Going Luddite on Mobile

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

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

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

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

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

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

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

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

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

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

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

This article originally appeared as a guest post on MyBankTracker.com.

The Klout-Influenced Credit Score Would Give Credit Where It Isn’t Due

*This post originally appeared on MyBankTracker

If you’re an insufferable person who speaks on social media panels with any degree of regularity, you’re probably more aware of what your Klout score is than you are your credit score. After all, you can check your Klout score all day — you can only check your credit score once a year from each bureau. Who has the time? You live an active social media lifestyle, and retweets probably matter more to you than your mortgage rate. You are pretty terrible. Well we’ve got good news for you: at Movenbank, your social media influence might soon influence your credit score — a terrifying thought!

Movenbank, a soon-to-launch financial services company, launched something called the CREDscore in private alpha. It is comprised of a number of different factors: your actual credit score, your personality and, yes, your social media influence. Strange as it sounds, Movenbank might actually make business decisions based on your Klout — or something a lot like it.

First, Movenbank puts you through a financial personality quiz to better understand your relationship with money. You’re assigned a “type”: salesperson, professor, accountant, rockstar, entrepreneur, officer, artist (wouldn’t want to get that one!), breadwinner or trader. For now, this is just filler, but it might factor into your score in the future.

The CREDscore also takes into account actually important financial information like annual income, how much you save per month, how much you have saved up, and your FICO score. So there is hard data factored into the score.

But users can also connect their Facebook, Twitter, LinkedIn or Google Plus accounts to give Movenbank a better sense of your social media influence. The company explains why in a blog post that describes different credit profiles that a CREDscore could benefit. Here’s Ashley, someone who has fallen on hard times, but has a lot of LinkedIn contacts:

Then there’s Ashley. Ashley’s a bit older than Matt and Jessica, but he lost his job a few years ago. Then he lost his house. Ashley’s suffering. The bank foreclosed and now he can’t get any opportunity to get new things started.

But he has an idea. He wants to launch a new business that makes funky trainers that tweet and check-in on foursquare as you run.

Sounds stupid, but don’t be fooled. According to LinkedIn, Ashley has a heavy influence on some potential investors who are sniffing around the ‘Tweener,’ as he calls it. The only thing is he has a problem. The mainstream financial service providers don’t want to know him.

Here at Movenbank though, we love Ashley.

We love Ashley because we can see he’s on the cusp of a breakthrough. But we can’t just give Ashley all the things he wants, so we offer him a deposit account and a limited loan facility to get the business started. The loan facility increases over time, as his Klout increases.

One reason why underwriters typically rely on hard data when assessing credit risk, is because dangling lots of money in front of people who need it desperately can often make them less than honest. Low-documentation and no-documentation loans are called “liar loans” for very good reason: if you’re self-reporting income to qualify for a mortgage, it’s easy to fudge it upward a bit, especially when your mortgage broker encourages you to. Despite what Movenbank would like to think, it’s very easy to fake social media influence — it’s just a pathetic and humiliating experience most of us would readily avoid. Unless we really wanted a loan from Movenbank, perhaps.

This sort of thinking only makes sense if you’re constantly surrounded by tech entrepreneurs all day, as they network and jockey for money and influence. Most of us never need business loans for shoes that integrate with social media. Our financial needs are personal: saving for our first home, retirement, our kids’ education, a vacation, whatever.

But in its defense, CREDscore addresses these issues, too. A higher CREDscore might mean better terms for customers on their accounts: higher savings rates, lower borrowing costs, or lower fees. Strangely, the range is not yet public; those who have been given CREDscores have not been told whether it is good, bad, mediocre, anything. Just: here’s a number, it might mean something later.

Movenbank will launch to the public later this year. And people with parody Twitter accounts might get a better rate on their savings account than you do. It’s strange, because one might reasonably suspect that introverts might have better financial habits than people who tweet every thought or joke that pops into their head. Being impulsive online is different from being impulsive at Macy’s, sure, but being freed of the rigors of a social life would likely cut 40% of the spending out of my monthly budget.

Klout is likely as good a measure of creditworthiness as waistline. Sure, I can infer a lot of lifestyle differences between the man with the 44 inch waist and the man with the 30 inch waist, but just because one probably spends more of his income on cheeseburgers, it doesn’t really tell me how likely he is to pay back a loan — and it definitely doesn’t mean he’s worthy of lower fees or higher savings rates, or vice versa.

But the CREDscore is still in its testing phase. It’s quite possible that none of this will come to pass. So you can stop spamming LinkedIn VC groups — you might end up burning bridges.

About Willy Staley:  Willy is a 25-year-old writer, and as a native San Franciscan, he is unreasonably loyal to Bank of America, if only for their superhero-like origin story, involving the 1906 earthquake and Italian fruit vendors.

Online Banking Ranks #1 With Consumers

An increasingly digital lifestyle has left most consumers conducting banking tasks outside of the traditional brick and mortar branch, whether via a mobile device or online banking. Intuit Financial Services’ 4th Annual Financial Management Survey echoed this sentiment as 27 percent of respondents said they only physically go into their bank or credit union once a month, excluding ATM visits.

Correlating with fewer branch visits, the percentage of consumers using online services provided by their bank or credit union continues to increase year-over-year; up 11 percentage points since 2009 to 38 percent in 2011. Not only are consumers utilizing online banking at a faster rate, they are placing a stronger emphasis on these tools. One-third of respondents said they would switch financial institutions for better online banking tools, showing the growing need for financial intuitions to provide a strong online suite of tools to customers and members.

Are you seeing a decrease in branch visits at your FI? Are your customers and members beginning to utilize online banking tools at a faster rate? Let us know in the comments section below, or Tweet @Bankingdotcom.

What We’re Reading

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.

  • Mobile On/Off Switch for Debit Cards Now in Testing

American Banker

A new system lets consumers deactivate debit and ATM cards from a mobile device, reactivating them only as needed. The security system, which one bank is testing, has the potential to make stolen card data less valuable, since a card would work for payments or cash withdrawals only when the legitimate customer permits it to. The technology, called card lock, is part of Diebold Inc.’s MobiTransact mobile banking platform. Consumers would have the flexibility to keep a card switched off at almost all times – or to lock it only in high-risk situations, such as when it has been misplaced, says Thomas Swidarski, the company’s chief executive.

Read more

  • In Mobile Payments, Card Companies Trusted More than Facebook

American Banker

Even though consumers increasingly trust nonbanks such as Google Inc. and Facebook Inc. with their personal information, they trust credit card providers more. In fact, the popular social media phenomenon Facebook ranked last among companies consumers would trust to support mobile payments in an Ogilvy & Mather’s online mobile-shopper survey of 500 U.S. consumers, says Gareth Evan, director of digital at its Ogilvy Action unit. The marketing communications firm conducted the survey in June. “When we talked to consumers as well as brand manufacturers, vendors and retailers, we started to see themes come out, and one of them was trust in new services being offered,” says Evan.

Read more

  • Intuit GoPayment Partners with Verizon Wireless

Credit Union Times

In a move that may enable large numbers of very small merchants to begin accepting credit cards, Intuit announced that its GoPayment merchant tools will be sold at 2,300 Verizon Wireless stores. Sharna Brockett, an Intuit spokesperson, said the importance of the deal is that it will put the tools in front of many more small businesses. “This is the first time many smaller businesses can easily and affordably accept credit cards on their phone,” Brockett said Thursday.

Read more

  • Customer Experience Lessons From Steve Jobs

Customer Experience Matters Blog

Steve Jobs is stepping down as CEO of Apple. That’s a big loss for Apple. Jobs transformed Apple from a niche computer maker to one of the most influential technology/consumer product companies on earth. Under his leadership, Apple developed iPods, iPads, iTunes, iPhones, Apple Stores, etc. That’s an incredible portfolio.

Read more

  • Citibank customers are gadget-freaks. Wells Fargo customers? Not so much.

Javelin Strategy & Research Blog

Citibank has the highest concentration of gadget-loving consumers in the US, with nearly four in ten of their account-holders saying they are “the first to try” new technology when it becomes available. Citi’s customers are more than twice as likely as the average US online citizen to crave and brave new gizmos and gadgets. Citibank is in entirely different position from which to market and launch the likes of mobile, social, online and other channel-based payments and financial services, as our Bank Benchmarking data show in spades. Bank of America and Chase have significantly more early-adopters than other larger US institutions, but they still trail Citi in this regard by a combined ratio of about 1.5x!

Read more

  • Fewer Banks In the U.S. Considered To Be at Risk

New York Times

The number of banks on the government’s list of institutions most at risk for failure fell in the second quarter, the first drop since before the financial crisis began. Twenty-three lenders came off the list of so-called problem banks during the second quarter, bringing the total to 865, according to data released Tuesday by the Federal Deposit Insurance Corporation. Not all the troubled lenders will inevitably fail, but the F.D.I.C. considers them most at risk, making the quarterly update one of the clearest measures of the banking industry’s health. It was the first decrease in the number of problem banks since the third quarter of 2006.

Read more

  • Banks start offering payday loans ; Financial institutions target most-strapped customers for revenue

The Tennessean

As regional banks ready for new federal regulations expected to cut into profits, some of them are zeroing in on the down-and-out customer to turn a buck. More banks are doling out short-term, high-interest loans to customers in dire straits. Observers worry that the loans signify an industry wide shift toward making money on desperate consumers and — more broadly — slapping more fees on services for everyone. “If the banks want to maintain their revenue growth, they’re going to have to come up with new profits and new approaches,” said Richard Bove, banking analyst at Rochdale Securities.

Read more


Financial Institutions & Security in the Cloud

Financial institutions are not strangers to cloud computing adoption. One of the earlier cloud uses in banks and financial institutions were for SaaS deployments, which allowed for more social media components to banking.

However, now FI’s face the issue of security due to the increased number of data leaks. As a result, cloud within IT strategies and architecture for FIs will increase the risk of a security breach among servers and networks unless there is an adoption of a multiyear cloud strategy to keep data protected – as was outlined by John Gubala of CapCo and Milo B. Sprague of Silicon Valley Bank in Wall Street and Technology.

A recent article in Bank Systems & Technology by Rodney Nelsestuen, a senior research director covering financial services and research for the TowerGroup, outlines  what he believes are the “3 Steps to Securing the Cloud’s Future,” which discuss the long term steps banks need to take to have a secure cloud architecture for a successful future in the cloud:

1) Network issues need to be resolved by having “an open and transparent industry dialogue about tomorrow’s physical network business model…and foster marketplace competition.” Marketplace competition and an open dialogue will aim to create a secure network that will reinforce all of the data that resides within the cloud.

2) Financial institutions must have a standardized cloud by working with groups such as the Cloud Security Alliance and the IEEE.

3) Mandated best practices in cloud risk management will reduce the risk of financial crime. As security breaches do become more prevalent and more money is being spent online than ever (Gartner predicts that cloud services revenue is forecasted to reach $148.8 billion in 2014– up from $68.3 in 2010), systematic structure will help to create a plan of action in case of any data leakage.

The plan of action aims to reduce the risk of cloud architecture, and financial institutions will reap the benefits of the cloud than has been experienced in the past.  By following the steps as defined by Nelsestuen, financial institution IT infrastructures can take steps to ensure security in the cloud and continue to find more uses of this relatively new technology.

Is your financial institution taking steps towards the cloud? Do you think regulation is the next logical choice for all banks to adopt the cloud for their IT architectures? Let us know in the comments section below, or Tweet @bankingdotcom.

How Banks Can Better Appeal to an Evolving Audience

By Kate Blatherwick

As the way we conduct our business and our personal lives becomes increasingly internet led, banking too must adapt and grow to appeal to an ever more internet-savvy audience. Online banking has already gone some way to revolutionising the way we manage our finances online – but this is just the beginning.

In order to better understand how banks might better appeal to an internet audience, it is important to first understand the current experience users are having and what they’d like to see change in the future.

With this in mind, research conducted by Zabisco was undertaken via social media and an online survey to gather opinions from which banking preferences can be drawn:

Of 30 participants questioned, 57.4% currently use online banking and 90% stated this was the banking method they prefer to use, showing a huge propensity to bank online over any other method. Interestingly, despite being more widely used by recipients than mobile or telephone banking, it was in-branch banking that came out as the least popular option…

When asked about their attitude toward mobile banking, almost 40% were unsure as to whether or not their bank offered a mobile banking app whilst only 23% expressed any concerns over their inherent security.

Clearly, a sample of 30 participants is not enough to base widespread predictions upon, but it does give us some interesting insights into how users feel about the way they bank – most notably, it seems the biggest hurdle to the adoption of mobile banking is awareness, rather than the UK market not being ready to adopt such technology as some articles claim.

How Banks Can Better Appeal to an Evolving Audience

In order to better service their customers, banks have got to seek new ways in which to appeal to their customer’s needs and improve their service offerings accordingly.

That means understanding the end user and sculpting services around their needs, not just the needs of the organisation or its internal members. The research stated here is the very first step to understanding how banking customers today behave, but it is by far the complete story. It is only by investing in that user understanding that banks can create a user experience that works as well for the customer as it does for them – and that’s no mean feat.


Kate Blatherwick works in the client services team at Zabisco, a  digital agency who produce engaging designs and content for websites  and mobile. Working in both London and Nottingham offices, Kate is project lead on a variety of clients including Barclays, RBS and Natwest.

Zabisco works with a range of financial services clients and, in the companies experience, the ongoing success of these banks is dependent on them taking a more user centered approach. To find out more about user experience and how banks can improve their, visit the Zabisco website at www.zabisco.com.

FI Spotlight: BankAtlantic

It can be difficult to educate consumers on the importance of taking control of their finances. With so many management tools available and advice coming from every direction, consumers may not know who to listen to. Banks can take this opportunity to demonstrate to their customers how important managing finances and accounts can be, and how to best utilize the tools available.

BankAtlantic in Florida recently explained to their customers:

“Not checking up on your personal finances is like driving a car without a dashboard – you don’t know how fast you’re moving, how much fuel you have or how far you’ve gone.

But with a “digital dashboard” on your computer, you can get a concise, consolidated view of your progress – everything from credit card balances and how much is in your savings account to bills that are due.”

BankAtlantic used the analogy of driving to draw a comparison that using the online banking digital dashboard with FinanceWorks was like driving a car well-equipped with all the right safety features. Banks and Credit Unions can take a cue from BankAtlantic and remember that at times, offering beneficial tools isn’t enough; financial institutions must demonstrate the need and communicate how their offerings best serve their members and customers.

You can read additional information on Bank Atlantic’s Website here.

How are you helping customers and members to understand the importance of financial management? Tweet at @Bankingdotcom or let us know in the comments below.

Think your FI deserves special recognition? Send information to info@banking2020.com.

Celent: Tablets and Banking

There are a lot of reasons to love Jacob Jegher‘s latest post, Tablet Wars: Online/Mobile Banking Will Never be The Same. First, if you know Jegher at all you know he’s not prone to making sensational broad sweeping statements. That alone make his post a must read.

Secondly, Jegher hits on all of the right points as to why tablets are a game changer, many of which his Celent colleagues have also teed up in recent months. In short:

  • Is banking on a tablet considered online banking or mobile banking? The answer is both and neither. Tablets are unique devices with distinct capabilities and form factors.” The bit about form factors is particularly important. Intuit’s hit on this in discussions around experience design and Omar Green’s a huge champion of what he likes to call “Mobile Context.”
  • Do tablets impact consumer banking, small business banking, or corporate banking? The answer is all of the above.” What’s important here is that tablets influence all three of these categories very differently.

The best part about this post, in my opinion, is that all of Jegher’s comments point in the same direction. End users, regardless of their stripe (consumer, big time enterprise executive, small business owner) all want what they want, when they want it, where they want it. Simply put this bolis down to meeting a customer at their point of need and in the right context.

*originally posted on the Intuit Network

About Allyson Casey:

Allyson Casey leads Intuit’s Industry Analyst Relations program. She is located in the wilds of Maine and spends her days turning data and pie charts into plain speak and making sure she’s connected with the vast community of influencers.

Tell Your Customers: Get Rid Of Inventory!

Editor’s Note: Gene Marks is a small business management columnist, author, and speaker who also owns and operates The Marks Group PC, a highly successful 10-person firm that provides technology and consulting services to small and medium sized businesses. The Marks Group PC, launched in 2004, has grown to help more than 500 companies and more than 2,000 individuals throughout the country. Gene writes weekly online columns for The New York Times and Forbes, as well as monthly and bi-weekly columns for Bloomberg Business Week and American City Business Journals. Intuit has, on several occasions, contracted Gene to provide marketing-related services.

“But I need to carry these items,” Sam whined to me one day. “What if a customer called and I didn’t have it in stock?”

Do you have customers who are distributors? Fine, then it’s their business to carry inventory. They’re the middle man. Inventory is their life. They’re being paid to make sure stuff is in stock so the manufacturer doesn’t have to.

But wait, you have customers who are not distributors? They manufacture? They provide services? Then you, as their banker, should say to this them: “What the HELL are you doing with extra inventory in your shop? Shame on you!”

Sam sells and services fire protection systems to restaurants and retail customers. He’s got inventory lying around all over the place. He’s got a warehouse with spare parts stacked up to the ceiling. He’s got a dozen trucks on the road with parts stuck in every crevice. Some of his techs keep materials in their own homes.

This surplus inventory is sucking out the cash. He’s leasing more warehouse space than he needs. He’s incurring utilities and other additional overhead costs. He’s losing production administering and accounting for missing parts. And he’s missing parts. Fifty bucks here, 50 bucks there. Sam’s company tosses out thousands of dollars each year on inventory mismanagement. It costs Sam MORE money just to keep a lot of this inventory then not.

“But,” he tells you, “what if a customer called and he didn’t have it in stock?”

Well, that depends on the customer! Sam wants to make sure he has stuff in-house so that if ANY customer calls he can get a replacement part right out to them. It’s not a great idea. If the customer is a high dollar, high turnover account then carrying inventory especially for them would make sense. But if it’s not, then other arrangements have to be made.

Tell him to dump that inventory. Sell it back to the manufacturer. Scrap it. Set it on fire. Whatever, just reduce it. Re-negotiate your lease for less space. Put a ping pong table in that newly created area so your people can have some fun on their lunch break. Or build a room there and move in your teenage son. There are a lot of great things you can do once you’ve relieved yourself of excess inventory.

It’s your job to help Sam re-think how he is servicing some of his customers. Can most parts be over-nighted from the manufacturer? If it’s going to be less expensive to pay that shipping cost, should he then carry the part in-house? Are the parts truly mission critical? Can they wait a day or two? Will Sam lose a significant amount of business because it takes an extra day to get that part in? Or is he losing more money on that account by keeping the part in stock?

By Gene Marks

IDC Poll: Which Banking Services Customers Will Pay For

IDC recently released a poll which investigates how consumers prioritize their banking services.  Through LinkedIn, the global intelligence firm polled 45 individuals on what single service that financial institutions offer deserved their hard-earned money.

The poll found that 39 percent found check writing to be the most important feature with the highest willingness to pay. The use of debit cards came in at a close second with 36 percent mindshare.

As the economy is stabilizing and the current consumer climate constantly wants free services, financial institutions will have to decide where they fall with respect to fees. However, the increasing ease and benefits of online banking may encourage more people to want to pay for banking services.

Which fees do you think make the most sense for consumers and FIs? Let us know in the comments below.