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Consumer Trust: Still A Major Issue

February 13, 2012 By Banking.com Staff Leave a Comment

Consumers have been regularly engaging in online transactions that involve personal finances for many years now—shouldn’t we be able to trust in the process by now?

Apparently not, if the report “2011 State of Online and Mobile Banking,” just out from comScore, is any indication. The report has many positive signs that should cheer the industry, but there are also some negative indicators that deserve attention.

The area commonly categorized as Personal Financial Management (PFM) is clearly an important one for most financial institutions—it enables each company to engage with their customers on a more personal level and subsequently derive more revenue. That’s why most FIs across the board offer a range of tools to help consumers do business online with speed, convenience and safety.

However, even with awareness of these options, adoption is undeniably low. Half the customers of Bank of America and Wells Fargo know that these banks offer a range of online PFM tools, but that hasn’t translated into usage—adoption hovers at only 12 percent and 6 percent respectively. With greater education regarding functionality and usage, there’s tremendous potential here for growth.

Going one level deeper into online bill pay, there’s definitely good news: nearly 66 percent of the customers surveyed use this capability, and the number is still growing. However, there was 19 percent year-over-year growth in 2010, but an anemic 2 percent rise last year. Consumer habits are also far from settled, with most using a variety of institutions—banks, third-party providers, credit card issuers. Given the value of these services in better engaging customers, there’s definitely scope for major enhancements.

In addition to sufficient awareness and adoption, security remains a core concern—in fact, it’s the single most important reason why more consumers don’t pay their bills online. More worryingly, these concerns are growing—the comScore report shows that consumer fears actually jumped by 14 percent over 2010.

Given the considerable resource most institutions have dedicated to building their defenses, the natural reaction is to dismiss these concerns as unfounded. However, it’s important to remember that even for the tech-savvy generation, security is a visceral issue. Consumers don’t generally turn to analyst reports to see which institutions have implemented the best firewalls or the most effective data encryption technologies—they respond to word-of-mouth, advertising, and media coverage of high-profile data breaches.

The comScore report also indicates that good education can be effective—nearly a quarter of the survey respondents reacted positively to good, accessible information provided by their FI about security measures.

There’s no question that each institution can gain a significant competitive advantage by effectively using an array of personal financial management tools to engage and build a lasting relationship with every customer. Those customers can in turn benefit from the speed, convenience and safety afforded by the tools available.

However, there’s clearly a gap between what’s doable and what’s being done. The only way we can bridge it is by getting the message out more effectively.

Filed Under Financial Management Insights Tagged With comScore, consumer trust, mobile banking, online banking

Banking on Facebook

February 8, 2012 By Banking.com Staff Leave a Comment

We all know that the upcoming IPO for Facebook will be an exercise in minting money—just ask founder Mark Zuckerberg’s tax accountants, who have some busy days ahead. But could the company actually mint money in an even more literal sense? Could this young upstart, which has become essentially the currency of communication in the era of social networking, become actual currency?

It already is. It’s clearly more interesting to write about all the young millionaires the public offering will spawn, but a more consequential story is that of Facebook Credits. For many consumers, it will be a completely new way of doing business. For financial services institutions looking ahead, it’s a potential—and totally unexpected—rival. But looking even further ahead, it could be a major opportunity, at least for those willing to go for the new.

For the record, Facebook Credits are, according to the company, a virtual currency consumers can use to buy virtual goods in any games or apps of the Facebook platform that accept payments. Facebook Credits can be purchased directly from within an app using a credit card, PayPal, mobile phone and other local payment methods. While they’ve gone largely unnoticed in the public forum, the practice is getting new attention for its inclusion in the company’s public filing.

For the record, Facebook is still essentially a media company in the sense that it derives the bulk of its revenue from advertising. However, revenue from “payments and fees” spiked from $13 million in 2009 to $106 million in 2010—a growth spurt similar to the company’s own consumer adoption. That’s even before Facebook Credits became mandatory for nearly all game developers in July of last year.

A couple of related factoids: first, while the best-known Facebook game developer, Zynga (the force behind FarmVille) has separate deals with other financial services providers like Discover, Facebook gets up to 30 percent of the face value of user purchases in Zynga’s games on the Facebook Platform. Even more interesting, the company acknowledges in its filing that “payments on the Facebook Platform could be considered a financial product.” In other words, the company could be classified as a financial services institution.

Wall Street, meet your newest occupant? No, Facebook isn’t likely to go head-to-head with JP Morgan Chase and Goldman Sachs, or even your neighborhood credit union, anytime soon. But banks and other financial entities would still be wise to take heed and consider options in this evolving marketplace.

No one, not even its most fervent backers, could have predicted Facebook’s astonishing ascent, from a Harvard dorm room in 2004 to a sixth of the world’s population in barely six years. In the process, it has redefined the very notion of daily human interaction, demolished geographic boundaries and age/class/gender/ethnic barriers, obliterated many distinctions between corporate and consumer communications, and played a key role in aiding democratic revolutions. Is the idea that it could fundamentally transform financial transactions really so far-fetched?

So far, it’s an open question as to what more traditional financial services firms can do to compete, even if they’re so inclined. Some analysts have suggested partnerships to, for example, launch co-branded credit cards. But that’s thinking small, and old. Facebook demands big, and new.

There are billions (literally) of consumers out there spending all that time on a platform that’s still largely a distraction. There are massive, and numerous, opportunities to monetize that. It’s time to innovate.

Filed Under Financial Management Insights Tagged With Facebook, Facebook IPO, online banking

Consumers Are Increasingly Using Multiple Devices to Support Banking Needs

November 3, 2011 By Jim Marous Leave a Comment

*This blog was originally posted on Bank Marketing Strategy by Jim Marous. Jim is a marketing services leader focused on building strategic solutions for the financial services industry. You can follow him on Twitter @JimMarous or connect on LinkedIn.

Traditional bricks and mortar facilities are being visited less as the use and importance of online and mobile devices continues to increase according to Intuit Financial Services’ 4th Annual Financial Management Survey released yesterday. According to the survey, while a large percentage of consumers still manage their finances offline (45%), the percentage of consumers using online services from their financial institution has continued to increase annually; increasing 11% since 2009 to 38% in 2011.

The main reason consumers said that they don’t visit their bank branch as often as they used to is because they are visiting their FI’s website and use their online banking tools (76%). These online banking tools are so important that one-third (33%) said they would switch their relationship to another institution if there were better online tools offered elsewhere.

The importance of online tools was reinforced by Brett King, author of the bestseller Bank 2.0 and founder of direct mobile banking start-up Movenbank at this year’s BAI Retail Delivery Conference in Chicago. “Banking is quickly changing from a place you go to something you do everyday,” stated King. He provided a chart from the American Bankers Association and Nielsen Research that illustrated the channel migration occurring today and projected in the future.

Source: ABA, Nielsen Research

It appears that the growth of mobile banking is only limited by the growth of ownership of a smartphone according to the Intuit study. Forty-one percent of all respondents indicated ownership of a smartphone, 23% said they used a mobile banking solution, and an additional 17% intend to try mobile banking in 2012. The primary reason consumers indicated that they do not use mobile banking was because they do not own a smartphone (25%) followed by the fact that they prefer to bank online (22%).

These findings are similar to the findings last week from comScore that drew a correlation between mobile banking and smartphone adoption. “The investments in mobile made by financial service institutions, along with the continued growth in smartphone adoption, have had a positive effect on the use of mobile financial services,” states Sarah Lenart comScore vice president for marketing solutions.

As expected, the adoption rate of mobile banking is demographically skewed. Young adults (aged 18-32) are three times more likely to carry their bank in their pocket, compared to Gen X, baby boomers or seniors. And while 65% of mobile banking users access their accounts through the internet/Web, 28% use a mobile application. “Regardless of age, each customer expects to connect to their financial institution in their own way,” said CeCe Morken, president and general manager of Intuit Financial Services.

In another Intuit study of more than 50,000 mobile banking customers, it was found that consumers tend to interact with their financial institution 45% more often if they use a combination of both mobile and online tools. These customer also tended to have larger relationships and a better retention rate.

“While we anticipate that there will be some mobile-only consumers, most people will be using multiple devices on any given day in the future,” said Intuit spokesperson Tobin Lee in a conversation yesterday. “Financial institutions must be prepared to deliver financial information and insights across multiple devices (PC, phone, tablet), optimized to the merits of each device it they are going to meet customer’s needs. If they don’t, someone else will . . . probably displacing a bank’s relationship.”

The desire for ‘anywhere app access’ is also supported by a just released study from Oracle entitled, Opportunity Calling: The Future of Mobile Communications – Part Two which found that while there was a stronger preference to use a tablet for mobile banking (34%) compared to a mobile phone (11%), the majority of consumers (55%) would prefer to use both devices. This is important to prepare for since the same study found that almost 30% of the U.S. mobile customers that do not already have a tablet device plan to purchase one in the next 12 months. These findings were also reinforced in last April’s, Intuit 2020 Report: The Future of Financial Services.

As customers continue to use multiple channels to connect with their bank, it will be increasingly important to have a 360-degree view of customer device touch points and to leverage the advantages of each device to provide an optimum customer experience. The current anxiety over online and mobile security needs to be addressed at the same time as innovations such as near field communication (NFC) and location based services get integrated into online and mobile solutions. Bankers will need to get ahead of the payments innovation curve and prepare for major distribution channel disruption. In short, banks will need to do a paradigm shift by becoming nimble at a time of increased regulation and consumer scrutiny.

Are today’s banks prepared for the massive changes ahead? Or will new online organizations such as Ally, BankSimple, Movenbank and others steal the hearts and wallets of Gen Y and device savvy consumers?

Leave us a comment below, or Tweet at the author @JimMarous.

Filed Under Banking 2020, Surveys Tagged With #b2020, #IFSsurvey, Banking 2020, mobile banking, online banking

Online Banking Ranks #1 With Consumers

November 2, 2011 By Banking.com Staff Leave a Comment

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

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

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

Filed Under Surveys Tagged With #IFSsurvey, banking services, financial management, Intuit Financial Services, online banking

American Bankers Association Survey: Online Banking on the Rise

September 12, 2011 By Banking.com Staff 6 Comments

The American Bankers Association released its annual survey last week, revealing that online banking is on the rise, while mobile banking has slowed in the last year. The most surprising statistic from this year’s survey is rise of online banking amongst baby boomers. For the first time, 57 percent of banking customers 55 and older said they prefer to bank online versus at a bank branch or via an ATM. This is up from 20 percent 2010, a significant gain amongst the baby boomer population.

Other interesting survey statistics include:

Among all adults, 62 percent said that they like online banking best, up from 36 percent last year
Only 1 percent of adults said that they liked mobile banking best, down from 3 percent last year
With younger consumers, ages 16 to 34, only 4 percent said that they preferred mobile banking to other methods
Telephone and banking by mail are losing popularity. Only 3 percent said that they prefer telephone banking, and only 6 percent said that they prefer mail banking

Are these statistics in-line with your customer/member base? Do you think the popularity of mobile banking is on the decline? Let us know in the comments section below, or Tweet @Bankingdotcom.

Filed Under Surveys Tagged With American Bankers Association, online banking, survey

Online and Mobile Solutions – If You Build It, Will They Come?

August 17, 2011 By Erika Teola and Gene Tunney Leave a Comment

It’s true that online and mobile solutions are in high demand, but that alone doesn’t guarantee that your customers and members will rush to adopt. If only it were that easy. For many, it’s going to take education on what the service is and why it will be valuable to them. Some “fence-sitters” may simply need convincing that now is the time to change their behavior from the old way of doing things.

Targeted marketing campaigns that address the barriers to adoption have proven to be extremely effective in moving these fence-sitters into active users. Growth and Retention Services campaigns have been so successful because they reach customers and members through email, offline and online channels and communicate the value in using your services to better manage their money and achieve their financial goals.

To weigh in on the biggest adoption challenges you face or share some of your own marketing and adoption best practices, visit In:Volve.

Filed Under For Financial Institutions Tagged With mobile, online banking

Mobile is the New Web

August 5, 2011 By Banking.com Staff 1 Comment

As mobile banking technologies advance, banks should re-evaluate how they package mobile offerings to their customers. Mobile banking, an umbrella term consisting of mobile applications, mobile web browsing and text message banking, actually improves on the online experience and offers the additional benefit of traveling with your customer. As Net Banker’s Jim Bruene notes, “Equating mobile banking to online is selling it short. Really, it’s much better than online.” With the added capabilities of near field communication, remote deposit capture and mobile wallets, the mobile banking experience can surpass online by providing resources to customers 24/7, at any location.

Because of these far-reaching and all encompassing attributes, online banking could soon be viewed merely as an extension of mobile. Companies are even beginning to develop mobile technologies first as the amount of time people spend on mobile apps has almost doubled in the past year.

However, Jim indicates that despite the buzz about mobile, it will be banks’ business models that determine success. He says, “Ultimately, banks will win or lose based on how well they execute on gathering deposits, making loans, facilitating transactions/payments, servicing customers effectively, and pricing it all correctly.”

Are you developing mobile first? Do you see your customers moving towards more mobile than online usage? Tweet @Bankingdotcom or let us know in the comments below.

Filed Under Financial Management Insights Tagged With mobile, mobile apps, mobile banking, online banking

Financial Management Capabilities and Remote Deposit Top Customers “Wish” List

July 20, 2011 By Banking.com Staff Leave a Comment

Earlier this month, we hosted a poll and asked our readers, “What one technological feature do your customers ask for the most?” With the myriad of technological features available, we wanted to determine what customers and members are interested in, whether it is mobile banking, remote deposit capture, P2P payments or more.

The results: financial management capabilities, which include budgeting, goal-setting and the ability to see spending/payments all in one place, and remote deposit capture ranked the highest, each claiming 22 percent of the votes. Below is a full breakdown of the results:

To delve into the poll results, Webster Bank, which has more than 180 offices throughout Southern New England and Westchester County, New York, weighed in with additional input from their customers.

Greg Jacobi, Senior Vice President, eBanking, said their customers most often inquire about mobile banking and remote deposit capture for consumers. Webster Bank currently offers mobile Web capabilities, but with the surge of smartphones, users are eager for a mobile app. They have also seen an uptick in their remote deposit capture application for businesses. Greg noted that, “business customers that use remote deposit capture get a tremendous amount of value out of it.” Although it cuts down on bank branch visits, remote deposit capture lets consumers make a deposit on their terms.

Greg adds, “to be honest, we have noticed a trend that customers are not asking (as much) about the marquee features you have in your poll. Across the industry, they want their existing online banking to be better. The basics of online banking have not been reconsidered for quite a while. One path people are taking to get there is PFM. We love the innovation happening around PFM. But, I do not think the average customer is asking for it as a separate offering. They want the benefits of PFM; being able to categorize their transactions, set goals, search better and get useful visualizations of their data integrated into what they already have.”

Are your customers and members asking for the same technological features? Let us know in the comments section below or Tweet @bankingdotcom.

Filed Under Financial Management Insights, Surveys Tagged With customer behavior, customers and members, mobile, mobile banking, online banking, PFM tools, remote deposit capture, survey

How Banks Can Better Appeal to an Evolving Audience

June 29, 2011 By Kate Blatherwick 2 Comments

By Kate Blatherwick

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

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

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

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

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

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

How Banks Can Better Appeal to an Evolving Audience

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

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

Bio/Information

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

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

Filed Under Financial Management Insights Tagged With banking services, banks, financial institutions, mobile banking, online banking

FI Spotlight: M&T Bank

June 16, 2011 By Banking.com Staff 1 Comment

Last month, M&T Bank launched new financial management and budgeting capabilities within online banking called FinanceWorks. For just $0.99 a month, the bank’s customers can manage all their financial transactions in one place, whether they’re executed on an M&T account or not. To provide further insight to members, M&T Bank also added a service which allows members to get their FICO credit score for a monthly fee. Mike Shryne, manager of alternative banking at M&T explains that the credit score is a true FICO score, giving members a snapshot of their “creditworthiness.” Shryne indicated that this added service was prompted by customers’ “heightened awareness of how important one’s credit score is to the ability to borrow, and also to monitor financial security in the age of identity theft.” Since M&T updates FICO scores monthly, members can track their credit over time.

While some may be wary of the fees associated with these services, Shryne warns that these solutions prevent additional fees from untrustworthy third party sites. Some “free” credit sites are misleading and end up charging expensive fees until you cancel the service, making a straight fee of $2.99 for “a straight service” a fair price.

You can read the full New York Times article here.

How are you helping your customers manage their credit and finances end to end? How important is it to give customers a one-stop dashboard of services and information? Tweet at @bankingdotcom or let us know in the comments below.

Filed Under For Financial Institutions Tagged With customers, FI Spotlight, FICO, financeworks, financial institutions, online banking