Bank Switching Increases As Consumers Look For Better Mobile Capabilities

March 16, 2014, 9:00 pm

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After a period of relative stability, the primary bank switching rate increased by more than 40 percent in late 2013, with 60 percent of smartphone/tablet users reporting mobile banking capabilities as being either "important" or "extremely important" in their decision to switch.

After relatively stable switching rates since the financial crisis, the number of consumers switching primary banks jumped from 7.1% in the first half of 2013 to 10% in the fourth quarter of 2013 according to the "Mobile Financial Services Tracking Study" from AlixPartners. This is the highest rate of switching since the end of 2008.

The highest incidence of primary bank switching was evident among millennials, where the annual switch rate approached 20 percent. The rate of switching quickly drops for older segments of the population, with baby boomers and seniors switching primary banks at low single figure annual rates.

% Who Switch Primary Bank in Past Year
Source: AlixPartners (March, 2014)

% Who Switched Primary Banks in Past Year by Age
Source: AlixPartners (March, 2014)

Among younger consumers, technology and innovation was of greatest importance, with the reasons for switching primary banks including:

"My previous bank didn't offer the level of technology/innovation that I wanted"
"My previous bank didn't offer the online services that I needed"
"My previous bank didn't offer the mobile services that I needed"

For older consumers, the primary reasons for switching were because of a bad customer experience or because of a move, new job, etc.

Impact of Mobile Banking on Decision to Switch

Mobile banking is playing an increasingly important role in primary bank switching decisions, with 60 percent of smartphone and tablet users reporting that mobile banking capabilities are "important" or "extremely important" in the decision to switch. This compared to an already high 48 percent in a similar survey in the first half of 2013.

"The availability of mobile banking features plays an increasingly critical role in the consumer's decision to switch primary banks," according to Bob Hedges, managing director in AlixPartners' Financial Services Practice. "Consumers are demanding, expecting, and shopping for mobile capabilities. Banks who fail to innovate run the risk of losing customers and face real challenges in attracting new customers."

The importance of mobile banking capabilities in the decision to switch banks correlates with a strong growth in adoption of mobile services overall. According to the AlixPartners study, mobile banking is being used by 28 percent of U.S. banking consumers, up four percentage points from the survey in the first half of 2013, and up nine percentage points from the end of 2012.

As penetration of smartphones and tablet continue to rise and consumer adoption of mobile banking increases, the consumer's use of higher cost banking channels, such as traditional branches and live customer service call centers, appears to be declining. According to the study, mobile banking users reported visiting a bank branch 39 percent fewer times per month after adopting mobile banking services.

"The behavior and decision making of consumers who have adopted mobile is making the business case for mobile innovation and promotion by financial services institutions," added Hedges.

Digital Engagement Extends to Account Opening and Service Use

Consumer engagement with smartphones and other digital channels goes beyond the decision to switch primary banks. According to AlixPartners, 51 percent of younger switchers used online or telephone channels to open their new account in the second half of 2013, with only 35 percent using the branch for the entire account opening process (compared to 46 percent in the first half of 2013).

“Given today’s margin-compressed environment, it becomes critical for financial services providers to address mobile-oriented consumers -- who prefer lower cost-to-serve channels and have a more attractive financial profile,” said Teresa Epperson, managing director in the Financial Services Practice at AlixPartners. “Our research continues to highlight the attractiveness of consumers who use mobile services and the importance for banks to focus on attracting and retaining those consumers.”

Further spotlighting the importance of digital innovation, mobile remote deposit capture (RDC) adoption is also growing steadily, with 22 percent of smartphone/tablet owners using the service compared to 18 percent in the first half of 2013. These users tend to be younger, wealthier and use more services at their primary bank than non-adopters.

"We will increasingly see banks developing and rolling out capabilities aimed at addressing specific consumer pain points and opportunities to add value. If mobile RDC is viewed as the current 'big attraction' in the ongoing wave of industry innovations on behalf of consumers, mobile photo bill pay could be the next big thing," says Epperson. "In the fourth quarter of 2013, 28 percent of consumers between the ages of 26 and 34 reported themselves to be likely to change banks to gain access to mobile photo bill pay," continued Epperson.

The Future of Digital Banking

All recent research studies point to a future of increasing mobile banking use and engagement. As sales of more technologically advanced mobile devices increase, consumers will become more comfortable with new applications that simplify daily life and provide tangible benefits.

In the future, consumers' mobile banking behavior and expectations will evolve rapidly. As a result, banks and credit unions will need to recognize the importance of rapid development and deployment cycles for mobile offerings in response to these expectations and understand that other industries, such as retail, may be setting the standard for new mobile offerings.

“As banks and other financial services providers explore new offerings that deliver value-added services to consumers, the growing importance of mobile capabilities in the lives of consumers should be viewed as both ‘table stakes’ and an opportunity for differentiation,” said Hedges. “Clearly, these devices’ extraordinary value to consumers has raised the bar on what consumers expect from their financial services providers and place greater importance on the role of mobile banking in bank selection. Those financial services providers that focus on mobile offerings as competitive differentiators will be winners in the future.”

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Retail Bankers Unprepared For The Future

March 17, 2014, 9:00 pm

≫ Next: Omnichannel Banking: More Than a Buzzword

≪ Previous: Bank Switching Increases As Consumers Look For Better Mobile Capabilities

At a time when powerful forces are disrupting the retail banking industry, financial services executives agree that a transformation of the banking landscape is inevitable. Unfortunately, while they agree on the priorities that are integral to success in 2020, fewer than 20 percent feel prepared to address these priorities.

In a survey of 560 executives from leading financial institutions across 17 markets entitled, "Retail Banking 2020: Evolution or Revolution," PwC found that 90 percent of financial services executives agree on the priorities that are the foundation for success in 2020, yet only a fifth (20 percent) feel well-prepared to address these priorities despite the fact that nearly all (96 percent) believe that a fundamental transformation of the banking industry is inevitable.

"Growth remains elusive, costs are proving hard to contain, returns remain stubbornly low and regulation is impacting business models and economics," said John Garvey, U.S. banking and capital markets leader at PwC. "Simultaneously, the evolution of technology and heightened customer expectations combined with the emergence of disruptive competitors creates new pressure to deliver higher levels of service at a time when value and trust in the sector is at an all-time low. Surviving and succeeding in this environment may require a fundamental rethink in approach."

Today's Challenges

The impact of growing and changing regulations is the primary challenge for retail banks in the U.S. (47 percent) and Europe (40 percent), where banks are trying to stop seeing regulations as a burden and hoping to weave compliance into the fabric of their operations.

In the U.S., attracting new customers (35 percent) and increasing profitability (33 percent) ranked second and third respectively, aligning with the hierarchy of investment priorities (56 percent regulatory compliance, 46 percent enhancing customer service and 30 percent implementing new technology).

Source: PwC Banking 2020 Survey

Nearly all respondents (97 percent) view innovation as a critical driver of growth – with companies who consider themselves innovative predicting 62 percent growth over the next five years, nearly double the market average of 35 percent and triple the 21 percent for the least innovative companies.

Despite understanding the importance, only 10% of CEOs view their organizations as innovation leaders. Further, 64% of CEOs agree that neither innovation nor operational effectiveness are dominant – and are looking to succeed at both.

PwC believes executives recognize they need to do things differently. According to the study, over 50% are planning to enhance their internal capabilities to foster innovation, and to create innovation management teams across business units. There is also a recognition that partnerships and third-party relationships may be the best way for banks to reap the benefits of innovation.

In the U.S., the primary areas mentioned for innovation were products (43 percent), customer interfaces/channels (60 percent), core platforms (50 percent) and customer need identifications (40 percent).

Finally, nearly three quarters (71 percent) of U.S. retail banking executives consider non-traditional competitors a threat, significantly higher than executives in Asia (42 percent), where more view them as an opportunity for partnering.

Gap Between Priorities and Preparedness

According to the research, 90 percent of the executives agree that the six key priorities for success in 2020 were:

Developing a customer centric business model
Optimizing distribution by evolving multichannel capabilities and reshaping the traditional branch model
Simplifying business and operating models
Harnessing data to deliver customer, risk management and financial advantages
Fostering agility and innovation
Proactively managing risk, regulation and capital

Banking executives agree that the priorities above are very important, with each of them scoring between 4.3 and 4.5 (out of 5) in the PwC survey. However, there was a striking gap between those ranking these priorities as ‘Very important’ (46%–64%) and those stating that they saw themselves as ‘Very prepared’ (11%–17%) and/or that they were making a ‘Significant investment’(18%–25%) in these areas. Technological, organizational, talent and cost constraints were viewed as the greatest obstacles to success.

According to PwC, each bank needs to develop a clear strategy to deal with the industry's transforming landscape. They need to decide whether to lead, to follow fast, or to manage defensively, putting off change. They need to create agility and optionality, to adapt to rapid change and future uncertainty. Yet, whatever the chosen strategy, success will come from successfully executing the right balance across the six priorities identified.

"Banks universally agree that they are hindered from addressing top priorities such as innovation by financial, talent, technology and organizational constraints, said Dave Hoffman, U.S. financial services management consulting leader at PwC. "Banks should take aggressive action to overcome these constraints to enable innovation and transformation, while preserving their ability to capitalize on market opportunities and address unexpected challenges."

Whether this is this a revolution, evolution or both is yet to be seen. Many players globally are innovating and experimenting with new products, delivery channels and analytics. The industry has historically changed very slowly – yet the pace of change is increasing rapidly.

According to PwC, the challenges in the future are clear, and but each institution's response will be unique based on their current capabilities, markets, capital strength, aspirations, etc. The key is to leverage knowledge from the industry and from outside the industry to succeed.

The biggest challenge is that banks that fail to shift gears risk being left behind.

Note: "Retail Banking 2020: Evolution or Revolution?" from PwC is a great report with an enormous amount of detail by geography, size of institution and role of respondent. It digs deeply into the challenges faced by the financial services industry and the ways different institutions are responding to these challenges.

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Omnichannel Banking: More Than a Buzzword

March 23, 2014, 9:00 pm

≫ Next: How to Become Your Customers' Everyday Bank

≪ Previous: Retail Bankers Unprepared For The Future

As customers continue to change their channel usage patterns, banks and credit unions must focus on delivering a consistent and seamless experience across various touch points. More than just a buzzword, omnichannel banking is an opportunity to deliver bottom line results by gaining insight into customer's channel preferences and behavior.

Today's customers are becoming highly sophisticated and are accustomed to receiving seamless service and targeted offers from companies like Amazon regardless of the device in use. So, it should come as no surprise that these same customers are beginning to expect similar experiences from their banking partner(s). From researching new services, to opening an account, checking balances, conducting transactions or getting customer support, delivering an omnichannel experience has become table stakes in a highly competitive marketplace.

The Importance of Omnichannel Banking

Banks are in an unequalled position to understand their customers. They already can see product use, transaction patterns and demographic profiles. By leveraging channel usage insight, they can develop an even more detailed customer profile. Understanding not only what the customer looks like, but also how they conduct their banking can allow for improved product offers using their preferred channel.

Developing strategies to integrate disparate digital and physical channels into a single, seamless experience has to be a priority. By analyzing the activity and preferences of their client base, banks can tailor offerings to address the priorities of each individual customer. Mass, low profit segments can be serviced accordingly as can high margin services and clientele.

Streamlined, integrated systems, a single customer view and an optimal customer experience are all objectives to work towards. Banks that focus on these objectives will get the edge over the competition.

Channel Use Shifts and Increases

It shouldn't come as a surprise that branch transaction volumes are slowly trending downward or that online and especially mobile banking usage are quickly trending up. What is less clear is whether call center usage will decline as more transactions migrate to digital platforms, or will it, in fact, increase as customers use call centers as their digital help desk? Finally, will Facebook, Twitter, and other social media platforms become banking channels in the future?

According to the channel usage component of the latest U.S. Retail Banking Study from Gallup, three different themes are emerging:

The branch-ATM-online trifecta still defines the core of day-to-day banking. The core banking needs of most customers are being handled by branches, ATMs and online banking. In fact, nearly half (46%) of customers have used all three of these channels over the past six months. While it may cost a bank more to serve these customers (compared, for example, to those who use mainly digital or phone channels) these core customers keep an average of 4% more of their deposits and investments with their primary bank and generate an estimated $155 more in profit per year to their primary bank than people who don’t use all three of these channels. So while it may be commonplace to talk digital-first, banks can’t alienate a significant portion of the customer base in the process.

Mobile banking usage is on the rise, but it is adding to, not replacing, other channels. Among the largest U.S. banks that Gallup studied in both 2012 and 2013, heavy users (at least once per week) of mobile banking increased by 11 percent (more than in any other channel). Not surprisingly, 57% of Millennials/Gen Y customers have gone mobile for their banking. That percentage falls to 37% for Gen X customers, 16% for baby boomers, and less than 10% for seniors.

Interestingly, this increased mobile usage has not led to a significant reduction in customers’ use of other channels. The Gallup research shows that customers that use mobile banking also use other channels more frequently than the average customer. Among mobile banking users:

79% have also used a branch in the last six months
84% have gone to an ATM
95% have used online banking
58% have spoken to a call center agent
15% have contacted their bank via Twitter
19% have contacted their bank via Facebook (compared to only 1% and 2%, respectively, among non-mobile users)

Below is the breakdown of channel use based on branch type/size:

Social media customers are valuable. Slightly less than 9% of customers contacted their bank via Facebook or Twitter during the six months of the Gallup study, and roughly half of those have done both. These socially engaged customers are both younger (91% are either Gen X or Gen Y) and more affluent. These customers are 12% more likely to be mass affluent ($100K to less than $1M in investible assets) and 18% more likely to be emerging affluent (age 35 or under with incomes over $75K/year.) These customers also are more engaged with their bank and hold much more positive feelings toward their bank than the typical customer.

Given the strong “AAA” status (age, affluence, and attitudes) of these customers, banks should continue to develop, refine, and strengthen their social media focus where feasible based on other priorities.

While more and more customers are moving to digital channels to conduct their routine banking, they aren't abandoning traditional channels at the same pace. This may be caused by banks not providing easy-to-use digital new account opening options or even simple mobile apps.

The Gallup research found that, even among those who visited a branch less than once a month, 80% chose to initiate their account opening in a branch and only 8% started by opening their account online. When customers did open their account online, they were far less satisfied with the account opening experience (nearly 20 percentage points less) than were those who opened their account in a branch.

So, while the industry and more consumers are trying to embrace the omnichannel perspective, the vast majority of new accounts are still initiated in the branch. This is because digital channels don’t offer customers the kind of experience they desire for more complex, important interactions like opening an account.

Building a positive omnichannel experience remains a work in progress for most banks and credit unions. Research shows that when done well, an omnichannel experience can strengthen relationships streamline the experience and increase profitability. Unfortunately, most banks, and many customers haven't completely bought in.

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How to Become Your Customers' Everyday Bank

March 25, 2014, 9:00 pm

≫ Next: 10 Ways iBeacon Can Improve Banking Sales & Service

≪ Previous: Omnichannel Banking: More Than a Buzzword

Banks have a unique opportunity to capitalize on the vast amounts of customer insight they hold to go beyond simply facilitating payments. They can reinvent themselves as an Everyday Bank, helping customers reach decisions about what to buy, when and where to purchase, and even helping to negotiate the best deals in a ubiquitous format.

Non-banks are capturing more and more of the banking value chain, providing services such as payments, checking and even savings accounts that could erode as much as one-third of traditional bank revenues by 2020 according to Accenture. These new entrants pose a threat to banks by raising service expectations and coming between banks and their customers.

According to a new report from Accenture, entitled "The Everyday Bank," the response is not just about closing branches, improving online and mobile banking offerings or making current products and services "more digital." Instead, banks need to move further into the daily lives of customers, providing assistance before, during and after the financial transaction.

Customer behaviors and expectations are quickly adjusting to a world where products and services are recommended based on past behaviors and where location-based offers are provided instantaneously on their mobile device. Customers want information to be fingertip-ready.

The Everyday Bank

According to Accenture, an Everyday Bank leverages the vast amount of insight it possesses to become central to a customer's financial and non-financial digital ecosystem. The Everyday Bank reinvents itself as a value aggregator, advice provider and access facilitator, acting proactively on the customer's behalf, improving reputation and trust.

An Everyday Bank drives continuous daily interaction by building partnerships and connections with provider partners who offer goods and services in every area of area of consumption, including retail, home services, health and security, travel and leisure, communication and transportation. By tapping its wealth of transactional data, without ever sharing analytic information outside of its four walls, the bank reaches out to the right third-party providers and other key players to build a digital customer experience combining mobile, big data, analytics, digital marketing coupling, ticketing capabilities (at ATMs?) and more.

The Everyday Bank uses its digital engine to automate front- and back-office processes to optimize for speed, efficiency and scalability. According to Accenture, a highly functioning Everyday Bank can:

Slash back-office effort by as much as 80 percent
Reduce its managed applications portfolio by 70 percent
Cut time to market by 40-50 percent
Increase operating income by 25-30 percent

In a real-life example, an Everyday Bank has the rich customer data to know when a customer may want to purchase a car (based on the age of current vehicle, family structure, etc.). After offering the customer assistance if they agree that a car purchase is in order, the bank can recommend vehicle models that might fit their lifestyle, personal preferences and budget.

Next, because the bank is in a position to negotiate thousands of car deals on behalf of their customers, they can get a price that meets both the customer's and dealers needs. After bundling in insurance and any other after-market products, the bank then recommends a payment plan that is best for the customer.

According to Accenture, the five critical elements of an Everyday Bank include:

Provides services that are digitally optimized across a variety of platforms
An omnichannel approach
Uses big data and predictive analytics to help anticipate customer financial and non-financial needs
Offers a human touch for high value interactions
Is attuned to their customers' moments of truth

The Everyday Bank also brings pricing transparency, trusted advice, social recommendations and transactions - as easy as one click.

Benefits of Becoming an Everyday Bank

For banks that build the capabilities of an Everyday Bank, the rewards are significant. According to Accenture, banks that exploit their rich customer purchasing data and secure data management capabilities can increase customer interactions by 250 percent.

Most importantly, the bank's customers enjoy the benefits of a financial partner who can anticipate their needs, looks out for them and rewards them for their loyalty by recommending ideal providers. They enjoy an improved experience that saves them time and money with a much more personalized relationship. Merchants and service providers also benefit from the bank's customer insights through improved targeting driven by the bank and increased sales volumes.

By acting as a digital value aggregator, the bank is rewarded with deeper relationships, increased loyalty and improved profitability due to a higher volume of lower-cost transactions and additional service fees.

It is important for banks to act quickly to become the indispensable Everyday Bank, moving customers from doing occasional interactions to being embedded into their digital lives with daily interactions. Banks need to develop the digital partnerships with merchants, suppliers, small and medium size businesses, telcos and other digital companies to deliver new products and enhanced service for the customer.

By collaborating with these partners as opposed to competing, the bank can be repositioned at the center of the customer's everyday life, becoming integral to both financial and non-financial needs. The Everyday Bank has the opportunity to acquire all segments of customers at an efficient cost (including underbanked, unbanked or unhappily-banked populations), using the number of interactions with these customers to offset the lower income per transaction.

Everyday Banking in Action

Below are examples provided by Accenture where banks have leveraged their customer insight and extended beyond traditional banking services to provide value to customers.

The Commonwealth Bank of Australia

Using augmented reality in a mobile application, The Commonwealth Bank of Australia helps its customers looking to buy a new house. The mobile app provides details on 95 percent of the residential properties available for sale throughout the country.

Included is data related to recent sales and prices, information about the neighborhood, and the location of each property in relation to where the customer is at any time. Integrating financial services into the application, the bank offers details about mortgage loans and insurance that can be purchased through the bank's website.

BBVA

BBVA of Spain supports its customers when they purchase a new car by equipping the customer with information on both the list price and selling price of the car. The app also offers loan and insurance information. The bank's goal is to ensure that its customers can negotiate the best deal.

To become an Everyday Bank, BBVA could expand this partnership with the customer by anticipating when the customer may be in the market for a car. This could be achieved by using outside insight into the age of the car owned by the customer and recent purchase cadence (the customer has shown a history of purchases every 3 years), upcoming auto loan final payments, or change in household structure (marriage, birth).

The bank could also build relationships with several dealers, allowing itself to negotiate prices on behalf of the customer and even provide offers related to after sale service, etc.

The Everyday Bank Challenge

To be a profitable industry, banks cannot simply rely on providing accounts and access to funds. Competitors are eating away at significant parts of the banking value chain with the potential of limiting banks to becoming nothing more than utilities.

The future of the industry will depend on its ability to leverage the power of customer insight and digital technology to provide services that help today's tech-savvy customers save and better manage their everyday lives. If banks don't move quickly, however, competitors will insert themselves into the buying process, gaining the valuable purchase insight that is the domain of the banking industry today.

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10 Ways iBeacon Can Improve Banking Sales & Service

March 30, 2014, 9:00 pm

≫ Next: Bank Marketing Strategy Joins The Financial Brand

≪ Previous: How to Become Your Customers' Everyday Bank

At a time when banks and credit unions are trying to improve the economics of branch banking, iBeacon could deliver a personalized digital sales experience as soon as the customer enters a branch office.

iBeacon, working in conjunction with Bluetooth Low Energy (BLE), can integrate the physical and mobile channels, enabling a bank's mobile app to deliver highly tailored digital promotions, coupons or offers directly to the consumer's smartphone when the customer is in the general vicinity of an office, at any specific location within an office or at an ATM.

There are already more than 200 million iBeacons in the form of phones in our pockets. Google has included BLE into the Android 4.3 and other recent phones. Apple has been including BLE in their devices since the iPhone 4, meaning that every iPhone from the past two years is an iBeacon in itself. More importantly, standalone low cost iBeacons ($40 - $100 each) can be placed in physical branch locations, linking the bank branch with consumers' smartphones.

iBeacon technology is designed to deliver continuous content based on the precise location of a customer within a branch, allowing for highly relevant messaging or special offers on products to be sent to smartphone users at the exact time and place they are most useful. This immediacy is a big advantage over other technology like NFC or QR codes that are either less accurate or require additional steps by the customer.

In order for iBeacon to work in banking, customers must first install the mobile app of the bank they are visiting and opt-in for personalized promotional alerts. By providing the bank access, the bank could track activities performed both online and in the branch in the past to customize both mobile and in-person communication the moment they step inside the branch.

Consumer Acceptance of In-Store Alerts

While there is virtually no research on the acceptance of in-store alerts by financial institutions due to the current lack of use by banks, there is positive response from consumers when in-store alerts are used by retailers. According to a study of 1,000 smartphone users commissioned by Swirl, 67 percent of consumers reported having received shopping-related push notifications on their smartphones during the previous six months. Of those, 81percent said they read or opened these alerts most of the time, and 79 percent made a purchase as a result.

The research also found that the alerts delivered must be both relevant and valuable from the customer's perspective. When asked what caused them to ignore mobile push notifications;

41 percent said they were not relevant to their interests or location
37 percent stated the offers did not provide enough value
16 percent fount the alerts to be annoying
6 percent did not opt-in to receive the notifications

It is clear that the lessons learned in the retail world apply also to the world of banking. While iBeacon technology can provide the power to deliver highly relevant digital content and offers personalized to the customers' location and banking relationship, the use of these alerts must be used judiciously.

In both retail and banking, privacy remains an ongoing concern for consumers, especially when disclosing their smartphone's location. The good news is that 77 percent of consumers said they would be willing to share their location information, as long as they received enough value in return. An opt-in process helps to establish this trust and consent.

iBeacon Banking Applications

Announced in February 2014, Australian bank Westpac is planning to trial the technology in selected branches over the coming months. iBeacon will work with both iPhone and Android devices and will be used to send customers special offers and other incentives on their device when they are in a branch or walking past the office. It'll also give bank staff full details of a customer's business with Westpac when they enter a branch.

It'll be an opt-in service, fully integrated into Westpac's mobile app.

Some potential ways banks and credit unions could leverage the potential of iBeacon technology include:

Welcome Communication: As customers pass or enter a branch, the bank can deliver a welcome message to the customer and a summary of services available at the branch. This could include a personalized map of the office and the available specialists currently at the office. Any special offers can also be highlighted.
Customer Recognition: When a customer enters a branch, branch personnel can be alerted and can be provided transaction history and sales prompts for interacting with the customer based on their value. This enhanced recognition can improve service and loyalty.
Availability and Wait Times: Much like at an Apple store, a customer could be provided the wait times for specific services/specialists as well as a way to set an appointment using their smartphone app.
Personalized Product Offers: Offers based on previous customer activity, account ownership and even demographics and credit score can be sent to the customer's smartphone upon entering the branch. This could allow for dynamic pricing of services or rewards offers based on the customer's current relationship or relationship potential.
Location Specific Offers: If a customer is standing at a deposit slip counter, they could receive a notification (along with introductory video) related to remote deposit capture services.
Education: When a customer is waiting for a teller or platform officer, highly relevant short form educational videos can be delivered to the customer's smartphone for viewing. These could include direct links to already partially completed application/authorization forms.
Surveying: iBeacon can provide a way to solicit customer opinions and service ratings when the customer visits or leaves the branch.
Branch Analytics: With iBeacon, banks will be able to understand which customers are using branches, what are the busiest days and times, how long on average are customers spending in branches and what type of transactions customers are completing. This data can assist in optimizing the branch experience for customers in the future. This data can also assist in cross-channel attribution tracking.
Beacon Enabled ATMs: For customers who have authorized communication via their mobile device, personalized offers can be delivered to the phone after an ATM visit based on the customer's relationship. This technology could also potentially replace the need to use a card to access the ATM.
Post Visit Retargeting: The ability to communicate with the customer via mobile, online, phone, etc. after a branch or ATM visit is possible applying the learnings collected during the visit.

Financial institution marketers should be excited about the opportunity to target customers as they walk past or enter a branch or use an ATM. It remains to be seen, however, how consumers will react to the growing number of retailers and other organization that track customer locations and push out offers.

Privacy advocates have already raised concerns about the use of iBeacon to deliver messages and offers. Until privacy laws and guidelines are updated to account for advances in technology like iBeacon, the onus will be on the bank or credit union to implement clear opt-in processes and focus on delivering value to customers as opposed to simply pushing out a series of offers.

The good news for banks is that locational alerts could turbocharge the activation and utilization of bank and credit union mobile apps. In retail, 80 percent of consumers surveyed said that they would use their mobile app more often if the apps delivered sales and promotion alerts. This can support the goal of transforming current mobile banking apps into indispensable financial applications that can deliver relevant and timely digital content.

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Bank Marketing Strategy Joins The Financial Brand

April 3, 2014, 9:00 pm

≫ Next: For The Best In Bank Marketing Strategies, Go To The Financial Brand

≪ Previous: 10 Ways iBeacon Can Improve Banking Sales & Service

Beginning today, Bank Marketing Strategy will be known as Retail Banking Strategies and will become part of The Financial Brand.

Go to the new site.

When I launched Bank Marketing Strategy over four years ago, the financial services industry was a lot different than it is today. We were in the middle of a huge financial crisis, the first iPad was just introduced, and banking customers were still more likely to go to branches than to bank on mobile devices.

My website began as a quest to better understand social media and content creation, with early posts generating less than 100 page views. Today, most articles published are viewed by more than 5,000 people, with the most popular article generating more than 35,000 page views. Boy, have times changed. And my website has evolved as well.

For the last two years, I’ve been talking with Jeffry Pilcher, publisher/founder of The Financial Brand about ways we could partner and work together. After careful planning and months of preparation, I’m pleased to announce that The Financial Brand will be my new publishing home.

Effective today, I’ll be sharing my insights at the Retail Banking Strategies section of The Financial Brand. Articles from my this site will be moved to the new location as quickly as possible (it is a manual process). The most popular articles have already been migrated, with the complete transition expected by June 1. Until articles are migrated, they will still be available on Bank Marketing Strategy.

By combining forces, we will be able to dig deeper into the opportunities and challenges banks and credit unions face. While The Financial Brand will continue to deliver the marketing, branding and advertising coverage you’ve come to expect, my Retail Banking Strategies section will provide a deeper level of analysis and perspectives into the issues confronting CEOs, CMOs, COOs and retail bankers at financial institutions around the world such as:
Distribution strategies
Customer experience management
Online and mobile strategies
Payments
Retail banking technology
Product development
Innovation
Sales/marketing strategies
As in the past, my Retail Banking Strategies section will combine my personal views and analysis with guest posts from some of the brightest minds in the industry. I will also continue to include crowdsourcing articles that provide views from dozens of financial industry followers worldwide.

I want to thank all those who have read and shared the hundreds of posts I’ve written over the last four years. Your loyalty and readership has transformed my modest website with humble beginnings into one of the most popular digital publications in the industry, with over 1 million pageviews annually. Without your continued support, the opportunity to launch Retail Banking Strategies at The Financial Brand would not have been possible.

I also want to thank the many people who have been instrumental in my growth. To Brett King, Ron Shevlin, Chris Skinner, Matt Wilcox, Deva Annamalai, Rob Findlay and Scott Bales, and Bradley Leimer, I offer you my deepest gratitude. You are some of the foremost visionaries in the financial industry, and I consider myself the fortunate beneficiary of your insight and friendship.

To the many bloggers and tweeters who I communicate with regularly, your continuous support and insight is also valued beyond measure.

And most of all I’d like to thank my wife, son and the rest of my family. If it weren’t for their patience as I write on weekends and late at night, their confidence in me and their ongoing encouragement, I wouldn’t be where I am today.

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For The Best In Bank Marketing Strategies, Go To The Financial Brand

April 8, 2014, 7:06 pm

≫ Next: Amazon's Mayday Button Could Revolutionize Banking

≪ Previous: Bank Marketing Strategy Joins The Financial Brand

Effective immediately, all articles from Jim Marous appear in the Retail Banking Strategies section of The Financial Brand.

Many of the most popular articles written for Bank Marketing Strategy in the past are already migrated to the new location. By late June 2014, all of the remaining content from Bank Marketing Strategy will be available at the new location.

If you are a subscriber to Bank Marketing Strategy, you will be receiving an email newsletter every other week containing all of the articles I have written over the previous 14-day period (eventually this will be a weekly newsletter).

If you are not a current subscriber, but would like to become one, go here.

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Amazon's Mayday Button Could Revolutionize Banking

January 5, 2014, 8:50 pm

≫ Next: Top 8 Financial Marketing Resolutions For a Successful 2014

≪ Previous: For The Best In Bank Marketing Strategies, Go To The Financial Brand

It's time for banks and credit unions to consider the potential of providing mobile banking customers single-click live customer support similar to Amazon's Mayday button that is embedded on the latest Kindle Fire HDX tablets.

Similar to a virtual version of Apple's store-based Genius Bar, without needing to wait in line or leave your house, a banking version of Mayday could provide both basic customer support as well as specialized or advisory services that could revolutionize both mobile and online banking.

This concept may seem like a major leap into the future for an industry that has yet to fully embrace 24x7 'push to talk' or text-based customer support for the mobile or online customer or extensive video banking at physical locations, but as technology advances and more customers are relying on mobile, tablet and online banking, there is significant potential. And, with the desire to create powerful emotional connections with customers, live video may replace the telephone for customer support.

The Amazon service is easily accessible with a button on the Kindle HDX device home page. Press the Mayday engagement button and a customer sees a remote Amazon Tech Advisor on their screen within seconds (over the holidays, Amazon beat their goal of 15 second response with a 9 second average wait). While a customer can see the live advisor, the advisor can't see the customer, just their screen. Once credentials are authorized, Tech Advisors can annotate the screen, change settings, download apps and do anything needed to help a customer step-by-step.

"With a single tap, an Amazon expert will appear on your Fire HDX and can co-pilot you through any feature on your screen, walking you through how to do something yourself, or doing it for you - whatever works best. Mayday is available 24x7, 365 days a year, and it's free," stated Amazon CEO and founder, Jeff Bezos. The commercial for the Mayday button is a great illustration.

While some people were initially concerned about privacy, the advisor can't access a customer's camera or access information within the computer that is private. Only audio is transmitted back to the advisor.

For Amazon, the Mayday support teams reside within the normal call center. While these advisors most likely didn't replace any of Amazon's other support channels, there could be additional resources that were needed (Amazon does not reveal details).

Supporting this capability required video-equipped computers and a de-cluttered environment for the advisors to work that appears more professional than a traditional call center cubical. For Amazon, they actually put each agent into well branded 'mini-studios'. Video agents also needed to be 'camera ready' based on wardrobe, visual appearance and even body language.

Mayday in Banking

None of the hurdles above seem to be insurmountable for the financial services industry. In fact, the latest generation of self-service devices (ATMs, Kiosks, etc.) are video-enabled and institutions such as Bank of America have already launched relatively small scale real-time video communication support services such as Teller Assist.

According to a recent Capco blog post entitled, 'Will Video Replace the Telephone in Banking', banks would need similar capabilities to deliver video support to customers.

People. Skilled resources would need to be engaged who can handle a wide range of customer inquiries.
Process. Live video support requires banks to redefine aspects of their operating model. As opposed to self-service applications, video support requires the discussion of product options based on insight already available and insight captured during discussions. Security is also important.
Technology. Vendors already provide quality video services. The challenge is to successfully integrate these capabilities into existing operating systems.

Here are some ways a direct link to a human being could provide differentiation for banks or credit unions:

Basic account inquiry calls. While this may seem resource prohibitive at first, how much more difficult would it be for a bank to provide video support as opposed to a call center connection? Because more context information is available with this solution, the call time could be shortened and savings could be realized. Long-distance costs would also be reduced since video interactions would be IP-based.
Contextual specialists. If a person is having difficulty conducting mobile or online banking, the customer support area can direct the interaction to the best CSR who can 'take over' the customer's screen (with customer approval) and provide technical channel support to help the customer conduct their banking. This is the foundation of Amazon's Mayday service and would increase deeper digital engagement beyond balance inquiries.
Insight collection. One of the major reasons Amazon introduced Mayday was so that they could collect insight directly from customers that could improve service and products in the future. While this can be done via traditional channels at a bank or credit union, a live video agent could gather greater insight into financial needs, services held elsewhere, etc. They can also verify information already on file like email addresses and cell phone numbers.
Cross-selling. At a time when organic sales by financial institutions are needed more than ever, precise real-time offer management could be leveraged by skilled personnel utilizing enhanced contextual insight known about the customer. With the potential for enhanced insight gathering as discussed above, better recommendations could be made.
Advisory services. It would not be too difficult to expand the Mayday type service to include advisory services from other areas of the bank. With a simple live transfer, the customer could be connected with an investment advisor, small business specialist, commercial banking or loan officer. With video engagement, the ability to conduct much more involved interactions is possible.
Customer acquisition. The abandonment rate from a digital shopper in banking is extremely high. A live video agent could provide an abandonment intercept by allowing a shopper to talk to live CSR as part of their shopping process. This is especially helpful for consumers who do not want to visit a branch.
Customer retention. With the ability to access a live agent immediately, and with greater contextual insight available to the agent, issue resolution will be faster and will provide a superior customer experience.

Testing Proof of Concept

I imagine most banks and credit unions aren't ready to jump into the 24x7x365 single click live video customer support ocean just yet. So how could an organization test this concept in more shallow waters?

Determine the nature of most of your customer support questions and determine which ones could be better answered by a live agent.
Instead of placing access to a live video agent on the home page of your mobile or online banking application, place it where abandonment occurs the most or in areas where you want to increase engagement. Are customers confused as to how to use mobile deposit or online bill payment? Is your current rewards program not meeting expectations? Place the video agent access button on the pages for these services first.

Test live video support during regular business hours. While not optimal, it provides parameters for testing the scalability of the service.
Have a live video agent available only to brand new customers of your mobile or online banking services. In this case, it may be best to provide the link to a live agent via email as part of your new customer onboarding process. This may also provide the ability to cross-sell additional services early in the relationship.

While your organization is testing the scalability of a live video agent, it may be good to also test customer support via text and push-to-talk. The upside potential may not be as great, but the customer experience is definitely better than current customer support options at most financial institutions.

The banking industry has just received a Mayday customer service wake-up call, requiring customer support centers to rethink their strategies and raising the customer experience bar. What financial institution(s) will answer this challenge?

Case Study: ASB Video Customer Support

ASB Bank in New Zealand is one of the only banks in the world that I have found that as developed applications for live video customer support. Discussed in a recent article on The Financial Brand, ASB customers can connect directly with banking specialists face-to-face at a time and place convenient to the customer.

While not quick a 24x7x365 immediate video link, ASB allows a customer to set up an appointment with a banking specialist for more involved interactions such as insurance, home loans, business banking, etc. With this application, customer can securely share documents, providing all of the convenience of a branch visit without needing to leave home.

ASB has been at the forefront of video technology banking integration, offering in-branch video banking for some time and even introducing a Facebook Virtual Branch, also written about by The Financial Brand.

Amazon Mayday Feature Video

Below is a great video highlighting the features of the Mayday solution from Amazon.

Additional Resources

Mayday Button and Mobility for Retail Banking with WebRTC - Web RTC Strategies

Will Video Replace the Telephone in Banking - Capco Blog (Nov. 2013)

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Top 8 Financial Marketing Resolutions For a Successful 2014

January 6, 2014, 6:34 am

≫ Next: It's Time to Reinvent Mobile Banking

≪ Previous: Amazon's Mayday Button Could Revolutionize Banking

For the past three years, I have published an article on resolutions bank and credit union marketers should make for the upcoming year. While these posts have always been extremely popular and well read, many marketers still have difficulty achieving some of the most important resolutions.

Despite this lack of success by some, I am again providing suggested resolutions for financial marketers since research shows that people who make resolutions are ten times more likely to attain their goals.

When I published my first financial marketing resolution post in 2011(Ten Bank Marketer Resolutions for 2011), the primary emphasis was on replacing lost fee income caused by the Card Act, Reg. E and the Durbin Amendment. Most of the other resolutions addressed ways to either generate new revenues or reduce costs. I did discuss the need to test social media marketing, deliver on the mobile banking promise and reconfigure the branch model, but these were not the highest priorities in 2011.

My resolution post for 2012 (10 Resolutions Bank Marketers Can't Ignore in 2012) enlisted the support of more than 20 global banking industry leaders to help develop suggested strategies for the upcoming year. While the focus of many of the resolutions were similar to the prior year (communication channel mix, customer centricity, social media testing and building share of wallet), discussion expanded to include the importance of leveraging big data and embracing innovation.

As with any list of resolutions, last year's banking industry leader crowdsourcing post (22 Industry Leaders Provide New Years Resolutions for Bank Marketers) included several resolutions from prior years that still presented a challenge, such as enhancing the customer experience, improving measurement of results, integrating the mobile channel and continuing to innovate. The major difference last year was the increasing importance of focus and grabbing the lower hanging fruit due to all of the distractions caused by new regulations and compliance initiatives.

This year, I again collected ideas from some of the most prominent names in the banking industry in the development of my top resolutions for financial marketers. I also researched trends in other industries that are served by my firm, New Control. While some of the suggested resolutions are similar to those in the past, the impact of digital shopping, big data, the mobile channel and a contextual customer experience is evident.

Resolutions are intended to represent major transformational shifts in behavior that will impact personal or professional success in the future. With that in mind, the following resolutions are what some of the best global marketers believe are important for financial institution marketers in 2014.

1. I will move some budget from offline channels to digital channels.

With limited budgets and reduced response rates for almost all traditional marketing channels, there has never been a greater need to optimize marketing spend for bank and credit union marketers. One way to improve results is to supplement your investment in offline channels like direct mail, email and mass media with online tools that can improve results while decreasing costs.

One highly effective way to take advantage of the shift in the consumer's purchase funnel, where they begin their shopping experience online as opposed to in the branch, is to leverage digital retargeting. First discussed in a Bank Marketing Strategy article entitled, 'Banks Include Retargeting as Part of Digital Marketing Strategy' and also written about in a guest post for The Financial Brand, retargeting allows a financial marketer to improve the results of traditional marketing by reaching customers and prospects across their digital footprint in real time as they search the web on their computer or mobile device.

Providing additional touches at a fraction of the cost of traditional media, retargeting allows financial marketers to improve the results of direct mail acquisition or cross-sell campaigns, email programs, social media initiatives or other digital marketing programs while also reaching those prospects and customers who visit your web site or do searches in the financial services category.

While not stopping traditional direct mailings, customers of New Control have moved as much as half of their direct marketing budget to digital channels for one reason . . . it works in conjunction with offline media. That is why this is the first resolution for financial marketers in 2014.

2. I will engage with my customers on mobile channels.

While referenced in previous resolution posts, the need to engage customers on both web and mobile channels has usually been more talk than action. Another relatively inexpensive initiative for bank and credit union marketers, the need to build engagement and sales across mobile touchpoints is akin to the first resolution regarding retargeting.

Financial marketers need to leverage the mobile banking platform they already control to reach out to customers with contextual offers that reflect their current relationship, transactional behavior and potentially even their location. With the advanced tools and technologies available, banks and credit unions are in a position to integrate highly personalized offers within mobile banking applications that reflect the next most likely product or service needed by a customer.

As discussed in my post entitled, 'Banks Accelerate Mobile Banking Innovation', the most progressive banks are already monetizing their mobile channel by including custom product offers within their mobile banking application. In 2014, we will begin to see many more financial institutions enhance their merchant funded reward programs by taking advantage of location optimized offers that reflect both the customer's buying behavior as well as their specific location.

3. I won't get distracted by 'big data'.

Thankfully, much of the hype has died down over the past 12 months, but there are still those who want to chase the next shiny object around big data. The key for 2014 is to capitalize on the ever growing silo of data already available within your organization. Sometimes referred to as structured data, this includes customer demographics, product ownership insight, transactional data, channel usage behavior as well as digital and social interactions with your organization.

In addition to narrowing the scope of data to more easily accessible insights within your firewalls, the importance of moving from data manipulation and reporting to data usage and application has never been more important. As I mentioned in my BankDirector.Com article entitled, 'When It Comes to Big Data, Start Small', competitive advantage is achievable through the better use of data in the development of lifestage trigger cross-sell programs, optimal branch configuration, pricing decisions and risk and fraud monitoring.

In my travels, I have seen that only the very largest of financial institutions are effectively using unstructured (big) data in the development and implementation of marketing programs. For the rest of us, it is better to focus on using the data at our fingertips to improve targeting, communicating, building offers and measurement of results on a real-time (vs. campaign-based) basis.

4. I will innovate through simplification.

According to Siegel + Gale's Fourth Annual Brand Simplicity Index, 75% of customers will recommend brands that provide a simple experience and use simple communications. In other words, if you offer products and services that make it easy to do business with you, your customers will spread the word.

Unfortunately, banks and credit unions sometimes equate innovation with 'adding on new bells and whistles'. Instead, 2014 should be the year we eliminate steps, simplify communication, and even simplify processes within your organization that can foster simplification and innovation.

Over the past few months, I referenced important innovations that simplified the customer experience when I reviewed the way Mitek Systems has leveraged the picture taking capability of a smartphone to remove steps from depositing checks, opening an account, transferring a credit card balance or completing forms ('Banking Innovation for the Fat-Fingered'). I also discussed research by A.T. Kearney and how Fifth Third increased sales and revenue by reducing their deposit services portfolio from 42 to 8 products ('Bank Product Proliferation: Too Much of a Good Thing').

Innovating through simplification is not simple. It just takes a dedication to stripping away legacy steps and messages, leaving behind only key elements. But it is a necessary role for financial CMOs in the future as we try to respond to the needs of the digital consumer.

5. I will maximize the value of my current customers.

Similar to the resolutions that most people have around losing weight or getting fit, the financial marketing resolution of maximizing the value of current customers needs to appear on each year's list of resolutions. This is not because bank and credit union marketers don't already make attempts in this area. It is because so many of the basic tenets of success are either missed or not allocated the appropriate human and/or financial resources.

In 2010, 2011, 2012 and again in 2013, I provided the business case and steps required to implement a successful new customer onboarding program. In the next few weeks, I will update some of my recommendations to include digital and mobile components that can improve the important welcome process. Despite this emphasis (and documented financial success in the marketplace), more than half of the financial institutions still haven't introduced a multitouch, multichannel onboarding program that encourages engagement in the first 90 days of the relationship.

In addition, many financial institutions are not leveraging the customer insight they have at their disposal to build a real-time cross-sell process that is based on customer insight as opposed to product goals. It's time to break down the product silos at your organization and use trigger marketing to communicate to customers when their needs are highest as opposed to when your institution's needs are highest.

6. I will get actively involved in branch transformation efforts.

As noted in my Top 10 Retail Banking Trends and Predictions for 2014, while we may not be moving to a branchless banking environment anytime soon, it is clear we are moving to a 'less-branch' distribution structure due to the rapid acceptance of online and mobile banking and the resultant reduction in branch-based transactions.

Bank and credit union marketers may or may not be at the table during the discussions around branch transformation, but the outcome of these discussions will definitely impact customer communications. So make a resolution to get involved.

In the future, a customer will engage with our bank or credit union using multiple channels based on their needs and channel preferences. As noted in two 2013 posts entitled, 'Migrating Banking Customers to Digital Channels' and 'Rethinking the Multichannel Banking Experience', it is not a good strategy to 'force' a customer to use a specific channel. It is also clear that as a customer uses multiple channels (including digital channels within a physical branch), they will expect marketing communications to be consistent across channels.

Its time to become a holistic financial marketer, moving from developing programs for specific channels to supporting real-time marketing experience across all channels the customer may use.

7. I will increase my use of email.

I realize that my resolution of moving budget from offline channels like direct mail, email, and other traditional channels to digital channels may sound counter to a resolution of increasing email, but it comes down to segmenting lists and improving the content of email, resulting in better leads. As one of the most important tactics in achieving the share of wallet goal in resolution 5, personalized emails can improve open rates by 14% and conversion rates by 10% according to recent research by Hubspot.

Despite Google's assault on email last year, the power of personalization, improved segmentation, linked videos ('Improving Bank Onboarding, Cross-Selling and Retention With Personalized Video') and improved response tools positions email as one of the strongest marketing tools for communicating to current customers.

It is time for financial marketing CMOs to demand the ability to effectively leverage the email channel at those institutions that have either restricted or severely limited the use of this channel.

8. I will assume the role of Chief Experience Officer.

At the end of the day, all of the above resolutions will fail if your customer has a poor experience when engaging with your bank or credit union. Unfortunately, as technology has advanced, communication channels have multiplied and the customer has assumed control of the sales and engagement processes, the ability to 'manage' the customer experience is no longer viable. Instead, it becomes the CMOs role (or a designated team) to view your organization from the customer's perspective.

The good news is that the customer has the ability to share their (good or bad) feelings about your organization whenever they desire through a vast array of social channels or using various channels we have developed for transacting and communicating. The bad news is that most of this sharing is now done in public where the interaction can be viewed by hundreds of thousands of other unrelated people.

While the ultimate responsibility for the customer experience needs to reside in one place, the ongoing responsibility needs to be shared with everyone within the organization. When everyone feels empowered to 'make things right' with the customer, the customer usually wins.

My Resolution

Resolutions are usually only successful when they are embraced and measured. I only scratched the surface on resolutions I believe are important for 2014. I may have listed too many and I am sure I missed several.

The key is to make whatever resolutions you set central to what you want to achieve in the new year. In the meantime, I will be collecting research and insights on all of the resolutions above to help readers achieve the above goals using the experiences and findings of others.

My resolution (beyond losing weight and becoming more fit) is:

I will be the 'go to' resource needed by C-level executives and their teams for insights into the constantly changing retail banking marketplace.

Good luck on your resolutions in 2014 and feel free to provide input into how I am doing on my resolution.

Additional Resources

Ten Bank Marketer Resolutions for 2011 - Bank Marketing Strategy (Jan. 2011)

10 Resolutions Bank Marketers Can't Ignore in 2012 - Bank Marketing Strategy (Jan. 2012)

22 Industry Leaders Provide New Years Resolutions for Bank Marketers - Bank Marketing Strategy (Jan. 2013)

New Years Resolution Statistics - Statistic Brain (Jan. 2014)

5 New Years Resolutions for Marketers - Mashable (Dec. 2013)

7 Marketing Resolutions to Start The New Year Right - Hubspot (Jan. 2014)

9 Marketing Resolutions for 2014 - Eloqua (Jan. 2014)

Marketing Predictions Hits and Misses for 2013 and 2014 - Hubspot (Jan 2014)

5 Marketing Resolutions for 2014 - The O'Hara Project (Jan. 2014)

Digital Marketing: 12 Predictions and Resolutions for 2014 - eWeek (Dec. 2013)

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It's Time to Reinvent Mobile Banking

January 12, 2014, 1:16 am

≪ Previous: Top 8 Financial Marketing Resolutions For a Successful 2014

MOBILE STRATEGIES

It's time to shut down the mobile banking operations at most banks. I say this after watching the development of mobile banking sites worldwide and realizing that most traditional banks don't understand the needs of the consumers they serve or the competition they face.

Mobile banking should not be a delivery channel for branch-based banking. It should be a contextual experience, with a clean design, simple interface and engaging platform to manage money. Unfortunately, most mobile banking sites look like miniaturized online banking websites. This is a problem as we try to serve Customer 3.0.

Last week, AXA Banque in France launched a new 'mobile-first' offering called Soon (website translated to English). Similar to other pure-play mobile banks worldwide like Moven, Simple, GoBank, Fidor, Hello, etc., Soon was initially introduced using a registration/invite model to allow for orderly scalability. Not a bank as such, Soon is a set of services accessible via a mobile application and backed by AXA Bank.

In an exclusive interview with Raphaël Krivine, head of direct banking for AXA Banque, "We started to engage with users in mid-2013, presenting the concept of the offer and the main functionalities to get feedback and comments (especially via our introduction video). It was very useful for us to validate the overall concept and to finalize developments in the right direction." He continued, "The offer is now available for the people who registered last year as a way to thank them for having been supportive from the very beginning.

Unlike virtually all traditional mobile banking sites, Soon (and the neo-banks mentioned above) rethinks the way mobile banking is done by designing a bank for the smartphone as opposed to simply providing access to banking products through a mobile device. This was done at AXA by creating an entirely different brand and mobile platform within the bank. This allowed for an alternative digital infrastructure, a lean start-up mode, open architecture and the ability to view banking from the customer's (as opposed to the bank's) perspective.

With a significantly lower cost structure, the emergence of pure-play mobile banks feels like a similar trend in the 1990s when direct online banks were in vogue. Some of these banks still exist such as First Direct and ING overseas and Capital One 360 (originally ING Direct US), USAA, Ally and Discover Bank in the U.S.

While many traditional banks have imitated some of the direct bank advantages, deposits at the top four direct banks have grown at three times the industry average according to TNS Global. Interestingly, while once having a pricing advantage compared to traditional banks, consumers also rate these direct organizations as 'more convenient' than traditional bricks and mortar banks.

The question is, will traditional banks ever fully embrace the process of managing money through mobile as opposed to simply providing mobile access to accounts? Will they lose the 'convenience advantage' with the mobile channel also?

The Soon Difference

As with other pure-play mobile banks, Soon provides an entirely different user experience than traditional mobile banking. You can see it immediately in the simplicity of the design, the ease of interaction and the approach of the application. In fact, you can see it on the mobile banking sign-in page where the interaction is personalized (can even be seen in the French version).

"Soon has got the same mindset as Moven, GoBank or Simple because it aims to totally change the way to do banking, with a strong focus on UX," said Krivine in our interview. "Unlike some of the new mobile banks in the U.S., however, Soon is launched by an existing bank, with the strength of existing business processes and potential access to our wide range of products (i.e loans, mortgage)."

Comparison between sign-in page of Soon and Wells Fargo

Opening an account is as simple as snapping a picture. No more long forms or extended account opening process. With Soon, a new customer simply takes a picture of their identification, proof of residence (a bill sent to their home) and a evidentiary signature and the account is opened. Opening of associated savings account and a credit card is just as easy.

Once an account is opened, the experience leverages many of the unique benefits of a pure-play mobile application. If the customer wants to save for a project or future expenditure, Soon uses a 'nudge' behavioral science approach, which encourages a customer to behave responsibly with encouragement provided along the way. Not only does the application help a customer save, but it looks at future planned expenses and upcoming revenue to determine if a current purchase should be made.

The dynamic vision of providing a projection of purchasing power in real time is similar to the GoBank 'fortune teller' and Simple's Safe-to-Spend features and very unlike a traditional mobile banking application that simply shows balances based on cleared items. An analogy would be the difference between looking out a front window to the future as opposed to the rearview mirror.

As opposed to simply a current balance, Soon provides a Safe-to-Spend value

Each transaction or project can be associated with a document or an image for better record-keeping and security. The simplicity of using the photo capability on a mobile phone adds to the convenience. Moreover, each purchase can also be associated with a comment, geolocation or even a 'mood' (smiley face or frown). Unlike many mobile banking applications, the Soon mobile app allows a customer to find previous expenses using natural language search.

Transactions can be associated with pictures, comments and even emotions

Similar to Bluebird from American Express, Soon provides its customers with both a checkbook and Visa card (debit) with an NFC functionality. P2P transfers between individuals can be done via PayPal automatically within the application for ease of payment (a partnership avoided by almost all U.S. banks).

P2P is made easy with the PayPal integration

Customer support is one area I believe Soon falls a bit short from a mobile app perspective. Soon will provide support via advisors 24/6 by chat and 24/7 by email, but will not support calls or live chat (like Amazon's Mayday).

Mobile-First Target Audience

As with most pure-play mobile banks, Soon is targeting smartphone users, (which is to say nearly everybody as the smartphone market continues to expand rapidly). There may be a challenge for Soon, however, since recent research suggests that the French seem to still be attached to the proximity of their physical bank, even if the general craze for online and mobile seems to increase.

The benefit of being a division of AXA is clear in the Soon offer. "We expect our first customers to be among the digital natives, because they are used to do anything with their smartphone, including banking," stated Krivine. "Nevertheless, we know that especially for the young people, it is very important to receive advice and support (for instance for loans), so Soon customers will benefit from the expertise of AXA branches (our core business model relies on insurance tied agents that choose to diversify their business with banking in order to develop customer loyalty). This is a fall-back option, but customers will have an option to go to a branch (using Soon apps that will integrate geolocalisation to find an agent)."

Soon - English subtitles from Soon on Vimeo.

The Reinvention of Mobile Banking

Customer's behaviors are changing as they become more comfortable with the web and mobile devices. They are looking for simplicity, availability, real-time insight, contextual engagement and the ability to leverage social networks and enjoy gamification. They expect far greater transparency with the type of personalization they receive as they interact with other industries.

Smartphones provide the technology and contextualization never before available. These devices open the door to a completely new way to manage money on the go. Instead of providing mobile access to an array of branch-based banking services, there is the potential to provide advice and real-time financial insight.

Soon is not the first, but it is the latest in a string of mobile banking offerings where the design, functionality and customer experience is central to the offering. The question is whether traditional banks globally will embrace the potential of the mobile device to deliver much more than just balances and a narrow span of capabilities.

Best selling author, speaker and founder of Moven, Brett King wonders if traditional banks can meet this challenge. "US Banks are avoiding the digital trend worryingly. We have the BIG banks who are too big and too fragmented to come up with a pure-play digital brand that might cannibalize their main brands. We have regional players who are too traditional in their approach. And we have smaller players who might be too small to think they can do this.""The U.S. right now is really slipping behind the Asia Pacific region and much of the rest of the world in terms of industry-wide innovation."

With regard to the introduction of another mobile-first offering, King adds, "It is great to see that organizations like AXA are embracing digital engagement of customers. I think Soon is another great example of why simple, easy to use user experience is still a strong differentiator in retail banking today. While some might think that Soon.fr is a competitor to Moven, the reality is that we are part of an exclusive new club of disruptors creating an entirely new category of banking experience. We stick together, because it is the other banks who still insist on account opening in a branch, or think that mobile is about putting internet banking on a smaller screen who are the guys we're trying to unseat."

Marketing Opportunity

Marketing needs a seat at the mobile banking design table. You need to have input as to whether your organization is going to continue to deliver mobile banking as an access tool or a money management tool.

In the meantime, it is marketing's responsibility to promote mobile banking sign-up and usage whenever (and wherever) possible. Mobile banking customers are more engaged, own more services and are more loyal than customers without mobile banking.

Additional Resources

Direct Banks and the Future of Consumer Banking - TNS Global (Apr. 2013)

Banking in a Digital World - AT Kearney (Aug 2013)

↧

It has been an another amazing year for Bank Marketing Strategy in 2013. The blog was named a top financial industry blog for the second straight year by The Financial Brand and bank and credit union industry followers viewed articles more than 600,000 times during the year.

Below are this year's top 10 articles with links to each post.

After a period of relative stability, the primary bank switching rate increased by more than 40 percent in late 2013, with 60 percent of smartphone/tablet users reporting mobile banking capabilities as being either "important" or "extremely important" in their decision to switch.

Impact of Mobile Banking on Decision to Switch

Digital Engagement Extends to Account Opening and Service Use

The Future of Digital Banking

Today's Challenges

Gap Between Priorities and Preparedness

The Importance of Omnichannel Banking

Channel Use Shifts and Increases

The Everyday Bank

Benefits of Becoming an Everyday Bank

Everyday Banking in Action

The Everyday Bank Challenge

At a time when banks and credit unions are trying to improve the economics of branch banking, iBeacon could deliver a personalized digital sales experience as soon as the customer enters a branch office.

Consumer Acceptance of In-Store Alerts

iBeacon Banking Applications

Beginning today, Bank Marketing Strategy will be known as Retail Banking Strategies and will become part of The Financial Brand.

Go to the new site.

Effective immediately, all articles from Jim Marous appear in the Retail Banking Strategies section of The Financial Brand.

Many of the most popular articles written for Bank Marketing Strategy in the past are already migrated to the new location. By late June 2014, all of the remaining content from Bank Marketing Strategy will be available at the new location.

If you are a subscriber to Bank Marketing Strategy, you will be receiving an email newsletter every other week containing all of the articles I have written over the previous 14-day period (eventually this will be a weekly newsletter).

If you are not a current subscriber, but would like to become one, go here.

It's time for banks and credit unions to consider the potential of providing mobile banking customers single-click live customer support similar to Amazon's Mayday button that is embedded on the latest Kindle Fire HDX tablets.

Similar to a virtual version of Apple's store-based Genius Bar, without needing to wait in line or leave your house, a banking version of Mayday could provide both basic customer support as well as specialized or advisory services that could revolutionize both mobile and online banking.

Mayday in Banking

Testing Proof of Concept

Case Study: ASB Video Customer Support

Amazon Mayday Feature Video

Additional Resources

For the past three years, I have published an article on resolutions bank and credit union marketers should make for the upcoming year. While these posts have always been extremely popular and well read, many marketers still have difficulty achieving some of the most important resolutions.

Despite this lack of success by some, I am again providing suggested resolutions for financial marketers since research shows that people who make resolutions are ten times more likely to attain their goals.

1. I will move some budget from offline channels to digital channels.

2. I will engage with my customers on mobile channels.

3. I won't get distracted by 'big data'.

4. I will innovate through simplification.

5. I will maximize the value of my current customers.

6. I will get actively involved in branch transformation efforts.

7. I will increase my use of email.

8. I will assume the role of Chief Experience Officer.

My Resolution

Additional Resources

MOBILE STRATEGIES

It's time to shut down the mobile banking operations at most banks. I say this after watching the development of mobile banking sites worldwide and realizing that most traditional banks don't understand the needs of the consumers they serve or the competition they face.

The Soon Difference

Mobile-First Target Audience

The Reinvention of Mobile Banking

Marketing Opportunity

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