Mobile Banking: The Monetization Code

Mobile banking in its current form—complete with company-specific apps and services to match—has been with us forever, or at least five years, whichever comes first. Either way, in tech years, that’s an eternity. So why does it still feel like the financial services industry us still trying to figure out what to do about this whole mobile thing?

One reason we’re always playing catch-up is that there’s a lot to catch up to. Technology delivers progress in its purest form, which innovations come down the pike on a regular basis. However, mobile advances seem to arrive faster than ever before. There are always new apps, new channels and new capabilities, and far from being tentative about changing too much too soon, users jump from one bandwagon to another with relish. Meanwhile, the servers in the back room have to ensure that it’s all compatible, not mention secure and compliant, and that’s a whole lot more difficult than trying out a free download to see if we like it.

That said, it’s still sobering to hear that we haven’t yet really cracked the code on how best to monetize this phenomenon, if indeed we can. Here’s one indication: “The 2014 Monetizing Mobile Banking for Small Business Customers Study,” a new research initiative from consulting firm Simon-Kucher & Partners, tells us that, unlike consumers, many small businesses are willing to pay for mobile banking services—perhaps a small monthly fee of $5 for peer-to-peer transfers, or to add money to prepaid cards.

It’s good to ask these questions, of course, but shouldn’t we have figured out the answers by now?

For the record, the study also reveals the diversity of the market, which is a nice way of saying that it’s still emerging. Fully a third of the respondents report using mobile banking on a weekly basis, while on the other end of the spectrum 18% say they see no need for such services at all. The numbers are similarly widespread for online banking.

To put this in perspective, let’s understand the basic elements in this equation. First, the only thing small businesses have in common is that they’re small; in every other way, they’re completely different. A corner deli and a dentist’s office might be neighbors with the same number of employees, but their business needs are hardly similar. More to the point, waiting for a mass market in the traditional sense is an exercise in futility. By the time a sizeable segment of the target demographic has adopted a particular mobile platform, channel or app, there are multiple options already available and finding an audience.

It’s not that the market for mobile banking is still emerging; it’s that it will always be emerging. It will never settle down.

So what should the industry do about this? There’s clearly a huge market out there, with banking customers hungry and waiting for capabilities they don’t have, even if they can’t or won’t articulate specific preferences. We’ve covered on this blog how customers are rapidly eschewing branch banking to go digital, and that trend continues with mobile. For example, M&T Bank claims that 65% of its online customer base, some 700,000 customers, have already registered for mobile services, and the numbers keep growing.

However, we might have to acknowledge a harsh reality—waiting to see what these customers want is often a mistake. In a traditional sense, the wise course of action would be to see which specific technologies users prefer, these developing services for those sub-markets. But technology isn’t traditional, and mobile is even less so. This is why following the lead set by others means always being behind the curve.

Trying to stay ahead, meanwhile, means investing in platforms that either don’t catch on or, worse, go from killer app to legacy overnight. It means making blind choices and predictions. It means risk.

So, mobile banking is risky business. But when done right—when the monetizing model is just right—it’s also very good business. It’s up to us to figure out the difference, and we need to do it soon.

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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Financial Institutions Need a Can-Do Attitude

 “Don’t mistake activity with achievement.”
– John Wooden, former UCLA basketball coach and 10-time NCAA Basketball Champion

Target, Neiman Marcus and Michaels recently compromised sensitive customer data to hackers, joining Facebook, Gmail, Twitter, and Yahoo!. And those are the ones made public.

Financial institutions (FIs) aren’t safe either: Global Payments (processor for Visa and MasterCard), Bank of America, Citibank, JP Morgan, and Fidelity National Information Services all suffered data breaches recently. Hundreds of millions of dollars stolen and boatloads of personal data exposed to criminals.

Companies, especially FIs, are not doing enough to safeguard sensitive information. FIs scramble to buttress their systems to thwart attacks, while criminals easily elude the safeguards.

If you shop online your information could already be on a hacker’s hard drive, waiting to be bundled and sold to another criminal, making you vulnerable to identity theft and other crimes.

The protection plans offered by credit card companies and FIs do provide additional protection. But, if it isn’t enough, why would consumers pay for safeguards that should be provided automatically? The “safeguards” aren’t really all that safe, in truth.

EMV (Eurocard, MasterCard, Visa) (covered on this blog) would be a step in the right direction, erecting additional layers of protection between FIs and hackers. EMV has been adopted by most of the world, but not in the U.S.

EMV replaces the magnetic strip on cards with a microchip used for authentication, encrypting the information during the transaction, making it more difficult for thieves and card skimmers to steal. Security is further bolstered when used with a PIN or signature. However, it is by no means a panacea.

Retina scans and fingerprints could also thwart criminals. Those systems require expensive investment in hardware and new software to support them. FIs and their customers should implement anything that makes it more difficult for hackers.

Dual-factor authentication (2FA) is another, more feasible, option. It adds another level to the standard password login. The FI would send a code via text message to your mobile phone, which then is entered by the user to execute the transaction.

Ninety-one percent of Americans already have a mobile phone, according to Pew Research. Convenience alone makes 2FA via text message a logical solution.

Sending out text message codes would require investment in software, but the cost is meager compared to implementing a scanner or other hardware solution. Twitter, Google and Facebook already support 2FA as an option at login. It should be made mandatory.

2FA has been around for decades but never took hold. If a mobile phone was compromised, it would carry frightening ramifications. And, transactions are susceptible to Trojan horses, Man-in-the-Middle attacks, and other malware. In fact, all computers are vulnerable to these types of attacks.

Tokens like RSA’s SecurID, 1Password, Toopher, YubiKey and the like that provide one-time passwords have weak points as well, which can serve as gateways for criminals. If breached, could expose every one of the user’s passwords, all at once. Not good and hardly safe.

So what’s the answer?

Disappointingly there isn’t one that ensures total protection in all situations. Hackers are clever and will continue to exploit weaknesses in any, and every, system.

2FA is easy to implement with current technology and is a formidable additional security layer.

Coach Wooden said, “Do not let what you cannot do interfere with what you can do.” FIs need to heed this advice.

About David Sutton: David has a BA in economics and a MS in business journalism, and his articles have appeared on Forbes.com and in the Boston Business Journal. David has had a bank account since he was three.

The Top 10 Trends in the Digital Banking Industry

2014 is rapidly approaching and as the year wraps, the Digital Insight team has pulled together the top 10 trends in the digital banking industry based on data and trends from studying financial institutions. What do you think about the trends below? Which one do you think rings most true for 2013 and 2014?

*click on each image to enlarge it

 

1. U.S. Consumers continue to favor large financial institutions. There are over 13,000 chartered financial institutions in the United States, yet close to three-quarters of all deposit dollars are held by just 100 financial institutions. Although deposits are flowing into large national banks, an opportunity exists to gain market share for regional & community financial institutions by offering consumers the most relevant services available in the market today.

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2. The U.S. population is aging and changing banking behaviors. 39% of the U.S. population over the age of 44, compared to 34% 10 years ago. New consumers opening their first account at a financial institution represent a demographic that is different than five to 10 years ago, meaning an “older” consumer is opening up their first account with the bank and/or credit union.

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3. Younger generations are becoming more active bill pay users. Although the population is aging, the age of active bill pay consumers is declining, with Gen Y consumers becoming more active bill payment users. In addition, mobile banking consumers are 14 years younger than offline bankers.

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4. Boomers and Seniors are engaging in digital banking. Although Boomers and Seniors have tended to be late to technological adoption, these groups are showing an increasing willingness to engage in digital banking! The traditional product curve for online banking reveals early adopters are younger demographics who embrace technology, have grown up with a computer and internet access, and value anytime/anywhere convenience. Technology services such as email, Skype and eBay have become increasingly popular with Boomers & Seniors, and as their technology comfort level grows, so does their adoption of online banking.

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5. Consumers are moving to mobile-only banking. More and more consumers are starting to “ditch” their PC and rely solely on their phone and/or tablet to conduct their banking needs. Mobile-only banking is increasing, while PC-only banking has declined over the past year. One challenge that financial institutions face from mobile banking is the inability to grow cross-selling opportunities through the online and branch channels.

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6. Mobile bankers are early adopters. The majority of mobile users become engaged in mobile banking early in their digital banking lifecycle. Of new consumers who adopt mobile, 62 percent adopt within 90 days of registering for Internet Banking. Mobile banking leads to higher engagement for financial institutions’ customers. Over a month-long span, the average offline banker visits the branch two times and the ATM three times; a total of five touch points. When compared to an engaged online banker, the financial institution has three times the opportunity to cross sell to this customer.

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7. Digital bankers user multiple devices to connect with financial institutions. Now more than ever digital banking consumers are using multiple ways to interact with their primary financial institution, and the trend of consumers using multiple “touch points” continues to rise. Approximately 40 percent of digital bankers are using multiple devices to access their financial information.

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8. More devices means more time online. As consumers use more devices to interact with their financial institution, they spend more time on their financial institutions’ website. This provides financial institutions additional opportunities to cross-sell their most profitable products to their customers. Online bankers spend approximately 38 minutes per month on financial institutions’ websites.

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9. Mobile remote deposit capture is changing consumer behavior. Mobile features, such as mobile remote deposit, are changing how consumers interact with their financial institutions. For banking and credit unions, cross-sell opportunities will become increasingly relevant as more consumers rely on the digital banking channel to conduct transactions and become less dependent on brick and mortar visits. Consumers who adopt mobile remote deposit capture display similar deposit activity to consumers who never use remote deposit, but once mobile remote deposit consumers start actively using the service, they quickly become less dependent on the branch.

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10. Personal financial management users are more engaged with their financial institution. The percent of consumers aggregating outside accounts into their online banking experience has doubled in three years. Consumers are able to see their entire financial picture in personal financial management (PFM) solutions, which means intelligent cross-sell opportunities are growing dramatically. Consumers who enrolled in FinanceWorks (Digital Insight’s PFM offering) in 2012 were two-times more likely to aggregate outside accounts than consumers who enrolled in 2009. FinanceWorks consumers log-in 54 percent more frequently than online bankers without FinanceWorks.

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

The data used for this article was analyzed by the following Digital Insight team members: Jason Weinick, manager of analytics, Ann Gladstone, business analyst, Fatai Bamidele, senior business analyst, Brenda Shimmons, manager of analytics and Denis Kimondo, senior marketing analyst.

Q&A with Jeff Reser of Progress Software

We recently got the opportunity to speak with Jeff Reser who leads DataDirect Connect & Cloud Marketing for Progress Software. Below is our conversation with Jeff:

Q) What is the role of data connectivity in the banking & financial services industry?

A) Core banking systems enable financial institutions to create, process, and manage their products and services. They are composed of several key components—the general ledger, customer information files, deposits, loans, and payments—and drive a bank’s day-to-day activities. Without a core system, an institution would fail to exist. Because of their high level of importance, the performance of core systems is of great concern to the financial services industry worldwide.

The flexibility of these systems determines the speed with which an institution can launch new products, the ease with which it can integrate with other newly deployed applications, and the rate at which it accesses customer information. As a result of the complexity, cost, and often multi-year implementation timelines of core banking systems, most banks around the globe have ignored the shortcomings of their current system, maintaining the same one for as many as 30 years rather than replacing it.

The key to any banking system is high-performance data connectivity between the front office and back office, arrangers and investors, and buyers and sellers.

Q) What are the top data connectivity concerns affecting financial companies?

A) The top five connectivity concerns affecting financial companies:

  1. Security: Protecting customer information
  2. Reliability: Streamlining business continuity protocols and disaster recovery solutions
  3. Performance/Scalability: Ensuring the reliability of real-time transaction systems
  4. Flexibility: Quickly responding to business requirements
  5. Compliance: Adopting new regulations

Q) How can data connectivity help banks deliver better services to its customers?

A) Banks who have high-performance data connectivity between the front office and back office are able to be more responsive to the specific financing needs of their customers. They are also able to launch new products faster and easily integrate newly deployed applications. It also allows users the ability to access data quickly in order to run business critical reports.

Q) What risks do financial services companies face if they don’t invest in high quality connectivity?

A) They face security risks as well as losing competitive advantage to other organizations in the sector who are investing in updating their technology. Also they risk losing customer confidence if the bank does not appear to have timely access to integrated data.

About Jeff Reser:
Jeff Reser Headshot
Jeff currently leads DataDirect Connect & Cloud Marketing for Progress Software. Before that, Jeff was responsible for Business Process Management Solutions Marketing. With over 30 years of experience in software technologies, product management, and product marketing, Jeff’s areas of expertise include Big Data & Cloud connectivity, Business Process Management, Business Rules Management, Web application serving, and mobile computing.

How to Crack the Code to Serve Small Businesses Well

We all know that small businesses are very important to financial institutions, since they provide more profitable relationships than consumer accounts. But here’s the problem: More than three-fourths of all small businesses (21 million) have no employees, operate out of the owner’s home and have less than $500,000 a year in revenue.1  So it’s hard to know who these business owners are and how to service them.

Many small businesses look and act like consumers to their financial institutions. The owners use their consumer accounts because it’s convenient — and they don’t know what small-business banking products can do for them. But if you can discover these business owners, you can provide the products and services they need to be successful.

Payments and account control/security are big pain points for small businesses.

25 percent of small-business online banking users view entitlements as a very important or top-priority solution.2 Plus, we’ve found that 71 percent of customers strongly agree that entitlements save them time by delegating online banking tasks to others, and 71 percent say that entitlements make them feel more secure about giving others access to accounts.3

70 percent of small businesses consider ACH and wires to be an important functionality for online banking.65 percent of all small-business payments are electronic, and this percentage is expected to grow as small businesses get more access to the right products.

Another issue for financial institutions is the Goldilocks and the Three Bears syndrome…small business offerings are either “too big” or “too small” but not “just right”.  Financial institutions simply don’t know where to put small businesses, so those businesses stay on the retail platform with its limited functionality or they are migrated to a cash management platform that’s too big and too expensive for what they need.

Recent Barlow research indicates that 50 percent of small office/home office businesses (SOHOs) are on a retail banking platform and the rest are on a business banking platform. With digital banking that’s designed for small businesses, you can introduce your small-business customers to new services and start generating fees as they take advantage of the new capabilities you offer.

Like Goldilocks, small business owners are realizing that most solutions just don’t “fit” them. 74 percent of small-business owners say they aren’t wowed by their financial institutions.4 That’s why many are threatening to take their business elsewhere.

Finding the right-sized solution for small businesses can be hard, but so is monetizing these relationships.  The good news is that there is an opportunity to generate fees by offering solutions they are willing to pay for (small-business payments) and creating small-business-specific account bundles and packages that add value to their banking relationships.

What’s your small-business strategy? What would help you serve small businesses better? What are your top successes and/or issues in servicing small businesses?

About Dianna Morton: Senior Marketing Manager for Small Business Online Banking Solutions
Dianna is an experienced marketer who has led innovative and complex marketing programs focusing on the small business segment for over 15 years.  She joined the Digital Insight team (previously Intuit Financial Services) in 2011 and has brought with her extensive knowledge and experience about the small business industry and how to help financial institutions acquire, engage and grow their small business customer base. Prior to Digital Insight, Dianna also worked at Merrill Lynch Credit Corporation, Harke-Hanks Direct Marketing and Beneficial Finance where she drove and executed successful marketing programs. Dianna holds a Masters of Business Administration from University of North Florida and a Bachelor of Science in Business Administration degree from Towson University.

References: 
1 Barlow SOHO Opportunity Study 2013 and U.S. Census Bureau, 2010
2 Barlow Research Associates Business Internet Banking Study, 2012
3 Digital Insight entitlement beta results
4 Aite Group, Aug. 2011

 

The Industry Is On A Rebound (Maybe)

It’s official: Our industry is back with a vengeance.

For the first time since credit debacles entered the headlines toward the end of the last decade, financial services companies are seeing the fastest earnings growth in the S&P 500, and potentially preparing to become the market’s biggest vertical industry. (For the record, according to Bloomberg, the technology sector still leads with 17.6% over 16.8%.) But guess who’s got the momentum.

That’s what’s happening at the top of the ladder. Further down, it’s a slightly different story. Every company and every professional working in it is acutely aware that huge changes are taking place, the whispers of unease are getting louder. Some of the concerns got publicly expressed at the American Banker and Bank Technology News’ seventh annual Mobile Banking & Commerce Summit earlier this summer.

To be clear, the industry as a whole has reason to take pride in its accomplishments thus far: exceptions notwithstanding, financial services institutions have been in the forefront of adopting innovations ranging from documents imaging to social media integration. Yet there remain some uncomfortable questions: Do even the sweeping changes go far enough? And are some institutions being left behind not through any lack of desire but because they don’t have the resources to overhaul their infrastructure?

A new report from Javelin Strategy & Research provides a startling view of the scope of the changes taking place, and the breadth of the adjustments needed to keep up. We all know that digital interaction has radically transformed banking practices, but the numbers still come as a surprise: Javelin says “88.5 million Americans attempted to open an account online or with a mobile device in the past 12 months,” but emphasizes that the full market potential remains mostly untapped.

It’s not just about the technology, of course. The truth is that the ubiquity of digital apps, both mobile and otherwise, is fundamental redefining what we know as ‘personal banking,’ and this revolution-as-evolution still has the market ahead of the industry. In other words, the changes may run deep, but not deep enough.

Take mobile, by most accounts the single greatest area of change. Despite the staggering numbers cited by Javelin, it’s also estimated that there’s a glass ceiling of 15% to 20% for mobile adoption among online banking customers. This isn’t because not enough customers have smartphones, or don’t wasn’t to use them—as with many other uses, there’s an initial resistance (particularly when there’s money involved) followed by an inevitable shift. Instead, it’s at least partly because at least some institutions, even those that may have devoted considerable resources to the effort, haven’t done their part.

In this context, “Consumers and Mobile Financial Services 2013,” the study released this spring by the Federal Reserve, is worth another look for gauging where we are in the move to mobile. There, too, we see a similarly substantial gap between adoption and practice.

Again, the industry seems to be doing fine—in particular, banks, brokers and insurance companies are posting much better numbers than they have in a while. But putting the broad brush aside for a minute, it’s also clear that the market is moving faster than some of us are, and in the long run that could be a huge problem for everyone.

 

Mobile Only Banking: The Pros & Cons for Financial Institutions

If you commute to work, go to the grocery store or walk down a busy street, chances are you will see someone using their smartphone. As a mobile-only lifestyle becomes more common, financial institutions have started offering additional mobile products to keep customers engaged across a variety of platforms. But, with this shift to mobile only banking comes a challenge to financial institutions: the ability to effectively cross-sell, especially as mobile users rely predominately on their mobile devices to conduct banking tasks and visit the bank branch less frequently.

Woman Holding Phone 2

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

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

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

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

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

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

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

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

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

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


[1] Online Banking Report, Number 212, January 5, 2013, page 5

[2] Digital Insight Internal Internet Banking/Mobile study of 7 Digital Insight financial institution customers, February 2013

[3] Javelin Strategy & Research, A Tale of Two Gen Ys: On the Road to Long-Term Banking Profitability, page 6, January 2013

[4] Internal study of 33 Digital Insight financial institution customers, June 2010 through February 2013

[5] Javelin Strategy & Research, A Tale of Two Gen Ys: On the Road to Long-Term Banking Profitability, page 9, January 2013

[6] Ilya Shalman, with Michael Tevebaugh, Chris Crawford, Debbie Miller, Craig Miller: From “The Handheld Billboard – Cross Selling with Financial Services Mobile Applications”, from CapTech Blogs, July 2012

[7] Internal study of one Digital Insight financial institution client, November 2012

Keeping Tabs on the Lobby: Tracking Key Sales, Service and Productivity with Intelligence-Gathering Solutions

Most financial institutions (FIs) gather and analyze product and service metrics and other business intelligence (BI) in some form. However, branch and senior management often overlook an area overflowing with invaluable information—the lobby. Fortunately, technology now makes it simple for FIs to determine the value of service and sales efforts in the branch lobby—and facilitate more sales and better service, as well.

In the Queue
Historically, banks have relied upon sign-in sheets to manage lobby customer service efforts. Once a personal banker, loan officer or customer service representative calls a customer into his or her office, there is often no easy way for the agent to note activities and discussions and upload them to a central BI platform for meaningful analysis.

A far better solution—but one that surprisingly few banks use—is to track and manage customer experiences via a computerized solution from the moment they sign in or are greeted. Here’s how it works:

1. The customer signs into a terminal or iPad and provides his or her name, purpose for visit and any special information that might help the customer service agent assist them. Upon sign-in, the system notes the arrival time. (Optionally, a greeter can sign the customer in and input this information into the system.)
2. The system begins tracking wait time and alerts representatives and managers if it becomes excessive.
3. A service agent notes in the system that he/she will assist the customer, entering the name, reason for their visit and other details for use during the interaction, and then greets the account holder, by name, for the consultation.
4. During the consultation, the agent seamlessly updates the system with items discussed—not only services addressed but also products and cross-sell products suggested (with outcome, e.g. purchased or requires follow-up).
5. When the consultation is complete (or the customer transitions or is escalated to another staffer or different department, if appropriate), the agent closes out the session, which stops the time tracker.

Business intelligence solutions that track agent-customer interaction from sign-in let management know:

  • How long customers are waiting to be helped (and whether agents are responding to reminders about excessive wait times).
  • Average time spent in consultations during sales and service accomplishments.
  • Most prevalent topics during consultations (which can pinpoint hidden service issues and highlight future sales opportunities).
  • Percentage of service interactions, products sold, cases escalated and other important metrics during the average consultation.

Without a dedicated, user-friendly software solution, most managers and agents will not accurately record the details needed for such a powerful sales, service and performance analysis. When reports are utilized that analyze this and other data in real-time, the branch and senior management teams can gain vital insight into the health of their lobby service and sales efforts, segmented by specific time periods, high- and low-performing staff members, and other key metrics.

Analytics can generally be customized to enable reporting on any number of available metrics. To learn more about lobby tracking technologies and their benefits, we invite you to download the Retail Branch Lobby Study white paper from FMSI.com.

About W. Michael Scott:
W. Michael Scott is President and CEO of Financial Management Solutions, Inc. (FMSI). FMSI provides easy-to-use, yet sophisticated, business intelligence and performance management systems that allow financial institutions to manage and staff efficiently to meet service and sales needs. For more information, visit www.fmsi.com.

Three Ways Banks can Support Innovation in Their Markets

Why did Willie Sutton, famous bank robber from the 1920′s to 1950′s, rob banks? “Because that’s where the money is.” Sutton, by the way, denied the quote. But we can’t deny it’s true. Financial institutions remain the place to go for money.

So why do FIs opt for the sideline in participating more fully in innovation? I recently wrote on these pages that FIs should develop Shark Tank like processes to get early stage equity capital into the hands of nearby entrepreneurs to fuel growth in local markets.

But bankers generally don’t like to be at the tip of the spear in product and service offerings. In many cases, it’s far too risky to undertake a strategic direction that has been untested. The potential for failure is greater. So we opt for making incremental improvements to business as usual. But in my opinion, business as usual is a riskier course. Better to innovate and go out swinging, than to remain mired in the past and go out with a whimper.

But there are some leading edge bankers to use as your guidepost. Take Silicon Valley Bank in Santa Clara, California. Here is a bank that nurtures start-ups from the garage to global distribution (see picture from their investor presentation). Through their Accelerator Solutions, they package products, expertise, and connections into one business unit to improve the likelihood of start-up success. The bank has maintained an ROA at or near 1% throughout the financial and economic doldrums.

SVB 3Q12 Investor Pres Niche Slide

I understand SVB’s location allows them to specialize in serving tech start-ups and venture capital firms. But innovation need not start in northern California. In fact, I would put to you that this region benefits tremendously by having nearby support systems that foster innovation. Your markets can too. And why can’t it start with your FI?

Here are three things I think your FI can do to foster greater innovation in your markets that can drive economic prosperity, and therefore your success, for generations:

1.  Develop specialized expertise within your FI to help entrepreneurs get their businesses off of the ground;

2.  Create flexible product packages to make banking simple for early stage companies;

3.  Find creative means to get capital in the hands of promising companies. This can be done through equity funding similar to what I proposed in my Shark Tank post, partnerships with various VC firms and institutions such as nearby insurance companies, factoring firms, etc., or outright balance sheet lending so long as you put a wall around the risk.

Should we continue to lament about our local economies or should we do something about it?

P.S. Subsequent to this post, Inc. Magazine published an article It Might Be Time to Break Up With Your Bank describing great alternatives to bank financing for small businesses. Why can’t we either do this lending or develop relationships with reputable lenders, as determined by our due diligence, and serve as brokers to this financing and advisers to our client?

*This blog was originally posted on Jeff for Banks

About Jeffrey Marsico: Mr. Marsico specializes in strategic planning, process improvement, performance measurement, and financial advisory. He has over nineteen years of financial industry experience, including: IT, Trust operations, retail branch management, strategic planning, financial institution M&A, consulting, and capital formation. He served seven years in the US Navy, earning three Navy Achievement Medals and other various commendations. He received a B.A. from the University of Hawaii and an MBA from Lebanon Valley College and serves on the faculties of the Pennsylvania and North Carolina Schools of Banking, and the ABA School of Bank Marketing Management.

Jeff can be found on his blog at: Jeff for Banks or the The Kafafian Group