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.

  • Omnego Launches White-Label Mobile Payments App

American Banker

Omnego Inc. of Toronto announced last week a white-label mobile app that would provide companies with their own branded service, alleviating the need to develop their own apps. Merchants can use Omnego’s program with loyalty programs such as gift cards, membership cards or coupons. The platform also lets companies advertise and track the number of clicks for card and coupon access. The new platform follows the November release of Omnego’s Wallgo app, which similarly enabled merchants to combine loyalty and marketing programs with a mobile wallet.

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  • Social Media Sites Deliver Deeper Data, Card Brands Say

American Banker

Credit card companies are using social networks to create ads that are more interactive and that deliver valuable consumer data. Social media websites can help to identify consumers’ interests, such as which businesses and brands they follow. When consumers “like” a product or company on Facebook, it can generate significant brand presence and strength. And that gives marketers an inside track to target those consumers.”It’s interesting as marketers to figure out how to harness the power of the comments going back and forth in social media,” said Alex Craddock, Visa’s head of North American marketing.

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  • Online banking is about to undergo a generational shift, says Yodlee CEO

Beta News

If you use online banking, chances are good that you see the same things in your account that I see when I log into mine (albeit with different numbers): a lot of transaction data, and maybe some basic budgeting tools or low-level personalization. But over the next few months, many of the United States’ top ten largest banks will replace their current online banking experience with something more akin to an app store model, where customers are presented financial apps to make their banking experience more personal and more effective. Financial services company Yodlee, who provides some level of online banking functionality to 80% of the nation’s largest banks, tells us that online banking is sitting right on the edge of a big generational shift.

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  • Tower Federal Credit Union Receives Trailblazer Awards For Excellence in Marketing & Communications

Corridor Inc.

Continuing a tradition of superior member service, Tower Federal Credit Union received two Trailblazer Awards for Excellence in Marketing and Communications from the Maryland & D.C. Credit Union Association (MDDCCUA). MDDCCUA is comprised of 129 credit unions in the state of Maryland and the District of Columbia. Tower won “Best Marketing Campaign” and “Best Newsletter” in the credit unions with $500 million or more in assets category. Tower’s award-winning marketing campaign focused on the credit union’s March 2010 launch of FinanceWorks™, an online Personal Financial Management (PFM) program that is free for Tower members.

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  • Fait Accompli – Fundtech and S1 Merge ——— Next? One, Two, Core

Fiserv Strategies Blog

The Fundtech – S1 merger really isn’t a big surprise to me after covering the online cash management, online consumer and payments spaces for over 25 years. The two were bound to mash up with another entity. In a consolidating bank market, larger scale is needed by both to catch more “ big fish” by serving global and domestic markets with a full suite of information, payments, trade, supply chain and liquidity products. Another scale element of the deal is the ability to serve far more community institutions, more efficiently (they both have SaaS operations in Atlanta).

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  • Who Bears Online Fraud Burden: Bank Or Business?

InformationWeek

Patco, a family-owned construction firm in southern Maine, fell prey to the ZeuS botnet in May 2009. Hackers bilked its account with Ocean Bank for more than $588,000 before the fraudulent activity was detected and stopped. The bank recovered roughly $243,000. Patco sued Ocean Bank for the balance, but it won’t see a dime: A U.S. District Court magistrate in Maine recently recommended the case be dismissed, citing the bank’s accordance with Federal Financial Institutions Examinations Council (FFIEC) security guidelines. It’s a case banking and security experts are calling a potential landmark. As a precedent, it means SMBs–not their banks–are on the hook if their online banking credentials are compromised by malware or other means.

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  • Debit cards poised to get much costlier; Banks may tap consumers to recoup drop in merchant fees

Los Angeles Times

Debit cards, a gleam in bankers’ eyes 30 years ago, have become the preferred method for people to tap their bank accounts, a free and easy alternative to paper checks, live tellers or cash machines. U.S. shoppers used them 37 billion times last year, making them more popular than credit cards (19 billion transactions) and checks (18 billion), according to the payments newsletter Nilson Report. Another estimate puts the figure at 45 billion debits. But big changes are afoot that could make it much more expensive for consumers to use the cards.

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How Banks Can Better Appeal to an Evolving Audience

By Kate Blatherwick

As the way we conduct our business and our personal lives becomes increasingly internet led, banking too must adapt and grow to appeal to an ever more internet-savvy audience. Online banking has already gone some way to revolutionising the way we manage our finances online – but this is just the beginning.

In order to better understand how banks might better appeal to an internet audience, it is important to first understand the current experience users are having and what they’d like to see change in the future.

With this in mind, research conducted by Zabisco was undertaken via social media and an online survey to gather opinions from which banking preferences can be drawn:

Of 30 participants questioned, 57.4% currently use online banking and 90% stated this was the banking method they prefer to use, showing a huge propensity to bank online over any other method. Interestingly, despite being more widely used by recipients than mobile or telephone banking, it was in-branch banking that came out as the least popular option…

When asked about their attitude toward mobile banking, almost 40% were unsure as to whether or not their bank offered a mobile banking app whilst only 23% expressed any concerns over their inherent security.

Clearly, a sample of 30 participants is not enough to base widespread predictions upon, but it does give us some interesting insights into how users feel about the way they bank – most notably, it seems the biggest hurdle to the adoption of mobile banking is awareness, rather than the UK market not being ready to adopt such technology as some articles claim.

How Banks Can Better Appeal to an Evolving Audience

In order to better service their customers, banks have got to seek new ways in which to appeal to their customer’s needs and improve their service offerings accordingly.

That means understanding the end user and sculpting services around their needs, not just the needs of the organisation or its internal members. The research stated here is the very first step to understanding how banking customers today behave, but it is by far the complete story. It is only by investing in that user understanding that banks can create a user experience that works as well for the customer as it does for them – and that’s no mean feat.

Bio/Information

Kate Blatherwick works in the client services team at Zabisco, a  digital agency who produce engaging designs and content for websites  and mobile. Working in both London and Nottingham offices, Kate is project lead on a variety of clients including Barclays, RBS and Natwest.

Zabisco works with a range of financial services clients and, in the companies experience, the ongoing success of these banks is dependent on them taking a more user centered approach. To find out more about user experience and how banks can improve their, visit the Zabisco website at www.zabisco.com.

Social Media and Banking Regulation

Financial institutions who implement social media programs are now facing the challenge of new rules and regulations of such interactions. Unlike other industries that can interact with consumers on a product level, financial intuitions have to tread lightly on social media platforms to ensure their messages are being pushed out in accordance with industry regulations.

American Banker reported that in January of 2011, the Financial Industry Regulatory Authority  issued, “specific guidance to broker-dealers and securities firms about tracking and archiving social media correspondence, as well as many other issues pertaining to social media interactions.”

When social media drives the communication between corporations and the public, financial institutions must comply with the regulations that apply to their industry. Mark Schwanhausser, a senior analyst for Javelin Strategy and Research said that, “Social media is rewriting the rules and [increasing the] speed with which banks have to respond.”

Some large banks, such as Citigroup Inc., have chosen to work with various companies, including CoTweet, Socialware Inc. and Hearsay Social to support their social media strategy, while other banks are reluctant to share information on which technologies they use to run their social programs.

Jesse Engle, vice president of social media for ExactTarget weighed in with his thoughts on implications of social media stating, “[Banks] no longer have a choice [of whether] they will participate in social media…the volume of people who want to engage with companies via social media is increasing, and their level of expectation is also increasing.”

Is your financial institution using social media to engage customers? How do you ensure social media programs are in compliance with changing regulations? Let us know in the comments section below, or Tweet @bankingdotcom.

FI Spotlight: BankAtlantic

It can be difficult to educate consumers on the importance of taking control of their finances. With so many management tools available and advice coming from every direction, consumers may not know who to listen to. Banks can take this opportunity to demonstrate to their customers how important managing finances and accounts can be, and how to best utilize the tools available.

BankAtlantic in Florida recently explained to their customers:

“Not checking up on your personal finances is like driving a car without a dashboard – you don’t know how fast you’re moving, how much fuel you have or how far you’ve gone.

But with a “digital dashboard” on your computer, you can get a concise, consolidated view of your progress – everything from credit card balances and how much is in your savings account to bills that are due.”

BankAtlantic used the analogy of driving to draw a comparison that using the online banking digital dashboard with FinanceWorks was like driving a car well-equipped with all the right safety features. Banks and Credit Unions can take a cue from BankAtlantic and remember that at times, offering beneficial tools isn’t enough; financial institutions must demonstrate the need and communicate how their offerings best serve their members and customers.

You can read additional information on Bank Atlantic’s Website here.

How are you helping customers and members to understand the importance of financial management? Tweet at @Bankingdotcom or let us know in the comments below.

Think your FI deserves special recognition? Send information to info@banking2020.com.

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.

  • Questions to ask about mobile banking and marketing

Bank Director

Recently, Google generated a fair amount of buzz with its Google Wallet app. So is this a competitor to your bank —or a simple reinforcement that for those of you not in the mobile field, it really is time to sit up and take notice?  How might your board start down this path?   Al Dominick passed along a few tidbits c/o Intuit Financial Services’ John Flora. John is the Mobile Solutions Group Product Manager—and counts banks with tens of billions in assets as customers.

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  • Cloud & Mobile: Vendor Weak Points

Bank Info Security

Cloud computing and mobile banking are two vendor management program areas that have opened up a wide range of security issues, says the FDIC’s Donald Saxinger. And in the wake of such high-level breaches like Citigroup and Epsilon, financial institutions need to look at their vendor programs, risk assessment plans and service level agreements carefully. “Now with so many services out there, it’s getting a lot more challenging,” Saxinger says. Saxinger, senior examination specialist with the Federal Deposit Insurance Corp., says vendor management programs are getting more scrutiny from regulators.

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  • Mobile Savings Feature Could Make Shopping a Necessity

Javelin Strategy & Research Blog

Beth Robertson recently came across an interesting idea that uses the mobile device to promote savings. This iPhone app from Putnam Investments sparked her interest because it is a step toward new thinking. Dubbed PriceCheck&Save, the app is available for participants in Putnam 401(k) plans. The idea plays on a combination of a consumer’s desire to spend with his or her need to save.

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  • Mobile Payments Venture Isis Adds Austin as a Test Market

American Banker

Isis, the wireless carrier-led mobile payments joint venture, plans to pilot its service in Austin, Texas, next year. The venture said Wednesday that it is working with local merchants there to deploy the system, which would allow consumers to pay for purchases using their smartphones. It earlier announced plans to also test the service next year in Salt Lake City with the Utah Transit Authority.

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  • Consumers Union Urges Stronger Protections in Mobile Payments

American Banker

Bankers and credit card networks mobile payment systems will be more secure than plastic cards, but a consumer advocacy group says these systems lack vital safeguards. Consumers Union, the nonprofit publisher of Consumer Reports, said Wednesday that it is urging wireless carriers to strengthen their customer contracts to ensure consumers are protected in the event of fraud. “As more Americans start using mobile phones to make purchases, we need to make sure that consumer protections keep pace with all the new technological advances,” Michelle Jun, a senior attorney with Consumers Union, said in a press release. “Consumers shouldn’t have to worry that a lost or stolen mobile phone or billing error could turn into a costly financial headache.”

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  • The Last Bastion of Benchmarking – Management

Gonzo Banker

There is one big area in banks that frankly has not received as much focus and discussion as others, and that’s management. While we have often been asked whether we think a bank’s team is top-heavy or whether there might be too many managers in a particular function, most banks have not looked at or benchmarked overall management count. Why not? Well, there are several reasons, many valid.

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  • Capital One Agrees to Buy ING’s Online Banking Unit

New York Times

Capital One Financial agreed on Thursday to buy the ING Group’s online banking unit in the United States for $9 billion in cash and stock, one of its biggest efforts yet to add to offerings beyond credit cards and other consumer lending. Under the terms of the deal, Capital One will pay $6.2 billion in cash and issue $2.8 billion worth of new shares to ING, giving it a 9.9 percent stake. ING will also have the right to name a director on Capital One’s board. Long known for cheeky credit card ads asking customers ”What’s in your wallet?” Capital One is seeking to build up a national banking franchise.

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Mobile Apps Prevail over the Web

In 2009, Apple created a commercial for the iPhone 3 to highlight the versatility of apps, coining a term that has been widely used for the last couple years: “There’s an app for that.” With apps for everything from gaming to banking to social media, it’s no surprise that mobile adoption has soared in the past couple years.

Mobile analytics firm Flurry recently released a report which revealed people are spending more time on mobile applications than on the Web. In fact, the amount of time people spend on mobile apps has almost doubled in the last year. See below for the breakdown:

Are you using mobile apps more than the Web? What are you doing to engage customers on their mobile devices? Tweet @bankingdotcom or let us know in the comments section below.

SMS Prevails on Smartphones

A recent survey by Upstream highlighted consumers’ attitudes towards mobile marketing. The survey indicated that although there are a plethora of mobile marketing options available, 75 percent of smartphone users prefer to receive notifications via SMS.

Other interesting findings from the survey include:

  • 51 percent of smartphone owners prefer receiving offers concerning mobile products only (upgrade plan, top-up discounts, etc).
  • 83 percent of respondents indicated they are only open to receiving notifications up to twice a month
  • 72 percent would change providers if they received third party ads

For more details you can view the mobile marketing infographic.

Do you find these statistics in line with your own mobile preferences? 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.

  • Online banking—it’s so 1998

ABA Banking Journal

Online banking, once state of the art, has failed to keep up with the times. Banks in general are missing out on new revenue and cost-cutting opportunities, concludes a recent report from Celent Inc. “The online banking space has stagnated for far too long. The evolution of the internet has provided consumers with rich and interactive experiences online. Unfortunately, the banking industry has not kept pace with the evolution of the internet, and customers have started to demand that their banks keep up with the times,” says the report, “Top Trends in Retail Online Banking.”
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  • Bank Claims a Lift from Social Media

American Banker

National Australia Bank said its new social media “break up” campaign has led to an increase of one point in mortgage share in just a couple of months with minimal cost. National Australia Bank, which has found itself repeatedly explaining and covering for batch processing-driven glitches in its payments and other IT systems over the past year, had some good tech news to report last week. Its microsite attacked its rivals, saying the bank was “breaking up” with them over presumably higher interest rates. The bank used Twitter, Facebook and YouTube to spread its adversarial message, gaining both buzz and followers.

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  • Debit Reward Plans: Slim Bank Benefit

American Banker

When Congress threatened to cap the interchange fees that banks collect on debit card transactions, the industry argued that such a move would force it to kill off its own debit rewards programs. As it turns out, the demise of those programs might inconvenience consumers but it is unlikely to deal banks much of a financial blow. A bank that offers a rewards program typically earns a gross profit of $73 per active debit card per year. That compares with $63 for each account that offers no rewards, according to data from Aite Group LLC.

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  • Branch of the Future: Getting there from Here

Celent Banking Blog

Multichannel is more than a buzzword, it’s a way of life in retail financial services. With consumers increasingly using a growing array of self-service channels to interact with their financial institutions, many banks are struggling with creating and implementing a vision for their most expensive channel – the branch network. How to address these challenges given today’s capital constraints and multiple other pressing priorities can be vexing. These challenges are going to be discussed in detail on June 16th at the Celent Innovation and Insight Day.

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  • NFC mobile payments could hit $50 billion by 2014

CNET

Consumers around the world could generate as much as $50 billion in sales through NFC-based mobile payments by 2014, according to a report released yesterday by Juniper Research. NFC, or near-field communication, lets consumers pay for goods and services on the go through their mobile phones simply by touching or passing them over another NFC-equipped device such as a register or terminal. The funds themselves are transferred from the user’s credit card account stored through the mobile phone. Google recently announced its own mobile payments service called Google Wallet that would let owners of NFC-enabled Android smartphones pay for items from participating merchants.

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  • Electronic banking is the wave of the future

Observer & Eccentric Newspapers

Electronic banking is here to stay. Whether it’s direct deposits of paychecks or paying bills online, electronic banking is the future. I have no doubt that in the near future companies will no longer accept checks for payments. They will require you to make an electronic payment. Therefore, the sooner you take advantage of electronic banking, the better it will be for you.

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  • New Financial Rules Delayed

Wall Street Journal

U.S. regulators, behind schedule in finalizing key rules mandated by last year’s financial-regulatory overhaul, agreed to delay a host of new requirements scheduled to hit the $600 trillion derivatives market next month. The move offers temporary relief to banks, companies and investors who have worried their use of derivatives—sometimes-complex financial products used to hedge risk or speculate for profit—could run afoul of regulation. Certain parts of the Dodd-Frank financial law automatically take effect July 16, though regulators have yet to issue final rules in affected areas. On Tuesday, the Commodity Futures Trading Commission offered a six-month reprieve.

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FI Spotlight: M&T Bank

Last month, M&T Bank launched new financial management and budgeting capabilities within online banking called FinanceWorks. For just $0.99 a month, the bank’s customers can manage all their financial transactions in one place, whether they’re executed on an M&T account or not. To provide further insight to members, M&T Bank also added a service which allows members to get their FICO credit score for a monthly fee. Mike Shryne, manager of alternative banking at M&T explains that the credit score is a true FICO score, giving members a snapshot of their “creditworthiness.” Shryne indicated that this added service was prompted by customers’ “heightened awareness of how important one’s credit score is to the ability to borrow, and also to monitor financial security in the age of identity theft.”  Since M&T updates FICO scores monthly, members can track their credit over time.

While some may be wary of the fees associated with these services, Shryne warns that these solutions prevent additional fees from untrustworthy third party sites.  Some “free” credit sites are misleading and end up charging expensive fees until you cancel the service, making a straight fee of $2.99 for “a straight service” a fair price.

You can read the full New York Times article here.

How are you helping your customers manage their credit and finances end to end? How important is it to give customers a one-stop dashboard of services and information? Tweet at @bankingdotcom or let us know in the comments below.

Wal-Mart Expands ‘MoneyCenter’ Kiosks

As traditional banking relationships continue to diversify, new players are entering the market. This  is creating a larger pool of options for customers  than ever-before. One “nonbank” services provider, Wal-Mart, is rolling out ‘MoneyCenters in a Box’ this week, offering a variety of financial services to shoppers. The ‘MoneyCenter in a Box’ looks similar to an ATM machine and will be placed in Wal-Mart stores that do not have full MoneyCenters. Presently, Wal-Mart has over 1,000 full MoneyCenters across the country that provide bill payment, wire transfers, check cashing and other services. According to Wal-Mart representatives, the MoneyCenters are one of the most profitable areas of the store.

Brian Riley, a research director at TowerGroup believes the MoneyCenters in a Box will have strong implications for retailers and banks. Quoted in an American Banker article, Riley said, “Retailers should shake in their boots, banks should shake in their boots…because if Wal-Mart starts linking their kiosks to doing reloadable gift cards, they have the power to move a lot of transaction money.”

As the world’s largest retailer, Wal-Mart has the ability to penetrate the market with these new services. How do you see the Money Centers affecting banking and retail in the coming years? Tweet @banking.com, or leave us a comment below.