Preventing Financial Exploitation Of The Elderly

The Financial Services Roundtable released its 2012 Fast Facts Book in September, which contains Fast Facts from January 2012 through July 2012. Fast Facts provides reliable, bullet-point research about issues facing the financial services industry. Below are a section of Fast Facts on preventing financial exploitation of the elderly.

By 2030, seniors will make up over one-sixth of the U.S. population. As our population grows older, it is essential to educate people about how to protect themselves from financial exploitation.

FACT: The annual financial loss for victims of elder abuse is around $2.9 billion, which is a 12% increase from 2008, according to a 2011 MetLife study of Elder Financial Abuse.

FACT: The elderly are a target for financial abuse because they may be more likely to depend on others for help, have predictable patterns, and have little understanding of modern management of finances. Additionally, they often have accumulated savings. Persons over the age of 50 control over 70% of the nation’s wealth, according to one survey.

FACT: Men and women of any race, economic level, or health status can become victims of elder financial abuse.

  • Women are twice as likely to become victims
  • Most victims are between the ages of 80 and 89
  • Most victims live alone and require help with health issues and home maintenance

FACT: The most common perpetrators of financial abuse are family members, who commit nearly 75% of crimes.

FACT: Signs of exploitation of the elderly include: unpaid bills, changes in banks or attorneys, changes in spending patterns, missing property, unfamiliar signatures, and a lack of personal amenities.

FACT: Many Roundtable member companies are coordinating to protect elderly customers from financial abuse. Examples include:

  • Capital One has partnered with the Consumer Action advocacy group to create MoneyWi$e. MoneyWi$e is a national personal financial education program offering free materials and community-based training opportunities on various topics including elder fraud, identity theft, and money management. In Canada, Capitol One partnered with SeniorBusters to raise awareness about the prevalence of elder abuse and fraud.
  • City National Bank has published various materials regarding elder abuse. Such materials include a facts bulletin regarding the actions and consequences of elder abuse, examples of common identity theft methods, and what to look for when elder financial abuse is suspected.
  • Comerica Bank provides publications on how to be aware of the signs of abuse and how the bank can help. They make an effort to partner with law enforcement to conduct community seminars open to all regarding various fraud topics. They have also created county taskforces to address the issues of elder abuse to provide a response plan for elder abuse and develop a network of contacts for the members.
  • Fifth Third Bank conducts a program which informs and offers protection from elder financial abuse. Fifth Third works regularly to protect assets, prevent losses, and safeguard information through customer interaction. By getting to know their customers, they are able to watch out for unusual activities. They also pay close attention when seniors come into a banking center for service by observing if they have someone with them, noticing if they seem uneasy, and noting if the transaction is unusual in nature. They will then take immediate action to safeguard the customer.
  • First Horizon is kicking off a program to prevent identity theft in their headquarters city of Memphis. In partnership with the Memphis Police Department, County Sheriff’s Office, and the District Attorney General’s Office, employees will make presentations at retirement communities and other groups regarding how to protect their finances. These presentations will also be made free to any organization interested in identity theft prevention.
  • Regions Financial is providing communication and instructor led training to all associates focusing on elder financial abuse prevention. By September 30, 2012, every Regions associate will complete training on how to prevent, detect and report elder financial abuse. Regions has a long standing commitment to elder protection efforts. Since 2003, Regions has invested in the Senior Housing Crime Prevention Foundation, a nonprofit whose mission is to protect vulnerable seniors in housing facilities in various locations across our footprint and to provide ongoing crime prevention programs for senior housing residents.
  • The Principal Financial Group has provided grants to support WesleyLife Community Services’ Money Management program since 2007. This no-cost program promotes independent living for low to moderate income older adults and persons with disabilities who are at risk of victimization because they cannot manage their own finances. WLCS-Money Management program curriculum was designed by AARP which provides training, evaluation and technical support. Nationally, this program helped 6,000 adults in 2010 with a 98% satisfaction with service rate.
  • Wells Fargo has developed training and informational content for distribution. This includes periodic articles which are distributed via internal channels. Additionally, their Regulatory Affairs group has coordinated and hosted regional Elder Financial Abuse Symposiums in various cities around the country. This group will also conduct ongoing meetings with regulars such as FINRA, SEC and State, and is in regular contact with State APS.

For additional resources and examples of member programs, visit http://www.fsround.org/fsr/financial_literacy/financial_literacy_corner.asp.

What We’re Reading: NFC, Mobility and Apple’s Passbook

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.

  • The iPhone 5 Doesn’t Have NFC — So What?

All Things Digital

With last Wednesday’s Apple iPhone 5 unveiling, and the recent Nokia Lumia launch, mobile is on top of the media agenda. But as the screen size and connector stories die down, the question of “when will my mobile phone become my wallet?” rises up once again. The terms “mobile wallet” and “digital wallet” should not be used interchangeably. Your mobile phone won’t be the one device that will forever banish your leather wallet to the back of a drawer. It will, however, be an important access point to your digital wallet — which will live in the cloud and follow you wherever you go. NFC is a technology, not a strategy.

Read more

  • Bank of America Execs Assert Mobile Banking and Security Are Top Priorities

American Banker

Bank of America executives can’t stress strongly enough how seriously they take their mobile banking initiatives due to consumer research released on Tuesday by Google around American attitudes toward mobile computing and mobile banking.The search engine giant’s statistics said mobile banking websites are one of the six types of online portals that users expect to load in short order, five seconds or less.That means, Google says, that banks can no longer afford to not provide customized tablet and smartphone services.More proof: 67% of surveyed consumers agreed with the statement, “A mobile-friendly site makes me more likely to buy a product or use a service.”

Read more

  • PNC Growth Strategy: Get ‘Em While They’re Young

American Banker

Over the last few weeks, the Pittsburgh company has forged deals with three universities and it is eyeing others within its markets as more contracts for campus ATMs, branches and other banking services are put out for bid. At least two dozen schools have “told us that they are going to be approaching the market in the next six months, looking for partners,” Nick Certo, senior vice president and manager of university and workplace banking said.

Read more

  • Payments Startup Stripe Expands to Canada in Challenge to PayPal

Bloomberg

Stripe, an online payments startup backed by Peter Thiel, is expanding into Canada to ramp up competition with EBay’s PayPal and widen its merchant base in a country with few options for transactions over the Internet. Any individual or business based in Canada can start using Stripe to collect payments starting today, the company said in a statement. Stripe, based in San Francisco, charges customers a flat fee of 2.9 percent plus 30 cents for every transaction and supports major credit cards. Most merchants in Canada currently go through banks to set up online payments, which can be a lengthy process of faxing documents and providing personal information, said Tobias Lutke, chief executive officer of Shopify, an e-commerce company based in Ottawa.

Read more

  • Mobility – A New Way for Banking

Finextra

We often talk about mobile banking from a technological point of view, about the fancy new tools which allow customers to view the status of their accounts or execute simple transactions. Many have the view that mobile banking is a simply new channel for online banking, bringing the functionality available on the desktop to the mobile phone. However, for mobile banking to be truly successful, it needs to be much more; it needs to be a new way to do banking, a permanent space for the bank and its customers to interact. In a presentation from Miguel Montes and Pol Navarro of Banco Sabadell made a very compelling argument for a more powerful, flexible, and human banking. They clearly showed that while mobile banking is being driven by technology, it will only be successful by fostering new processes to improve customer service and sales.

Read more

  • AmEx launches integration with Apple’s Passbook

VentureBeat

American Express is launching an integration with Apple’s Passbook today. You won’t be able to pay with AmEx using Passbook, but you will be able to get details on recent transactions as they happen. “We’ve essentially re-imagined what’s possible for the newly launched Apple iOS6 Passbook technology – taking it beyond just mobile ticketing, coupons, and loyalty cards,” AmEx spokesman Brad Minor told me in an email. “This is an entirely new use-case for Pass that makes it useful every day, and not just for specific occasions.”

Read more

Satisfaction With Social Media Interaction

Guest post by Karen Licker, Social Banker & Content Contributor (Independent) at J.D. Power and Associates

Social media, a non-traditional method of customer interaction is clearly becoming increasingly important for banks to understand.

It’s no longer just a vehicle for customers to vent about poor experiences, praise their bank for exceeding expectations, or read about other customers’ positive or negative experiences—it has now become a legitimate service channel!

Social media sites not only allow customers to interact with their bank, but also provide another medium to converse with representatives, get questions answered, and resolve problems. For example, data from our 2012 J.D. Power and Associates US Credit Card Customer Satisfaction Study shows that during the past 12 months, 5% of credit card customers have contacted their issuer through their social media site to ask a question, resolve a problem, or make a request.

Although many questions or problems may need to be handled outside of the social media site that was the initial contact, it is important for banks to show they are listening to their customers’ “pain points” by providing an actual response to the social media posting.

Did you know that only 60% of customers who contacted their credit card issuer via social media received a reply?

Needles to say, the impact of replying to a posting on overall satisfaction is profound, as Interaction satisfaction among customers who have received a reply to their social media contact is notably higher than among those who did not receive a reply (802 vs. 748, respectively). Findings from our recent study also revealed that optimizing customer satisfaction with their social media experience does not end at merely responding to the request, but that issuers should continue to focus on the following:

  • Resolving the initial issue at hand
  • Offering additional assistance
  • Thanking the customer for their business

When each of these best practices are met, Interaction satisfaction increases to 839, which is 91 points higher than when they are not met.

Source: J.D. Power and Associates 2012 US Credit Card Satisfaction StudySM    

The Bottom Line:
With the continued advancement of technology shifting the way customers interact with financial institutions, it is vital for banks to proactively respond to the changing demands of their self-service channels and understand the importance of being responsive to feedback posted on social media sites.

 

Killer App, circa 2013

Anyone have fond memories of the term ‘killer app?’ More to the point, what would a new killer app for the banking and finance world look like? What exactly would it do?

It’s not that the phrase has gone away, but over the years, it seems to have been overtaken by marketing hype—so many new releases are routinely tagged this way that a collective yawn seems to be the only appropriate response. That’s unfortunate, because a true killer app really does make a huge difference. It can by itself generate an industry shift, propel a new technology paradigm and markedly alter end-user habits, particularly by introducing business professionals and home consumers alike to new ways of doing things.

With regard to finance, Visicalc played exactly this role more than 30 years ago. As the first spreadsheet to appear on PCs, specifically the Apple II, it helped change the perception of the entire field of computing. What were previously seen as toys for geeks became serious business tools, and a whole generation climbed aboard the technology train. The Lotus 1-2-3 similarly propelled sales of the IBM PC, which in turn spawned a vast hardware and software industry. And while it’s easy to be dismissive of video games as creative time-wasters, releases like Quake helped drive the development and adoption of 3D accelerators in home computing, which in turn raised the stakes for other technologies.

These days, perhaps more than new hardware, one tool that propels other forms of innovation is the API, or application programming interface. Simply put, by serving as a common language that enables different kinds of software to communicate with each other, it eases and speeds the development of new apps—perhaps even killer apps.

Intuit seems to think so. In search of the “next killer finance app,” the company, for the first time in its history, is opening the APIs to its financial data service in the U.S. and Canada. The move gives third-party developers unprecedented access to the financial data service that powers Quicken, QuickBooks, Mint.com, and FinanceWorks. In fact, developers can now to tap into transaction information from 19,000 financial institutions, auto-categorize the data, and embed it into whatever applications they develop.

Innovation in this field has frequently been driven by the ease with which vast amounts data can be accessed, collated and packaged. The new releases have the potential to take developers and users alike many steps forward in harnessing new capabilities. The new APIs are available on a limited basis now through the Intuit Partner Platform, with wider availability to come in December.

One early program that has already built on the new service is SaveUp, a free rewards game for saving money and reducing debt. Customers can securely access data from just about any financial source, while the company tracks their financial actions and offers rewards accordingly.

Here’s the thing about killer apps: We never see them coming, yet when they do, we wonder how we ever got along without them. It’s easy to say that we already have more apps than we need, while financial institutions and independent software developers alike come up with new ones every day. Sure, new mobile devices keep emerging, and we need new software just to keep up. But completely new applications offering completely new capabilities that will change how we do everything? That’s not going to happen.

Sure—just like we were never going to use our phones to do anything but talk.

So, getting back to the key question, what will a new killer app for finance look like? Rampant speculation welcome.

*Photo credit:

Image: FreeDigitalPhotos.net

New Technologies Are Coming for Unbanked, Underbanked

*This post originally appeared on MyBankTracker

In the past year, countless prepaid cards have flooded the nation to target the large portion of the American population that is either unbanked or underbanked. Acknowledging that the market for these alternative financial products is rapidly growing, more tech companies are catering to this group of consumers.

According to a recent survey by the FDIC, in 2011, 8.2 percent of U.S. households do not have bank accounts, up from 7.6 percent in 2009. And 20.1 percent of U.S. households have bank accounts, but rely on alternative channels for financial services (e.g., check-cashing, payday loans and money orders), up from 18.2 percent in 2009.

Even traditional banks have jumped on the bandwagon to compete against non-bank prepaid-card companies and get a piece of the prepaid-card market.

Last fall, Regions Bank started rolling out asuite of products and services that included a prepaid card and check-cashing and Western Union services. In July, Chase, the largest bank in the country, launched the Liquid prepaid card that does almost everything that a regular Chase checking account can do.

“As banks have steadily inflated the cost of banking, more and more depositors are seeking substitutes for bank accounts with escalating costs, high minimum balances and surprise fees,” said Jim Wells, president of Wellspring Consulting, a firm that specializes in solutions for the unbanked and underbanked.

But, with the proliferation of financial technology, the focus is shifting to serving the unbanked and underbanked through mobile devices.

Last week, at a Finovate conference, two companies demonstrated their versions of a mobile wallet for the unbanked or underbanked consumer.

The CAT (Cash and Transact) mobile wallet, by Emida, is an app that is based solely on the consumer’s smartphone. Through participating retailers, users can refill their CAT accounts with cash (for a convenience fee of $1.50). Then, they can use the funds to pay for purchases through the app.

The Flip mobile wallet, from PreCash, is an app that allows users to perform instant mobile check deposit and make expedited bill payments — two services that were never before available on a prepaid card account.

“Although these mobile-enabled, prepaid card-based accounts are attractive to far more than just low-income consumers, one key to success will be in making the services available via even the simplest of mobile devices,” said Wells.

In countries where financial institutions are hard to come by, mobile devices are the preferred channel for financial transactions. For example, more than 17 million mobile subscribers in Kenya use a mobile-phone-based money transfer service called M-Pesa, which enables users to deposit and withdraw money, pay bills, buy phone minutes and send money to bank accounts or other users.

In the U.S., the decreasing cost of smartphones may make it seem like everyone has a smartphone — but non-smartphones are still the most common mobile devices among the low-income population.

According to the Federal Reserve, 64 percent of the unbanked have access to a mobile phone (18 percent have a smartphone) while 91 percent of the underbanked have access to a mobile phone (57 percent have a smartphone).

Regardless of the types of mobile devices, the demand for alternative financial products and services is there.

And, history tells us that unbanked and underbanked consumers could be the users of the next wave of financial innovation.

In last year’s fall Finovate conference, card-linked offers made regular appearances on stage. Since then, card-linked offers became more available to bank customers. Bank of America, Capital One, American Express and many other financial institutions began providing card-linked deals.

Considering that the conference offers a good idea of what products and services we’ll see in the near future, it wouldn’t be a surprise to find that, by this time next year, there are more prepaid card accounts and other financial services that live on mobile devices.

 What are you offering your customers? Let us know in the comments below!

What We’re Reading: The Underbanked, iPhone 5, P2P Mobile Transfers

  • Who are the unbanked?

CNN Money

Nearly 10 million households across the country are living without a bank account. And in some states, these residents make up a big slice of the population. Among all of the regions in the country, the South has the largest percentage of residents who are “unbanked,” meaning they don’t have a checking or a savings account. According to an FDIC report released this week, 10% of the region’s population doesn’t have a bank account, compared to the national average of 8.2%.

Read more

  • Banks Working On Linking Up Their Payment Systems To Make Person-To-Person Mobile Transfers Easier

Consumerist

The nation’s big four are discussing how they can link up their payment systems to make it easier for consumers to send money via mobile devices or even emails. The first step involves getting all the banks on the same playing field. Right now, JPMorgan Chase, Bank of America and Wells Fargo are already cool with operating on a system called clearXchange. The remaining Big Four bank Citigroup has teamed up with 1,400 smaller banks on the Popmoney system.

Read more

  • Members’ Needs Driving Force Behind PFM Adoption

Credit Union Times

The $915 million Unitus Community CU blocked access to a popular online personal finance software service provider over possible security issues, said Laurie Kresl, vice president of planning and business development for the Portland, Ore.-based credit union. “We started looking into why our members wanted to share their financial information [with the software service],” Kresl recalled. “So we thought since we are in the business of taking care of our members’ needs, it was up to us to offer them a PFM; one that would appear on our online banking site and provide them with security.” After reviewing proposals from numerous vendors, Unitus partnered with Geezeo of Tolland, Conn.

Read more

  • New Mobile Payments Standards Issued by PCI

Credit Union Times

Mobile payments via smartphones will in fact take off soon. A step in that direction: the PCI Security Standards Council now has issued its PCI Mobile Payments Acceptance Security Guidelines. a dense, 20-page document designed to bring safety and security to the emerging sector. The current document focuses on two issues: how best to secure mobile payments transactions and how to secure the apps used for mobile payments.The document stated: “Any risk that exists on a standard desktop or laptop computer may also exist on a mobile device. In addition, mobile devices may have a broader set of functionalities than standard desktop and laptop computers, resulting in more security vulnerabilities.”

Read more

  • The Mobile Banking Infographic

Into Mobile

More and more people are using mobile banking services. In fact, now that 87% of the U.S. population has a mobile phone, half of which are smartphones, the trend will undoubtedly continue its upward trajectory. According to some estimates, 20% of mobile subscribers use their phone to access mobile banking services, with 80% saying it’s more convenient than an ATM machine. The most common use (for 90% of mobile banking users) is to check account balances or recent transaction, followed by money transferring between accounts (42%). Only 12% used their phone to make a mobile payment in the past year, though that figure will rise, as well.

Read more

  • iPhone 5 Omits One Technology

The New York Times

It turns out that getting N.F.C. to work right with the new design of the iPhone wasn’t even possible. The iPhone 5′s all-aluminum-and-glass body would block information from being transmitted to a terminal. Another explanation is that Apple simply didn’t want to add N.F.C. yet, because the company doesn’t do something unless it feels the market is there. For instance, it never released a cheap Apple netbook because it didn’t have faith in that market. Other times it is way ahead of the marketplace – witness the iPhone itself, which radically changed the cellphone market.

Read more

  • Mobile Devices Hit Retail Pay Dirt

The Wall Street Journal

As customer habits shift, big businesses will be at risk. For example, iPads and iPod Touches already are becoming popular alternatives to cash registers and credit-card swipe machines. Take Nordstrom-over time, the large retailer says it plans to go “completely mobile” in its stores. It is outfitting employees with iPod Touches or similar devices equipped to take credit cards. With more walking cash registers, the traditional kind provided by, say, Fujitsu, may be threatened. The same goes for regular credit-card swipe terminals from the likes of VeriFone Systems.

Read more

  • More Americans opt out of traditional banking

Washington Post

In the aftermath of one of the worst recessions in history, more Americans have limited or no interaction with banks, instead relying on check cashers and payday lenders to manage their finances, according to a new federal report. Released Wednesday, a Federal Deposit Insurance Corp study found that 821,000 households opted out of the banking system from 2009 to 2011 and that the “unbanked” population grew to 8.2 percent of U.S. households. That means that roughly 17 million adults are without a checking or savings account. An additional 51 million adults have a bank account but use pawnshops, payday lenders or rent-to-own services, the FDIC said.

Read more

The Impact of the iPhone 5 on Bank Marketing

*This blog was originally posted on Bank Marketing Strategy by Jim Marous. Jim is the senior vice president of corporate development for the direct and digital agency New Control focused on building strategic solutions for the financial services industry. You can follow him on Twitter @JimMarous or connect on LinkedIn.

So, the anticipation is over and the newest version of the iPhone has been introduced. When all was said and done, there were few surprises left as to what the iPhone 5 would offer, and for those of us who were crossing our fingers for the possibility of NFC integration (and further payments disruption), there may have even been a bit of disappointment.
And while additional enhancements to the Passbook app provides a glimpse into the potential for a head on competition with Google Wallet for payments supremacy in the future, the shop-with-your-phone coupon capability is not applicable to most bank marketers. What should be of more importance to bank marketers is the additional marketing real estate provided with the new phone and the growth in sales that may be on the horizon.

Bank marketers should see promise with the iPhone 5′s larger, 4-inch screen with Retina display which provides 18% more pixels for delivering enhanced mobile ads, banners, landing pages and interactive campaigns. While the extra pixels may not seem like much, it moves the iPhone experience closer to that of the iPad, which has already proven itself to be a major tool for consumer consumption. And for those who are still tablet-less, it is possible that this new device will a bridge for engaged behavior.

According to Rachel Pasqua, vice president of mobile at digital agency iCrossing, “the enlarged iPhone is enough to make mobile creative a little more eye catching and get more users more deeply engaged.” She mentioned that there will also be less potential for mis-clicks leading to better potential interaction. The potential for greater speed through the LTE and the new iOS6 also will help.

Charles Golvin from Forrester Research noted in a recent post that while other competitors already offer a larger canvas in some cases, “Apple still outpaces the competition when it comes to the entire package — the new iPhone unites significant improvements in industrial design, imaging, audio and connectivity, along with the wealth of new capabilities that iOS6 enables.”

The key for bank marketers is that iPhone 5 users, and smartphone users overall, will be spending more time with content on their phone. It is therefore important to provide the level of content that optimizes both the customer experience and marketing potential of the new devices. Consumers are no longer content with static web pages and difficult to use links and landing pages. Content (web pages, banners, ads, landing pages, etc.) will need to be easier to interact with and be more dynamic.

There is no way of knowing how popular the new iPhone 5 will be in the marketplace, but if the past is any indication of the future, not only will many current iPhone users upgrade to the new model, but the overall iPhone penetration will increase as well. As shown below, nearly 2 in 5 of the 38.2 million Americans using iPhones are on the iPhone 4, which was released just 2 years ago. More impressive than that is the fact that 35% of iPhone users today are on the iPhone 4S, which was introduced less than 12 months ago.

Just as with the tablet, bank marketers should realize that simply ‘super sizing’ a current app or website is no longer enough from the customer’s perspective. It is important to leverage the tools and advancements that are available with the newest generation of phones.

And even though our industry does not have products that are as visually appealing as in retail and other industries, the challenge to differentiate our offerings may be greater, but the opportunity is still significant.

Social Media Statistics: By-the-Numbers, September 2012

Below are some interesting statistics on social media usage. Feel free to share your favorite social media statistics in the comments section or Tweet @bankingdotcom.

  • 20: The percentage of US newspapers that now have online paywalls, twice the number that did one year ago. (Source: News & Tech)
  • 139: The number of Fortune 500 companies with a public-facing corporate blog in 2012, a five percent increase from 2011. (Source: UMass)
  • 24: The percentage of U.S.-based small businesses who claim to currently use social media in a “strategic and structured way.” (Source: eMarketer)
  • 63: The percentage of Pinterest users that are age 35 or older. (Source: Pingdom)
  • 129.7 million dollars in projected US mobile advertising revenue for Twitter in 2012. (Source eMarketer)
  • 235,000,000: The number of people who play games on Facebook each month. (Source: Facebook)
  • 65: The percentage of U.S. grocery retail executives who said they plan to use social media tools like Facebook and Twitter as part of their marketing arsenal within the next five years. (Source: eMarketer)

It’s no secret that smartphone growth is growing rapidly, but a Nielsen snapshot shows that teens and young adults lead growth in smartphone adoption. Read more here.

What We’re Reading: App Privacy, Mobile Banking and Data

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.

  • Consumers Say No to Apps Sharing Personal Info: Pew Survey

American Banker

Smartphone app software developers beware — more than half of those that have downloaded your apps have uninstalled or outright avoided your wares due to privacy concerns, according to a recent survey conducted by the Pew Research Center’s Internet & American Life Project. Of the roughly 88% of American adults who own cell phones, 43% say they have downloaded an app. 54% of app users did not even consider installing an app when they discovered how much personal information they were sharing. And 30% of those app users said ‘fuggedaboutit’ and uninstalled an app when they found out how much personal information they were handing over.

Read more

  • Online accounts can cut fees, improve rates

Chicago Tribune

According to an annual survey released earlier this year by J.D. Power and Associates, consumers are increasingly dissatisfied with fees, which have been on the rise at many banks. And a study by the Consumers Union found that even if you want to switch to another financial institution, the process of closing one account and opening another is cumbersome and costly. But what about online savings accounts? Introduced within the last decade or so, these accounts were supposed to be a no-frills option that paid high yields and charged minimal fees — a seemingly good match for young, tech-savvy consumers at the beginning stages of building their savings.

Read more

  • Study: Use of Mobile Banking Channel Exploding

Credit Union Times

New numbers released by Providence, R.I.-based Andera highlight dramatic increases in use of mobile banking channels over the past 30 months. Andera, a financial software company that provides many credit unions with online account opening technologies, noted that while mobile has primarily been used for simple tasks such as balance checking, “that is changing,” per Andera founder Charles Kroll. The implication is that as comfort levels have grown, consumers have increasingly shown a willingness to perform tasks such as bill pay on mobile devices. Perhaps the more compelling takeaway however is the explosion in usage documented by Andera.

Read more

  • If You Want Customers To Fork Over Private Data, Give Them Something Irresistible In Return

Fast Company

For brands and for customers, online interactions constantly churn out data–a daily deluge which, in its best cases, benefits both parties. If, that is, they can make a deal. As more of their interactions move to digital platforms, consumers will also leave behind much more data about what they are interested in, since they will be visiting sites and consuming media that captures everything they do. This will give advertisers the opportunity to get to know them much better so we can tailor our offers and products accordingly. Increased visibility into how consumers interact with your brand will also increase opportunities for interacting with them.

Read more

  • Mobile wallet awareness on the rise in Canada – study

Telecompaper

Awareness of being able to use smartphones to pay for products and services at point of purchase has reached critical mass in Canada. Users of m-banking apps currently account for 36 percent (4 million users) of Canada’s overall smartphone user base, according to a report from consumer research and insight consultancy company SRG. The study also shows that 56 percent of those users are aware of an upcoming service that would allow them to swipe their phones to pay for goods and services at check out. The study has also found that consumers with mobile banking applications are satisfied with the application they use most (67 percent, up from 63 percent in 2011), which shows their interest in knowing more about other ways their mobile devices can help improve their financial lives.

Read more

  • Intuit Opens Up APIs To Financial Data Service That Powers Quicken, QuickBooks And Mint

TechCrunch

Intuit is allowing developers to tap into transaction information from 19,000 financial institutions, autocategorize this data, and embed it into applications. While the Intuit Partner Platform already offers third-party developers access to QuickBooks data, this new financial data service will allow third-party technology providers to offer their customers access to their own financial data from thousands of sources of personal and business banking, brokerage, and investment accounts in the U.S and Canada. Intuit says that developers can use this data to track customer insights and support automated delivery of targeted guidance and offers based on the customer’s unique financial situation.

Read more

Peering Into The Future

Online banking carries with it the same question that accompanies every aspect of human activity moving online: Is it simply a more convenient way to do what we’ve always done, or is something new, particularly in the sense that we can do more, and therefore will do more?

There’s obviously no simple answer to this—the very act implies a level of customization that rules out any all-purpose conclusion. But if we still don’t know everything, what we do know now that we didn’t know even a couple of years ago?

A recent report from Javelin Strategy & Research has some answers, and they’re not particularly pleasant. Here’s the gist: Too many financial institutions still view online banking as the completion of a circle—consumers and (and maybe businesses as well conducting transactions, only doing it faster and more easily than by going to the bank. Javelin emphasizes that this “approach to online banking and bill pay has reached saturation because it is outmoded and unappealing in an era of customer-controlled interactive finance.” And that’s not all. Instead of new, technology-driven offerings drawing more business, Javelin theorizes, it might be even be a handicap: “The banking industry’s stale approach to online banking and bill pay leaves FIs particularly vulnerable to losing the 11% of consumers who are likely to switch primary FIs this year.”

The fundamental problem is the role of the bank in the equation—is it now simply a facilitator, the same way a basic piece of technology might be, or does it have more to offer?

Looking back, it’s easy to see that this is a transformation that’s been a long time coming. The availability of personal finance software two decades ago signaled a major shift in consumer behavior; the ability to collate huge amounts of information with ease and speed enabled a level of unprecedented control over money matters. The rise of online trading was another milestone—the boom years of the dot-com era surely had a lot to do with the voluminous buying and selling of the late ’90s, but instant access to business data was also responsible for much of it. Even the simple act of online bill paying was, in its own way, revolutionary.

In this context, it’s easy to understand that in the grand scheme of things, online banking in general and mobile banking in particular are still in their infancy. But in a few years (there’s a reason this blog is called Banking2020), everything we do now will seem antiquated. That still leaves the question of the banking industry’s role in this evolution.

For example, think of how consumers prefer to pay their bills. While FIs in general have a share of this market, they could surely get more. However, research shows that many consumers still indicate a preference for bill-paying services rather than their primary financial institution. What can the FIs do to bring the back the business that many think is rightfully theirs?

This may be a small issue, but it offers a perspective on a larger one. Throughout its history, the banking industry has thrived on certain core advantages—trust and credibility built over years of operation, the convenience afforded by a real-world presence and easy access, the stability that comes from size and government-backed insurance. But as with so many industries, the past couple of decades have brought about more changes than the dozen decades that came before. In the era of mobile banking, these advantages are still there, but they don’t mean as much as they used to.

The Javelin report urges FIs to “raise their aspirations beyond being an efficient pipeline for paying bills to instead become a place where customers gain control, oversight and insight into their bills, spending, cash flow and overall finances.” That said, there’s no magic bullet here—every institution will have to figure for itself what this change entails.

To be sure, this will require a fundamental transformation in everything from business philosophy to operating practices. Those that resist the change have a problem. However, those that take on the challenge early, and manage the change well, will not only survive but thrive.