5 Lessons Bankers Can Learn From WhatsApp

MOBILE STRATEGIES

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.

Interestingly, these trends were also important to the sale of Simple to BBVA a day later.

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.

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.

So, what lessons can retail bankers learn from WhatsApp...especially when our industry is surrounded by traditional thinkers and legacy systems?

The Shift to Mobile is Seismic

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.

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.

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.

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).

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.

An Interview With Chris Skinner on Building a Digital Bank

It is becoming more and more difficult for traditional banks to compete in an increasingly digital marketplace. With most bank systems stuck in the last century, the conversion of legacy technologies to new platforms with total reliability, security and resilience is a massive challenge.


How can today's banks evolve to a new model of servicing and processing, where the mobile internet allows consumers to bank wherever and whenever they want using an increasing array of devices? How can banks leverage their existing foundation to compete with new and nimble mobile-first competitors?

I had a chance to speak to Chris Skinner recently about his perspective on the evolution of banking, the emergence of new competition, winning the mindshare of an increasingly connected consumer and on the release of his newest book, Digital Bank: Strategies to Succeed as a Digital Bank (available on Amazon for $9.99 for the Kindle version or $17.99 in paperback).

Best known as an independent commentator on banking and the financial markets through the Financial Services Club blog and Chair of the networking forum The Financial Services Club, Chis is the author of several previous books covering everything from emerging regulations to innovation and new currencies. He is also Chief Executive of Balatro Ltd, a research company and a regular commentator on BBC News, Sky News and Bloomberg on banking issues.

In reading an advance copy of Digital Bank, I found that Chris provides a great overview of the digital revolution in banking from channels to systems to emerging currencies. He also provides in-depth analysis of the how incumbent banks such as Barclays to new start-ups such as Metro Bank in the UK, Alior Bank in Poland and FIDOR Bank in Germany are building for a digital future.

As several noted fintech followers mention in online reviews of this book, Digital Bank is the most recent must-have for anyone wanting to help their organization stay relevent in banking or for businesses wanting to better understand the impact of digitalization on the marketplace. 

What inspired you to write this newest book?

I've been blogging daily since the start of 2007 at the finanser.com. With the blog, I would write a series of four or five posts on a particular subject, like why branches were the wrong focus, how data is becoming the new banking battleground, why existing banks have challenges, what organizations are innovating in unique ways, etc. These posts were never edited or placed in any sequence, but provided a great foundation for potential chapters in a book. So, I finally got around to taking all of that experience and all those thoughts and personally editing them into a readable, digestible, logical book. 

What do you hope readers take away from your writing?

The overarching theme of Digital Bank is that banks are being fundamentally restructured and challenged by the Digital Age. From physical services through physical branches, we have rapidly become a business that provides digital products through digital relationships. That leap is not happening fast enough, however, as most banks are tied to their traditional operational, technological and physical structures. This book provides a roadmap to take that old bank into the new world, how it can be achieved, proof points as to why it is needed and lessons of what to do and not do. Anyone dealing with digital bank distribution through the mobile, social internet will find it useful.

Money2020 Attendees Share Insights and Takeaways at Bank of America Twitter Chat

On Wednesday, October 9 from 7:30 - 8:30 am, Bank of America hosted a twitter chat at Money2020. 

The live chat was designed to look back at the first few days of the conference, discussing important themes and takeaways, memorable moments, and issues facing the payments industry – essentially an opportunity to connect the dots.

The chat was aimed at conference attendees and people who weren’t able to attend, and was designed to focus on thought leadership around payments. Unlike most chats, this event had a live audience who participated on site along with others who participated in absentia. On the live panel moderated by Peter Osborne were Farhan Siddiqi from Bank of America, Cherian Abraham from Experian, David Birch from Consult Hyperion, consultant Tom Noyes, Elizabeth Dias from Perficient, Jim Issokson from MasterCard and myself (remotely).

The following transcript captures comments made during the Bank of America Money2020 Twitter chat. This transcript was edited to keep the answers to questions together. Retweets were also deleted that did not include additional content to shorten the transcript and show the flow of conversation. 

Metrics for the twitter chat were as follows: 

• Total Participants: 187 
• Total Number of Tweets: 711 
• Total Reach: 574,623 
• Total Impressions: 6,787,715 
• Total Number of Retweets: 318 

Bank of America @BofA_News: Welcome to the Future of Payments Innovation chat, live from #Money2020 in Las Vegas. #BofA_News is pleased to host this opportunity to connect the dots from the #Money2020 conference. My name is @peter_osborne and I’m a communications executive for #BofA. I’m joined by @FarhanSiddiqi, #BofA Strategic Planning Executive for Digital Banking.

Q1: What speakers or topics have most resonated so far at Money2020

Jim Marous @JimMarous: A1: Highlight - #Amazon #PayPal #Citi #AmEx #Discover #MasterCard rocked! Showed that payments innovation never sleeps. #Money2020

Elizabeth Dias @techmktggirl: A1: Standout #Money2020 Speakers: @thefriley of @Square & @PayPal. Topics: #TomorrowsBank, Consumerization of Data & Retail 3.0

Kevin Boglarsky @kmbx2ind: #money2020A1. The keynotes even if they went a bit long.

Thomas Noyes @noyesclt: A1: I thought amazon MCX and Amex did a fantastic job.

Bank Innovation @BankInnovation: I enjoyed the bullishness on Bitcoin and loved the Square and Amex keynotes. - Phil Ryan, Bank Innovation #money2020

Aaron McPherson @aaronmcpherson: A1: Tokens are BIG #money2020

Jim Marous @JimMarous: A1: Loved the tweets Monday "#Bitcoin will do to money, what the internet did for information" #Money2020

Bank of America @BofA_News: A1: Sarah Friar was impressive explaining Square’s lofty mission and its simple approach – Start-Run-Grow. ^fs #money2020

Dave Birch @dgwbirch: #money2020 A1: liked the Amex stuff about the unbanked, the Zapp direct to bank account retail proposition, new PayPal stuff

Banks Accelerate Mobile Banking Innovation

The acceptance of mobile banking has grown more quickly than most financial institution futurists could have imagined. The impact of channel migration is changing the foundation of banking as we know it, with banks now being carried in customer's pockets and handbags wherever they go.

This seismic shift in consumer behavior is prompting banks around the world to innovate their mobile offerings at breakneck speed. The question is . . . what will the next generation of mobile banking look like? And how should banks respond?

In the new insight report entitled, "Mobile Banking 2013 - Are You Following or Leading?", Mapa Research provides an in-depth quantitative and qualitative review of the mobile banking offerings of 67 banks in 14 countries to find the best of recent innovations in the industry. Using a panel of live bank accounts from around the world, the report has close to 100 visual examples of mobile innovations including reviews of 15 additional offerings that put the best and most recent mobile banking developments under the microscope.

The report debunks a number of myths that seem to be prevalent both inside and outside of the financial services industry:

• The largest banks have been hampered by legal constraints and legacy systems meaning ‘risky’ or innovative ideas have been shelved. Innovations are coming from large traditional banks as well as nimble mobile centric disruptors
• Few banks let customers make payments to new payees in mobile banking. In fact more do than don’t
• Payments to mobile/email services have been pioneered only by the most innovative banks. Again, the banks who don’t provide this functionality are now in the minority
• Meaningful customer support and advanced functionality such as PFM and share trading are hard to deliver on mobile. In fact more and more banks are proving that these features can be deployed successfully

Preview of Mapa Research report available for free download here. 

Digital Marketing Capabilities Lacking At Many Banks

With continued rapid growth of both online and mobile banking, banks and credit unions need to come up with better ways of marketing through digital channels. 

The technology is readily available, and best practices can be found at companies like Google, Amazon and others, but many banks are still at the infancy stage in terms of digital marketing capabilities.

To succeed in the future, financial institutions need to have a single view of the customer across channels, be equipped with advanced analytics for predicting behavior, be able to deliver offers to customers in real time and effectively integrate social media into the marketing mix.

A just released study by Efma and Wipro Technologies entitled, 'Global Retail Banking Digital Marketing Report', found that only a few banks are prepared for the digital marketing revolution, with the potential for improvement significant at most organizations. This first ever study also revealed that social media is not yet a part of mainstream marketing and is not a key customer interaction channel for most banks.

According to Rajan Kohli, vice president and head of banking and financial services at Wipro, "Digital technologies, social media and the explosion of data are redefining customer engagement models. The CMOs that we spoke with made it clear that the role of the CMO is changing as banks adapt to the development of new channels and capabilities."

For most banks surveyed, digital delivery channels were seen as complimentary to branches, being more important for processing transactions than for customer service and advice. With this transition across channels, it is believed interactions will be more frequent, insight collection will be more prolific and communication opportunities will be more direct.

CommBank Introduces Kaching For Facebook and 'Signals' Insight Platform

Commonwealth Bank of Australia continues to be one of the bank innovation leaders, announcing two social-based platforms this week. 'Kaching for Facebook' is an extension of the already popular Kaching smartphone app covered in a previous Bank Marketing Strategy post, allowing customers to do basic transactions within the Facebook website. 

In addition, CommBank introduced the 'Signals' insight hub that collects transactional data to allow customers to view and share how their transaction patterns compare with others.

Kaching Comes to Facebook

CommBank Kaching for Facebook is a new app that will give Australia's 12 million Facebook users access to everyday banking and payments on their favorite social network. Based on the popular Kaching mobile payments app, the new app lets users pay back money owed or make cash gifts to friends of family for birthdays or weddings. The app also allows a customer to view transaction history within the Facebook website.

"With Facebook popularity skyrocketing to more than 55 percent of the population in Australia, we know our customers, particularly Facebook's core user base of 18-35 year olds, are looking for new ways to connect their banking and their lives, friends and causes within Facebook," states Commonwealth Bank's chief marketing and online officer, Andy Lark. "So what better way to respond than by giving them access to everyday banking and payments on their favorite social network?"

Accessed directly from the Commonwealth Bank Kaching Facebook page, the app is a scaled down version of a typical online banking app optimized for mobile using responsive design.