This Week’s Reads: IBM, Disruption, Mobile Payments

Below are interesting stories the 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 We’re Reading: Mobile Wallets, Mobile Payments and Mobile Metrics

Below are interesting stories the staff has been reading over the past week. What have you been reading? Let us know in the comments section below or Tweet @bankingdotcom.

  • Small Bank Tries to Beat Big Banks at Their Own Tech Game

American Banker 

With 22 branches and $2.2 billion in assets, Rockville Bank is on the smaller end of the banking spectrum. But the lender has made a big commitment to virtual banking. The Rockville, Conn., company decided last year to create a position dedicated to overseeing its mobile, online, ATM and customer support center services. Now the role has been filled by a woman on the front line of digital banking for nearly two decades: former Bank of America (BAC) online and mobile product executive Donna Patel. Rather than attempt to beat big banks in the race for whiz-bang apps and sophisticated platforms, Rockville plans to focus on harnessing technology to better serve its customers.

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  • Loyalty Startup Seeks Credit Union, Bank Partners to Help Feed the Hungry

American Banker 

Mogl, a startup that’s created a restaurant loyalty mobile app, continues to gain credit union and bank partners for its program, which provides cash back for meals out, with the option of donating the money to local food banks. Financial services partners could benefit by becoming top-of-wallet while also helping to feed the hungry, and in turn, improving their brand images. Currently, the California startup counts nine credit unions, one bank, and two airlines as partners. Three additional credit unions are finalizing their participation in the program. Unlike some apps that use Yodlee or Intuit to power the user’s ability to link in outside accounts, Mogl has users enter in – or swipe in — their payment data. The information is sent to the card associations, which send back a token. Mogl does not store any card data.

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  • Two In Five Americans Will Use Mobile Wallets By 2017

Business Insider 

One-fifth of U.S. smartphone owners used a mobile wallet in 2013. That comes out to 40 million Americans, according to Parks Associates. The market research firm forecasts that this number will grow 183% to 113 million, or 43% of smartphone owners, by 2017. One factor that will likely drive growth is an explosion in payments technologies coming onto the market, which will have broader application beyond payments, including mobile loyalty programs and in-store marketing. These will give a greater number of smartphone users and merchants a reason to start using and accepting mobile wallets.

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  • How OnPoint Community Plans to Build Enthusiasm For Mobile Payments

Credit Union Journal 

OnPoint Community Credit Union is using person-to-person payments as the foundation of building consumer comfort with mobile as a channel for money movement. The $3.4 billion-asset credit union is adopting Fiserv’s Popmoney system, which includes a mobile and online version. Popmoney allows consumers to direct funds to a recipient’s mobile phone number, e-mail addresses or bank account number. “We’ve had very little mobile payment capability, so this is our entry. The opportunity is there to allow members to move money to other members and non-members’ accounts,” says Jim Armstrong, senior vice president of technology and human resources for OnPoint.

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  • Check Your Mobile Metrics

Credit Union Times 

Just five years ago, mobile banking seemed futuristic, the stuff of sci-fi; but today, it has emerged as a must have. That’s a powerful statement by Credit Union Times Correspondent Robert McGarvey in this week’s page 1 story (5 Mobile Banking Trends to Watch in 2014). How many credit unions still think of mobile banking as an optional, whiz-bang feature?

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  • Who are your most valuable Twitter followers? A new firm from ex-Dwolla staff wants to find out

The Next Web 

Payments platform Dwolla has lost its head of business development and its developer evangelist. Alex Taub and Michael Schonfeld have moved on to start their own company called Modern MAST that will develop products aimed at commerce, advertising tools, and APIs. In a post announcing the move, Taub says that the separation from Dwolla was an amicable one and that the two now-cofounders decided that it was the right time to begin their own venture. Why advertising technology? Over the next five years, it’s estimated that $350 billion will be allocated towards next generation ad tools and Modern MAST wants a piece of that.

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What We’re Reading: Finovate, Mobile Payments, Underbanked

Below are interesting stories the staff has been reading over the past week. What have you been reading? Let us know in the comments section below or Tweet @bankingdotcom.


  •  Use of Overdrafts Hits 14-Year Low: Report 

American Banker 

U.S. consumers are overdrawing their checking accounts less frequently than at any time in the last 14 years, according to new survey data. So far this year, the average consumer at a bank or credit union is overdrawing their checking account about seven times annually. That’s down from a peak of nearly 10 overdrafts per year in 2008 and 2009, the economic research firm Moebs Services found. Banks and credit unions have responded to the decline by raising their overdraft fees, says Michael Moebs, the firm’s chief executive officer. The average overdraft fee hit $30 in the second quarter of this year, up from $29 in the previous three months.

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  • 5 Ways Mobile Banking Is Evolving: Finovate

Bank Systems & Technology 

Several new technologies demoed at Finovate this week showcased new ways that mobile is solving pain points for banks and their customers. Mitek won the first place prize at Finovate this year for its mobile photo account opening solution that it unveiled at the show. Mitek wasn’t the only company making use of the smartphone camera in a new solution at the event. Capital Access Network, a small business finance specialist, showcased their Mobile Funder, a tablet-based tool for financial sales/ISO representatives selling small business loans.

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  • McDonald’s Testing Mobile Payment App as U.S. Sales Stumble


McDonald’s Corp. is currently testing a mobile payment application in Salt Lake City and in Austin, Texas, Lisa McComb, a spokeswoman, said today in an e-mail. McDonald’s, which today reported U.S. same-store sales that trailed estimates for August, is looking for ways to make it easier for diners to load up on Big Macs, McWraps and smoothies. It’s not alone in seeking to ignite growth at a time when many Americans are eating out less. Burger King Worldwide Inc. offers a delivery service with a $10 minimum order in some U.S. cities, while Chipotle Mexican Grill Inc. has a mobile ordering app.

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  • Digital Case Studies – What’s Next: The Search for Disruptive Innovation

Celent Banking Blog

Over the past five years digital technology has evolved significantly. Many financial services firms have moved past the exploration stage and are now more committed to the mobile channel. There is increased demand for expanded capabilities and functions and users expect “always on” access through an app on their smart devices.  Celent has seen a rise in the focus on mobility solutions across the enterprise and this trend is expected to be a sustained area of investment for the short to medium term. In short, there is a broad consensus that digital channels and mobile platforms represent a critical path forward.

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  • A Mobile Wallet for the Underbanked

Fast Company

Banks and private startups are all pushing digital wallets–smartphone software packages that allow users to connect their bank accounts or credit cards to their phone, and then make payments through NFC, mobile money transfers, or other technology. Wipit, which offers mobile banking services through Boost Mobile, just received a new round of Series A funding from VCs Core Innovation, who join current investors H&R Block and Euronet Worldwide. The amount of funding was not disclosed, but Core managing partner Arjan Schutte will join Wipit’s board.

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  • Study: Smartphones, tablets drive close to half of all online banking

 Fierce Mobile Content

Forty-three percent of all online banking activity in the U.S. now occurs on smartphones and tablets, according to the annual xAd/Telmetrics Mobile Path to Purchase Study. Millennials are driving the trend: Forty-three percent of mobile banking users are under the age of 35, and one-third indicated that smartphones are the most critical device for their personal banking needs, the study reveals. In addition, 62 percent of younger bankers have completed a purchase on a mobile device and lean heavily on those devices in all phases from initial research through conversion.

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What We’re Reading: Collaboration, Tablets and Google Glass

Below are interesting stories the staff has been reading over the past week. What have you been reading? Let us know in the comments section below or Tweet @bankingdotcom.


  • Collaboration Goes Social For Banks

Bank Systems & Technology

The rise and popularity of social media have had a dramatic effect on the ways people interact and share information on a personal level, and many banks have embraced social media as a way to improve customer engagement. But when it comes to bringing social media tools into the enterprise for business uses such as collaboration and project management, the revolution has not been quite as pronounced. That’s especially true in banking, where the use of social tools for internal business collaboration is still in the nascent stages, according to some experts. However, when banks are able to adopt the best practices for taking advantage of social channels internally, it can lead to a much more efficient and collegial work environment.
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  • Credit Unions Lead in Online Satisfaction

Bank Systems & Technology

Credit unions top the financial services industry when it comes to online customer satisfaction, according to a survey conducted by customer experience analytics firm ForeSee. The firm this week released its “Financial Services Benchmark,” which reports on online and mobile customer satisfaction trends for various industry segments. The report used data from more than 335,000 surveys from the first quarter of 2013 in which customers shared their experiences with online websites, mobile websites and mobile applications.

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  • iPad, Tablet Point-of-Sale Systems Gain Popularity

Over the next three to five years, many of the existing larger and pricier point-of-sale systems will be replaced with iPads, says Dave Kaminsky, an emerging technology analyst with Mercator Advisory Group, a payments-industry advisory firm headquartered in Maynard, Mass. It’s impossible to predict when a total conversion of the market would occur, he says. In the same way that some customers continue to write checks in an age of online banking, some merchants will continue to use the older point-of-sale systems out of habit, he says.

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  • Wearable banking: Google Glass


Using touch controls and voice recognition, Google Glass will allow users to capture photos and videos, view emails, use apps and surf the web on the move. But what does this mean for digital banking? This rises to a quarter for 18 to 24 year olds, which means once the technology is available to buy, banks will need to ensure they have a clear idea of how to extend their digital banking experience to wearable technology. This has interesting implications for how consumers control their finances and suggests that if Google Glass does indeed form an ‘important branch of the tree’, it is likely that consumers will choose to manage their money using the new technology.

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  • Why The iPhone Still Matters To Mobile Payments


Months before the iPhone 5 was released, the industry was a buzz of rumours on the details of Apple’s new device. New connectors, a new OS, thinner, taller. But one feature that received wide-spread attention from the banking industry was the rumoured inclusion of an NFC Chip. Something that anticipated bringing mainstream scale to a technology that could replace the need for us to carry wallets full of plastic credit & debit cards. Who could forget Google’s George Costanza advert for the Google Wallet, the first NFC Mobile Wallet. Rumors about the new iPhone having NFC, but at this point, they seem like a total long shot.

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  • The Key to Building Bank Ads That Work

The Financial Brand

Consumers do not buy products and services, they buy the benefits they receive from them. Take Dove Soap, for example; For years, Dove advertised that its soap had ¼ cleansing cream, leaving skin soft. Dove didn’t become a top seller because it had ¼ cleansing cream, but because it made consumers’ skin softer. Tip: You may need to describe your product and its details, but this isn’t the same thing as selling the benefits the product and its features deliver. For every product feature, you can almost always find a corresponding consumer benefit.

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  • KeyBank Moves To Data Driven Decision Making

When Cleveland-based KeyBank reaches a decision about its optimal branch footprint, the decision is based on analytics, said David Bonalle, executive vice president and director of client insights and marketing.

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  • Banks Might Hold The Key To Mobile Wallet Adoption

Investor’s Business Daily

Banks and other companies worldwide are vying to get consumers to use their mobile wallets, which enable point-of-purchase payments via smartphones. A recent report by network gear leader Cisco Systems found that banks might have the upper hand in the battle to rule a payments technology that could revolutionize how consumers buy things worldwide. The Cisco “Customer Experience Report,” which focused on retail banking, found that mobile wallet providers must offer more personalized and secure banking services before consumers will flock to their offerings.

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  • Global mobile payment transactions to surpass $235B


Global mobile payment transactions will generate $235.4 billion this year, growing 44 percent over last year’s US$163.1 billion. Asia-Pacific will account for US$74 billion, with growth driven by both developed and developing countries such as Singapore, India, and South Korea.  According to a Gartner report released Tuesday, global mobile transactions volume and value will clock an average growth of 35 percent between 2012 and 2017, climbing to over 450 million users and a market worth US$721 billion by 2017.

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What We’re Reading: Cybersecurity, Tablets in CUs and Consumer Spending

Below are interesting stories the staff has been reading over the past week. What have you been reading? Let us know in the comments section below or Tweet @bankingdotcom.


  • Cybersecurity Should Not Come at Expense of Privacy: White House

American Banker

The White House says the nation needs new laws to reinforce its cyber defenses but that the push should not come at the cost of privacy. The House of Representatives on April 18 passed the Cyber Intelligence Sharing and Protection Act, or CISPA, which would encourage owners of financial networks, utility grids and other critical infrastructure to share information about digital threats with the government and one another. The White House has threatened to veto the bill, saying it lacks sufficient privacy protections. Civil liberties groups and other critics of the measure charge that it would allow companies to share people’s emails and text messages with U.S. intelligence agencies.

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  • Small Business Owners Big on Mobile Technology

American Banker

A survey of 1,305 small business owners conducted by Constant Contact in March found that 66% currently use a mobile device such as a smartphone or tablet in their work. Of the non-mobile users, 65% have no plans to use a mobile device in the future, many citing a lack of demand for mobile access from their customers. This segment is partial to Apple devices, according to the survey — 66% use iPhones, while 39% use Android phones. About 49% use iPads; only 15% use Android tablets.

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  • Keep Wal-Mart Out of Financial Services, Bankers Ask


A group of bankers advising the Federal Reserve urged U.S. regulators to consider preventing Wal-Mart Stores Inc. from offering some financial services. The Federal Advisory Council, a body of bankers that includes PNC Financial Services Group Inc. and BB&T Corp., said at a Dec. 19 meeting that Wal-Mart’s sales of prepaid cards warranted greater federal oversight. Minutes of the meeting were obtained yesterday under the Freedom of Information Act.

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  • Consumers spending nearly 10% more than in 2009

CNN Money

American consumers are spending nearly 10% more than they did four years ago when the country was reeling from the effects of the financial crisis, according to an analysis of the spending behaviors of millions of account holders. In the first quarter of 2013, the average household spent roughly $4,220 per month — up from about $3,870 in the same period of 2009, according to the inflation-adjusted consumer spending index released Wednesday by Intuit, which owns personal finance site

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  • Why CUs Can’t Afford To Be Left Behind On Tablets

Credit Union Journal

It’s estimated that nearly half of the U.S. Internet population will be using tablets by 2014, which means increasing pressure on credit unions to adapt and conform to the trend. “The proliferation of tablet devices in the U.S alone is impacting everyone who manages their finances via a digital channel, including credit union members,” said Kenneth Hans, executive director of Blackstone Technology Group’s Financial Services Practice. “Much like banks, credit unions are looking for ways to cater to this latest form-factor that offers the power of a laptop in a much smaller and convenient size.” Among credit unions encouraging members to use tablets is the $5.3-billion Suncoast Schools FCU, which has 549,303 members that it has traditionally served via its 53 branches, but mobile devices such as tablets have changed that equation somewhat.

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  • Credit Cards – Game ON!

Gonzo Banker

Credit cards in circulation hit a peak in 2007 at 710 million cards, according to a 2013 Nilson Report. Then the crash of 2008 hit, the Card Act went into play in 2009, and consumer spending changed. From the low point in 2010, the number of cards increased by roughly 50 million in 2011 and continues to climb today, when we have 520 million cards in circulation. Credit card interchange has not been Durbin-damaged as of yet, and interchange is still high. In the United States, 10 issuers own 85.4% of the cards on the market (Source: The Nilson Report, February 2013).

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  • New Fed Report: U.S Mobile Payments Landscape – Two Years Later

Payments News

The Federal Reserve Bank of Boston in conjunction with the Federal Reserve Bank of Atlanta has just published a new report titled “U.S. Mobile Payments Landscape – Two Years Later.” Based upon ongoing meetings of the Mobile Payments Industry Workgroup (MPIW) convened by the Federal Reserve, the report updates an earlier paper from 2011. It examines changes in the evolution of mobile POS retail payments over the past two years, characterized by an expanding fragmented market environment and frequent technology innovations.

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What We’re Reading: Digital Wallet, Social Media and Data

Below are interesting stories the staff has been reading over the past week. What have you been reading? Let us know in the comments section below or Tweet @bankingdotcom.

  • Digital Wallet Race Is Far From Over

American Banker

Payments players with digital wallet aspirations — including Visa, MasterCard, Google, PayPal, Apple and Isis — are all vying for customers’ virtual pocket books in a race to truly electronic transactions. Yet none have had much luck, so far. There have been delays in launches (e.g. Isis’s delays on launching in its two pilot cities); changes in the way at least one major, digital wallet innovator processes its transactions (think: Google Wallet); and, most importantly, a lack of features appealing enough to spur widespread adoption. “Mobile wallets have been around for a while, and even for us, in the industry, we are only just starting to adopt these technologies,” says Philip Philliou, a payments consultant. “I don’t think anyone is far ahead in terms of disruption. We are still early on.”

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  • 3 Things Banks Must Do to Survive the Mobile Payments Jungle

American Banker

The mobile wallet market appears to be wide open to new entrants, with banks having a slight edge. While more than 20 percent of U.S. online consumers prefer to use their checking account for digital wallet services, 17 percent prefer PayPal, according to Gartner. That gap could quickly close in the next few years. To survive in the mobile payments landscape, banks need to do three things: Integrate mobile into existing offerings. Rebuild loyalty. Banks need to leverage emerging customer analytics techniques, coupled with geo-location services through mobile devices in order to make relevant offers at the right time. Redefine success. It’s no longer sufficient for banks to measure success by counting the number of mobile payments and online users.

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  • All Those New Channels Affecting Accuracy of Data

Credit Union Journal

Credit unions face many challenges as channels diversify and members demand digital options. According to a recent Experian QAS survey, financial institutions are operating through an average of four different channels, the most popular being the organization’s website. While these new channels are exciting endeavors, many credit unions are experiencing problems with collecting accurate contact data. According to that same data, 91% of financial institutions suspect their customer/member and prospect data might be inaccurate in some way. On average, respondents think that as much as 18% of their data might be inaccurate. Even worse, another 27% of respondents are unsure how much of their data is inaccurate.

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  • Introducing The Social Media Power 100 Rankings For Banks And Credit Unions

The Financial Brand

The Power 100 is an interactive list of retail banks and credit unions who have achieved the most social media traction. Components of the Power 100 score include Facebook ‘Likes,’ Facebook engagement rate, Twitter followers, tweets sent, YouTube views and YouTube subscribers. The top 15 institutions in the banking and credit union category are as follows: Chase, Capital One, ICICI Bank, E*TRADE Bank, Bank of American, Axis Bank, GT Bank, Wells Fargo, Citi, Commonwealth, FNB, Navy FCU, Bank of Nova Scotia, NAB and TD Canada.

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  • DDoS: The Worst Case Scenario

Javelin Strategy & Research Blog

Since September of last year, Izz ad-Din al-Qassam has engaged in cyberwarfare against U.S. financial institutions, and it is a war with which they have had a great deal of apparent success if we believe that their goal was to inconvenience U.S. bank customers by rendering online banking portals inaccessible for a number of hours at a time. More than information sharing on best practices is needed – financial institutions should pool resources to ensure the availability of excess network capacity, and network operators must be involved in the effort to identify infected servers and to subsequently stop the malicious traffic its source.  And while intelligence support is a good start, the Federal government must identify those responsible and cripple their ability to continue this campaign.

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  • Facebook tries to get more in your face

Los Angeles Times

It’s hard not to detect a whiff of desperation in Facebook’s new please-don’t-go interface, which is determined to keep people within the social network as long as it can. Facebook Home is intended to dominate Android smartphones, making Facebook your first and last port of call as you traverse the wireless wonderland. It will keep Facebook features front and center, rather than require users to use an app.

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  • Credit Union Takes an Early Lead with E-Signatures

SYS CON Media Blog

Aaron Pugh recently published a story on credit unions using e-signatures on He writes that only eight and a half percent of credit unions larger than $20 million in assets currently offer e-signatures to their customers even though the market for e-signatures as a whole has shot up 48 percent from 2011 to 2012 according to Gartner Research. Among the early adopters in the industry is the Teachers Credit Union in Ontario, Canada. The member-owned financial organization serves employees of education and their families throughout the province. The 15,000 members conduct business through multiple branch locations, ATMs, online and via mobile banking.

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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

New Technologies Are Coming for Unbanked, Underbanked

*This post originally appeared on MyBankTracker

In the past year, countless prepaid cards have flooded the nation to target the large portion of the American population that is either unbanked or underbanked. Acknowledging that the market for these alternative financial products is rapidly growing, more tech companies are catering to this group of consumers.

According to a recent survey by the FDIC, in 2011, 8.2 percent of U.S. households do not have bank accounts, up from 7.6 percent in 2009. And 20.1 percent of U.S. households have bank accounts, but rely on alternative channels for financial services (e.g., check-cashing, payday loans and money orders), up from 18.2 percent in 2009.

Even traditional banks have jumped on the bandwagon to compete against non-bank prepaid-card companies and get a piece of the prepaid-card market.

Last fall, Regions Bank started rolling out asuite of products and services that included a prepaid card and check-cashing and Western Union services. In July, Chase, the largest bank in the country, launched the Liquid prepaid card that does almost everything that a regular Chase checking account can do.

“As banks have steadily inflated the cost of banking, more and more depositors are seeking substitutes for bank accounts with escalating costs, high minimum balances and surprise fees,” said Jim Wells, president of Wellspring Consulting, a firm that specializes in solutions for the unbanked and underbanked.

But, with the proliferation of financial technology, the focus is shifting to serving the unbanked and underbanked through mobile devices.

Last week, at a Finovate conference, two companies demonstrated their versions of a mobile wallet for the unbanked or underbanked consumer.

The CAT (Cash and Transact) mobile wallet, by Emida, is an app that is based solely on the consumer’s smartphone. Through participating retailers, users can refill their CAT accounts with cash (for a convenience fee of $1.50). Then, they can use the funds to pay for purchases through the app.

The Flip mobile wallet, from PreCash, is an app that allows users to perform instant mobile check deposit and make expedited bill payments — two services that were never before available on a prepaid card account.

“Although these mobile-enabled, prepaid card-based accounts are attractive to far more than just low-income consumers, one key to success will be in making the services available via even the simplest of mobile devices,” said Wells.

In countries where financial institutions are hard to come by, mobile devices are the preferred channel for financial transactions. For example, more than 17 million mobile subscribers in Kenya use a mobile-phone-based money transfer service called M-Pesa, which enables users to deposit and withdraw money, pay bills, buy phone minutes and send money to bank accounts or other users.

In the U.S., the decreasing cost of smartphones may make it seem like everyone has a smartphone — but non-smartphones are still the most common mobile devices among the low-income population.

According to the Federal Reserve, 64 percent of the unbanked have access to a mobile phone (18 percent have a smartphone) while 91 percent of the underbanked have access to a mobile phone (57 percent have a smartphone).

Regardless of the types of mobile devices, the demand for alternative financial products and services is there.

And, history tells us that unbanked and underbanked consumers could be the users of the next wave of financial innovation.

In last year’s fall Finovate conference, card-linked offers made regular appearances on stage. Since then, card-linked offers became more available to bank customers. Bank of America, Capital One, American Express and many other financial institutions began providing card-linked deals.

Considering that the conference offers a good idea of what products and services we’ll see in the near future, it wouldn’t be a surprise to find that, by this time next year, there are more prepaid card accounts and other financial services that live on mobile devices.

 What are you offering your customers? Let us know in the comments below!

Mobile Transactions: Playing with Numbers

Could it be that the only numbers growing faster than mobile transactions are statistics about mobile transactions?

According to a new one just out from ABI Research, mobile shopping will make up nearly a quarter of all global online shopping revenue by the end of 2017. That’s great news for companies invested in this arena, since it clearly represents a sharp spike over the current market, which other estimates place at 10%. However, the same source indicated back in February 2010 that mobile shopping would reach $119 billion in 2015, representing about 8% of the overall e-commerce market.

That’s obviously comparing apples to oranges, but the larger problem is that it’s virtually impossible to accurately predict what’s going to happen with regard to technology use. Technological capabilities are always advancing, and user habits are constantly evolving, but the two phenomena frequently seem unrelated. The emergence of new capabilities does drive usage, of course, just as human needs drive the development of those capabilities, but they seldom happen in tandem. The flood of statistics that keep changing illustrates this problem.

In particular, the intersection of money, technological capabilities and behavioral change make for a strange brew. This is the very essence of a moving target.

Consider mobile payments. Portio Research told us back in March 2010 that 81.3 million people worldwide had used mobile device to make payments the previous year. By the end of 2014, this was predicted to rise to nearly 490 million, or 8% of all mobile subscribers. In June 2011, Yankee Group was putting dollar signs into the mix, reporting that global mobile transactions would reach $241 billion in 2011, and jump to more than $1 trillion by 2015. Fast forward another year, and Gartner was reporting that the number for worldwide mobile payment transaction values in 2011 had been $105.9 billion, and will surpass $171.5 billion in 2012. Bringing it back to users, meanwhile, Gartner said there had been 160.5 million in 2011, and is set to jump to 212.2 million this year.

One more demonstration of how the numbers stack up, even if they don’t add up: Yankee Group identified EMEA as the mobile money hot spot, accounting for 41% of mobile transaction value in 2011, compared to 35% for North America, 22% percent in Asia-Pacific and just 1% percent in Latin America. Others saw it differently: According to IDTechEx (R&M), Feb 2011, Japan had 47 million users adopting tap-and-go phones in just three years, and at the very same time, ComScore was revealing that that in December 2010 alone, 10% of Japanese mobile subscribers had used their mobile wallet to make a purchase—a undeniably a high number.

And how about mobile banking? Try this: In the spring of 2010, Global Industry Analysts (GIA) predicted that the global customer base for mobile banking will reach 1.1 billion by the year 2015, while Berg Insight put the corresponding number at 894 million users. In the summer of 2011, Yankee Group brought the figure down further, to 500 million.

Enough already? For sure. In fact—and again, let’s acknowledge that all this involves mixing apples and oranges and a whole lot besides—it may be time for a moratorium on analyses and predictions. Instead, let’s focus more on what we can do to drive the market rather than track where it’s going.

Smartphones, tablets and other mobile devices still coming down the pike are not just smaller PCs—they represent, and drive, a sea change in behavior. It’s our responsibility to offer applications and services that are flexible, convenient, customized and secure. And the only numbers that count are the ones where we beat even the most optimistic projections.

This article originally appeared as a guest post on

2020 Hindsight: A Look at Cash, Credit and Smartphones in 2020

Who needs cash? Who needs credit cards? They’re so old-school—and frankly so vulnerable to being misplaced or stolen –that they’re an inducement to danger. Fortunately, this is about to change…maybe.

A new report from the Pew Research Center’s Internet & American Life Project and Elon University’s Imagining the Internet Center brings news that mobile payments could all but eliminate the need to carry money or credit cards around. In advanced nations, at least, a majority of consumers will trust their phones and mobile devices to conduct end-to-end transactions.

And when will this happen? In the year 2020. Yes, 2020.

For the record, even that date carries multiple caveats. A strong majority, 65 percent, of the technology experts surveyed for the report signed on to that timeframe. The rest of the respondents disagreed with the premise (there was no middle ground allowed), and contend that this discipline will not gain sufficient traction in the timeframe discussed.

To be sure, the Internet terrain is pockmarked by failures, radical technologies that were designed to fundamentally transform human behavioral patterns and, well, didn’t. There are also plenty of legitimate reasons to doubt the broad-scale adoption of mobile payments.

To start with, not everyone has a smartphone—according to the Federal Reserve, the number is still only 44 percent of the population—and not everyone will anytime soon. Security and privacy concerns have always loomed large, and they will continue to do so.

Besides, consumer fears are not the only impediment to success: Credit card providers, among other business entities involved in the mix, will need to redirect their resources, and that likely won’t happen overnight. Most of them have considerable investments in the existing infrastructures, and a top-to-bottom overhaul probably isn’t on the priority list yet. Even when it does happen, everything from standards and the resulting interoperability to competitive positioning could lead to market fragmentation.

Still, it’s also important to note that however futuristic the concept of mobile payments seems, in some ways it’s already here. Consumers aren’t only using their phones to talk: According to other recent Pew Internet studies, 10 percent of Americans have used their phones to donate to charity via text message, more than a third use them for online banking, and almost half, 46 percent, have used a mobile app to, well, buy another mobile app.

Other research backs this up too, and retail seems a particularly active area. Analyst firm comScore reports that not only have 38 percent of smartphone owners used their devices to make buy products, but half the U.S. smartphone user base has gone online to look up deals while they’re inside a brick-and-mortar outlet, and nearly one in five even scanned barcodes.

As for the ‘advanced nations only’ argument, here’s another nugget cited in the Pew report: Users of Kenya’s M-Pesa system now send money amounting to 20 percent of the country’s entire GDP via text message.

For all Internet prognosticators, the reality is that this might be yet another area where we don’t know what will happen, or more importantly when. There are statistics and anecdotes to back up virtually any hypothesis, just as many changes have blindsided even the most accurate analysts.

The groundwork for a radical transformation has been laid. While there are certainly standards issues to work through, particularly at the back end, many of the tools needed to change payment habits are already in place. There’s a new generation that can’t remember a world without iPhone and iPad apps for everything. And some emerging mobile technologies have allowed business and consumers alike in developing markets to leapfrog landline infrastructures.

It may be that 2020 is the year of mass mobile payments. It may, as some analysts claim, take more time than that. But let’s not be surprised if it takes less.