Industry News — Banking.com

What We’re Reading: Branches, Apple, Security and Square

May 23, 2013 By Banking.com Staff Leave a Comment

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.

Capital One Turns to Responsive Design for Website Delivery

American Banker

With people no longer tied to their desks, customers are now checking their bank’s website from more than one type of device. So, in an effort to keep up, Capital One is enacting an online strategy to fit its website users’ screens using a technique called responsive design. Branchless bank startup Simple has been using adaptive web design and advanced mobile design since its inception, says spokeswoman Krista Berlincourt, in an email. The company was founded in 2010 and it launched in beta last summer.

The Evolving Branch Environment

Bank Systems & Technology

According to SNL Financial, 1,118 more financial institution branches were closed than opened in 2012 – representing the largest such discrepancy in eight years. Yet by all accounts, the branch remains one of the most strategic assets banks have in servicing customers, delivering new products and services and growing deposits. Driven by continued consolidation within the industry, lower operational budgets and decreasing foot traffic at the physical branch, banks are evaluating the traditional branch structure to increase profitability and efficiency at the branch level and new technologies are being leveraged to achieve this.

Android, iOS Dominate Smartphone Market; BlackBerry Falls

Bank Systems & Technology

Android and iOS, the number one and number two ranked smartphone operating systems worldwide, combined for 92.3% of all smartphone shipments during the first quarter of 2013, while Windows Phone jumped past BlackBerry for 3rd place, according to a recent report from IDC. According to IDC, Android smartphone vendors and Apple shipped a total of 199.5 million units worldwide during Q1 of 2013, up 59.1% from the 125.4 million units shipped during the same period in 2012. Samsung remained the leader among all Android smartphone vendors, the firm reported, wit 41.1% market share. Following Samsung was a long list of vendors with single-digit market share, and an even longer list of vendors with market share less than one percent, said IDC.

DDoS Attacks: What Banks Report

Bank Info Security

Leading U.S. banking institutions remain quiet about the ongoing distributed-denial-of-service attacks they’ve suffered since the fall of 2012. Last month, we pulled the year-end 10-K earnings reports filed by the nation’s top 10 banking institutions (see Top Banks Offer New DDoS Details). Those top 10 include JPMorgan Chase & Co., Bank of America, Citigroup, Wells Fargo & Co., Goldman Sachs Group, Morgan Stanley, U.S. Bancorp, Bank of NY Mellon, HSBC North America and Capital One. Among them, seven acknowledged they had suffered from some sort of DDoS activity in 2012 that impacted online- and/or mobile-banking services; Morgan Stanley, Bank of NY Mellon and Wells Fargo did not mention DDoS.

The Next Wave of Mobile Banking

Business 2 Community

In the U.S market today, retail banks offer a standardized mobile banking application. They enable their customers to monitor expenses, transfer funds and pay bills. This provides the convenience and ease of banking for the “on the go” customer. In general, mobile banking is an expanding market and has changed the way customers manage their funds. However, it is arguable that the user experience of each of the retail banks applications is similar. The application allows the end user to view their account balance, transfer funds and pay a multitude of bills.

Digital Usage Policies and the ‘New’ Desktop

Credit Union Times

The PC desktop is changing, so fast that what used to confidently be called the “desktop” is undergoing the sort of rapid evolution bound to throw up new and unfamiliar security challenges. Technological developments such as smartphones, tablets and mobile operating systems can be wheeled out to partly explain this change. However, it is to the humble user rather than computer architectures of network topologies that we must pay the closest attention if we are to understand how the business desktop will be reshaped from the ground up over the next decade.

Why Your Facebook Account Is More Secure Than Your Bank Account

Daily Finance

Earlier this month, federal prosecutors unsealed an indictment charging several men with bank theft on massive scale. According to prosecutors, the thieves loaded stolen account data onto magnetic stripe cards, which they then used to steal $45 million from ATMs around the world. As financial institutions reconsider their security procedures in the wake of the breach, much of the attention will naturally fall on America’s reliance on magnetic-stripe cards, instead of the more secure chip-and-PIN (also called EMV) cards used in other parts of the world. While they’re at it, though, the banks should also consider another big security black eye: The fact that it’s easier to hack into your bank account than it is to crack your Facebook account.

Banks should follow Apple, Starbucks in branch redesigns

Fierce Finance

Banks have steadily moved away from the traditional branch with its long teller queues toward more of a retail store experience. The inspiration these days tends to be Starbucks and Apple retail outlets. Umpqua Bank in Oregon, for example, offers free internet service, an espresso bar, and meeting space at some branches; Capital One plans to offer coffee in its “café” concept branches. Bank of America plans to open at least a dozen “flagship” branches, which will include “power bars” to allow people to plug in gadgets.

Square’s next step: Sending cash to friends by e-mail with Square Cash

VentureBeat

Sending cash to people by e-mail may be the next big payment feature to spread across the Internet (even though it’s 2013, and it feels like we should have had this years ago). Payment service Square is currently testing an invite-only service called Square Cash, which you can use to send money to anyone’s debit card with a simple e-mail, TechCrunch reports. Google launched a similar feature last week when it announced Google Wallet integration with Gmail, but Square’s version looks even simpler.

Filed Under Industry News Tagged With branches, security, smartphones, Square, what we're reading

What We’re Reading: Finovate, Consumer Spending and Security Technology

May 17, 2013 By Banking.com Staff 1 Comment

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 Buzz at Finovate: New Security Tech

American Banker

Security has taken on increased importance this year in light of recent data breaches that have put millions of dollars on the line and the ongoing threat of distributed denial of service attacks. Reflecting this industry-wide sense of alarm, at this week’s FinovateSpring there were several startups focused solely on providing authentication to bank customers. “Information security has always been a space with a ton of vendors, both small and large,” says Jacob Jegher, a Celent senior analyst. “[But] it’s great to see increased emphasis on security at Finovate.” He says it’s time for the banking industry to “up the ante with regards to authentication, identity management, and overall fraud prevention.”

Study Shows Widespread Ignorance on Credit Scores

American Banker

A large percentage of Americans know little about their scores, a new survey found. The survey shows widespread misunderstanding about how scores are calculated and how they can be improved. Between one-quarter and two-fifths of adults can’t answer basic questions about their scores, according to the survey released Monday by the Consumer Federation of America and VantageScore Solutions. Two-fifths of respondents did not know that credit card issuers and mortgage lenders use scores to make decisions about credit availability and pricing, the survey found.

The Next Wave of Mobile Banking

Business 2 Community

In the U.S market today, retail banks offer a standardized mobile banking application. This provides the convenience and ease of banking for the “on the go” customer. In general, mobile banking is an expanding market and has changed the way customers manage their funds. However, it is arguable that the user experience of each of the retail banks applications is similar.

Banking security and five essential layers

CIOL

There have been significant changes in the threat landscape for online banking. In order to protect customers using Internet-based products and services, such as applications, the Federal Financial Institutions Examination Council (FIEC) and other regulators have instituted significantly more stringent requirements for financial institutions. Ensuring a compliant security program requires the execution of a good, multi-faceted authentication solution.

5 Things You Don’t Know Because You Weren’t at Finovate

Credit Union Times

FIS Wants To Be Your Mobile Main Man. The Jacksonville, Fla., tech behemoth may not have a rep for cutting edge tech, but Doug Brown, a vice president, was at Finovate with authentic tech hipster Chris Gardner – presently CEO of Paydiant, a mobile payments platform, and a serial tech entrepreneur whose cloud-based technology is powering some of FIS’ mobile offerings. The message: FIS has the mobile tech a credit union or bank needs. For instance: Brown demoed FIS’ Cardless Cash Access which lets a consumer withdraw real money from an ATM using only a smartphone (no debit card required).

Banks should follow Apple, Starbucks in branch redesigns

Fierce Finance

It’s certainly true that banks are rationalizing the sheer number of branches they support, especially in regions where the costs outweigh the returns. But banks are also investing in the branch experience, which has led to lots of design and technology enhancements. By redesigning branches, banks are aiming to modernize the bank experience. This modernization has gone through many incarnations over the past decade.

FBI Briefs Bank Executives On DDoS Attack Campaign

InformationWeek

FBI expedited security clearances so it could share classified info on Operation Ababil, a distributed denial of service attack that continues to disrupt U.S. financial websites. The FBI recently granted one-day clearances to security officers and executives at numerous banks so it could share classified intelligence on the Operation Ababil campaign that’s been disrupting U.S. financial websites for almost a year.

5 Hot Opportunities for Start-ups

Inc.com

Fresh numbers from Intuit shine a light on where consumers are spending the most–and where you might want to look for new business ideas. One way to find a hot business idea is to follow the money: Where are consumers spending the most? If that’s your approach, consider Intuit’s recently released findings from its Consumer Spending Index. It’s based on anonymized and aggregated data from more than 2 million Mint.com (an Intuit-owned budgeting tool) users who have agreed to share their demographic information such as age, gender, income, and location. The index measures spending habits from January 2009 to April 2013 and shows consumer spending is up nine percent from four years ago, and significantly so in certain sectors.

The Next Generation of Cross-sell

Payments Journal

Too many financial institutions assume that cross-selling means offering products to every customer who walks through the door. According to Russell Lester, Director of Analytics at Intuit Financial Services, getting consumers to adopt lower cost services or channels can be a very profitable form of cross-sell. The cost of depositing a check using RDC on a mobile device is 10% of what it costs a bank to deposit a check in the branch. Using the previous example of an unprofitable DDA customer, it is easy to see how “cross-selling” them on RDC could result in a lower cost (and thus more profitable) relationship.

Filed Under Industry News Tagged With Consumer Spending Index, Credit Score, cross-sell, cybersecurity, Finovate, RDC, what we're reading

The Zen of Gen-Y

May 17, 2013 By Banking.com Staff Leave a Comment

*This post originally appeared on MyBankTracker as a guest post from Banking.com.

At this point it’s almost a cliché to talk about millennials. We know who they are: the generation born between the late ‘70s and late ‘90s, or essentially book-ended by the Vietnam War and 9/11. They’re frequently derided, but can’t be ignored — there are now close to 100 million of them, which means they constitute the bulk of the consumer class. More importantly, they define both the business and lifestyle practices of the modern era. They’re not them anymore — they’re us.

So what does this mean for the business world in general, and the financial services community in particular?

That question periodically generates hot debate, and we seem to be in one of those cycles now. Every shift and each innovation is viewed through this prism, and with good reason. Trends will rise and fall based on its success with this market.

To be clear, every successive generation has its defining characteristics. The Greatest Generation we associate with World War II was clearly unique. The Baby Boomers that followed them set trends that we follow today. Gen-Xers helped lead us into the digital revolution. So what is it about Gen-Y (sounds so much better than “millennials”) that will define our era for those that come after?

An exhaustive study of this demographic (conducted jointly by Service Management Group, Boston Consulting Group and Barkley) identified the key words associated with this group: technology-reliant, image-driven, multi-tasking, open to change, confident, team-oriented, information-rich, impatient and adaptable.

A few of those terms surely have great resonance. “Technology-reliant?” Absolutely. The Internet became mainstream just as this generation reached college age, which means they were its earliest adherents. No wonder, then, that they’re also “information-rich,” not to mention “impatient” and “adaptable.”

The fact that they’re team-oriented is equally significant. A new article in Investors.com analyzes the distinctive habits of financial advisers from this generation and finds that the key to performance is collaboration—in keeping with their upbringing, they thrive on constant feedback. Of course, they also differ from their predecessors in many ways. Rather than put in extra-long workweeks as their parents did, they want flexibility in everything from days off to working from home.

Perhaps most importantly, they have a greater sense of security about their savings. This is despite the fact they potentially have a pessimistic outlook, representing a sea-change in attitude from, for example, the election in 2008.

One unmistakable characteristic in the Gen-Y crowd, of course, is the adoption of new technologies. This also has a domino effect, and banks need to stay aware of this phenomenon. For example, remote deposit capture has spread with remarkable speed, which in turn has diminished the value of branch banking — it was often the only reason younger consumers ever entered a bank. Other mobile innovations have had a similar effect, which is why digital accounts now arouse greater interest than ever before. In addition, an entire generation nursed through technological adolescence by the soothing tones of Siri might want someone like “her” guiding them through complex financial transactions.

In a larger sense, if Gen-Y is a significant part of the market now, it essentially is the market (soon). They have enormous clout already, with massive buying power out-sizing influence. They are clearly more fickle, apt to change service providers on a whim, less impressed by brand credibility, and have a more international outlook than earlier generations.

Above all, the fundamental change with Gen-Y, actually, is just that — change. This may be the first generation that can be fairly assured the career they begin with is not the one they’ll end up in. Every aspect of their lives will undergo systemic transformation, often through no fault or desire of their own, and they will need support systems, including banks and accountants, to be similarly adaptable. Financial services providers that can stay ahead of such trends will win their hearts and their business, but be warned, just keeping up will be a challenge.

Filed Under Industry News Tagged With demographic, gen y, generation, millenials, mybanktracker, youth

What We’re Reading: Cybersecurity, Tablets in CUs and Consumer Spending

May 13, 2013 By Banking.com Staff 3 Comments

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.

Cybersecurity Should Not Come at Expense of Privacy: White House

American Banker

The White House says the nation needs new laws to reinforce its cyber defenses but that the push should not come at the cost of privacy. The House of Representatives on April 18 passed the Cyber Intelligence Sharing and Protection Act, or CISPA, which would encourage owners of financial networks, utility grids and other critical infrastructure to share information about digital threats with the government and one another. The White House has threatened to veto the bill, saying it lacks sufficient privacy protections. Civil liberties groups and other critics of the measure charge that it would allow companies to share people’s emails and text messages with U.S. intelligence agencies.

Small Business Owners Big on Mobile Technology

American Banker

A survey of 1,305 small business owners conducted by Constant Contact in March found that 66% currently use a mobile device such as a smartphone or tablet in their work. Of the non-mobile users, 65% have no plans to use a mobile device in the future, many citing a lack of demand for mobile access from their customers. This segment is partial to Apple devices, according to the survey — 66% use iPhones, while 39% use Android phones. About 49% use iPads; only 15% use Android tablets.

Keep Wal-Mart Out of Financial Services, Bankers Ask

BusinessWeek

A group of bankers advising the Federal Reserve urged U.S. regulators to consider preventing Wal-Mart Stores Inc. from offering some financial services. The Federal Advisory Council, a body of bankers that includes PNC Financial Services Group Inc. and BB&T Corp., said at a Dec. 19 meeting that Wal-Mart’s sales of prepaid cards warranted greater federal oversight. Minutes of the meeting were obtained yesterday under the Freedom of Information Act.

Consumers spending nearly 10% more than in 2009

CNN Money

American consumers are spending nearly 10% more than they did four years ago when the country was reeling from the effects of the financial crisis, according to an analysis of the spending behaviors of millions of Mint.com account holders. In the first quarter of 2013, the average household spent roughly $4,220 per month — up from about $3,870 in the same period of 2009, according to the inflation-adjusted consumer spending index released Wednesday by Intuit, which owns personal finance site Mint.com.

Why CUs Can’t Afford To Be Left Behind On Tablets

Credit Union Journal

It’s estimated that nearly half of the U.S. Internet population will be using tablets by 2014, which means increasing pressure on credit unions to adapt and conform to the trend. “The proliferation of tablet devices in the U.S alone is impacting everyone who manages their finances via a digital channel, including credit union members,” said Kenneth Hans, executive director of Blackstone Technology Group’s Financial Services Practice. “Much like banks, credit unions are looking for ways to cater to this latest form-factor that offers the power of a laptop in a much smaller and convenient size.” Among credit unions encouraging members to use tablets is the $5.3-billion Suncoast Schools FCU, which has 549,303 members that it has traditionally served via its 53 branches, but mobile devices such as tablets have changed that equation somewhat.

Credit Cards – Game ON!

Gonzo Banker

Credit cards in circulation hit a peak in 2007 at 710 million cards, according to a 2013 Nilson Report. Then the crash of 2008 hit, the Card Act went into play in 2009, and consumer spending changed. From the low point in 2010, the number of cards increased by roughly 50 million in 2011 and continues to climb today, when we have 520 million cards in circulation. Credit card interchange has not been Durbin-damaged as of yet, and interchange is still high. In the United States, 10 issuers own 85.4% of the cards on the market (Source: The Nilson Report, February 2013).

New Fed Report: U.S Mobile Payments Landscape – Two Years Later

Payments News

The Federal Reserve Bank of Boston in conjunction with the Federal Reserve Bank of Atlanta has just published a new report titled “U.S. Mobile Payments Landscape – Two Years Later.” Based upon ongoing meetings of the Mobile Payments Industry Workgroup (MPIW) convened by the Federal Reserve, the report updates an earlier paper from 2011. It examines changes in the evolution of mobile POS retail payments over the past two years, characterized by an expanding fragmented market environment and frequent technology innovations.

Filed Under Industry News Tagged With American Banker, behavior, credit cards, credit unions, mobile, mobile payments, payments, spending, tablet, Wal-Mart, what we're reading

Smile, You’re On Camera

May 8, 2013 By Banking.com Staff Leave a Comment

Do you need to see your banker?

It’s a serious question, and the answer represents one possible bridge between the two opposite ends of the retail banking spectrum.

At one end of, course, is the demise of the local outlet as we know it—new branch construction is the butt of jokes, and existing branches are being shut down in apparently record numbers. However, the transition to all-technology, all-of-the-time is not happening overnight, or perhaps even anytime soon. In fact, while foot traffic is clearly down, there seems to still be a huge audience out there of regular consumers who find reason to visit their banker in person. But for that latter category—the good people who need eye-to-eye contact in sensitive communications—is there a technology alternative?

One such model is being tried out at UMB Financial (UMBF) in Kansas City, which has built a reputation for innovation in its market-facing strategies. While joining the mass migration to mobile transactions and other fresh tactics, the institution is turning to video banking to fill the potential gap.

Videoconferencing capabilities at three pilot sites now connect consumers with tellers at the call center, who help customers negotiate the necessary financial tasks. It’s potentially a win-win—the technology speeds up the transaction and frees up trained branch personnel to focus on more difficult issues.

As we’ve documented on this blog, many institutions are experimenting with their retail models, from cutting back drastically on local branches to building in teller pods and community rooms. However, every new tactic has its own issues, and it will be interesting to see how using video plays out.

This technology actually goes to the heart of many issues currently confronting the modern workplace. As online collaboration tools gain greater sophistication and adoption, the idea of working from home is already going from an occasional luxury to the norm. Of course, home could be on the other side of town, or in the suburbs, or another city or even another country. But as just about all communication becomes virtual, what effect is it having on trust and camaraderie between co-workers?

This is also playing out on the customer side. The service industry in general (and retail industry in particular) is confronting these issues on a regular basis, as store chains and even mom-and-pop outlets try to develop a balance between in-store and e-commerce models. The hard truth is that we don’t have the answers yet—this is a movement that’s still moving, and will keep moving for some time.

With banking, the other X factor is that it’s about money—many consumers who might otherwise be considered tech-savvy remain skittish about conducting financial transactions online, and the steady stream of stories about data and identify theft don’t do much to instill trust in the process. Would personal interaction and eye contact, even via video cameras, help?

There are other issues to consider too. Most of the time when calling customer support, we have no idea who we’re talking to, and where that person is. There’s been plenty of media buzz about support functions being outsourced overseas: Will bankers based on the other side of the world now appear on camera? Or will there be a new generation of carefully coiffed financial advisors appearing on camera from designated sites—or even from home, assuming the background is industry-appropriate? On the flip side, banks could save on real estate. Oversized branches will be replaced by smaller sites that have only a few key personnel and a bank of workstations, and of course, there’s less chance of a waiting line.

Bottom line: The financial services industry is clearly in a time of huge transition, just like the rest of society, and banks that experiment with new ideas deserve support and encouragement. Video-enabled banking probably isn’t a panacea, but it could be one of the answers.

Filed Under Industry News Tagged With bank branches, bank closures, retail banking, Video-enabled banking

What We’re Reading: Small Business Banking, Mobile Growth and Social Media

May 6, 2013 By Banking.com Staff 6 Comments

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.

Small Business Owners to Banks: Meet My Needs

American Banker

Small businesses want banks to add more of a personal touch. Nearly a quarter of owners of companies with less than $10 million in annual revenue want their bank to make adjustments to meet their individual needs, according to a survey published Monday by U.S. Bank (USB). More than 20% of small businesses owners also want their banks to make more money available and to connect them with other small business owners. A fifth of those who participated in the study want their bank to serve as a financial mentor, according to the fourth edition of the Small Business Annual Survey.

Using Big Data to Fight Phishing

Bank Info Security

Using so-called big data to develop phishing intelligence systems that can connect e-mail attacks to specific criminal activities and groups over time is a good way to thwart targeted schemes, researcher Gary Warner of the University of Alabama at Birmingham says during an interview with Information Security Media Group. Rather than relying on e-mail signatures to filter out spam, Warner says organizations should rely on the e-mail data and statistics they collect. “We need to do more proper analysis of the log data,” he says.

Mobile Growing, But Still Not Preferred Channel

Bank Systems & Technology

Jason Malo, a research director in the CEB TowerGroup’s Retail Banking and Cards practice, reported that the majority of mobile bankers use the channel for alerts, with occasional transactional capability. According to a recent TowerGroup survey of mobile banking consumers, 54% said the most important mobile function to them was being able to receive notification from their bank about irregular account activity or changes to their account. That was followed by 51% who reported their most important mobile function was bill pay capabilities, while 46% listed notification of low account balance as the function they most wanted from mobile banking. 43% of respondents listed remote deposit capture capabilities as what they most desired from the mobile channel.

Banks plot major shrinking of branches

Crain’s New York Business

To cut costs bankers say hello to banking’s brave, new, cramped world. At about 1,000 square feet, [a new prototype branch is] 75% smaller than the traditional Wells Fargo outpost upstairs. Driven by changing consumer behavior and the urgent need to reduce costs, banks are devising ways to cut their branches down to size. Wells Fargo opened its first next-generation branch in April in Washington, D.C., and is looking to open seriously shrunken branches in New York and other major cities. JPMorgan Chase & Co. has started building branches that are 25% smaller than older models.

A New Social Media Platform For Advisors

Financial Advisor Magazine

The progress of social media is inexorable and inevitable. Yet many financial advisors are still trying to figure out how to play the game without getting into hot water with regulators. Finect, a New York City company, has recently rolled out an online platform aimed specifically at the financial services industry. The company believes it can help financial advisors meet their professional and compliance needs in the social media era. “Financial advisors are tiptoeing around social media and are looking for help to move forward,” says Jennifer Openshaw, Finect’s president.

In-Branch Tablet Banking Kiosks: Ideas, Opportunities and Costs

Financial Brand

The introduction of the iPad brought with it a whole new world of marketing opportunities for banks and credit unions. What are some examples of things bank and credit union marketers are currently doing with tablet kiosks? Jon VanderMeer, CEO/Kiosk & Display: The capabilities for kiosks and tablets is about 99% the same, only the form factor is different. Potential tablet uses include: In-branch demos, training and troubleshooting, onboarding new customers into online banking, and digital alternative to printed brochures where branch visitors can review and compare products.

Financial Pain Ensues When Custodians of Health Fail to be Good Stewards of Privacy

Javelin Strategy & Research Blog

The healthcare industry stores massive amounts of PII, and it is incumbent on them to protect that data from theft. According to Javelin research, approximately 1 in 9 data breach victims in 2010 were fraud victims – this correlation grew to 1 in 4 as of 2012! Social Security numbers are the keys to the castle when it comes to financial accounts. In our 2013 Banking Identity Safety Scorecard, 80% of the institutions examined still allowed consumers to authenticate themselves with SSNs.

Mobile Remote Deposit Capture and More Convenient Banking

Main Street

Mobile remote deposit capture (MRDC) has become banking technology’s must have for 2013. But MRDC is just the beginning of how the camera changes banking. Next up: picture bill pay. It works like this: You get a bill. You could input biller data – account numbers, addresses, all those details – into online banking. Or you could snap a picture of the bill and let the software – developed by the same folks who created MRDC – populate a payment form with all that information that has been harvested from the bill.

Banking by Voice Gets Test From U.S. Bank

The Street

Smartphone users are just getting used to issuing voice demands to make phone calls, get directions or ask for dining-out options. Now mobile phone users may be getting another audible option: using voice commands to conduct personal banking. U.S. Bank is testing a voice-banking service that enables customers to check account balances, review transactions and pay bills solely through voice activation. For now, U.S. Bank is limiting the app test campaign to its FlexPerks Travel Rewards program and to its employees; the voice-activated technology comes from Nuance Nina Mobile, and is now limited to iPhone and Android phones.

Filed Under Industry News Tagged With big data, cybersecurity, mobile, mobile banking, small business, what we're reading

The Phab Factor

April 29, 2013 By Banking.com Staff 1 Comment

When it comes to technology, the banking industry spends a lot of time just trying to keep up. From the glut of function-specific applications arriving daily to new hardware like Google Glass, there’s always something new just around the corner, and every fresh entry has the potential to change everything.

But what if there was a new market already here that hasn’t been categorized as such? Would that offer some interesting possibilities?

Meet the phablet. Actually, you probably met it a while ago and carry it around all the time.

A bit of context here: The driving force behind Apple’s revolutionary iPad was to bridge the yawning chasm between the laptop and phone. The former—despite its designation as something we could carry around and perch on our knees—was entirely too big, while the later was just too small. (A few mini-notebooks attracted some attention but never really caught fire.) The tablet fit the bill perfectly and the touch-screen functionality, complete with keyboard, was the cherry on top.

But now, as avid consumers search for new modes of consumption, we want more (or less, depending on the device). That’s why we have the iPad mini, alongside smaller versions of non-Apple tablets. This is technically a new market, and users seem to grasp the concept—quite a few have bought one in addition to the regular-sized device they bought earlier. But what’s equally interesting, though perhaps less noticed, is that while tablets have gotten smaller, phones have gotten larger.

That brings us back to the phablet, which eliminates the apparent gap between phones and tablets. The category is loosely defined as devices with larger screens, but it’s not only about size. Some devices in this market feature software designed and/or customized for the phablet as a form factor. For example, the Samsung Galaxy Note touts a self-storing S Pen stylus for certain functions (which users with a memory might remember from earlier Palm devices).

It’s easy to make phun, sorry, fun, of the phablet. Even the word reeks of geekery run amok, a pointless portmanteau for an unnecessary category. (‘Superphone,’ a newer addition to the vocabulary, is even more groan-inducing.) A recent piece on the subject in American Banker actually begins with the words, “They may look ridiculous, but. . .”

But that ‘but’ is important—despite the derision, this segment continues to spike at a staggering pace. The new report “Phablets and Superphones Market – Global Industry Analysis, Size, Share, Growth and Forecast, 2012 – 2018” predicts that the phablet (let’s just get used to saying it) market is growing at a compound annual growth rate (CAGR) of 44.1% from 2012 to 2018, reaching 825 million units and $116.4 billion.

This puts us in a strange place—here’s a market that’s already vast and will keep growing, yet there’s virtually no functionality customized specifically for it.

It’s easy to dismiss the notion of any real difference between smartphones and phablets, and this could be just another fad, of course. Still, there’s no question that a huge audience has emerged specifically for larger phones—a complete reversal of long-held beliefs that we like our phones to be as small and light as possible. And just to be practical, the phablet will fit into clothes in a way the tablet won’t.

So here’s how this will play out. The phablet will remain what it is, a phone with a larger screen that eases multimedia functions. Alternatively, it will become a specific hardware category, thanks in part to innovators who can thread the needle and develop apps and capabilities that dovetail perfectly with this form factor. Those individuals and the organizations that back them will reap the rewards. The rest of us will wonder why we didn’t think of that.

Mobile banking is literally in its infancy—it didn’t even exist just a few years ago. Today, facing frantic competition, every financial services institution is pouring resources into the field, with dazzling apps that can function on every kind of platform. Staying ahead of the curve for once might make for a healthy change.

Filed Under Industry News Tagged With Google Glass, phablets, smartphone, superphones, tablets

What We’re Reading: Google Glass, Payments and Branches

April 26, 2013 By Banking.com Staff Leave a Comment

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.

Google’s Glass Guidelines Provide Clues to Future Bank Apps

American Banker

Banks will be prohibited from advertising on Google Glass, the wearable computing product the tech giant has just started releasing to privileged developers and early adopters. In guidelines and best practices Google released this week, the search engine company told developers it will reject apps for the device — so-called “Glassware” — that it considers an irritation to users. “Google is very clear about apps limiting distraction, not [bothering] people all the time, so this isn’t something that banks can use as a platform to coax their customers 100 times a day,” says Sarah Rotman Epps, an analyst with Forrester Research. “But it is potentially a platform for them to deliver utility when it could be most useful.”

Phablet, Superphone Shipments Expected to Reach 825 Million Units in 2018

American Banker

They may look ridiculous, but phablets and superphones — mini tablets and extra-large phones — have a bright future, according to research released today by Transparency Market Research. According to a new market report, “Phablets and Superphones Market — Global Industry Analysis, Size, Share, Growth and Forecast, 2012 — 2018,” the global phablets and superphones market is expected to reach $116.4 billion by 2018, growing at a compound annual growth rate of 44.1% from 2012 to 2018. The number of units of the devices is expected to grow at a CAGR of 25.8% from 2012 to 2018, and reach 825 million by 2018.

Critical Bank Management Skills for the 21st Century

Bank Systems & Technology

In the past, your teams needed to be able to demonstrate a detailed grasp of policy, rigor in analyzing reports, and dedication to data quality — but to tackle today’s challenges, a different form of expertise is required. The rapidly shifting economic and regulatory conditions of the 21st century, mean that market changes often outpace management skills. In the past, your teams needed to be able to demonstrate a detailed grasp of policy, rigor in analyzing reports, and dedication to data quality – but to tackle today’s challenges, a different form of expertise is required.

How Apple and Amazon Will Shape Mobile Payments

Bank Systems & Technology

Apple and Amazon will continue to drive customer expectations and create big shifts in the retail world even if they don’t release a mobile payments solution. Many traditional payments players like banks have been worried for a while about the possibility of Apple entering the mobile payments space at the point of sale. Many speculated that the last iPhone release would include an NFC chip, which did not happen to the relief of those who would have to compete with Apple. Although Apple already has a bridgehead into the payments business thanks to iTunes, experts seem to think Apple will refrain from entering the mobile payments business.

Small Banks Excel at Industry Specialization

Barlow Research Analyst’s Journal

Many business banking customers value financial institutions and banking relationships that cater to their specific industry’s needs. Unfortunately, not all business customers believe their bank is industry-focused. However, customers that believe their primary bank caters to their specific industry needs appear to be more confident about the financial condition of their company, as well as their industry and believe their banker is more knowledgeable about their business. Barlow Research’s Second Quarter 2013 Economic Pulse provides valuable information about business banking customers’ need for industry-focused financial institutions.

The five layers of Online banking security

CIOL

It is becoming increasingly critical that financial institutions ensure their consumer and corporate banking customers are able to access their accounts with the highest reasonable security, using a process that is very straightforward and approachable. There have been significant changes in the threat landscape for online banking. In order to protect customers using Internet-based products and services, such as applications, the Federal Financial Institutions Examination Council (FIEC) and other regulators have instituted significantly more stringent requirements for financial institutions. Ensuring a compliant security program requires the execution of a good, multi-faceted authentication solution.

Retailers likely to be winners in m-payments, with banks making it work, suggests leading banker

Internet Retailer

Mobile payments is currently a three way battle for consumers being fought out between retailers, banks and mobile network operators – each keen to ‘own the customer’ – but it will be retailers and banks that win, leading m-payment experts concluded at the International Payment Summit (IPS) in London last week. Mobile operators are likely to end up just as dumb pipes. Retailers, banks and operators are all looking towards mobile wallets as the key to mobile payments and this is likely how the technology will start to gain traction in mainstream retail and it is through this that mobile payments will start to be used. But who will brand the wallets and how do you make sure not every retailer, bank and brand that a consumer uses has its own wallet?

What Bank Branch Closures Mean for Consumers

U.S. News

The traditional notion of banking, in which customers visit their local branch to deposit money, check their balance or take out a loan, may no longer be the reality. In the past year, American banks shuttered more than 2,000 branch locations—and news of additional closings appears on a regular basis. Banks cite rising operation costs and shifts in consumer-banking behaviors as primary causes for reducing the number of branches. For banks, these decisions are a matter of improving their bottom line, but for customers, these closings may force them to develop new habits. In one way or another, most people are likely to notice a change in how they interact with their bank.

Filed Under Industry News Tagged With Amazon, Apple, bank branches, FFIEC, Google, Google Glass

Old-Time Finance, Newfangled Technology

April 24, 2013 By Banking.com Staff Leave a Comment

It’s almost an article of faith that when it comes to technology, the financial services sector is ahead of most other vertical markets. The industry resides at the critical intersection of money and information, and for that reason alone—let alone compliance, security, competitive pressure, etc.—staying at the edge is critical. And of course, by just glancing at the budgets many Wall Street titans work with, we can get a sense of the enormous commitment.

However, as a recent piece in InformationWeek makes clear, the reality is quite different. The IT budgets are somehow both colossal and constrained, hampered by everything from tight markets to increased regulatory pressures. As a result, while many of these corporations might excel at developing and releasing new market-facing applications and other tools, they’re functioning with 40-year-old legacy architectures.

In the past couple of decades, this highly sensitive arena has seen hundreds of mergers and acquisitions, and chief priority has been integration—finding or building common layers between vastly heterogeneous infrastructures. It’s surely expensive to maintain, but would be even more costly to replace.

That said, major changes are virtually unavoidable. The operating environment has undergone seismic shifts in just the past few years. Tech-savvy consumers have a plethora of tools—and competitive options—at their disposal, and re ready to take full advantage of them. For their part, institutions must be able to offer a seamless customer experience during transactions that are initiated with, say, a mobile app and completed inside a branch setting. This mandates a back-end infrastructure that can handled wildly divergent technologies. Those institutions that can’t handle it are destined to lose business.

And who they might lose business represents a very different, yet equally significant, aspect of industry transformation. For a very wide range of services, old-line banks are no longer the only game in town.

As many industry observers make clear, there’s a banking revolution taking place, and it’s got nothing to do with the Occupy folks. It’s from a new generation of technology entrepreneurs who see a market that’s primed for change, and they’ve for the technologies to do it. Aggressive startups such as Billfloat to GreenDot are not financial services institutions in the traditional sense—they’re really tech players whose core product happens to involve the handling of money. In the process, they’re perfectly positioned to service millions of individuals whose needs revolve around speed, flexibility, convenience and customization, all of which come from agile technologies and new-wave innovation, not lumbering titans with legacy infrastructures.

This surely plays to some simplistic stereotypes, and it’s unfair to paint every major financial service firm with the same broad brush. But the reality is that with the broad-scale development, implementation and adoption of greatly empowering financial tools and technologies, the divide between individual and institutional has become a chasm. There’s an entire generation of potential customers that doesn’t see or at least appreciate the credibility built up by longtime banks and other financial services providers. They want instant gratification of the kind that only tech-savvy institutions can offer, and pedigree matters much less than it did before.

The ever-present industry shakeout might yet reach a phase where larger banks rely almost entirely on B2B services built around consolidation and size, while younger and nimbler enterprises with a mix of technology and moxie compete for consumer business. Of course, that leaves many current institutions that don’t fit into either category out in the cold. It should be interesting to watch.

Filed Under Industry News Tagged With Billfloat, GreenDot, IT budgets, technology

What We’re Reading: Malware, Fees and Tablets

April 18, 2013 By Banking.com Staff 4 Comments

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.

Prepaid Cards Still Have Lots of Fees: Survey

American Banker

A survey by Bankrate.com compares 24 prepaid cards based on the fees they charge consumers. For example, the 2012 survey found that 14 of 18 prepaid cards charged customers a balance inquiry fee on at least some automatic teller machines. This year, 18 of 24 cards charged such a fee on at least some ATMs. In last year’s survey six out of 18 prepaid cards charged fees for at least some declined transactions. This year, nine out of 24 cards did.

FDIC on Social Media Risks

Bank Info Security

As the use of social media grows among banking institutions, federal banking regulators warn those institutions need to be mindful of phishing and spoofing schemes. Drafted guidance issued by the Federal Financial Institutions Examination Council now details how banks and credit unions can prepare to mitigate the new and emerging risks social media poses. The drafted guidance, issued in January, references applicable laws and regulations banking institutions should consider when planning and conducting their activities related to social media, says Elizabeth Khalil, of the Federal Deposit Insurance Corp., which is part of the FFIEC.

Creating A Customized Banking Experience With Big Data

Bank Systems & Technology

Big data opens the door for banks to group their customers according to their banking preferences, which can make customers more satisfied and more profitable. Banks have been increasingly focused on customer experience in recent years, but they’ve been taking an approach that is too broad, says Dean Nicolackis, a partner at PwC’s banking and capital markets practice. While many banks are trying to configure a customer experience that is consistent for every customer across every channel, the key to a really great customer experience is providing a different personalized experience that fits different customer segments, Nicolackis contends. Different customers just want different things – and are willing to pay for different things – from their bank.

Are Tablets Their Own Channel And Does It Matter?

Business 2 Community

The latest research from Javelin Strategy and Research indicates that the tablet users are older; between the ages of 35 to 54, have an average household income of $75,000, and half of them consider themselves to be early adopters. When compared with mobile banking, statistics show that users spend more time on tablets. The question though is not whether it should be considered a separate channel. However, whether separate or not, the bottom line, from a customer experience point of view, the service has to be consistent, and that is the key – it has to be fully integrated into all the other channels and the interchange between the channels has to be seamless.

SaveUp Program, Other Tools Target Millenials

Credit Union Journal

Frankenmuth Credit Union CEO Vickie Schmitzer is continually focused on implementing industry innovations to attract members of all ages, but especially Millenials. That focus stems from the credit union’s work in the field. “We work as much as we possibly can with our local public and parochial schools at every grade level,” said Schmitzer. “We know they are our credit union’s future and that new technology is what attracts them to a financial institution or business of any kind, for that matter,” said Schmitzer.

First Tech Also First CU to Launch Windows App

Credit Union Journal

First Tech FCU, the credit union for Microsoft Corp., said it has introduced a new Windows Phone mobile banking application, the first credit union in the U.S. to introduce a native Windows Phone mobile banking app complete with integrated mobile deposit and bill pay functionality. First Tech launched its new Windows phone app on-site at the main Microsoft campus in Redmond, Wash., giving employees of Microsoft an in-depth look at this new platform. Microsoft employees and First Tech members will be able to view the app on a giant Microtile phone display, chat with First Tech App experts and personalize their Windows Phone at a laser engraving station.

Malware Attacks Growing, Getting Smarter, Targeting Android: Report

eWEEK

In 2012, 95 percent of malware threats targeted Android, says a new report. Malware attacks are increasing, getting smarter and targeting Google’s Android mobile operating system, according to a new report from NQ Mobile, a mobile security solutions provider that based the report on the findings of its Security Lab. Mobile malware threats increased by 163 percent in 2012, and 95 percent of all threats were targeted at Android, said the report. The firm estimates that 32.8 million Android devices were infected in 2012, an increase of 200 percent from the 10.8 million infected in 2011.

Banks Are Designing Branches to Look Like Apple Stores In a Struggle to Remain Relevant

Go Banking Rates

There are a few regional banks, like Umpaqua, that fully embraced “smart banking” years ago. For major, national banks, it was Citi that sparked the trend. In 2008, beginning with its Singapore location, the bank began constructing futuristic branch prototypes that swapped tellers for touchscreens, size with efficiency, and gave locations the overall look and feel of Apple stores.. Rather than reinventing the wheel when it came to modern design, Citi actually hired the services of Eight, Inc., the architectural and strategic design firm behind Apple, according to The Financial Brand.

Filed Under Industry News Tagged With app, data, malware, mobile, security, social media, tablet, what we're reading

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