Archives for June 2010

Customer control in the ATM world

I wanted to build on my earlier blogs about customers getting more control over their card transactions. I do think it’s a genuine trend, although I am conscious that the more you think about something, the more you tend to notice things which seem to support your argument, yet otherwise perhaps wouldn’t have caught your attention. This is one such example. I just came back from a long weekend in Brugge, Belgium. Just as an aside – if you haven’t been to Brugge, you should pack your bags and go as soon as you have a chance. Many years, before I even heard of it, when people described it to me as “Venice of the North, prettier than Paris, etc”, I could not believe it, but I’ve now been there three times and agree with all those accolades. Beautiful litte town. Back to cards though. Card acceptance is broad and you can use your plastic pretty much anywhere. You can also see the signs of Bancontact/ Mr Cash, a local debit scheme, all over the place, with the plans to migrate Mr Cash to Maestro having been shelved a few years ago. As a tourist though, you still feel the need for the safety of cash sometimes. So I went to BNP Paribas ATM, which if I remember it correctly was one of the Diebold models. Most ATM transactions, especially abroad, tend to suprise you only when for whatever reason they refuse your card and you can’t get your money. However, here I was positively surprised – after I entered the amount, I was given a choice of notes denomination. For 150 Euros I was given a couple of options – 3×50 or 5×20+1×50. As I changed the amount, the options changed accordingly, e.g. for EUR160 = 2×50 + 3×20 or 8*20. I am not sure, perhaps it is a standard ATM feature in some other countries as well, but I haven’t seen that in the UK or in any other countries I travelled recently and I thought it was a nice bit of functionality, making me feel that I have influence and control over the outcome of the transcation.

Banking in the Cloud

I have undergone a conversion. After talking to a bank CIO and attending the Cloudforce Tour yesterday in San Jose, California, I now see a place for the cloud in banking. The bank CIO talked about moving not just prospecting, but account origination to the cloud, specifically to The tools available on make for a reasonable environment and development platform for this bank. It can make sense. Seeing the hurdles that banks apply to security, I would have never thought that a horizontal provider would meet the rigorous requirements that banks require. is SAS70 compliant. A year ago I wouldn’t have thought about moving real banking activity to the cloud. Today I do. Are you moving any of your banking activities other than prospecting to the cloud?

Learning from Asia About Banks & Carriers Playing Nice

One of Celent’s greatest strengths is that we have offices and analysts all over the world, covering various aspects of financial services. This is important because Celent is able to research cutting-edge technologies developed in one country/region that may be harbingers for market developments in other countries/regions. My latest report, Lessons from the Mobile Payments Leader: What the World Can Learn from the Japanese Market, is a good example. I’m now back in Asia, to examine retail banking technology and trends which will likely carry impact in North America and Europe. The first area of research focuses on a Japanese bank which has been built from the ground up, with mobile as its main channel. This bank offers a number of innovative features, including mobile-based account opening, loan origination and credit card/ATM lock. The second research area centers on the Korean mobile contactless payments market, which is much more bank-centric than the Japanese market, and thus holds different learnings for financial institutions hoping to enter the mobile NFC payments arena. Perhaps even more significantly, this research will reveal business models marked by collaboration and co-investment between banks and mobile carriers. In both Japan and Korea, there are a number of major mobile banking & payment players which have spun out of such bank-mobile carrier cooperation. In the U.S. and other non-Asian developed countries, mobile carriers are said to be looking to enter the payments market, while banks are hoping to enter the mobile market — the Asian experience shows that these aspirations are not mutually-exclusive. Stay tuned.

8.3.10: Celent Banking Webinar: Lessons from the Mobile Payments Leader: What the World Can Learn from the Japanese Market

Red Gillen, Senior Analyst, Celent’s Banking Group

This event is free to attend. Celent clients and the media will have access to the webinar’s PowerPoint presentation after the event.

Please click here for more information.

Chase Quick Deposit: Finally an Investment in Client Adoption

JPMorgan Chase has apparently launched a targeted campaign to boost its Chase Quick Deposit, remote deposit capture client base with some unusually rich discounts. Specifically, Chase is offering two years of free Chase Quick Deposit (normally $50/mo, plus the $855 Panini MyVisionX scanner to power it. Total retail value = $2,055. Like any offer, there are specific requirements to this offer. — Users must deposit at least 10 checks per month — Offer is valid for new Chase Quick Deposit users only — $500 cancellation fee if discontinued within 12 months — Offer good through July 31, 2010 Some banks may balk at such aggressive pricing in the small business RDC segment. What is Chase thinking? I can guess – and they’re on to something. The minimum monthly check deposit requirement is a pretty good clue. According to its 2009 Annual Report: • Last year, 61,000 people in 5,154 Chase branches in 23 states served more than 30 million U.S. consumers and small businesses • Retail operations teams processed 700 million teller transactions • Chase added 2,400 branch sales staff last year – personal and business bankers, mortgage officers and investment representatives – to better serve its customers. What is Chase doing? It is becoming more efficient, while strategically transitioning its branch network from transaction processing centers to sales and service centers. Significantly growing its small business RDC customer base – even without associated fee revenue – can pay large dividends to Chase. How? By reducing the number of small business branch deposits. Self-service deposits are less costly to process than paying tellers to do them. The graph below depicts Celent’s estimate of declining check transaction volume in the average US branch with and without small business RDC assistance.
Declining Check Transaction in the Branch

Declining Check Transaction in the Branch

So, the robust promotion of Chase Quick Deposit reflects both a shift in RDC strategy (from PxV product revenue to a self-service reason for being) and a shift in branch strategy (from transaction centers to sales & service centers). Chase serves as a great example for other banks to follow. Celent is currently researching the evolution of North American branch infrastructure. Weigh in on the link below, and we’ll send you a complimentary executive summary of the results.

RBC Launches myFinanceTracker PFM. Strong Start or False Start?

I am always excited when a bank launches an innovative product. RBC (in Canada) recently announced the launch of myFinanceTracker. RBC is “using the services of a California-based online financial solutions company” to offer the solution. To my knowledge, RBC is the first Canadian bank to offer PFM. It is a great move on their part and testament to where the online banking market is headed. RBC has, however, committed a false start by deciding not to include account aggregation capabilities in the launch (see “Can I View All of My Accounts Simultaneously in myFinanceTracker?“). Potentially interested customers who try the service will be frustrated by this. Many of them have multiple accounts (including cards) at a variety of institutions, and the ability to view their complete financial picture is a must. Once an online user is turned off, it will be very difficult to turn them back on, even if/when account aggregation is introduced. Throw in a few potential competitors (non-banks, or other Canadian banks that follow suit), and the ability to capture the customer’s PFM needs and precious customer data may be lost. I will be exploring the role of PFM in online banking in an upcoming Celent report – stay tuned!

8.11.10: Celent Banking Webinar: Cutting Cost to the Core

Bart Narter, Senior Vice President, Celent’s Banking Group

This event is free to attend. Celent clients and the media will have access to the webinar’s PowerPoint presentation after the event.

Please click here for more information.

7.14.10: Celent Banking Webinar: Reg, Reg, Go Away: Sorry Banks, They’re Here to Stay

Bart Narter, Senior Vice President, Celent’s Banking Group

This event is free to attend. Celent clients and the media will have access to the webinar’s PowerPoint presentation after the event.

Please click here for more information.

Customers getting in control of their cards

In my last blog post, I talked about a Lloyds TSB Airmiles Duo card, which gives the customers a choice of using either MasterCard or American Express card for their purchases. I believe this is an example of a broader trend in card issuing – giving the customers more control. Here are a couple of other examples of card issuers giving customers more control: – Control of funding and settlement timing. Chase Blueprint card is a product combining a traditional credit card with debit, installment loan and financial planning functionality. It allows the customer to bucket payments into different categories – for example, everyday payments to be cleared in full or large one-off items to be paid off over time. It also offers tools to assist the cardholder in managing finances, such spending trends analysis and ability to set goals and set up payment plans. – Control of spending patterns and limits. Barclaycard and Orange have implemented the MasterCard’s inControl technology for their contactless card – the first deployment of this functionality for consumer cards. It lets cardholders set personalised controls, such as blocking a transaction made abroad. The customers can also set spend budgets and choose to receive instant SMS alerts or e-mails when these are exceeded. Regulation is also pointing in the same direction – Reg E in the US requires banks to let their customers choose whether they want to use the overdraft facilities on their ATM and one-off debit card transactions or not. I expect to see customers taking more control over their cards in the coming months and years.

non-branch channels

Two different banks in the past 30 days have come to Celent looking for help with non-branch channels, and the banks couldn’t be more different. One is a local bank in the US with a few dozen branches. The other is a global bank with operations in dozens of countries. Both are thinking about the shift of activities from branch to other channels as their clients change their behaviors. I believe that this will impact the technology infrastructure of all banks. Channel proliferation will drive banks to an SOA so that new channels, whatever they may be, can easily be added to banking infrastructure.
  • Branch
  • ATM
  • IVR
  • Call Center
  • Internet Banking
  • Mobile SMS
  • Mobile Web
  • Mobile Thick client / App
  • Twitter?
  • Facebook?
The list grows and grows. Since most of these channels are real time, systems will also need to be real time. Banks will need to invest to keep up.