Tax Time & Financial Institutions: Data from Digital Insight

The tax filing deadline is rapidly approaching, and for many consumers that means looking through last year’s financial records for various items like charitable contributions or tax deductions. Digital Insight, which offers TurboTax ® for Online Banking to its financial institution (FI) customers, took a deep dive into how consumers are using tax software and how it can benefit FI’s. Through tax exit studies and surveys, Digital Insight was able to see how the tax preparation software helps FI’s with customer engagement and retention. Below are key findings from the study, and you can view a more in-depth analysis here.

And, you can view previous Digital Insight studies on mobile banking behavior and online banking. 

Intuit, TurboTax and TurboTax Online, among others, are registered trademarks and/or service marks of Intuit Inc. in the United States and other countries. Other parties’ trademarks or service marks are the property of their respective owners.

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Five Steps to Monetizing Your Company’s Data

Anabel Pérez - CEO, NovoPaymentEvery second of every day, banks, retailers, payments organizations and a broad network of companies across the region play host to a vast flowing river of transactional data. From the tiny ripples of single transactions to massive waves of batch settlements, this information comes from customers, merchants and even third parties. Most of this data is recorded and stored for invoicing, account statements, auditing and fraud prevention, but it’s poorly exploited when it comes to generating new revenue sources and businesses.

That’s right – businesses. Those countless daily transactions containing data have real value and are the “prima materia” or source material for improving profitability, efficiency, customer experience and customer loyalty, and fashioning new, finished products. How, is this possible? Here are five initial steps you can take to start monetizing your company’s data:

  1. Start thinking about institutionalizing your approach to data – The initial step is to promote an informed discussion about the value you can begin to extrapolate from what you have and its potential value to others inside and outside your organization. What would it look like if your company started to institutionalize the capture, storage, analysis and application of data? Clearly, the help of a business intelligence and analytics specialist would be of significant value in this process. It may also be useful to create a steering committee with specialists from various business areas.
  2. Audit your current data – Establish the size and nature of the data that your company has by undertaking a comprehensive audit. Where is it stored? Is it centralized or dispersed? How many customer records and data points do you have? How far back do they go and across how many different markets? How much of a customer’s “life journey” are you holding? What kind of predictive insights and behavioral patterns might be possible with your data, such as: what do they buy, when do they buy and how often do they take out cash? Finally, what do you know about their demographic profiles?
  3. Assign a data manager – To truly maximize revenue or any other tangible value from your data, someone must own responsibility for it. These experts are increasingly specialized and coveted talents, and like all human resources, recruiting is key. Also, when you find the right leader, make sure that person has an important seat at the executive table. In today and tomorrow’s world, data managers will have a major strategic influence as opposed to the current operational role of custodians and safe-keepers of data.
  4. Package and make your data work for you – Determining the best delivery vehicles for new data-based products or services targeted toward existing and/or new customers is a considerable, but worthy challenge. Through business analytics and intelligence, your newly collected and organized data will reveal insights and understanding into how your company’s bottom line can be improved by: 1) streamlining current business processes, 2) revealing new revenue sources and models and 3) providing opportunities to frame, package and brand the data to be shared externally. The possibilities include geo-localization, proximity +NFC, apps for mobiles, imaging and M2M among others.
  5. Embrace emerging-payment systems – As non-traditional or emerging-payment platforms (such as mobile phones and wallets) grow in use this represents a rich data pool. However, many companies are not taking advantage of such emerging payments, and they are losing out on opportunities for new revenue streams. Make sure you embrace emerging-payments systems in order to capture as much data as possible.

Regional Challenges

As the buzz around big data turns to increased action in our region, some eminent and long-term challenges will have to be addressed:

Digital payments: If our formal economies are flowing rivers of data, our informal economies are like vast, opaque lakes. We’ve heard for many years about the war on cash, but this initiative is going to be increasingly relevant to broaden our digital world and break down its current edges.

The talent question: A new generation of talent is going to be needed to carry these practices forward and improve them. The question then is where will new resources be trained in order to effectively wield these powerful tools?

Security: Our standards and local laws will need to be up to the task of addressing the risks associated with bad practices and misuses of data, and of protecting consumers in particular.

Collaboration: Good data is like good ingredients. Some combinations can be extremely appetizing and even sustaining. Will our companies learn to share data or will our strong culture of competition and suspicion keep us from great things? Can we imagine a “First Bank of Data” for sharing this information or is it some utilitarian dream?

These and many other questions come to mind when contemplating how we will relate to our data tomorrow. Whatever the answers, one thing is certain: the time to start thinking about data differently was yesterday.

 

Anabel Pérez is President & CEO of NovoPaymentthe leading payments technology services company in Latin America, providing prepaid/stored-value program design, implementation and Platform as a Service (PaaS). 

Innovation: Both Homegrown and Outsourced

Let’s put it out there: The banking industry is rising to the many challenges it currently faces, and the key to that ascension is innovation. One clear indication comes from the new report Innovation in Retail Banking 2013, commissioned by IT services conglomerate Infosys and conducted by the European Financial Management & Marketing Association (EFMA), which features a raft of good news.

The study, which surveyed 148 banks in 66 countries, shows that retail institutions around the world are systematically investing in innovation specifically to boost revenue and cut costs. A remarkable 60% of the banks now actually have an innovation strategy, compared to only 37% five years ago. Among other highlights, more than half (58%) say their deployment of new systems will have a positive impact on their ability to innovate even further, 69% are making moves into mobile location-based offerings, and 61% are working on enabling customers to do some form of product personalization. And of course, 77% already have in place or are working on a mobile wallet solution.

What’s just as interesting, however, is how all this innovation is coming into the organization. For example, Denver’s FirstBank is about to become the first regional U.S. bank to launch mobile photo bill pay. But the $13 billion institution, which has  more than 115 locations in both Colorado and neighboring states, didn’t outsource the development of its technology—with 12% of its employee base working in IT, the company developed its own core banking software and 12% of its employee base of about 2,100 works in IT. FirstBank sees this as a competitive advantage, and a way to move fast in response to market demands.

On the other hand, there’s Tioga-Franklin Savings Bank, which has a 140-year history in the Fishtown neighborhood of Philadelphia. The institution has long prided itself on its reputation for stability, but it has more recently recognized that there must also be change—its numerous manual processes required a major transformation in order to stay competitive. So, after a year-long search, Tioga-Franklin—the bastion of tradition—signed on with Data Center Inc. (DCI), of Hutchinson, Kansas, the force behind the iCore360 core banking software. The bank is now looking forward to significant enhancements in organizational efficiencies through workflow automation and regulatory simplification.

The big picture on change through innovation offers an even more diverse view. One interesting point: as noted in a recent column on the ABA Banking Journal, a remarkable amount of the real innovation seems to be happening in less developed markets.  Many market analyses make the same point.

For example, a broad study from consulting firm BearingPoint found that emerging economies are twice as efficient at innovating as their more developed counterparts. Similarly, PriceWaterhouse Coopers says that U.S. companies are certainly tracking with the shift in innovation strategy, but most pioneers in its study are actually not U.S. companies.

Finally, a contest launched by Accenture and EFMA to find winners of their inaugural global distribution and marketing innovation awards for retail banks handed out plaudits to entries from, among other markets, Nykredit in Denmark, Hana Bank in Korea, BRE Bank in Poland and Aktifbank in Turkey.

It’s not as if in the new world, all the rulebooks should be thrown out. In fact, we still should value industry best practices and see how they apply to us. But there’s also no question that at least some of the rules are changing, and we need to keep pace. Just think who our next great rival might be: Wal-Mart (which officially gave up the banking chase in 2007), Amazon (which clearly has many irons in the fire), Facebook (which has even more), some tiny technology startup, or someone different from all of the above.

In this competitive and rapidly evolving competitive environment, we know that innovation is both the best defense and the best offense. Where that innovation comes from, however, is a different question altogether.

Banking.com, Barlow Research and Digital Insight to Host Twitter Town Hall on November 14th

Banking.com and Barlow Research SOHO Twitter Town Hall

In conjunction with Barlow Research and Digital Insight, we will host a Twitter Town Hall on Thursday, November 14th to discuss Barlow Research’s recent study of the Small Office/Home Office (SOHO) market. The Twitter Town Hall will discuss the survey results and how they tie into current banking trends, including  financial management, payment and credit card behaviors, mobile and digital banking habits.

Barlow Research recently completed a comprehensive, multi-sponsored study that gathered the information needed to segment the SOHO market, examine their financial management, payment and credit card behaviors, measure the value of the SOHO customer, analyze product usage and explore business Internet banking and mobile device habits. Banking.com will be hosting a Twitter Town Hall to discuss the study results, how banks are currently serving consumers and answer any questions about the study.

The Twitter Town Hall is open for all our readers to join and participate in the conversation. To join us and/or learn more about the event, see below

Steps to Join:

  • Twitter Town Hall: Go to www.tweetchat.com. Log in using your Twitter ID.
  • Enter the hashtag to join the conversation: #SOHOStudy
  • You can also follow the hashtag (#SOHOStudy) using Twitter applications such as Hootsuite or Tweetdeck 

Details:

  • Date: Thursday, November 14th
  • Time: 10:00 am PST/1:00 pm EST
  • Hosted by: Banking.com Staff (@bankingdotcom), Joel Mueller, Research Analyst, Barlow Research (@BankingResearch), John Barlow, President, Barlow Research (@JohnRBarlow) and Digital Insight (@Digital_Insight)
  • RSVP/Add to your Calendar: You can register for the event via Eventbrite and add a reminder to your calendar. See Eventbrite link here

Additionally, if you are interested in submitting a question prior to the Twitter Town Hall, please DM us on Twitter.

We hope to “Tweet” with you on November 14th!

For more on the study, visit our earlier posts on the topic.

 

The Haves and the Should-Haves

Small business and younger, tech-savvy consumers—these are two market segments that couldn’t be more different. Yet for our purposes, at least, they could be seen as representing two sides of the same coin. For both, there are big obstacles and even bigger opportunities. The key to success on both fronts is to get smarter about what we’re doing.

First, consider the sheer size of the small business market. In a word, it’s big. In fact, with $6 trillion in revenue each year, it’s the second largest economy in the world. That is one huge pie, with profitability enough to go around for everybody. That said, it’s only a ‘market’ in the loosest sense of the term—with some 28 million companies around, it’s too diffuse to identify specific patterns. Besides, it’s a target that’s constantly moving. Thanks to the constant emergence of new online and mobile capabilities, routine best practices and fundamental human behaviors alike keep shifting.

But here are some numbers that should stick with us. Only 14% of small business owners currently use their financial institution’s cash management/business banking solutions. Sad as that sounds, our customers spend 5.4 billion hours each year doing taxes (it takes less time to produce every car, truck and van in the country). And finally, let it be noted that a stunning 66% of small business owners still use personal bank accounts for business.

So that’s what they’re not doing. To get a snapshot of what they could be doing, consider the generational shift. A Digital Insight study of 27 financial institutions found that 84% of mobile bankers fall into what we call the ‘Gen Y’ and ‘Gen X’ categories (to make some of us feel a little older, remember that Gen Y alone will account for close to half of the nation’s personal income within the next 10 years.) This is one ripe demographic.

And how does this translate into tech-savvy behavior that benefits them and us? Online banking customers have 13% more accounts than their offline counterparts. In fact, online banking customers conduct 59% more debit card purchases and have a 7% higher annual retention than offline customers. Going one level deeper, consider the difference in log-ins: for online banking users, the number is 9.73; for online and mobile users, it’s 18.87; and for online, mobile and tablet users, it’s 29.05.

We may be sick of hearing it, but mobile is a particularly big deal. These consumers conduct 40% more monthly debit card purchases than online non-mobile consumers. Even more significantly, mobile consumers access their financial information 65% more frequently than online non-mobile users.

Underlying all these changes is an even more fundamental shift, and it’s from consuming credit to managing cash. Basically, business customers of every kind want simplified workflows with greater access to financial information and tools, ranging from payments capabilities to asset management. Do traditional cash management solutions do the job? Or are they too complex to meet emerging business needs?

Now for the good news. Nearly 80% of consumers name their bank or credit union as their most trusted online destination to manage finances. According to the Tower Group, business owners’ use of online financial services has risen 17% in just the past year. Online services are among the top three reasons businesses choose their financial institution in the first place (but we warned: Barlow Research tells us that nearly half of business online banking customers would switch banks for better online banking functionality).

So here’s the future of financial management. To get smarter about profitability, credit unions must get to manage every facet of customers’ financial lives. There’s a ton of research telling us this—of the 88% of consumers who now pay bills and transfer funds online, 62% would like a single place to manage their complete financial picture, regardless of where the information originates, and an unbelievable 94% of TurboTax for Online Banking users who used direct deposit for their refund sent it directly to their host financial institution.

It’s easy to get overwhelmed by all the changes taking place in our customer base. If the move to online banking was a big change, then the adoption of mobile tools and services is a seismic shift. Yet the wealth of data we have at our fingertips also offers a clear view into the multitude of opportunities that comes with that transformation. Consumers who actively use technology-enabled services, particularly those offered through mobile channels, undeniably represent higher account ownership, balances, retention, and debit card purchases. They will find, join and be loyal to financial services providers that offer customizable tools and services to meet a wide range of evolving needs. The onus is on us to get smarter about how to meet those needs.

Where Does Your State Stand? The Financial States of America

Ever wondered how your local community is affected by changing financial climates? This interactive infographic from MoneyChoice.org breaks down how people are faring across the United States. Take a look and let us know what you think!


Source: Financial States of America

What We’re Reading: Customer Surveys, Cloud, Big Data

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.

 

  • What’s new is what’s happening

ABA Banking Journal

It’s big deal when your company is named in a list of the “world’s top 100” anything, and it’s a really big deal when your company is listed on Forbes’ “World’s 100 Most Innovative Companies.” So the people at FIS—or more specifically, Fidelity National Information Services—should rightly feel pretty good about their recent placement on this very list, at the 98th spot. It’s the only U.S. financial technology provider there, which includes such other companies as Apple, at a surprisingly distant No. 79, Pepsi, at No. 58, and Google, at No. 47.

Read more

  • Bank Fees Rankle Otherwise Satisfied Customers: Survey

American Banker 

Checking account fees may help banks pad revenue, but a new survey suggests that ATM and overdraft charges can send customers running. Over a third of Americans said they would be very or extremely likely to switch banks to avoid paying fees on their checking accounts, according to TD Bank’s inaugural survey of more than 3,000 consumers. In fact, 14% of respondents have already moved their business for those reasons. Some types of charges aggravate customers more than others; 38% of respondents said that nonbank ATM fees were the most frustrating type of charge. Another 27% awarded that dubious honor to overdraft charges. Just 13% picked minimum balance fees as the most annoying type of charge.

Read more

  • Microsoft and Nokia: What Kind of Marriage Will It Be?

Celent Banking Blog

Microsoft announced that it has purchased Nokia’s mobile phone business. According to the announcement, “Under the terms of the agreement, Microsoft will pay EUR 3.79 billion to purchase substantially all of Nokia’s Devices & Services business, and EUR 1.65 billion to license Nokia’s patents, for a total transaction price of EUR 5.44 billion in cash.” Both companies have been struggling to adapt to changes in mobile computing – Nokia has lost its leadership in handsets, and Microsoft was rather late in announcing its latest Windows mobile operating system, which remains a distant third to Apple and Android.

Read more

  • ‘Stache & Save’ Helps Kinecta Connect On Facebook

Credit Union Journal

Kinecta FCU here boosted its Facebook engagement by using mustaches and an online slot machine. Kinecta launched it “Stache & Save” campaign as a way to increase engagement on its Facebook page and grow its number of likes. To do so, it created an online slot machine, and when users pulled the digital handle, it rotated through three different mustaches. Three matches made for an instant winner of a $50 gift certificate and was entered into a drawing for a $2,500 gift certificate.

Read more

  • Big Data and Payments Drive Loyalty in Business Banking.

Finextra

In the ‘consumer edition’ of the blog it was suggested that banks can reinvigorate their payments brand and influence customer loyalty by integrating incentives and offers to their payments solutions. The premise is that banks are missing out on an opportunity to become more influential in where people shop and what they buy, rather than just how they pay. Offers can be driven by analytics into a combination of historical payments information and big data analysis of demographics, location positioning and peer group analysis. Such a strategy requires more than an offers solution, or a mobile banking app.

Read more

  • The Path to Innovation Goes Through the Cloud

Huffington Post

As cloud adoption reaches the tipping point, some sectors are seeing newer market entrants threatening to overtake legacy players mired in tradition. Gartner predicts that the worldwide cloud services market will grow 18.5 percent in 2013 to total $131 billion, up from $111 billion in 2012. Yet, many of the world’s oldest professions such as accounting, legal and banking have been slow to tap the cloud to make it rain. The flexibility of cloud computing – being able to try before you buy, scale easily and use the device that suits you – allow savvy businesses to respond quickly to market trends and demands.

Read more

  • 6 Tips for Safer Smartphone Banking

TIME.com

More than half of American adults have a smartphone today, and more of us are using them to check balances, pay bills, deposit checks and conduct other banking business. Luckily, experts say there are steps that even non-technophiles can easily take to safeguard sensitive information. Password-protect your phone. Stay off public wi-fi networks. Use the bank’s app. Don’t save your log-in data. Keep up with updates. Log off when you’re done.

Read more

Online Banking Engagement: Data from Digital Insight

Digital Insight has been conducting a comprehensive and ongoing study of financial institution customers. From these studies, the company has been able to provide a deeper view of banking customer behavior across several categories, such as mobile and online banking. Earlier this year, we examined mobile banking behavior and now we are taking a look at how online banking is an integral engagement tool for financial institutions. Below are key findings from Digital Insight’s online banking study, and you can view a more in-depth analysis here.

As we continue this series of data, we will be publishing blog posts on additional topics on Banking.com. *For information on the on the methodology used for the study you can download the PDF

What We’re Reading: Bank Websites, Mobile Fees, Security Gaps

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.

 

  • Value-add mobile features offer potential revenue play

ABA Banking Journal

Retail banks can realize the full potential of mobile banking by offering segmented consumer experiences and advanced digital wallet capabilities, according to a study by Cognizant and Monitise. This, the study states, represents a new opportunity for retail banks to drive customer loyalty, attract new business, and generate more revenue. Tablets have emerged as a unique and valued user interface with 41% of survey respondents wanting to use tablets compared with smart phones, and 60% of tablet owners preferring a tablet for mobile banking. Feature personalization like rearranging tabs and functions is also important to more than 75% of the consumers surveyed. Offering this flexibility can give banks a competitive edge and help retain customers.

Read more

  • Whither wallets?

ABA Banking Journal

ComScore’s study earlier this year painted a pretty dismal portrait of the digital wallet future. This company specializes in measuring consumer awareness of all things digital and when it queried a lot of people about digital wallets in particular, it found that only 51% of U.S. consumers had any understanding about what digital wallets are about, with the exception of PayPal. “Digital wallets represent an innovative technology that has not yet reached critical mass among consumers due to a variety of factors, including low awareness and a muddled understanding of their benefits,” says Andrea Jacobs, payments practice leader at comScore. Again, with the exception of PayPal-of which 72% of respondents were aware and 48% of respondents had actually used-only 12% of respondents said they had used some other form of digital wallet.

Read more

  • How to Perfect Your Bank’s Website

American Banker

Up until the last decade or so, many banks and credit unions didn’t even have websites allowing consumers to access existing accounts, open new ones or apply for loans. Today, however, financial institutions not only have these sites, they are more focused on the mobile experience and creative apps that allow consumers to, for instance, deposit checks via their phones or get texts after they use an ATM. However, financial firms should make sure that their website is helping generate and retain customers before launching into more advanced mobile ventures. A website should influence customers to talk about their experience in a positive way, which helps expand a bank’s presence.

Read more

  • Why Banks Are Finally Embracing Cloud Computing

American Banker

Banks are warming to cloud computing after nearly a decade of hesitation about trusting their data to outsiders. Seventy-one percent of bank executives surveyed in a recently released report say they plan to invest more in cloud computing, nearly four times the figure a year earlier, according to PricewaterhouseCoopers. (About half of the 115 large banks surveyed around the world are based in the U.S.) One reason for this shift, according to Julien Courbe, PwC’s financial services technology leader, is that vendors of public cloud services have made their offerings to banks more secure and reliable.

Read more

  • 4 Ways Banks Can Improve Their Fraud-Fighting Efforts

Bank Systems & Technology

Today, we see threats associated with denial of service attacks, potential disruptions of sites, not necessarily intrusion onto sites. Over the years, banks have grown accustomed to the balancing act between protection and convenience. As threats change, protection measures must change, as well. Some protection measures are more transparent to the customer. Many customers use the same personal computer to conduct online banking, and their financial institutions are able to recognize the familiar computer as a method of authentication.

Read more

  • Pay for Mobile? Banks Think So; Looking for ROI

Credit Union Journal

How to make money off mobile banking? — That was the question on the minds of bankers at the recent Mobile Banking Summit here. For banks, mobile app development projects can cost $1 million to $5 million, and often boards and executive committees want to see some kind of ROI first. For banks, the obvious answer is fees. Some in the industry feel it’s reputationally risky to charge fees for mobile banking services. Some believe mobile banking initiatives pay for themselves because the channel is much lower cost than branches.

Read more

  • Surge in Mobile Banking Creates a Security Gap That’s a ‘Wild West’ for Fraudsters

Entrepreneur.com

Online banking has become ubiquitous as more people turn to their smartphones to carry out daily tasks. Still, while it may be more efficient, using your phone to make financial transactions could raise security risks. Portland, Ore.-based online fraud detection company iovation tracked online financial transactions across 1.5 billion devices in July and found that 20 percent were done through a mobile device or tablet. That’s an increase over the 18 percent of online financial transactions done on a mobile device between January and July of this year, and 11 percent last year, according to a statement the company released today.

Read more

  • Global core banking market to hit $10bn in 2017

Finextra

Global spending on core banking technology is set for steady, if unspectacular, growth over the next four years, breaking the $10 billion barrier in 2017, according to research from Celent. This year, around $8.6 billion will be invested by banks around the world on core systems and Celent is anticipating a four per cent rate of growth over the next few years. Breaking down the spending, maintenance is set to rise at 6.1%, compared to just 2.4% for new projects. Fiserv remains the dominant vendor in the market among small banks with less than $1 billion in assets, commanding 39% of the market, more than twice as much as nearest rival, Jack Henry & Associates. Among bigger banks, the market is more splintered, with FIS, Temenos and Misys leading the way.

Read more

  • The $1.5B Opportunity in Mobile Banking

FOX Business

If banks want to add another $1.5 billion to their collective bottom line, they should work on promoting mobile banking opportunities and, in particular, mobile deposits. That’s according to a July report from Javelin Strategy & Research, which found that banks could see significant savings if they did more to leverage mobile banking. The report notes that not only do mobile transactions cost less to process, but that mobile customers tend to be younger and more affluent — two traits that make them desirable targets for banks: Mobile deposits can save nearly $50 per customer and better banking apps might help.

Read more

 

Money Sense: Financial Literacy in the US

Did you know that 2 in 3 adults don’t prepare written or digital household budget or that spending went down 3 percentage points in 2013?

Gauging the financial literacy of your members and customers is a necessary step to offer them the best services, tools and education to manage their money.

Below is an infographic from Online Accounting Degrees which details some interesting statistics about financial literacy in the US.

What do you think? How are you serving these knowledge gaps?
Dollars and Sense: How Wise Are We With Money?

Source: Online Accounting Degrees