Mobile Banking: It’s Not a Phase

Mobile banking innovation continues to move forward as the need for mobile based applications becomes a “must have” for businesses. Whether it is basic banking functionality, such as checking an account balance, or the ability to deposit a check via remote capture, mobile banking apps are enhancing the customer’s everyday banking experience.

A recent Barlow Research report noted that 43 percent of middle market companies and 45 percent of small businesses are interested in mobile banking. Barlow noted, “interest in mobile jumped considerably over the past year in the middle market segment (up 10 percent from 33 percent).”

Companies including Wells Fargo, Fiserv and Intuit, among others, are all standing behind mobile banking as a valuable channel for reaching customers. Barlow Research spoke with Nadilee Russell, SVP Business Solutions at Intuit Financial Services who said, “Business people, regardless of company size, are constantly on the go so they want tools to help them manage time-sensitive cash, payment and fraud prevention decisions from wherever they are, whenever…Staying connected is a key reason the mobile channel shows tremendous growth potential and may surpass online as the primary way some customers interact with their bank.”

Does your FI offer mobile banking? Have you seen higher adoption of mobile banking applications in the last year? Let us know in the comments section below.

Financial Management Emerges from the Tab

As consumers increasingly look to find ways to budget and manage finances, financial institutions are looking to provide easy access to financial management tools and information. With a recent announcement, Intuit introduced tighter integration between its personal financial management software, FinanceWorks, and financial institutions’ web sites.

In an American Banker article, Celent’s Jacob Jegher noted online banking is moving toward a ‘dashboard’-like experience, that goes beyond a static display of information. The article also profiled Beneficial Mutual Bancorp Inc. of Philadelphia, which has 140,000 online banking customers using the ‘dashboard’-like experience:

“It is very straightforward and transparent, and the ease of use is the most important,” said Denise Kassekert, executive vice president of relationship banking for the $4.7 billion-asset Beneficial.”

Furthermore, Forrester analyst Emmett Higdon supported the shift, noting one of the common features of modern website redesigns is a reduction in the number of clicks that consumers must make for common items like bill payments, viewing statements or setting up alerts.

The article noted that with the tighter integration, Intuit also introduced merchant-funded rewards, presenting a huge opportunity for financial institutions, according to Ron Shevlin of Aite Group LLC. The rewards link consumers’ debit card purchases from merchants with deals and money-saving opportunities.

Are your personal financial management tools hidden behind a tab? How many clicks does it take your customers to navigate through your site? Let us know about your “site-stickiness” in the comments below!

What We’re Reading

Below are interesting stories the Banking.com staff has been reading over the past week. What have you been reading? Let us know in the comments section below.

  • Breach at RSA Security May Threaten Bank Systems

American Banker

A severe security breach at EMC Corp.’s RSA Security may threaten the thousands of banks that use its technology. Most banks use RSA’s technology to secure access to online banking and other systems. The company is best known for its one-time passcode-generating tokens, though many banks also use its software to invisibly protect their websites. Without disclosing the exact scope of the breach, RSA indicated that it is a serious and far-reaching threat. Experts said the break-in demonstrates a weakness of passcode tokens, and advised banks to begin migrating to a multilayered approach to protect their systems.

Read more

  • Synergistics Sees Small-Biz Mobile Bill-Bay Opportunity for Banks

American Banker

Many small businesses that do not use mobile bill-payment services are unlikely to use them in the near future, a survey suggests. Of the 327 small-business owners and executives Synergistics Research Corp. surveyed who do not use mobile bill payment, 30% said they likely would not use the service in the next 12 months, while 38% said they were “not too” likely to use it. Bill McCracken, Synergistics’ chief executive, said he believes banks have an opportunity to persuade more small businesses to use mobile bill payment because roughly 80% already use electronic bill-payment services. “This next step to mobile bill payment isn’t as big of a step as going from check to electronic bill pay,” he said.

Read more

  • Microsite Surveys Financial Services Industry Fears

Credit Union Times

Credit unions, are you ready to share your fears? Wanting to drive an awakening in the credit union industry, James Robert Lay, grower of relationships at PTP New Media and Bryan Clagett, chief marketing officer/investor at Geezeo, have launched sharewhatyoufear.com. The new microsite is designed to jumpstart conversations about shifting the credit union industry’s strategic outlook. According to Clagett and Lay, the traditional CU model of looking at the competition in the immediate marketplace and what’s in the consumer mindset has to change to beyond the traditional geographic market and include the real competition coming from Google, Apple, Amazon or even Starbucks.

Read more

  • How far we have come

Javelin Strategy & Research Blog

We have come a long way in the evolution of our susceptibility to attack.  And yet, in spite of the most sophisticated efforts (technically) to combat them, the most sophisticated attacks today (the APT’s) start with the human element.  Good security systems can keep us safe to a point but traditional security fails when it faces an attack that it just can’t recognize as such.  Today’s security tools are more sophisticated than ever but they cannot protect us against human nature. Without good security awareness on the part of the individual, all the tools in the world can only keep us so safe.

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  • Starbucks Card Mobile Is a Hit: 3 Million People Pay Via Phone App

Mashable

Grabbing a cup of joe got a whole lot easier this year. In January, Starbucks began accepting mobile payments via the Starbucks Card Mobile iPhone and BlackBerry applications at 6,800 company-operated stores. Today, the company revealed that more than 3 million people have paid using Starbucks Card Mobile. The mobile payments milestone was presented by chairman and CEO Howard Schultz to shareholders during the Starbucks Annual Meeting of Shareholders at Marion Oliver McCaw Hall in Seattle.

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  • How Banks Could Learn From Apple’s iPad

Wall Street Journal: Writing On The Wall

Comparing the retail experience of banking and consumer technology isn’t exactly Apples-to-apples. Yet it’s closer than you might think. Like the retail-gadget industry, banks often don’t have a clear advantage on rivals. Bells and whistles are short-lived, so much of the difference comes down to marketing and consumer perception. Banks don’t have to dazzle us the way those companies do, but they need to create buzz. So how would our iBank do that?

Read more

  • Banks Hit for Credit Union Ills

Wall Street Journal

Federal regulators are blaming Wall Street’s biggest firms for the collapse of five institutions at the heart of the nation’s credit-union industry and are seeking to recoup tens of billions of dollars in losses on securities that doomed the five. In one of the broadest accusations that Wall Street helped cripple financial institutions during the crisis, the National Credit Union Administration, or NCUA, has threatened to sue several investment banks unless they refund over $50 billion of mortgage-backed securities sold to the five institutions, called wholesale credit unions. The NCUA is accusing Goldman Sachs Group Inc., Bank of America Corp.’s Merrill Lynch unit, Citigroup Inc. and J.P. Morgan Chase & Co. of misrepresenting the risks of the bonds to wholesale credit unions, which loaded up on the bonds in their role of investing on behalf of retail credit unions, according to people familiar with the situation.

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Tell Your Customers: Get Rid Of Inventory!

Editor’s Note: Gene Marks is a small business management columnist, author, and speaker who also owns and operates The Marks Group PC, a highly successful 10-person firm that provides technology and consulting services to small and medium sized businesses. The Marks Group PC, launched in 2004, has grown to help more than 500 companies and more than 2,000 individuals throughout the country. Gene writes weekly online columns for The New York Times and Forbes, as well as monthly and bi-weekly columns for Bloomberg Business Week and American City Business Journals. Intuit has, on several occasions, contracted Gene to provide marketing-related services.

“But I need to carry these items,” Sam whined to me one day. “What if a customer called and I didn’t have it in stock?”

Do you have customers who are distributors? Fine, then it’s their business to carry inventory. They’re the middle man. Inventory is their life. They’re being paid to make sure stuff is in stock so the manufacturer doesn’t have to.

But wait, you have customers who are not distributors? They manufacture? They provide services? Then you, as their banker, should say to this them: “What the HELL are you doing with extra inventory in your shop? Shame on you!”

Sam sells and services fire protection systems to restaurants and retail customers. He’s got inventory lying around all over the place. He’s got a warehouse with spare parts stacked up to the ceiling. He’s got a dozen trucks on the road with parts stuck in every crevice. Some of his techs keep materials in their own homes.

This surplus inventory is sucking out the cash. He’s leasing more warehouse space than he needs. He’s incurring utilities and other additional overhead costs. He’s losing production administering and accounting for missing parts. And he’s missing parts. Fifty bucks here, 50 bucks there. Sam’s company tosses out thousands of dollars each year on inventory mismanagement. It costs Sam MORE money just to keep a lot of this inventory then not.

“But,” he tells you, “what if a customer called and he didn’t have it in stock?”

Well, that depends on the customer! Sam wants to make sure he has stuff in-house so that if ANY customer calls he can get a replacement part right out to them. It’s not a great idea. If the customer is a high dollar, high turnover account then carrying inventory especially for them would make sense. But if it’s not, then other arrangements have to be made.

Tell him to dump that inventory. Sell it back to the manufacturer. Scrap it. Set it on fire. Whatever, just reduce it. Re-negotiate your lease for less space. Put a ping pong table in that newly created area so your people can have some fun on their lunch break. Or build a room there and move in your teenage son. There are a lot of great things you can do once you’ve relieved yourself of excess inventory.

It’s your job to help Sam re-think how he is servicing some of his customers. Can most parts be over-nighted from the manufacturer? If it’s going to be less expensive to pay that shipping cost, should he then carry the part in-house? Are the parts truly mission critical? Can they wait a day or two? Will Sam lose a significant amount of business because it takes an extra day to get that part in? Or is he losing more money on that account by keeping the part in stock?

By Gene Marks

Social Media Statistics: By-the-Numbers, March 2011

Below are interesting statistics on social media usage. Feel free to share your favorite social media statistics in the comments section.

  • 140,000,000 was the average number of tweets sent per day, in the last month (Source: Twitter)
  • 80% of children in the US between the ages of 0 and 5 use the Internet on at least a weekly basis (Source: The Joan Ganz Cooney Center)
  • 48% of people polled said they believe media companies and publishers should not charge for online content (Source: SmartPulse)
  • 7,500,000 users for location-based social network Foursquare, an increase of 4.5 million from the time Facebook Places launched (Source: Foursquare)
  • 50% of 12-17 year-olds said they could trust a company’s website, while only 26% said the same about a company’s social media presence (Source: Forrester)
  • 25.3% of U.S. mobile subscribers over age 13 used a mobile device to access social networking sites or blogs in January 2011, a 1.1 percent increase from October 2010 (Source: comScore)
  • 19% of U.S. small businesses used Twitter in the fourth quarter of 2010, up 9% from the same period in 2009 (Source: eMarketer)
  • 6% of U.S. consumers aged 12-17 are interested in interacting with brands on Facebook (Source: Forrester)
  • $65 billion is the latest reported valuation for social networking giant Facebook (Source: CNBC)

Mobile Banking: More Than Checking Your Account Balance

It’s no secret that mobile banking has become a part of consumers’ day-to-day life. Whether it is checking an account balance, or making a remote deposit from a smartphone, mobile banking is poised for significant growth in the next five years. Forrester Research Inc. approximates that 10 million Americans are currently using mobile-banking technology, and by 2015 that number could grow to 50 million.

In order to keep up with the speed of smartphone and tablet adoption, Gartner Inc. believes companies need to make mobile banking more versatile than ever. Analyst Stessa Cohen said, “While many of those consumers are comfortable using mobile apps to check their balances, companies need to work themselves more deeply into a mobile customer’s financial life or the work that goes into developing all of these mobile apps may wind up being  ‘another cost center.’”

So, how can financial institutions keep their customers engaged on mobile platforms? A recent Bloomberg article outlined a few tactics, including offering coupons and promotions to shoppers and the ability to have face-to-face teleconferencing.  As the adoption of smartphones and tablets continues to soar, Arah Erickson, head of Wells Fargo’s retail mobile banking division, summed up the importance of mobile banking by stating, “Mobile devices are changing consumers’ perceptions of how convenient financial transactions should be…today, convenience means the PC is across the room, and I don’t feel like booting it up.”

Does your FI offer mobile banking? What features do your members use most often? Let us know in the comments section below.

What We’re Reading

Below are interesting stories the Banking.com staff has been reading over the past week. What have you been reading? Let us know in the comments section below.

  • Prepaid Divide on Social Media

American Banker

Nearly a billion consumers worldwide participate on social network platforms such as Facebook, Twitter and Foursquare. But prepaid industry executives and merchants are split about how the medium could improve closed-loop gift card sales. “I don’t know if Facebook is such a great place for gifting,” Walter Paulsen, senior vice president of business development and retail at the prepaid card provider Giiv Inc., said during a panel discussion March 9 at the Prepaid Card Expo here. “I certainly don’t think the code has been cracked yet.”

Read more

  • Find Small-Business Leads via Social Media

American Banker

Most bankers think of social media or online banking when they consider customer acquisition channels. However, there is another dimension to multichannel — using a bank’s existing consumer retail customer base to reach those individuals who are also small-business owners. With today’s e-communications platforms, it’s easy to go after this segment. According to Raddon Financial Group’s 2009 Small Business Survey, most small-business owners are more likely to use a local bank (55%) or a credit union (35%) than a large bank because of what has happened in the banking industry.

Read more

  • Bank, CU Groups Form Rare Alliance in Suit Against Interchange Rule

American Banker

In a rare show of unity, the leading bank and credit union industry groups filed a joint friend-of-the-court brief on Friday to support TCF Financial Corp.’s lawsuit against implementation of a rule that would limit interchange fees on debit cards. The groups argued the Federal Reserve Board’s proposal to limit such fees, which was required by the Dodd-Frank Act, was too narrowly defined. “The board’s erroneous interpretation of the Durbin Amendment threatens to wreak havoc on this vital component of our nation’s economy and to cause substantial structural disruptions to the financial services industry,” the brief said. It was signed by The Clearing House Association, American Bankers Association, Consumer Bankers Association, Credit Union National Association, Mid-Size Bank Coalition of America, The Financial Services Roundtable, Independent Community Bankers of America and National Association of Federal Credit Unions.

Read more

  • U.S. Bank, PayPal, Wells Fargo, Intuit and Fiserv Concur: Mobile Banking Will Go Mainstream

Barlow Research Newsletter

U.S. Bank has now joined Chase and PayPal bringing mobile remote deposit capture to its consumer and small business customers. Mobile banking is clearly building momentum. It is becoming a “must have” solution for your product set.  While current mobile users have come to this channel for a need or convenience, looking ahead, some believe that users will come to this channel because of their day-to-day attachment to their cellular device. “Business people, regardless of company size, are constantly on the go so they want tools to help them manage time-sensitive cash, payment and fraud prevention decisions from wherever they are, whenever” contributes Nadilee Russell, SVP Business Solutions at Intuit Financial Services.

Read more

  • Lawmakers Readying Bills to Delay Debit-Card ‘Swipe’ Fee Caps

Bloomberg

U.S. Senator Jon Tester, a Montana Democrat, discusses the outlook for legislation to delay proposed debit-card “swipe” fee caps that have been challenged by financial companies and questioned by bank regulators. Tester talks with Peter Cook in Washington on Bloomberg Television’s “InsideTrack.”  Senators worked to complete their bill late yesterday as House Republicans got a first look at language that would put a hold on Federal Reserve rules aimed at making fees paid by retailers “reasonable and proportional” to processing costs, as required by the Dodd-Frank Act. A proposal by Senator Jon Tester, a Montana Democrat, could be introduced as soon as today, according to his spokesman Andrea Heller.

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  • Square, Verifone, BankAmericard and PayPal: History Requires Payments Innovators to be Security Leaders

Javelin Strategy & Research Blog

Verifone has fired a missive at Square, aimed squarely at the innovative company that brought card-swipe devices to nearly anyone with a smartphone. As with PayPal a decade ago barriers to becoming a payments-accepting merchant have been removed, this time by Square. As is often the case, in place of the barriers are new security concerns. BankAmericard and PayPal were launched amidst significant fraud concerns too. In fact, whole new categories of protection methods, technologies, regulations and products came in the wake of what is now Visa and EBay.

Read more

 

  • Digging Up Dirt. And Deciphering It.

Wall Street Journal

The Financial Industry Regulatory Authority, Wall Street’s self-policing organization, has been broadening the scope of information about securities-industry professionals available to investors through its free BrokerCheck service at www.finra.org/brokercheck. BrokerCheck now discloses certain customer complaints and legal actions involving brokers as far back as 1999. A broker previously had to rack up three or more such complaints before they appeared on BrokerCheck. Some information, such as criminal convictions and certain penalties, are now permanently available. Some details about brokers who are no longer registered but who may be working as another type of financial adviser, such as a financial planner, are now available for 10 years, instead of two.

Read more

 

FI Spotlight: Veridian Credit Union

Hesitant to adopt mobile banking? One credit union has shown that if you offer it, they will come.

Veridian Credit Union in Waterloo, Iowa introduced mobile banking this past August. The institution already boasted a 153,000 user online banking community, which conducted 1.4 million online transactions in 2010.  In the first five months of mobile banking adoption, the credit union saw 6,000 members using the new service.

Mobile banking isn’t the only service that Veridian offers to give customers a more robust banking experience. Veridian CU’s service organization, The Veridian Group, is hoping to add personal payments to their, and participating credit unions’, roster of services through a person-to-person (P2P) partnership with The Members Group and Dwolla.

Veridian CU

 

 

 

 

 

 

Read the full Credit Union Magazine article here.

Does your financial institution offer mobile banking? If not, what are the biggest issues you foresee with mobile adoption? Let us know in the comments below.

Debit, Check or Cash?

The American Bankers Association recently published a whitepaper on the benefits of debit cards versus alternative methods of payment, titled “Debit Cards Cost Less, Provide More.” The paper discusses how debit cards are not only more time efficient in comparison to checks or cash, but save businesses money. While some may believe cash is a quicker method of payment than debit cards, businesses can process a debit card transaction faster than making change for a $20 bill.

According to the whitepaper, “Fast food restaurants such as McDonald’s see the benefits of debit cards: a customer can place an order, use their card and finish the transaction in less than five seconds. On the other hand, cash can take as long as 8 to 10 seconds.” When time is of the essence, each transaction affects the bottom line and a mere 8 to 10 seconds adds up for a business on a daily basis.

Other reasons merchants prefer debit cards? Consumers generally spend more money. Without the restriction of cash, a consumer can spend more money. The whitepaper goes onto cite, “In comparing debit sales to other payment methods, debit cards increase individual sales by as much as 20-30 percent at fast food restaurants and 10 percent at Big Box Discount stores.”

Are your members using debit cards more frequently than cash or checks? What do you think of the shift towards a cashless wallet? Let us know in the comments section below.

3 Wrong Notions about Credit Card Debt

The great depression, which the U.S witnessed in the 1930s, ruined a lot of families financially. The financial tsunami which hit America a couple of years back also affected millions of people. However, there is a basic difference between the two economic meltdowns. The plastic cards wrecked havoc on our finances during the recent financial recession. This was something our grandfathers did not witness during the previous depression.

The Americans have become too much addicted to spending these days. They are racking up debt to maintain a life style that is beyond their means. Therefore, it is not surprising that the total credit card debt in the U.S is $886 billion (as per data from the U.S census bureau). Do you know that an average card holder has $5100 in credit card debt?

There are certain myths associated with credit card debt. Many of them are quite baseless. Here are a few of those myths:

1) Consumers always managed everyday expenses with credit cards

A few retail chains such as Sears and Montgomery Ward had credit card system in the 1960s to buy goods from their stores. But it was not possible to use those cards anywhere else. So there was no option to use that card extensively. Moreover, Vista and Master cards were usually restricted to the upper-middle class and upper class families with high income. These cards were rather a status symbol. The trend changed in the late 1980s. So it cannot be claimed that our grandparents paid their grocery bills with credit cards like we do.

2) Responsible card holders suffer for unwise card holders

A lot of people believe that high default rate due to unwise use of credit cards has resulted in soaring interest rates. As a result even responsible card holders need to pay high interest rates. However, they overlook the fact that it is mortgage foreclosures and home-equity loan defaults that affect the banks the most.

On the eve of the financial depression, the banks made it easy to open new lines of credit. Therefore, more people got access to credit cards and consequently, credit card debt increased. The banks advised these debtors to refinance their mortgage. This move by the banks backfired as they could not sell the low quality assets during the recession. The banks had to increase the credit card interest rates to support themselves.

3) The CARD Act completely shields the consumers against unscrupulous practices

The CARD Act has banned malpractices like some retroactive interest rate increases, free credit card marketing to minors etc. Nonetheless, this bill is not going to work for people who are already in debt. The credit card companies have already pushed up the interest rates, hiked service fees and lessened the value of loyalty reward programs. As a result, the debtors are in the same mess. Also, the borrowing costs have already skyrocketed. This does not help the indebted people either.

The good news is that consumer debt, though quite high right now, is showing signs of decline. Statistics from the Federal Reserve reveals that consumer debt dipped by $155 in December last year. Perhaps the consumers are realizing that being wise with the plastic cards is a basic condition for a financially secure future.

Author Bio

Marc Brown is a content developer and a financial advisor. He writes on a wide range of money related topics with a special focus on credit card debt.