In that context, a new report from J.D. Power & Associates offers an interesting, and perhaps contrarian, outlook on common beliefs and practices in the banking world. Titled, “Improving the Return on Investment in Bank Customer Satisfaction—Focusing on What Really Matters,” the study shines a light on issues may seem obvious but have slipped off the radar. This has potentially serious implications for many corners of the industry.

In the past few years, conventional wisdom in general and industry policies in particular have favored initiatives around increased advertising and severe cost cutting, among other areas, to boost revenue.  The new analysis from J.D. Power, however, reveals that despite the business justification for these moves, they do more to bring customers in than to keep them engaged, and this in turn hurts margins. By contrast, there’s a clear connection between enhanced customer satisfaction and a bottom-line boost. In fact, even a 50-point increase on a 1,000-point satisfaction scale could drive an 8.5% boost in pre-tax revenue.

So what can banking institutions do to keep customers happier? Many of the study’s recommendations are quite specific and tactical. In fact, that may be the point of such an exercise—a step back to gain a strategic view of the big picture helps uncover problems with the details.

Banks clearly need to place greater emphasis on maximizing account opening and onboarding activities, such as by highlighting account pricing and other features available, specifically in response to unique customer needs. It’s been found that share of wallet typically doesn’t grow much after the first year. Failing meet the most basic needs, such as those around understanding account fees and terms during initial contact, sets the groundwork for a relationship that can’t be enhanced or even sustained—new customers become former customers very soon.

Next, with Baby Boomers moving into retirement mode, it’s vital to broaden relationships with customers and increase awareness of, for example, investment opportunities. Here’s one stat that should be on the mind of every banking professional: Just by providing financial advice, banks can increase their share of investable assets by 11 percentage points.

And if you want to find banks with the highest attrition rates, look for those that take too long resolving customer problems. We don’t live in fantasyland—there will always be problems, and we have to deal with them. But in an age of technology-enabled instant gratification, the window for resolution is getting smaller. Customers know that many alternatives are just a click away.

None of this is to suggest that big-picture strategies should be set aside—in a time of enormous change, banks need to make bold moves in all areas, from infrastructure implementations and mobile apps to refocused retail approaches. But there are times when it’s important to do the same things better, and the new study helps provide exactly that focus.

• 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.”

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• 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.

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• 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.

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• 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.

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• 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).

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• 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.

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• 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.

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• 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.

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• 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.

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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.

Banks and credit unions are always looking for new ways to cross sell solutions and encourage adoption of existing profitable services. For our most recent FI Spotlight, we spoke with Kris VanBeek, president & CEO of USAlliance Federal Credit Union. Kris shared insights on the implementation of Micronotes Cross Sell™ and encouraging further engagement with members.

Q: In a few sentences, can you tell me about USAlliance Federal Credit Union?

USAlliance Federal Credit Union is one of the nation’s fastest growing credit unions. We were founded in 1966 as a credit union for IBM employees.  In less than fifty years, we’ve become a full-service financial institution with over $800 million in assets and over 60,000 members located throughout the globe.  We‘ve accomplished this through an extensive portfolio of progressive products and services all designed with one objective in mind – to help members achieve their personal financial goals.

We have big plans for the future. The key to achieving them is by adopting the most innovative and efficient technologies including online delivery and communication channels to support the needs of our growing member community.

Q: You recently implemented Micronotes Cross Sell™. Can you tell us a bit about the technology and the drive behind implementing a cross-sell technology?

Sure, but first let’s talk about the business drivers that led us to Micronotes Cross-Sell.

Financial institutions are keenly aware of the fact that the average consumer owns seven banking products yet only two are likely to be from the same institution. Realizing the enormous potential in cross-selling, the entire industry is focused on finding a way to anticipate when a customer is in the market for a new banking product and then making a compelling offer at the right time to convert the lead into a sale.

While cross-selling is a top priority, executing on the strategy presents a challenge because traditional marketing approaches such as direct mail, banner ads and in-statement offers lack the personalized, one-on-one experience that customers get when they come into a branch office. Also, those approaches tend to market to the masses as opposed to individuals, therefore resulting in a low ROI.

Given these factors, we started to explore a different approach to cross-selling and that’s when we discovered Micronotes Cross-Sell. The product was designed specifically for financial institutions to more effectively cross-sell through the online banking channel. It does this by combining big data with one-on-one interviews to recreate the in-branch experience.

For example, imagine you’re incurring a series of auto repairs and rental car expenses over a period of three months. When you go online to do your banking, you may be presented with a dialog box that asks, “Are you thinking about buying a car?” The conversation would then continue for about 18 seconds, ultimately leading to a personalized offer.

Micronotes Cross-Sell is able to do this by analyzing customers’ financial needs, asking relevant questions, listening to customers’ responses, providing advice, and making a relevant offer within seconds.

Q: What successes have you seen with the Micronotes Cross-Sell program?

We conducted a series of one-month digital marketing campaigns to a limited audience of our online customers. More specifically, we targeted 11,958 of our online banking customers and yielded the following results:

• Interviewed 15 percent of our online banking population.
• Converted 50 percent of interviewees into warm leads, generating 1,098 qualified leads.
• Converted 8 percent of loan product leads to sales.

Based on these results, we’re continuing to develop campaigns using Micronotes Cross-Sell that will be made available to all of our online customers.

Q: Do you find other methods of member’s engagement such as social media beneficial to interacting with members/customers?

Yes. However, what’s important to note about member engagement through these channels is that immediacy and customer service must work together.

For example, if a customer has an inquiry, they should get a response from a live person immediately, and that answer should be delivered through the member’s preferred channel, for example, this may be during an online banking session or even through Twitter.

On the other side, it’s also our responsibility to proactively present our members with information that’s relevant to their financial needs. This may include operational updates, special announcements, and offers on new products that will ultimately save members time and money.

Q: What advice do you have for credit unions looking to more effectively cross-sell their solutions?

Given the continued rise in online banking, I would recommend bringing your technology and marketing teams together as you create a cross-selling strategy that taps into the growing needs of this audience. I would also recommend putting Micronotes Cross-Sell at the top of the consideration list because, honestly, it’s the most effective cross-selling tool we’ve ever used.

Want to hear more from USAlliance FCU? Follow them on Facebook.

Think your FI deserves special recognition? Submit your FI here.

Kris VanBeek is President & CEO of USAlliance Federal Credit Union. Prior to leading USAlliance, he was Senior Vice President of Information Systems and Risk Management at Digital Federal Credit Union in Massachusetts. His career encompasses a broad spectrum of experience in fields such as e-commerce, real estate, commodity markets and financial services. He is also an entrepreneur, having founded and led two companies. Kris is a frequent contributor to industry magazines on his areas of expertise and serves on several advisory boards.

• 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.

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• 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.

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• 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.

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• 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.

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• 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.

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• 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).

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• 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.

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According to the Online Banking Report[1], “We are almost at the peak of online access, with just one million new online households added last year, the fewest annual total since Internet banking came on the scene in 1995. The growth going forward will almost all be on the mobile front.  It’s been a fantastic five years in mobile, growing from less than 1 million U.S. households to about 28 million.”

Adding to this, an Intuit study of financial institution customers found that mobile only consumers are more actively accessing their financial information than consumers who only use a PC.  Online only logins per customer average 9.96, while mobile only logins per customer average 16.6.[2]

Mobile banking has many of the same benefits that are commonly used in PC banking, such as transaction history, bill payment and transferring money between accounts. Other positive outcomes to promoting mobile only banking include a lower cost to the financial institution per customer, as well as sustaining the generational aptitude to use mobile banking products. Javelin[3] “estimates that each in‐person transaction at a bank branch costs financial institutions an average of $4.25, while use of the online channel averages $0.19 per transaction and the mobile channel averages a mere $0.10.”

There are also many benefits to the financial institution to promote mobile only banking as the upcoming generation is focused on mobile and have a higher earning potential compared to older generations. An internal Intuit study of 27 financial institutions[4] found that 84 percent of mobile bankers are Gen Y and Gen X, and Javelin pointed out that by 2025[5], Gen Y will account for almost half of the nation’s personal income (46 percent). Targeting these specific users is a strong opportunity for revenue growth for financial institutions in the future.

Financial institutions will need to consider altering their branch banking methods as more consumers switch to mobile only banking versus online only. One challenge that financial institutions face from mobile banking is the inability to grow cross-sell opportunities through the online and/or branch channel, especially to Gen X and Gen Y.  These generations are the future of banking.  Mobile vendors are working on features to solve how financial institutions will handle cross-sell when fewer customers are entering the branch and less are logging online because mobile only is taking over.

Ilya Shalman, a Senior Certified Project Manager at Cap Tech Ventures wrote[6], “Financial institutions continue to struggle with creating cross-selling opportunities across their mobile channels… while the entire product offering from the online consumer site could be integrated into a mobile app, most options are not available. The failure to focus on cross-selling across channels is not only detrimental to your channel integration strategy but ultimately a threat to your bottom line.”

Ilya offers three threats to cross-sell on mobile banking: lack of mobile real estate, mobile platform immaturity, and code rigidity to incorporate. However, there are possible solutions for these threats. In addition, Andera’s Melanie Friedrichs wrote, “When it comes to cross-selling, experts suggest that less is more – consumers who haven’t thought about other products are likely to gloss over the heavy text and hit next as quickly as possible. If they are presented with a small number of choices and they can absorb the offer with only a few words, they are more likely to pause and consider the offer.”

A majority of the customers enter the branch for deposit only interactions. The issue with deposit only transactions at the financial institution is that once mobile remote deposit capture grows and the younger generation begins to deposit checks through their mobile device versus the branch, branch interactions will decline[7]. There will be a need for customer service representatives at banks and credit unions to morph into cross sell warriors, targeting those customers that still enter the branch.

As mobile only banking continues to grow, one cannot help but consider the positive and negative aspects this situation may bring. Mobile only banking will surely decrease transaction cost to the financial institution, as well as targeting a high earning potential market in the upcoming generations. However, the challenge of cross-sell efficiency will need to be combated with new practices. In addition, with the rise of Mobile Remote Deposit, comes declining deposit activity in the branch.  What do you think about the idea of mobile only banking? Will this become a strong benefit to the financial institution, or will it begin to cause challenges that the financial institution will have to consider and combat?

About Heather Youngo:  Heather is a business analyst with Intuit Financial Services and leads the initiative on generating and maintaining the accuracy of financial institution profitability data.  Heather holds a Bachelor of Business Administration degree in marketing from the University of Georgia.

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.

• 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.

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• 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.

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• 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.

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• 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.

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• 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.

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• 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.

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• 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.

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• 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.

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• 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.

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The United States has enjoyed more than three years of modest uninterrupted economic growth since the end of the recession, with a promising improvement to select industries, including the housing market.

FACT: The US economy sped up in the first quarter of this year, with a growth rate of 2.5%. Despite growth, the Federal Reserve Bank has changed its 2013 GDP projection to an expansion rate in the range of 2.3% to 2.8%.

• In December 2012, the Federal Reserve projected growth as high as 3.0%.
• Consumer spending, exports, residential investment, and business spending on equipment and software rose, but it is unclear whether the trend will continue.
• The Federal Reserve is also concerned that prices of consumer goods have only increased 1.3% year over year, instead of targeted inflation rate of 2% to reflect healthy rises in wages and employment.

FACT: According to nearly 30 investment strategists and money managers surveyed by CNNMoney, stocks will climb further, and the S&P 500 should deliver a healthy 11% return for the year.

• Last week, the Dow Jones and the S&P 500 witnessed their worst drops since November due to discouraging international and national economic reports.
• The declines in major stock indices came after dismal growth reports from China, reporting a growth rate of 7.7%, 0.2 percent lower than expected. The reports triggered a massive sell-off in commodities and equity.

FACT: Home prices rose by more than 7% last year, according to the S&P/Case-Shiller index.

• The number of underwater borrowers, those whose mortgages exceed the value of their homes, fell by almost 4 million last year. While this is an improvement, 7 million borrowers, or one in five, are still underwater.
• Headwinds from the current round of government spending cuts and tax increases could slow the housing market’s recovery.

FACT: The US unemployment rate fell 0.6 percentage points between March 2012 and March 2013, from 8.2% to 7.6%, but much of the decline from peak unemployment has occurred because of workers leaving the labor force.

• Job growth slowed sharply in March, with employers adding only 88,000 jobs, much lower than the average monthly gain of 220,000 from November through February, although prior months were revised higher.
• Health care, construction, and food services were among the top industries for job growth.
• The monthly average number of Americans seeking unemployment benefits has declined steadily, if modestly, since November and in mid-April was at the lowest level since February 2008.

FACT: While others are slowly returning to work, the unemployment rate for Americans ages 16-24 stands at 16.2%. Additionally, the unemployment rate remains at an elevated 11.1% for those aged 25 and above with less than a high school diploma.

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