Community Service with the Personal Touch

September 23, 2014
/   Insights

Question: Community branch, personal service, mobile banking—which is the odd one out? Answer: None. Otherwise, the industry is in trouble. For some time now, there have been discussions about the future of community banks...

Cause and Effect: If you build it, will they come?

July 23, 2014
/   Spotlight

Many financial institutions assume that digital banking is lucrative because the most valuable customers happen to bank online. While there is certainly a correlation between online bankers and higher profitability, quantitative evidence suggests that...

Intuit 2020 Report: The Future of Financial Services

April 11, 2011
/   Insights

Today, Intuit released the latest edition of the Intuit 2020 report, Intuit 2020 Report: The Future of Financial Services, which identifies and examines four key trend areas that will  transform the financial services industry...

Fast Facts: Student Loans

January 22, 2013
/   Insights

The Financial Services Roundtable recently released another iteration of its Fast Facts, reliable, bullet-point research about issues facing the financial services industry. Topics span TARP, Dodd-Frank, insurance, lending, retirement savings and more.  Below are some updated Fast...

The Top 10 Trends in the Digital Banking Industry

December 18, 2013
/   Spotlight

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....

Platform Shift in the Making

February 13, 2013
/   Insights

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

Financial Literacy Month: How are you celebrating?

March 22, 2013
/   Insights

With April approaching, it’s almost time to kick off Financial Literacy Month! Strongly supported by the United States Congress and the Financial Literacy and Education Commission, Financial Literacy Month aims to promote the importance...

Mobile Banking Engagement: Data from Digital Insight

June 24, 2013
/   Spotlight

Intuit Financial Services 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...

Security: What It Takes to Lead the Way

January 22, 2014
/   Insights

You say Target, we say EMV—how’s that for a conversation-starter? The recent mass hack of retail giant Target—it’s estimated that more than 100 million consumers’ information might have been compromised—has generated considerable attention, as...

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.

 

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Zachary Ehrlich

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

Brad Strothkamp

http://www.forrester.com/rb/analyst/brad_strothkamp

James W. Gabberty

Gabberty is a professor of information systems at Pace University in New York City. An alumnus of the Massachusetts Institute of Technology and New York University Polytechnic Institute, he has served as an expert witness in telecommunication and information security at the federal and state levels and holds numerous certifications from SANS & ISACA.

Marisa Mann

Marisa Mann brings over 15 years of experience in consulting and financial services industries to the Solstice team, working on large scale enterprise initiatives across many technologies, including specializing in the digital space – Internet and mobile. Mann is passionate about mobile and the endless possibilities for the enterprise, delivering business value through strong brand recognition and driving to excellence in the consumer experience. Prior to Solstice, Mann worked at JP Morgan Chase, Diamond Management and Technology Consultants, Washington Mutual, Inc, and Accenture.