%20expect%20communications%20and%20engagements%20that%20are%20meaningful.%20Personalization%20is%20a%20great%20way%20to%20establish%20and%20maintain%20the%20solid%20rapport%20that%20helps%20turn%20customers%20into%20advocates.%20Let%20technology%20inspire%20your%20next%20program.%20The%20old%20%E2%80%98work%20backwards%E2%80%99%20approach%20can%20help%20ignite%20your%20most%20creative%20marketing%20campaign%20yet.%20Let%20your%20imagination%20run%20wild%20and%20design%20a%20program%20based%20on%20an%20app%20or%20technology%20integration%20functionality.%20For%20instance,%20check%20out%20how%20Brandi%20Starr%20at%20Sage%20let%20Eloqua%20cloud%20connectors%20guide%20her%20campaign%20strategies.%20Start%20a%20research-based%20content%20marketing%20program.%20Conducting%20benchmark%20research%20%E2%80%94%20either%20independently%20or%20in%20conjunction%20with%20a%20third%20party%20%E2%80%94%20is%20a%20great%20way%20to%20support%20your%20thought%20leadership%20efforts.%20It%20also%20provides%20a%20great%20springboard%20for%20other%20important%20content%20marketing%20efforts.%20Consider%20establishing%20a%20research%20project%20to%20support%20your%20initiatives%20in%202014.%20Host%20a%20virtual%20event.%20While%20budgets%20don%E2%80%99t%20always%20permit%20you%20to%20host%20in-person%20events%20for%20all%20your%20geographical%20targets,%20virtual%20events%20provide%20a%20great%20alternative%20to%20bring%20your%20customers%20and%20communities%20together.%20Virtual%20event%20platforms%20also%20offer%20some%20unique%20benefits,%20such%20as%20transcripts%20from%20presentation%20content%20that%20can%20be%20used%20to%20fuel%20follow-up%20nurture%20programs.%20Sit%20in%20on%20an%20upcoming%20sales%20meeting.%20Sales%20forums%20are%20goldmines%20for%20marketers%20to%20glean%20insight%20into%20the%20challenges%20and%20triumphs%20that%20customers%20are%20sharing%20with%20field%20reps.%20Understanding%20how%20to%20formulize%20content%20that%20will%20enable%20your%20sales%20reps,%20as%20well%20as%20your%20customers,%20is%20dependent%20on%20your%20ability%20to%20do%20the%20research%20into%20what%20works%20and%20what%20does%20not.%20Build%20Twitter%20lists%20to%20organize%20insights%20by%20subjects.%20Twitter%20Lists%20are%20a%20great%20way%20to%20segment%20all%20the%20information%20constantly%20flowing%20in%20your%20Twitter%20feed.%20For%20instance,%20you%20can%20set%20up%20a%20list%20for%20your%20favorite%20subject%20matter%20experts%20or%20authors,%20as%20well%20as%20your%20customers%20for%20improved%20listening.%20Go%20to%20%E2%80%9CLists%E2%80%9D%20under%20account%20settings%20in%20your%20Twitter%20profile%20to%20get%20started%20making%20lists.%20Attend%20a%20networking%20event.%20Get%20to%20know%20other%20marketers%20in%20a%20casual%20setting.%20You%E2%80%99ll%20have%20the%20opportunity%20to%20exchange%20ideas%20and%20find%20inspiration%20for%20your%20next%20campaign,%20and%20make%20some%20new%20friends%20locally.%20Networking%20events%20also%20are%20helpful%20forums%20for%20finding%20new%20talent%20and%20vendor%20resources.%20Set%20a%20social%20point%20person%20on%20your%20team.%20If%20you%20don%E2%80%99t%20already%20have%20a%20dedicated%20social%20media%20or%20community%20manager,%20think%20about%20allocating%20the%20responsibilities%20to%20a%20new%20role,%20or%20assign%20an%20existing%20marketing%20team%20member%20the%20tasks%20of%20managing%20your%20social%20strategy.%20Hey,%20maybe%20you%E2%80%99ll%20meet%20a%20new%20social%20media%20manager%20at%20a%20networking%20event!%20Check%20out%20our%20social%20media%20tips%20for%202014%20for%20more.">Banks Include Retargeting as Part of Digital Marketing Strategy</a></i>' and also written about in a <a href="http://thefinancialbrand.com/34921/online-digital-retargeting-for-banks-credit-unions-jm/">guest post for The Financial Brand</a>, retargeting allows a financial marketer to improve the results of traditional marketing by reaching customers and prospects across their digital footprint in real time as they search the web on their computer or mobile device.<br />
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Providing additional touches at a fraction of the cost of traditional media, retargeting allows financial marketers to improve the results of direct mail acquisition or cross-sell campaigns, email programs, social media initiatives or other digital marketing programs while also reaching those prospects and customers who visit your web site or do searches in the financial services category.<br />
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While not stopping traditional direct mailings, customers of <a href="http://www.newcontrol.com/">New Control</a> have moved as much as half of their direct marketing budget to digital channels for one reason . . . it works in conjunction with offline media. That is why this is the first resolution for financial marketers in 2014.<br />
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2. I will engage with my customers on mobile channels. </h3>
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While referenced in previous resolution posts, the need to engage customers on both web and mobile channels has usually been more talk than action. Another relatively inexpensive initiative for bank and credit union marketers, the need to build engagement and sales across mobile touchpoints is akin to the first resolution regarding retargeting. </div>
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Financial marketers need to leverage the mobile banking platform they already control to reach out to customers with contextual offers that reflect their current relationship, transactional behavior and potentially even their location. With the advanced tools and technologies available, banks and credit unions are in a position to integrate highly personalized offers within mobile banking applications that reflect the next most likely product or service needed by a customer.</div>
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As discussed in my post entitled, '<a href="http://jimmarous.blogspot.com/2013/06/banks-accelerate-mobile-banking-innovation-mapa-research.html">Banks Accelerate Mobile Banking Innovation</a>', the most progressive banks are already monetizing their mobile channel by including custom product offers within their mobile banking application. In 2014, we will begin to see many more financial institutions enhance their merchant funded reward programs by taking advantage of location optimized offers that reflect both the customer's buying behavior as well as their specific location. </div>
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3. I won't get distracted by 'big data'.</h3>
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Thankfully, much of the hype has died down over the past 12 months, but there are still those who want to chase the next shiny object around big data. The key for 2014 is to capitalize on the ever growing silo of data already available within your organization. Sometimes referred to as structured data, this includes customer demographics, product ownership insight, transactional data, channel usage behavior as well as digital and social interactions with your organization.</div>
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In addition to narrowing the scope of data to more easily accessible insights within your firewalls, the importance of moving from data manipulation and reporting to data usage and application has never been more important. As I mentioned in my BankDirector.Com article entitled, '<i><a href="http://www.bankdirector.com/index.php/board-issues/technology/when-it-comes-to-bank-big-data-start-small/">When It Comes to Big Data, Start Small</a></i>', competitive advantage is achievable through the better <i>use </i>of data in the development of lifestage trigger cross-sell programs, optimal branch configuration, pricing decisions and risk and fraud monitoring.</div>
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In my travels, I have seen that only the very largest of financial institutions are effectively using unstructured (big) data in the development and implementation of marketing programs. For the rest of us, it is better to focus on using the data at our fingertips to improve targeting, communicating, building offers and measurement of results on a real-time (vs. campaign-based) basis.</div>
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4. I will innovate through simplification.</h3>
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According to Siegel + Gale's <a href="http://www.siegelgale.com/media_release/siegelgale-releases-its-fourth-annual-global-brand-simplicity-index-demonstrates-the-impact-of-simplicity-on-revenue-brand-loyalty-and-innovation-3/">Fourth Annual Brand Simplicity Index</a>, 75% of customers will recommend brands that provide a simple experience and use simple communications. In other words, if you offer products and services that make it easy to do business with you, your customers will spread the word.</div>
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Unfortunately, banks and credit unions sometimes equate innovation with 'adding on new bells and whistles'. Instead, 2014 should be the year we eliminate steps, simplify communication, and even simplify processes within your organization that can foster simplification and innovation.</div>
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Over the past few months, I referenced important innovations that simplified the customer experience when I reviewed the way <a href="http://www.miteksystems.com/">Mitek Systems</a> has leveraged the picture taking capability of a smartphone to remove steps from depositing checks, opening an account, transferring a credit card balance or completing forms ('<i><a href="http://www.siegelgale.com/media_release/siegelgale-releases-its-fourth-annual-global-brand-simplicity-index-demonstrates-the-impact-of-simplicity-on-revenue-brand-loyalty-and-innovation-3/">Banking Innovation for the Fat-Fingered</a></i>'). I also discussed research by <a href="http://www.atkearney.com/financial-institutions/featured-article/-/asset_publisher/j8IucAqMqEhB/content/reducing-complexity-in-retail-banking-simple-wins-every-time/10192">A.T. Kearney</a> and how <a href="http://www.53.com/">Fifth Third</a> increased sales and revenue by reducing their deposit services portfolio from 42 to 8 products ('<a href="http://jimmarous.blogspot.com/2013/10/bank-checking-savings-product-development-complexity-simplification-53.html">Bank Product Proliferation: Too Much of a Good Thing</a>'). </div>
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Innovating through simplification is not simple. It just takes a dedication to stripping away legacy steps and messages, leaving behind only key elements. But it is a necessary role for financial CMOs in the future as we try to respond to the needs of the digital consumer.</div>
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5. I will maximize the value of my current customers.</h3>
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Similar to the resolutions that most people have around losing weight or getting fit, the financial marketing resolution of maximizing the value of current customers needs to appear on each year's list of resolutions. This is not because bank and credit union marketers don't already make attempts in this area. It is because so many of the basic tenets of success are either missed or not allocated the appropriate human and/or financial resources.</div>
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In <a href="http://jimmarous.blogspot.com/2010/06/ten-steps-to-onboarding-success.html">2010</a>, <a href="http://jimmarous.blogspot.com/2011/04/business-case-for-onboarding.html">2011</a>, <a href="http://jimmarous.blogspot.com/2012/02/banks-and-credit-unions-focusing-on.html">2012</a> and again in <a href="http://jimmarous.blogspot.com/2013/02/improving-bank-onboarding-cross-selling-retention-personalized-videos.html">2013</a>, I provided the business case and steps required to implement a successful new customer onboarding program. In the next few weeks, I will update some of my recommendations to include digital and mobile components that can improve the important welcome process. Despite this emphasis (and documented financial success in the marketplace), more than half of the financial institutions still haven't introduced a multitouch, multichannel onboarding program that encourages engagement in the first 90 days of the relationship.<br />
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In addition, many financial institutions are not leveraging the customer insight they have at their disposal to build a real-time cross-sell process that is based on customer insight as opposed to product goals. It's time to break down the product silos at your organization and use trigger marketing to communicate to customers when their needs are highest as opposed to when your institution's needs are highest.</div>
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6. I will get actively involved in branch transformation efforts.</h3>
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As noted in my <i><a href="http://jimmarous.blogspot.com/2013/12/2014-top-bank-trends-predictions-forecast-digital-disruption.html">Top 10 Retail Banking Trends and Predictions for 2014</a></i>, while we may not be moving to a branchless banking environment anytime soon, it is clear we are moving to a 'less-branch' distribution structure due to the rapid acceptance of online and mobile banking and the resultant reduction in branch-based transactions.<br />
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Bank and credit union marketers may or may not be at the table during the discussions around branch transformation, but the outcome of these discussions will definitely impact customer communications. So make a resolution to get involved.<br />
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In the future, a customer will engage with our bank or credit union using multiple channels based on their needs and channel preferences. As noted in two 2013 posts entitled, '<a href="http://jimmarous.blogspot.com/2013/05/migrating-banking-customers-to-digital.html">Migrating Banking Customers to Digital Channels</a>' and '<a href="http://jimmarous.blogspot.com/2013/08/rethinking-multichannel-banking-customer-experience.html">Rethinking the Multichannel Banking Experience</a>', it is not a good strategy to 'force' a customer to use a specific channel. It is also clear that as a customer uses multiple channels (including digital channels within a physical branch), they will expect marketing communications to be consistent across channels.<br />
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Its time to become a holistic financial marketer, moving from developing programs for specific channels to supporting real-time marketing experience across all channels the customer may use.<br />
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7. I will <i>increase</i> my use of email.</h3>
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I realize that my resolution of moving budget from offline channels like direct mail, email, and other traditional channels to digital channels may sound counter to a resolution of increasing email, but it comes down to segmenting lists and improving the content of email, resulting in better leads. As one of the most important tactics in achieving the share of wallet goal in resolution 5, personalized emails can improve open rates by 14% and conversion rates by 10% according to <a href="http://offers.hubspot.com/marketing-predictions-2014">recent research</a> by Hubspot.</div>
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Despite Google's assault on email last year, the power of personalization, improved segmentation, linked videos ('<i><a href="http://jimmarous.blogspot.com/2013/02/improving-bank-onboarding-cross-selling-retention-personalized-videos.html">Improving Bank Onboarding, Cross-Selling and Retention With Personalized Video</a></i>') and improved response tools positions email as one of the strongest marketing tools for communicating to current customers.</div>
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It is time for financial marketing CMOs to demand the ability to effectively leverage the email channel at those institutions that have either restricted or severely limited the use of this channel.</div>
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8. I will assume the role of Chief Experience Officer.</h3>
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At the end of the day, all of the above resolutions will fail if your customer has a poor experience when engaging with your bank or credit union. Unfortunately, as technology has advanced, communication channels have multiplied and the customer has assumed control of the sales and engagement processes, the ability to 'manage' the customer experience is no longer viable. Instead, it becomes the CMOs role (or a designated team) to view your organization from the customer's perspective.<br />
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The good news is that the customer has the ability to share their (good or bad) feelings about your organization whenever they desire through a vast array of social channels or using various channels we have developed for transacting and communicating. The bad news is that most of this sharing is now done in public where the interaction can be viewed by hundreds of thousands of other unrelated people.<br />
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While the ultimate responsibility for the customer experience needs to reside in one place, the ongoing responsibility needs to be shared with everyone within the organization. When everyone feels empowered to 'make things right' with the customer, the customer usually wins.<br />
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<h3>
My Resolution</h3>
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Resolutions are usually only successful when they are embraced and measured. I only scratched the surface on resolutions I believe are important for 2014. I may have listed too many and I am sure I missed several.</div>
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T<span class="Apple-style-span" style="font-family: inherit;">he key is to make whatever resolutions you set central to what you want to achieve in the new year. In the meantime, I will be collecting research and insights on all of the resolutions above to help readers achieve the above goals using the experiences and findings of others.</span><br />
<span class="Apple-style-span" style="font-family: inherit;"><br />My resolution (beyond losing weight and becoming more fit) is:</span><br />
<span class="Apple-style-span" style="font-family: inherit;"><br /><b><span class="Apple-style-span" style="color: blue;">I will be the 'go to' resource needed by C-level executives and their teams for insights into the constantly changing retail banking marketplace.</span></b></span><br />
<span class="Apple-style-span" style="font-family: inherit;"><br />Good luck on your resolutions in 2014 and feel free to provide input into how I am doing on my resolution.</span><br />
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<span class="Apple-style-span" style="font-family: inherit; font-size: small;">
Ad</span>ditional Resources</h3>
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<a href="http://jimmarous.blogspot.com/2011/01/ten-bank-marketer-resolutions-for-2011.html" style="font-style: italic;">Ten Bank Marketer Resolutions for 2011</a> - Bank Marketing Strategy (Jan. 2011)<br />
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<a href="http://jimmarous.blogspot.com/2012/01/10-resolutions-bank-marketers-cant.html" style="font-style: italic;">10 Resolutions Bank Marketers Can't Ignore in 2012</a> - Bank Marketing Strategy (Jan. 2012)<br />
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<a href="http://jimmarous.blogspot.com/2013/01/2013-bank-marketing-resolutions.html" style="font-style: italic;">22 Industry Leaders Provide New Years Resolutions for Bank Marketers</a> - Bank Marketing Strategy (Jan. 2013)<br />
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<i><a href="http://www.statisticbrain.com/new-years-resolution-statistics/">New Years Resolution Statistics</a> -</i> Statistic Brain (Jan. 2014)<br />
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<i><a href="http://mashable.com/2013/12/20/marketing-resolutions-brandspeak/">5 New Years Resolutions for Marketers</a></i> - Mashable (Dec. 2013)<br />
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<i><a href="http://blog.hubspot.com/marketing/marketing-new-years-resolutions-list">7 Marketing Resolutions to Start The New Year Right</a></i> - Hubspot (Jan. 2014)<br />
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<i><a href="http://blog.eloqua.com/2014-marketing-resolutions/">9 Marketing Resolutions for 2014</a></i> - Eloqua (Jan. 2014)<br />
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<i><a href="http://offers.hubspot.com/marketing-predictions-2014">Marketing Predictions Hits and Misses for 2013 and 2014</a></i> - Hubspot (Jan 2014)<br />
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<i><a href="http://oharaproject.com/5-marketing-resolutions-for-2014/">5 Marketing Resolutions for 2014</a></i> - The O'Hara Project (Jan. 2014)<br />
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<i><a href="http://www.eweek.com/database/slideshows/digital-marketing-12-predictions-and-resolutions-for-2014.html/">Digital Marketing: 12 Predictions and Resolutions for 2014</a></i> - eWeek (Dec. 2013)</div>
Anonymoushttp://www.blogger.com/profile/05424097007271218756noreply@blogger.com0tag:blogger.com,1999:blog-8930153101988441660.post-5260187145739421142014-01-05T23:50:00.000-05:002014-01-05T23:50:00.469-05:00Amazon's Mayday Button Could Revolutionize Banking<h3>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj29uTLjP8O6eb5Mn2qSphcXIDZBkj0NfN2hC25blB2I_0opgImV3aAONcTlFhxx1N02Nqrqtvim579rLXQRWWcrE6W8BlAJ8bs9rxwT6aMkFszBCo95oj_EGTCheu4xwQSTnbfdvt5QYI/s1600/kindle_fire_hdx_the_mayday_button.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="217" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj29uTLjP8O6eb5Mn2qSphcXIDZBkj0NfN2hC25blB2I_0opgImV3aAONcTlFhxx1N02Nqrqtvim579rLXQRWWcrE6W8BlAJ8bs9rxwT6aMkFszBCo95oj_EGTCheu4xwQSTnbfdvt5QYI/s320/kindle_fire_hdx_the_mayday_button.jpg" width="320" /></a></div>
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It's time for banks and credit unions to consider the potential of providing mobile banking customers single-click live customer support similar to Amazon's <a href="http://www.amazon.com/dp/B00BHJRYYS#mayday">Mayday</a> button that is embedded on the latest Kindle Fire HDX tablets.</h3>
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Similar to a virtual version of <a href="http://www.apple.com/retail/geniusbar/">Apple's store-based Genius Bar</a>, without needing to wait in line or leave your house, a banking version of Mayday could provide both basic customer support as well as specialized or advisory services that could revolutionize both mobile and online banking.</h3>
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<span class="Apple-style-span" style="font-family: inherit;">This concept may seem like a major leap into the future for an industry that has yet to fully embrace 24x7 'push to talk' or text-based customer support for the mobile or online customer or extensive video banking at physical locations, but as technology advances and more customers are relying on mobile, tablet and online banking, there is significant potential. And, with the desire to create powerful emotional connections with customers, live video may replace the telephone for customer support.</span></div>
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<span class="Apple-style-span" style="font-family: inherit;">Th</span>e Amazon service is easily accessible with a button on the Kindle HDX device home page. Press the Mayday engagement button and a customer sees a remote Amazon Tech Advisor on their screen within seconds (<a href="http://phx.corporate-ir.net/phoenix.zhtml?c=176060&p=irol-newsArticle&ID=1886962&highlight=">over the holidays, Amazon beat their goal of 15 second response with a 9 second average wait</a>). While a customer can see the live advisor, the advisor can't see the customer, just their screen. Once credentials are authorized, Tech Advisors can annotate the screen, change settings, download apps and do anything needed to help a customer step-by-step.</div>
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"With a single tap, an Amazon expert will appear on your Fire HDX and can co-pilot you through any feature on your screen, walking you through how to do something yourself, or doing it for you - whatever works best. Mayday is available 24x7, 365 days a year, and it's free," stated Amazon CEO and founder, Jeff Bezos. The commercial for the Mayday button is a great illustration.</div>
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While some people were initially concerned about privacy, the advisor can't access a customer's camera or access information within the computer that is private. Only audio is transmitted back to the advisor.</div>
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For Amazon, the Mayday support teams reside within the normal call center. While these advisors most likely didn't replace any of Amazon's other support channels, there could be additional resources that were needed (Amazon does not reveal details).<br />
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Supporting this capability required video-equipped computers and a de-cluttered environment for the advisors to work that appears more professional than a traditional call center cubical. For Amazon, they actually put each agent into well branded 'mini-studios'. Video agents also needed to be 'camera ready' based on wardrobe, visual appearance and even body language.<br />
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Mayday in Banking</h3>
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None of the hurdles above seem to be insurmountable for the financial services industry. In fact, the latest generation of self-service devices (ATMs, Kiosks, etc.) are video-enabled and institutions such as Bank of America have already launched relatively small scale real-time video communication support services such as <a href="http://newsroom.bankofamerica.com/press-release/consumer-banking/bank-america-adds-human-touch-new-atms">Teller Assist</a>.<br />
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According to a recent Capco blog post entitled, '<i><a href="http://www.capco.com/insights/capco-blog/will-video-replace-the-telephone-in-banking">Will Video Replace the Telephone in Banking</a></i>', banks would need similar capabilities to deliver video support to customers.<br />
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<li><b>People</b>. Skilled resources would need to be engaged who can handle a wide range of customer inquiries.<br /></li>
<li><b>Process</b>. Live video support requires banks to redefine aspects of their operating model. As opposed to self-service applications, video support requires the discussion of product options based on insight already available and insight captured during discussions. Security is also important.<br /></li>
<li><b>Technology</b>. Vendors already provide quality video services. The challenge is to successfully integrate these capabilities into existing operating systems.</li>
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Here are some ways a direct link to a human being could provide differentiation for banks or credit unions:</div>
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<li><b>Basic account inquiry calls</b>. While this may seem resource prohibitive at first, how much more difficult would it be for a bank to provide video support as opposed to a call center connection? Because more context information is available with this solution, the call time could be shortened and savings could be realized. Long-distance costs would also be reduced since video interactions would be IP-based.<br /></li>
<li><b>Contextual specialists</b>. If a person is having difficulty conducting mobile or online banking, the customer support area can direct the interaction to the best CSR who can 'take over' the customer's screen (with customer approval) and provide technical channel support to help the customer conduct their banking. This is the foundation of Amazon's Mayday service and would increase deeper digital engagement beyond balance inquiries.<br /></li>
<li><b>Insight collection</b>. One of the major reasons Amazon introduced Mayday was so that they could collect insight directly from customers that could improve service and products in the future. While this can be done via traditional channels at a bank or credit union, a live video agent could gather greater insight into financial needs, services held elsewhere, etc. They can also verify information already on file like email addresses and cell phone numbers.<br /></li>
<li><b>Cross-selling</b>. At a time when organic sales by financial institutions are needed more than ever, precise real-time offer management could be leveraged by skilled personnel utilizing enhanced contextual insight known about the customer. With the potential for enhanced insight gathering as discussed above, better recommendations could be made.<br /></li>
<li><b>Advisory services</b>. It would not be too difficult to expand the Mayday type service to include advisory services from other areas of the bank. With a simple live transfer, the customer could be connected with an investment advisor, small business specialist, commercial banking or loan officer. With video engagement, the ability to conduct much more involved interactions is possible.<br /></li>
<li><b>Customer acquisition</b>. The abandonment rate from a digital shopper in banking is extremely high. A live video agent could provide an abandonment intercept by allowing a shopper to talk to live CSR as part of their shopping process. This is especially helpful for consumers who do not want to visit a branch.<br /></li>
<li><b>Customer retention</b>. With the ability to access a live agent immediately, and with greater contextual insight available to the agent, issue resolution will be faster and will provide a superior customer experience.</li>
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Testing Proof of Concept</h3>
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I imagine most banks and credit unions aren't ready to jump into the 24x7x365 single click live video customer support ocean just yet. So how could an organization test this concept in more shallow waters?</div>
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<li>Determine the nature of most of your customer support questions and determine which ones could be better answered by a live agent.<br /></li>
<li>Instead of placing access to a live video agent on the home page of your mobile or online banking application, place it where abandonment occurs the most or in areas where you want to increase engagement. Are customers confused as to how to use mobile deposit or online bill payment? Is your current rewards program not meeting expectations? Place the video agent access button on the pages for these services first.<br /></li>
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<li>Test live video support during regular business hours. While not optimal, it provides parameters for testing the scalability of the service.<br /></li>
<li>Have a live video agent available only to brand new customers of your mobile or online banking services. In this case, it may be best to provide the link to a live agent via email as part of your new customer onboarding process. This may also provide the ability to cross-sell additional services early in the relationship.</li>
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While your organization is testing the scalability of a live video agent, it may be good to also test customer support via text and push-to-talk. The upside potential may not be as great, but the customer experience is definitely better than current customer support options at most financial institutions.</div>
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The banking industry has just received a Mayday customer service wake-up call, requiring customer support centers to rethink their strategies and raising the customer experience bar. What financial institution(s) will answer this challenge?<br />
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Case Study: ASB Video Customer Support</h3>
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ASB Bank in New Zealand is one of the only banks in the world that I have found that as developed applications for live video customer support. Discussed in a recent article on <a href="http://thefinancialbrand.com/25363/asb-video-banking/">The Financial Brand</a>, ASB customers can connect directly with banking specialists face-to-face at a time and place convenient to the customer. </div>
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While not quick a 24x7x365 immediate video link, ASB allows a customer to set up an appointment with a banking specialist for more involved interactions such as insurance, home loans, business banking, etc. With this application, customer can securely share documents, providing all of the convenience of a branch visit without needing to leave home.</div>
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ASB has been at the forefront of video technology banking integration, offering in-branch video banking for some time and even introducing a <a href="http://thefinancialbrand.com/18510/asb-bank-virtual-facebook-branch/">Facebook Virtual Branch</a>, also written about by The Financial Brand.</div>
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Amazon Mayday Feature Video</h3>
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Below is a great video highlighting the features of the Mayday solution from Amazon.</div>
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Additional Resources</h3>
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<a href="http://webrtcstrategies.com/2013/12/12/mayday-button-mobility-retail-banking-webrtc/"><i>Mayday Button and Mobility for Retail Banking with WebRTC</i></a> - Web RTC Strategies<br />
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<a href="http://www.capco.com/insights/capco-blog/will-video-replace-the-telephone-in-banking"><i>Will Video Replace the Telephone in Banking</i></a> - Capco Blog (Nov. 2013)</div>
Anonymoushttp://www.blogger.com/profile/05424097007271218756noreply@blogger.com4