Archives for July 2012

From Libraries to Bank Branches

Technology can clearly be an input used to transform traditional industries. Banking has plenty of tradition, and has already experienced plenty of change. What can banks learn from other industries that have successfully gone through a transformation process? Cushing Academy, a Massachusetts boarding school, has successfully transformed its library (read about it here and here). Gone is the old, sparsely populated library. In its place is a popular and modern digital library / cafe, complete with TVs and a $12,000 espresso machine. This example was recently brought to my attention by a bank client (and Cushing Academy alumnus). There is clearly a lot we can take away from this example. It’s a fine mix of technology and tradition, in a model that increases engagement. The bank branch, like the library is far from dead – it does however need to be reinvented in order to service clients effectively. Bob Meara has blogged and written about branch banking, I encourage you to take a look. What do you think of the Cushing Academy example? What can banks learn from it?

Are Bank Facebook Apps the Future of Digital Banking?

Should banks have a Facebook presence? What should they actually offer to customers via Facebook? Should it be informational or dare I say it, transactional? A couple of interesting announcements and feelers have surfaced lately:

A handful of banks have already gone wild on Facebook , a notable example is ICICI.


Is Facebook going to be a viable access point for consumer transactional needs? In my opinion, banks that are enabling or attempting to enable transactions via a Facebook app are barking up the wrong tree. I’ve seen nothing to suggest that customers want this or would even use this. In fact, I’ve seen evidence of the contrary. Security concerns are without a doubt the number one issue. Furthermore, most US and Canadian banks have to jump through multiple compliance and legal hoops simply to post basic info on Facebook. My quick take – banks have so much room to improve across digital channels. Time and money are better spent improving online, mobile, and tablet experiences. Even if banks do go the route of offering Facebook transactional banking apps, they are likely to suffer the same fate as iGoogle. The web is boundless, and I don’t see Facebook as the primary “portal” for transactional banking. Facebook is still primarily about interacting with friends and family. Brands clearly have some sort of home on Facebook, but hey, we all know what the value of a “like” is really worth on Facebook (or do you?). Please chime in. Are Facebook banking apps the future of digital banking?

From Turfing to Crystal Balls

Nope, it was a new one on me too. Turfing cropped up in the latest communications survey in the UK, run by Ofcom, the regulator for that sector. Turfing – obviously! – refers to the ability to surf and watch TV simultaneously on the same device. You might think then that report tells a tale of sexy new technologies, and the death of old ones. Not so. There is always a danger in interpreting data, let alone someone else’s, but here’s what caught my eye. The report is well worth reading – my comments certainly don’t do justice to the 400+ pages. At first, it’s the headlines catch the eye. For the first time, over half (52%) of all call volumes were made from a mobile phone, with 92% of adults personally own/use a mobile phone. That’s an awful lot of mobile phones – indeed, there are 81.6m mobile subscriptions. The average cost of making a mobile voice call fell to broadly the same level as a fixed line call in 2011 which may partly explain the increase and why 33% of 16-24s, and 26% of 25-34s, now live in mobile-only households. So the future is mobile then? I’m not so sure it’s as simple as that. Firstly, the overall time spent on the phone fell by 5% in 2011. This reflects a 10% fall in the volume of calls from landlines, and for the first time ever, a fall in the volume of mobile calls (by just over 1%). Then when you consider that there are “only” 23.8m landlines, you realise that there must be roughly 4 times the calls made by landline than mobile. It’s not just voice either – use of mobile internet fell, as did revenues for the mobile operators. I’m not suggesting that mobile is in trouble. It’s more that whilst sexy new technology continues to appear, it’s yet to replace any existing method to a sufficient extent that we can exclude it. Even post is the same. Use fell by 30% by individuals (depending on what you measure), but remains a massive number (16.6bn letters annually), with significant volumes still relating to transactional mailings such as statements and bills. And of course, face-to-face remains the preferred communication of all. So what can the payments world take-away from this? There are undoubtedly some exciting new technology frontiers being explored. But the reality is that these developments are alongside existing methods and channels, at least for the foreseeable future. We tend to forget that many things that are part and parcel of our daily life, such as debit cards, have taken decades to get the point that they are today. The challenge for banks is identifying which of the new developments will still be around in 5 years, let alone decades. If we look back 5 years, there are many developments that have fallen by the way side, that bear little resemblance to their initial guise or that have been bought by bigger companies. Whilst Celent can (and do) help with that process of identification and planning, it does sometimes feel that a crystal ball would be the best investments in payments technology planning!

Payments and the London Olympics

It’s less than two weeks until the opening ceremony of the Olympic Games. The Olympic spirit is already in the air in London with all sort of preparations entering their final stages. A section of M4, a major motorway connecting the West of the UK with London was closed for a few days last week causing havoc – all to make sure it can cope with the increased traffic from Heathrow. No doubt, London will be ready to welcome thousands of athletes and guests that will be arriving from next week. If only the weather would be more welcoming as it’s been a terrible summer so far – chilly, rainy and windy… There has been an increased interest from our clients and press in the Olympics-related payments topics as well. Is Visa right in monopolising payments for the Olympics? Will all those who receive Samsung Galaxy S III NFC phones to try out new NFC payments be aware of the potential security risks? And why were the ambitious plans to upgrade the London transport infrastructure to accept NFC delayed? Indeed, as a worldwide sponsor of the Olympics, Visa is investing heavily in payment innovations, such as NFC and contactless and promoting its brand. The Olympic tickets could be paid for only with a Visa card – not that big of a deal in the UK, as most UK debit cards are now issued under Visa brand, but I imagine, a bit of a nuissance for those in other countries who may not have a Visa card. Most recently, the press reported Visa requesting that the existing ATMs in the Olympic Village, which would have accepted all Link cards, were switched off and replaced with eight new machines which would only accept Visa cards. While no one disputes Visa’s right to certain privileges as a major sponsor, it is arguably not the most elegant way to endear your brand to the users. Also, Visa and Samsung, another worldwide Olympics sponsor, have started distributing 1,000 Samsung Galaxy S III NFC phones with a Visa payments app to key stakeholders and decision makers for use during the Olympics. All POS terminals at the Games will be able to accept Visa PayWave contactless payments and the distribution of phones is expected to help promote wider adoption of NFC and contactless services. Those with a chance to try out the new app are reporting favourable first impressions. However, there was also a lot of buzz around a recent blog from McAfee, a security software firm, which (perhaps not that surprisingly) warned about the potential security risks, particularly if the hackers used the so-called “fuzzing” technique. My personal view is that while these risks are real, the organisers are busy making sure they address much bigger and more immediate security concerns around the Olympics. It’s only natural that many people will find their own relevant angle to the Olympics. However, I am sure London 2012 will not be remembered for what it did or did not do for payments. Lets hope it is remembered for all the right reasons – sportsmanship, passion, spectacle and lasting legacy. Let the games begin and lets enjoy them!

Why Small Business RDC Matters

Celent recently completed the analysis of some small business research among a random sampling of 500+ small business owners with annual revenues up to $2.5 million. The universe of U.S. SMBs excluding those making less than $50k/year is roughly 25 million.


The research underscored the centrality of check payments among small businesses – like it or not. For example, 90% of responding SMBs accepted checks compared to 70% accepting cash, 33% credit cards, 31% debit and 28% PayPal (with large variations depending on type of business). And when asked “If you could be paid the same way each time by every customer –how would you choose to be paid?” Check (38%) and cash (33%) were the two favorites. This will change over time, of course, but for the mid-term, checks will remain commonplace among SMBs.

All these checks are producing a good deal of branch activity. In the same survey, businesses were asked how often they made check deposits and how many checks were in each deposit. The results were logical – the larger the SMB, the larger the average check deposit and the more frequently they deposited. smb-deposit-frequency About two-thirds of all SMBs in the sample had less than five checks per deposit, making them suitable candidates for low-cost remote deposit capture (RDC) solutions. smb-checks-per-deposit Why is small business RDC important? At least two reasons. Approximately 20 million small businesses are accepting checks on a regular basis and depositing them at local branches and ATMs. RDC represents an obvious convenience for these businesses. The second reason is the favorable impact RDC can have on branch traffic and the resulting cost to serve these customers. Using the surveyed deposit frequency shown above, the collective activity amounts to 3.6 billion bank deposits annually. Assuming these deposits were distributed equally among the nation’s 119,000 bank and credit union branches, each branch could see 30,400 fewer deposits annually if SMBs were enrolled in RDC en masse. That averages 117 branch deposits per day, or roughly a single teller per branch based on a teller efficiency of 18 transactions per hour. Larger banks that serve the majority of small businesses would enjoy the bulk of the savings. Financial institutions would do well to leverage RDC’s popularity by offering desktop and mobile RDC freely to small volume depositors, and aggressively selling more capable solutions to the third of SMBs with more substantial check deposit volumes. This needs to happen alongside realistic RDC risk assessments and a corresponding broadening of eligibility requirements and raising of deposit limits. Otherwise, RDC will remain a niche product that under delivers customer needs as well as product revenues.

iGoogle is Dead. Are Online and Tablet Banking Dashboards Next?

Google has announced that it’s going to deep six iGoogle, its dashboard portal to the web. Google is shutting it down because it claims that iGoogle, “had become less relevant in the age of the mobile Internet.” There are likely numerous reasons for this shutdown – Google’s “spring cleaning effort,” politics, centralization of web apps in Chrome, etc. I’ve personally always liked iGoogle and the concept behind iGoogle (although I have to admit I don’t use it much). In fact, the launch of portals like My Yahoo and iGoogle supported my thinking and research on the creation of online banking dashboards. This dashboard concept is something I have been writing about for years now, and banks and software vendors have been somewhat slow to catch on. This has however started to change, especially as tablets enter the picture – the perfect use case for a rich and interactive dashboard. Does the death of iGoogle mean that banks should abandon all plans for an online banking dashboard? Should software vendors be fearful that their investment in dashboard creation has been in vain? Absolutely not. In my opinion, iGoogle was axed because it becomes secondary to the Google experience. The web is boundless. In other words, when users go to Google they can launch into literally anything, based on their search. iGoogle attempted to box in the web. Online banking has boundaries, it’s limited to select functionality and activities. It works to have key areas grouped onto a rich dashboard – these groups are the home of widgets that can be informational, transactional, managerial, service related etc. There is a case to be made for bringing as much of that functionality to the forefront of the online banking experience – it improves user efficiency and experience, it can showcase other bank products. I can go on and on here. Unlike iGoogle, we have just touched the tip of the iceberg when it comes to online banking dashboards. The tablet will influence much of this experience (you can read about this concept here). This type of environment is starting to take on a prominent position, as banks catch up to the design of an offering that Google launched in 2005!