When Moderate Is Good

The Federal Deposit Insurance Corporation (FDIC) isn’t supposed to make news. It’s the safety net beneath the high-flying trapeze act that the financial world can sometimes be—unquestionably vital but decidedly unglamorous. Since its launch almost 80 years ago, not a single depositor has lost money through a bank failure, yet no one seems to talk about it much.

Still, its role as the consumer safeguard at some 8,000 institutions nationwide gives the agency a ringside view into the industry a whole. That’s why its reports, such as its recent announcement on the second quarter of 2012, deserve attention.

The topline items fit nicely into the current narrative around the economy, which typically goes by the cliché ‘cautious optimism.’ The numbers are clearly up: Commercial banks and savings institutions insured by the FDIC collectively reported aggregate net income of $34.5 billion for the period. That’s a significant jump of $5.9 billion over the $28.5 billion in profits the industry reported in the second quarter of last year.

The gradual progress is also evident in that this is the 12th straight quarter in which earnings have registered a year-to-year increase. In other good news, the money is flowing out too, with an uptick in consumer loans in most categories, the fourth time in the last five quarters that this has happened.

However, there might be even better news in the bad news (you read that right). It’s hard to discount the nearly $6 billion in losses incurred by JPMorgan Chase this year through a bet that went awry. However, the reality is that without that single blow, this industry-wide report would look a lot healthier.

The news that 40 banks have failed so far this year is sobering, yet that represents a steep decline from recent times—92 went under last year and 157 in 2010 (the highest since the S&L debacle of 1992). That trend should hold for a while. The list of ‘problem’ banks (it’s surely not fun to be on any list with this tag) continues to shrink, to 732 from 772 in the first quarter of this year.

This has in turn helped replenish the insurance fund’s own coffers. After turning from red to black at this time last year, the Deposit Insurance Fund (DIF) has had a balance of $22.7 billion as of June 30, compared with $15.3 billion at the end of March.

It’s not that all the news is good: total revenue 0.8 percent over the second quarter last year. Still, the rise is the profitability measure—average return on assets, or ROA—spiked from 0.85% in the year-ago quarter to 0.99% this year. That’s a very decent increase.

“Most institutions are profitable and are improving their profitability,” said FDIC Acting Chairman Martin J. Gruenberg. “All of these trends are consistent with the moderate pace of economic growth.”

After the past couple of years, that almost sounds like cheerleading.

What We’re Reading: Student Loans, Branch Banking and Mobile Payments

  • Consumers Paying Back Their Debts, Except Student Loans

American Banker

Borrowers are paying down their debts across a number of credit categories — with the big exception being student loans, according to new data published by Equifax. Auto loan delinquency rates for payments at least 60 days overdue fell 35% in July from a year earlier, and bank card delinquencies dropped 21% over the same period, the credit bureau reported on Thursday as part of its monthly National Consumer Credit Trends report. First mortgage delinquency rates for 30 days or more fell 15%, and home equity revolving 30-day plus delinquencies fell 7%, the company added.

Read more

  • Convenience is Key for Bank Consumers: Report

Bank Systems & Technology

Consumers rank banking services as providing the greatest value for their investment compares with other services that require a bill or fee, according to a poll conducted by Angus Reid Public Opinion in conjunction with TD Bank. According to the survey, which polled 1,231 U.S. consumers in August, 57 percent cited day-to-day banking as providing the greatest value for their investment. Nineteen percent listed telephone or mobile phone services as the best value compared to investment, whereas 19 percent also cited cable and television services, and five percent listed financial advice. When it comes to day-to-day banking services, the poll found that, not surprisingly, convenience is king.

Read more

  • Apple Goes Thermonuclear on Google –But Who Wins?

Javelin Strategy & Research Blog

What does this Apple victory against Samsung mean? Apple took a big swipe at Google-the same Google which has won its battle for dominant market share by being open and free. Google is now the number one operating system for smartphones and Apple is fighting back, not by innovating with even better smartphones, but by going to court. Don’t get blinded by the names on the lawsuit. The $1 billion patent war victory against Samsung by Apple was really a shot fired at Google Android.

Read more

  • Three Strikes for Branch Banking

Finextra

Thus, if you’re a bank, by 2015 your #1 channel for day-to-day retail banking will be Mobile, then Web, then the ATM, then Call Centre, and at #5, Branch.” – says Brett King, bestselling author and founder of MovenBank. He also predicts that his children might never need to see the inside of a branch when they’re older. A leading research firm declares mobile banking a more important innovation than the credit card or even the ATM! That’s a spectacular comeback for a channel, which failed to make a mark in its debut. So what is it about mobile banking, other than the obvious advantages of convenience and cost that is now enabling it to surge ahead of other channels, especially the branch?

Read more

  • Food carts switching to mobile payments      

Oregon Business

More than 50% of Portland’s historically cash-only food carts have moved to mobile payments, according to Brett Burmeister, managing editor of FoodCartsPortland.com. He says that 18 months ago, 25% of food-cart owners in Portland used mobile payment options. That number is now more than half. “With the newer carts coming in, [owners] are younger, more tech savvy. It’s not an afterthought, it’s part of what they do,” says Burmeister on how mobile payment systems are standard operating procedure with newer carts.

Read more

  • QuickBooks Online Gets Some Mint.com Data Entry Smarts

PC World

QuickBooks Online, the web-based version of Intuit’s popular small-business accounting software, is getting an update that includes improved online banking features and income transaction tracking. The online banking enhancements borrow technology from Mint.com, Intuit’s web-based personal finance manager. QuickBooks online will now download transactions automatically every night, and assign them categories based on historical data or intelligence built in to the software. Users can review the categorization when they log in, and (as before) override them as needed; the software will remember the approved category and use it on future transactions.

Read more

Online Banking: Glory or Gloom?

TSB Bank just announced that less than a month from today, it will close its Frankleigh Park branch.

For readers who might be unfamiliar with those names, TSB is a locally owned full-service bank, and Frankleigh Park is a suburb of New Plymouth, in the western North Island of New Zealand. The most recent figures indicate a population of less than 4,000. The given reason for the branch’s closure is simple: It reflects the global shift to “self-service banking,” where people do more things online. In particular, consumers are using mobile devices in increasing numbers to conduct financial transactions.

Going to the other extreme, consider ICICI Bank, the second-largest private sector financial institution in the world’s second-most populous nation, India. “More than one third of our transactions take place through Internet, making it the second most used medium,” Chief Executive and Managing Director Chanda Kochhar, just announced. “With the increase in Internet usage, it may also grow to occupy the No. 1 position.”

She further noted that mobile phones and tablets are growing at over 100% every year, compared to only 20% in desktops, and that has prompted the company to launch an array of new services, including electronic ‘branches’ that conduct operations around the clock, ‘tablet-based’ banking offerings that ease account opening, and enhanced POS terminals that facilitate every transaction. In the spirit of ‘democratization’—helping consumers without personal access to technology still enjoy its benefits—the company already has 25 electronic branches in 18 locations around the country.

If those seem like extreme examples, take a look at KB Kookmin Bank of South Korea. It launched KB Star Bank, a service optimized for smartphones, in April 2010, and the results seem to have surpassed all expectations. The service had I million subscribers in barely a year, passed 3 million the next year, and was up to 4 million by June of this year.

So where is the United States in all this? The most recent survey by the American Bankers Association reported in September of 2011 that 62% of all bank customers preferred online banking, a rise from 36% the previous year. The real news back then was that, for the first time, a clear majority, 55%, of bank customers over the age of 55 professed a preference for online banking over any other method. That represented a very sharp spike over 2010, when only 20% had the same opinion.

Let’s acknowledge that pretty much any Internet report or survey is nothing more than a snapshot. Online adoption or activity is a fast-moving target, and today’s hot trend is tomorrow’s dinosaur. Obviously, online banking in general and mobile banking in particular are not some niche trends—they represent a massive change in customer behavior, and they’ve evolved faster than most trends that came before. But what does that actually mean?

The most fascinating perspective we can draw from all this is not what’s happening now, but what will happen next year, and the year after that. In that vein, here are some questions that need answers.

First, earlier this year, some banks announced that they were actually constructing new retail outlets. Looking ahead, how many bank branches will we see being closed down over the next few years? Could we see trends following certain patterns—for example, conglomerates shutting down local branches while community banks take their place?

Next, it’s apparent that online banking doesn’t respect demographic or regional boundaries—the trend is being adopted everywhere from Iowa to India, and by Gen-Xers and senior citizens. In developing countries, Internet cafes are being replaced by boutique electronic banks that enable non-tech-savvy people to do everything they would with a PC or a smartphone. The easier the access, the thinking goes, the more the business. If that’s the case, will innovation-minded banks draw business away from institutions that have spent decades building trust?

And finally: If two years from now your bank hasn’t closed any branches and has the same mix of face-to-face and online banking it currently has, is it doing things right? Or is it facing eventual disaster?

What We’re Reading: PayPal & Discover’s Partnership, Mobile Banking Soars and More

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.

  • Credit Union Experiments with Responsive Web Design

American Banker

Have you ever felt frustrated at having to spread your fingers (or unpinch) and then swipe around your smartphone screen to read website content? Army Aviation Center Federal Credit Union believes it’s found a way to reduce the navigation and squinting required to view content on its sites. The method, called responsive design, centralizes the management of web and mobile content. Using software from Banno, the credit union is able to, at the time of log-in, determine the type of device, the screen size and the browser the user has, and automatically tailor content for that device.

Read more

  • PayPal’s Partnership with Discover Extends Its Mobile Wallet Reach

American Banker

PayPal (EBAY) will soon extend its reach through Discover’s (DFS) network — enabling direct acceptance of its mobile wallet at more than seven million American merchants. Up until now, the ecommerce unit of eBay has been inking individual deals with big box retailers, such as Home Depot, as well as terminal makers and middleware providers. This latest deal places PayPal in the same league as the issuing banks in terms of its ability to issue a card that’s accepted over an open-loop network. The partnership, which was due to be announced Wednesday morning, will change the way PayPal handles those transactions as well. Once the system is live (in spring 2013, the companies say), Discover will be the network over which those payments ride, and PayPal will continue to process the transactions. Previously, PayPal did both jobs.

Read more

  • Report: 108 Million U.S. Mobile Banking Users by 2017

Credit Union Times

Forrester Research in its newly issued “The State of Mobile Banking 2012” dropped a huge bomb: Much quicker than many expected, mobile appears primed to emerge as a dominant banking channel with a predicted 108 million users by 2017, per Forrester. That pencils out to some 46% of all U.S. bank account holders. By contrast, around 13% of present U.S. account holders have done mobile banking. Said Forrester in its report: “Mobile banking is displacing use of other channels like branches and online banking.” The report defined mobile banking broadly, to include checking balances and transferring money between accounts as well as performing mobile payment.

Read more

  • Google Wallet Isis NFC Will Push Mobile Payments to 13 Trillion

eWEEK

Mobile-payment transactions are expected to rise nearly fourfold over the next five years, exceeding $1.3 trillion, according to a new report from Juniper Research. The research company expects sales using remote purchasing and near-field communication (NFC) technologies to be the primary drivers of the growth. Encouraged by the increased engagement of the wireless carriers and increasingly widespread rollout of NFC infrastructures, by 2017 these two types of transactions are expected to account for 54 percent of the total value of the mobile payments market. And still, the purchase of goods over mobile phones will account for only 4 percent of global retail transactions by that date. The report takes note of a number of recent efforts—such as Google Wallet and a joint venture by Verizon Wireless, AT&T and T-Mobile called Isis—that together mark a “tipping point,” but says much more still needs to be done.

Read more

  • Dunkin’ debuts doughnut debit

Investor’s Business Daily

Dunkin’ Donuts parent Dunkin’ Brands (DNKN) is the latest retailer to roll out a mobile app letting customers make purchases with smartphones and other devices. No. 1 coffeehouse chain Starbucks (SBUX) on Aug. 8 said it’s investing in mobile-payment platform developer Square. Dunkin’ shares rose 0.6% to 31.07. Starbucks rose 0.6% to 48.40.

Read more

  • Are you ready for a mobile wallet?

MarketWatch

Now that a group of prominent retailers has announced a plan to embrace mobile payments, consumers are once again facing the Big Question: Is it finally time to ditch that Costanza wallet? The question, of course, refers to George Costanza, the clueless sidekick of “Seinfeld” TV sitcom fame who carried a wallet so filled to capacity that it finally exploded. In recent years, the big players in the payment industry—merchants, banks, mobile-phone companies—have touted a day when such an overstuffed leather carryall will become as much a relic as the typewriter or LP. But even with a new wave of retail giants, including Wal-Mart and Target, entering the digital-wallet space, consumers may still have rightful reason to be skeptical—at least for another year or two—and to hold on to their plastic, say experts who track mobile commerce.

Read more

The Klout-Influenced Credit Score Would Give Credit Where It Isn’t Due

*This post originally appeared on MyBankTracker

If you’re an insufferable person who speaks on social media panels with any degree of regularity, you’re probably more aware of what your Klout score is than you are your credit score. After all, you can check your Klout score all day — you can only check your credit score once a year from each bureau. Who has the time? You live an active social media lifestyle, and retweets probably matter more to you than your mortgage rate. You are pretty terrible. Well we’ve got good news for you: at Movenbank, your social media influence might soon influence your credit score — a terrifying thought!

Movenbank, a soon-to-launch financial services company, launched something called the CREDscore in private alpha. It is comprised of a number of different factors: your actual credit score, your personality and, yes, your social media influence. Strange as it sounds, Movenbank might actually make business decisions based on your Klout — or something a lot like it.

First, Movenbank puts you through a financial personality quiz to better understand your relationship with money. You’re assigned a “type”: salesperson, professor, accountant, rockstar, entrepreneur, officer, artist (wouldn’t want to get that one!), breadwinner or trader. For now, this is just filler, but it might factor into your score in the future.

The CREDscore also takes into account actually important financial information like annual income, how much you save per month, how much you have saved up, and your FICO score. So there is hard data factored into the score.

But users can also connect their Facebook, Twitter, LinkedIn or Google Plus accounts to give Movenbank a better sense of your social media influence. The company explains why in a blog post that describes different credit profiles that a CREDscore could benefit. Here’s Ashley, someone who has fallen on hard times, but has a lot of LinkedIn contacts:

Then there’s Ashley. Ashley’s a bit older than Matt and Jessica, but he lost his job a few years ago. Then he lost his house. Ashley’s suffering. The bank foreclosed and now he can’t get any opportunity to get new things started.

But he has an idea. He wants to launch a new business that makes funky trainers that tweet and check-in on foursquare as you run.

Sounds stupid, but don’t be fooled. According to LinkedIn, Ashley has a heavy influence on some potential investors who are sniffing around the ‘Tweener,’ as he calls it. The only thing is he has a problem. The mainstream financial service providers don’t want to know him.

Here at Movenbank though, we love Ashley.

We love Ashley because we can see he’s on the cusp of a breakthrough. But we can’t just give Ashley all the things he wants, so we offer him a deposit account and a limited loan facility to get the business started. The loan facility increases over time, as his Klout increases.

One reason why underwriters typically rely on hard data when assessing credit risk, is because dangling lots of money in front of people who need it desperately can often make them less than honest. Low-documentation and no-documentation loans are called “liar loans” for very good reason: if you’re self-reporting income to qualify for a mortgage, it’s easy to fudge it upward a bit, especially when your mortgage broker encourages you to. Despite what Movenbank would like to think, it’s very easy to fake social media influence — it’s just a pathetic and humiliating experience most of us would readily avoid. Unless we really wanted a loan from Movenbank, perhaps.

This sort of thinking only makes sense if you’re constantly surrounded by tech entrepreneurs all day, as they network and jockey for money and influence. Most of us never need business loans for shoes that integrate with social media. Our financial needs are personal: saving for our first home, retirement, our kids’ education, a vacation, whatever.

But in its defense, CREDscore addresses these issues, too. A higher CREDscore might mean better terms for customers on their accounts: higher savings rates, lower borrowing costs, or lower fees. Strangely, the range is not yet public; those who have been given CREDscores have not been told whether it is good, bad, mediocre, anything. Just: here’s a number, it might mean something later.

Movenbank will launch to the public later this year. And people with parody Twitter accounts might get a better rate on their savings account than you do. It’s strange, because one might reasonably suspect that introverts might have better financial habits than people who tweet every thought or joke that pops into their head. Being impulsive online is different from being impulsive at Macy’s, sure, but being freed of the rigors of a social life would likely cut 40% of the spending out of my monthly budget.

Klout is likely as good a measure of creditworthiness as waistline. Sure, I can infer a lot of lifestyle differences between the man with the 44 inch waist and the man with the 30 inch waist, but just because one probably spends more of his income on cheeseburgers, it doesn’t really tell me how likely he is to pay back a loan — and it definitely doesn’t mean he’s worthy of lower fees or higher savings rates, or vice versa.

But the CREDscore is still in its testing phase. It’s quite possible that none of this will come to pass. So you can stop spamming LinkedIn VC groups — you might end up burning bridges.

About Willy Staley:  Willy is a 25-year-old writer, and as a native San Franciscan, he is unreasonably loyal to Bank of America, if only for their superhero-like origin story, involving the 1906 earthquake and Italian fruit vendors.

Mobile Transactions: Playing with Numbers

Could it be that the only numbers growing faster than mobile transactions are statistics about mobile transactions?

According to a new one just out from ABI Research, mobile shopping will make up nearly a quarter of all global online shopping revenue by the end of 2017. That’s great news for companies invested in this arena, since it clearly represents a sharp spike over the current market, which other estimates place at 10%. However, the same source indicated back in February 2010 that mobile shopping would reach $119 billion in 2015, representing about 8% of the overall e-commerce market.

That’s obviously comparing apples to oranges, but the larger problem is that it’s virtually impossible to accurately predict what’s going to happen with regard to technology use. Technological capabilities are always advancing, and user habits are constantly evolving, but the two phenomena frequently seem unrelated. The emergence of new capabilities does drive usage, of course, just as human needs drive the development of those capabilities, but they seldom happen in tandem. The flood of statistics that keep changing illustrates this problem.

In particular, the intersection of money, technological capabilities and behavioral change make for a strange brew. This is the very essence of a moving target.

Consider mobile payments. Portio Research told us back in March 2010 that 81.3 million people worldwide had used mobile device to make payments the previous year. By the end of 2014, this was predicted to rise to nearly 490 million, or 8% of all mobile subscribers. In June 2011, Yankee Group was putting dollar signs into the mix, reporting that global mobile transactions would reach $241 billion in 2011, and jump to more than $1 trillion by 2015. Fast forward another year, and Gartner was reporting that the number for worldwide mobile payment transaction values in 2011 had been $105.9 billion, and will surpass $171.5 billion in 2012. Bringing it back to users, meanwhile, Gartner said there had been 160.5 million in 2011, and is set to jump to 212.2 million this year.

One more demonstration of how the numbers stack up, even if they don’t add up: Yankee Group identified EMEA as the mobile money hot spot, accounting for 41% of mobile transaction value in 2011, compared to 35% for North America, 22% percent in Asia-Pacific and just 1% percent in Latin America. Others saw it differently: According to IDTechEx (R&M), Feb 2011, Japan had 47 million users adopting tap-and-go phones in just three years, and at the very same time, ComScore was revealing that that in December 2010 alone, 10% of Japanese mobile subscribers had used their mobile wallet to make a purchase—a undeniably a high number.

And how about mobile banking? Try this: In the spring of 2010, Global Industry Analysts (GIA) predicted that the global customer base for mobile banking will reach 1.1 billion by the year 2015, while Berg Insight put the corresponding number at 894 million users. In the summer of 2011, Yankee Group brought the figure down further, to 500 million.

Enough already? For sure. In fact—and again, let’s acknowledge that all this involves mixing apples and oranges and a whole lot besides—it may be time for a moratorium on analyses and predictions. Instead, let’s focus more on what we can do to drive the market rather than track where it’s going.

Smartphones, tablets and other mobile devices still coming down the pike are not just smaller PCs—they represent, and drive, a sea change in behavior. It’s our responsibility to offer applications and services that are flexible, convenient, customized and secure. And the only numbers that count are the ones where we beat even the most optimistic projections.

This article originally appeared as a guest post on MyBankTracker.com.

What We’re Reading: BankAmeriDeals, Retail Banking and the Square/Starbucks Partnership

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.

  • Bank of America’s Cash-Back Deals System Launches Nationwide

American Banker

Bank of America announced the nationwide launch of its online rewards system, BankAmeriDeals. The system allows consumers to select deals online or through a mobile app and then redeem those offers by spending with an eligible Bank of America credit or debit card. The bank began testing BankAmeriDeals internally with Cardlytics in January, and has since rolled out the system regionally to consumers. After a consumer redeems a cash-back reward, the funds are credited to the credit or checking account linked to the consumer’s card.

Read more

  • The Pros and Cons of Mobile Payment Services

Entrepreneur.com

Apps for accepting customer credit cards on mobile devices such as smartphones and tablets are becoming big business. Take for instance San Francisco-based mobile payments startup Square, which recently inked a deal with Starbucks to process all of the Seattle coffee giant’s credit and debit transactions. And major companies such as PayPal and accounting software provider Intuit have created their own payment apps, too. For small businesses, that means there are more options for simpler credit card processing or an inexpensive point-of-sale system.

Read more

  • Putting the retail into retail banking

Celent Banking Blog

Whilst perhaps still not at the level the regulators want, shopping around for better financial deals is becoming much more prevalent in the UK, particularly in the insurance, credit card and mortgage markets. As a result, there is a huge market in lead generation, with comparison websites spending huge sums on TV advertising, resulting in merchants and demented opera singers being amongst the most recognized people in the UK! It’s also led to a revolution in how these products are sold – you can go into most supermarkets and buy a carton of pet insurance at the same as you are buying their favorite tinned food. This weekend saw a number of interesting developments that raises the question as to whether we are on the cusp of another step in the realization of financial services, and perhaps into a very different type of universal bank.

Read more

  • Wells Fargo named best Internet bank in U.S.

Charlotte Observer: Bank Watch blog

Global Finance magazine has named Wells Fargo the “best Internet bank” in the U.S. for both consumers and corporations, according to its annual rankings published in its September issue. In the consumer category, Wells took the top spot in best bill payment, best website design and best in social media. In corporate, Wells was tops in website design, mobile banking and online treasury services. “Customers have woven online and mobile banking into their everyday lives, and engage with us each day through our social media channel. The Global Finance Magazine awards are a great honor,” Wells Fargo digital channels group executive Jim Smith said in a statement.

Read more

  • Starbucks/Square partnership: what does it mean?

Javelin Strategy & Research Blog

The Starbucks/Square partnership certainly is among the major recent announcements related to in-store mobile payments, and has the potential to significantly help jump start adoption. Key questions that our research addresses still remain:  1) “What’s the benefit to consumers” (short answer: it’s still more of a novelty. If a consumer could start ordering earlier in the long early morning queues or loyalty benefits such as discounts or coupons are integrated the mainstream consumer will be standoffish. For more details, see our data on consumers who are early adopters of mobile payments, banking, alerts and more, along with analysis of the solutions offered by various providers.

Read more

  • Alliance Wants to Make Mobile Payments the New Norm, But Where Is Square?

Wired

The mobile payments industry may have entered adolescence this week. Square’s deal with Starbucks shows “m-payments” are no longer just the cute little kids on the block who everyone pats on the head and tells “good job” while the adults do the real work. In another sign of apparent maturity, most of the major players in mobile payments (with one big exception, its poster-child, Square — more on that in a moment) are forming an alliance to solve the problems that arise when trying to transition from novelty to norm. AT&T, Sprint, T-Mobile, and Verizon have joined with the major credit card companies, Google, PayPal, Intuit and others to form the Electronic Transactions Association’s Mobile Payments Committee.

Read more

Forget Social, Banks Need to Customize Their Accounts

*This post originally appeared on MyBankTracker

What does it take for a bank to understand its customer base? A whole lot, according to Ernst & Young, which has published one of the most exhaustive and comprehensive studies on what customers expect out of their banking relationship. In a survey of almost 30,000 banking customers in 35 different countries, the study ultimately shows that bank loyalty worldwide has been disintegrating as customers spread their wealth among multiple banks and search for the most convenient ways to access their money.

Customer loyalty isn’t what it used to be — nowadays people want to find the cheapest and most convenient banking experience. In the United States this has caused a 7 percent increase from the previous year in customers willing to switch banks as well as an equivalent decrease in those adamant on staying with their current banks. Customers in the U.S. have also been migrating away from keeping their money in a single bank in favor of opening accounts in multiple banks. Over the past year, the amount of customers with an account at only one bank has decreased from 51 percent to 42 percent and increased in those with two, three or more accounts.

An omni-channel banking world

However, perhaps even more important than the fact that customer loyalty is decreasing are the reasons. The study offhandedly references a term that Cisco has coined: the omni-channel approach to banking. As opposed to the multi-channel approach, where customers are bombarded by the many different ways to access their bank accounts, which do not necessarily coincide or complement one another, the omni-channel approach seeks to enjoin all the banking channels so that they work together harmoniously.

Cisco published an entire study just to explain and present this term only about a month ago. Now E&Y reference it as commonplace: “Move from multi-channel to omni-channel distribution: Banks need to look beyond multi-channel distribution, recognizing that customers care more about convenience than about channels.” Coupled with the data that consumers have been leaving their current banks, both partially and fully, it seems that consumers are already choosing which channels they prefer to access, whether or not banks are prepared.

Consumers prefer different channels for different banking functions, which the study only breaks down based on simple or complex transactions. But with all the different channels — branches, call centers, email, mobile apps, etc. — banks must understand which are most appropriate and when.

Banks must also understand that social networks currently are pretty much inept and any efforts to engage customers on social networks either fall short or are simply not worth reporting. Only 13 percent of customers use social networks to discover a bank’s products and services — and it goes down from there. Compare that to China, where it’s at 81 percent of customers.

Customize

The answer for banks trying to garner broad customer loyalty is not reaching out over Facebook or Twitter or even connecting with customers, it’s in personalization. Customers need to see that banks are versatile and flexible. While they search for the right bank to fulfill their needs, banks should be asking themselves, “How do we ensure that we are the ones filling those needs?” Some customers are looking for the best rates while others look for the best online experience. Still others need more products. With multiple amounts of services offered, banks must tailor them to different customer packages. Customers know what they should be paying for their experience and are willing to pay for certain extras.

Blanket debit card fees placed was a bust, but an essentially comparable fee works on the prepaid market. If a bank needs extra funds, it should increase its service and charge accordingly. In this way it will keep customers happy, while providing a fair value for its service. The omni-channel approach is more than just technology — and it is here to stay.

You can find the full study by clicking here.

About Zachary Ehrlich: Zachary holds a B.A. in English from the Macaulay Honors College at Queens College, has a strong passion for writing and transparently explains relevant nuances in personal banking. Zachary has banked with CitiBank his whole life and recently opened a checking account with Capital One for its competitive rates overseas as he lived in Italy for 6 months. Follow his tweets: @ZachEhrlich

Big Data: The Link From Dinosaurs to Batman to Small Business

It’s hard to escape the hype around big data these days. From magazines to newspapers to TV, discussions of big data are everywhere. But for the average business or software developer, what does big data mean? What is its promise or potential? The answer depends on the business.

For Google, Facebook and others, big data is intelligence and revenue rolled into one. In cases like the British Museum, it’s about preserving and making freely available a corpus of better than 150 million assets, from maps to musical scores. But even the smallest businesses can begin to use data in new and creative ways.

Consider the case of seasonal retail businesses, such as hardware stores. In years past, store owners manually managed inventory, attempting to anticipate demand for their wares. Today, forward-looking businesses incorporate big data into that decision-making process.

Some turn to predictive algorithms, which are primed with years of inventory data to render better, more accurate projections of demand. Others factor freely available weather data into their inventory predictions. When long-term drought conditions are forecast, as they were prior to this spring, intelligent hardware store owners could lower their inventory of garden hoses and sprinklers and stock the parts necessary for deeper wells that may be dug.

And it goes far beyond internal or general sources, such as weather data. Two years ago the New York Times examined Netflix data to determine which movies were being rented, by neighborhood, in a dozen cities. If you were an entrepreneur looking to open a comic book store, knowing where the fans lived for movies like “Batman Begins,” “Captain America” or “Thor” would be invaluable. Or if you were opening a cooking supply store, planning your location and marketing around which boroughs were consumed by Julie and Julia could be a real competitive advantage.

The nonprofit sector can also benefit from big data. U.S. government census data, made available via the open API at www.census.gov, offers insights on poverty and homelessness. The Cornell Program on Applied Demographics, for example, uses the API to layer poverty statistics onto a map. From there, a savvy nonprofit could turn to the ProgrammableWeb’s collection of nonprofit APIs to tap into databases of potential volunteers.

Whatever the business and whatever the industry, there are datasets – some of them very large indeed – that can help make better decisions faster. The key to effectively using big data is to think creatively about how it can be leveraged. Consultants or contractors won’t necessarily see the same possibilities that you will. But keep an open mind, and big data will more than justify its hype.

*This post originally appeared on the Intuit Network.

About Stephen O’Grady: Stephen is an industry analyst and cofounder of RedMonk. He is based in Maine, a frequent traveler, ardent RedSox fan and focused on helping companies understand developers better and, in general, helping developers do what they do best. He is a paid contributor to the Intuit Network.

What We’re Reading: Check Deposit, Lessons from Amazon and Mobile Apps

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.

  • More Reasons Banks Are Taking Outsourced IT Work Onshore

American Banker

Outsourcing firm CGI (GIB) has created 800 jobs in the U.S. in the past five years, due to a “rebalancing” taking place among its customers — large U.S. corporations, a third of which (200) are banks, including 16 of the top 25 U.S. banks. In this geographic shifting of work, companies are not tearing up their outsourcing relationships, but they are moving some outsourced IT work back onshore. Where before, a company might have handled 80% of its IT workloads in India, the Philippines and other popular outsourcing destinations, today it might do 70% of its work offshore and handle more tasks on U.S. soil. “The banking industry pioneered moving offshore,” observes George Schindler, president, CGI U.S. “But we’re starting to see clients look at changing their sourcing strategy.”

Read more

  • Nuance’s Nina Platform Adds Speech Interface to Corporate Mobile Apps

All Things Digital

If you’ve ever wanted to talk to the mobile banking application on your iPhone or Android device, you soon may get the chance. Nuance, the voice technology company best known for its Dragon Naturally Speaking line of voice applications for personal computers and Dragon Dictation on the iPhone, today announced Nina, a voice platform that’s aimed at enhancing customer-service applications with a Siri-like voice-control interface. AllThingsD got a demo of the technology last week. It basically brings together what Nuance does well: Speech recognition, text-to-speech, natural-language understanding and voice-ID biometric technology.

Read more

  • Five Lessons Credit Unions Can Learn from Amazon.com

Credit Union Times

As the online channel has become the primary channel through which most customers interact with their financial institutions, the pressure to deliver a more compelling user experience has grown. Websites such as Amazon.com are often cited as the gold standard for the online experience, yet turning your credit union website into a carbon copy of a retailer site is neither practical nor wise. While no financial institution can be, or should be, just like Amazon, there are some strategies and tactics that credit unions can borrow from online retailers, particularly when it comes to promoting products and services. To better understand consumer attitudes toward online banking and shopping, Fiserv conducted a series of consumer focus groups and a survey of 3,000 U.S. consumers who both bank and shop online.

Read more

  • Banks grow check deposit, other mobile services

Fierce Finance IT

Bank of America has become the latest of the big banks to roll aggressively into this new area, launching a service that allows retail customers to deposit checks by transmitting a photo of the check via hand-held devices. It also launched a P2P program that will allow money transfers via email addresses and mobile phone numbers. These programs will increasingly be seen as de rigueur. Wells Fargo has already launched a mobile check deposit service for retail customers. Recall also that the clearXchange P2P initiative, involving JPMorgan Chase, Wells Fargo and Bank of America, was also launched earlier this year.

Read more

  • Mobile purchases to make up a quarter of all e-commerce revenues by 2018

Payment Eye

Mobile shopping will account for 24.4% of global online shopping revenue by the end of 2017, according to new figures from ABI Research that emphasize a growing consumer reliance on smartphones for making purchases. Although ABI claims that mobile commerce accounts for a relatively small fraction of total e-commerce revenues, bringing in USD65.6bn, it does not provide any comparative figures. If total e-commerce revenues in 2011 came to USD680bn, as forecast by J.P. Morgan, that would mean mobile currently accounts for less than 10% of all online shopping revenues. ABI attributes the current growth to the continuing boom in smartphone ownership, which in turn is fuelling better apps, platforms and services.

Read more

  • Mobile payment options grow for small companies

USA Today

Small-business owners are skeptical about spending money on yet another piece of hardware. With so many options available, consumer confusion is inevitable. Still, a confluence of recent developments suggests that the payment revolution engendered by mobile devices will forge ahead. Wireless carriers — which stand to make money from all purchase-transaction data traffic carried on their networks — also are aggressively pushing the mobile-payment effort.

Read more