Consumers Have Evolved – Now More Than Ever, Financial Institutions Must Too

Few banks and credit unions today will disagree that consumers, and consumer behavior, have changed with the advent of social media.

Where the divide begins to widen is between institutions that respond to that awareness with prescriptive action vs. those that idle aimlessly — hoping the answer will somehow fall into their laps.

Having received guidance from the FFIEC in December 2013, market participants can no longer hide behind the veil of ignorance regarding establishing their own social media practices.

Notwithstanding the establishment of their internal policies, the single most important move decision-makers in these organizations must make today is identifying a technology partner that can enable their stakeholders to compliantly engage in social media.

The New Paradigm: Consumers in Control

Social media has made the world a much smaller place, creating endless opportunities for consumers and brands to engage in 1:1 dialogue. Unfortunately, being 1:1 isn’t always possible when you’re dealing with thousands of daily conversations.

In order to support bidirectional conversation at scale, institutions need to be equipped with a social infrastructure.

Having the appropriate infrastructure in place — one that is built from a single, native architecture; one that can connect to your legacy systems; and one that can meet for the needs of your entire organization — is paramount to surviving social disruption.

While control may have shifted to consumers, organizations that respond thoughtfully now can — and will — level the playing field.

Are You Compliant?

Many institutions fear that by taking the first step into social media, they will be increasing their risk — quite the contrary.

Regardless of the day of the week, another crisis bubbles up to the top of the headlines.

Whether its rogue posting, account hacks or even just human error, preventative governance and enterprise controls are a must in any environment. This is especially true in regulated industry.

Nowhere to Run

The good news is many leading banks and credit unions aren’t looking to run away from the problem.

Early leaders in leveraging social media like Navy Federal Credit Union and Citi, have proven that the rewards outweigh the risks in leveraging social.

Brands can survive and thrive in this brave new world, but to do so, they’ll require the awareness, vision and desire to execute in this challenging new environment.

The first step in graduating to that level is by ensuring the needs of their entire enterprise are accounted for by their social technology partner.

If not, they will stampeded by the herd of consumers seeking to engage with their brand 1:1 in social media.

 

Tim O'Connor, Global Account Manager, Sprinklr

Tim O’Connor is a Global Account Manager at Sprinklr.  In his role, he builds partnerships with many of the leading global financial services organizations helping to enable their success in social media.  Prior to joining Sprinklr in 2012, Tim spent the previous 11 years as a sales executive in the financial services industry with his tenure including Merrill Lynch and two boutique investment banks in Manhattan.

Security and Compliance in the Interconnected Age – Webinar

*Disclosure: Banking.com is powered by Digital Insight

 

The Internet of Everything (IoE) is here, and with it your users will be connecting within a new online ecosystem of devices, networks and services. But with the new interconnected age of IoE comes new risks for cyber attacks and other fraudulent activity. How are you protecting your customers?

On  Tuesday, June 24th, Digital Insight will host a free webinar,  “Security and Compliance in the Interconnected Age,” as part of their 2014 Momentum Webinar Series.

The webinar will include insights on optimizing the benefit of your mobile channel and help you:

  • Learn about best practices for maintaining security and privacy across the interconnected ecosystem.
  • Rethink about maintaining compliance with FFIEC layered-security requirements.
  • Understand the types of tools you need to avoid a cyber attack and mitigate fraudulent activity.

Do you know what you need to keep your end users protected? Join Digital Insight for the second segment in our 2014 Momentum Webinar Series as we take a dive into security and compliance in this new era of banking. We’ll be attending, following along and sharing insights via Twitter with the hashtag #DICompliance.

You can register for the webinar by clicking the image below. See you there!

DI Webinar Banner_June

 

 

The Next Wave of Digital Money Transfer

Money, technology and accounting in real time—with all deference to spiritual learnings, that might just be the mantra for modern life. At the very least, it makes for a potent brew that says a lot about how we do just about everything we do.

Image courtesty of Graur Codrin/FreeDigitalPhotos.net.

Image courtesy of Graur Codrin/FreeDigitalPhotos.net.

The trinity is in the news in our industry because late in March, mobile payment and merchant services provider Square launched a new integration program with accounting software specialist Xero. Built around a new API (application programming interface), the deal enables transaction data from Square to be fed directly into financial records managed by Xero. That’s a big market and growing: Xero claims 200,000 paying customers in more than 100 countries, with a cloud platform approach that allows a wide range of business applications—from large companies like ADP and PayPal to new entries—to be integrated easily into the ledgers of Xero users.

Of course, in many ways, that’s exactly what Quickbooks does too. Which is why, when the most recent version of Quickbooks was released last fall, owner Intuit also announced a major partnership with Square. That deal, which formally launched a few weeks later, is specifically designed to help small businesses that use the mobile payment service to automatically feed data from those transactions into their books. By all accounts, the arrangement has proved quite successful.

As observers have been quick to point out, these companies are competing furiously with each other. For example, Xero has a Quickbooks conversion service to draw users from its desktop rival, and Intuit has launched Quickbooks Online as its own cloud-based alternative. Meanwhile, Square is increasingly branching into other accounting-related services.

While the market has been waiting for options such as Facebook Credits and Amazon Coins to gain traction, Square is putting its money—in a sense literally—where its reputation is with Square Cash. This is not really another form of currency, per se, but it does represent another form of financial flexibility in the digital era. With this personal payment app, users can ‘email money’ to other individuals with nothing more than a debit card.

For the record, plenty of other companies offer similar services. Larger entities like PayPal and Google allow person-to-person payments, and as in every other category, there are newer entries like Dwolla and Ribbon are also in the mix. And let’s not forget clearXchange, the consortium created by Bank of America, Wells Fargo and JP Morgan Chase. This is clearly a work in progress: Capital One just joined, but founding member Chase has yet to come online.

And that’s really the problem in a nutshell. This is a market that exhibits all the characteristics of the technology sector—it moves forward at warp speed, seemingly solid players get nudged aside by startups, fierce competitors find ways to cooperate with each other, fickle users constantly change in their behaviors and tastes, and products go from killer app to legacy in a heartbeat. Meanwhile, banking industry giants seem to be just lumbering along—a consortium with huge names that makes more of a ripple than a splash.

Why does so much of the really exciting stuff always come from the technology side? Why do innovations from the banking industry never seem innovative enough?

It’s not as if tech companies will be replacing banks anytime soon. The barrier to entry on that side of the fence is much lower, hence there’s more experimentation, and as a result more successes (and more failures). What they do enables us to do what we do—nothing more, nothing less.

But remember, much of the customer base is now made up of a generation that never goes inside a bank branch, has precious little brand loyalty and expects instant digital gratification in every sphere of life, work and play. Other industries such as retail and music have had their very existence undermined by these tectonic shifts, some of which they never saw coming. Our world keeps changing too. Are we changing enough, and fast enough?

Don’t Touch the ATM

We have smartphones, and we have ATMs. Why can’t these two essential technologies get along?

It’s a question we’ve asked on this blog before, and with good reason. While every other aspect of financial services has been revolutionized with blizzards of mobile applications, ye olde automated teller machines have remained immovable, like those phone booths no one uses any more. If anything, they’ve proliferated: We see them everywhere, from mega-malls to corner delis, and they still do pretty much what they’ve always done.

Woman Holding Phone 2Of course, that’s not true, and it’s about to become even less so. According to a new report released this week by the ATM Industry Association (ATMIA), the global trade group with 1,300 members in 50 countries, it could be the next market to watch for real innovation. There’s one area in particular that should be really interesting: mobile.

There have been innovations, of course. As we noted earlier, banks in Greece have added elements of social media, with personalized greetings and reminders of other people’s birthdays, enabling instant gifts. Some machines tout their use of solar power.  But fundamentally, it’s still about walking up to that hunk of hardware, pulling out that otherwise-useless debit card, and making a transaction.

For the record, we’ve been hearing for some time now about ‘contactless’ access, which builds on the promise of mobile technologies. Well, it’s here—kind of.

Diebold Federal Credit Union (DFCU) is pioneering what it calls “the world’s first ATM without a card reader or PIN pad that relies solely on mobile authentication.” In a nutshell, here’s how it works. The consumer scans a unique QR code at the ATM using a smartphone, and the ATM authenticates the user via cloud-hosted services to enable secure, cardless transactions. There’s no need for a card or a PIN required, eliminating the fear of card-skimming and shoulder-surfing at the ATM. (Diebold and white-label mobile wallet provider Paydiant developed the cross-channel solutions and hold complementary patents on the technologies.)

An ATM with no card reader sounds basic, but it’s a big deal. Transactions via smartphones and without cards removes a step that is basically very inconvenient and eases theft or fraud. We only accept it because we’re so used to it.

There are other benefits too. For a start, there’s heightened security: While the pho ne could be stolen or lost just as easily, there are new methods of authentication in this arrangement. Bank customers can verify their identity at the ATM by taking a photo of a QR code on the machines screen (yes, despite the frequent criticism, QR codes have some value).

Convenience arrives in other ways, too. By integrating the ATM with Diebold’s Mobile Cash Access (MCA) solution, consumers can actually pre-stage cash withdrawals via their smartphones, even to third parties. Just pick the person you want to send cash to from your contact list, and the app will send a text message to that recipient with a six-digit code. When that person goes to an ATM and enters this code, they’ll get the money. And for those who are environmentally minded, the new arrangement, we should remember, is paperless, delivering receipts via the mobile wallet.

Of course, the real action will be down the road. This is the mobile generation, which the new solution pays tribute to with flick and drag capabilities on the interface. Like most other advances in this all-digital era, the real innovation will come from users. As with Facebook, Twitter and a host of other ground-breaking services, we will routinely use the smartphone-ATM combo to do things we never thought we needed to do. So far, it’s just one bank in one market. Tomorrow, who knows?

All we needed was the technology to get here. Now it has, and it’s about time.

Preventing Banking Errors: Q&A with Charley Rich of Nastel

As anyone in banking knows, the slightest error can result in catastrophe. Recently, Banking.com spoke with Charles Rich, vice president of product management and marketing at Nastel, an application performance monitoring company, about how the company works to help mitigate issues for financial institutions and where the biggest challenges lie.

Charley Rich, Nastel

Charles Rich, Nastel

Banking.com: What do you see as the biggest issue for financial institution’s data transfers?

Charles Rich: The biggest issue for data transfers is to ensure that they arrived on-time and accurately.  Often, there is a bottleneck in performance that prevents on-time delivery.  The challenge is building a performance monitoring culture that finds these problems before the issue impacts the transfer.

Banking.com: How does Nastel work?

CR: Nastel provides real-time monitoring and analysis of messages and transactions. Nastel’s product, AutoPilot is built on an analytical engine using Complex Event processing.  This analytical engine enables AutoPilot to utilize pattern matching of events from multiple sources along with algorithms to detect anomalies. AutoPilot is very effective at reducing the frequency and duration of incidents and at reducing false alarms.

Banking.com: What is the most common error that Nastel works to correct?

CR: Delivering visibility to IT where they were previously unable to detect problems before impact or unable to determine root-cause.

Banking.com: Is there any advice outside of adopting the Nastel technology you have for financial institutions?

CR: It is important to have requirements for applications that include performance expectations.  These should be appropriately tested in QA.  It is surprising how many times testing only looks at individual functions and does not adequately test performance.  It can be challenging to improve performance late in the application’s lifecycle.  It is better to design it in and test it before provisioning into production.

Banking.com: Which industries are the most successful or innovative right now in their data management?

CR: Healthcare is moving into the forefront as they begin to handle the loads of data from both claims and electronic health records.

How are you mitigating risk with data transfers?

 

Tax Refunds: Are you helping your customers spend it wisely?

Piggy Bank

Now that Tax Day is upon us and refunds are trickling in, your customers and members are being provided with new funds. But whether they spend, invest or save, are you guiding them to make the wisest decision?

Christopher McGill, president and CEO of East River Bank  in Philadelphia, PA has a few recommendations for his customers on how to use their refund dollars.

While the smartest decision is to obviously pay off a prior debt or invest that refund, spending – even just a portion of it – on a smart purchase is actually advisable, according to Christopher.

Rule of Thirds

Christopher always recommends the “rule of thirds” when upon receiving an unexpected amount of income. Divide the refund into thirds and put one portion towards a credit card bill or other debt, another third into savings and investment, such as an IRA and the final amount towards something for you.

Save More Money

However, instead of spending it on something frivolous like a trendy handbag or new set of golf clubs, consider splurging on a purchase that could actually save you money over time. Examples include an espresso maker (much cheaper than a daily trip to Starbucks), a bicycle (a healthier and more affordable means of transportation) or a high efficiency appliance, which can help you save loads on energy costs.

Invest in Yourself

Another smart splurge is investing in your career by furthering your education. Use part of your refund to take some continuing studies courses to sharpen your skills and better your chances for that promotion and, hopefully, salary increase.

Spend Selflessly

Finally, for the most selfless purchase of all, consider this the time to get some life insurance. If you have a spouse or children who depend on your income, invest in their financial security and your own peace of mind. While it might seem depressing, spending a few hundred dollars a year to create an insurance protection fund for your family is something definitely worth considering.

What advice are you giving your customers and members?

 

Monetizing the Mobile Channel – Webinar

*Disclosure: Banking.com is powered by Digital Insight

The mobile channel is no longer optional for banks and credit unions. But for those financial institutions already deploying mobile solutions, how do they optimize profit and benefit to the customer?

On  Wednesday, April 23rd, Digital Insight will host a free webinar,  “Monetizing the Mobile Channel,” as part of their 2014 Momentum Webinar Series.

Digital Insight Mobile Webinar

The webinar will include insights on optimizing the benefit of your mobile channel and help you:

  • Learn about key trends driving mobile innovation and their potential to solve real problems for your users while driving revenue.
  • Rethink potential disruptors to your business with a new collaborative approach.
  • Understand how traditional channel profitability analysis may limit your perspective and therefore your outcomes.

Does your mobile spending embrace change with a laser focus on ROI? Join Digital Insight as we kickoff our  and take a dive into the future of the mobile channel as a profit engine.

We’ll be attending, following along and sharing insights via Twitter with the hashtag #DIMobile.

You can register for the webinar by clicking the image above. See you there!

Party Time at the Branch

This post originally appeared as a Banking.com guest post on Sageworks’ Blog.

Source: TampaBayNewswire.com

Source: TampaBayNewswire.com

Everyone in our industry acknowledges banks need to be different, and we’ve explored numerous initiatives on Banking.com, from video transactions to teller pods and community rooms.  But how about serving up a cocktail with your account statement?

That’s one way to look at St. Petersburg, Fla.-based C1 Bank’s new branch in Miami’s Wynwood district. Sure, it’s got all the amenities every branch needs, but be prepared for the teller desk to become a bar, and a fully stocked kitchen ready to accommodate a sizeable party of movers and shakers. In fact, the location actually doubles as an event space.

The trendy art on the walls is kind of a giveaway too, as is the custom, rounded table near the entrance and safe-deposit boxes behind moveable bookshelves. It takes virtually no time for the entire setup to be transformed into a party room. And when the party’s over, a laser light show continues.

The investors say it’s a new kind of bank that’s designed for entrepreneurs by entrepreneurs. For the record, C1 Bank was recently named one of the five local companies to watch in 2014. The branch has also been the area’s first full-service provider for more than 20 years.

It’s easy to wish the establishment luck while privately seeing it as a novelty, but there’s another aspect that demands attention. Many banking industry analysts stress that in order to survive, new branches must reflect and serve their neighborhood’s tastes and needs, as this one surely does.

In the last few years, the Wynwood area in Miami has seen more than its share of ups and downs. However, like many urban areas, it has recently undergone major shifts leading to greater investment, and of course gentrification. What might have once been described as urban blight—personified by abandoned warehouses and buildings occupied by squatters—has been replaced by trendy cafes and art galleries. The textiles industry has been supplemented with fashion outlets.

In that sense, the new branch fits right in. It serves its purpose as a bank branch in the traditional sense, but it does more. And that might be the key to future success.

There’s no doubt that bank branches everywhere have been hit hard by changes in the business environment. Just recently, Minnesota-based TCF Bank announced that it isclosing eight branches in the Twin Cities area, all within the Cub Foods chain. The parent company closed many more late last year in the Chicago market.

The troubles confronting bank branches represent just one aspect—though a painfully visible one—of the many changes rocking the industry. The debate on what comes next continues to rage. There are even discussions on the nature and scope of the problem, let alone the solution. And it’s a good discussion to have.

Source: CommunityNewspapers.com

Source: CommunityNewspapers.com

In the meantime, however, innovations are surely welcome. Turning a sober financial services establishment into an event space with martinis and DJs probably isn’t for everyone. But every branch should probably be asking itself not only what kind of banking services it can provide to better serve the community, but what else it can do as well.

We live in a world of instant gratification, an international outlook and unprecedented mobile capabilities that radically alter consumer behavior. Having with a solid, dependable presence in the community and offering great customer service with a personal touch used to be enough. But in this business environment, at this time, we need to do more.

Top 5 Mobile Missed Opportunities that Cost Financial Institutions Money

In recent years, the proliferation of smart phones, tablets and web-enabled mobile devices has spurred nearly every financial institution to scramble and put together a mobile banking option for their consumers. It’s not just the growth of these technologies that is driving demand, it’s the users themselves.  Mobile users have been found to access their financial information 64 percent more frequently than non-mobile users.  As these consumers become increasingly more dependent on these devices, financial institutions are realizing that the first-generation mobile banking offerings are not sufficiently supporting the demand for anytime, anywhere banking needs, or giving financial institutions the ability to integrate all product and service offerings.  At what point did the existing mobile banking experience become obsolete?

It is time to start thinking bigger.  Financial institutions of all sizes must evolve their mobile strategy from a simple transaction only application – to a platform that allows your financial institution to offer all products and services via the mobile channel. In fact, it is projected that mobile banking will reach nearly 46 percent of all U.S. bank account holders by 2017.  To stay competitive, financial institutions must embrace mobile technologies to deliver a consumer experience that is both competitive and world class.  This will help mitigate the risk of losing customers in the coming years by supporting the consumer’s needs while simultaneously promoting products and services.  It is time to think in terms of a strategic channel that serves a virtual presence for a growing percentage of financial consumers.

Throughout our years of experience in the industry we’ve witnessed some of the nation’s largest financial institutions miss significant growth opportunities by not expanding their mobile strategies.  To help, we’ve compiled a list of the top five missed opportunities that are costing financial institutions growth and profit:

Top 5 Mobile Missed Opportunities:

  1. A mobile strategy is not just an app:  A good mobile strategy includes all the services consumers want and need – not just transactional banking. The strategy needs to consider how the app can be used to boost revenue, provide best-in-class customer service, as well as attract new consumers while maintaining and engaging existing users.
  2. Like a traditional branch – the user experience matters: Focus on this experience.  Users find it frustrating to continually enter log-in information for every mobile application an institution offers tarnishing the experience.  A positive user experience will quickly drive product adoption and usage, saving the institution tremendous amounts of time and money.  For example, a typical institution should experience an average savings of $4.15 in processing costs for every check that is deposited through their mobile platform versus a brick and mortar branch.  The app must also be fully customized and branded to align with strategic marketing guidelines.  It should provide the highest level of consumer self-service and provide answers to questions 24/7 to enhance the value of the mobile platform.
  3. One’s enough!:  One app creates a unified mobile presence.   Multiple apps lower adoption and confuse consumers.  The results are poor ROI and consumer adoption.  Give your consumers access to all product and service offerings in one downloadable app.
  4. Make the data work for you: Tracking app downloads just isn’t enough these days.  Your organization is missing out on valuable intelligence about how your consumers are interacting with your app.  Take advantage of analytic tools tied to your platform to learn about user preferences, engagement stats and true ROI data.
  5. Not monetizing the mobile presence:  Beyond simple banking transactions, the mobile app needs to provide opportunities to engage and serve the consumer.  The mobile app should promote products and enhance revenue opportunities through a great user experience, while also maximizing channel efficiency and lowering operating expenses for the institution.  ROI is created by offering products and services like loan applications, knowledge base  answers to questions with strong calls to action,  and new account openings to name a few.

For a growing number of consumers, the mobile experience is the only interaction they have with your financial institution. By avoiding these 5 missed opportunities you will develop a mobile strategy that encompasses all aspects of your business – from attracting new revenue and promoting products, to providing superior self-service. Done right, your mobile strategy and presentation should both increase productivity, revenue and profitability.

 

Amber Robinson is the Director of Marketing at SilverCloud, Inc.

Dan Chaney is the CEO of FI-Mobile.

 

Bridging the Generation Gap

Kids today—they don’t know much, but they think they know everything.

That’s the familiar yet only appropriate reaction to the latest deep dive into millennial behavior as it pertains to banking. This one comes from “The Millennial | Financial Behaviors & Needs,” a comprehensive new study commissioned by TD Bank and conducted by Angus Reid Public Opinion. The study samples 2,031 millennials aged 18-34, all of whom have some form of financial relationships.

In what might not be a big surprise, a significant majority of the respondents, 69%, have never taken part in any financial courses, seminars or workshops. But apparently that isn’t a big problem—fully 59% of those surveyed say they’re extremely, very or somewhat knowledgeable about day-to-day banking. And here’s a nugget that will confirm some more stereotypes about this generation.  When they actually do go search for information, nearly half cite parental influence for their opinions in this area, and 40% turn to family for specific advice. Of course, a strong 62% also go online to find answers.

To be sure, none of the findings in the TD Bank is particularly surprising. They do more banking online than in-branch; nearly half favor mobile access, and the numbers keep rising; and so on. Each generation carries with it a level of stereotypes, and this one is no exception. And of course, as with most stereotypes, there is more complexity than is first apparent, and that emerges with more detailed research.

It’s easy to shrug off these studies, but to do that would be a mistake. Negative perceptions aside, millennials do bring real change. And for our industry to survive, let alone thrive, we must do things very differently.

Millennials are the reason why a retail giant like Costco is facing some very real problems. The company is still frequently celebrated in customer service surveys and documentaries alike, but concerns are rising that the membership and bulk-goods business models don’t appeal to younger consumers. That may be one reason why the stock is suffering.

Costco is facing issues in generating and retaining millenial-aged members.

On a related note (since the Costco model is so dependent on customers having cars), the auto industry—which is still in recovery mode after a rough few years and government bailouts for some—is getting worried that those pesky millennials don’t seem to want cars as much as their predecessors did? Is it because, in this economic climate, they just can’t afford to buy what they want? The car makers certainly hope so, but the fact that an alarming number of teenagers haven’t even bothered get a driving license should be cause for concern. Is it because the wealth of social media tools and channels make it less necessary to meet face to face? Is it because in the age of Big Data, these tech-savvy and privileged consumers won’t respond to marketing unless it’s much more customized?

And as even a scan of the headlines will make clear, millennials are the reason why President Obama appeared on a far-outside-the-mainstream outlet like “Between Two Ferns” to pitch his signature legislation, the healthcare law. Critics have savaged the appearance as being beneath the office of the President, but the undeniable truth is that the stunt generated enormous attention and drove unprecedented traffic to the primary healthcare site.

In a sense, we’re not that different from giant retailers, carmakers and the Presidency. We need to get our message out there in order for our customers to come to us. We don’t have to change our identity or our philosophy in the process, just certain strategies and a lot of tactics. But the bottom line is that in appealing to millennials, if we’re not doing things differently, we’re probably doing things wrong.