Archives for October 2011

“Did I just Tweet my account number?”

As if financial institutions don’t already have enough to do to keep up with developments in social media! They must clearly outline company policy to employees concerning what should and should not be posted, inform agents of the regulatory do’s and don’ts, and continually scan the internet to respond to comments about their brand. Now, it is clear that they must also guide customers about the appropriate and inappropriate use of social networking when dealing with fiduciary transactions.

As usage grows, requests to employ social tools as the main communication tool between customers and their financial providers will also increase. For example, Bank of America now offers a Twitter feed to their customers as a first point of contact. Customers tweet their inquiries, complaints, solutions, etc. and these are transferred to the BOA customer resolution system at a call center. A customer service professional asked me about this recently, “How does the bank prevent customers from tweeting their account number?” My reply? “They can’t.” Last week, I was speaking with one of the largest disability insurers in the U.S. and found that their claimants are asking them to track their recovery on Facebook. To paraphrase the question received from a client: “I am keeping my family and friends updated on my progress by posting on Facebook. Can’t you just follow along?”

These are only two data points, but I suspect there are many more. Customers need their awareness raised about what information should be protected when communicating with a bank or insurer. These institutions have been dealing with privacy and confidentiality protection for decades, but usually in a context where the conversation is more controlled and private. With the broadening use of social networking for operational processes, companies must explain and remind their customers of the sensitivity of data.

I took a look at the Facebook walls of ten U.S. financial institutions and noted that there was no mention of do’s and don’ts or reminders to safeguard information on these front pages. There were plenty of contests I could enter, and a few postings on positive service experiences, but no tips on how to keep financial data safe. There were mentions of confidentiality and privacy on some Info and Guideline pages, but these are the domains of attorneys and dedicated research analysts – not likely where John/Jane Q. Customer is going be.

As social sites become more “operational” in nature, highlighting this issue in high profile places such as the main wall will be necessary, but not sufficient to protect customers from themselves. Look for leading companies to aggressively coach their customers and prospects on how best to use social tools when posting/tweeting/blogging on the same valuable real estate that they now reserve for marketing messages.

(Thanks to Jacob Jegher, Senior Analyst, Celent Banking Team, for an assist on this post.)

Now Accepting Nominations for Celent Model Bank 2012

Remember when banking was broadly embraced as an honorable profession? That idea seems to have been lost among most businesses and consumers these days. Hardly a day goes by without a news story about some sort of alleged bank impropriety. In sharp contrast, Celent seeks to celebrate financial institutions doing things well. Each year, we honor a hand-picked selection of financial institutions who model excellent utilization of technology in banking. Celent Model Bank 2011 winners received recognition at our annual Innovation and Insight Day this past May in Atlanta, GA.


So, forget the depressing daily news and think about great examples of technology innovation at your institution (or one of your clients if you’re a technology provider). Share your story with us using our online nomination form. We’ll welcome nominations through January 31, 2012. A panel of analysts will review all nominations based on three criteria: 1. Degree of difficulty 2. Degree of innovation, and 3. Measurable, quantitative business results achieved Success stories are welcome across the spectrum of financial services disciplines, from: infrastructure and architecture, product development, marketing/sales, distribution / channel management, transaction processing, loan processing, customer service / support, and security and risk management. Nominations can be made online at: If you’d like, e-mail me and I’ll send you an excerpt from last year’s report, Celent Model Bank 2011: Case Studies of Effective Technology Usage in Banking.

Social Media Best Practices for Banks – “Be Cool.” Good Luck With That!

I’m still inundated with inquiries from financial institutions regarding social media. Everyone seems to be so concerned with getting on Facebook or Twitter. It’s as if that would solve all the woes of the banking industry. A very popular website, Mashable, put out an article yesterday titled, 5 Best Practices for Financial Institutions on Facebook. Needless to say I read it with great interest and much disappointment and disdain. My favourite is best practice #4, “Be Cool.” I can already see the catch phrase emblazoned in the social strategy of every financial institution in America. Good luck with that! The article misses the most fundamental point that every financial institution must take into account – banks need to focus on business goals and incorporate social media into the process. It’s not about Facebook or Twitter, or whatever the flavour of the week is. Am I opposed to social media? On the contrary. I think it’s critical and something that banks need to take very seriously. Social media, is but one of the elements to be used in satisfying business objectives. I’m happy to chat more about this topic, it’s an important one. It was the subject of a presentation I gave at the NACHA payments conference earlier this year. Feel free to reach out or comment here. I’d love to hear your thoughts on the Mashable article, it was the subject of a healthy conversation on Twitter yesterday.

Engaging In An Industry Discussion About Payments

A few weeks ago, I was asked by David Bannister, editor of the Banking Technology magazine, to join a panel of industry experts to discuss the question – “Whatever happened to the listening bank?” The premise behind the question is that banks are at risk of getting disintermediated in payments by alternative providers. Are banks doing enough to protect their payments franchise? Should they listen more – to their customers, merchants, competitors? If you would like to view the short video capturing the highlights of our discussion, you can find it here. Do you agree with our conclusions?

Mobile platforms for building mobile banking

I’m at the Pyxis mobile conference learning about the latest and greatest. Pyxis is one of a number of Mobile Enterprise Application Platforms (MEAP). The goal is to write the software once so that it can be deployed anywhere: Android, iOS, Blackberry, wherever… There seem to be three major ways to implement the solution:
  1. Create a wrapper app that gives you a web interface that looks like an app.
  2. Compile down to native code from an integrated development environment (IDE).
  3. Create meta data that enables a local interpreter on the phone to render your app.
This last mode is how Pyxis chooses to implement their solution. The app is essentially an interpreter that takes Pyxis meta data from the Pyxis server to render the app on the local device. I must confess I wouldn’t have come up with this solution, but it comes with a unique advantage: When you update your app, you don’t need to update the app in the app store. The downloaded app is the Pyxis interpreter. To change the behavior of the app, the enterprise changes it on the app server and it is automatically updated. Given the dynamics of working with the app stores, the ability to upgrade apps without going through another approval process is a significant advantage. Additionally, a bank can push different functionality to different users, based on login profile. This latter functionality resonates with large banks. Most banks will want to use software from any number of mobile banking providers. You can see our reviews of them here.

The Tablet Will Act as a Catalyst to the Redesign of Online Banking

I’ve been thinking about this for some time and wrote about it in a report I published this past June. It’s already starting to materialize. This week, Citi unveiled it’s new website, and it’s modeled after the mobile and tablet experience. To get a feel for the changes, have a look at the video Citi has on its preview site. I was out at the Bank Systems & Technology Executive Summit this week and had the opportunity to chat with a Citi executive about some of the changes. No doubt it’s a step in the right direction. I’m curious to hear what consumers think about the changes and the redesign. I’m also very intrigued regarding how adoption of PFM will materialize (see my blog post, Is PFM The Future of Online Banking? and my recent report, Personal Financial Management: The Devil Is in the Details). American Banker is reporting that Citi engaged Yodlee for the aggregation and PFM components of the site. Citi isn’t the only large bank up to major changes with their online banking solutions. Stay tuned for some upcoming changes at Bank of America. BofA is claiming that the outage they suffered this week was due to a “multi-year project to upgrade its online banking platform.”

Reflections from EFMA Cards & Payments Conference

The conference season continues with gusto. After a hectic week in Sibos, I found myself last week on a Eurostar heading to Paris for a three-day Cards and Payments conference organised by EFMA, where I was invited to speak on Day 1. I don’t know if others have the same experience, but I view these events as falling into one of two categories. I call the first category “trade shows”, which may have a conference running in parallel, but the main attraction (at least for me) is the exhibition floor with its many participants. Usually my diary during those events is full of meetings, which is a great way to catch up with clients, prospects and industry experts. Personally, I put Sibos and BAI Retail Delivery into that category – I know that both have a strong conference programme running in parallel to the exhibition, but I am lucky if I get to attend any of the sessions. The other category is a true “conference”, where the main attraction is the content of the presentations and the ability to interact during the breaks with the speakers as well as other participants. I have to say that EFMA’s Cards and Payments conference in Paris was one of the best I’ve attended in recent years. The organisers, and Julia O’Hegarty and Patrick Desmarès in particular, have done an excellent job in attracting interesting speakers and a great audience – over 360 participants from 40 countries! The conference started with the Leadership Forum, which had many of the major industry names among the presenters and panelists, such as Peter Ayliffe, CEO of Visa Europe, Gertrude Tumpel-Gugerell, formerly of ECB, Gerard Hartsink, Chairman of EPC, Rita Wezenbeek, Head of Payments Unit, Directorate General for Competition at the European Commission, senior representatives from MasterCard and PayPal, and a panel of esteemed bankers. Annich McIntosh, Managing Editor of C&M Publications did a fantastic job at chairing the session and moderating the discussions. Here are a few of my key takeaways from those discussions: – SEPA is still a success, but we need patience. Much has already been achieved and the march towards common standards will continue irrespective of what happens in the eurozone markets. – Competition between schemes is heating up. Visa Europe re-affirmed its European status and independence from Visa Inc, and announced new solutions, such as card-based P2P payments and secure digital wallets for the banks. MasterCard talked about “the new retail world” and their partnership with Google Wallet. PayPal also talked about the need to create a new retail experience and re-assured banks that they are “moving into physical retail space, not banking.” – Despite this increasing competition, European Commission would “welcome new card schemes” in Europe, particularly because of “risks of some domestic schemes leaving the market due to investments needed for Sepa compliance”. However, EPC said they had “no policy or mandate” to implement an additional European card scheme, leaving it firmly in the hands of the market. – Of course, the topic of interchange received quite a bit of attention. Many issuers in the room must have breathed a collective sigh of relief to hear that Europe is unlikely to follow in the footsteps of Australia and the US and that there would be “no regulatory initiative at EU level.” Throughout the three days, contactless, mobile and payment innovation continued to be strong themes. My own presentation was on how mobile financial services can help meet diverse customer payments needs. However, for any of the innovations to take off, security and fraud issues need to be addressed and those were discussed at length as well. A presentation on a fingerprint-based biometric authentication solution sparked a witty exchange in the audience via Twitter. If a finger replaces a card, do the hands become a wallet? And if all 10 fingers are linked to different cards, how do you remember which is which? By tattooing the respective brands on the fingertips? 🙂 One of the speakers in the fraud session was a great example of the organisers’ resourcefullness and creativity. We heard from Elliott Castro, an ex-fraudster, who has been convicted and served time in the UK for his fraudulent activities in the past. Elliott is now working with the Financial Services sector to help improve security practices. His tip? Banks should vary the questions they ask an individual for authentication. Many of his schemes relied on him knowing what a given bank is going to ask him and obtaining relevant personal details from his victims. It was three days well spent – I learned, I got food for thought, I made new contacts. That’s exactly what all conferences should be about. I am off to BAI Retail Delivery in Chicago next week. Celent Banking Team will be well represented with many of my colleagues attending. Our diaries are filling up quickly, but we still have a few slots available for meetings. If you are going and would like to meet with any of us, drop us a line. See you in Chicago!

Durbin or Duhhh?!bin

I’ve been following the Durbin debit card discussions with interest for years. As many of you will know, I believed that if you’ve been following regulation in other markets, Europe and Australia in particular, this was inevitable. And, following the script I laid out, banks have decided to recoup fees by introducing a monthly fee (Bank of America, JP Morgan and Wells Fargo). And the Senator concerned has responded in a shocked, spluttering way. By the way, I hope he responds in a similar “I can’t believe this would happen” way when the retailers fail to reduce prices like they said they would. All good. Can we move on already? Because I believe worse is actually to come. Much of the issue is not the level of fees per se, but the transparency and appropriateness. That is, being able to prove that the level of fee is based on the actual cost. This is problematic. A study I did in a previous role showed that none of the 38 global banks we interviewed could say with any accuracy what the P&L on their card business was. They had some broad views but that was about it. That’s because debit cards are so integrated into the deposit account, it then becomes very tricky to decide what should be included in the P&L. So, I think short-term, the fees are a good thing, at least for the banks. They will either recoup lost revenue or more price sensitive customers will leave, leaving the least sensitive behind (ie profitable), a point which many of my peers agree on to. However, longer term, I think it will herald a deep look at bank fees and charges. The comments from Durbin himself show a belief that banks are over-charging. Indeed, it would seem to show a misunderstanding about what a bank is (he seems shocked that they are operating as a business and charging for services rendered). The fact that other costly products remain free (checks in particular) will raise accusations that one set of fees cross-subsidise other products. That’s what triggered many regulatory investigations in Europe. And that’s what I believe will happen in the US. You have been warned!