What We’re Reading: Microlending and Social Media, Mobile Payments and Mobile Banking

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 or Tweet @bankingdotcom.

  • Banks See Dollar Signs in Getting Websites Up to Date

American Banker

Banks are starting to notice that their online banking and mobile sites are not as good as customers expect. “On balance, the customer experience presented in financial services tends to be less advanced than that of Amazon, Apple, Google and others,” Jeffery Yabuki, Fiserv Inc.’s chief executive, said in an interview Thursday at Sibos in Toronto. “That’s why consumers tend to view banks’ websites as not good enough.” This is beginning to change, he says, as many banks, especially the largest ones, are making major investments in their mobile and online banking platforms. At eight large U.S. banks, there are online banking revitalization projects going on that will end up costing upwards of $100 million apiece. A similar shift is happening in mobile banking.

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  • Microlending and Social Media: Competition Between Banks and Non-Bank Lenders

Bank Systems & Technology

George Warfel, consulting director of global payment solutions at Fiserv, gave his insight on microlending and social media for a byline in Bank Systems & Technology: The mention of microlending may call up images of loans made to farmers in India or credit extended to women entrepreneurs in immigrant communities. While the village-based credit delivered by non-governmental organizations does constitute microlending, it is only part of the scope of microlending today. Now, instead of rural villages, microlending has shifted to social media-based online communities and the prevalent non-bank payment companies are facilitating the transactions. To prevent the loss of short-term loans to competitors, banks need to establish a social media presence that will help retain customers and generate income.

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  • Banks vs. tech/telco: Who will win mobile payment race?

Connected Planet

Fiserv, a provider of financial services technology solutions, has produced a paper  explaining why banks are best placed to win in the mobile payment space. This is good news for banks, but the problem is that high tech companies are already in place and others are getting in fast. According to Pew Research, 30% of American smartphone users rely on their devices to manage their daily lives, including their financial ones. Fiserv believes that banks are missing out on an ‘open door’ opportunity. With 58% of smartphone users interested or somewhat interested in paying or receiving bills via their mobile device, the opportunity is obvious ($670 billion by 2015, according to Juniper), but the banks have not moved.

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  • Banking? Thanks, but No Thanks.

Forbes.com

Banks, forced by regulation to lend to “priority sectors,” which include rural markets, don’t find it a viable business.  So, the question must be asked, “Is there a need for simple, conventional thinned down banking services among the financially excluded?” Author Sanat Rao is not suggesting for a moment that the unbanked are financially irrelevant.  Far from it. But let’s recognize that banking has been designed to serve urban, salaried, middle-aged classes, which have very different needs and goals.  Mobile banking is so far designed to accommodate the moneyed classes who are too busy to find an ATM or a branch.

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  • SMS Text, mWeb or Downloadable App – Which Deserves the Crown?

Javelin Strategy & Research Blog

We are in the process of finishing up our annual mobile banking vendor scorecard and we’ve seen some surprising findings come out of the process. One of the questions we asked vendors is: What is the average number of transactions per user per month (across the entire customer/channel base in the US) by mode? Answers varied by vendor but a pattern definitely emerged: In 2011, U.S. mobile banking vendors awarded the crown to the downloadable app based on average number of consumer transactions per month. SMS text experienced the lowest consumer usage patterns, apps the highest, and mWeb fell somewhere in the middle. Using a straight average based on the numbers of vendors reporting, the mean number of transactions was 9 for SMS, 10 for mWeb and 15 for apps.

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  • For Hackers, the Next Lock to Pick

New York Times

Hackers have broken into the cellphones of celebrities like Scarlett Johansson and Prince William. But what about the rest of us, who might not have particularly salacious photos or voice messages stored in our phones, but nonetheless have e-mails, credit card numbers and records of our locations? A growing number of companies, including start-ups and big names in computer security like McAfee, Symantec, Sophos and AVG, see a business opportunity in mobile security — protecting cellphones from hacks and malware that could read text messages, store location information or add charges directly to mobile phone bills. On Tuesday, McAfee introduced a service for consumers to protect their smartphones, tablets and computers at once, and last week the company introduced a mobile security system for businesses.

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  • For Some Companies, No Interest In Interest

Wall Street Journal

A little-noticed provision of last year’s financial-overhaul law gave companies something they had long wanted: a way to earn interest on large balances held in bank checking accounts. But now, with the economy weak and interest rates tumbling, many of them don’t want it anymore. The law, which permits banks to pay interest on business checking accounts for the first time since the 1930s, is getting a lukewarm reception from companies that long lobbied for the measure. That is because in a period of historically low interest rates, some companies would rather rely on other ways in which they can make money on short-term deposits, including deals that many companies use to cut the fees they pay bankers.

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Malcolm Gladwell and Banking: 3 Key Ingredients for Mass Market Innovations

Malcolm Gladwell, author of Blink, The Tipping Point and Outliers, presented at the Intuit Financial Services National Conference this week in Los Angeles. In the session, Gladwell challenged the audience’s thinking around innovation with case studies from Israel’s Bekaa Valley air battle in 1982, to the development of the Mac computer, to NCI’s cancer research breakthroughs in 1965, to the creation of Facebook.

Gladwell highlighted three key ingredients for successful mass market innovations:

1) Being a tweaker instead of an inventor. The most brilliant inventors often don’t know how to put ideas into practice. Tweakers, on the other hand, are highly effective at taking an existing idea and working collaboratively to make it better for the masses.

2) Lack of material advantage is often an impetus for innovation forcing you to be creative on how you approach a problem.

3) Being third to market is actually an advantage over being first. Wait to see where the market is going and then jump in with your innovation that improves on what is already out there.

For financial institutions that don’t have the same budgets as a large corporation to develop new technologies and services for customers, Gladwell’s advice can be heeded as they tap into the latest innovations on the market.

What is your experience with bringing new products to market? Does your FI have “key ingredients” to tapping the latest innovations? Let us know in the comments section below.

Video: Banking Customers Are Changing: Are Bankers Prepared?

Intuit Financial Services’ CeCe Morken explores consumer trends and insights that will impact how financial institutions serve customers.

What We’re Reading: Groupon Integration, Overdraft Fees and Mobile Money

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 or Tweet @bankingdotcom.

 

  • Groupon Integration with Financial Tools May Be a Great Deal for Banks

American Banker

The Groupon daily-deal craze allows financially savvy consumers to save money with merchants they frequent, but it has so far had little to do with banks. A third-party e-billing provider may change that, setting an example by which banks could become the best value to their most coupon-obsessed customers. Manilla Inc. said Wednesday it would allow consumers to manage their daily deals through online financial management tools, much like many consumers already manage their upcoming bills. Providers like Groupon Inc. and LivingSocial sell coupons that provide deep savings to the consumers that buy them, but which expire without the option for a refund if the coupons go unused.

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  • Consumer office takes aim at overdraft fees

CNN Money

Raj Date, unofficial chief of the Consumer Financial Protection Bureau, said in a speech in Philadelphia last week that the bureau is going to start looking at overdraft programs with an eye toward clarifying the cost of free checking accounts.”With these free checking accounts, much of the costs to the consumer were buried in overdraft fees,” said Date, special adviser to the Treasury secretary on the consumer bureau. “Going forward, the bureau will carefully assess how we can best ensure that the overall market for short-term credit is fair, transparent and competitive.” Date, who is administering the consumer bureau as it awaits the confirmation of its first director, said that one of the agency’s first big decisions could be setting guidelines for banks to make sure consumers know what they are doing when they rack up overdraft fees.

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  • First Look at PayPal’s Mobile Strategy

Celent Banking Blog

With preparations for SIBOS (see Gareth’s earlier blog), it would have been easy to miss PayPal’s announcement this week amongst all the other pre-SIBOS press releases. And it would have been a mistake, because it is important. PayPal talked about “re-imagining money” and “new normal in retail”. Often such platitudes don’t mean much, but if PayPal can implement what their slick video demonstrates, it might indeed be something special. Details are still scarce, but PayPal showed how it would change the retailing experiencing through mobile, but without changing the retailers’ terminals. No NFC, but code scanning; cards with PayPal logo (but no Visa/ MasterCard and not even a number).

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  • Credit Union Journal Roundtable On Mobile Banking; Consensus: Solution Is Secure, But Only For The Time Being

Credit Union Journal

Mobile banking is secure, for now, according to credit unions participating in a Credit Union Journal mobile banking security roundtable. “Fraudsters could only inflict a limited amount of damage in mobile banking,” explained Chris Saari, AVP-Internet banking at Worker’s CU here. “Fraudsters want to break in, transfer money, and get out. There’s no fast cash available to fraudsters, because our mobile banking doesn’t allow inter-institution transfers. And you can pay a bill, but you can’t set one up.”

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  • The Power of Price

Gonzo Banker

Let’s face it, GonzoBankers – we are going to have to learn how to compete with the online monsters. Sadly, in this fight, some of us are shooting blanks. The inconvenient truth is that the price leaders on the Internet are cleaning our clocks, especially when it comes to consumer banking products like checking. Let’s look at the three big online players that are taking consumer market share right now. ING Direct started this whole conversation with a very attractive savings rate on a very plain Jane Web site.

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  • Money Goes Mobile: Video from Intuit’s Innovation Gallery Walk

Xconomy.com

Wednesday was Investor Day at the Mountain View, CA, headquarters of Intuit, the 28-year-old consumer and business finance software giant. Most attendees were there to hear about the company’s fiscal strategy for 2012—and if that’s your cup of tea, there’s a recorded webcast of the meeting here. But Xconomy attended for a different reason—to see the 20-plus internal Intuit projects being spotlighted as part of the company’s annual Innovation Gallery Walk. Mobile was the theme of the event—in fact, it’s safe to say that since the acquisition in 2009 of Mint, known in part for its powerful mobile apps, Intuit (NASDAQ: INTU) has gone mobile-mad.

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Video: Customer Insights with CeCe Morken, Intuit Financial Services

CeCe Morken, President and General Manager of Intuit Financial Services discusses how financial institutions can help better engage with customers and grow.

Poll: Remote Deposit Capture: Would you prefer to deposit checks via a mobile phone, or desktop computer?

Thank you to Affinity Federal Credit Union for submitting this month’s question!

If you could only choose one, which would you prefer: depositing a check via a remote deposit capture application on a mobile phone or via a desktop computer with a scanner?

 

Interested in submitting a poll question on Banking.com? Email us at info@banking2020.com or DM @bankingdotcom on Twitter.

The Next Frontier: Mobile Money

By Eric Dunn, Senior Vice President, Payments Initiatives, Intuit

The adoption of smartphone-based mobile banking is one of the fastest trends in digital banking. While today’s smartphone applications, for the most part, mirror the functionality of bank websites with balances, transfers and bill pay, a new frontier is opening with the proliferation of mobile wallets and payment solutions. Already, hundreds of thousands of retail point-of-sale terminals support near field communications (NFC) protocols such as PayPass (MasterCard) and PayWave (Visa). Industry forecasts for smartphones suggest that at least 50 percent of new smartphones will be NFC-capable within 18 months.

As the new frontier of smartphone-based mobile payments is unfolding, there is uncertainty for financial institutions.  How will banks and credit unions participate?  Some industry players — PayPal, Google, the wireless carriers and others – are designing mobile payments ecosytems in a way that could reduce the role of banks.

As a business partner to many financial institutions, Intuit wants to share some of our newest thinking about the mobile payments landscape, and in particular how banks and credit unions can preserve or expand their role in payments during the evolution to digital and mobile. Specifically, Intuit has been working closely with terminal manufacturers and others in the mobile payments ecosystem to develop a working prototype of an NFC-based payment solution that is complementary to smartphone-based mobile banking.

What’s on your mind about mobile payments?  Is this a payment option your financial institution is interested in offering? To join the conversation visit In:Volve.

How Can Your Financial Institution Get the Right Feedback?

It is essential for financial institutions to monitor and respond to feedback provided by their customers. With the increased use of social media, consumers now have a vehicle to project their attitudes about a given company or product at any time, and into a large net of listeners, such as Twitter.

A recent study by the Temkin Group investigated how often consumers give feedback, segmenting results by age and type of feedback. The data reveals that consumers are far more inclined to report bad feedback, a fact that is not surprising due to the volume of complaints to customer service centers and through social media. The data suggests financial institutions need to find ways to react quickly and inform users to curb these negative complaints; additionally financial institutions need to tailor their relationships with customers to ensure younger demographics are encourage to be more vocal about their banking experience.

You can see a representation of the report findings below, or on the Customer Experience Matters blog.

 

How do you ensure you are getting the right feedback from your customers and members?  Let us know by posting a comment below or tweet at @Bankingdotcom.

What We’re Reading: Mobile Banking, Banking Relationships and Hybrid Bank Cards

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 or Tweet @bankingdotcom.

New Tool Helps TD Bank Speed Social Media Queries to Reps

Bank Technology News

The latest incarnation of TD Bank’s buildup of a broad social media program for North America—the embedding of Twitter staff within the contact center—is only a few months old, but the bank has already discovered the formula to win an impressive spike in the use of social media to resolve customer queries. By embedding its Twitter experts with the contact center, and tying the two staffs’ efforts together with a real-time online monitoring and analysis engine, the bank has seen a 25 percent monthly growth in Twitter use for customer service for each of the past three months.

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U.S. Bank Offers New Mobile Banking Tool for Businesses

Bank Systems & Technology

U.S. Bank (Minneapolis) announced that it is rolling out a new tool for its business customers designed to provide secure banking services via mobile devices. The bank’s offering, called Mobile SinglePoint, will allow businesses to connect to their account information wherever they are located. It is an extension of U.S. Bank SinglePoint, the web portal to the bank’s suite of treasury management services, and SinglePoint Essentials, a basic suite of services for small businesses. Mobile SinglePoint uses the same security standards and policies as SinglePoint and SinglePoint Essentials, the bank said.

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To end a banking relationship, don’t just walk away

Baltimore Sun

To end a banking relationship, don’t just walk away. Breaking up with a bank can be hard to do — and expensive if you don’t do it right. Ending a relationship with a bank takes a little more work than starting one up. Both sides bear responsibility, but consumers should be extra vigilant. You might assume it’s over, but the bank might not have gotten the message. And that misunderstanding can have serious repercussions, because fights with a bank can end up damaging your credit history.

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When is a bank not a bank?

Finextra

Who will ultimately win in this market depends on a complex mix of brand, technology and customer service. And if, as expected, payments become increasingly mobile-based, the organisations providing the hardware and the technology could be better placed than traditional banks to benefit. Consumers tend to have a good relationship with their mobile phone provider whilst many banks are rebuilding their brands four years into the financial crisis. A potential spanner in the works is security, or a perceived lack of it. The UK’s newspaper hacking scandals have made mobile telephone security a contradiction in terms to many people.

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Bank Offers Hybrid Card

New York Times

It’s one of those things that makes you wonder why it wasn’t available before. Fifth Third Bank has just introduced Duo, a piece of plastic that works as both a debit card and a credit card. Fifth Third, based in Cincinnati, says that while various institutions have been testing the cards, it is the first to formally offer it to consumers. Research with its own customers suggested that there was a significant demand for the two-in-one cards, said Stephanie Honan, a spokeswoman for Fifth Third.

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Banks Brace For a Season Of Fall-Offs

New York Times

As if the troubles in Europe were not enough, two months of the most turbulent markets in decades are expected to seriously damp trading results for the nation’s largest banks. There are still 13 trading days left in the third quarter ending Sept. 30, and Wall Street firms will not release their final numbers until the middle of next month. But a sharp fall-off in summer trading seems poised to weigh heavily on the banks’ earnings — and perhaps accelerate another round of layoffs expected in the coming months. After helping lift Wall Street’s results during the financial crisis, trading revenue is projected to fall for a second straight quarter.

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Why is there no killer app for paying all your bills online?

Reuters Blog

If you want to manage all of your money and all of your monthly payments in one convenient online place, you’re pretty much out of luck. But if you want one system where you can auto-pay your cable bill through your checking account, review your mortgage statements from a different financial institution and coordinate payment for soccer sweatshirts on the fly, you’re dreaming of a future world that doesn’t yet exist. “The industry is at a crossroads,” says Mark Schwanhausser, senior analyst at Javelin Strategy & Research, which just released a study on online banking behaviors. “I’d like to be able to see more things in one place, yet banking systems are not yet satisfying those needs. Online banking needs a pick-me-up.”

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TechCrunch Disrupt: Intuit and Instagram Discuss the “Lean StartUp”

TechCrunch’s bi-annual TechCrunch Disrupt conference took place in San Francisco this week, attracting start-ups, entrepreneurs and tech lovers to hear about the latest and greatest from companies both large and small. Yesterday, Intuit Founder Scott Cook, and Instagram Co-founder Kevin Systrom took the stage with Eric Ries, former CTO at IMVU, to discuss Ries’ book, “The Lean StartUp.”

The discussion started with Ries diving into the definition of the word ‘lean,’ as he believes it is often misconstrued as meaning cheap or frugal. Ries said, “for starters, ‘lean’ does not mean being cheap or frugal, it’s about being efficient and taking a smarter approach to the development of your product.”

Both Scott Cook and Kevin Systrom weighed in with input from their own innovations, and the importance of running a lean company. You can hear their observations in the video below.

As financial institutions begin to broaden their product line-ups to meet increasingly diverse customer needs, tapping into the “lean startup” mentality could be a beneficial approach. Can financial institutions adapt, adopt and go, or do business realities stand in the way? Let us know your thoughts in the comments section below, or Tweet @bankingdotocm.