For the third year in a row, I attended the BAI-FinacleGlobal Banking Innovation Awards ceremony that takes place as part of the BAI Retail Delivery Conference. This year's program, which recognizes innovation excellence in the banking industry, drew more than 200 nominations from institutions based in over 30 countries.

The two overriding impressions I have had each year when the finalists and winners were announced were that 1) despite industry challenges, there are amazing innovations happening in the banking industry that impact the daily customer experience and 2) with the exception of Citibank in 2011 (for their 'Smart Banking Branch), no other U.S. bank has ever won the award.

• More banks have an innovation strategy: 60% had a formal strategy in 2013 vs. 37% in 2009.
• Investment in innovation is increasing: In 2009, more banks were decreasing innovation investment than increasing. Today, 77% of banks say they are increasing investment vs. 5% decreasing (personally, I am concerned about the definition of innovation investment in this study).

• Most banks believe they are becoming more innovative: 76% believe they are becoming more innovative vs. 6% who said they were becoming less innovative.

• Performance metrics are focused on revenue and customers: Measurement of profitability from innovation is less common.
  
  
• IT systems and culture are the biggest barriers to innovation: IT systems were the biggest barrier to innovation for banks of all sizes. Culture and silos are issues with large banks more than smaller organizations. Silo based IT systems have a huge impact on time to market for large banks.

• Business processes need development: Speed, agility and efficiency is an area in need of development.
  
  
• Additional factors can improve innovation: Other capabilities that would improve innovation include the ability to personalize products, seamless multichannel integration and having a single customer view.

The study also measured the current status of innovation deployment in mobile and online and found that:

• On average, out of 10 mobile and online innovations measured, deployment averages around two per bank, with larger banks averaging around 3 innovations and smaller banks having only 1 of the 10 innovations deployed on average.
  
• Mobile P2P payments have been deployed by 29% of the banks and mobile NFC payments by 23%. Mobile location offers have been deployed by 18% of the banks with an additional 51% planning on deploying.
  
• Direct-only banking has been deployed by 23% of the banks, but only an additional 21% have this in their plan.
  
• Gamification has only been used by 9% of banks.

Innovation in the U.S.

So why is it that in the USA, where more banks and some of the largest banks in the world exist, is true innovation so difficult to find? Here is what some of the people who watch innovation regularly told me.

"Many U.S. Banks are so invested in their legacy business models that it makes it very hard to undertake truly disruptive innovation projects. Banks in emerging markets have to be innovative to reach their customers, many of whom don't have access to the broad range of choices that Americans have." - JP Nicols, co-founder Bank Innovators Council

"While there are many reasons U.S. banks are innovation laggards, I think legacy technology, regulation, compliance, and risk aversion have to top the list of reasons why we're not seeing more movement." - Bradley Leimer, Vice President, Mechanics Bank

"The US is a major leader in internet innovations but, outside this, it has been behind most other regions of the world on mobile developments. This is largely due to the tariffs and state splits between cellphone usage and providers which, when you get to China or Africa is a totally different position. These newer markets do not have the old systems in place and therefore saw mobile as a leapfrog for digital services to the customer. American banks just don't see it that way, and see it more as an overlay to what's already there." - Chris Skinner, Author of the new book Digital Bank

The Efma/Infosys study found that 73% of banks in the Americas (they did not break out the U.S. specifically) were increasing investment in innovation in 2013 compared to 2012. This is less than for banks in Middle East, Africa and Asia Pacific but is more than Europe. By far the biggest area of increase for the Americas was in 'channels', with the 'product' category being the lowest area of increase.

Interestingly, 86% of banks said they had become more innovative in the last 12 months, though this may be from a lower base than in other regions. Again the 'channels' category was the area of highest increase, with 71% of banks saying they had become more innovative.

The innovation performance self-assessment scores were the lowest in the Americas out of the four regions – just 4.08 on a scale of 1 to 7. Innovation performance in 'channels' was the highest, and innovation performance in 'products' was the lowest (a big difference from Middle East and Africa where innovation in 'products' is the strongest area for banks). Overall, it is clear that the focus in this region is on channels.

 

Barriers to Innovation

In contrast to the other regions, the main barrier to innovation for the Americas, according to the Efma/Infosys study, was culture rather than IT systems, which was only the third largest barrier. Regulation was the second most significant barrier. The least important barriers were senior management and organization silos.

In conversations with my counterparts in the industry, here are the barriers they mentioned.

"Two things. The first is that innovation is simply not in the DNA of most bankers. They've been trained throughout their whole career to identify and avoid risks, and innovation is about taking small risks and failing fast and cheaply and learning from those mistakes to get to the right answer quickly. The second is analysis paralysis. Most banks have too many silos with conflicting agendas, and that makes it hard to actually put new ideas into action. Consequently, those few innovators who do exist in banks find themselves surrounded by the 'business prevention department'."- JP Nicols

"The U.S. market is plagued with many more problems than its international peers - we have a more complicated system of financial players, embedded legacy technology and processes for everything from acquisition to money movement, from telcos to payment providers - and in spite of changing client behavior, we continue to prop up legacy financial services like paper checks." - Bradley Leimer

"Lethargy and lack of competitiveness. Lethargy embraces everything from 'oh, the regulators won't allow it' to 'if ain't broke, don't fix it' to 'but the legacy, the legacy, the legacy'.  If Barack Obama ran a typical bank, he'd ask 'can we fix it?' and the team would answer 'why bother?'" - Chris Skinner 

BAI/Finacle Innovation Winners for 2013

This year's awards were presented to the following organizations in the following categories:

• Product and Service Innovation: CaixaBank (Spain) and Hana Bank (South Korea)
• Channel Innovation: Alior Bank (Poland)
• Innovation in Internal Process Improvement: ZUNO Bank (Slovak Republic)
• Innovation in Societal and Community Impact: Standard Bank (South Africa)
• Disruptive Innovation in Banking: Hana Bank (South Korea)
• Honorable Mention for Disruptive Business Model: Jibun Bank (Japan)
• Most Innovative Bank: CaixaBank (Spain)

To learn more about the winners and their innovations, go to www.baiglobalinnovations.com.

As can be seen from the winners (and finalists') entries, much of the innovation that was recognized dealt with moving from traditional to digital and mobile channels. In addition, it is important to note the impact of culture as it relates to innovation. Not only did Hana Bank and CaixaBank have multiple entires for this award, but CaixaBank has been named the most innovative bank two out of the last three years.

Congratulations to the winners and I am sure we will soon see more examples of innovation in the U.S., either by traditional financial institutions or by one of the many newer neobanks that have been created or from some of the financial intermediaries that are providing the tools for U.S. banks to serve customers better.

When asked about the dearth of U.S. representation, Debbie Bianucci, president of the BAI stated, "Each year the BAI-Finacle Global Banking Innovation Awards program receives numerous submissions from innovative U.S. banks, and there have been finalists from the U.S. in both 2011 and 2012. Each year we receive over 200 submissions from banks from around the world, all who have inspiring stories to tell about how they serve their customers differently. It’s a very competitive program with just a few finalists and winners. We will  encourage U.S. banks to continue to submit their innovations for the 2014 awards program, which begins in January, 2014." 

Which bank(s) do you believe are the most innovative in the United States? Who has a chance in 2014?

I would love to hear your comments.

Additional Resources

Finalists Announced for 2012 BAI-Finacle Global Banking Innovation Awards - BAI-Finacle (2013)

Innovation in Retail Banking: Simplify Technology to Innovate - Efma and Infosys Finacle (Sept. 2013)

2012 BAI-Finacle Global Banking Innovation Awards Announces 2012 Winners - BAI-Finacle (2012)

2011 BAI-Finacle Global Banking Innovation Award Winners Announced - BAI-Finacle (2011)

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

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

Digital Disruption

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

Source: 2013 Accenture Retail Banking Survey

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

The Disruption Has Already Begun

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

Source: 2013 Accenture Retail Banking Survey

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

Source: 2013 Accenture Retail Banking Survey

It is clear that the most fundamental question in the post-financial crisis environment has changed from "how do I find my future customer' to 'how do my future customers find me?" As discussed in my recent post, Is Your Bank Ready for Customer 3.0, digital shifts inside and outside the industry are rapidly changing the information flows and the way that financial firms and customers interact. It is imperative for banks to become an integral part of customers' lives with a ubiquitous presence wherever customers are.

The branch banking conundrum continues, however, since customers still use branches due to proximity. Branches continue to be the number one reason for loyalty and 78 percent believe they will use their branch as often or more often in five years' time. Conversely, with increased use of services like mobile deposit, there has been a 50 percent increase in the number of customers indicating they are using mobile banking in 2013 (32%) than in 2012 (21%).

Source: 2013 Accenture Retail Banking Survey

"The internet is now the most frequently accessed distribution channel on a monthly basis . . . well above the branch. And mobile use has soared in the past year, almost overtaking the ATM in its perceived importance to customers," says the survey.

While the migration to online and mobile channels has been somewhat additive as opposed to a complete transition of behavior, online and mobile banking will continue to weaken the branch's stronghold on the consumer as better applications and more seamless experiences are developed. This migration is imperative due to the high cost to build and maintain a branch and the misalignment between the cost and value of the branch channel.

A Path for the Future

In light of the digital disruption in the marketplace, and as expanded regulation, more onerous capital requirements, economic volatility and consolidation continues, banks need a lower cost operating model that can generate more predictable and sustainable revenues. Branch networks need to be restructured, reducing the number of large footprint offices and increasing the number of 'light' branches and kiosks.

And while some industry observers believe we are quickly moving to a 'branchless' industry, Accenture and others (myself included) believe the environment will be more of a 'less-branch' scenario, at least in the next five to ten years (Chase continues to add branch locations as do other large and mid-sized organizations). But there must be a response to the customer-centric capabilities of the digital players who can leverage big data and analytics to build a better customer experience.

Move to Digital

With inertia being the main reason current bank customers don't switch, traditional banks need to quickly mimic the new digital banking leaders. Agility and a stronger innovative culture will be required to compete effectively as our industry invests to upgrade our legacy back offices and deeper customer insights will need to be leveraged to provide real-time solutions to customer needs. 

As mentioned in my recent post, Bank Product Proliferation: Too Much of a Good Thing, banks and credit unions will also need to eliminate antiquated products, streamline offerings and build new services that leverage the new digital delivery capabilities. By using digital capabilities to track transactional and channel behavior, banks will be able to develop better services and offer new solutions in real-time. This enhances cross-sell opportunities and can increase share of wallet.

Restructure the Branch Network

According to the Accenture research, the top 25 U.S. banks spend more than $50 billion per year to maintain oversized and poorly placed branch networks. While Accenture acknowledges the importance of a branch network, they propose a less costly branch banking model that can balance the sales capability with the digital opportunity:

• 'Light' branches: Oriented primarily to sales, these offices represent less than a third of the network and are highly automated with a minimal staff and reduced real estate footprint leveraging remote advisory specialists.
  
• Kiosks: Representing up to half the total network, these units include feature heavy ATMs with video, and can handle routine transaction activities.
  
• Full-service 'hubs': Similar to conventional branches (but fewer in number), these offices offer full sales and transactional support with extended hours and specialized advisors for services like mortgages, investments, business banking, etc.
  
• Flagships: A minimal number of strategically located flagships will serve as the center of service-excellence, combining a full range of capabilities including expanded self-service tools.

While many banks are already experimenting with more open and flexible branch formats, there doesn't seem to be a silver bullet yet in response to the digital disruption occurring. A bigger question may be which branches to close or reconfigure, especially with the looming eyes of the Community Investment Act (CRA) regulators looking over the industry's shoulder.

"The acceleration in consumer acceptance of digital banking in the past year -- particularly in the areas of mobile banking and online banking product sales -- foreshadows the need for a very different banking landscape in 2020," said Goodson from Accenture. "Branches remain vital to banks, but they need to be reimagined as one one aspect of a radically new approach to consumers. It is an opportunity to recover profitability, reduce costs and to establish a much more sustainable relationship with customers into the future."

The Best of Both Worlds

Given the scope of disruption impacting our industry, organizations need to start their transformation today if they want to be relevant in the year 2020 according to the complimentary Accenture report, Banking 2020: As the Storm Abates, North American Banks Must Chart a New Course to Capture Emerging Opportunities. 

The winning formula may well be to combine the advantages of the traditional bank with the benefits of the digital bank. By reducing the cost structure of branches and optimizing the products and services provided, yesterday's banks can move into the future leveraging a core strategic asset (a reconfigured branch network) complemented by an enhanced digital experience across all channels.

To succeed, traditional banks must become significantly more agile (no more three year planning cycles), embrace an innovative culture (see my post Banking Innovation: Not Made in the U.S.A.), focus on simplification and optimization while delivering an exceptional customer experience . . . in real-time. This is a very lofty ambition for an industry that historically moves at a snail's pace, but there really are no options.

More importantly, traditional full-service banks must shift their operating philosophy from being a product-oriented organization to being a customer-centric organization with the ability to engage with customers anywhere, anytime they want.

The goal is to become a bigger part of our customers' daily lives and to become integrated with other industries in a seamless manner that reduces friction. Unfortunately, organizations such as PayPal, Square, Google and others are already moving quickly down this path, assuming the role of payments facilitators, supplanting a link to merchants and consumers the banking industry once owned.

Additional Resources

A Critical Balancing Act: Retail Banking in the Digital Era - Accenture (Nov. 2013)

Banking 2020: As the Storm Abates, North American Banks Must Chart a New Course to Capture Emerging Opportunities - Accenture (Nov. 2013)

Say Hello to Customer 3.0 - Accenture (October 2013)

To drive greater mobile banking adoption and engagement, banks and credit unions need to take a more active role in helping customers proactively manage their finances through real-time notification of events that impact their accounts.

Beyond simple balance and transaction updates, alerts can provide the foundation for greater interaction with your customers, increasing engagement, lowering servicing costs and even providing potential revenue opportunities.

Source: Javelin Strategy & Research (2012)

Bank of America Mobile and Online Banking Alert Selection Pages

Alert Channel Preference

At a time when the vast majority of interaction with online and mobile banking involves simplistic balance inquiries or funds transfer, expanding the number and variety of alerts can lead to a significantly higher level of engagement that can deepen the relationship with the customer.

According to the Javelin research, while email continues to be the primary delivery channel for alerts, text alerts are the fastest growing type of alert even though this form is usually used to supplement the email variety. As mobile banking downloadable app usage continues to grow (currently at about 50% of mobile banking users), opt-out push notification alerts continue to grow.

In early 2013, Varolii Corporation did research on mobile banking preferences entitled, Can You Bank On Your Banking App, which found that consumers differ significantly in the way they want to be contacted regarding their account. Some of these preferences may be correlated with the way in which they are currently being notified by their financial institution.

Source: Can You Bank on Your Banking App?, Varolii Corporation (Jan. 2013)

With such a wide variety of preferences, banks and credit unions must find a way to economically tie their alert system to a unified system of engagement that does not confuse the customer with too many notifications but still allow the customer a degree of customization. The key is to ensure that time-critical information is delivered to the customer in a manner that both informs and allows for immediate action.

"An enterprise alert strategy should include a wide variety of alerts distributed via multiple end points and devices," says Jim Tobin, senior vice president and general manager, Mobile Solutions from Fiserv. "This will enable financial institutions to serve customers at different stages in their lives while keeping pace with regulatory demands."

Types of Alerts

While the origin of alerts were to notify customers of overdrafts or potential fraud potential, the variety of alerts within downloadable applications has expanded significantly over the past 18 months resulting in an increase in engagement and a better potential customer experience. In the past, the majority of alerts have involved a one-directional flow of information from the bank to the customer. Examples include:

• Balance alerts: these could include overdraft or NSF alerts
• Scheduled alerts: could be balance or other insight delivered on a scheduled basis
• Event-based alerts: Could be based on a bill payment or potential fraudulent activity

While the majority of the above were usually done via email, the movement to using SMS channels opened the door for potential conversations between the bank and the customer. This expanded to 'push' notifications that allowed customers to instantly take action on an alert.

Push notifications enable customers to not only view an alert, but initiate a transaction in response to an alert within a secure app . . . in real time. For example, instead of simply getting notified that there is a low balance on an account, the alert can include a response option that allows for a transfer to be made using the mobile device. This deepens the engagement level, provides the customer more control and ultimately increases customer satisfaction.

As the use of smartphones continues to grow, push notifications are the expected level of engagement for 'Customer 3.0'.

"With push notification, financial institutions have an opportunity to transform their existing alerts offering from a reactive, event-driven service to a proactive personal financial management (PFM) tool," says Fiserv's Tobin.

According to Fiserv, Push notification uniquely provide the ability for financial institutions to evaluate and measure alert programs. Unlike text and SMS, push notifications within the mobile banking app are not limited by carrier policy restrictions. For this reason, push notifications open the door for innovation and facilitate Enterprise Process Management (EPM) with the ability to measure the value of alerts.

Bottom line, an expanded alert strategy with the resultant engagement by customers can transform a one-way, static alert offering into a proactive personal financial management tool.

Not surprisingly, the new digital banks (Moven, GoBank and Simple) as well as several banks overseas have leveraged the power of mobile push alerts the most effectively. The options available and the ability to personalize the alert 'experience' can be seen below.

Monetizing Alerts

Marketing of Alerts

• Frontline staff: leveraging the referral power of customer-facing personnel
• Email: a series of email communication regarding alerts with direct links to preference pages on the customer's online banking site (Don't forget the power of engaging offline customers as well)
• Ad campaign: Because of the innovative nature of robust alerts, ad campaigns have been used as a way to acquire new mobile-first customers
• Branch and ATM signage: While branch traffic is less than in the past, branch and ATM signage is still effective at raising the awareness of customers who may or may not use online or mobile banking
• ATM receipts: One of my perennial favorites is the use of QR codes on ATM receipts to encourage both the sign-up for mobile banking but the selection of alert preferences. Linking to the alert marketing page of a bank, these receipts are an inexpensive way to reach mobile customers and prospects.

Banks and credit unions have a unique opportunity to expand the functionality and engagement of both online and mobile banking by developing an enterprise approach to alerts that satisfies customer needs, addresses regulatory issues and can generate revenue. Since the implementation of a robust alert strategy is still in formative stages, financial institutions have a unique opportunity to develop both a standard (free) set of alerts along with premium (fee-based) alerts that customers value and are willing to pay for.

Additional Resources

Only in the ever changing world of payments.

It is more than a bit ironic that on a day that Isis Mobile Wallet announced that they were going live with their carrier-backed digital payments initiative, a unique card-based solution named Coin announced their alternative solution to the overstuffed wallet.

The question is . . . which solution has the greatest chance for near-term and long-term success?

What is Coin?

Coin is Secure

For those concerned about the security of the card should you leave the card behind (only happens to me about 4x a year), the Coin card uses Bluetooth low energy technology to inform you on your phone that you left your card behind. Better yet, the card completely disables itself if your phone and card are away from each other for more than 10 minutes. 

For those concerned about someone scanning another person's plastic into the app, Coin says that the app only accepts a card that includes the user's personal information. Further, the Coin app is protected with 128-bit or 256-bit encryption and the company is pursuing PCI compliance. The app is also password protected.

Coin is Cool

From the video alone, it is clear that Coin is cool. I personally love it because it is another example of incremental innovation, based on simplifying a person's life seamlessly. It combines something that I am very familiar with (traditional magnetic swipe mechanics) and leverages very high tech digital technology to lighten my wallet.

No new hardware is needed since the device uses a traditional (or new form) credit card swiping device.

In other words, Coin has done what mobile payments is hoping to do (eliminate wallet bulk) without changing my payments behavior. And until NFC, Isis, PayPass or any other mobile payment alternative gains the needed momentum to become omnipresent in my life, an incremental improvement works for me (even though I still love the integration of my Moven debit card and PayPass with mobile receipt and payment analysis).

Initially, the Coin card is expecting to be released in either black ('Midnight') or white ('Snow'), with additional colors being introduced later (sound familiar?). The app will initially be able to run on both iOS and Android. Obviously, the Coin card would not be used for online purchases.

While not the best way to judge a new payments alternative, even the Card website is cool. Here is a link to the product's FAQ page (be sure to read all of the questions . . . some are helpful in daily life).

Coin Crowdfunding

While already having raised funds from venture capital firms (and interestingly the backing of former Google Wallet head Osama), Coin hoped to raise the $50,000 it says it needs to start producing the card by pre-selling the cards to the public beginning immediately for $50 on their website. This method of pre-sale was to gauge the acceptance of the concept up front and underwrite the initial  offering. It is expected that the card will be priced at about $100 at introduction which is scheduled for next summer.

According to representatives from Coin, the start-up surpassed their initial goal for funding . . . within 40 minutes. In addition, the buzz in the industry (while not always the perfect barometer) was unprecedented. Obviously, the consumer wants an alternative to the fat wallet, that is easy to use, acceptable everywhere and avoids a steep learning curve.

To kickstart the process (pun intended), Coin is offering a $5 referral incentive for those who pre-order Coin. Once a person orders Coin, they will be provided a unique URL via email which can be used to tell friends and family about this unique payments solution. For each referred party (up to 10) who also pre-orders within 90 days, a $5 credit will be applied (up to covering the $50 cost of the service.

No Platform is Perfect

Additional Resources

Last week, I was fortunate enough to be one of the keynote speakers at the inaugural Next Bank Sydney. In preparation for my presentation entitled, 'My Digital Banking Nirvana', I looked globally for mobile banking applications that were the best at being simple, encouraging engagement and being contextual.

With help from the team at Mapa Research, I came up with almost 30 components for my perfect mobile banking relationship from every region of the world. Some were completely unique, while others were mobile applications that multiple financial institutions provide.

Link to my Next Bank Sydney presentation, My Digital Banking Nirvana on SlideShare here

What Makes a Great Mobile Banking Application

Mobile Banking 'Basics'

• Mobile photo account opening using just my drivers license
• Mobile photo bill pay
• Mobile deposits
• Mobile photo balance transfer

In addition to leveraging the photo capabilities of my phone to simplify my banking, I would prefer to eliminate many of my password and authentication steps, while not having to worry about security issues. One potential solution is to integrate Capital One's new SureSwipe login feature into my new mobile banking relationship. With SureSwipe, I remember a pattern as opposed to passwords, making my login easier as shown in this humorous video.

I also do not want to go through a series of authentication steps just to see the balance in my account. In the U.S., GoBank provides me the opportunity to see my balances with a simple swipe of the finger. GoBank is still one of the few banks in the U.S. to provide this instant balance feature, even though Mapa Research found close to 20% of major banks worldwide offing this functionality.

Banks overseas offering a similar capability included Commonwealth Bank's Kaching, Swedbank's 'balance shake' and Bank of New Zealand's mobile app that allows you to see your entire relationship without a full login.

Other benefits of GoBank I would like to include as part of my digital banking nirvana include having a wide range of customized alerts, a negotiable monthly fee, and their 'fortune teller' that informs me when I might be spending money I will need later. (I covered the reasons I like GoBank in a Financial Brand blog post here)

Going a step further, I would prefer not to type any information at all into my phone for basic mobile banking. If I had USAA's Virtual Assistant powered by Nuance, that would be possible since members are able to use voice commands to perform basic banking tasks. Nuance is also testing a similar solution at U.S. Bank.

  

CommBank Kaching Mobile Payments Functionality

It would also be nice to include the ability to add pictures to my receipts as offered by Simple in addition to having real-time adjustments to my safe-to-spend and budgeting insight. Simple also provides a very comprehensive search capability that can assist the tracking of spending using 'Google-like' queries or hashtags for spending categorization. Poland's mBank also provides transaction search capability using Google-like queries supported by the excellent Meniga PFM platform.

Simple Real-Time Receipts with Safe-to-Spend

 Simplified Budgeting

I understand that my mobile phone is not the best platform for enhanced budgeting, but I still want to be able to track how I am doing each month using my mobile device as an adjunct to the online banking capability on my desktop. This requires striking a very careful balance between form and functionality.

As I mentioned, I am a fan of both Moven and Simple for their tracking and budgeting capabilities. Both allow me to see my financial position compared to previous periods and utilize a mobile-first design. The visualization of spending behavior is excellent with the use of easy to understand graphs on both the online and mobile platforms.

For me, one of the best personal financial management (PFM) tools has been developed by MoneyDesktop. Using some of the most advanced user interface design capabilities in the industry, their MoneyMobile solution takes some of the best functionality from their online application and creates an excellent visual interface for mobile devices.

MoneyDesktop Mobile PFM Solution

Channel Integration

As much as I am looking for the ultimate mobile banking experience, I realize that mobile may not be the best channel for all of my interactions with my bank. In those instances when I want to use online banking tools, talk to a customer service representative or visit a branch, I still use the same criteria of simplicity, positive engagement and contextual functionality.

As I travel between online, mobile and my tablet, I don't want to relearn how to conduct my banking. While I may want added functionality that takes advantage of the tactile and interactive benefits of the tablet or the expanded canvas of the desktop computer, I want the 'feel' of the experience to be similar.

Westpac New Zealand recently introduced an excellent device agnostic solution  that provides a similar look and feel across devices. In addition to using a responsive design (making the look conform to the device and how the device is held), the use of a 'central platform' will simplify changes in the future.

WestPac Device Agnostic Central Platform

When I have a problem with my account, the last thing I want to do is search for the appropriate phone number for customer service or wait until I get home. Therefore, the ability to have an integrated customer service capability within my mobile banking application is a must.

NatWest and RBS were the first two banks in the U.K. to offer in-app, real-time customer service whereby a customer can initiate a conversation with a dedicated Mobile Chat advisor. In addition, ING has a mobile application that allows for direct appointment setting with a specific agent in a few easy steps.

NatWest Mobile Chat

Going one step further, Turkey-based Akbank became the first bank to offer video chat. Customers can make a one-click video call from within the bank's online banking site to one of the bank's video enabled service agents. No additional software is needed and the application will soon work on Android and iOS devices as well.

Akbank Video Chat

Finally, for those potential instances I may want to use a branch, the traditional branch just doesn't meet my needs. I want to be in and out as quickly as possible and most likely won't need to see a teller. Banks globally are trying to address this change in customer behavior by scaling back traditional transaction-centric branches and replacing them with either advisory-centric units or technology-enabled branches that leverage video and advanced transaction capabilities.

National Australia Bank (NAB) recently opened their first 'Smart Store' where traditional tellers have been replaced by full service machines. These new branches take less space, will potentially have longer hours and are geared to the lifestyles and digital-savvy nature of Customer 3.0. (This new branch format was covered by The Financial Brand here)

Expanded Mobile Functionality

As with any avid mobile banking user, I want even more from my mobile banking experience than just basic transactions, payments and basic money management. For instance, I have definitely come to enjoy my PNC Bank ATM/Branch Finder, that uses augmented reality to allow my phone to search and find facilities through the screen on my phone. Interestingly, while I find the app useful, I am intrigued as to why the app isn't integrated into my normal mobile banking application (PNC Finder is a separate app).

With the demise of most points programs associated with debit card usage, more elaborate (and potentially more lucrative) merchant-funded rewards programs have taken their place. Unfortunately, the vast majority of these programs require a proactive opt-in on an offer level basis and are connected with the online banking relationship as opposed to mobile banking. This makes taking advantage of any rewards cumbersome at best and downright maddening most of the time.

To address this problem and to provide locational rewards using my phone's GPS capability, Cardlytics is enhancing their merchant-funded reward program in early 2014 to include a much more user-friendly rewards program that will provide offers based on where the customer is located. This functionality is already available from American Express with their My Offers program that leverages both transaction history (what I do) with locational information (where I am).

Support of Wearable Technology

As long as I am trying to develop my digital banking nirvana, I might as well look a bit further into the future and make sure my mobile banking relationship can be supported by wearable technology. While definitely not for budgeting or more difficult mobile banking transactions, both Google Glass and SmartWatches can potentially be effective for mobile alerts, balances, simple transfers/payments and augmented reality ATM/Branch finding capabilities.

Two banks are setting the pace globally for wearable technology integration. Banco Sabadell has already used an open app development forum to create mobile banking using Google Glass. As covered by The Financial Brand, the first iteration of 'banking by glass' includes balance inquiry, the ability to get alerts and find branches and eventually deposit a check by looking at it.

In addition, Westpac New Zealand has created the first SmartWatch banking app that leverages the bank's Cash Tank application. Initially only providing balances without formal login, the application is expected to also include the ability to get alerts and do transfers in the future.

One Last Word on Mobile Banking Innovation from Australia

It is clear that the development of innovative mobile banking applications is an ongoing process with new applications and capabilities being introduced almost every day. Therefore, it is important for those searching for digital banking nirvana to not only keep up with industry trends globally (much of the innovation is being done in the Asia Pacific region as mentioned in my recent blog post on innovation), but to also partner with those banks that have innovation ingrained in their culture.

I was lucky enough to be surrounded by many banks at Next Bank Sydney that obviously do more than just talk the talk on innovation . . . they walk the walk. It was apparent that each institution put a high premium on future thought and were encouraged to think out of the box and not be afraid to fail. The energy level of people from these banks was high and there was an amazing willingness to share from each other as well as leaders globally.

Beyond Australia, banks like CaixaBank and HanaBank, as well as USAA, Moven and Simple in the U.S. are ones to follow. I also am intrigued by BBVA, where their Innovation Center is both robust and very public. In addition to a public Innovation Center web site, there is also a LinkedIn and SlideShare page, sharing ideas that have been developed and discussing the innovation process at BBVA.

It is clear that my digital banking nirvana will be a moving aspirational target. But, if I was to combine what is available globally today into a single mobile banking app, I would have a killer mobile banking relationship with my bank.

MY DIGITAL BANKING NIRVANA from Jim Marous

Additional Resources

My Digital Banking Nirvana - Jim Marous on SlideShare (Nov. 2013)

Mobile Banking 2013: Are You Following or Leading - Mapa Research (June 2013)

Banks Accelerate Mobile Banking Innovation - Bank Marketing Strategy (June 2013)

Anticipation is building as FinovateFall 2013 is returning to Manhattan on September 10 and 11 for the seventh consecutive year. With more than 70 cutting edge firms doing 7 minute demos in front of a sellout crowd of more than 1,000 bankers, investors, analysts and the press, it is the premier showcase and networking event for what is new in the world of fintech.

While the overarching innovation theme remains the same, it is interesting to see the ebbs and flows of presenting categories and companies through the years. It is more interesting to realize how fast things have changed in the financial services industry.

Finovate 2007: When Mobile Was Young

FinovateStartup 2008 - The First West Coast Show

Riding The Storm Out: Finovate 2009 - 2011

My First Finovate: FinovateSpring 2013

FinovateFall 2013: Fintech Innovation is Alive and Well

Additional Resources

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

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

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

Moving From a Cost Savings to Revenue Generation Perspective

Net Interest Margin for Banks with Assets > $10B

Aggregate Deposit Account Service Charges for Banks with Assets >$10B

Mobile Deposit Marketplace Potential

According to recent research by Mitek Systems, more than 12 million mobile users have made deposits exceeding $40 billion using their mobile device. In fact, four of the top banks in the country have reported extraordinary volumes of mobile deposits when considering the relative infancy of this service.

• Bank of America: 1M/Week
• JP Morgan Chase: >3M in May
• Wells Fargo: 1.4M in May
• PNC Bank: 450K/Month

The percentage of the largest financial institutions offering mobile remote deposit capture has almost tripled in the past two years, with 64 percent of the top 25 retail banks offering mobile deposit in 2013, up from 48 percent in 2012 and 22 percent in 2011, according to Javelin Strategy & Research. 

In addition, according to research from community bank mobile app provider, Malauzai Software, Inc., the usage of mobile deposit varies from organization to organization. Best-in-class financial institutions have approximately 20% of their active mobile banking end-users making deposits monthly and the average bank or credit union has 10% of active end-users making mobile deposits monthly. Average usage increases to 15%-17% of active end-users when looking at activity over a longer, 90-day period. 

The growth in mobile deposit use is not expected to subside any time soon either. In a June 2013 Celent survey of US internet active consumers, mobile deposit was the second most highly valued capability surveyed, with two-thirds of smartphone users ranking the capability “highly valuable” (6 or 7 on a 7-point scale). Among those surveyed, mRDC was more highly valued than person-to-person payments (54%) and the emerging capability to enroll a new bill payee using the phone’s camera (46%) which a handful of banks offer.

“Mobile deposit, the ability for consumers to quickly and easily deposit checks using their smartphone or tablet cameras has become a must have for banks as consumers increasingly adopt a mobile lifestyle,” said James DeBello, CEO of Mitek, San Diego.

Mobile Deposit Customer Profile

According to the Spring 2013 Raddon Financial Group National Consumer Research, mobile deposit is currently done by 7 percent of households, with 21 percent of Gen Y households using the service and 30 percent of higher income (>$50,000) Gen Y households using mobile deposit.

Indexing the age, income, balances and behavior of the mobile deposit user against all households (index=100), a mobile deposit user is younger (by 14 years), has a higher income and loan balance, has an average checking balance, and provides interchange income that is higher than the norm. Not shown is the fact that these households have average mortgage, equity and credit card balances.

  

Mobile deposit users, as expected, index significantly higher than the average household as to their likelihood of opening a new checking account online, and are more likely to use mobile payments, apply for a loan online, use a prepaid card and even make a payment through social media.

Bottom line, mobile deposit users are heavy users of all mobile services . . . or heavy users of mobile services and heavy mobile deposit users. The research also found that these customers use the branch at a rate that is 66 percent of the average customer.

Mobile Deposit Revenue Opportunity

One of the selling points of mobile banking has been the reduced costs of delivery of the channel. Estimated cost of in-person or call center delivery is quoted as roughly $4.00, with the cost of a mobile transaction being quoted as $.19. Even if we assume that these are accurate estimates of the fully loaded costs of each channel, an assumption that there is a 1:1 offset of transactions is definitely faulty.

Taking these assumptions one step further, if we assume one transaction per month, some quote a cost savings of close to $50 per mobile customer per year. This is highly unlikely (as presented by Bob Meara, senior analyst from Celent in a recent blog post).

While it is definitely easier to assume the cost savings above and to simply sell 'free', this leaves a great deal of potential revenue on the table based on recent research from Market Rates Insight. In the report, Growth and Revenue Potential of Emerging Financial Services, executive vice president and author of the report, Dr. Dan Geller, provides evidence of the willingness of consumers to accept 'value-added fees. In other words, while increasing fees on traditional services such as checking accounts will be seen as punitive and met with resistance (and potential defection), there is an opportunity to sell emerging financial services such as mobile deposit either singularly or as part of an enhanced service bundle.

In the study, both the importance of mobile deposit and perceived value of the service were measured. In the case of mobile deposit (13 emerging services were evaluated in the study), this evaluation was able to illustrate that more could be charged for a premium level of service (such as same day availability) while a lower fee could be charged for slower availability.

According to the study, 56 percent of consumers who did not already have the service found mobile deposit important to some degree. The average value consumers place on this service is $2.63 per month, while the 3.5 percent who found the service extremely important would pay $5.60 per month as shown below.

Mobile Deposit - Level of Importance (MRI, 2013)

Mobile Deposit - Distribution of Monthly Value (MRI, 2013)

The MRI Study also provided these distributions for different types of institutions (national, regional, local and credit unions).

Demographic Variances

From the perspective of demographics, it was interesting that the importance of mobile deposit was stronger for females (72.8%) than for males (64.9%) but that males were willing to pay significantly more on average for mobile deposit per month ($3.89) than their female counterparts ($1.82).

In addition, as would be expected based on the Raddon Financial Group research noted above, the importance of mobile deposit as well as the willingness to pay for the convenience decreased with age, while the importance and willingness to pay increased with income (specific details of these values are available in the report).

Potential for Bundling

Market Rates Insight (MRI) also developed revenue optimization scenarios for 26 different bundles of emerging financial services. Of the 26 bundles, four included mobile deposit as part of the service combination. These bundles included:

• Mobile Deposit with P2P Payments (optimal value of $8.38/mth)
• Mobile Deposit with Credit Score Reporting (optimal value of $8.57/mth)
• Mobile Deposit with Billpay, Low Balance Alerts and Prepaid (optimal value of $10.04/mth)
• Mobile Deposit with Payment Protection (optimal value of $9.23/mth)

While the development of optimal bundles would differ by customer composition, type of institution and competitive scenario, an analysis such as the one below combining mobile deposit with P2P payments illustrates how the analysis was performed for each bundle. As can be seen, while total revenue could increase with the addition of more services, the incremental revenue would actually decrease due to cost of offering and lower customer acceptance of an expanded bundle.

Overall Monthly Fees from Mobile Deposit/P2P Bundle + Add'l Services

Incremental Fees from Mobile Deposit/P2P Bundle + Add'l Services

"One of the most revealing and significant findings from our latest study on emerging financial services is that the principle of diminishing return applies to the bundling of financial services," states, Dr. Dan Geller, the author of the report.

Competitive Overview

Of the top five banks in the US, only U.S. Bank charges a fee ($.50) for each mobile deposit. Fees have been collected since 2010 by U.S. Bank, and while not currently supporting the Blackberry platform, mobile deposits are possible via an iPhone, iPad and Android devices. As with most programs, there are daily and weekly deposit limits.

Regions Bank is the other larger bank that currently charges for mobile deposits. Unlike the flat transaction fee charged by U.S. Bank, Regions has a sliding fee scale based on availability of funds. Immediate availability has a fee 1%-5% of the check amount with a minimum of $5. Overnight availability is $3 and 'standard processing' (two business days) is only $.50 per check. The 'standard' processing is actually faster than any of the 'neobanks' (Moven, Simple, GoBank) at this time. 

"Obviously, customers aren't going to be happy with any kind of cost you throw out there," stated Greg Melville, product owner of mobile products and payments for Regions Bank. "But if you offer a value-added service, such as immediate access to their funds, they have shown that it's something they are more than willing to accept." There was also some negative feedback initially, especially on social media, but very few of the complaints resulted in customers actually leaving the bank.


"FedEx pioneered the concept of higher fees for greater expediency and now consumers are expecting the same option from their financial institutions especially when it comes to mobile deposits," states Dr. Geller.

Jim Bruene, who was one of the first to write a study on the potential for fee revenue from mobile services applauded Regions Bank on their decision to charge a fee, but still believed it would have been better to include mobile deposit as part of a larger bundle with a monthly subscription fee. He also believed the fee structure is overly complicated.

Dave Kaminsky, a senior analyst at Mercator Advisory Group, a research firm focused on the payments industry, explained that users perceive mobile banking's offerings as worth the cost. "Customers tend to look at remote deposit capture or expedited processing as an additional value, so they're willing to pay for it—at least for now."

Many of the other large banks do not currently charge a fee, citing that the value of the mobile deposit customer is higher than average (as shown above), that they are less likely to leave the bank because of this 'sticky' service, that mobile deposits reduce their costs (somewhat debatable) and that there are more transactions that generate interchange income. While each of these arguments may be true to varying degrees, I still believe needed revenue is being left on the table.

The Process of Transitioning from Free to Fee

Despite all of the logic above around the why a  bank or credit union should charge for mobile deposits, the real challenge is in answering the how question without alienating your customers, frustrating your sales teams or negatively impacting the growth potential of mobile deposits. If there is a question around moving from a free to fee strategy, then research your customer base, competitive position, internal capabilities and institutional priorities. If there is not enough rationale around making this transition, maybe now is not the time.

According to James "Alex" Alexander, founder of Alexander Consulting, there are four options available when trying to implement fees when the market (or your current strategy) may be giving services away for free.

1. Don't Do It: With the potential challenges to moving to a fee-based structure, maybe it is better to wait until all impacted parties buy-in. Selling 'free' is easy. Selling 'fees' is hard.
2. Just Do It: This strategy is based on picking a date and letting customers and all employees know that there will be fees from the selected day forward. The upside is that this strategy is simple. The downside is that phones will ring and you need a very strong constitution to decipher the customer (or employee) threats from the reality. The key here is to not make exceptions, because exceptions quickly escalate into more and more fee waivers. If your entire team understands and believes the value proposition, they should be in a position to help stem attrition (there will be some).
3. Grandfather Existing Customers: Under this strategy, current customers who have used mobile deposit will not be charged, while any customers who use the service for the first time after the transition date will be charged a fee. The challenge is that customers (and employees) talk, potentially undermining this strategy.
4. Productize the Old and Sell the New: The challenge with any of the above strategies is that they can trigger a powerful, negative psychological response -- people don't like to have something taken away from them or to have differential treatment for a segment of the customer base. In this scenario, mobile deposit continues to be given away, but in a lower value manner. For the majority of organization, this approach is far superior to the others since the customer is given a choice of services and fee options.

• Productize the old: With 'basic' mobile deposit, this can be done by extending the period for funds to clear. Similar to what Regions Bank has done, change basic mobile deposit to a 7-10 day clearing period.
• Sell the new: For 'premier' mobile deposit, the clearing time can be reduced to 3 days or even shorter. When given the option, most customers will willingly opt for the faster clearing of deposit and will pay the fee. Another option is to include 'premier' mobile deposit in a bundle of mobile benefits as discussed above, with the option of charging an even higher fee.

Five Keys to Marketing a Fee-Based Mobile Deposit Program

To fully benefit from the a fee-based mobile deposit program, the solution must be marketed to customers. For those who have used the service, it is extremely simple and time saving. For those who haven't, it could be considered confusing and even scary from a perceived security and risk perspective. Similar to making a deposit at an ATM, until a customer tries the process and realizes it works, there can be barriers to acceptance and use. Here are five quick ideas to stimulate mobile deposit usage:

1. Free Trial: When you buy a new car, many come with satellite radio already installed and ready for use. In my case, I would never have taken this option at the time of sale, but would have most likely waited or never turned on the service. With the free trial (and very complete up-front training), I not only enjoyed the service . . . I now pay for it on a monthly basis. For mobile deposit, make a huge deal about this service an its benefits. Educate the customer up front and get them 'hooked' on the 'premium' mobile deposit service. After the trial, penetration of the service will be much greater and the opt-in rate for a faster clearing (and the fee) will be greater.
2. Incent Your Team: Don't compensate on sales volume alone, compensate on profitability (or at least reaching a minimum 'premium'/bundle penetration benchmark). By providing incentives, your front line will spend more time educating customers and will emphasize the benefits of your 'premium' mobile deposit service or bundle. Make sure your expectations are that all new customers will begin to use mobile deposit immediately.
3. Don't Accept Deposits: O.K., maybe a bit radical, but when a customer wants to deposit a check into their account in a branch, use this transaction as a customer education opportunity. Either arm your tellers with a tablet device used exclusively for mobile deposits (and other training) or use another available terminal in the office.
4. Build an Educational Video: a short educational video serves several purposes including being a landing page for online and mobile banking customers, providing a location for linking email communication, and providing a tool that can be used in the branch when a customer opens an account or wants to deposit a check.
5. Leverage Digital Communications: Don't be afraid to regularly email customers about the benefits of mobile depost. If you have implemented either a 'premier' or bundled mobile deposit product, each email will more than pay for itself. In addition, monitor customers who continue to deposit checks in your branches. Remind these customers (through email, direct mail, online banners, digital retargeting, mobile banners, etc.) that they can save time by taking advantage of mobile deposit.

The key to success in generating revenue from mobile deposit programs is to 1) communicate the value of the service, 2) provide customers the option of not having to pay (or use the service), 3) reinforce the importance of 100% acceptance of the process to all internal teams through education, mandate and incentives, 4) continuously market the service, 5) build a segmentation strategy and 6) measure results.

"Amid the growing proliferation of digital channels and rapidly evolving consumer behavior, retail banks can no longer afford to adopt a one-size-fits-all approach in devising and enhancing their mobile strategies," says Vin Malhotra, consulting partner for Banking and Financial Services with Cognizant Business Consulting, Cognizant's consulting practice. "Providing innovative and personalized mobile services based on consumer segmentation will enable banks to not only run better by maximizing their investments, but also run differently by strengthening customer engagement and driving greater adoption of mobile banking for competitive differentiation." 

If properly positioned, packaged, sold and reinforced, not only will your employees and customers understand the rational of moving from free to fee, but the service will serve as a retention tool as customers become more comfortable with the benefits and value the fee options. 

And mobile deposit will become one of several new revenue engines within your institution.

Coming Next Month: How to Generate Revenue from Mobile Bill Payments

Additional Resources 

Growth and Revenue Potential of Emerging Financial Services - Market Rates Insight (2013)

Study on Emerging Lifestyle Financial Services - Market Rates Insight (2012)

The Mobile RDC Cost-Savings Myth- Bob Meara on the Celent blog (August 2013)

The US Mobile App Landscape: An Annual Evaluation of Mobile Banking at Top US Banks: Celent (June 2013)

Leveraging an Omnichannel Approach to Drive $1.5B in Mobile Banking Cost Savings- Javelin Strategy and Research (July 2013)

Creating Fee-Based Online Services - Online Banking Report (May 2011)

Retail Bank Pricing: Resetting Customer Expectations - Deloitte (April, 2013)

Three Things You Need to Know About Mobile Deposit - The Raddon Report (August 2013)

The State of Consumer RDC 2011 - Celent (November 2011)

2011 Mobile Remote Deposit Capture: Creating a Compelling Business Case for Mobile Servicing - Javelin Strategy and Research (May 2011)

The ath Power Mobile Banking Study - ath Power Consulting (2013)

Mobile Deposit: Why Now . . . and How- Mitek Systems (2012)

Mobile RDC: Changing How Consumers Bank and Banks Compete - AlixPartners (October 2011)

Subscribe to Bank Marketing Strategy Via Email

I just returned from my second Finovate event in New York City and I realized that, despite being warned, I was totally unprepared for what was going to transpire when I went to my first event last Spring in San Francisco. As a result, I didn't experience the full benefit of the event.

For Finovate Fall, however, I was much more prepared for the onslaught of great ideas, interactions and multi-sensory experiences that are legend at Finovate.

While the next U.S. event is more than 6 months away (there are upcoming events in Asia and London), I thought I would share my survival tips for anyone lucky enough to attend Finovate.

1. Arrive Early: Unlike other conferences where the attendees are divided into several rooms for breakout sessions, the entirety of Finovate takes place in one big hall. Even if the crowd is divided into different viewing venues (which occurred at FinovateFall), it pays to be early, since the best viewing locations (and close accessibility to outlets) go fast. While Finovate goes out of its way to ensure the free Wifi and electricity access is widely available, it's impossible to support 600, 1,100 or 1,400 people equally.
2. Get Connected: If you have an iOS or Android device, download the free Finovate app to better understand the event, learn about the companies doing demos, rate the presentations and to capture your notes during the program. I have yet to see a mobile event app that is so well developed. Also, sign-up for FinovateConnect so that you can set up meetings or simply communicate with other attendees.
3. Develop a Game Plan: To optimize your experience, download the program guide and keep abreast of updates and demo descriptions on the Finovate.com site beginning weeks before the event. Determine which innovations appeal to you and decide who you want to meet with before arriving. As with anything in life, if you have a plan, everything goes smoother.
4. Come Well Rested: The demos always start on time and they come at you at a pace that's hard to get used to. With dual podiums, a new demo comes at you non-stop every seven minutes until a break (usually after 7-8 presentations). With global presentations, some accents may be difficult to understand and some presenters try to give a 30 minute demo in 7 minutes . . . so it helps to stay alert.
5. Network: While Finovate is known as an innovation demo event, it may even be a better financial service innovation networking event. Not only do you have several 30-45 minute breaks between demo sets to mingle with other bankers, providers and media, there is a ramped up version of networking done after the show each day. My suggestion is to arrive the night before the event begins and stay the evening after the event because some of the best interaction occurs during the evening.
6. Bring Your Devices: Bring your computer, tablet and phone to the event. Finovate provides adequate power sources throughout the hall as well as tables for the majority of the attendees. I found using my computer was best to follow the live blogging that is done as the show proceeds as well as the tweeting (see below). For me, multitasking was a way to keep up with the fast paced demos or catch something I may have missed.
7. Get Engaged: Thanks to a wide array of tweeters at the Finovate events, #finovate quickly becomes a trending term worldwide during the show. Don't sit on the sidelines. Share your own live updates on Twitter using the #finovate hashtag. While there is some humor shared on Twitter, many people will share opinions on the innovation as well as links to other resources. You can also follow @Finovate before, after and during the event for updates year round.
8. Dress Appropriately: It is impossible to have the right temperature for everyone's taste. It is good to realize that, despite the weather outside, Finovate organizers have a habit of keeping the temperatures meat locker cool during the event. Therefore, it makes sense to bring a sweater or jacket.
9. Vote: It may seem trivial as an attendee, but voting for the top three innovations each day is the foundation for the very highly coveted 'Best of Show' awards. Finovate provides a nice incentive ($5 Starbucks gift card) for ballots each day, encouraging all attendees to vote. While some great innovations have less polished presentations and some great presentations are made for less noteworthy innovations, the votes are important.
10. Stay Connected: Just because the event ends, it is important to continue to visit the Finovate.com site after the event. Links to all of the live blogging and media coverage of the event is provided as well as videos of all of the demos (a week or so after the event). In addition, the Finovate site provides updates on the status of all of the innovations over time.

According to PEW Research Center, tablet adoption has almost doubled over the past year and for the first time, a third (34%) of American adults currently own a tablet computing device, including almost half (49%) of those in their late thirties and early forties and a majority (56%) of those in higher income households.

With this platform becoming increasingly important to customers, banks and credit unions can no longer sit on the sidelines and watch as the digital landscape develops around them. Unfortunately, with limited resources, new research indicates that development of native tablet apps has occurred at a snails pace due to limited resources and a focus on developing new smartphone applications.

Tablets Require Special Attention

Evolution of Tablet Banking

Tablet Banking Evaluation

In 2011, only 7 banks were ranked in the top 200 iPad apps in the finance category. The good news is that Bank of America, Chase and Wells Fargo are now the top 3 downloaded free iPad finance apps on iTunes according to padgadget.com, with Citibank (13), U.S. Bank (19) and PNC (22) ranking in the top 25 (28 banks are in the top 200). The bad news is that most of the largest banks are not rated very highly by users (First National Bank of Omaha (5) and Peoples United Bank (8) are the highest ranked iPad finance apps according to Padgadget.com here).

Some Tablet Innovations

Mapa Research reviewed innovative tablet uses globally in March, 2013 and shared many of these unique apps in their study entitled, Tablet Banking Series: Branch on the Go?. Below are some of the more interesting screen shots that caught my attention. The 75 page report has over 50 screen shots covering many different tablet applications as well as outlining a blueprint for success from their perspective.

Citibank: Integration of Check Visuals for Tablet Application

Amex: Upon first sign-in, all features of app are highlighted

KBC Bank: Social media integration includes sharing of savings goals

Raiffeisen Bank: Direct access to applicable advisor

The key findings of the Mapa research included:

• Innovative features and services focus on providing both convenience and a smooth user experience for both transactions and browsing, creating the tablet almost as a “on the go branch”. This is highlighted by the incorporation of access to advisors and features which aim to increase banks revenue.
• Personalization and PFM go hand-in-hand. While not all users utilize the PFM feature, it is essential that incorporating this service incorporates a high level of customization. Furthermore, the ability to customize even basic features such as the color and layout enhance the customer journey.
• While there are mixed findings on the eradication of Apple’s market share for tablet device by Android and Kindle tablets, the iPad should be the device of priority for innovation due to demographics of user and web usage volume.

The Future of Tablet Banking

It is clear that digital channels are no longer 'alternative' channels. In fact, they are the fastest growing financial channels in the history of banking and are supporting an ever changing consumer who is more connected than ever. As more tablets are purchased and the capabilities of the devices expand, banks and credit unions must evolve to meet customer expectations. This will require a clear, focused and integrated strategy for tablet banking as well as for all digital channels.

Institutions of all sizes can't continue to sit on the sidelines, providing vastly underdeveloped tablet applications or 'canned' solutions. While it can be expected that mid-sized and smaller institutions will lag their larger counterparts in this development process, monitoring best in breed in the US and overseas is one of the keys to success. This evaluation of what is possible should be done by product managers, marketers, as well as other senior executives in the organization to set the foundation for future strategies and development.

Note: The Celent research on the tablet banking applications at the top 13 banks in the US is a report that complements a similar series of evaluations done by Celent on mobile banking. Analysis of this report Celent was done by Bank Marketing Strategy in August 2013 entitled, Today's Mobile Banking Apps: Table Stakes or Cutting Edge.

Additional Resources

Tablet Banking: An Evaluation of Tablet Apps at the Top 13 Banks - Celent (September 2013)

Tablet Ownership 2013 - Pew Research Center (June 2013)

Banking on the Tablet Channel - Fiserv (August 2013)

Portrait of Today's Tablet User - Wave II - Frank N. Magid Associates (June 2013)

Tablet Banking Series: Branch on the Go? - Mapa Research (March 2013)

User Insights Volume Two: Comparing the Desktop and Tablet Banking Experience - Corporate Insight (August 2013)

iPad Apps Tracker: Top 200 For Finance (Free) - Padgadget.com (updated several times a day)

Subscribe to Bank Marketing Strategy Via Email

For the second consecutive year, Bank Marketing Strategy was named a top 5 financial marketing blog by The Financial Brand. 

With the intent of providing a list of valuable resources for bank and credit union marketers to reference, this year's honor was bestowed on blogs that met a defined set of weighted criteria including relevancy, quality, originality, frequency, longevity and design.

"Of all the banking blogs out there, Jim’s is most similar to The Financial Brand. Jim regularly discusses the design of retail banking products/services, pricing, marketing and the customer experience. Jim’s posts will also frequently gravitate towards new/emerging technologies and channel integration, with a slant towards mobile. Some financial marketers will struggle putting the insights in some of these posts to use, but they will always find the material interesting and engaging."

If you are an Apple iPhone devotee and have downloaded the new iOS7, you probably have a strong opinion about the new design. Maybe you love it. Maybe you hate it. Maybe you are like me and are still getting used to the new look, feel and functionality. 

Upon introduction, many apps immediately took on the new 'flatter' iOS7 look. That is, except for your mobile banking apps. In an industry desperately trying to keep up with customer demand for basic functionality, most didn't have time to change the look of their apps . . . except for GoBank.

• Deference: The UI helps users understand and interact with the content, but never competes with it.
• Clarity: Test is legible at every size, icons are precise and lucid, adornments are subtle and appropriate and a sharpened focus on functionality motivates the design.
• Depth: Visual layers and realistic motion impart vitality and heighten users' delight and understanding.

New GoBank User Experience

Project Runway Update

OH: "It’s amazing. I’m totally going to use this in my everyday life.” #projectrunway#sponsorhttp://t.co/F3cBkWFzWv
— GoBank (@gobank) September 27, 2013

Billed as the largest event focused on emerging payments and financial services, Money2020 has easily eclipsed its inaugural event in 2012, bringing together more than 4,000 fintech followers, including 300+ CEOs and more than 1,250 companies from 50 countries.

While not being able to attend this year, I was able to live vicariously through the tweets of others who captured the highlights (and some humor) from the first full day of the event. Below is a recap of today's sessions.

#money2020 has started. Read the blog of 3 questions to be asked in almost 60 sessions: http://t.co/X7JIS61Tx1’s
— Money2020 (@money2020) October 6, 2013

#money2020"what happens in Vegas, gets tweeted from Vegas"
— Dave Birch (@dgwbirch) October 7, 2013

Money2020 looks to be an awesome event. Sold out, it looks like EVERYONE is here. @Wmagency#money2020
— William Mills (@williamemills) October 7, 2013

Omni-Channel Reality: "67% of consumers have started shopping on device but completed the purchase elsewhere" -Kevin Levitt #money2020
— comScore FinServ (@comScoreFS) October 7, 2013

$Mitk and Experian® Collaborate to Help Organizations Monetize the Mobile Channel http://t.co/cqFCNfizbu#money2020#mobile#technews#tech
— Deppilf flippeD (@deppilf) October 7, 2013

From Scott Grimes: Adding mobile to a banking relationship adds 6 touchpoints per week #money2020
— Ryan Page (@helloryanpage) October 7, 2013

#money2020 MasterCard have already used my favourite statistic! US is a quarter the world's card volume but half the world's card fraud
— Dave Birch (@dgwbirch) October 7, 2013

State of Gift Cards this morning at #money2020. Here's what @rsrresearch says about the best digital gifting programs http://t.co/4lPzhfL5ko
— CashStar, Inc (@CashStar_Inc) October 7, 2013

The chances of Bitcoin being regulated out of existence are the same as the entire Internet being regulated out of existence. #money2020
— Bank Innovation (@BankInnovation) October 7, 2013

Dwolla launches #realtime payments in beta, promises new level of convenience with same transaction cost http://t.co/alh5S2hhAs#money2020
— Dwolla (@dwolla) October 7, 2013

Patrick Gauthier from #PayPay"Regulation is like flood insurance. You bitch about paying for it until you need it."#money2020
— Sam Maule (@sammaule) October 7, 2013

#money2020 Fred Neil @HomeDepot Payments-retail-consumers: win-win-win collaboration that can be used effectively in marketing programs
— IMTC (@IMTConferences) October 7, 2013

RT @davidschropfer: 52% of users who have not used mobile for shopping say they are neutral to ever doing so. @comScore#money2020
— comScore, Inc. (@comScore) October 7, 2013

Why do you have to pay high fees to use your own money? @SuzeOrmanShow was giving the financial industry a hard time today! #money2020
— Ericsson M-Commerce (@EricssonMcomm) October 7, 2013

CardLinx unites Microsoft, Facebook, BofA, LivingSocial, FirstData, Cardlytics- most interesting yet from #Money2020http://t.co/IhtcPOvYYm
— Andera (@AnderaInc) October 7, 2013

Dear #money2020 attendees: Hoping one of you will keep track of all the different definitions of "mobile wallet" that speakers provide.
— rshevlin (@rshevlin) October 7, 2013

#NFC = Not for Commerce. Panel on Innovation in Online Payment Networks. #money2020

— Matt Wilcox (@mattwilcoxpro) October 7, 2013

Between 1/3 and 1/2 of the audience claimed to be working on integrating Bitcoin into their businesses at the Bitcoin panel @ #money2020 !!
— Roger Ver (@rogerkver) October 7, 2013

Results of poll:44% here polled say phone at POS market share will be 50% won't happen until 2020 or LATER. #money2020
— William Mills (@williamemills) October 7, 2013

@KausikRajgopal at #money2020 the survey reflects 29% of attendees believe that banks have the most to lose with the innovation in 7 years.
— Mike Horrocks (@mikehorrocks) October 7, 2013

840 users and 1,204 tweets (846 RTs) in 2 weeks made #money2020 a Trending Topic in United States. #trndnl
— Trendinalia USA (@trendinaliaUS) October 7, 2013

How Bitcoin will do to money what the web did to information #money2020http://t.co/UIhNx89n3Q
— Business Insider (@businessinsider) October 7, 2013

Visa syas it can double size of its network over next 5 years through use of mobile acceptance devices, says exec Jim McCarthy #money2020
— ngenuity Journal (@ngenuityjournal) October 7, 2013

@PayWithIsis is launching a new version of their mobile wallet. Bravely with live demo! #money2020pic.twitter.com/oRrMmy5EyP
— Ericsson M-Commerce (@EricssonMcomm) October 7, 2013

CEO Mike Abbot of ISIS mobile wallet estimates by next year there will be 30M enabled ISIS phones to make payments, #money2020
— ngenuity Journal (@ngenuityjournal) October 7, 2013

Of course @phazlehurst is wearing his Google Glasses on stage at #Money2020 - will he send money by blinking?
— Erin McCune (@erinmccune) October 7, 2013

Google using an iPhone to present their payment app is the cockiest move I've seen at #money2020 Love it.
— Alex Maffeo (@AlexMaffeo) October 7, 2013

My takeaway from #Money2020 keynotes? Still lots of solutions searching for a real consumer problem to solve.
— Norman Guadagno (@ThinkTone) October 7, 2013

I’m really surprised by how many blackberries I see in use here at #Money2020. Of course, I’m surprised when I see even one…
— Jason A. Cobb (@jasonacobb) October 7, 2013

@GoogleWallet has just announced new partnership with @Walgreens for #digital loyalty program at #Money2020
— SpecOpsComm (@SpecOpsComm) October 7, 2013

Mobile wallets are the "game changer" for P2P payments because everything is right there, says Dave Wilkes of @fusenetwork#money2020
— ngenuity Journal (@ngenuityjournal) October 7, 2013

P2P need to be done in, or close to, real time so that the time-to-spend is equivalent to cash. #money2020
— Ericsson M-Commerce (@EricssonMcomm) October 7, 2013

#money2020 Amex reckon that checking account costs 2.5x Bluebird account
— Dave Birch (@dgwbirch) October 7, 2013

@chuckcordray There must be transparency to be able to monetize #bill pay data. #FutureOfBillPay#money2020
— Perficient Fin Serv (@Perficient_FS) October 7, 2013

.@Simplify CEO Josh Reich talks about pushing out 10,000 app updates vs. banks' quarter update cycles. "3 months is an eternity"#money2020
— JP Nicols (@JPNicols) October 7, 2013

Heard from Simple CEO Josh Reich (@i2pi): “As an incumbent, you’re building a 2013 mobile experience on top of 1970’s technology” #Money2020
— Tyler Felous (@TMFelous) October 7, 2013

@foursquare using #geolocation to push card-linked offers w/out user checking in #money2020
— VeriFone (@VeriFone) October 7, 2013

Best part of asking question at #money2020 panel discussion about online banking is that you get a #Patron shot.
— David Pinski (@dapinski) October 7, 2013

Jered Kenna, founder of bitcoin exchange TradeHill: "Banks are afraid of anything that's new."@money2020#money2020@Minyanville#bitcoin
— Josh Wolonick (@JoshWolonick) October 7, 2013

In US, 57% have savings of < $25,000. Info lacking for people to make financial decisions about life, says Anil Arora of @Yodlee#money2020
— ngenuity Journal (@ngenuityjournal) October 7, 2013

Heard at Money 2020 - "The option to expedite a bill payment today is a billion dollar business."
— D3 Banking (@D3Banking) October 7, 2013

Health and Finance are the most important things so people can live their lives-but they can’t see it in one place @Ryan_Caldwell#Money2020
— Matt West (@Matt__West) October 7, 2013

Incumbents have vested interest in not opening up the app ecosystem, but it's changing says Jim Schinella of @Manilla#money2020
— ngenuity Journal (@ngenuityjournal) October 7, 2013

The only data more valuable than Google's is financial data. How do we use it for good!? @moneydestop @Yodlee#money2020
— Melanie Flanigan (@MelanieFlanigan) October 7, 2013

"There are no unbanked people in the US." Dave Wilkes @fuzenetwork. Either I missed his point, or I...disagree. #money2020
— David W. Schropfer (@davidschropfer) October 7, 2013

#money2020 Bitcoin 'settles nearly instantly' is this good enough for the future of payments?
— Debbie Gamble (@debgamble1) October 7, 2013

"If we said 'With your permission we would add value to your life,' most people would support that," says Anil Arora of @Yodlee#money2020
— ngenuity Journal (@ngenuityjournal) October 7, 2013

One big question at #money2020 surrounds #privacy. Is it dead, is it irrelevant, is it secured, is it swapped for $? What do you think?
— Mike Horrocks (@mikehorrocks) October 7, 2013

#money2020 is like the Who's Who of #Payments. Be There Or Be Square. Well, not @Square, like nerdy. Forget it. #PaymentsHumorIsTough
— CNPsolutions LLC (@CNPsolutions) October 7, 2013

@dgwbirch just hit the nail on the head, calling American identity mgmt "Security Theater" at best. #Money2020#FakePortugeseFishingLicense
— (╯°□°)╯︵ ʇʇɐɯ (@msgrasser) October 8, 2013

"No offense, but 99% of what I've heard so far at #money2020 has been *consumer*. The elephant in the room is...*business* banking"<= Truth
— Michael Levinson (@mdlevinson) October 8, 2013

Does the emergence of 'mobile' mean the death of bank branches? Send us your thoughts on #VocaLink. #banking#payments#Money2020
— VocaLink (@VocaLink) October 8, 2013

What? Why?! Cheers! #money2020 @ Money2020 http://t.co/IZnvVyE6iw
— Alex Linebrink (@AlexLinebrink) October 8, 2013

After an evening of fun at the Haze Nightclub, Money2020 kicked it into high gear on Tuesday with a series of industry updates and major product announcements from PayPal, Citi, MasterCard, Square, American Express, Ericsson, Discover and Amazon.

While not being at Money2020 in person, I have compiled the highlights of the day from tweets posted during the day from my fintech friends as I did at the end of Day One.

Day 2 of #Money2020 ahead and they just pushed the keynotes to 20 minutes later. Maybe I can go lose $20 more? #20overload
— Norman Guadagno (@ThinkTone) October 8, 2013

Sign Up for Wed. Twitter Chat Breakfast at #Money2020@dgwbirch@cherian_abraham@techmktggirl@noyesclthttp://t.co/iyhW73z7Fn
— Jim Marous (@JimMarous) October 8, 2013

Partnerships are critical to success in technology innovation #money2020
— Matt Wilcox (@mattwilcoxpro) October 8, 2013

"More iPhones sold than babies born" via @PayPal - I love mobile but that's frightening #money2020
— Walt Cox (@waltrcox) October 8, 2013

The battle is joined at #Money2020...as #PayPal and #ISIS exchange blows during their keynotes (respectively). Game on!
— James Ray (@Rockhopper08) October 8, 2013

@paymentsnews: PayPal Introduces Payment Code for POS Purchasing http://t.co/dzZPKCadTw#money2020
— Erin McCune (@erinmccune) October 8, 2013

@PayPal omnichannel announcements: PayPal App (new), PayPal Beacon, & Payment Code (QR). Where does this leave FIs?#CreditUnions#Money2020
— Walter Cunningham (@cunningham95) October 8, 2013

Citi and Aetna to debut in January an app dubbed M2Health to make payments and billing easier says Gary Greenwald of @Citi#money2020
— ngenuity Journal (@ngenuityjournal) October 8, 2013

#money2020 props to Citi for best acronym so far NFC = needlessly fucking complicated
— Dave Birch (@dgwbirch) October 8, 2013

So Citi 'leaps' into NFC and PayPal launches QR codes. Is this #money2020 or is this #money2005? Where's the innovation?
— Bradley Leimer (@leimer) October 8, 2013

85% of global payments and 50% of US payments are still cash and check according to MasterCard research. #Money2020
— Jason A. Cobb (@jasonacobb) October 8, 2013

Consumers don't want to pay in a different way that's slightly more complex, but want to see a benefit- Ed McLaughlin @MasterCard#money2020
— ngenuity Journal (@ngenuityjournal) October 8, 2013

#money2020 we're all edging towards the Something Present (SP) model, if you ask me
— Dave Birch (@dgwbirch) October 8, 2013

MasterCard discussing working with Visa/Amex on defining payment standards. Tokenization, form factors, consistent UI #money2020#money2020
— Walt Cox (@waltrcox) October 8, 2013

Next Level of Instant Gratification Combination of physical and digital #payment worlds http://t.co/ZiAt5qxKYI#money2020
— Jim Marous (@JimMarous) October 8, 2013

@square merchants sign up in 3 minutes. In four years, 4.5M customers, doubling every 9 months. #money2020
— ngenuity Journal (@ngenuityjournal) October 8, 2013

#AmEx Serve® Introduces New Money Management Capabilities and a Free Cash Load Network http://t.co/IJ063wvhRL#Money2020
— Jim Marous (@JimMarous) October 8, 2013

1 Million $AXP Bluebird customers, $1B+ in balances 39% funded via direct deposit 87% enrollees new to AMEX 47% consumers <35 #money2020
— Mike Crawford (@mccrawf7) October 8, 2013

Reserve (@americanexpress Serve) actually encourages/facilitates positive financial behavior - teach a person to fish-well done! #money2020
— Raph J. (@dninjaraph) October 8, 2013

We're entering into era of the nonbank, consumers have all the power in palm of their hand, says Dan Shulman of @AmericanExpress#money2020
— ngenuity Journal (@ngenuityjournal) October 8, 2013

By 2020, we will have 50 billion connected devices, all with purchasing power. @ericsson exec at #money2020@retailmag@bsminfo
— Jim Roddy (@Jim_Roddy) October 8, 2013

Great Discover presentation new focus on Network NOT just PayPal white label rails for rent. #money2020
— Thomas Noyes (@noyesclt) October 8, 2013

Amazon has 215 million active users, including payment and shipping info and is world's most trusted brand. #money2020
— Bank Innovation (@BankInnovation) October 8, 2013

Announced @money2020: Tom Taylor, @amazon launches "Login & Pay" for #online#payments! #money2020#paypal#challengehttp://t.co/HRDRiBbOHp
— SpecOpsComm (@SpecOpsComm) October 8, 2013

Different models, but Amazon has 2 mil sellers doing $24 bil (2012) Square has 4.5 mil doing $15 bil (2013) #money2020
— Jim Bruene (@netbanker) October 8, 2013

#money2020@amazonpayments doing what everyone fears/hopes/envisions/wonders what @apple would do in the #payments space ... still waiting
— chris fleischer (@ccfleischer) October 8, 2013

Amazon captures 10%of GoGo Air's payment volume in 2 months. Wow!! Fantastic adoption and consumer experience. #money2020@amazonpayments
— Thomas Noyes (@noyesclt) October 8, 2013

all the announcements coming out of #Money2020 further convince me that payments are the new 5th P of marketing http://t.co/3msJx9JyNv
— rshevlin (@rshevlin) October 8, 2013

After a very exciting morning of Money2020 new product announcements and visions for the future, it would be difficult to maintain the same energy level on Tuesday afternoon. 

As can be seen from the hashtag tracker below, #Money2020 tweets reached a crescendo during the opening keynotes, with more than 300 tweets during the 9:00(PT) hour.

In just it's second year, #money2020 is to payments what Mobile World Congress is to mobile. Great, well done event and *everyone* is here.
— jake furst (@furst) October 8, 2013

Has everyone underestimated Amazon's potential to crush payments? High trust, 215 mm active accounts, pushing to Pay With Amazon.#money2020
— Kate Fitzgerald (@plasticpayments) October 8, 2013

Chat with us & our panel of experts on the future of payments innovation. 10/9 at 7:30AM PST. #Money2020. RSVP here: http://t.co/Ay5v2twhh8
— Bank of America (@BofA_News) October 8, 2013

Impressive mobile payment technology by @LoopPay: It emulates the same magnetic field as your credit card http://t.co/XbVBgtOJHH#money2020
— Erol Kazan (@ErolKazan) October 8, 2013

#Money2020 Tweet Highlight Reel Monday: http://t.co/ll2PP0WvaiTuesday AM: http://t.co/55lE6uWhVn#payments#mobile
— Jim Marous (@JimMarous) October 8, 2013

"Finance companies are going to need to become technology companies" -- Patrick Collison, Stripe #Money2020
— Scott Baldwin (@benry) October 8, 2013

Seems clear that the value prop to #MCX is all about retailers and they just said so, merchants are driving. No consumer focus? #money2020
— Suzanne LaProva (@SuzanneLaProva) October 8, 2013

There is no substance to this conversation about MCX. Disappointed. #money2020
— Erin McCune (@erinmccune) October 8, 2013

The twitter feed on MCX is way more entertaining than the panel #money2020
— Aaron McPherson (@aaronmcpherson) October 8, 2013

Why do so many "vision videos" look alike? Predicting the future is much easier than creating it. #Money2020
— Norman Guadagno (@ThinkTone) October 8, 2013

MCX represents 700M customer loyalty and payment accts... not far from the summation of Apple (575M) & Amazon (215M) #money2020
— Mike Crawford (@mccrawf7) October 8, 2013

Tons of mobile payments hype here at #money2020 -- here's a contrarian view of the challenges the industry faces. http://t.co/7JfkmKMSl3
— ngenuity Journal (@ngenuityjournal) October 8, 2013

What if we as an industry adopt the @LivingSocial mindset to create inspiration in the hearts of consumers everyday? #imagine#money2020
— Suzanne LaProva (@SuzanneLaProva) October 8, 2013

"Winners in the space will be the ones who can combine the device with the experience"@MungKiatMC#money2020
— Erla Ósk Ásgeirsdótt (@erla_osk) October 8, 2013

Jingming Li of AliPay says shops closing as more commerce goes online. Stores becoming "experience centers" for online #money2020#China
— Scott Dueweke (@Scott_Dueweke) October 8, 2013

For emerging markets its essential to provide wallet solutions working seamless across both smartphones AND feature phones #money2020
— Jan Hallberg (@jhb_mcom) October 8, 2013

Yandex, Russia's search engine, looms large: it is 3x more popular than @google, w/ 15MM users, 50K merchant accounts- #money2020
— ngenuity Journal (@ngenuityjournal) October 8, 2013

"Let's redefine loyalty. It's not discounts or coupons but can we add value in every transaction? How do we personalize the exp?"#money2020
— Walt Cox (@waltrcox) October 8, 2013

Full house at today's LatAm session ! Read what consumer says on the topic in our latest #consumerlab rep: http://t.co/lziQha0LCC#money2020
— Ericsson M-Commerce (@EricssonMcomm) October 9, 2013

#money2020 question: will the bank cannibalise their own interchange revenues. My answer: Yes, but if they don't someone else will
— Dave Birch (@dgwbirch) October 9, 2013

#money2020 Hank on panel: "International transfer infrastructure can't keep pace with volume today"
— Earthport (@Earthport) October 9, 2013

Loyalty panel - Get the payment part of mobile wallets right first, then loyalty programs can be a differentiator #money2020
— anncave (@anncave) October 9, 2013

Will digital #payments in China go mainstream in the next five years? #Money2020 Panel divided. #banking#SightSpan
— Jon Stotts (@JonathanStotts) October 9, 2013

While we've been talking all day about replacing cash #money2020@money2020, Benjamin Franklin got a makeover today. http://t.co/Ecq45lTu2D
— PinkInPayments (@PinkInPayments) October 9, 2013

Things are heating up #PayPal party aria #money2020 @ Aria Pool & Cabanas http://t.co/4KdaYCZRq1
— Daniel Weckend (@cuervodan) October 9, 2013

U.S. Bank, Monitise partner for mobile commerce #Money2020http://t.co/5JewwaUoiz
— Mike Crawford (@mccrawf7) October 9, 2013

Bitcoin sets the agenda on day one of #Money2020 conference http://t.co/EvsBnUdeRl as digital currency remains the hot topic
— Sophie Donkin (@SophieDonkin) October 9, 2013

The 7 Most Inspirational Quotes From The First 24 Hours of #Money2020 - Anil Arora CEO of #Yodlee included http://t.co/sT2rOeUxSm
— Yodlee (@Yodlee) October 9, 2013

#Money2020 Music Downloads 'A Time for Growth'http://t.co/rINgCNoZH1'Titans of the Industry'http://t.co/o7NphhcXKq
— Jim Marous (@JimMarous) October 8, 2013

Wednesday at Money2020 started very strong with an early morning tweet chat hosted by Bank of America and attended by over 200 fintech followers in a live chat room and digitally.

Participants provided feedback on the topics they enjoyed the most, the biggest takeaway, what the future shopper would look like and what it will take to make mobile payments mainstream. Despite the early hour, the twitter volume hit event highs based on tracking shown below.

#Money2020 Banks & Google are positioned in a way to capture a lot of customer context and can deliver value if & when they make useof it.
— Cherian Abraham (@cherian_abraham) October 9, 2013

@noyesclt makes the point: even with strong product, persuading consumers to change behavior is hard and slow. #money2020
— John Muller (@jmuller) October 9, 2013

Tweet Recap of Mon/Tues - Mon: http://t.co/ll2PP0Wvai Tues AM: http://t.co/55lE6uWhVn Tues PM: http://t.co/LNwvynrB8x#Money2020
— Jim Marous (@JimMarous) October 9, 2013

Watching Deborah Liu of #Facebook payments. How far will she go in exposing their goals of being the ID engine for alt payments? #money2020
— Scott Dueweke (@Scott_Dueweke) October 9, 2013

The @facebook ecosystem supports 55 currencies, 80 pmt methods and over 1MM pmts daily. Heck yes, they're a player in payments! #money2020
— Suzanne LaProva (@SuzanneLaProva) October 9, 2013

800 million Facebook users on mobile. #money2020
— Sam Maule (@sammaule) October 9, 2013

50% of apps are abandoned within the first month of use, according to @facebook presenter at #money2020
— ngenuity Journal (@ngenuityjournal) October 9, 2013

Money2020 Word Cloud Created By My Friends at TSYS

#money2020@facebook Showing integration of facebook in shopping experience ... more evolutionary (A to B) than revolutionary (A to M)
— chris fleischer (@ccfleischer) October 9, 2013

BofA: 50m customers; 30m online; 14m mobile; 200+ debit swipes/sec; ~100 credit swipes/sec; 3m small biz customers #money2020 --that's scale
— Scott Baldwin (@benry) October 9, 2013

Bank of America adding 40k-50k mobile banking users every week. #money2020
— Eric Rosenzweig (@erosenzweig) October 9, 2013

@bankofamerica saves customers $15MM and advertisers $151MM with Bank AmeriDeals powered by @cardlytics#money2020
— B.Horne (@BHorne_bdh) October 9, 2013

The most used mobile payment device is the debit/credit card. Aditya Bhasin at #money2020
— Bank of America (@BofA_News) October 9, 2013

FirstData launching Clover at #money2020http://t.co/Xhs2tyYsOL
— Scott Baldwin (@benry) October 9, 2013

#Pangea wants to revolutionize money transfers, remittances. 250m people transfer $500b/yr market. US/Mexico launch 1st #money2020
— Scott Dueweke (@Scott_Dueweke) October 9, 2013

RT @PamelaLeiSmith RT @sheusuk: Very cool demand generation tools embedded into Spark Pay, plus a great skit and free cake pops. #money2020
— Social Network Woman (@Donnaantoniadis) October 9, 2013

Simplee integrating payment plans into its healthcare payment management service. Great banking opportunity #money2020
— Jim Bruene (@netbanker) October 9, 2013

@fastacash allows users to send money via social platforms such as @facebook, @Skype, @Twitter#money2020.
— ngenuity Journal (@ngenuityjournal) October 9, 2013

@Zumigo1 allows issuers to geolocate customers via their phones so that they can authenticate users in cases of suspected fraud #money2020
— ngenuity Journal (@ngenuityjournal) October 9, 2013

Catching up on #money2020 via Twitter. There are more elephants in the room there than Africa, apparently.
— Dominic Venturo (@innov8tr) October 9, 2013

Experian launches consulting services for the mobile market at #Money2020http://t.co/CcdX5gQqUg Congrats @cherian_abraham !!!
— LoyaltyPayments.com (@mloyaltypayment) October 9, 2013

Stuart Aitken, CEO dunnhumby USA: "data allows you to see customers as individuals""demographics tell you nothing"#BigData#money2020
— Iker de los Ríos (@ikerdlr) October 9, 2013

Digital ID just as messy in banking as it is in tech #money2020 panel on emerging authentication and ID solutions
— Scott Baldwin (@benry) October 9, 2013

User behavior the holy grail for authentication? Current model way too complex. Need standardized security model states panel. #money2020
— Sam Maule (@sammaule) October 9, 2013

Personal opinion: Until Apple supports NFC, NFC will not become the new standard for payments #money2020
— Howie Wu (@Howie_Wu) October 9, 2013

Cardless ATMs Allow You To Get Cash with Your Phone via @CNNMoney#money2020#mobilecommercehttp://t.co/6x2oCtwTKw
— SpecOpsComm (@SpecOpsComm) October 9, 2013

One differentiation of Leaf v @Square: Leaf believes merchant better served w/ dedicated POS hardware-Leaf CEO Aron Schwarzkopf #money2020
— ngenuity Journal (@ngenuityjournal) October 9, 2013

New Gartner data shows banks drop from top digital wallet consumers likely to use in future #Money2020#GartnerSYMpic.twitter.com/5RiQ3M4yep
— Mike Crawford (@mccrawf7) October 9, 2013

#money2020 finally made it in to the exhibition - now on the swag trail - vanitv M&Ms current fave
— Dave Birch (@dgwbirch) October 9, 2013

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.

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

Banks and credit unions realize that there is a strong correlation between customer satisfaction, portfolio growth and financial results, yet recent studies of customer satisfaction indicate there is still a major gap in performance between the financial services industry and other verticals. 

Where are financial institutions falling short in their quest to become customer-centric and how can banks and credit unions begin to exceed customer service expectations? 

Quick Problem Resolution Provides Challenge and Opportunity

One of the impediments to customer satisfaction is that more than a third of consumers surveyed by Carlisle & Gallagher did not believe their problem* was completely resolved. Of the complaints resolved, a whopping 72 percent of the problems required two or more interactions, with close to 30 percent requiring 3 or more interactions. This is certainly not a path to success.

Source: Carlisle & Gallagher (2013)

From an opportunity perspective, more than half of the customers surveyed said they felt like a valued customer when their issue was resolved with a single interaction and that their confidence in the financial institution increased by 38 percent. Conversely, confidence dropped to 17 percent and trust dropped to 10 percent when a problem required two or more interactions to be resolved.

While some complaints may be complex and require further research, this insight shows the power of resolving a problem quickly and completely. In fact, several studies done in the past have illustrated that a customer who has had a problem resolved satisfactorily can be more loyal than one that has never had a problem.

Source: Carlisle & Gallagher (2013)

There is also a direct correlation between a customer's experience and future banking relationship potential according to the Carlisle & Gallagher study. As shown below, while first call resolution can often lead to more business, slower resolution requiring additional interactions leads to higher dissatisfaction and lower potential for relationship growth.

"Banks have one shot to resolve their customer’s problems before they hurt confidence, trust and future banking relationships. Two calls is just too many in the eyes of the consumer when it comes to solving problems," according to Patricia Sahm, Ph.D., Customer Experience and Channels Practice Lead at Carlisle & Gallagher

Source: Carlisle & Gallagher (2013)

Key Problem Areas

According to Carlisle & Gallagher, the key problem area for banks and credit unions are the core banking products, including checking accounts, credit cards, mortgages and debit cards, with fees and payments being the primary focus of service issues. As a result, focusing on resolving issues with these core products will have the greatest short and long-term impact on customer satisfaction.

"We were surprise that is was the rudimentary products that banks offer that are costing consumers the most headaches with personal checking leading the pack at 38%," said Sahm.

Source: Carlisle & Gallagher (2013)

Interestingly, the CG research also found that customers who did not have their problems resolved felt they shared ideas for problem resolution with their financial institution but were not listen to. This was especially true with debit cards (75%), credit cards (68%), mortgage issues (63%) and problems with checking accounts (60%). 

For institutions hoping to improve satisfaction levels, being able to collect and leverage these insights may provide the foundation for improved customer communication and problem resolution.

Opportunities for Improvement

From recent research from Carlisle & Gallagher as well as ForeSee, it is clear that customer expectations are increasing daily with industries other than financial services setting the bar for success.

According to Patricia Sahm from Carlisle & Gallagher, “Financial institutions have a long way to go to become great customer service organizations. In today’s world of instant gratification, consumer expectations are being shaped by experiences outside of the financial services industry where content, interactions and features are richer, delivering a more engaging and rewarding experience for the consumer.” 

With new compliance requirements, expanded transaction and communication channels and increased competition, the potential cost of poor complaint resolution is high. The good news is that, in an industry struggling with trust and service issues, there is a great opportunity for those financial institutions that meet or exceed expectations.

In fact, according to the study from ForeSee, customer experience is highly predictive of future business success. When comparing the financial behaviors of highly satisfied customers (scores of 80 or higher) to less satisfied customers (scores of 69 or less), highly satisfied customers are:

Source: ForeSee (2013)

"Satisfaction studies are not beauty contests," noted Larry Freed, CEO of ForeSee. “We see more and more CEOs monitoring and improving the customer experience because research shows that, when measured correctly, satisfaction predicts future financial results, revenue and even stock prices."

Some of the recommendations provided by recent research includes:

• Manage customer expectations by sharing problems and solutions with transparency and communicating the type of service level that customers can expect. (if it’s going to take 24 hours for the problem to be resolved share this with the customer)
• Invest in solving the issues with core products first (this is where the most opportunity resides)
• Evaluate your complaint database to determine the primary issues needing to be resolved (spend time resolving those issues driving the most pain)
• Create a 'first touch' resolution process (find a way to avoid multiple interactions)
• Improve social channel problem resolution (consumers using social media to complain can impact the most consumers and expect the quickest resolution)
• Develop a robust listing program (customers are willing to share ideas on problem resolution . . . let them help)
• Share the results (employees will respond to tangible measurements)

As we look to the future, the impact of social media can't be ignored. "The social media channel will serve as the benchmark in customer care, enabling customer communication across the banking enterprise and help break down silos within financial services organizations," according to Pat Sahm.

"Beyond social media, banks and credit unions will need to create the feel of first touch resolution for the customer by enabling employees to take quick action to solve the customer’s problem. It’s all about creating a ‘prevent’ defense and a culture of customer advocacy," continued Salm.

"In the next five years, consumer demands will continue to increase and regulatory requirements will only become more intrusive. Customer experience will need to be built into every aspect of the institution, no longer its own department."

 

* 'Problem' as defined by the Carlisle & Gallagher research included inaccuracies, issues with fees, concern with speed of loan, mishandled funds or other concerns and did not include a basic inquiry about a transaction or to ask product questions.


To request a copy of CG’s research report on customer complaint management available in early 2014, emailinsight@cgcginc.com.

Additional Resources

Are Two Calls Too Many in the Eyes of the Customer? - Carlisle & Gallagher Consulting Group SlideShare Presentation (December 2013)

ForeSee Experience Index - ForeSee (December 2013)

ForeSee Mobile Satisfaction Index: Financial Services Edition - ForeSee (November, 2012)

There is no doubt that strategies around mobile banking are in the top five priorities for any financial institution. Even with this focus, many bankers have a difficult time making the paradigm shift that is required to build a great mobile banking application.

As a result, I asked Scott Bales, who is currently working on a new book entitled 'Mobile Ready' to share his thoughts on the keys to mobile app development success. 

1. Get Out of the Building

2. Enlist Partners

3. Remove Strings

4. Leverage Personal Context

5. Build Engagement

6. Make Mobile Banking Simple

7. Build an App Unlike Your Website

8. Test and Learn

9. Focus on Performance

Digitally savvy users have no tolerance for slow performance, but a strong appreciation for mobile sites that get the job done. Ensure you take the time to ensure quality outputs. Build beta communities if you want to test things in the wild, therefore protecting your core mainstream users. Users that opt for beta programs have higher tolerances for bugs and performance, and often will passionately help you fix issues.

Scott Bales

Scott Bales is the Regional Director for the strategic advisory firm, User Strategy out of Singapore and Innovation Director for NextBank. Scott is a self-proclaimed extrovert, who has meshed his fascination with people and what motivates them, with his enthusiasm for technology. 

Bales is 'the most influential in financial services and mobility', with over a decade of international experience in innovation, thought leadership, implementation planning and strategy. He is an avid blogger and can be found often on Twitter.

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

This year's list run the gamut from a continuation of past trends to the introduction of new trends in delivery, payments, competition, operations, customer experience and marketing. Prioritization of response to these trends will differ for each bank, credit union and industry provider, but none of these trends can be ignored.

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

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

All of the contributors did concur, however, that a guaranteed prediction for 2014 is that disruption will continue at an unprecedented pace and that the industry will look different this time next year.

This year's Top 10 Retail Banking Trends and Predictions are:

• Drive-to-Digital: Impacting delivery, marketing and service usage
• Payment Disruption: New players, technologies and innovations
• Increased Competition: Neobanks and non-traditional player pressures
• Branch Optimization: Maybe not branchless, but certainly less branches
• Focus on Customer 3.0: Digitally astute, social and yearning for insight
• Breaking Down Silos: Product and data silos begin to crumble
• Simplifying Engagement: Removal of friction and steps to engage
• Improving Contextual Experiences: Leveraging data for improved service
• Differentiating Brands: Avoiding commoditization in a digital world
• Global Innovation Perspective: Expanding view of tomorrow's innovations

The following infographic is a graphical representation of top trend and prediction terms provided by the contributors to this year's report. The size of each word represents the prominence of terms from the industry leader submissions.

No trend has impacted the financial services industry as much or as quickly as the drive-to-digital. In fact, according to two recent reports from Accenture, 35 percent of banks' market share in North America could be in play by 2020 as traditional branch banking gives way to new digital players. The research also indicates that 15 to 25 percent of today's roughly 7,000 North American financial institutions could be gone as a result of consolidation before 2020.

With the rapid expansion of ownership of smartphones and tablet devices, today's consumer wants to be able to research, purchase and manage their financial services on demand using the device(s) of their choice in virtually any location. Reinventing the financial services purchase funnel, the way people conduct daily banking, the delivery of insight, and the interaction between channels, the drive-to-digital will provide both opportunities and challenges for financial insitutions of all sizes.

"In 2014, we'll see greater experimentation in new products and revenue build around mobile, web and social commerce," according to Moven CEO Brett King. "We’ll also see the emergence of Drive-to-Digital competing with Drive-to-Branch. Mobile and web have all been about brochureware and transactional services to this point – finally we’ll start to see a concerted effort to revenue fulfillment digitally." 

Bryan Clagett, chief marketing officer at Geezeo also believes it will be the 'year of the digital bank' in 2014. According to Clagett, "There will be a realization that channels are owned by consumers, and not banks, and thus must meld into a digital experience that exists seamlessly regardless of channel or device. The silos of traditional retail delivery channels will begin to erode and a more holistic approach to a digital banking experience will take hold."

"In a mobile-first environment, banks will begin to support more complex types of functions and transactions on the small screen, new forms of authentication that better balance security and convenience, and more relevant, contextual information delivery via alerts, push notifications, and other forms of messaging, predicts Bryan Yeager, financial institution analyst for eMarketer. "Banks will also likely promote mobile banking to an older, more risk-averse cohort than in the past."

An example of this more complex integration is provided by Stessa Cohen, banking industry analyst and research director for Gartner , referencing a recent report entitled, 'The Best Thing to Do With Your PFM Tools May Be to Get Rid of Them', "Driving revenue for banks will require that personal financial management (PFM) tools evolve to become true digital personal financial advisors (DPFAs). These digital advisors will use a customers' own data and other business intelligence to learn about a personal financial habits. It will enable the bank to proactively help the customer perform the intermediate steps involved in accomplishing short- and long-term personal financial goals."

The drive-to-digital will impact all areas of the bank and all levels of customers in 2014. April Rudin", founder and CEO of The Rudin Group predicts, Fewer private banks will have street addresses and more will have IP addresses – HNW clients want the bank to come to them."

Chris Skinner, chairman of the London-based Financial Services Club and author of the book Digital Bank believes banks may begin to move beyond traditional mobile in 2014 embedding services in devices, citing the advances by Banco Sabadell with Google Glass Banking and Westpac's Smartwatch banking app.

Alex Bray, retail channel director at U.K. based Misys agreed with Skinner saying, "I believe Google Glass will drive a whole new device category for banking. Customer value propositions and bank's transaction, marketing and sales processes will have to adjust accordingly – just as they did for mobile banking." He also believes the appearance of thumb print readers points to a more biometric future for retail banking in 2014. "We will see easier payments and quicker sales processes – further underlying the drive-to-digital."

Realizing that not all banks even have mobile banking yet, Bryan Yurcan, reporter and editor for Bank Systems and Technology recommended, "If I'm a tiny community bank and I don't even offer mobile banking, I would set out to do that. The point being, as consumers continue to become more comfortable conducting transactions online, I want to at least keep up with what they expect from a mobile experience in other industries." 

It is virtually impossible to keep track of the new players hoping to disrupt the payments marketplace. With so many steps and interactions in a normal P2P or retail payments process, there is no shortage of players trying to grab a piece of the payments pie. And for good reason . . . since the scale is so large. For instance, FIS, the company atop this year's FinTech 100 list, moves more than $5.5 trillion annually (which is larger than all but three of the larges economies in the world).

Of greater consequence than the loss of steps in the payments process to non-traditional players is the potential impact of losing the insight connected with payment transactions. This 'big data' is the crown jewel of the overarching financial relationship and the foundation of a contextual customer experience and future loyalty.

Dave Birch, director at U.K. based Consult Hyperion says, "In the next year, I think technology will continue to drive competition in the payments space, with the emergence of new competitive structures based on APIs." He continues, "Nobody really knows how this will pan out, but that's what makes it fun."

"The move to create a joint standard for tokenization of payments credentials will create new opportunities for payments improvement in the digital realm," offered Dominic Venturo, chief innovation officer for payment services at U.S. Bank. He also wasn't the only contributor who believed BitCoin will continue to get buzz and maybe additional traction in 2014.

Zilvinas Bareisis, Senior Analyst at Celent believes that payments will take a backseat to the overall purchase experience, with merchants continuing to launch their own apps. "All payments players will focus on engaging the customer early and throughout the shopping cycle,"says Bareisis. "In 2014, it will be even more important for banks to make sure their issued payment instruments are used to facilitate transactions."

Cherian Abraham, Mobile Commerce and Payments Lead at Experian Global Consulting, is most concerned about the impact of courtroom battles in 2014, citing the interchange settlement in front of Judge Gleeson in Brooklyn and the NASC v Board of Governors of the Federal Reserve. "The rulings will have a domino effect – starting with severely impacting the economics around debit." 

"Payments (especially mobile) will reach a critical mass with Apple, Paypal, Square and Google providing some attractive use cases for both consumers and merchants using technologies like iBeacon, Beacon, Real-time P2P and HCE emulation," offered Deva Annamalai, SVP of marketing technology and data insights at Zions Bank, "The player(s) who play nicely with the card providers and FIs by sharing data will definitely see more traction in the market place," he added.

Alex Jimenez, SVP of Rockland Trust agree. "We’ll start to see the eventual winners of mobile wallets clearly emerge.  Personally, I think that Apple, Amazon, Visa and MasterCard will be the leading providers while ISIS, PayPal, Google and others will falter. I also think Apple and Amazon will finally make their wallet plays in 2014, with Amazon being first."

David M. Brear, principal consultant at Infosys Lodestone in the U.K. sends a cautionary note regarding Apple, by predicting, "Apple will finally get into the payments space in 2014, and all hell breaks loose with banks beginning to be disintermediated  from their customer data."

Veteran banker P. Andrew Will, formerly from Norwest, Wells Fargo and BMO Harri points to the rollout of EMV chip enabled cards (particularly in the second half of 2014) in advance of the October 1, 2015 POS liability shift date in the U.S. He also foresees other new innovations in the payments space as transactions become more mobile and less card based.

A somewhat sobering thought came from Starpoint LLP partner and payments industry investor Tom Noyes who believes that banks will begin to realize that they are not in control of mobile payments and can not force the use of credit cards. "Payments are NOT about banking," Noyes stated. "Payments are only the last (and easiest) phase of a long commerce process."

In 2014, the trusted role of banks and credit unions as the collector of funds, provider of loans, processor of payments and advisor of financial relationships will continue to come under fire from non-traditional players including new financial organizations (neobanks), hardware providers, third party payment processors, and mobile app developers that merchants and consumers are using to chip away at the traditional financial services model. And as anyone who attends Finovate knows, crowdsourcing options for investment and lending are just a regulator's approval from going mainstream.

Jim Bruene, founder of Finovate and publisher of the Online Banking Report boldly predicts, "Debt crowdfunding (aka P2P lending) will become hyped in 2014 with Lending Club going public in potentially the biggest fintech startup IPO of all time". He continues, "The alt-lending sector will begin to be taken as a serious competitive threat to mainstream lenders with an outside chance that one or more mid-size or larger financial institutions will begin offering P2P lending services of their own."

Serge Milman, principal consultant of SFO Consultants warns that while personal financial management (PFM), mobile, P2P and other 'things that glitter' will continue to receive buzz, most community and regional banks and credit unions will be unable to benefit from these solutions. He recommends proactivity in pursuing these opportunities.

"It strikes me that a number of conversations have shifted from the 'big vs. small' to 'smart vs. stupid,' stated Al Dominick, managing director and EVP at Bank Director. "That is, leadership teams that both identify and implement innovative strategies and tools have a chance to more realistically compete with the BofA's of the world."

Banks and credit unions that take a fast follower position can also leverage innovation of neobanks and non-banks or can invest in the best customer engagement and new product development advances, eliminating the need to build from scratch.

Current branch-based distribution models are no longer sustainable and are unable to meet the rapidly evolving customer needs for real time access and simplicity in banking interactions. Brett King's Bank 3.0 vision of a branchless future may be a ways off, but there is no arguing his belief that 'banking is no longer somewhere you go, but something you do'. In other words, while not branch-less, we are definitely moving to a less-branch distribution model.

As a result, retail banking and credit union executives will be focusing on 'smart-sizing' distribution networks in 2014, closing offices, shrinking footprints and integrating new technological breakthroughs to digitize transactions without dehumanizing interactions.

Sherief Meleis, Managing Director at Novantas concurs that a new round of cost reduction is coming in 2014, with banks turning to more fundamental transformation, particularly in retail distribution. "Banks will begin to figure out how to achieve 'perceived convenience' much less expensively than in the past." P. Andrew Will also believed branch automation pilots will become more prevalent in the coming year, improving the integration of systems and platforms.

"Branch transformation has already moved from talk to action, albeit in a small minority of banks and credit unions, states Bob Meara, senior analyst at Celent. "The efforts will pick up steam as growth in mobile banking usage and the resulting inexorable erosion in branch foot traffic leave banks with no choice." He also predict that mobile RDC will be offered by nearly a fourth of U.S. financial institutions by year-end 2014, while he doesn't see significant growth in other mobile photo apps. 

Sam Kilmer, senior director at Cornerstone Advisors predicts, "At least a dozen banks will announce significant branch network realignments under the guise of technology and customer experience next year, but under the covers, most of them will be largely about distribution cost take outs." 

The branch reduction efforts have not just occurred in large financial institutions. Dominick from Bank Director mentioned, "I'm hearing that more community bank CEOs are thinking about – or actually closing – branches due in part to mobile's impact."Jim Perry, senior strategist for Market Insights, Inc. also expect that 2014 will be a year when many smaller institutions stop wringing their hands about the “future of the branch” and actually develop strategies for the incremental evolution of their branch network and delivery channels. 

The impact of regulations and costs related to 'keeping up' will even push some credit unions and smaller banks to consolidate and/or close at a faster pace than in 2013, according to Sarah Cooke from the Credit Union Times. George Hofheimer, chief research and innovation officer at Filene Research Institute concurred, reiterating that the cost of regulations will force more organizations to gain scale through consolidation.

Closing offices doesn't come easily, however as mentioned by Jeff Marsico, EVP of the Kafafian Group. "I think the decline in bank branches will challenge financial institutions to minimize customer attrition and maintain their community commitment to those locales affected by consolidations. This will require a disciplined and multi-channel approach that includes media (traditional and social), participations in community organizations, charitable giving, lending, and a strong digital distribution platform."

Alternatively, Patricia Hines, director of financial services industry marketing for GXS sees a geographic expansion of global and super-regional banks.

The importance of moving the sales process out of the branches is more difficult than moving transactions as many banks and credit unions have seen. David Hodgkinson, principal advisor for KPMG in the U.K. agreed, saying, "As mobile banking adoption accelerates, banks will need to work harder to develop non-intrusive sales techniques through this channel or risk losing cross-sales opportunities as customers shift much of their online and in-person banking to mobile."

"Banks will start to offer video-based services for higher value, complex sales such as mortgages and investment products," Hodgkinson added. "Expect to see second screen usage to sit alongside the video call – so customers can review the numbers on their ipad while conversing with the bank agent through their SmartTV," David M. Brear from Infosys and Accenture also believed that banks will begin to invest heavily in video conferencing capability to maximize the use of existing staff.

Finally, Tom Pritzker , EVP at John Ryan provide this glimpse into the future of branches in 2014 and beyond:

• Increased and innovative use of technology to transform the branch into more collaborative and relevant sales and information centers including:
• Enhanced use of tablet technology for side-by-side selling applications
• Greater use of mobile, and digital interactivity within the branch – particularly with a view to starting conversations, understanding customers' needs and generating cross sales
• Sophisticated targeting of marketing messages within the branch based on improved cross channel customer data.
• Use of geo-fencing to provide highly relevant and location based offers and to lure customers into the branch.
• Novel uses of technology to start conversations — Use of augmented reality to prompt sales demos.

Customer 3.0 is digitally connected, highly informed and demands a highly personalized approach in their communications, their products and the service they receive as referenced in a recent Bank Marketing Strategy post. This customer begins their bank and credit union product shopping experience at their desk, in their car or on their couch, relying on friends and family reviews and published reviews across social media channels. Instead of walking into a local branch office and sitting down to open an account during banking hours, these customers purchase their banking services much like they purchase music, books or other products . . . online, 24/7.

The bar for engagement is set high for these customers, since their frame of reference are the best digital retailers and social marketers. Neobanks and banks with a simplified mobile-first strategy are the strongest competitors for these customers.

Scott Bales, Director of User Strategy, Innovation Director for Next Bank and author of the soon to be released book, Mobile Ready reminds bankers that digital natives, the same age as Google, will begin to need banking services and that their vote on providers will be a huge leading indicator for industry shifts for the next decade. 

"When implementing a mobile-first strategy for the digital consumer, banks will need to be sure to include the same service fundamentals that were found in staffed branches, recommended Wade Arnold, founder and CEO of Banno. "Effectively migrating customers to a unified mobile solution that will last requires support at an individual level; anything less is a transactional commodity and will simply be viewed as replaceable by these connected customers."

According to Arnold, "The bar has been raised for mobile self-service to satisfy more than OLB parity. In 2014, organizations will have to provide improved levels of individualized engagement and simplified consultation. If done well, institutions will be rewarded by gaining intimate customer knowledge that can be used to improve revenues and communication. Once we get there, our industry will never be the same."

"As non-bank competitors continue to materialize, banks will discover their entanglements to antiquated and siloed core systems along with a lack of agility in utilizing data, will present quite a challenge in 2014, according to Mike King, founder and president of Bankwide. 

In order to manage customer information more effectively, banks will begin to eliminate both human and insight silos by integrating data, systems and processes across different product lines. Moving to a service-oriented architecture (SOA), data will be shared and leveraged in real-time on all of the bank's touchpoints, allowing the bank to provide more personalized service based on a complete customer profile.

"The single biggest priority of 2014 should be innovating in a customer-first and lean startup manner." stated Mark Zmarzly, business development executive of Deluxe Corporation. "Too often banks have made product-first decisions that are designed to solve the bank's profitability problems instead of the consumer's problems. Then the bank wonder why adoption is in the low single digits."

"Instead, banks need to understand current customer financial product problems, break down current silos and build a pilot project to solve, test in beta, and measure the results. Then repeat. 'Build, measure, learn' is the lean startup mantra, and it works," continued Zmarzly.

David Sosna, founder and CEO of Personetics predicted, "Some leading banks will try to move from a product approach to a customer focused strategy especially in the digital channels. FIs have been 'talking the talk' for a while and now a few will be in the position to execute on that strategy as silos are eliminated.".

In 2014, we'll start seeing banking examples of cross-channel experiences, driven by insights and powered by channel analytics, according to Danny Tang, worldwide financial transformation leader at IBM. "The leaders in the industry will eliminate silos, starting the convergence of mobile and online banking and building a linkage between the digital and physical channels. Conversely, the laggers will unfortunately realize that a siloed mentality and the lack of multi-channel platform is an inhibitor to success."

Mike Bartoo, regional manager for Marquis challenges financial marketers to go beyond just advertising and branding and to break down data silos. "Hopefully, we’ll see the trend of actually USING insight from across the organization to drive revenue. While it is great to have the insight, it's more valuable to use it."

At a time when everything around us seems to becoming more complex, consumers are searching out those products and companies that can simplify our lives. But it's important to recognize that simplifying an interaction with customers does not mean that the underlying product or service is simple. Instead, the key is to rethink as opposed to append and look for ways to eliminate steps, paperwork and processes that overly complicate.

In 2014, financial institutions will begin to realize that simplicity is mutually beneficial to both customers and the organizations. Not only will those firms that simplify see improved trust and loyalty, they will also realize savings from redundant and outdated processes, reduced customer inquiries and fewer refunds and reversals.

Jin Zwicky, vice president of experience design at Singapore's OCBC Bank and publisher of the Designful Co. blog that focuses on simplicity in financial services, told me in an interview that, "Simplicity is the 'forever' black". Brett King agrees with Jin when he said, "Removing friction will become the catch cry of 2014 though – whether it is a real-time core system replacement, or trying to get application processes streamlined, the big push will be for simplification of the engagement."

Beyond mobile deposit capture, Kofax and Mitek have taken mobile simplicity to a new level by leveraging the photo taking capability of a mobile device to eliminate keystrokes, simplify applications, facilitate bill payment and account transfers, provide digital security for documents and validate customer information. Both firms also say new simplified processes are on the way, making mobile banking easier and even fun.

Some additional ways banking will be made simpler in 2014 will include voice and gesture recognition, multichannel video chat, branch-based digital billboards and real-time spending updates via a customer's mobile device according to Accenture. Penny Crosman, editor for The American Banker agrees that simplification and innovation in mobile banking will continue – with voice recognition and video conferencing potentially becoming part of many banks’ apps this year, as well as contactless payments. 

Responsive web design will also become more prevalent in 2014 according to Melanie Friedrichs, contributor to Bank Marketing Strategy and analyst for Andera.

Finally, as Jill Castilla, EVP of Citizens Bank of Edmond mentioned in an email to me for this post, even compliance processes will be simplified with new decision tools that allow bankers to better assess adherence to new regulations.

According to Aite Group senior analyst, Ron Shevlin, a new type of marketing will emerge in 2014 — activity-based marketing — or marketing within the context of an activity being performed by a customer or prospect. There are a number of examples of financial institutions already doing activity-based marketing: 1) USAA’s Auto Circle app; 2) Commonwealth Bank of Australia’s home buying app; and 3) Caixa Bank’s ticket-purchasing app.

The common threads in the examples is the creation of a new point of interaction for banks based on the context of the interaction. Activity-based marketing changes the point of interaction for banks, moving that point much closer to the identification of the need or want for the product or service using advanced customer insight. 

As Bradley Leimer, vice president of Mechanics Bank wrote in his great American Banker article, There Will be Blood: The Era of Engagement Banking, "Delivering contextual financial services with beautifully crafted interfaces and experiences is becoming a necessity to maintain relevance with the digital consumer." To achieve this, banks will focus on personalizing engagements with a wider range of insight, going beyond demographic and account level data to include transactional, locational and social insight.

In the coming year, new location-based merchant-funded reward platforms will emerge that improve the targeting of offers and social media channel insight will be used to improve service and delivery. Finally, banks will continue to improve real-time alerts and notifications that will strengthen loyalty and engagement.

According to Brett King, "The new skills we’ll see in demand in 2014 include Data Scientist and User Experience specialists . . . more around trying to build great contextual revenue opportunities, not ad campaigns."

"Digital channels will mature from being transactional to being engaging in the coming year," stated Nicole Sturgill, research director for retail banking at CEB TowerGroup. "Financial Institutions will also focus more on developing the channels to improve customer service and to help customers better manage their finances."

Fred Hagerman, chief marketing officer of Firstmark Credit Union, believes that organizations need to focus on the mobile, online banking and lending experiences in the coming year since these are the primary areas of 1:1 contact between the consumer and most banks. Both Hagerman and Hofheimer from Filene also believe that organizations need to make sense out of the mountains of data within their firewalls to improve the customer experience. Gertjan Reinders, senior IT manager for ING Bank in Amsterdam concurred when he offered, "2014 is all about being data-driven—not just in marketing and sales, but within the entire organization. For improving the customer experience, big data will become more of a game changer."

"Banks will get serious about using analytics to assess customer interactions across channels in 2014—to identify needs, trends and complaints and take corrective actions to improve customer experience and increase satisfaction" predicted Jenni Palocsik, marketing director of retail financial services at Verint. "We’ll also see 'Identity 2.0' emerge as FIs learn how to combine voice biometrics plus data science in their evolving models to more accurately detect and reduce contact center fraud."

Steven Ramirez, CEO of Beyond the Arc agrees that the mobile banking experience will rise to the top of the strategic agenda in 2014. "Simply having a mobile app will not be enough. Leaders will re-architect the relationships they have with customers using mobile to provide personalized offers and mine the data to further increase the effectiveness of the platform."

"The most successful credit unions and banks preparing for business in a digital economy will begin to focus on optimizing their digital user experiences built upon a marketing automation platform to target, capture, nurture and convert leads within the market segments they have identified," predicted James Robert Lay, CEO of CU Grow. He also is a strong believer that financial institutions will expand their use of personalized digital and video content in the coming year.

Paul Kadin, financial category development officer for AOL agrees that the importance digital content and video will increase in 2014, as mentioned in his recent tweet. 

Scott Bales goes a step further, saying that user experience design and Design Thinking will shape not only the mobile experience, but a bank's web site and product development as well.

James Anthos, SVP of BB&T may have summed it up best when he said, "As banks focus on the holistic client experience in 2014, no matter what the channel, banks can create an environment that fosters constant connectivity between them and the client, which should allow for deeper relationships, bigger share of wallet, and increasing confidence of the client in managing their finances."

In the Financial Brand blog post written by Simon Clough, Partner and Group Board Director at U.K. based Clear, it was accurately stated that "Consumers view most banking brands as undesirable and wholly undifferentiated". The digitalization of the industry is further commoditizing our brands, with fewer face to face interactions limiting our ability to set ourselves apart.

That's why Clough's battle cry of 'Differentiate or Die' has never been more relevant. Banks and credit unions will begin to find ways to stand out in a crowded competitive marketplace in 2014, leveraging all channels to make their message heard.

"The most significant driver of improved results in 2014 will be the ability of leaders to manage through ongoing, ever-changing regulatory changes to focus on key customer segments with innovative products, new technology and exceptional customer experience across all channels," stated Debbie Bianucci, president and CEO at BAI. "Leaders who can balance innovation and customer experience with the pressure of regulatory compliance will differentiate their brand and win," she added.

JP Nicols, CEO of Clientific and co-founder of the Bank Innovators Council predicts that many banks and credit unions will continue to pull the familiar levers of price and promotion to drive new business in 2014, which will put further pressures on already compressed margins. Alternatively, he states "The winners will be those institutions that differentiate their brands by innovating new client experiences and leverage better targeting and segmentation."

New and/or improved products can also help differentiate banks in 2014. "We will see a massive growth in online and mobile banking in the coming year," stated Hansjörg Leichsenring, Germany-based consultant for Meniga. "More and more banks will adapt tools like Personal Finance Management (PFM) to improve their brand, increasing retention and loyalty and to keep their customers away from independent new players in the market.

As a note to financial institution marketers, John Mathes, director of brand strategy at Weber Marketing Group, warned, "More banks and credit unions will realize that most of their marketing content is just noise and they will embrace the art of storytelling to help differentiate their brand in the crowed and commoditized world of financial services."

A Note of Thanks