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

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.


  •  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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Mobile Banking: Enigma, Mystery and Conundrum

It’s so simple. Need some kind of transaction with your bank? Just take out your mobile device—smartphone, tablet, whatever, on just about any operating system—and you’ll have a wealth of apps to get it done. You’ll get reminders when you need to do it again, or set it up to do it automatically. It’s very simple, really.

Now let’s pull back and try to analyze the mobile banking market overall. That, it turns out, is not simple at all. In fact, it can be an exercise in frustration and futility.

Here’s an example. As documented in this forum recently, mobile banking is drastically changing the industry landscape. According to a report from Javelin Strategy and Research, no less than “88.5 million Americans attempted to open an account online or with a mobile device” between June of last year and this one. A new report from the same firm, meanwhile, identifies the huge potential opportunity in this market—financial institutions can save almost $50 per customer per year just by getting them to switch to mobile deposits. That’s an industrywide boost of $1.5 billion.

But do those savings by themselves constitute a clear ROI? At a recent industry summit, many of the discussions hovered around the idea of fees, since providing mobile services can be seen as a value-add (and it takes resources to develop and market those apps). As a result, some institutions such as U.S. Bank and Regions Bank have built monetization models into their mobile offerings.

This may be one reason (but only one reason) why not everyone is using the mobile option as much as they can. For example, both the Javelin study and another from MoneyRates note that while there’s a general level of satisfaction with the notion and practice of mobile banking, mobile deposits have been slow to catch on. Javelin reports that while the percentage of customers who opt for mobile banking rose from 15% to 25% between 2010 and 2013, only 6% of that demographic—in other words, those who bank via their mobile devices—go that way for check deposits. It’s as if the act of having a paper document in hand mandates a visit to the branch. As a result, banks have to do more to change user behavior.

Fair enough—but again, that’s not how everyone sees it. “Think about it. Do you know anyone who writes checks anymore?” begins a new article that hammers home the security risks inherent in mobile banking. The author certainly has a point: While banks have developed and released many new apps to help customers turn to mobile banking (though apparently they still have more to do—see paragraph above), security seems to have taken a back seat in that many technologies and procedures are adapted from the old world of online on even traditional branch banking. Innovation in this area has clearly lagged behind, and fraudsters have noticed.

Meanwhile, the market may be about to get even more messy. As we’ve noted here before, industry professionals need to understand that tablets and smartphones might not be the only mobile options—there will inevitably be other form factors disrupting the market. One we speculated about was Google Glass, which didn’t have a clear financial purpose but represented another potential platform with which to conduct financial transactions. Of course, very few people even have the device, so who’s going to develop apps for it?

Try Fidelity Investments. That fund giant’s development unit is launching a Market Monitor app that delivers quotes for major U.S. stock indexes over computerized frames. Pretty basic—just like the early incarnations of online apps and mobile apps.

The truth is that because of the rate of technology innovation and the speed of market adoption, any industry snapshot is old by the time it’s taken. Best practices can become similarly obsolete virtually overnight. None of this negates the fact that as an industry, we have to be prepared for technologies as they emerge and paradigms as they shift.

With mobile banking in particular, let’s assume that we seldom know what’s coming next. But even if we don’t know what the change is, we know there’s one coming soon, and one right after that. We’re not always going to be ahead of the market, but we shouldn’t always be scrambling just to catch up. Let’s try to keep pace.

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

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.


  • 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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The Phab Factor

When it comes to technology, the banking industry spends a lot of time just trying to keep up. From the glut of function-specific applications arriving daily to new hardware like Google Glass, there’s always something new just around the corner, and every fresh entry has the potential to change everything.

But what if there was a new market already here that hasn’t been categorized as such? Would that offer some interesting possibilities?

Meet the phablet. Actually, you probably met it a while ago and carry it around all the time.

A bit of context here: The driving force behind Apple’s revolutionary iPad was to bridge the yawning chasm between the laptop and phone. The former—despite its designation as something we could carry around and perch on our knees—was entirely too big, while the later was just too small. (A few mini-notebooks attracted some attention but never really caught fire.) The tablet fit the bill perfectly and the touch-screen functionality, complete with keyboard, was the cherry on top.

But now, as avid consumers search for new modes of consumption, we want more (or less, depending on the device). That’s why we have the iPad mini, alongside smaller versions of non-Apple tablets. This is technically a new market, and users seem to grasp the concept—quite a few have bought one in addition to the regular-sized device they bought earlier. But what’s equally interesting, though perhaps less noticed, is that while tablets have gotten smaller, phones have gotten larger.

That brings us back to the phablet, which eliminates the apparent gap between phones and tablets. The category is loosely defined as devices with larger screens, but it’s not only about size. Some devices in this market feature software designed and/or customized for the phablet as a form factor. For example, the Samsung Galaxy Note touts a self-storing S Pen stylus for certain functions (which users with a memory might remember from earlier Palm devices).

It’s easy to make phun, sorry, fun, of the phablet. Even the word reeks of geekery run amok, a pointless portmanteau for an unnecessary category. (‘Superphone,’ a newer addition to the vocabulary, is even more groan-inducing.)  A recent piece on the subject in American Banker actually begins with the words, “They may look ridiculous, but. . .”

But that ‘but’ is important—despite the derision, this segment continues to spike at a staggering pace. The new report “Phablets and Superphones Market – Global Industry Analysis, Size, Share, Growth and Forecast, 2012 – 2018” predicts that the phablet (let’s just get used to saying it) market is growing at a compound annual growth rate (CAGR) of 44.1% from 2012 to 2018, reaching 825 million units and $116.4 billion.

This puts us in a strange place—here’s a market that’s already vast and will keep growing, yet there’s virtually no functionality customized specifically for it.

It’s easy to dismiss the notion of any real difference between smartphones and phablets, and this could be just another fad, of course. Still, there’s no question that a huge audience has emerged specifically for larger phones—a complete reversal of long-held beliefs that we like our phones to be as small and light as possible. And just to be practical, the phablet will fit into clothes in a way the tablet won’t.

So here’s how this will play out. The phablet will remain what it is, a phone with a larger screen that eases multimedia functions. Alternatively, it will become a specific hardware category, thanks in part to innovators who can thread the needle and develop apps and capabilities that dovetail perfectly with this form factor. Those individuals and the organizations that back them will reap the rewards. The rest of us will wonder why we didn’t think of that.

Mobile banking is literally in its infancy—it didn’t even exist just a few years ago. Today, facing frantic competition, every financial services institution is pouring resources into the field, with dazzling apps that can function on every kind of platform. Staying ahead of the curve for once might make for a healthy change.

Celent: Tablets and Banking

There are a lot of reasons to love Jacob Jegher‘s latest post, Tablet Wars: Online/Mobile Banking Will Never be The Same. First, if you know Jegher at all you know he’s not prone to making sensational broad sweeping statements. That alone make his post a must read.

Secondly, Jegher hits on all of the right points as to why tablets are a game changer, many of which his Celent colleagues have also teed up in recent months. In short:

  • Is banking on a tablet considered online banking or mobile banking? The answer is both and neither. Tablets are unique devices with distinct capabilities and form factors.” The bit about form factors is particularly important. Intuit’s hit on this in discussions around experience design and Omar Green’s a huge champion of what he likes to call “Mobile Context.”
  • Do tablets impact consumer banking, small business banking, or corporate banking? The answer is all of the above.” What’s important here is that tablets influence all three of these categories very differently.

The best part about this post, in my opinion, is that all of Jegher’s comments point in the same direction. End users, regardless of their stripe (consumer, big time enterprise executive, small business owner) all want what they want, when they want it, where they want it. Simply put this bolis down to meeting a customer at their point of need and in the right context.

*originally posted on the Intuit Network

About Allyson Casey:

Allyson Casey leads Intuit’s Industry Analyst Relations program. She is located in the wilds of Maine and spends her days turning data and pie charts into plain speak and making sure she’s connected with the vast community of influencers.