Inside the Innovation Gallery Walk

Intuit recently held an Innovation Gallery Walk in New York City, where the company walked the media through hands-on demonstrations of new products and services. Former CNN reporter Bill Tucker takes a look inside:

What We’re Reading

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

  • Square Late to the Apple Store Party

American Banker

Square Inc. is making its smartphone magnetic stripe card reader available through Apple Inc.’s retail stores and website, but its rivals got there first. Square has distributed its smartphone card reader primarily through the mail to people who have downloaded its payment application. The company, headed by Twitter Inc. co-founder Jack Dorsey, has pitched its product as a simpler way to begin accepting card payments than conventional payment industry channels. Though the deal would seem to grant Square further legitimacy in the payments space, it is not a breakthrough for the startup, said Gil Luria, a research analyst at Wedbush Securities Inc., a Los Angeles equity research firm.

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  • Small Banks Boost Kids’ Savings by Educating Parents

American Banker

Big banks may have the deep pockets to subsidize financial literacy programs, but it’s the smaller banks, with their deep ties to communities, that may actually benefit the most from sponsoring such instruction. At the website of one such community bank, Salem Five Cents Savings Bank, in Salem, Mass., children can check balances and access an educational section that the bank encourages them to use with their parents. It includes 12 online lessons that teach financial literacy on topics such as checking accounts, taxes, mortgages, smart shopping and credit cards. The bank said the number of its children’s accounts, called the Gold Star Saver account, doubled to 2,000 last year from 2009, and these now have more than $1 million in deposits.

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  • Amex Reaches Out as It Tries to Build Up Serve

American Banker

American Express Co. is hitting the streets in Eugene, Ore., to promote Serve, its digital wallet for those consumers who are turned off by the elite branding of its main product line. To succeed, Serve must win over consumers who already have numerous mainstream and alternative payment products to pick from. Serve’s benefit to merchants is clear: Since it is tied to a prepaid card, Serve costs them less than Amex credit cards do. The benefit is also clear to Amex, which is aiming to attract a wider audience.

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  • Analyst’s Point of View

Celent Banking Newsletter

As described in Payment Services Hubs: The Bank’s Perspective over 40% of payment services hub projects are at large financial institutions with assets exceeding $100 billion, and nearly 56% are in Western and Northern Europe, according to data provided by nine leading PSH vendors (see Featured Celent Chart). However, banks of all sizes and from all geographies are starting to consider how to adopt PSH concepts in their payments businesses. In my research I found that, to understand why banks start payment services hub projects, it is helpful to distinguish between the true reasons and how the banks justify them. The fundamental drivers include the presence of a burning platform or a large related programme, while the benefits case is usually built around cost reduction, revenue retention and enhancement, risk and liquidity management, and increased agility.

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  • Studies say bank customers still confused by debit-card overdraft policies

Philadelphia Inquirer

Two new studies suggest that checking-account customers continue to be confused by banks’ debit-card overdraft policies, despite Federal Reserve rules imposed last summer to protect card users from unexpected charges for overdrafts on point-of-sale transactions. The new rules bar banks from imposing fees on such overdrafts unless an account-holder agrees in advance to the banks’ terms. With typical fees of $35 per overdraft, banks have made billions of dollars a year by authorizing debit-card purchases even though there are insufficient funds in customers’ accounts. In a report released Tuesday, the Center for Responsible Lending said that many banks “use scare tactics and other misleading practices to persuade consumers to opt into high-cost overdraft programs for debit card purchases.”

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  • Overdraft fees pile up despite Fed regulation; CRL puts blame on banks’ misleading, high-pressure tactics

USA Today

Consumers continue to spend billions on overdraft fees, despite a Federal Reserve regulation that requires banks to obtain customers’ permission before signing them up for overdraft-protection programs, consumer advocates say. Consumers will spend an estimated $38.5 billion in overdraft penalty fees in 2011, up from $18.6 billion in 2000, according to a study out today by the Pew Health Group, the consumer-product safety arm of the Pew Charitable Trusts. Part of the problem is that most banks fail to adequately disclose the cost of different overdraft options, Pew said. For example, the median overdraft-protection fee is $35, vs. $10 to transfer funds from a customer’s savings account to cover the overdraft, the study said

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  • Agencies lag in client-friendly technology, senior officials say

Washington Post

There’s online banking, self-checkout at grocery stores and self-check-in at airports. But President Obama thinks that the federal government is mostly checked out when it comes to customer-friendly technology. Senior administration officials said the president is expected to sign an executive order Wednesday requiring federal agencies to develop new, reliable online services that might one day replicate the success of the Internal Revenue Service’s electronic tax-filing program. A decade ago, about 70 percent of Americans filed taxes through the mail and 30 percent filed online.

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Twitter Town Hall Highlights

Last week, we hosted a Twitter Town Hall to discuss the findings of the Future of Financial Services report. Key trends discussed included small business, cloud computing and technology, the use of social channels and the influence of Baby Boomers and Gen Y on banking. We were joined by Steve King (@smallbizlabs), founder of Emergent Research, Mark Rapport (@RapportCUTimes), from Credit Union Times, Brett King (@BrettKing), author of Bank 2.0, Al Ko (@FinanceWorks), SVP of consumer and small business solutions at Intuit Financial Services, well as other industry influencers and participating FI’s.

Below are a few tweets that outline the discussion from the Town Hall.

Small Business:

  • @smallbizlabs: We’re seeing a lot of traditional and non-traditional FIs targeting the traditional #smallbiz mid-market #b2020
  • @smallbizlabs: The number of personal businesses (solopreneurs) is growing rapidly. Our surveys show they don’t feel banks serve them well #b2020
  • @leimer: Consumer/SmBus want mobile + online + POS integration: One login. One platform. One user experience. One simple consistent process. #b2020
  • @JeffMarsico: @leimer Small businesses want access to capital/loan. Perhaps in 2020 FIs will develop their own p2p lending platform like Prosper. #b2020

Social Channels:

Demographics (Gen Y and Baby Boomers):

  • @BrettKing: GenY don’t get checks, paper banking and signatures. Modality needs to change to accommodate them for banking #b2020
  • @RapportCUTimes: Don’t know about gender roles but what magic bullet will be for CUs to get Gen Yers, younger to come aboard. Tech and marketing? #b2020
  • @smallbizlabs: Baby boomers are going to need a lot help with retirement, retirement planning and elder care #b2020

To view the full discussion, visit #b2020 on Twitter.

Mobile’s growth is supersonic—is your strategy up to speed?

By Al Ko, Senior Vice President, Consumer Solutions, Intuit Financial Services

We are entering an era where financial management online via PC is being eclipsed by the “anytime, anywhere” convenience of mobile phones and tablet devices. As technological advancements fuel changing customer expectations, financial services innovation will continue to forever alter existing paradigms of transacting, accessing information and providing customer service. There is no looking back:

  • A recent study from IDC shows that smartphones are outpacing PCs: there were more smartphone shipments than personal computer shipments around the world in the last quarter of 2010.
  • Celent forecasts that the number of mobile banking users in the U.S. will quadruple between 2010 and 2014, reaching 77 million.
  • Javelin Strategy & Research found that one in five consumers had mobile banked within the previous 12 months, and 7 percent of consumers who switched financial institutions did so for mobile banking capabilities.
  • USAA reported that in less than one year, 1.5 million checks and nearly $1 billion were deposited via mobile.

Leading financial institutions are riding this tidal wave: 80 percent of the top 19 have iPhone apps, according to Javelin … and Android is catching up. But it’s not all about apps—consumers in the millions are opting for the speed and simplicity of text-message banking, and the convenience of Web banking on their mobile device’s browser, which is about to get even more powerful with the advent of HTML5.

Tell us how your financial institution is thinking about and forming its mobile strategy and the challenges that you face. What other aspects of mobile banking concern/interest you?

***All participants contributing to this particular blog topic shall be eligible for a chance to win an iPad 2 provided by the Intuit Financial Services Mobile Banking Sweepstakes. Click here to read the official rules. The sweepstakes to win an iPad 2 close on June 2, 2011 at 11:59:59 PM PT. People posting comments received after that time will not be eligible to enter the contest.***

What We’re Reading

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


  • Paper Gives Small Banks Rewards Tips

American Banker

Community banks should examine their customers’ card use and use their findings to customize rewards programs, a new white paper says. The paper cites research from the Federal Reserve Bank of Chicago that suggests that often, little is needed to get cardholders to respond to a rewards program. The Chicago Fed’s study found that a 1% cash-back bonus created average monthly spend of $220 among previously inactive cardholders. The CARD Act “and proposed debit interchange regulations may be making the job [of card portfolio management] more difficult, but methods for program optimization still exist,” said Ivy Sprague, product development architect at Members Group and the author of the white paper.

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  • Ad-Backed Kindle Helps JPMorgan Chase, Visa in Customer Analysis

American Banker

To get a better read of their customers, JPMorgan Chase and Visa have become the initial sponsors of’s new advertiser-supported Kindle e-book device. E-readers such as the Kindle allow users to set their own pictures to display on the screen after they have stopped reading. The new discounted Kindle, which costs $25 less than the standard $139 Kindle, replaces these screen saver images with advertisements. The device is expected to include a feature called AdMash that allows consumers to choose which version of an ad they prefer to see. “It’s a learning opportunity,” said Chris Conrad, JPMorgan Chase’s marketing director in charge of the Amazon rewards card.

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  • White House’s Online ID Strategy to Rely on Banks

American Banker

Banks and other payment providers are expected to take a leading role in the White House’s revised strategy for securing consumer identities online. The guidelines, which the Obama administration announced Friday, would create, under the National Strategy on Trusted Identities in Cyberspace, a so-called identity ecosystem for “interoperable, secure and reliable credentials.” The strategy, which further develops prospective policies included in a draft proposal published last June, gives private industry the leading role, and government a supporting role, in securing online transactions. Consumers would have one identity, managed either through a token or other technology, on a smart card or on a smartphone.

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  • 5 Things Everyone In Banking Is Talking About

Bank Systems & Technology

Matt Gunn shared some of the topics currently most pressing to those in the banking industry.Regulation: Dodd-Frank, and particularly the Durbin Amendment’s threat to debit interchange fees, is something all bankers are concerned about. Loyalty/Stickiness: There’s a sense that, with the new regulation, banks will be working harder than ever to attract and maintain customers. While traditional debit rewards and free checking are already starting to disappear from the big banks, it represents an opportunity for smaller community and regional banks to incentivize customer relationships through loyalty rewards, merchant-funded rewards and the thing one thing a small bank can do that a national one can’t: highly personalized customer service.

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  • Digital and Bricks and Mortar Fill Consumer Needs

Credit Union Times

Don’t bag the branch yet. A study of U.S. consumers’ digital habits finds that the great majority still go bricks and mortar for at least some of their banking needs. And, according to a new Forrester Research report, only 15% of U.S. consumers have ventured into mobile banking, citing a variety of reasons for their reluctance, from security concerns to just not knowing if it’s there. The March 21 report-”The Changing Landscape of U.S. Consumers’ Digital Banking”-noted that only 4% of U.S. consumers bank exclusively online while almost 40% use the online channel and at least one other. When the survey was taken late last spring, 23% of adults with a mobile phone had a smartphone, a number that has grown since then. Forrester now projects that there will be more than 42 million mobile banking U.S. adults by 2013.

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  • Are the banks missing a trick?

Consumers are driving technology adoption in the financial services industry like never before. Indeed, as the popularity of smartphones and tablets grows, consumer demand for information and services via the mobile channel is rising somewhat faster than banks can keep pace with. Much of the innovation in mobile transactional services at present is coming from outside the banking industry, ironically. For example, in Kenya Safaricom has taken the initiative with M-Pesa, the mobile money transfer solution, while elsewhere in the world Starbucks has rolled out 2D barcodes enabling customers to pay with their mobile phones.

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  • Drawing a blank on free checking; No-fee accounts going away, but few in rush to switch their banks

The free checking account, once a big marketing draw for customers of all income levels and a staple for the banking industry, might be an endangered species. Many of the country’s largest banks, such as JPMorgan Chase, Wells Fargo and Bank of America, are abandoning no-fee checking as they look for ways to deal with a revenue squeeze caused, they say, by federal financial rules changes. “Some of the same banks that were the last to jump on the free-checking bandwagon are now among the first to jump off,” said Greg McBride, senior financial analyst for research firm Bankrate Inc. People are clearly fee-weary, though there are no signs that account holders are switching banks in droves in retaliation.

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Will the U.K. Abolish Checks?


The use of paper checks is declining as consumers move to an online world of e-bills and reoccurring Web payments. The U.K. in particular has seen such a steep decline in the use of checks that the Treasury proposed eliminating checks. However, despite the change from paper to online, small businesses, charities and consumer groups have protested this move as they still rely heavily on paper checks.

The U.K.’s Payments Council, which operates independently of the Treasury, is planning to vote on the abolishment of checks, beginning in 2018.

Bank Technology News reported, “There also seems to be a war of sorts brewing between the Treasury and the Payments Council—the Treasury is for evidence of trends in likely check usage over the next ten years, the advantages and disadvantages of abolition and asking the Payments Council on submissions on whether it’s accountable for the impact of its decisions on consumers.”

Do your customers and members still rely on checks? What are your thoughts on abolishing checks?

New Entrants, Big and Small, Target the Financial Services Industry

One of the key findings of the recently released Intuit 2020 Future of Financial Services research report is that the financial services industry will see a wide range of new entrants in the coming decade. These new competitors will include both Davids and Goliaths. Expect to see some of the world’s largest corporations and some of the best funded venture-backed startups enter as new financial services players.

These new entrants are attracted to the financial services industry for 4 key reasons:

1. New technologies and the shift to online and mobile banking provide an opportunity to disrupt existing competitors and win customers with new methods, approaches and business models.

2. Consumers and business customers are becoming more comfortable managing their finances online and are increasingly willing to trust online providers with important financial data and transactions. Gen Y (born 1980 to 2000) is especially open to using online financial services products, even from new startups.

3. Technology now allows highly customized online banking services to be delivered seamlessly to customers, both virtually and at brick-and-mortar establishments.

4. The size and scale of the financial services industry makes it a very attractive target for new entrants.

walmart-logoWal-Mart is an example of a non-traditional, new entrant. They offer a growing array of financial products, including small business and consumer credit. Wal-Mart has even gained regulatory approval in Canada to open a bank focused on consumer credit.

Some of the largest technology companies are also adding financial services products, with many targeting electronic payments. Facebook, for example, recently created an electronic payments division and Google, Amazon, Apple and Microsoft have all either announced or are rumored to be announcing products in the payments space. There are also dozens of startups targeting electronic payments.

The financial services industry is so attractive to startups that specialized incubators focused on building new financial services companies are being developed. FinTech Innovation Lab was created by a consortium of large banks and venture capital firms to find, fund and develop the next generation of financial services companies. It is just one example of the many approaches venture capital firms are using to fund financial services startups.

New entrants using new technology, business models and, in some cases, regulatory advantages will target the most profitable and attractive market segments. Financial institutions that don’t recognize and respond to these new competitors risk losing their best customers.


About Steve King:  Steve is a Partner at Emergent Research. His current research and consulting is focused on economic decentralization, the growth of small business and the future of work and workplaces. Steve has extensive consulting, marketing and general management experience with both large and small companies.  Steve is a senior fellow and board member at the Society For New Communications Research, a research affiliate at the Future of Work and an advisory board member at Pond Ventures.

About Carolyn Ockels:  Carolyn is the Managing Partner at Emergent Research.  Her current research and consulting is focused on economic decentralization, the growth of small business and Gen Y.  Carolyn has extensive consulting experience, and prior to Emergent Research managed Cambridge Energy Research’s Asian energy consulting business, led market research in Japan for RCM Capital Managment, and held a variety of domestic and international consulting positions with the economic forecasting and planning consulting firm Data Resources, Inc.

Intuit 2020: Future of Financial Services Twitter Town Hall

Last week, we posted a report compiled by Emergent Research and Intuit Financial Services which identifies and examines trends that will transform the financial services industry over the next decade. To accompany the release of the report, we’re hosting a Twitter Town Hall to discuss the findings and key trends that will shape the next decade of the banking industry.

We’d like to invite all our readers to tune into the conversation and participate:

What: Future of Financial Services Twitter Town Hall

When: Tuesday, April 19, 2011 at 1:00 pm PT/4:00 pm ET

Where: Go to Log in using your Twitter ID. Search for #b2020

Some topics the Town Hall will touch upon include the need for financial services to increase across all age groups and demographics; increased competition between financial institutions to serve small and mid-market businesses; cloud computing reshaping how value-added products and services are designed and delivered.

To download the full report, click here.


What We’re Reading

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

  • Defending Your Brand 2.0

American Banker
More and more bank managers are slowly coming around to the fact that thousands of conversations are occurring online every day about their brands, and not surprisingly, many of them aren’t very nice. A simple Google search for the phrase “I hate banks,” for example, yields more than 43 million results. SunTrust, Bank of America Corp., Citigroup Inc., Wells Fargo & Co. and Discover Financial Services are among those companies that have established teams devoted to monitoring and responding to comments online. As consumers’ use of social media grows — there are now more than 500 million users on Facebook and 175 million on Twitter — it is becoming increasingly important for banks to monitor and respond to what is being said about them online, in an effort to protect their corporate identity
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  • Boston Fed: Cash Use Rose in 2009

American Banker
Consumers’ use of cash to make payments grew in 2009, a Federal Reserve Bank of Boston study released April 7 found. While debit cards were still the most commonly used payment method, cash use increased. Consumers made an average of 19 debit card payments a month, compared with 18.4 for cash. In 2008, consumers reported making 21.2 debit card transactions a month and 14.5 cash transactions. The Boston Fed’s Consumer Payments Research Center attributed the shift to the economic downturn and card regulation, which it said may have affected card use in general.
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  • Bank earnings will provide a snapshot of how the recovery is going; JPMorgan goes first

Associated Press Newswires
A lot of big banks had a free ride to higher earnings the last few quarters. That could be ending soon. As the economy gets better, investors want to see if banks can improve their core businesses of writing loans, issuing credit cards and advising on corporate deals. Several major banks including Wells Fargo & Co., JPMorgan Chase & Co. and Citigroup Inc. recorded substantial gains in income in recent quarters from accounting adjustments in their loan loss reserves. Those adjustments, which are perfectly legal, reflected a decline in the likelihood that their borrowers would default on loans.
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  • Rediscovering Character in Small Business Lending

Barlow Research Newsletter
Many of the five pillars of credit worthiness in small business lending have been cracked at their foundations during the recent recession. In the past, a banker’s analysis of a company’s Collateral, Capital, Conditions, and Capacity became easier with their bank’s centralized systems and automated credit-scoring models. But during the economic downturn, these systems did not always adequately prepare the lender for a swiftly deteriorating loan portfolio.  Meanwhile, Character had become the lost C in the 5 C’s of credit analysis.
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  • Banks want a favor — at your expense
You might think the big banks would be too embarrassed to ask Congress for more special favors. You think wrong. The big banks are pressing Congress for a favor that will cost the average American household $230 a year. The bankers argue that the favor is needed to support small community banks. But since the lion’s share of the favor will be collected by just four banks, it might be cheaper to subsidize community banks with a check direct from the Treasury. Banks keep debit fees higher than necessary in order to protect their much more lucrative credit card business.
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  • Welcome to Facebank

Javelin Strategy & Research Blog
Slowly but surely the banks and large financial institutions appear to be losing their stranglehold and franchise on the right to keep and process your money. Paypal was one of the first to break the mold.  While they got their start in the world of person-to-person payments, they are now a major processor of financial transactions.  Facebook recently set-up a legal entity known as “Facebook Payments Inc”.  Facebook has the advantage of being a ‘destination’.
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Social Media is Not the Next New Thing

There is nothing revolutionary or exciting about social media. Building customer relationships has been a bank’s job since the onset of the financial services industry. Over the past hundred years, banks have successfully adopted technologies from telegraphs to telephones, in an effort to better serve customers. Social media is just the latest step in this evolutionary path.

However, to successfully build relationships in social media, financial services firms must rethink a few paradigms of customer engagement. First, customers should not be required to come to the bank’s turf for help or information.  While traditional channels will continue to be important, customers want bankers to step outside their stores and join them in conversations on the sidewalks of the social web.

The first step into the fresh air of social media should be listening to customers to understand current conversations. Once topics and needs are understood, a bank can respond to customers, so long as value can be delivered through the engagement. If a customer requires a private environment to discuss their issue, they should be invited to step back inside a traditional channel where secure servicing can be delivered.

Second, social media breaks through the traditional silos of customer communications and mixes all messages, whether they originate from marketing, customer service or corporate communications in to a messy soup, side by side and often colored by customer commentary. Success in this new reality requires tight coordination between internal teams to ensure quick, consistent and coordinated communications.

Financial services firms may initially feel overwhelmed by the risks and options of social media. Success comes when they approach social media as they would any other program by requiring clear alignment to business priorities and customer needs, articulated success metrics and risk management planning. So long as they start with their customer, financial services firms are not breaking new ground by entering social media. They are simply doing what they have always done­—growing their business through strong customer relationships, with a little help from a new technology.

Kimarie Matthews is Vice President of Social Web for Wells Fargo’s Internet Services Group. For more than 10 years, Kimarie has been helping improve the customer experience in financial services by developing customer listening and satisfaction measurement programs that guide the business to better meet customer needs. She is now on the front lines of proactive customer support managing Wells Fargo’s Twitter channels (@ask_wellsfargo and @wachovia) and developing programs that extend Wells Fargo’s ability to support customers by leveraging social technologies.