The New Normal

One reason the technology industry is so unique is that it has—or more accurately, successful companies have—developed the art of self-cannibalization. It’s a neat trick, and everyone can learn from it.

As technology consumers, we’ve come to expect that every product will invariably get ‘better-faster-smaller-cheaper.’ For their part, most technology vendors know that if they don’t deliver advances at a lower cost, someone else will. As a result, companies build around a business model that routinely cuts into their own profit margins. It’s counter-intuitive yet vital.

It’s not necessarily a discipline that travels well across industries, although there are exceptions (anyone remember how much flat-screen TVs used to cost?). But elsewhere, the price tag for everything from cars to houses continues to rise. With technology, it almost always goes the other way.

The banking industry seems to be in the process of learning these lessons. At a number of industry events recently, leading lights from the world of financial services have gone public with the need to change some fundamental operating assumptions. At its heart is the vexing question the technology industry has long confronted: Can customers benefit only at the expense of the vendor?

This is the new normal, and everyone needs to change accordingly.

To be clear, the banking industry does face major challenges. While overall economic belt-tightening surely takes its toll, governmental pressure hasn’t helped either. For example, regulations that place curbs on debit card and overdraft fees have hit the industry hard; banks could collectively lose revenue in the $12 billion range.

But the problems are even more systemic. The new normal is worlds removed from the past—customers now routinely expect more from less, and they have more options than ever before. Even a question as basic as branch banking is now the source of constant headaches. On the retail side, this model has been the cornerstone of virtually all market-facing initiatives. But as customers do more online, this model has been thrown into turmoil. Today, every institution must conduct extensive cost-benefit analyses on which branches to close and which, if any, to open. Of course, this affects everything from staffing to capital expenditures on real estate, which in turn affects the bottom line.

In the same vein, the plethora of mobile apps available from every financial institution means that everyday processes have been completely transformed. For example, it’s estimated that, rather than walking up to a teller’s window or even stopping by the ATM, customers now deposit checks via their mobile devices 10,000 times a day. And if that’s the case now, imagine what the numbers will be in five years. For the record, as related by William S. Demchak, President of the PNC Financial Services Group, this change in user practices customer saves $3.88 per transaction. That’s money the bank gets to keep.

So new technologies and changing user habits benefit the customer and benefit the bank—everyone’s happy, right? Sure, but this is why additional and alternative revenue models are so important. Key question: if customers no longer have to go to the bank or even an ATM to deposit a check, would they be willing to pay a very small fee for the convenience?

In other words, does technology enable only savings or additional revenue?

This is why the lessons to be learned from the technology industry are so important. It has weaned the market to want new products—the latest smartphones, software upgrades, cool accessories—regardless of the validity of the model they already have. There are plenty of Apple iPhone 4s to be had for very little money, but everyone wants the iPhone 5. And that’s just one reason why Apple recently had the highest market cap of any U.S. company in history (though it’s fluctuated since).

Not every company can be the paragon of innovation that Apple is, of course, and financial services is a very different industry. But as we’ve covered on this blog before, the former has benefited greatly from disruption and innovation, leading to an endless supply of emerging market leaders, while banking seems to have the same players and same business models year after year.

Banking’s new normal brings not just disruption but opportunity. There are new markets, new capabilities, new technologies and new customers. All of that should surely add up to some new revenue.

Platform Shift in the Making

What does the banking industry as a whole have to do with Amazon, Microsoft and Apple? Just about nothing—and down the road, it may turn into a major problem (if it isn’t already).

Consider the many stories emerging from the realm of technology that have to do with financial services. Just last week, Amazon unveiled Amazon Coins, billed as “a new currency for Kindle Fire.” To launch the program, the company will dole out coins to customers (each coin is worth a cent), giving them essentially free access to apps and other services available on Kindle. The company can afford the generosity; late last year, it raised $3 billion through its first bond offering in a long time. Giving customers some free money is a great way to raise goodwill and popularize a new program that represents a new channel for transactions. For their part, app developers get another source of monetization.

See which industry is missing from this process?

Actually, the new “currency” is just the latest salvo in the ongoing battle between Amazon, Google, Apple and Microsoft to seed new apps on their respective platforms: Android, iOS and whatever mobile iteration of Windows happens to be in vogue. It’s not really about new software; it’s about creating mobile and other technologies that become increasingly embedded in the daily lives of consumers and business professionals everywhere. More apps, more users, more transactions, more money—that’s how it works. And at the core of this financially intense ecosystem will be. . .the technology platform companies.

In other words, it won’t be the banks.

The way these conglomerates (and it’s appropriate in this context to see Amazon as a technology provider) are driving app development is itself noteworthy. Each company is using a different model for the platform war, raising comparisons to everything from currency manipulation in China to ‘quantitative easing.’

For the record, it looks as if Apple still has a major advantage, thanks in part to being first to market with a smartphone and tablet. But few leads in the technology industry last very long. Kindle still has significant mindshare through its e-reader fan base, Google has racked up major partnerships for Android, and counting out Microsoft is often a mistake. (The company, which has at least as much in assets as Amazon, has been subsidizing developers to the tune of up to $600,000 per app for the Windows Phone, and the just-released Microsoft Surface Pro will likely have even more support, along with the massive user base for Windows PCs.)

We may also see more platforms emerge and find an audience. Facebook, which has already stirred interest with Facebook Credits, could yet become a financial services platform of its own, enabling consumers to pay bills and transfer funds when they go online to post a comment about a movie.

It’s not quite fair to suggest that banks are already irrelevant, but they may be in danger of getting to that point. The financial services industry has long been seen as the enabler for all other forms of commerce, which automatically brought with it a significant level of power. Is that power corroding?

If the role of enabler moves from banking institutions to technology platforms and the companies that own them, and the center of gravity shifts from Wall Street to Silicon Valley—a status some already crave—will that be a good thing?

We’ve commented earlier in this space how the two industries are dramatically different in their operating philosophies. New technologies considered “disruptive” win praise, while new releases from financial services providers that play the same role create instability and roil the markets. There are always new technology companies climbing into the upper echelons of the industry, while the top tier in banking seldom changes except through consolidation.

It’s not as if banks can’t handle technology—they have huge IT departments to run daily operations and regularly release custom apps designed to draw new business and ease customer engagement. But it may be time to go further.

Could banks do what Amazon did and release their own hardware? Should they partner with Apple, Google or Microsoft to gain more control at the platform level? Is it feasible to compete with those companies on their own turf and develop a banking-centric platform?

We don’t have the answers to any of this yet, but we may need some soon.

 

What We’re Reading: Credit Unions, Bank Branches and Square

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.

  • Credit Unions May Gain Mobile Payments Edge with Shared Tech Platform

American Banker

CO-OP Financial Services hopes the model used in one of the oldest staples of credit union cooperation, the shared branch, can drive new digital commerce innovation such as person-to-person payments and mobile remote deposit capture. The country’s largest credit union service organization, with about 1,400 credit union participants in its shared branch program totaling about 4,400 branches, has extended components of the shared branching model to digital commerce, using centralized processing resources to allow credit union consumers to access mobile payments and other digital capabilities.

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  • Online Banking Design Succeeds or Fails on Feedback, Details: Citi’s Weber

American Banker

After Forrester Research dubbed Citi’s online banking site the best in the U.S. last week, we spoke with Tracey Weber, Citigroup’s head of internet and mobile banking and Bank Technology News’ Mobile Banker of the Year for 2012, about the bank’s latest initiatives. Citi partners with Yodlee for PFM and account aggregation. “But I think what we did that was different, and that will lead to a better experience for customers, is the integration of PFM into the online banking dashboards,” Weber says. “Historically PFM capabilities have been somewhere off in a corner of the site.” This echoes comments made by Chris Cox at Regions Financial last week, when he shared how his bank is trying to weave online banking and PFM together.

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  • Banks Take a ‘Swipe’ at Square

BAI Banking Strategies

As the swoosh of the card swipe migrates from the terminal to the tablet or the smartphone thanks to mobile payment devices like Square, banks have decided they want a piece of that action both for the revenue opportunity and to solidify merchant relationships. Unlike other mobile payment schemes, which may require consumers to enter codes or utilize wireless near-field communications, the mobile swipe approach enables them to conduct a payment transaction in the same way that they have at the point-of-sale (POS) terminal for years. The difference: the minimalist technological infrastructure involved in these mobile POS terminals, which are typically a few inches long and attach to an iPhone, iPad or Android, appeals to merchants reluctant to invest in card functionality.

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  • Say goodbye to more bank branches

CNN Money

Banks are killing off branches by the thousands. Overall, banks closed 2,267 branches last year and opened only 1,149, according to research firm SNL Financial. That resulted in a total loss of 1,118 branches nationwide — the highest level since 2005, when the firm began tracking closures.  Looking to cut costs, many banks are aggressively shuttering branches they deem unnecessary and encouraging customers to shift to online and mobile banking instead, said Nancy Bush, a bank analyst and contributing editor at SNL.

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  • Scammers Now Taking The Time To Chat

Credit Union Journal

A new attack scheme is hitting banks and credit unions that takes advantage of the live chat feature in the FIs’ online banking platform, Guardian Analytics reports. The criminals impersonate a member or customer and initiate fraudulent wire transfers. Many have been successful. “It’s difficult to predict how it will spread, but criminals usually stick with what works. When it stops working they find another approach,” said VP of Marketing Tiffany Riley.

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  • Fiserv Study: It’s A Mobile World

Credit Union Times

In its fifth annual study of bill payment habits of U.S. households, Fiserv Inc. found that this is the era of the “omnivore” bill payer – multiple methods are proliferating – but in the fast track is “mobile bill pay. It is growing very fast,” said Eric Leiserson, an analyst. In 2012, 8% of online households paid at least one bill with a mobile device, up from 6% in 2011, per the Fiserv research.

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  • Nacha Establishes Guidelines for Using Bar Codes for Bill Payments

Payments Source

Nacha, the electronic payments association, issued guidelines for the use of quick-response (QR) codes for consumer bill payment. QR codes are two-dimensional bar codes that can be scanned with a smartphone’s camera to direct users to a website or pull up specific information. The codes are increasingly common in stores and advertisements to direct consumers to product information, and some mobile payment systems use them to present account data.

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  • 5 Financial Accounts You Should Check Every Week

Yahoo! Finance

Individuals should track their weekly expenditures on budget accounting Web sites like Mint.com to get a complete picture of where and how they’re spending that hard-earned cash. These online sites allow users to review their balances and transactions for all accounts – credit cards and retirement accounts included – usually at no extra cost.

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  • What Is a Mobile Wallet?

ZDNet

Mobey Forum, an industry organization established by banks in 2000, is dedicated to encouraging the use of the mobile channel in financial services. Sybase 365, now SAP Mobile Services (and my employer), has belonged to the group since 2006. In the Forum’s most recent quarterly meeting, the 60-plus members couldn’t agree on what a mobile wallet was.

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What We’re Reading: Green Dot, Virtual Piggy and Mobile Banking

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.

  • Account Balance Forecasts On the Way to E-Banking

American Banker

What would it take to make personal financial management apps more popular? Cash flow predictions and deeper spending insights, say many observers in this market, from entrepreneurs to analysts to bankers. “Historically, most PFM solutions focus on what has already occurred. It’s too late. It’s done. You spent it. It’s gone,” Jacob Jegher, senior analyst at Celent, tells BTN.

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  • Mobile Banking Via Tablet Continues To Grow

Credit Union Journal

A new study from SYNERGISTICS Research finds that four in ten Internet households already have some form of tablet device, and one-third of those report that they use those machines for online banking. The study, titled “Optimizing Mobile Banking and Payment Strategies,” found that mobile and online banking activity is most widespread among consumers ages 18 to 34-a demographic many credit unions and banks are trying to attract.

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  • Get a Fresh Financial Start with a Credit Union Savings Plan

Credit Unions Online

When it comes to helping members budget and gain control over their spending in order to save more, Leaders offers Greenpath Financial Education, and Intuit FinanceWorks integrated into their online banking. “FinanceWorks is very similar to Mint, yet it’s already built-into online banking and allows the member to track spending, set goals, and categorize their finances,” explained Josh McAfee, Marketing Manager, Leaders Credit Union.

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  • Threat of the Week: Corporate Credit Unions Should Bolster Defenses Against DDoS

Credit Union Times

The accepted opinion among security professionals is that most credit unions will get a free pass to dodge the Distributed Denial of Service (DDoS) blitzkrieg that has been knocking big banks offline and that is because the attackers have exhibited a strong preference for hitting targets that – when they go down – generate headlines, like Bank of America or Capital One. Historically, DDoS attacks were driven by pings from a ragtag Zombie PC botnet. Today’s attacks against big banks are said to be organized by a nation state and they harness not Zombie PCs but industrial-grade web hosts and data centers.

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  • Virtual Piggy Puts Allowances Online–Could It Be Paypal For Kids?

Forbes.com

Virtual Piggy’s software for desktop and mobile allows families to manage allowances and helps guide kids’ shopping online, 100% free for users. The rapidly-growing Hermosa Beach, California-based company has attracted the attention of billionaire John Paul Dejoria, (no. 92 on the FORBES 400 list with an estimated net worth of $4 billion) who in 2012 made a multi-million dollar investment and joined the company’s board. Actress Sela Ward and Oprah Winfrey‘s longtime partner Stedman Graham also advise.

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  • If You Use Chase Mobile Banking, You’re Probably Richer than All Your Friends Who Don’t

Go Banking Rates

According to data recently released by Intuit, the use of banking technology in addition to banking through traditional brick-and-mortar branches may aid in saving money. The Intuit data, which examined information from approximately 50 financial institutions, collected between July 2009 and Sept. 2012, revealed that people who bank online are far more engaged with their financial institutions. Director of analytics at Intuit Financial Services, Russell Lester, stated the ease of accessing accounts and making transactions via online and mobile devices was beneficial for both parties. “The data is clear — greater engagement via digital channels leads to better financial outcomes for the user and the financial institution,” he explained.

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  • Green Dot’s GoBank Takes Aim at Gen “Y.2” and Slow-Moving FIs

Javelin Strategy & Research Blog

Green Dot’s effort to blaze a trail for the next generation of banking highlights the building competition for Gen Y consumers and the challenges that must be overcome to redefine banking. It also sends a warning signal to the credit union industry that it must do something to avoid becoming a generational anachronism. As Javelin detailed in “A Tale of Two Gen Ys” – a report issued to subscribers last week and scheduled for public release Jan. 22 – the growing economic clout of Generation Y cannot be ignored. Of immediate interest are 25- to 34-year olds – whom we dubbed “Y.2” – a group of hyper-vigilant but cautious consumers raised with expectations of digital service but struggling at times to establish online and mobile financial habits.

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  • Banking Branchless & Mobile Only

Juniper Research Blog

Branchless banking is a banking strategy beginning to be widely adopted in many developed as well as developing countries over the world. Banks and FIs opting for branchless banking will not have any kind of physical presence or branches – whether expanding their network or starting a new network – in any of the markets. For example, First Direct in the UK launched branchless banking as early as 1989 and operates only via phone, post and online.

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  • New Bank Has No Branches, Just an App — And Thinks You’ll Volunteer to Pay for It

Wired

The company that made prepaid debit cards for the “unbanked” ubiquitous has a new venture: a bank. But Green Dot isn’t planning on opening any branches. To visit this bank, you have to open up the app. Green Dot’s GoBank, announced this week in San Francisco, attempts to push mobile banking forward by making banking mobile-only. And the company seems to believe the GoBank app will delight account holders so much that they will voluntarily pay for the privilege of using it.

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What We’re Reading: The Underbanked, Credit Union Executives and Social Media

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.

  • It’s a Real Bank, and It’s Made by Real Internet

All Things D

Green Dot today launches the smartphone-based GoBank, which will have no overdraft or penalty fees, no minimum balance and a “pay what you feel is right” monthly membership fee. GoBank promises that it can fully bridge the two worlds. That’s because pre-paid card provider Green Dot actually bought an FDIC-insured bank back in 2011 in Utah, after two years of regulatory hurdles.

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  • Mobile Devices Can Help Bank the Underbanked

American Banker

Mobile technologies are revolutionizing financial services in both developing and developed economies, helping bring a wider range of services to a greater number of people than ever before. As a result of advances in mobile technologies, the way consumers interact with financial institutions is being redefined, providing a new level of access. While potentially revolutionary for everyone, this is particularly so for the underbanked.

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  • Pessimistic Outlook for 2013 in Web Survey of Credit Union Executives

Credit Union Times

An increasing number of executives are pessimistic about the 2013 outlook for their credit unions because of more regulations, low interest rates and a weak economic recovery, according to a Web survey of 271 credit union leaders by Abound Resources, an Austin, Texas-based management consulting firm. The survey found that 25% of credit union executives are either somewhat or very pessimistic. Last year, the Abound Resources survey found only 16% of credit union executives were either somewhat or very pessimistic in 2012.

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  • Reacting to Nasty Tweets, Snarky Posts May Help CUs Shine

Credit Union Times

Just when your credit union starts getting the hang of Facebook, Twitter, Tumblr and Google+, someone writes a negative post on your page, and all hell breaks loose. The ability to create a forum where credit unions can communicate directly with members or potential members creates a direct relationship. According to Michael Ogden media relations manager-new media for CUNA Mutual Group, a recent survey of credit unions by the groups marketing research department showed that 94% of credit unions are investing time and money on Facebook as a part of their marketing strategy. Facebook and Twitter are the two most-used social media platforms for credit unions and 55% of credit unions are using some form of Web analytics.

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  • Beyond Mobile Banking: Building New Consumer Apps

Financial Brand

Examples of non-core mobile apps from financial institutions certainly aren’t common. That’s not to say that in the future, financial institutions won’t invest more time and money into this area. The strategy offers a number of advantages: Provide real value for customersIncrease loyalty, Attract new customers, Extend product and service offerings, Boost saving volumes and interest in investments, Improve corporate social responsibility. We are already seeing non-core banking apps, allowing people to take their financial institution with them where the last hurdle (house hunting, acquiring goods/services, etc.) ultimately comes back to paying for something. Device developments and the explosion of data will give consumers apps so they can navigate these experiences more seamlessly.

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  • Reboot Hadoop?

Forbes.com

Big Data’s sweet spot starts at 110GB and the most common customer data situation is between 10 to 30TB.Brad Smith, CEO of Intuit came out with a set of articles highlighting the fact that “Big Data wasn’t just for Big Companies”. Brad is right. If you look at the distribution of businesses by employee count in the U.S here, you’ll notice, that, state by state, the number of companies between 20-500 employees is on average 40 times larger than that of large companies.

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  • US Bank to pilot NFC iPhone case

Payment Eye

US Bank has chosen Salt Lake City and Portland as test sites for an iPhone case that turns the handset into a contactless payments device. The bank is offering its FlexPerks Visa customers in the cities the chance to sign up for the Go Mobile trial if they have an iPhone 4 or iPhone 4S.

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  • Seven Resolutions to Get Your Nest Egg in Shape

Wall Street Journal

But if you want to learn to stick with a budget over time, a growing number of largely free online tools and mobile apps can help. Services offered by banks and companies, including Intuit Inc.’s Mint.com import and aggregate data from your credit cards, loans, and bank, brokerage and 401(k) accounts. They break down your spending into categories, such as utilities or groceries, and some can even track how much you spend at specific stores or on specific items, like coffee. Once you know how much is going out and for what, it becomes much easier to pinpoint cuts that can make a real difference.

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What We’re Reading: The Digital Age, Top Finance Apps and Online Passwords

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.

  • Branches Are Catching Up to the Digital Age

American Banker

The pressure to change physical footprints and update old service and staffing models for bank branches is accelerating, a trend underlined by this week’s purchase of video teller specialist uGenius by self-service technology company NCR. NCR plans to expand its APTRA Interactive Teller, which lets consumers conduct remote, assisted-teller transactions over an ATM. The teller has control over the machine and can help consumers execute deposits, transfers and other financial transactions while at the ATM. David Albertazzi, a senior analyst with Aite Group, says video enhances the customer experience by allowing questions to be answered in real time. It removes barriers to adoption for groups of consumers who are still reluctant to fully utilize the newer capabilities of the ATMs, such as multi-media deposit.

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  • Corporate Mobile Banking Slowly Gaining Traction

Bank Systems & Technology

Despite the exploding growth of mobile banking among consumers, mobile banking for corporate customers has seen a more cautious adoption. According to Patricia McGinnis, director of the commercial and enterprise payments solution at Mercator Advisory Group, corporate mobile banking faces a two-fold challenge: on the one hand, corporate IT departments are still figuring out BYOD policies and how to best secure mobile devices that are used for company purposes. While many corporate treasurers can do things like receive alerts and approve payments on a mobile device, functions like performing administrative duties and initiating payments are still being debated.

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  • “Do What You Do”: Capital One Touts Mid-Mobile Banking Multitasking

Brand Channel

The flurry of mobile banking ads lately is no accident. Just like every other business, banks have figured out that consumers are on the go — and connected — all the time.  Banks are already scrambling to get their piece of the mobile payments market, and now mobile banking apps are the latest new thing. A slew of campaigns are featuring the ease of mobile banking, with banks such as Barclays expanding mobile. Bank of America says, “Life is mobile. So is your bank.” Chase calls mobile banking, “The power of Chase in the palm of your hand.”

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  • Eric Ries On How To Make Any Company Move Like A Lean Startup

Fast Company

“Corporations are ruled by the systems that you create,” Lean Startup author Eric Ries tells Fast Company. Whether your team’s 100 or 100,000, here’s how to make a system that’s entrepreneurial by process, not by slogan. It’s like an alternate reality,” Eric Ries says. It’s “like on Star Trek or something,” he says of his consulting forays with organizations including Intuit, GE, and the U.S. government. “Everyone is very familiar and very alien at the same time.” While a 300,000-person company looks nothing like one with 100 people, Ries says the problems that entrepreneurs in those super-sized ecosystems are dealing with are the exact same ones that he made a name for himself researching.

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  • 10 Leading Finance And Banking Apps For iPhone And iPad

Forbes.com

Company

iPhone Rank

iPad Rank

PayPal

1

none

Chase

2

3

Bank of America

3

1

Mint (Intuit)

4

5

Wells Fargo

5

2

TurboTax (Intuit)

6

31

Capital One

7

none

TaxCaster (Intuit)

8

16

Credit Karma

9

none

American Express

10

7

 

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  • A Financial Service for People Fed Up With Banks

New York Times

Like many people, Josh Reich got fed up with his bank after it charged him overdraft fees and he endured painful customer service calls to fight them. But unlike most people, Mr. Reich, a software engineer from Australia, decided to come up with a better way to bank. Mr. Reich and a co-founder, Shamir Karkal, created Simple, an online banking start-up company based in Portland, Ore., that offers its customers free checking accounts and data-rich analysis of their transactions and spending habits. “Banks make money by keeping customers confused,” Mr. Reich said. “There’s no incentives to make the experience better.” Of course, inviting people to trust a start-up with their money is a lot to ask.

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  • 7 Reasons Passwords Are Doomed – Finally

Read Write 

Passwords control your life. From accessing work email and stock prices on the go to checking a grocery store shopping list, passwords have become the primary source of identifying who you are. They are arguably more important than your driver’s license. But with that ubiquity comes risk – this tiny, yet powerful device contains enough information to expose your financial or health records and other personal details. From an enterprise perspective, the risks are just as great, if not greater. Ubiquity also creates confusion. On average, password reset requests make up 10% – 30% of all IT helpdesk calls.

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What We’re Reading: New Year’s Edition

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.

  • Bring Your Own Device Trend Sparks New Security Technology

American Banker

The “bring your own device” trend in banks and other businesses is spawning a mini industry in mobile device security. Developers from companies such as Good Technology, IdentityX, and Centrify are all targeting institutions with new tools for user authentication and corporate identity management for employees via mobile and other personal devices. Good Technology, for example, has what the company calls Good Vault, which incorporates identity access management (IAM) and encryption to guard data accessed remotely by mobile and other devices while using programs such as email. Good Vault combines with Good Technology’s broader security platform to extend IAM to mobile devices in an effort to customize mobile application experience based on user identity.

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  • Experian Offers Searchable Consumer Credit Database

American Banker

Experian has taken a quarterly report of consumer credit data, one that used to be printed and came to hundreds of pages of text and charts, and turned it into a web-based searchable database. The new tool, IntelliView, provides data in seven categories: bank card, retail card, automotive, first mortgage, second mortgage, home equity line of credit and personal loans. Credit.com recently used it to compile a list of the 10 states with the highest average bank card balance per consumer in the third quarter of 2012.

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  • Three credit unions in US to implement mobile banking services

Banking Business Review

Three credit unions in US – Municipal Employees Credit Union of Oklahoma City; Central Communications Credit Union of Independence, Missouri; and Texell Credit Union of Temple, Texas – will deploy mobile banking services. Minnesota-based core data system vendor Sharetec Systems said Municipal Employees CU of Oklahoma City and Central Communications CU will use mobile banking solution from Sharetec partner Data Systems in Waco, Texas, in Q1 of 2013, reports Cutimes.

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  • Android, iPhone are Top Fraud Targets, Study Finds

Bank Systems & Technology

A Javelin Strategy & Research report on mobile payments found that the two most popular smartphone platforms are targets for fraudsters. Consumers who use Android and iPhone devices to conduct mobile payments and mobile banking are top targets of fraudsters, according to a new report from Javelin Strategy & Research. The research firm says that Android is especially vulnerable in the $20 billion mobile payments market because of its large and growing user base and open source platform. However, according to Javelin, the 33 million iPhone users are also attractive targets, as they spend more on average and shop more frequently with their smartphones than Android users.

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  • 5 Crucial Banking Safety Lessons Learned from Losing My Wallet in a Cab

Go Banking Rates

How to Avoid Identity Theft When You Lose Your Wallet: 1. Don’t keep bank account information in your wallet! 2. Ensure you’re signed up for mobile banking. 3. Shred old credit cards. 4. Keep a business card behind your ID. 5. What goes around comes around.

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  • The 2012 GonzoBanker Awards

Gonzo Banker

Technology of the Year. Enhanced Multi-Factor and Web Security/Fraud Detection. Denial of service attacks on big banks and wicked malware like Gauss have reawakened bankers to hacker darkness – just when new Federal Financial Institutions Examination Council regulations regarding enhanced Multi-Factor Authentication go into effect. It will be a struggle for bankers to balance security with a simple customer experience, and the journey has just begun. Innovators like Silver Tail Systems (recently acquired by EMC) are to be commended for their work to tackle this ongoing challenge.

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  • How banks will continue to innovate in mobile next year

Mobile Commerce Daily

Smartphone adoption continues to grow and recent research from ForeSee shows that the customer experience provided by financial institutions on mobile can translate to real bottom-line results. This means banks need to be measuring the mobile customer experience and looking for ways to improve it. One mobile banking feature that is likely to play a bigger role next year is mobile payments. Other sectors have been aggressively moving into mobile payments and financial services firms know they need to act soon or they risk missing their opportunity to play a role in how consumers use mobile to pay for transactions – potentially a very valuable service.

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  • 2013 Watch: Marketing in the Year Ahead

Credit Union Times

Mobile banking, onboarding and gamification may be some of the buzzwords marketing professionals in the credit union industry are using throughout 2013. Marketing veteran Drew McLelland said if mobile banking wasn’t your top priority in 2012, it better be for 2013. “This isn’t optional for financial institutions that want to be in business in 2020,” said McLelland. “It’s really that simple.” Michael Kelly, president/CEO of PSCU Financial Services, couldn’t agree more. “The future of credit unions rests in the ability to offer current mobile tools and technologies to members,” Kelly wrote in an opinion column posted at cutimes.com.

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All Hail 2013: It’s Time to Change

As announcements go, it wasn’t a very big deal when the British Bankers’ Association said at the end of the year that it is urging its 200 member banks to participate in a broad, two-pronged initiative to boost the industry’s image. Part of the plan is to monitor “people’s concerns before they become massive scandals”—a worthy goal, to be sure. But this wasn’t an isolated symptom of the problem. At around the same time, a Financial Times survey of 93 Members of Parliament revealed that fully two-thirds of the legislators believe British banks should be required to create a stronger barrier between investment banking and what’s known as ‘high-street’ operations. More worryingly, this wasn’t a liberal push for more regulation—the number of Conservative MPs backing the idea is actually higher than their Labour counterparts. There’s already a proposal to create a ‘ringfence’ around retail banking, but the new research indicates that many think the changes don’t go far enough.

That’s really the recurring theme here. If 2012 was a year of major change for banking institutions and individuals around the world, then 2013 will require even more.

A tsunami of bad news throughout the year was capped off by the news late in December of massive fines levied against UBS. The Swiss banking conglomerate ponied up $1.5 billion to global regulators, including $700 million to the Commodity Futures Trading Commission (CFTC) alone, the largest such settlement in the agency’s history. The fines stemmed from the charges of manipulation directed primarily at the bank’s Japanese securities subsidiary, all part of the mushrooming Libor scandal.

Some are even calling for the company to be shut down—an action that would surely cause ripples throughout financial markets worldwide. This brought up unpleasant memories of a similar situation earlier in the year, when HSBC was accused of money laundering and other transgressions. In that case, the company agreed to pay $1.2 billion in restitution, yet calls for more stringent penalties met with strong resistance even from regulators. The reason: more criminal charges could destabilize the global financial system. Moving forward, it should be apparent that regulators, and the public at large, will lose patience with a ‘too-big-to-charge’ environment in which massive institutions are able to avoid serious penalties because of their size and clout.

Continuing with the bad news global tour, Japan got a new Prime Minister around Christmastime, and he promptly sent signals that he will bring pressure on the Bank of Japan to essentially monetize the national debt outright. Whatever the merits of his strategy—which goes beyond any stimulus spending in the U.S.—the feeling is that it goes a long way toward taking away the Bank of Japan’s independence. This is a major story that hasn’t received much attention so far. Expect that to change in 2013.

While these are established institutions, there was also evidence that new players with different business models have a hard time breaking in. TandemMoney was an interesting idea designed to meet the needs of the unbanked and underbanked by providing a line of credit that required customers to sign up for direct deposit. A combination of savings and credit would thereafter deal with unexpected expenses. The company saw itself as an innovative startup that would protect consumers from institutional loan sharks. Instead, it will be seen as a cautionary tale—unable to satisfy regulatory scrutiny, it soon shut its doors.

Despite this seeming litany of bad news, it definitely isn’t all gloom and doom. In fact, the industry as a whole is not exactly suffering—the four largest banks in the U.S., particularly Bank of America, had quite a good year, and according to reports some regional banks did even better. A few greatly outperformed their much larger competitors, and that trend is expected to continue. Cautionary tales aside, nimbleness and innovation are still being rewarded.

Other aspects of change are equally welcome, at least to non-Luddites. For one thing, the move toward mobile banking continues to escalate.

We all know about the trend in developed markets, but it seems to be spreading far beyond those borders. The State Bank of Pakistan just announced that between July and September alone, the number of new mobile banking accounts spiked by an astonishing 25%. The news provides more evidence that in developing nations where the lack of infrastructure is a serious hurdle to economic growth, the building of mobile capabilities allows them to leapfrog traditional foundations and gain a major advantage through the proliferation of mobile technologies. (Neighboring India has already taken significant steps forward in this regard.)

Also, despite the buzz, mobile isn’t the technology paradigm changing the face of the industry—cloud computing is another. To give just one example, National Australia Bank just provided an update on its highly ambitious 10-year technology transformation plan drastically improve the customer and banker experience and avoid obsolescence in the process. The bank has already upgraded its network from eight voice and data networks to one, and will virtualize employee desktops, among many other advances. At the heart of the change is the core banking overhaul, which will enable it to retire more than 100 legacy applications. In December, the bank opened a social media command center with cloud-based technologies that enable the staff to field thousands of comments and service requests every month. This is exactly the kind of ground-level change that forward-thinking banks around the world need to undergo.

In fact, one interesting trend to monitor this year will be changes in the CEO position. It’s a safe bet that those executives who get the ax will get it not because they’re resisting change but because they’re not changing fast enough.

Which brings us back to where we started. If the year just ending was a challenge, the next one will be even more so. From presidential elections and regulatory reform to emerging markets and mobile apps with startling capabilities, we’re all in transition mode. Organizations everywhere can see that there must be a transformation in foundational principles, bedrock strategies and longtime operating practices. It’s scary but exciting, and institutions that can change with the times will find more opportunities and better returns than ever before.

What We’re Reading: Holiday Edition

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 to Donate Cell Phone Minutes to U.S. Military Members

American Banker

Capital One said Thursday it will donate 60 seconds of air time to Cell Phones for Soldiers, a nonprofit group that provides communication services to active duty members of the military and veterans, whenever someone downloads Capital One’s mobile banking app. The $302 billion-asset company also will give the group 10 seconds of air time that military members can use to view their own accounts at the bank or to transact online whenever customers use the app to view their transactions, pay bills or move money.

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  • Special End of Year Issue 2012 Story of the Year Mobile

Credit Union Journal

A recently issued Bain & Co. report found that mobile banking in the U.S. has soared 50% since 2011, with 64% of mobile banking users in the U.S. indicating that the future ability to use their smartphones or tablets to check account balances would be highly valued. Still, that value proposition must be explained and marketed. Fiserv recently analyzed data compiled by Mobiliti and found that institutions that have actively marketed mobile banking have experienced an average adoption rate that is twice as high as financial institutions that have not promoted the service. FIs that didn’t market the service saw about 10% of eligible persons adopt mobile banking.

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  • Twelve Things to Do When It’s Cold Outside

Huffington Post

It might not be sexy, but a balanced budget sure is useful. Use an online budget planner like LearnVest or Mint to gather all your financial information in one place so you can see where money is going each month, set budgets for certain categories and never miss a bill payment

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  • Mobile Devices 2013—The New Attack Vector for Distributed Denial of Service

Javelin Strategy & Research Blog

The slate of distributed denial of service (DDoS) attacks in 2012 will be irrevocably seared into the memories of FI security professionals. The phenomenon is not new, but in response to private industry’s efforts to mitigate the effects of an attack, hackers have proven capable of developing increasingly sophisticated means of crippling IT infrastructure. According to Javelin’s newly published report- –10 Trends for Financial Services in 2013 – in the coming year, hackers will undoubtedly continue their nefarious activities. But the mobile device will provide a new attack vector that requires less technical prowess than those that recently brought FI websites to their knees.

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  • Mobile banking expected to triple from 2012 to 2016

Mobile Payments Today

The future of mobile banking is strong, according to a new report from analysts at Aite Group. The Boston-based research firm said that approximately 7,000 financial institutions in the U.S. now offer mobile banking services and that more will deploy them in the years ahead, judging by growing consumer demand. Of smartphone-owning consumers more than one-third, 36 percent, use their mobile device to check account balances, with nearly three in 10 receiving account alerts to their phones, the Aite report said. Additionally, one in six smartphone owners use mobile banking to transfer funds, pay bills, and view monthly statements, the report said.

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  • Cash and Debit Prevail This Holiday Season

New York Times, Bucks Blog

Roughly three-fourths of Americans are buying gifts with cash or a debit card this year, according to a survey from ING Direct. And 63 percent are spending the same on holiday gifts as they did last year. The finding dovetails with reports finding that consumers are better managing their credit card debt. The fourth-annual national survey of 1,000 adults was conducted by both landline and mobile phones by ORC International on November 23-25. The margin of sampling error is plus or minus three percentage points. (Online bank ING Direct, which is now a division of Capital One, will be re-branded next year as Capital One 360.)

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  • Finance Resolutions for 2013

Unbank Blog

This may sound hard, tedious, and undesirable but creating a budget at the beginning of the New Year will help avoid mistakes that may have happened in the past. Take a look at this past year’s finances. Did you overspend in certain areas? Were you late in paying loans and credit card payments? Look at what needs to be fixed and also take into consideration new loans that might be happening within the New Year. Not sure where to start?

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What We’re Reading: Mobile, Big Data and More

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.

  • Integrating Mobile and Branch Banking Will Increase Customer Loyalty

American Banker

Mobile banking has finally come into its own. Almost one-third of the 5,200 consumers that Bain & Company surveyed recently used their smartphones or tablets for some type of banking interaction during the three months prior to the survey, up sharply from one-fifth of respondents in 2011. The survey finds that mobile banking is more likely to increase a customer’s likelihood to recommend his or her bank to other people than any other channel interaction. For retail bankers battling to retain customers and sell more financial products, digital channels have become a powerful means of building loyalty. Digital banking also reduces branch visits, setting the stage for major branch redesigns in order to serve a mass market efficiently.

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  • $850 Million Scheme Exploited Facebook

Bank Info Security

There’s good news in the fight against cybercrime. Authorities have arrested 10 individuals allegedly tied to a global phishing scheme that exploited Facebook and relied on a botnet to compromise more than 11 million computers and steal more than $850 million. But arrests alone aren’t enough to combat online banking fraud. Experts say banking institutions need to take several important steps to support the ongoing cyberfight, including sharing more information with law enforcement and using stronger authentication and end-user security. “I think it’s a good strike against the bad guys, but it just reinforces my view that the FBI is good at coordinating the arrests,” says Dave Jevans, head of online security firm IronKey and a member of the Anti-Phishing Working Group, an international organization of online security thought leaders. “You need private companies to help you know who to arrest.”

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  • How Paper Bills Could Protect You From Cyber Theft

Bloomberg Blog

Hackers are increasingly wiring money directly out of victims’ online bank accounts – without ever typing a keystroke. Three safeguards to avoid being hacked: 1) Use long phrases and symbols in passwords; 2) set up two Web browsers — or better yet, two computers — to keep sensitive data walled off from everything else; 3) on websites that offer it, sign up to receive text-message alerts if someone tries to break into your account. And a new tip that might upset anyone who has a “think before printing” disclaimer in their e-mail signature: Don’t use paperless billing.

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  • Using the Branch to Sell Mobile

Celent Banking Blog

American Banker published an article last week describing Bank of America’s quest to bolster the ranks of its mobile banking customer base. According to the article, the bank is outfitting its teller stations with quick response (QR) codes that can be scanned by mobile devices to download the mobile app. For too long, most financial institutions have limited the merchandizing of mobile banking capabilities. Even after investing in sought after capabilities such as mobile remote deposit capture, many banks enrol mobile banking users primarily through the online channel.

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  • Mobile Banking Expected To Triple

Credit Union Journal

A new report from the Aite Group indicates mobile banking users will triple between 2012 and 2016, and that smart phones and tablets will each serve different banking functions as mobile expands. “Aite Group anticipates that mobile banking users in the United States will triple between 2012 and 2016,” predicted Ron Shevlin, senior analyst and author of the report. “Tablets will become financial management devices, and smart phones will become financial transaction devices. Financial institutions should invest accordingly.” Among smart phone owners, 36% use the device to check their bank account balances, nearly three in 10 get account alerts sent to the device, and roughly one in six use it to transfer funds, pay bills and view their monthly bill statements.

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  • Intuit Survey: Mobile Banking Is Pathway to Profits

Credit Union Times

Think digital banking is only for Gen Y and younger? Think again, think older. Much older. That is the sharp message contained in a new report from Intuit on the ongoing digital banking revolution. The other key finding: mobile banking is a pathway to profitability. In an interview, Intuit senior analyst Jason Weinick elaborated that retention rates for members who use mobile banking services are sharply higher than for those who are online banking only customers.

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  • 7 Steps for Millennials to Take for Gaining Control Over Their Financial Future

Forbes.com

Fortunately, one of Millennials’ greatest strengths is their comfort with technology. While this has translated into using LivingSocial and Groupon to save money, you can also use the Internet to manage your overall cash flow. Sites like Mint and Yodlee MoneyCenter will track your expenses online for free and allow you to access the information on your smartphone as well. You can then have the sites alert you by text or email if you start going over budget in any area.

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  • Strike One for Retailers, But Still Up at Bat in the Payments Business

Javelin Strategy & Research Blog

Earlier this week, a federal appeals court refused to expedite a merchant group’s appeal of the recently proposed $7.25 billion settlement with Visa and MasterCard in a credit card related price-fixing case. A setback for merchants, but one that is unlikely to deter their persistence in advocating and working for change in the payments business.  According to Javelin’s newly published report –10 Trends for Financial Services in 2013 – in the coming year, merchants will continue active litigation efforts designed to address and control payment costs. Following the 2011 implementation of the Durbin Amendment, retailers have are continuing to recognize their ability to achieve broad influence and collective power.

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  • How Main Street will fight big business with ‘big data’

VentureBeat

Intuit, the maker of financial management products for small businesses, currently has hundreds of engineers tasked with bringing the benefits of big data to Main Street. The company envisions a future where small businesses will be armed with data to help them make strategic business decisions and drive consumer sales. It’s turning its database of small business finances into tools to help its customers save time and money. Small businesses have a “treasure trove of data” In an intimate meeting at the company’s San Francisco office, CEO Brad Smith told reporters that Intuit is stressing three things: privacy, innovation, and the accessibility of data.

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