Fast Facts: Recent Cyber Attacks

The Financial Services Roundtable released its 2012 Fast Facts Book in September, which contains Fast Facts from January 2012 through July 2012. We shared  information on preventing financial exploitation of of the elderly in a recent post. Below are some updated Fast Facts on recent cyber attacks.

FACT:  Since late September 2012, large financial institutions have been the subject of (or threatened to be the subject of) attacks intended to disrupt the availability of their Web sites.  A group that calls itself the Cyber Fighters of Izz ad-din Al Qassam has claimed credit for these attacks.

FACT:  The attacks have flooded certain bank Web sites with an extremely high volume of electronic traffic from thousands of locations around the world.  This flood of traffic, called “a distributed denial of service (DDoS) attack,” is intended to slow down or disable the bank’s Web site.

FACT:  The attacks are not designed to be – and have not resulted in – a data breach, hacking, or unauthorized access to consumer information.

  • Consumers can access their accounts through alternative means, including bank branch offices and call centers.

FACT:  The financial services industry has robust cyber protections in place.

  • Banks collaborate with other banks, federal regulators such as Treasury, law enforcement officials, other government agencies such as the FBI and DHS, Internet Service Providers, and Internet security experts to fully analyze and deflect online attacks and deliver safe and consistent online service.
  • Financial services institutions use sophisticated online security strategies to protect customer accounts and continue to invest in technology to increase capacity and defend against potential attacks.
  • Financial services institutions are regularly examined by their primary federal regulator to ensure their compliance with cybersecurity regulations and information standards, including standards set in the Gramm-Leach-Bliley Act, Payment Card Industry Data Security Standard, and FFIEC Information Technology Examination Handbooks.
  • Financial services institutions collaborate with the Financial Services Information Sharing and Analysis Center (FS-ISAC) which is an industry forum for collaboration on critical security threats facing the financial services sector.

FACT:  While there is nothing in particular that customers can do in response to the DDoS attacks, consumers can improve the general security of their private information by using the following tips:

  • Install on your computer—and keep updated—anti-virus software, firewall and anti-spyware software.
  • Set your computer’s operating system and browser to “automatic download” to ensure your operating system and browser include the latest security updates.
  • Don’t get hooked by phishing.  Do not respond to unsolicited emails requesting personal information and do not download attachments on unsolicited emails.
  • Use strong passwords and change them regularly.  The best passwords are long—a minimum of 8 characters—and complex. Not your birthday or the name of a child or pet.  Use a combination of numbers, symbols and letter; something meaningful to you like an acronym or batting averages, but not easily guessed.

For additional resources and examples of member programs, visit

What We’re Reading: Gamification, New Banking Rules and Data Privacy

Below are interesting stories the staff has been reading over the past week. What have you been reading? Let us know in the comments section below or Tweet @bankingdotcom.
  • Decoding New Rules for Banks

Wall Street Journal

Big U.S. banks are bigger than before the financial crisis. In 2001, the assets of the five largest U.S. bank holding companies accounted for 25% of all U.S. bank assets. Last year their share was 53%. In other countries, the size of big banks, relative to their economies, is even larger—though the U.K. and Switzerland are trying to shrink theirs. Dodd-Frank and global standards negotiated in Basel, where bank supervisors from around the world convene, did more about too-big-to-fail than public debate often suggests: In the U.S., there now is a mechanism, albeit untested, for the government to take over and liquidate any financial institution, even one like Lehman Brothers that isn’t legally organized as a bank. There is a limit on how much banks can borrow. There are bans on some 2008-style bailouts. And firms deemed “systemically important financial institutions” will have to set aside more capital than smaller banks.

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  • Banking Trends Offer Clues To The Real Business Cycle

Recent banking trends offer subtle clues about the business cycle. The financial crisis which burst across world markets in 2008 stemmed from explosive monetary policy during the preceding period. An old banking adage holds that the worst loans fund in the best of times. Greenspan’s Put and Bush’s deficits injected cortisone after the tech bubble dislocated markets and 9/11 hit. Instead of allowing the recession’s curative surgery, intrinsic weaknesses were perpetuated. From artificially low interest rates and devalued dollars to fiscal deficits rewarding idleness, federal policies prodded us from savers to borrowers and from producers to consumers. Nothing can be borrowed which isn’t first saved; nothing purchased which isn’t produced. With interest rates low and inflation high, Americans consumed all they made and more. Household wealth and personal income spiked, but debt climbed faster peaking at 359 percent of GDP before the crash.

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  • Tech Companies Bring Gaming to Debt Collectors’ Training

American Banker

San Diego-based BankersLab introduced Tuesday CollectionLab, a training product that uses simulation and games to help bank participants improve their collection approaches and better understand what variables drive good decisions when collecting delinquent debt. The course, which is targeted toward middle management and senior professional bankers, takes place in person but relies on software to train students. Participating students break off into smaller teams that compete against one another in interacting with data and interpreting trends in hopes of operating the most profitable virtual bank while also gaining the most satisfied customers. CollectionLab, which runs for several days, focuses on collection management, including topics like staffing, resource allocation, economic stress and product growth. To put it simply: It’s like a flight simulator but for bankers.

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  • Apple’s iPod Touch is fast becoming the new cash register

Info World

By 2015, the traditional cash register may be gone from whole swaths of the market, relegated to grocery stores where the sheer volume of items per basket requires a table to set them on. Many small stores will keep their counters but dump the large cash register in favor of the mobile payment terminal, one that very likely will have an iPod Touch at the core. The use of a sled around the iPod Touch means that the clerks can swipe credit and debit cards — no need to worry about proprietary technologies such as Square’s or haphazardly adopted advances such as near-field communications (NFC). Plus, if those other payment methods get traction, a merchant need just replace the sled with a new one that supports the technology — much cheaper than replacing today’s point-of-sales terminals.

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  • Regulators raise bar on US data privacy

Financial Times

Regulators are increasing their scrutiny of digital privacy issues. On Tuesday, EU privacy commissioners called for Google to substantially change a controversial privacy policy or risk paying fines. The policy allows Google to deploy users’ information across a wide range of services. Internet and advertising groups, meanwhile, are in the midst of a contentious debate over the implementation of a “Do Not Track” preference in web browsers that would let consumers signal their interest not to be tracked or targeted with tailored adverts. The fight over voluntary standards threatens to deter its adoption. The US Senate Commerce Committee recently launched an investigation into the practices of nine consumer data brokers. “The digital footprint [that consumers] will inevitably leave behind will become more specific and potentially damaging, if used improperly,” John Rockefeller, chairman of the committee, wrote in a letter to one large data broker.

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  • Checking fees can add up to hundreds

USA Today

About 9% of consumers pay more than $10 a month in banking fees overall, according to an annual survey of 1,000 adults conducted by Ipsos Public Affairs for the American Bankers Association in August. And 59% said they did not spend anything each month on fees. The fee for bouncing a check — or using a debit card to make a purchase without enough cash — has been trending upward. The average overdraft fee is $31.26 vs. $30.83 a year ago, says.”Most people aren’t paying anything in fees. Some people are going to pay a whole lot,” says Greg McBride, senior financial analyst at watchdogs point out that it can be easier to cause an overdraft because there are more ways to access a checking account besides just writing a check — online bill pay, debit cards, ATMs.

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VIDEO: What is the Greatest Misunderstanding about the Financial Services Industry?

The Partnership for a Secure Financial Future recently asked employees to share what the greatest misunderstanding is in the financial services industry and what the public should know. Watch the unscripted and honest answers in the video below, and let us know what you think!

What do you think the greatest misunderstandings are? Let us know by tweeting at @bankingdotcom or @OurFinancialFtr or sounding off in the comments below.

Going Luddite on Mobile

Tracking the adoption of mobile banking is like putting human behavior under a microscope…again. In a sense, it’s very much like the adoption of online banking (or online anything else), only on a much faster scale. To some, it’s still odd working with professionals who can’t remember what business was like before the Internet. Imagine how we’ll feel when the colleague in the next cubicle has no memory of life before “there’s an app for that.”

The issue seems to have taken on extra relevance because there’s been a flurry of articles recently about how mobile banking is not being adopted as widely as it should because of security concerns. Even the Better Business Bureau (BBB) is offering tips on safe mobile banking practices.

There’s nothing wrong with good, sensible advice, but maybe we need some perspective here.

First, let’s be clear about the adoption of mobile banking: It’s growing at an astonishing rate. As far back as 2011, an eternity in tech years, research firm Yankee Group projected in its Mobile Money Forecast that global mobile transactions would grow from $241 billion last year to $1 trillion-plus by 2015. That’s a staggering CAGR (compound annual growth rate) of 56%–how many other trends can we say that about?

More to the point, the practice continues to grow without huge amounts of education or even promotion. Just a few years ago, the term ‘mobile app’ didn’t even exist; now there are literally millions of them, and most of us are blasé about what we choose to download and use on a regular basis. The mobile device has effectively blurred the distinction between personal and business use and forced our employers to keep up rather than push us to try new software.

Sure, putting money into the mix changes things. It’s one thing to download a video game for playing while on the road and entirely another to use a new button to make an impulse investment or just transfer funds. But what’s remarkable is not how few people do exactly this and more, it’s how many do it every day.

Again, good advice is always welcome, but it’s likely that most of have already heard (perhaps many times over) what the BBB is telling us we should do to protect out investments. Don’t follow links; don’t download authorized applications; keep devices secure. That said, we probably need to keep hearing it.

It used to be said that while Windows PCs got hacked relentlessly, Macintoshes were pretty safe. That’s statistically accurate, and therefore true, but one reason is that the customer base for Apple products was comparatively small. Hackers went after Windows users for the same reason that Willie Sutton allegedly gave for robbing banks: that’s where the money is. Well, guess where the money is now.

There will always be some, from the hyper-cautious to the Luddites, who resist mobile banking. The alternate reality is that there’s already a vast customer base for mobile banking, and they deserve the greatest attention (which is exactly what cyber-criminals are giving them).

The mobile experience for every human action will continue to evolve and gain in popularity, and banking is no exception. There will be viruses and data breaches, and a few will gain enough of a profile to scare off some potential users. But the technology itself offers too much flexibility, productivity and convenience to completely outweigh the risks.

There’s a downside, and we need to keep it in mind. But as industry professionals, it’s our job not to be overwhelmed by the threats but instead focus on keeping the practice as secure as possible. Our customers—and there are many of them—need that.

This article originally appeared as a guest post on

What We’re Reading: Mobile Payments, Bank Fees and BAI Retail Delivery

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

  • Small Institutions Face a Dangerous Technology Gap

American Banker

Community banks and credit unions are well behind the innovation curve, enough to draw alarms from one of the segment’s most ardent advocates. “What is amazing about our industry is your customers and members use Amazon and Hulu and Square and we think it’s OK that when those customers and members walk into our branches they are going back 30 years,” said Louis Hernandez, chairman and CEO of Open Solutions. Open Solutions operates the DNAappstore in which smaller banks and credit unions can be certified to develop and share tech products, which are called DNAapps.

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  • Finance CIOs reveal plans to recover from recession

Computer Weekly

The Financial Services Report research out by IT giant Fujitsu analysed the activities and plans of 55 banks across the retail, investment and wholesale banking sectors. CIOs were asked for their top three IT priorities for the next three years. Over half (51%) listed reducing cost as a top priority, while 27% said upgrading IT systems, 22% improving customer experience, 20% mobile banking and 18% said moving to the cloud. A total of 85% said the IT department is attempting to meet the needs of the business by doing more with less. Mobile banking is high on the agenda. A significant 71% of the CIOs surveyed said mobile banking is important for customers compared to 49% that were asked the question three years ago. The biggest overall benefit of mobile banking is the ability to generate new revenue streams, with 80% citing it as a key benefit. Better customer retention is a key benefit according to 76% of respondents.

Read more

  • How Checking Account Fees and Terms Vary by State

New York Times Bucks Blog

No one likes to pay bank fees. And they are even more annoying when it is clear that the amount and variety of fees can vary depending not only on where you bank, but also on the state where you live. The Pew Safe Checking in the Electronic Age project, part of the Pew Charitable Trusts, recently analyzed the fees and terms offered to consumers in the 50 states, using the country’s 12 biggest banks by deposits. Nationally, for instance, Pew found that 89 percent of checking accounts had a monthly fee. The median fee was $12, and the median minimum balance amount necessary to avoid the monthly fee was $2,000. The median length of a bank disclosure, meanwhile, was 69 pages. And the median number of “extra” fees – categories beyond the 12 most common fees charged by many banks – was 26.

Read more

  • At BAI: The Mobile Wallet Wars Are On: Onsite Coverage

Credit Union Times

The mobile wallet wars will be over inside two years. That was the chilling prediction offered on Thursday at the BAI Retail Delivery conference by Carl Tsukahara, chief marketing officer at Monitise. The U.K.-based mobile apps developer recently acquired ClairMail, which had succeeded in staking out a foothold in the U.S. market “but as Monitise we are unknown in the U.S.,” Tsukahara shrugged. Tsukahara’s message to financial institutions is that the time has passed for sitting on the sidelines because non-banks – think PayPal, Google, Amazon, possibly Apple – are circling and they seem ready to attempt to disintermediate financial institutions. Tsukahara cited third-party research that showed 50% of consumers indicated a preference for PayPal as their mobile wallet provider. Thirty-percent (30) liked Google. A similar number liked Apple.

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  • Who’s Securing Mobile Payments?

Bank Info Security
Google and Facebook are in the mobile payments arena. But consumers still expect their banking institutions to secure the mobile wallet, says Alphonse Pascual of Javelin. What role must banks play? Pascual, who focuses in security, risk and fraud at Javelin Strategy & Research, says banking institutions must declare their roles as security experts in mobile payments, and they have to stake their claims early. As more non-traditional financial players take seats at the emerging payments table, the burden of security leadership and fraud prevention will fall on the shoulders of traditional financial-services providers, he says.

Read more

  • How to Cut Bank Fees


Get ready to see banking costs and balance requirements go up while free checking is put on the endangered-species list. That’s the expensive state of banking, according to’s 15th annual checking survey, which concludes that banks are in a “fee-ing frenzy.” The average monthly fee on basic checking accounts rose 25% over the past year to a record $5.48, says the survey. The average minimum balance required to avoid that charge on “free” checking accounts rose 23% to $723 nationwide, also a record. Neither a checking nor basic savings account pays enough interest these days to bother calculating. Accounts still called “free” have dwindled from 76% of all checking in 2009 to about 39%, notes McBride, and will grow scarcer.

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Greater Privacy Regulation For Children Online Will Impact Data Collection

*This post originally appeared on Payments Journal

In the coming weeks, federal regulators from the Federal Trade Commission are expected to outline new rules which will make collecting information from children’s online activities much more difficult without parental consent. Mary Engle, the associate director of the advertising practices division at the Commission states, “Today, almost every child has a computer in his pocket and it’s that much harder for parents to monitor what their kids are doing online, who they are interacting with, and what information they are sharing.” She continues, “The concern is that a lot of this may be going on without anybody’s knowledge.”

The current federal rule, the Children’s Online Privacy Protection Act of 1998, has become outdated due to new technological advances, say privacy advocate groups, despite the rule mandating the need for websites to obtain parental permission to collect sensitive personal information from children under 13. For example, under the existing rule, no regulation existed monitoring the use of webcams and online photography. However, regulators are expected to mandate that companies seeking children under 13 to submit photos of themselves online would require parental consent.

Generation Z children are the most computer and Internet literate generation in history, and with new technologies and applications continually produced that involve the exchange of personal information, privacy rules are vital. While no one is debating the importance of maintaining the safety of children, both online and offline, the new rules could potentially have a substantial effect on the payment industry, particularly for firms involved in the collection of information and social media websites.

The growing number of Generation Z online users means that the market represents a potential goldmine for online realtors and marketers. The new rules, however, will likely change the ability of firms to accurately target and market their goods and services for the teen and pre-teen markets online. While the added security in the new regulations will provide for children is important, it will slow the growth and development of payment-related technologies for this emerging demographic.

Tristan Hugo-Webb is an analyst with the Mercator Advisory Group covering the international market and U.S. debit card market. His responsibilities include covering new U.S. and international legislative regulations and analyzing their impact on the payment industry in the U.S. and around the world. Tristan is also a frequent contributor to Payments Journal, writing on a series of payments industry issues.

Tristan is a graduate of Seton Hall University in South Orange, NJ, with a BS in Diplomacy and International Relations and Minors in Economics and French. He has spent several years living abroad including stays in Italy, Germany and Niger.


Intuit Financial Services’ Innovation Conference: Mobile Trends, Technology Transformation, and Personal & Small Business Finances

In early October, Intuit Financial Services hosted its annual user conference, the Intuit Innovation Conference, in Nashville, Tenn. The conference brought together industry leaders from banks and credit unions across the country, and discussed key topics affecting the financial services industry. To provide a broad spectrum on issues, Intuit hosted an array of esteemed keynote speakers included Steve Forbes, Chairman, CEO, and Editor in Chief at Forbes Media; Tom Kelley, General Manager of IDEO; and, Dan Ariely, behavioral economist and author.

The staff got a chance to pull key tidbits from the event, which focused on mobile trends, technology transformation, and personal and small business finances. Below are some top tweets and highlights from the conference:


  • Tablet users touch their financial institution (FI) 30 times per month across multiple devices (tablet, phone and PC) not including text banking touches.
  • Smart phone remote deposit users deposit approximately 2+ checks per month at an average of more than $420 per deposit. Cost savings to FI – $3 each deposit over using a branch.
  • 30% of customers now factor mobile solutions into why they choose their primary FI.
  • Average mobile phone user now spends 12 minutes/day on the actual “phone,” two hours/day doing other things.
  • Mobile is the primary way people interact with their FIs today and growing; mobile banking up 63% to 57 million in 2011.
  • 10% of online banking users are now using their tablet.

Technology Transformation:

  • Web and mobile is eliminating intermediaries like traditional editorial process. Media model of last 150 years has been blasted away.
  • Mobile is changing the media model again. Everything in marketing must be customized to the individual. There are more specialized segments than ever before.
  • Contingent workforce will be 40% in few years (following passions, seeking work/life balance). This offers a new set of financial complexities that financial institutions will need to consider.
  • Digital trends shaping future behavior:
    • World without borders
    • Participatory networks
    • Mobile first & only
    • Humanizing the data
    • Reputation rules
  • “The Digital channel has increased engagement 3x to 32 times/month” – Intuit Financial Services General Manager, CeCe Morken

Personal & Small Business:

  • 2/3 of personal businesses don’t track their mileage for tax time or they track it incorrectly.
  • 50% of small businesses use manual methods (pen paper) to manage finances.
  • Average value of personal business to an FI is $5,000 in revenue per year. Consumer value is $500.
  • Personal small business market segment is growing. Forecast is 32 million by 2018.
  • Personal businesses take longer to make buying decisions than consumers and larger businesses.
  • “74% of #smallbiz owners aren’t wowed by their FI”-Christine Barry of @AiteGroup

A recurring theme of the conference was mobile in the banking industry; how important is a mobile presence to you? Does your FI meet your needs with its mobile solutions? What do you expect from your FI’s when dealing with mobile? Leave us a comment below.

What We’re Reading: Citi’s Tweets, Google as a Bank and Mobile Deposits

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

  • For Credit Unions, Mobile Deposits Are a Lifeline — But Are They a Fee Generator?

American Banker

The camera appears as a small icon on most mobile phones. But for credit unions, it’s a big part of ensuring their future viability against much larger institutions. And depending on whom you ask, it may also be a way to boost fee income. Mobile remote deposit capture (RDC), or the use of the camera on a mobile device to create an image of a check for deposit, is expanding across financial services.

Read more

  • Google Wants to Be a Bank Now

Atlantic Wire

Google, the search engine company that also happens to do 35 other things, is expanding its horizons once again with a new financial services division. On Monday, the multi-billion dollar corporation is set to launch a new credit business in the United Kingdom with plans to expand to other countries in the next few weeks, according to the Financial Times. Based on what we know so far, the program will let businesses take out a line of credit — between $200 and $10,000 — to spend on Google’s money-making AdWords program. Google’s treasurer Brent Callinicos told the FT that businesses just “weren’t buying Adwords as much as they need to,” and a pilot program in the United States last year showed that offering loans made customers advertise more.

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  • Reflections on the Remote Deposit Capture Summit 2012

Celent Banking Blog

Discussions with a number of financial institutions prior to and during the event suggests that mobile RDC is a source of both excitement and aggravation. The excitement is a function of the large and growing appetite among consumers and businesses for the capability. Stories abound about how enrolments and subsequent deposits happen within minutes of making apps available on the Apple iStore. The aggravation reflects a growing realization that we may have collectively over promised and under delivered mobile RDC’s efficacy to consumers.

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  • Intuit opens digital banking platform to third party app developers

Intuit data shows that customers now interact with their financial institution via the digital branch more than any other way. A recent Intuit internal study showed that Intuit’s financial institutions’ online customers interact with their financial institution’s website approximately 10 times per month. When mobile is added, users interact roughly 19 times per month. And, those who access using onliusing online banking, mobile banking and tablet banking access their accounts approximately 30 times per month.

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  • Being Financially Fit Can Help Your Heart

On a daily basis 79% of women stated that they feel stress because of their finances. Would you be surprised to know that “stress” is one of the factors that can increase your risk of heart disease?  So how can we reduce this financial stress? With simple money management knowledge, that stress can be reduced significantly.  With Heart Disease being the number one killer of women, and financial stress affecting so many of us, it is critical that we deal with this stress and become financially fit. A simple first step is to have the Money Talk with yourself which means write down where all the money is going.

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  • Wal-Mart, Amex team up on card for lower-income shoppers

Reuters News

Wal-Mart Stores Inc and American Express Co have teamed up to provide financial services to customers who often do not have traditional bank accounts by offering a prepaid debit card called Bluebird. The Bluebird will allow for deposits by smartphone and mobile bill paying, with no minimum balance or monthly, annual or overdraft fees, the companies said on Monday. “Bluebird is our solution to help consumers who currently may be poorly served by traditional banking products,” said Dan Schulman of American Express. “In an era where it is increasingly ‘expensive to be poor,’ we have worked with Walmart to create a financial services product that rights many of the wrongs that plague the market today.”

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  • Small Businesses Are Finding An Unlikely Banker: Amazon

Wall Street Journal

With its foray into commercial lending, 18-year-old Inc. AMZN +1.68% is looking to help sellers obtain cash more quickly than they might otherwise from a bank or other traditional lender, an Amazon spokesman said. “Our goal is to solve a difficult problem for sellers,” he said. He declined to say how many merchants have been invited to participate in its Amazon Lending program, adding that it “is early” in the life span of the initiative, which began at the end of 2011. The goal of Amazon Lending, he added, is to “serve sellers of all sizes.

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  • Citi Won’t Sleep on Customer Tweets

Wall Street Journal

Frustrated by the 40 minutes she spent on hold with Citibank customer service, Stacy Small tweeted her displeasure. To her surprise, a Citibank agent tweeted right back. “Send us your phone number and we’ll call you right now,” read the message. Within minutes Ms. Small, who owns a luxury-travel company in Los Angeles, was on the phone with an agent, one of about 30 customer-service personnel based in Jacksonville, Fla., and San Antonio who have received special training in social media.

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The Impact of Baby Boomers & Seniors on Online Banking

There is a presumption which exists in the world of online banking that baby boomers and seniors do not use their computer and/or mobile device to interact with their financial institution. We’ve all heard the reasons why – security, lack of internet access, or they prefer to bank the way they’ve always banked. However, as a Gen Xer and someone who works in the banking industry, I’ve seen that boomers and seniors do use online banking, and they could fuel the next growth wave within digital banking.

Over the last three years, I have performed portfolio analytics across dozens of Intuit Financial Services’ clients encompassing 2.8 million checking account holders.* These deep dive studies have provided me with insights into the banking behavior of consumers. While baby boomers and seniors have not quite reached the level of adoption rates of online banking as Gen Y/X, it’s hard to ignore their adoption growth over the last several years. Additionally, once baby boomers and seniors become active users of online banking, their engagement within the channel rivals Gen Y/X. Baby boomers and seniors, ages 49-68 and over 68 respectively, account for 46 percent of all open checking account holders.

* See chart below for breakdown by generation and comparison of bank vs credit union.


Across the 2.8 million checking account holder segment I have analyzed, 55 percent of Gen Y (0-28 in age) consumers actively use online banking. This rate is 57 percent for Gen X (29-48); 46% for baby boomers; 27% for Seniors. Those stats probably don’t surprise anyone, but what if I were to say that both baby boomers and seniors demonstrate a higher active use rate for bill payment than GenX and GenY? Granted, Gen Y includes a portion of consumers who (enjoy it while you can) haven’t reached the point in their financial lifecycle to have payment obligations, but it’s probably safe to say that most Gen Xers have monthly obligations. 35 percent of online banking boomers utilize bill payment, compared to 33 percent for seniors and 32 percent for Gen X. Granted, the variance here is very tight across these 3 generations, but the point I’m making here is that boomers and seniors utilize the services within the online channel once they feel comfortable with using online banking. And it’s not just bill payment – Personal Financial Management tools, internal funds transfer, eStatements – boomers and seniors have shown an appetite for these services, and as we know, the more engaged a consumer is within a channel, the less likely they are to leave the financial institution.

According to a study by Market Insights Professionals, “Boomers…are not far behind in embracing the Internet for their shopping needs–two out of three Boomers have researched a product or service online in the past three months, and more than seven out of 10 have made an online purchase during the same time frame. Boomers are the generations with the highest online spending levels.”[i]

What is also interesting within the data I’ve analyzed is the trend over time related to the active use curve of online banking. The traditional product curve for online banking reveals early adopters are younger demographics who embrace technology, have grown up with a computer and internet access, and value anywhere/anytime convenience. Pew Research found that “While the youngest generations are still significantly more likely to use social network sites, the fastest growth has come from internet users 74 and older: social network site usage for this oldest cohort has quadrupled since 2008, from 4% to 16%”[ii]. Technology services such as email, Skype, eBay have become increasingly popular with boomers and seniors, and as their comfort level with technology grows, so too does their adoption rates of online banking. The table below illustrates the online banking behavior of the same checking account holders over a two year period. The annual growth rate of seniors actively using online banking is outperforming all other generations, followed by Gen Y, Boomers, and Gen X. The additional growth in Gen Y is believed to have been fueled by mobile banking.

I know what you’re thinking – because seniors started at such a low adoption rate there was more room for them to grow. That is true, but their rate of growth still exceeded other generations, in part because technology is becoming more commonplace in their household and financial institutions have vastly publicized the security and convenience of online banking. “Older generations become more active as their experience with a new channel increases. Our research shows that as tenure with a digital channel increases, so, too, does a user’s willingness to conduct more complex interactions through that channel — such as selling a security through a mobile phone.”[iii]

While the saturation point of online banking for Gen Y and X might be near, boomers and seniors not only represent the majority of the US population, but their acceptance of online banking continues to grow at a rapid rate. Financial institutions and providers of online banking services must be aware of consumer demographics and perhaps go so far as to customize online banking for those demographics. Whether it’s the font size on the computer screen, products/services presented to the consumer, or changes to secure login credentials, demographics should not be ignored when considering growth in the online banking channel. Do not grow complacent in pursuing this older market. As you can see, there is much opportunity and benefit to attract the older generation. It is observed, that once the baby boomers and seniors gain confidence in the online channel, they will begin to cultivate additional online services, which presents another chance to cross-sell this generation.

About Jason Weinick: Jason is a Senior Analyst with Intuit Financial Services and leads the initiative on client profitability analyses, providing banks and credit unions a valuable in-depth look into the value of the online channel. Jason’s background includes 15 years experience within the financial services sector, focusing on consumer behavior, risk modeling, reporting, and financial analysis. Jason holds a Bachelor of Science degree in Finance from Clemson University.

[i] November 2, 2011: The State Of Consumers And Technology: Benchmark 2011, US, by Gina Sverdlov, for Market Insights Professionals

[iii] June 8, 2011: Mobile And Social Technologies Come Late To Wealth Management: Younger Generations Are Just The First Wave Of Mobile and Social Adopters- by Bill Doylewith Benjamin Ensor, Amelia Martland, and Beth Hoffman

Perspectives from Intuit CEO Brad Smith: Opening up your Platform Requires a Mindset Shift from Ownership to Outcome

The world has shifted from a paper-based, human-produced, brick-and-mortar bound market to one where users understand, appreciate and embrace the benefits of truly connected services. As a result customer expectations are changing. Customers expect products to work seamlessly across devices. They expect to have their other efforts aggregated or harnessed into something you provide so they don’t have to do re-work. Customers want to have a 360 degree view of their lives or business, not just what you provide. And they want it all to be personalized for them.

On top of that new devices are launched every day and the pace of platform change has moved from six years to six months.

We are operating in a world where no one company can solve all of their customers’ problems. We have to shift our mindset from ownership to outcome.

Meeting that demand can be a technological challenge for any provider, especially in financial services. This morning I had the opportunity to join a panel of CEOs at the BAI Retail Delivery Conference in Washington D.C. We discussed the future of financial services and tackled this very topic.

Some bankers may be reluctant to open up their platform. But to remain relevant, they will have to. Opening up empowers a financial institution to incorporate the contributions of others, solve a wider array of specific customer challenges and, ultimately, delight those they serve. And, with higher engagement comes better revenue opportunities for all involved.

Intuit data shows that customers now interact with their financial institution via the digital branch more than any other way. A recent Intuit internal study showed that our financial institutions’ online customers interact with their financial institution’s website approximately 10 times per month.  When mobile is added, users interact roughly 19 times per month. And, those who access using online banking, mobile banking and tablet banking access their accounts approximately 30 times per month.

At Intuit, we’re finding new ways to open our products and platforms so that our customers and third-party software developers can help us add value to our products, even while we sleep. Recently we opened up the APIs to our financial data services and our digital banking platform.

In this new digital world, we’re committed to unleashing the power of many to continue creating innovative solutions that improve people’s financial lives. I encourage you to join us.

*The panel discussion can be viewed online at: