This Week’s Reads: Real-Time Payments, Retail Banking, Digital

Below are interesting stories the Banking.com staff has been reading over the past week.

What have you been reading? Let us know in the comments section below or Tweet @bankingdotcom.

This Week’s Reads…

What We’re Reading: Holiday Edition!

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

  • If Economists Wrote Christmas Cards

The Atlantic

Cash is the most efficient gift, according to economists. Cash is also a terrible gift, according to economists. By guaranteeing that the recipient can buy exactly what she wants, you guarantee that the recipient will consider you an unemotional robot. That’s why the vast majority of economists in the University of Chicago’s IGM poll said it’s absurd to give cash to loved ones for the holidays. “In some cases,” Steven Kaplan said, in a stirring defense for thoughtful gifts, “non-pecuniary [not cash-related] values are important.”

Read more 

  • 2014 Top 10 Retail Banking Trends and Predictions

Bank Marketing Strategy

This year’s list run the gamut from a continuation of past trends to the introduction of new trends in delivery, payments, competition, operations, customer experience and marketing. Prioritization of response to these trends will differ for each bank, credit union and industry provider, but none of these trends can be ignored.

Read more 

  • Is 2014 the Year of Mobile Banking?

Bank Systems and Technology

Here are the top three predictions on what to expect in mobile banking 2014. Mobile Deposit Will Move Beyond the Consumer to Commercial. Photo Bill Pay Adoption Wiill Be Steeper and Faster than Mobile Deposit. Mobile Banking Adoption Will Catch Up to Smart Phone Adoption.   It is looking like 2014 will be the year that the human element of mobile banking finally catches up with the technology.

Read more 

  • 4 New Year’s Resolutions for Your Bank Accounts

FOX Business

Here are four things you should do in the new year to get your banking situation into better shape: 1. Optimize your checking/saving balance. 2. Move deposits longer — with caution.  3. Consider a shorter-term mortgage.  4. Re-prioritize your banking needs

Read more 

  •  IRS Reveals How Long 2014 Tax Filing Season Will Be Delayed

My Bank Tracker

A couple of months ago My Bank Tracker informed us that the government shutdown would delay the 2014 tax season, and that the actual length of the delay would be announced at a later date. The IRS announced yesterday that processing for the 2014 tax-filing season would be delayed until Jan. 31.

Read more 

  • 3 ways banks will try to win you back in 2014

Yahoo! Finance

Here are just a few ways banking will get a lot sweeter in 2014: 1. They’re bringing the bank teller to you: Bank of America (BAC) raised eyebrows when it rolled out 150 teller-assisted ATM machines earlier this year, and we can expect to see more banks follow suit. Expect perks on perks on perks: Consumers, no matter the size of their checking accounts, can expect more “star” treatment from banks in 2014.  Banks will take on the classroom: In 2014, you can bet big banks will continue their uphill battle to redeem themselves by focusing on consumer education.

Read more 

What We’re Reading: Online Banking, Mobile Wallets, Retail Banking

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

  • Why Cost-Conscious Bankers Should Cheer an Appless Future

American Banker

Attention cost-conscious bankers: tiny University of Wisconsin Credit Union may have begun cutting a path to building mobile apps at a fraction of today’s typical cost. In what appear to the first such move of its kind, the $1.6 billion-asset outfit has done so by designing a mobile bill-pay function for an off-the-shelf web browser. The upside of this approach is that creating smartphone and tablet software is expensive, especially when it involves developing multiple versions for multiple types of devices. At most banks, that involves building apps for Android, Apple and even the fast-fading BlackBerry.

Read more 

 

  • Is Online Banking Dead?

Celent Banking Blog

Banks can’t afford to drop the online banking ball. There are several key reasons for this: The online channel is still the most popular with consumers of all ages. The results of our most recent consumer survey (September 2013) are quite clear.  While mobile is certainly growing in importance and popularity, online still rules. Most tablet banking apps are pitiful. Kudos to the banks that have ventured down this road as it’s an interesting and exciting space. However, we recently reviewed the tablet apps of the top banks in the US, and most can’t compete with the features, functionality or experience of classic online banking. I recently spoke with a bank that had just finished doing some customer research to evaluate how customers were using their tablet app.

Read more

 

  • A Tale Of Two Futuristic ATMs

Credit Union Journal

As Fexco and First Data demonstrated their futuristic ATM concept, which allows consumers to use a mobile phone instead of a card for access, they emphasized that the CU or bank is at the heart of the offering – everything about the technology could be changed to the bank’s whim. And as Lamassu took the same stage to pitch a very similar device, which reads from a consumer’s mobile phone to access a Bitcoin wallet, a very different message came across: “Our machines are, in a sense, bankless ATMs,” said Lamassu co-founder Zach Harvey. Each company presented its product during the Payments Innovation Day session of PaymentsSource’s ATM, Debit and Prepaid Forum here.

Read more

 

  • With IPO In Sight, Lending Club Looks To Upend Banking Industry

Forbes.com

Laplanche is recounting the five-day Transpacific yacht race in July from Los Angeles to Hawaii on the company-sponsored yacht. His team won the multihull division race with the second-fastest time ever. The most harrowing part of the race was when the vessel was struck by what looked like a telephone pole, seriously damaging the center board of the boat. But Laplanche recalls the incident like it was a walk to the corner store. Laplanche is no stranger to sailing; he started sailing at age 10, began sailing competitively at 14, and later won two French sailing championships.

Read more

 

  • PayPal Nudges out Visa in Javelin “TIP” Mobile Wallet Rankings

Javelin Strategy & Research Blog

Who is winning the mobile wallet race? The answer might surprise you. PayPal moved up strongly in Javelin’s TIP (Trust-Innovation-Privacy) consumer rankings to grab the lead from Visa this year. PayPal is the most trusted brand among consumers compared to Apple, Google, Amazon and Facebook, and compared to the top banks, major payment networks and largest mobile network operators.

Read more 

 

  • Three Essential Priorities for the Retail Banking IT Roadmap of 2014

Tower Group Blog

As we move into the Q4 2013, retail banking IT executives should consider three crucial priorities as they begin to assemble an IT investment roadmap for 2014. Optimize the IT Delivery Model: The pace of technology development and acquisition continues to accelerate, amplifying the difficulty of integrating new technology with outdated legacy systems. Target Channel Investments to Maximize Customer Engagement: Customers are rapidly migrating to digital channels, performing an increasing proportion of banking tasks through online and mobile channels rather than through the branch or call center. Identify the ROI of Investments in Mobility: Many banks are making significant investments in mobile technology despite a lack of clarity about mobility’s impact on loyalty or revenue.

Read more 

What’s Loyalty Got To Do With It?

There’s no question that the banking industry is working overtime to woo new customers—this blog continues to document ongoing initiatives to draw people in. This includes emerging demographics, such as folks who want a comfortable atmosphere, or those pesky millenials who need constant attention and rewards.

This leads to a related question: Once we get them in, how are we doing at keeping them there?

Not so well, as it turns out. The World Retail Banking Report 2013, an annual survey of 18,000 global customers conducted by Capgemini and Efma, provides a sharp counterpoint to the perceptions of success in retail banking. The bottom line seems to be loyalty ain’t what it used to be.

For a start, 10% of retail banking customers say they will ‘likely’ leave their bank within the next six months. But that’s not even the worst of it.  A surprising 41% of customers say they are actually unsure whether they’ll stay. In other words, one out of every two retail customers might just go elsewhere before the end of the year. And just to rub salt in the wound, the numbers are actually worse than they were in the 2012 study.

One underlying factor for the dwindling sense of loyalty is customer satisfaction. Fewer than half of all customers worldwide, 44%, express satisfaction with the banking experience their institution provides, and a sobering 63% voice the need for greater personalization, specifically learning about and meeting their unique needs.

Looking at these issues in a historical context is misleading. The typical retail customer today is a far cry from even the most demanding patrons of the past—they have too many options available at the click of a button, and in the digital era they’ve been weaned on a steady diet of instant gratification. If even the most complex problems can’t be solved in an instant, it’s surely a failing on the part of the bank.

In fact, even positive customer experiences can be undermined by unrelated events, such as high-profile scandals around rigging and money-laundering involving marquee institutions, not to mention huge government bailouts. Unlike, say, the retail industry, loyalty in this business has a lot to do with trust, and this has become a major issue. The survey reveals that 49% of banking customers don’t ‘completely’ trust their institution.

Even with all these clouds, however, there might be a silver lining or two. Most regions studied reported improvements in customer satisfaction levels. North American institutions checked in with a 5.5% jump—a respectable showing, but somewhat behind an 11.9% spike in Latin America and a 7.2 rise in Western Europe. That said, customer satisfaction is still highest in North America. Canada leads the pack a 61% rating, but the U.S. is close with 57%.

It’s hard to tell what the 2014 study will look like, and there’s clearly no panacea. But a pair of related statistics offers some markers to the road ahead.

First, the most recent report from research and consulting firm Celent shows the extent to which retail banking in changing. Branch density has risen steadily for a long time now, registering a staggering 281% growth in FDIC-insured branches since 1970. Now, it’s clearly going the other way, with a “dramatic reduction” in local branches. In 2012 alone, according to SNL Financial, 2,267 branches were shuttered. Main Street USA will never look the same.

Meanwhile, this is the year in which there will officially be more mobile devices than people. In other words, there might be far fewer branches but the opportunity to do far more banking.

The industry isn’t going away—consumers need financial institutions, and vice versa. The better the service, the more the business, and that’s the way it’s always been. But moving forward, customer loyalty and fidelity probably will be quite different.

Smile, You’re On Camera

Do you need to see your banker?

It’s a serious question, and the answer represents one possible bridge between the two opposite ends of the retail banking spectrum.

At one end of, course, is the demise of the local outlet as we know it—new branch construction is the butt of jokes, and existing branches are being shut down in apparently record numbers. However, the transition to all-technology, all-of-the-time is not happening overnight, or perhaps even anytime soon. In fact, while foot traffic is clearly down, there seems to still be a huge audience out there of regular consumers who find reason to visit their banker in person. But for that latter category—the good people who need eye-to-eye contact in sensitive communications—is there a technology alternative?

One such model is being tried out at UMB Financial (UMBF) in Kansas City, which has built a reputation for innovation in its market-facing strategies. While joining the mass migration to mobile transactions and other fresh tactics, the institution is turning to video banking to fill the potential gap.

Videoconferencing capabilities at three pilot sites now connect consumers with tellers at the call center, who help customers negotiate the necessary financial tasks. It’s potentially a win-win—the technology speeds up the transaction and frees up trained branch personnel to focus on more difficult issues.

As we’ve documented on this blog, many institutions are experimenting with their retail models, from cutting back drastically on local branches to building in teller pods and community rooms. However, every new tactic has its own issues, and it will be interesting to see how using video plays out.

This technology actually goes to the heart of many issues currently confronting the modern workplace. As online collaboration tools gain greater sophistication and adoption, the idea of working from home is already going from an occasional luxury to the norm. Of course, home could be on the other side of town, or in the suburbs, or another city or even another country.  But as just about all communication becomes virtual, what effect is it having on trust and camaraderie between co-workers?

This is also playing out on the customer side. The service industry in general (and retail industry in particular) is confronting these issues on a regular basis, as store chains and even mom-and-pop outlets try to develop a balance between in-store and e-commerce models.  The hard truth is that we don’t have the answers yet—this is a movement that’s still moving, and will keep moving for some time.

With banking, the other X factor is that it’s about money—many consumers who might otherwise be considered tech-savvy remain skittish about conducting financial transactions online, and the steady stream of stories about data and identify theft don’t do much to instill trust in the process. Would personal interaction and eye contact, even via video cameras, help?

There are other issues to consider too. Most of the time when calling customer support, we have no idea who we’re talking to, and where that person is. There’s been plenty of media buzz about support functions being outsourced overseas: Will bankers based on the other side of the world now appear on camera? Or will there be a new generation of carefully coiffed financial advisors appearing on camera from designated sites—or even from home, assuming the background is industry-appropriate? On the flip side, banks could save on real estate. Oversized branches will be replaced by smaller sites that have only a few key personnel and a bank of workstations, and of course, there’s less chance of a waiting line.

Bottom line: The financial services industry is clearly in a time of huge transition, just like the rest of society, and banks that experiment with new ideas deserve support and encouragement.  Video-enabled banking probably isn’t a panacea, but it could be one of the answers.

Big Banks Make Big Gains in Customer Satisfaction

*Guest post by Karen Licker, Financial Services Social Media & Marketing (Independent) at J.D. Power and Associates

Overall customer satisfaction with retail banks improved significantly from 2012, largely a result of improvements made by big banks, (1) according to our J.D. Power and Associates 2013 U.S. Retail Banking Satisfaction StudySM  released today.

“Many of the big banks have made great strides in listening to what their customers are asking for: reducing the number of problems customers encounter and, more importantly, improving satisfaction with fees,” said our own Jim Miller, senior director of banking here at J.D. Power and Associates

Below are a few highlights from the study:

  • Fees have begun to stabilize and banks have helped their customers better understand their fee structures.  Satisfaction in this area has begun to rebound, and is up by 14 points this year from 2012.
  • One-third (33%) of customers say they “completely” understand their fee structure, compared with 26 percent in 2012.
  • Fees also have been a major source of customer problems and complaints. The stability in fees, coupled with banks placing more emphasis on preventing problems, has lowered the proportion of customers experiencing a problem by 3 percentage points year over year, to 18 percent in 2013.
  • While customers appreciate the personal service they receive at their branch, such transactions are slowly declining, while the numbers of online, ATM and mobile banking transactions are increasing.
  • As banks roll out envelope-free ATM deposits and deposits by mobile phone, customers are finding it easier to handle routine transactions without needing to visit their branch.

“Successful banks are not pushing customers out of the branch, but rather providing tools that make it easier to conduct their banking business when and where it is convenient for them,” said Miller. “Customers are quickly adopting mobile banking, making it a critical service channel for banks, not just a ‘nice to have’ option.”

For study results by region, view retail banking satisfaction rankings at JDPower.com

For more information on this 2013 U.S. Retail Banking Satisfaction Study, please contact Holly Zagresky at (248) 680-6319 or via email at Holly_Zagresky@jdpa.com

(1)Big banks are defined as the six largest financial institutions based on total deposits as reported by the FDIC, averaging $180 billion and above. Regional banks are defined as those with between $180 billion and $33 billion in deposits. Midsize banks are defined as those with between $33 billion and $2 billion in deposits.

What We’re Reading: Retail Banking, Tech Disruptions and Vine

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

 

  • ‘Consumer Reports’ Offers Tips For Doing Taxes Online

All Things Considered

If you expect to have an adjusted gross income of $57,000 or less, the easiest thing to do is use the IRS website — it has a section called Free File. You can prepare and file your federal income taxes for free with one of 15 companies that have signed up with Free File. If you think you’re going to have an adjusted gross income that’s greater than that, you can use the search engine, type in “tax preparation,” and a number of names should come up. One that everybody might know is TurboTax.

Read more

  • Big Bank Breakups and Tech Disruptions: Predicting the Future of Reform

American Banker

Almost everyone in Washington finds some fault with Dodd-Frank. But rather than making smaller, incremental corrections in the short term, Congress could attempt a more comprehensive fix further down the road. To many, Dodd-Frank, which is meant to apply more regulatory pressure on the largest financial companies, tried correcting problems with Gramm-Leach-Bliley, which made it easier for multiline financial conglomerates to operate. Alternatively, the rush of technological change in financial services could serve as motivation to lawmakers to devise regulatory reforms that keep pace.

Read more

  • Social Media Newbie Regions Bank Aces Facebook, Considers Vine

Bank Investment Consultant

Looking further ahead, Liliana Grip, vice president of social media at Regions Bank has her eye on Vine, a Twitter-owned mobile service that lets users capture and share short looping videos. “We’re trying to figure out how to leverage Vine[…]One concern, and Twitter is addressing this, is there’s a lot of [content] that isn’t consistent with our brand. We need to get through some legal and compliance hurdles.”

Read more

  • Consumer Appetite for Comprehensive, Mobile PFM Grows

Bank Systems & Technology

Javelin estimates only 21 percent of U.S. consumers — or more than 49 million adults — mix and match current PFM features from software like Quicken, online banking, and various websites. However, many of those polled indicated that they wold like a way to view all their account balances in one place, with nearly half prioritizing this feature over all the other PFM services.

Read more

  • What Will Retail Banking Look Like in 2020?

Bank Systems & Technology

Opening a new bank branch used to be a matter of simply choosing a location and building out the structure according to a template design. But today, the definition of “bank branch” is being transformed by technology, competitive dynamics and economic pressures. As reported in Jones Lang LaSalle’s recently published Global Retail Banking 2020 study, up to 50 percent of branches in today’s U.S. bank networks may be declared obsolete — although not necessarily defunct — by 2020. Given that branches constitute 75 percent of a bank’s total retail distribution costs, according to research from Capgemini, implementing smart, technologically savvy retail strategies will be critical to driving shareholder value.

Read more

  • Threat of the Week: DDoS Becoming an Expensive Fact of Life

Credit Union Times

The ceasefire is over. Last week, on Feb. 25, the Cyber Fighters of Izz ad-Din al-Qassam renewed their Distributed Denial of Service attacks against U.S. financial institutions. That included again taking down the websites of two credit unions: the $1.5 billion University FCU in Austin, Texas, and Patelco, the $3.8 billion Pleasanton, Calif., institution. They issued the same demand – removal of an anti-Islam video from YouTube – and said their campaign against financial institutions would continue. What is new is that the conversation about how to respond to the industrial-grade DDoS unleashed by the Cyber Fighters is beginning to shift.

Read more

  • Consumers Want More Practical Online Tools, Portable Bank Account Numbers

Financial Brand

According to a study conducted by BT and YouGov, 61% of banking customers in the U.S. favor portable banking account numbers. When asked which three tools they would most like their bank to provide, customers indicated that they would like to see more sophisticated, more practical online tools — all hosted on the financial institution’s main website. The features most desired by consumers include peer review sections (32%), live chat functionality (23%) and compare-my-bank style services (29%). When asked about which three factors would be the most appealing when considering moving banks, the results were fairly consistent across all countries. Good online banking facilities (39%), the presence of a local branch (45%) and the ability to access banking services 24/7 (29%) were ranked highest.

Read more

  • Consumers remain resistant to digital banking aspirations

Finextra

A YouGov poll of consumer attitudes to the introduction of portable bank account numbers has unearthed an underlying distrust of social and mobile technologies and a clear preference for human-to-human interaction via the branch, the call centre and the Web. The BT-commissioned poll of 6500 adults from six countries worldwide, found that the majority of consumers in Spain (76%), Hong Kong (70%), France (64%), Germany (61%) and the UK (62%) all agree that a portable identity number – allowing them to switch banks without changing account details – would be useful.

Read more

  • Five High-Tech Trends Driving the Future of Banking

FOX Business

Here are some of the trends driving the future of banking. Customers will soon be gaining more mobile-banking payment and account options. “We’re going to see a lot more and different products, and a richer (banking) experience,” says Brett King, author of “Bank 3.0″ and “Branch Today, Gone Tomorrow. Banks already are rolling out banking software for iPads and tablets and thinking of new ways to structure bank accounts “that are more purpose-built,” with more options for tracking money and ways to make payments, King says.

Read more

Key Banking Topics in Social Media

*Guest post by Karen Licker, Social Banker & Content Contributor (Independent) at J.D. Power and Associates

The challenges confronting banks that seek to bolster their bottom-line profitability, retain customers, and stay competitive in the marketplace are formidable. Research conducted by J.D. Power‘s Consumer Insight and Strategies Group to track social media activity regarding banking issues between April 2011 and March 2012 finds that:

  • Online sentiment was distinctly negative not only regarding fees, but also for bank technology
  • Complaints associated with website or online issues were a major source of discontent in technology-related messages

 

 

 

 

 

 

 

 

 

 

 

 

 

With customer feedback on critical topics discussed online going from technology to fees and service, banks should see the handwriting on the wall and provide an appropriate outlet for these customers, along with an acknowledgement and guidance for direction for immediate response.

Retail Banks aren’t the only ones that have an opportunity to engage with the vocal online customer. Credit card holders appear to be even more outspoken online, but card issuers appear to have learned this a bit faster than their Retail Banking peers.

  • 43% more credit card customers indicated that their financial institution responded to their online post than for Retail Bank customers (J.D. Power and Associates 2011 Credit Card Satisfaction Study). This may not be surprising, however, given the more virtual nature of interaction associated with credit card servicing.
  • Mobile apps for payments, online sites for daily transactions and much heavier reliance on phone-based rather than in-person interaction all combine to make the credit card environment more conducive to engaging the customer online.

Financial services, however, need to step up to the plate more and address the disgruntled customer. While these percentages are a step in the right direction, there is much more to be done to placate this online audience and turn the negative intensity and passion around.