Big Data Is A Retail Bank Marketing Mirage

Over the past week, I have reached out to many of my banking industry colleagues in the U.S. and abroad asking for examples of where 'big data' is being used effectively in retail banking. 

The response was underwhelming to say the least, as the majority of banking leaders provided examples of 'works in progress' or 'initial wins', with some of the most mentioned case studies being in the areas of risk and fraud prevention as opposed to marketing. 

In addition to a post on big data by Aite Group's Ron Shevlin on The Financial Brand, and widely covered discussions about 'big data hype' on blogs from Gartner and CapGemini this past week, most industry leaders believe banks need to focus on data close to home before expanding their pursuit of the next shiny object. To this end, a friend from the U.K. offered to provide a guest post on the topic from his perspective as a supplier to the financial services industry.

By Darren Oddie, CEO and co-founder of AGILEci

Consumer banking behavior is changing rapidly before our eyes. Will this changing consumer behavior mean that incumbent retail banking 'zombies' may become corpses walking the halls of banking, as energizing and engaging competitors take enlightened customers away from them?

I firmly believe that many retail bankers are operating on autopilot in an increasingly dynamic and complex environment. They are trying to understand, develop, deliver and manage new solutions with buzzwords such as cloud, big data, mobile, social, NFC and mobile wallets to name a few.

I'm going to highlight one of these trending terms within the context of retail bank marketing, and the mots de jour are 'big data'. 

Optimistic Forecast for FinTech Providers

A new report, being released today by the William Mills Agency, reveals that spending by financial institutions is recovering as the economy and industry rebounds. The tenth annual ‘Bankers as Buyers’ study shares indepth insights and research from more than thirty individuals and organizations regarding what technology, services and solutions banks and credit unions are expected to invest in 2013. 

This report is a compilation of viewpoints from many of the most influential research and fintech support institutions in the country and is available as a free download here.

In this year's report, IDC Financial Insights projected that technology spending is expected to increase to $57 billion, with much of the spending expected to occur in the ‘second tier’ of financial institutions ($1 billion - $10 billion) as opposed to the largest banks.

"As technology continues to be central to customer interactions and an improved customer experience, we are constantly reminded that technology in not a banking department, but is everywhere . . . including in the hands of consumers”, states Scott Mills, president of the Williams Mills Agency. “Demographic and behavioral changes, combined with changing technology preferences and the need for improved trust and brand loyalty will force banks and credit unions to evaluate the role of technology in the delivery of services", adds Mills.

Additional findings of this year’s ‘Bankers as Buyers’ report include:

• A total of 14,210 financial institutions make up today’s depository landscape, which is down 3.7 percent from 2011 according to the FDIC and CUNA.
• While much of the focus on payments technology is on mobile, organizations are also looking at improvements in online payments, ACH, P2P and prepaid cards to attract customers.
• Mobile banking gained a stronger foothold in 2012, as FIs strived to meet increasing consumer demand for anytime, anywhere financial services.
• Consumer mobile banking is now used by 33% of mobile consumers according to Javelin Strategy and Research.
• According to the 2012 KPMG Community Banking Outlook Survey, 47 percent of responding institutions identified regulatory and legislative pressures as the most significant barrier to growth over the upcoming year.

From Passbook to Mobile: The Evolution Of The Bank Account

"Some might argue that nothing replaces a face-to-face relationship. That assumes that a digital, mobile experience is inferior to face-to-face. And while that may have been true in the past, that's not going to be the case in the future. Welcome to the total disruption of retail banking".

By Brett King, Bestselling author of Bank 3.0 and founder and CEO of Movenbank.

In 2009, I was visiting the head of retail for a major retail banking brand headquartered in Asia, and with a growing presence in the Middle East. This was 2 years after Apple's phenomenal launch of the iPhone, and by this time the iTunes store already had close to 100,000 apps and had surpassed a billion downloads. 

People were clamoring to get the iPhone, with unlocked 'grey market' phones available everywhere you looked in Hong Kong, Dubai, Shanghai and Singapore, because to that point, Apple had not launched the iPhone anywhere outside of countries like the U.S. But sitting in this executive's office, you'd never realize it.

I spoke about the impact that mobile and social media was having on consumer behavior, and how dominant apps would become in respect to the way consumers would do their banking over the next 3-5 years. I discussed the breakout success of Bank of America, the first bank in the US to launch mobile banking, with millions already using the bank's app daily to access their bank (and with 10,000 mobile users currently being added each day). 

This executive didn't buy my message. They insisted that nothing they were seeing was showing a shift in behavior. If anything, they believed the branch was getting stronger and the Gen-Y segment was just like any other demographic.

5 Bank Marketing Strategy 'Quick Wins'

With the start of a new year, financial institution marketers are under increased scrutiny to generate measurable returns on marketing investments. While it is important to focus on the 'big picture', moving  your organization forward to create long-term value, many institutions ignore 'quick wins' along the way that can build momentum. 

Winning organizations are advised to leverage a hybrid approach to marketing strategy prioritization, using short-term wins as milestones that are aligned with longer term objectives. When implemented correctly, quick wins have the added advantage of serving as clarion calls that signal deviations from the overarching roadmap to success.

Over the past few years, I have written several blog posts on specific bank marketing strategies for financial institutions looking to acquire new customers, improve product engagement, increase share of wallet, reduce attrition and enhance the customer experience. Some of the strategies are complex and are more difficult to implement, while others represent money that is left on the table if not initiated by a bank or credit union. 

The key is to effectively prioritize your strategies and implement those that meet your organization's goals while not burning unneeded resources.

Strategy Prioritization Matrix

A Strategy Prioritization Matrix (SPM) is an easy to use tool to quickly and easily identify those initiatives from a wish list that offer the highest return for the least amount of effort. This tool is especially useful for organizations that have more marketing initiatives than can be funded, or where human resources are limited (every financial organization I know).

The Strategy Prioritization Matrix quadrants include:

• Quick Wins (High Impact, Low Effort): These are the most attractive projects, giving you a good return for relatively low effort. Focus on these to build momentum and a strong ROI;
• Must Haves (High Impact, High Effort): While these provide strong returns, they take longer and use more resources, potentially crowding out viable 'quick wins'. While these are important, they only bring a return when complete. Set deadlines for completion but don't ignore their importance;
• Low Hanging Fruit (Low Impact, Low Effort): While tempting, don't focus too much on these unless they are creating a distraction to the accomplishment of either of the above. Do these in spare time, but put them to the side if a 'quick win' or 'must have' initiative comes along;
• Money Pits (Low Impact, High Effort): These strategies should always be avoided. Not only do they provide low returns, but they crowd out time that is better used on any of the other three quadrants.

Finding Serendipity in Big Data

Unexpected pleasantries always have a deeper impact. Like moments that surprise you as if a higher power had designed them just for you. The luck of making exciting discoveries by accident, love at first sight, coming across a childhood treasure at a yard sale, unintentionally coming across a precious memory or connecting with an insight that answers your dreams. These are moments that create internal warmth that can only come from unexpected joy.

Take, for example, a concert by your favorite childhood band, The Rolling Stones. Such an event has expectation, build up, and the experience of the moment. The joy is foreseeable. Now, imagine that you head to a local bar for a drink, and on that night a special guest is making an appearance. Without any prior notice, The Rolling Stones come on stage. Previously, such magical moments were only possible by two means. Organized by someone that knows you, or by fate. 

Guest Post By Scott Bales, Chief Mobile Officer, Movenbank

In today's digital world, it is possible for someone to know you well enough to create such experiences. This is because there has been an accelerated growth of data over the past five years, where every minute massive amounts of insight are being generated from every phone, website and application across the Internet.

In his post, ‘How Much Data Is Created Every Minute’ Josh James of Domo, dissects the world’s data creation in a unique infographic. Many innovative organizations have recognized the potential of this data, such as ESPN, which drives ESPN.com through Facebook open graph data to optimize the content a user experiences. Some financial organizations have also begun to tap into the potential of ‘big data’. In a world full of data to drive insight, however, there are still very few organizations that use all of the data at their disposal to enhance their offerings. 

Banking Leaders Predict Major 2013 Trends

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

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

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

Battle For Payment Supremacy Will Continue

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

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

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

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

Top 10 Bank Marketing Strategy Posts of 2012

I have been publishing Bank Marketing Strategy for only three years, but it has been an exciting (and sometimes challenging) adventure. It has provided me a forum for discussing many of the changes and exciting innovations in retail banking, while allowing me to meet leaders who provide interesting perspectives on an industry I have been working in for more than three decades.

So, which of last year's Bank Marketing Strategy posts were the most read and created the most buzz? The top posts definitely covered a wide spectrum of topics, but also may have helped Bank Marketing Strategy be recognized as one of the top 5 financial industry blogs by The Financial Brand.

Banks and Credit Union Marketers Taking Different Paths in 2012 

A follow-up to the fourth most read article of 2012, this blog post provided details into the differences between bank and credit union marketers as noted in the 2012 Bank and Credit Union Financial Marketing Survey conducted by The Financial Brand and myself early last year.

The post discussed how, while both banks and credit unions were anticipating constrained budgets in 2012, that was where the similarities ended. Not only were banks expecting to be dealing with trust and compliance issues for much of the year, they were going to be focusing on different products and services in their promotional efforts.

22 Industry Leaders Provide New Year's Resolutions for Bank Marketers

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This is the third annual installment of my financial institution marketer resolution series which I started two years ago with 'Ten Bank Marketer Resolutions for 2011' and followed up with 'Ten Resolutions that Bank Marketers Can't Ignore in 2012'.

Unsurprisingly, there are similarities from year to year as bank marketers continue to be challenged by increasing regulations, new competitors, expanding channels and products, new technologies and a much higher emphasis on measured results. In addition, the need to focus on the customer experience and find ways to generate additional revenue has become a requisite for bank and credit union marketers.

As I did for the marketing resolutions in 2012, I collected ideas from my travels across the country meeting with banks of all sizes in addition to asking industry leaders to provide insight into what they believe bank marketers should focus on in 2013. I appreciate the fantastic response I received from almost two dozen blogging, tweeting and LinkedIn friends in the U.S. and abroad who provide me with insight and inspiration on a daily basis.

Here are the resolutions that industry leaders believe are most important for financial institution marketers in 2013:

Improve Focus

The fact that I have fewer resolutions this year than in the past is intentional. While I could have easily presented 10, 13 or more resolutions for 2013, it has become apparent that the inability to focus is hampering the ability for most financial institution marketers to accomplish what is required. The noise created by multiple (sometimes conflicting) initiatives is distracting financial marketers and making it difficult to move the marketing needle for many organizations.

Tim McAlpine, president and creative director of Currency Marketing says it best in his response. "Retail financial institutions should resolve to focus. This could be a focus on a singular product or a singular type of customer. Don't forget about everything else, just put 70% of your energy into one big thing that your institution can be the best at in your marketplace."

In the same vein, Ron Shevlin, senior analyst from Aite Group and publisher of the Snarketing 2.0 blog states that, "bank marketers should resolve to NOT fall in love with every new buzzword that comes along." Knowing Ron, this would include, but not be limited to 'big data', many concepts around social media and even some marketing roles/titles. Before moving to the next 'shiny object', make sure you are doing the basics well.

Being focused should not come at the expense of flexibility, however. As Matt Wilcox, senior vice president of Zions Bank and proficient financial blogger points out, marketing plans should remain nimble and fluid. "Marketers should not fall into the trap of making a detailed calendar that must be followed at all costs. Consumers have changed and so should marketing. Seasonality will always play a role, but cater your marketing to your opportunities and go after the business that supports your overarching objectives."