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 MyBankTracker.com.

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!

FI Spotlight: Truliant Federal Credit Union

Truliant FCU in North Carolina is giving away iPads to promote the use of their online personal financial management (PFM) tool, FinanceWorks. Truliant members who sign up to use FinanceWorks between July 6 and September 29 are automatically entered to win money and/or iPads. FinanceWorks is free for Truliant members.

Each week, Truliant will award $100 to a member, and each month an iPad2 will be awarded.

A visual of how to sign up for FinanceWorks is below.

Gen Y: The Digital Generation

The Intuit 2020 Report, The Future of Financial Services, predicts that in the next 10 years Gen Y will transition from young carefree spenders to an important part of the financial services customer segment. By 2020, a majority of this group will be in their early to mid-thirties and learning to manage money as adults, with families and mortgages.

Gen Y, also known as the digital generation, is a tech-savvy group of individuals who were brought up using mobile technologies, Facebook and email. Javelin Strategy & Research recently released a report, Gen Y: How to Engage and Service the New Mobile Generation, which outlines how to reach the mobile generation as financial members and customers.

Some of the key findings include:

  • 4 out of 5 Gen Y consumers already have a personal and/or joint checking account, and 38 percent of them are very satisfied with their current banking relationship.
  • A Gen Y consumer is nearly twice as likely as an everyday consumer to be a mobile banker, and 31 percent of Gen Y consumers review account balances more than eight times a month via mobile banking.
  • Gen Y has high expectations from PFM tools, and 23 percent want PFM to categorize their spending.
  • For mobile PFM users: 46 percent want to make comparisons when shopping, and 33 percent use it to track finances on a daily basis.

For more Gen Y statistics, Credit Union Times has a slideshow here.

Are your Gen Y customers and members using mobile solutions more frequently than Gen X and Baby Boomers? Do you see a high demand in PFM functionality from Gen Y’ers? Let us know in the comments section below.

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

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.


Financial Management Emerges from the Tab

As consumers increasingly look to find ways to budget and manage finances, financial institutions are looking to provide easy access to financial management tools and information. With a recent announcement, Intuit introduced tighter integration between its personal financial management software, FinanceWorks, and financial institutions’ web sites.

In an American Banker article, Celent’s Jacob Jegher noted online banking is moving toward a ‘dashboard’-like experience, that goes beyond a static display of information. The article also profiled Beneficial Mutual Bancorp Inc. of Philadelphia, which has 140,000 online banking customers using the ‘dashboard’-like experience:

“It is very straightforward and transparent, and the ease of use is the most important,” said Denise Kassekert, executive vice president of relationship banking for the $4.7 billion-asset Beneficial.”

Furthermore, Forrester analyst Emmett Higdon supported the shift, noting one of the common features of modern website redesigns is a reduction in the number of clicks that consumers must make for common items like bill payments, viewing statements or setting up alerts.

The article noted that with the tighter integration, Intuit also introduced merchant-funded rewards, presenting a huge opportunity for financial institutions, according to Ron Shevlin of Aite Group LLC. The rewards link consumers’ debit card purchases from merchants with deals and money-saving opportunities.

Are your personal financial management tools hidden behind a tab? How many clicks does it take your customers to navigate through your site? Let us know about your “site-stickiness” in the comments below!

Don’t Give Customers a Reason to Look Elsewhere

In all the frenzy of this past Holiday season, you may have overlooked Apryl Motley’s piece on “Smarter Service” in the December 2010 Independent Banker; it’s definitely worth a read.  Consumers today expect more from their community banks than ever before, and they want a lot of added value in the services they get. Motley stresses that a multichannel approach to user-driven technology (many of which a bank already deploys across its many operations) can help retain and cross-sell customers.

She emphasizes four key channels of customer engagement as prime examples:  integrated voice recognition systems (IVRs); ATMs; microsites; and online personal financial management tools – and Motley stresses that the bank needs to better integrate and coordinate these services to enhance the customer experience.  For example:

Presenting a Stronger Voice: Believe it or not, voice is still among the most powerful channels. With the integration of IVRs, telephone banking systems and core banking systems, customers can make deposits at the ATM and then call to verify those deposits.

Personalized ATM Service: Along with valuable information, what customers want most are high levels of speed and service, and they don’t want to sacrifice one to get the other. Smarter technology is enabling ATMs to “listen” to a bank’s customers.

Making the Most of Microsites: Stand-alone microsites (like Savehardspendsmart.com, launched by $11B Umpqua Bank in Roseberg, OR) are mini-websites that provide targeted interactive news and resources on a particular topic, product or service – customers want to rely on their bank as a trusted resource for important information.

Show Them Their Money: The ability to give customers insights about their finances without them having to do much work is driving customer adoption of online personal financial management tools; some banks are revisiting the integration of online banking and PFM applications so that customers have to log in only once to get access to a “hub for managing their accounts.”

What are you doing to coordinate your channels of customer engagement? We’d like to hear.

FI Spotlight: Provident CU

Provident Credit Union Prepares for 2011

Despite the economic challenges of 2010, Provident CU’s CEO Wayne Bunker details the credit union’s preparation for 2011 by adding a variety of e-services, Website improvements and personal financial management in the form of FinanceWorks.

Remote check deposits and financial seminars top Bunker’s list of added convenience for the Provident CU customer in the new year.

Read the full message from the CEO here.

How has your financial institution prepared for a bright 2011? Leave us a comment below.

Financial Fun and Games

Celent Banking Blog recently posted an article about a new startup, Payoff.com. The site, which “makes money management fun,” targets users by blending games with finances. For an introduction to the service, watch the video below.

Payoff.com from Payoff.com on Vimeo.

Celent’s Jacob Jegher believes the service provokes interest with its “fun and games,” but once you delve into the site, the components are confusing. One of Jegher’s main concerns is security. After the recent mishaps with Blippy and Rudder, Jegher believes Payoff.com does not have enough security for the depth of information it asks its users to provide.

Jegher writes,

“Is financial planning a game? Certainly not. Can it be fun? Absolutely, but there has to be some knowledge transfer and education involved. Firms that will be successful in the PFM space have to find simple ways of providing financial education to their customers.  This is especially important for younger users as they are at a stage in their lives where financial literacy is crucial.”

What are your thoughts on combining games with financial planning? Let us know in the comments section below.