Jacob Jegher

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Moven inks deal with TD Bank – For PFM?

Moven inks deal with TD Bank – For PFM?
The rumors have been swirling for some time now that Moven was going to sign up a Canadian bank. This was announced today and I read about it in The Globe and Mail. Curiously, the article is titled, “TD Bank helps its customers pinch pennies with new app.” What does this mean exactly for Moven and TD? Is TD going to start a digital only bank/account or are they merely going to add PFM capabilities? It’s not clear to me if this will require the opening of a new account or not. I’m also not clear on if this will be a separate app or if it will be integrated into the existing TD apps. It is however quite clear that TD is honing in on PFM capabilities.
“We’ve been interested in [personal financial management], but adoption is very low.” – Rizwan Khalfan, SVP and Chief Digital Officer, TD Bank Group
The Canadian banking scene is super conservative, so this is no doubt an interesting move. This deal can provide great opportunities and also comes with some challenges. Great opportunities:
  • Banks absolutely need to try new things. Kudos to TD for taking a leap here in an effort to innovate and try something new. Their recent mobile wallet announcement is another great example.
  • Canadian consumers could benefit from new, exciting and useful mobile tools. The Canadian mobile landscape has been pretty quiet, with the most recent “innovation” being the launch of mobile remote deposit capture by some of the banks. There have been interesting mobile payments announcements (e.g. RBC and Bionym), but not much as it relates to classic banking.
  • Consumers need help managing their money and turn to their bank for advice. Our US consumer survey and Canadian consumer survey point quite clearly to this. Americans and Canadians prefer to use bank provided tools to manage their personal finances.
Possible challenges:
  • Adding features to TD’s simplistic mobile app could present technical and user experience challenges. Moven has a keen focus on the user experience. The existing TD smartphone app – well, not so much. TD’s Canadian tablet app is slow and buggy. We could not even install this app on our Android test tablets due to compatibility issues. This leads me to believe that TD will either completely overhaul their app or release Moven as a separate app/account.
  • Most PFM endeavours have not been very successful when it comes to customer adoption. Will Moven and TD manage to figure out how to get customers on board and actively using PFM? This is going to be extremely challenging. Celent has done all kinds of research on PFM and will be publishing a fresh report on this topic in the new year. The report will encourage banks to take a completely different approach to PFM – stay tuned for our insights on this topic.
  • The viability of a digital only bank is questionable. Can Canada or the United States sustain a digital only bank? Is there a future for the neobanks? See the following blog post for our viewpoint on this. The Canadian bank switch rate is quite low overall, though it is quite high (13% in 2013) for the 18-25 year old segment. Neobanks have a place, though they will have difficulty being successful in the near term.
Overall, I think this is a great announcement. I love the fact that TD is going to try something new here, and attempt to shake up the market a bit. I’m looking forward to seeing how this one plays out.

Wearable devices and the future of authentication

Wearable devices and the future of authentication
There is a lot of hype around wearables (smartwatches, fitness bands, etc.) and they may have all kinds of interesting potential. This potential, particularly for banking is still to be determined. However, I believe that there is a great opportunity for certain wearable devices to provide strong authentication and enhance the user experience (see this blog entry). Examples are starting to trickle out:
  • RBC recently announced that it has partnered up with a firm called Bionym. Bionym offers a wearable device, the Nymi Band, that can be used for authenticating you to all kinds of products, devices and services (see this video for potential use cases). The device will take the user’s electrocardiogram and use it for authentication purposes. RBC and Bionym are going to test ECG authenticated payments at the point of sale. Sounds pretty cool to me! The Nymi band is a $79 product that can be ordered on Kickstarter.
  • Last week, at the AFP Conference, Online Banking Solutions (OBS) showed me a demo of how they are using a smartwatch to authenticate corporate online banking transactions. When the user performs a certain function, an alert is sent to the smartwatch (the demo was shown to me on a Moto360). The user then has to interact with the watch in order to confirm or reject the transaction.
Much of this is obviously still experimental. It is however highly innovative, and a step in the right direction to killing the password.

Are security fears hindering corporate mobile banking adoption?

Are security fears hindering corporate mobile banking adoption?
Corporate mobile has been a popular topic for a number of years now. While many banks have launched solutions, corporate adoption has stagnated. 66% of respondents to a Capital One survey  indicated “security challenges with sensitive corporate data” as their number one barrier to adoption. There are other reasons for slow adoption of corporate mobile, but this one is quite interesting and can be challenging to overcome. Should banks and corporations be concerned about mobile banking security? Is it a real threat at this stage? The short answer is that security should always be a concern — there are all kinds of real threats out there. However, it’s important to quantify and understand the risks and myths associated with current threats. At this stage, I would argue that security is an often overlooked BENEFIT to corporate mobile banking. It provides an additional layer of security; when executives receive mobile alerts, they have the ability to intercept potentially fraudulent transactions in near real time. A sandboxed app can also be quite helpful. I can go on and on here, and encourage you to read more about it in, Corporate Mobile Banking Update: Adoption Conundrums and Security Realities. Do the benefits outweigh the risks? Should banks be investing in corporate mobile given these adoption challenges? There is a chicken and egg situation; it’s quite difficult for banks to prioritize mobile investments when corporate adoption simply isn’t there. Celent believes that all banks should be investing in digital infrastructure that encompasses online, mobile, and tablet banking. Each of these touchpoints should leverage common components and banking modules (e.g., ACH, wires, etc.) This infrastructure should allow banks to eventually support mobile. Banks don’t need to deploy actual mobile solutions immediately, but should be poised to rapidly deliver when customers ask for it. Customer demand should dictate when banks invest their hard-earned IT budgets in corporate mobile apps and solutions. I’ll be at the AFP Conference next week, drop me a note if you would like to meet to discuss this topic.

Should your bank acquire a UX design firm?

Should your bank acquire a UX design firm?
I was very intrigued and excited when I heard about Capital One’s acquisition of Adaptive Path. When was the last time you heard of a bank acquiring a design firm? This fresh thinking is exactly what is needed in the banking space. I’d also like to see some of the major software vendors acquire firms like this (cc:@dmgerbino). I think it’s a great idea for several reasons:
  • Design and user experience (UX) are critical to digital AND brick and mortar banking. From a cultural perspective, it makes a huge difference to have designers and UX specialists “on the team” as opposed to engaging external contractors. UX becomes embedded in projects and in thinking.
  • Design / UX should be a horizontal function at financial institutions. Creating a horizontal function can be beneficial to all parts of the bank. There are parts of the bank that require even more help than retail banking (corporate digital banking is a great example) . It can really help to be able to tap into an internal department and have this approach permeate through various parts of the enterprise.
  • Labs and UX go hand in hand. If your bank has a lab or is thinking about a lab, you are likely going to have a bunch of new projects. Development and design belong together.
  • It makes for an awesome PR buzz : )
Banking UX isn’t just about the business case, it’s about an approach. This is the quote I gave to American Banker:
“When the paint starts to peel on the walls of the branch and the carpet starts to fray and the glass is scratched, what happens? It gets renovated,” said Jacob Jegher, a research director at Celent. “Same can be said for digital banking.”
Or so I would like to think… like it or not, banking projects have to be justified, compete for scarce IT dollars, and can be very hard to pull off if they don’t have a direct link to revenue. Banks often come to us for advice on how to tweak their business case to show increasing revenues, # of customers, etc. if they move forward with a new UX and design. Many banks resort to creative accounting in order to get their business cases approved. We often point them in the direction of customer retention metrics since it’s about delighting your customer. Happy customers are loyal customers. I’m looking forward to the day when UX becomes part of banking culture and isn’t just another metric in a business case. Sounds like Capital One is on the right track.  

Why I’m not Buying an Apple Watch

Why I’m not Buying an Apple Watch

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First reason –I’m an Android user and enthusiast : ) Like it or not, Android and iOS don’t play nicely with each other, and the Apple Watch is a companion device for the iPhone. It’s definitely an intriguing device though, and I enjoyed learning more about how Apple plans to tackle the wearables space. The Apple Pay announcement was also extremely fascinating – my colleague Zil has prepared an excellent and informative review of Apple Pay. Back to the topic at hand. Why would I stay away from this device? A few reasons come to mind, some are banking related, and others are not:
  • The battery life is expected to be pitiful. The rumour is that this device will POSSIBLY last through the day and will need to be charged every night. I have to regularly remember to charge my laptop, mobile phone, Fitbit, tablet, Kindle, kid’s iPad, and a bunch of rechargeable batteries that are used in various toys and gadgets around our household. I don’t want anything else that I need to charge regularly, and I certainly don’t want to travel with another charging cable or dock. My goal is to downsize our chargers and we need better battery life and a set of charging standards to be able to do this. Note that this comment isn’t specific to the Apple Watch – it’s an issue for the Android Wear watches as well, and the primary reason I’m hesitant to dive in. I’m also a believer that the success of mobile payments will be contingent upon battery life (among other things). Who wants to end up at the POS with a dead device or worry that this could happen?
  • It only comes out in early 2015.  The slew of Android smartwatches has clearly put pressure on Apple to ANNOUNCE a device but they obviously aren’t ready to release it. Otherwise, it would have ended up on the shelves as rapidly as the new iPhone 6 and 6+.
  • It’s a first generation offering. This builds on the previous point regarding battery life and release date. Like most new products, this first gen device will require some improvements. It will certainly be fun to tinker with, but will be frustrating at the same time. If you are an iPhone user and you want a smartwatch you are limited to this first generation offering. Note that competing Android offerings from Samsung have already gone through multiple product iterations and will be even further along by the time the Apple Watch is released. Motorola and LG also have first generation products out there that will be rapidly refreshed.
  • I don’t think it’s very fashionable. I like watches and there is much to appreciate about a beautiful timepiece. A watch is my primary if not only “accessory.” To me this watch looks a bit childish and cheap. Not to mention that if you want a nicer band or colour it will cost more money. My wife disagrees with me, she thinks it’s awesome and she is an iPhone user. Most of the Android watches aren’t that fashionable either, with the exception of the Moto 360 (save for the black bar at the bottom of the screen) and the LG G Watch R. The watches will get nicer over time and it will take a generation or two for these to become more elegant timepieces. Note that not everyone shares my opinion about the Apple watch as a fashionable timepiece – Hodinkee, a watch review site (not a tech site), finds the watch to be well made and fashionable. Hat tip to Jimmy Dinh for pointing me to this particularly informative review.
  • Health reasons. Radios communicating everywhere – in my pocket, my house, at the office, etc. Do I need another, particularly one that is stuck to my body? I have no scientific data to back this up at this point, but I do think about harmful exposure.
Now that I’ve vented, here are a few reasons why I would consider the watch. I’m not sure they are enough though to justify the price tag:
  • I’m a gadget enthusiast. I’d buy a smartwatch for pure tinkering purposes. You’ve probably gathered by now that I like this stuff. Even if it’s not practical, I enjoy a hands on approach to understanding how these devices work and what they can be used for.
  • As a fitness device and companion. I currently wear a Fitbit, and while I really like it, I’d like to get rid of it. It’s just something extra to remember, carry and charge. This class of devices will likely disappear as heart monitors, step counters, etc. get built into smartwatches and mobile phones. The Apple Watch, or any other smartwatch could make a great bike computer or running computer.
  • To experiment with Apple Pay (in the morning of course, when the battery still works!).
  • As a conversation starter with bankers. I enjoy demoing cool technology to our banking clients that unfortunately don’t have the time to think about new technology or devices. Their day jobs are demanding and they turn to us for opinions on how emerging technology with impact the banking landscape.
Enough about me. More importantly, what does all of this mean for financial institutions? I recently blogged on wearables for banking and you can read more about that here. Even if the masses aren’t flocking to smartwatch banking, I believe that every bank should buy this watch and a couple of Android watches. It’s critical for banks to understand the impact of new technology and the best way to learn about it is hands on experimentation and experience. Buy a couple, give them to your senior digital banking product folks and tech staff so that they can form educated opinions. This will require some budget of course – a budget that every bank should have for research and development and the creation of new products. What I’m suggesting certainly isn’t typical or commonplace, but well needed if banks want to be the digital powerhouses that they are aspiring to. Will you buy the Apple Watch? Why or why not? How does Apple Pay factor into your purchasing decision? Please weigh in with your thoughts or comments.

Wearables – banking hype or opportunity?

Wearables – banking hype or opportunity?
Lately there has been much fanfare around wearables. From Google Glass to smartwatches, there has been no shortage of press releases, articles and hype surrounding these devices. I must say that I personally find all of this stuff amazingly cool, and love trying out new things. I am also super excited about the Moto 360 smartwatch and will likely pick one up when it launches. My interest in these devices however has absolutely nothing to do with banking. Don’t get me wrong, I think it’s critical for banks to try out new technology in order to understand how devices are evolving and how consumers will use them. In other words, banks should proactively throw stuff against the wall in order to see what sticks! Will wearables be the next big “channel” or consumer touchpoint? I have a hard time believing that consumers are going to want to “bank” using these devices – there is a lot of hype here that needs to be filtered. Wearables, specifically smartwatches, will act as more of a companion to a smartphone. There are however a couple of specific areas where wearables can have an impact on banking:
  • Alerts and notfications. The alerts that pop up on a watch should in theory be the same ones that appear on your smartphone. Most day to day banking alerts may not be that critical, however there are some that the user may want to have access to at a glance. Security at the point of sale is also a possible use case. If a credit card is swiped an alert can be sent – it’s simpler and faster to have this appear on your wrist then in your pocket.
  • Authentication. These devices, particularly the smartwatch, represent an interesting authentication alternative. The Android platform can be configured to allow for a “trusted device” to unlock the phone or an app. In other words, the phone or app can be unlocked if the device detects the presence of a smartwatch. If the device is lost or not in the hands of the user, the smartwatch won’t be detected and the user will be prompted for a password. The Moto X smartphone currently has this software feature incorporated into its build of Android, and it can be used to unlock the device. Celent believes that devices like the smartwatch can act as a solid form of authentication and enhance the user experience. Additionally, banks have been challenged to come up with new methods of providing authentication for mobile banking, particularly since classic multifactor authentication involves something you know and something you have.
The mobile world is rapidly evolving and there is much to look forward to. Please weigh in with your thoughts and comments.

Is St. George Bank really getting rid of online banking?

Is St. George Bank really getting rid of online banking?
There was an interesting headline in the news last week that grabbed my attention – St George Bank to ‘decommission’ online banking for mobile. I read this article with great interest, particularly since St. George was such an early mover in online banking. The message is confusing, as is the quote from the bank’s CIO:
“We will have our first implementation for tablet in October 2014, a second mobile implementation in March 2015, and then desktop sometime in 2015, so we’ll have it as one system altogether.”
All this really tells me is that the bank is going to have a single digital platform and they are focusing on a mobile first approach. The next gen desktop implementation will arrive next year!  This also begs the question of what really is mobile or desktop these days? Is a Windows 8.1 convertible unit a tablet or a desktop? If I access “online banking” through the web browser on my iPad is it online or mobile banking? It doesn’t really matter. Customers expect to pick up their device of choice and have the appropriate experience. The burden is on the bank to provide it. The controversial nature of the headline certainly grabbed my attention. Online banking is far from dead. Feel free to add your comments, I’m interested in your opinion on the St. George bank announcement.

Finovate Spring 2014 Recap

Finovate Spring 2014 Recap
I spent much of last week in San Jose attending Finovate Spring. I’m a Finovate veteran at this point, having seen all kinds of companies take the stage at the conference. Even after all these years Finovate is still my favorite conference. I rarely attend sessions at industry conferences but I make it a point to attend most if not all of the Finovate demos. The demo format is awesome, new companies show up each year, and there is much to learn. Granted, some of the companies don’t stand a chance, though all need to be applauded for innovating and attempting to take our industry to the next level. There were several key themes at Finovate Spring:
  • Lending and alternative credit (e.g. LendingTree, LendingRobot, Roostify, CUneXus, Visible Equity, etc.)
  • Security and authentication. (e.g. Rippleshot, EyeVerify, TrueLink, ID.me, etc.)
  • Digital investing. (e.g. Motif Investing, Stockpile, TD Ameritrade / LikeFolio, etc.)
  • Self service (e.g. Interactions, Intellisresponse, etc.)
  • Mobile enhancements. (e.g. Ondot Systems, Loop, Jumio, etc.)
What stood out? Funniest demo and best pitch: PrivatBank with their Topless ATM. Stay tuned for when the Finovate crew posts the videos. This one is really fun to watch. Most innovative demo: Fiserv’s demo of payments and notifications using Google Glass and a Samsung Galaxy Gear smartwatch. The demo is a great example of why it’s important to dream, try things out and not be afraid to fail. Most useful and practical: Jumio’s card activation using a smartphone camera; TrueLink’s solutions to protect the elderly and impaired; Stockpile’s stock on a gift card (shout out to former Celent senior analyst Dan Schatt!) Glad it was gone: PFM has dominated the stage for several years at Finovate and I was glad to see only a handful of PFM companies on the docket this time around. Banks have lots of work to do on the PFM front and it is going to involve rethinking how banks and consumers approach PFM. More on that another time. There were other standouts, though this should give you a good sense of what Finovate Spring had to offer. Finovate Best of Show winners (audience selected) can be viewed here. I’m looking forward to seeing you all at Finovate Fall in NYC!  

It’s so easy for bank marketing to take a wrong turn

It’s so easy for bank marketing to take a wrong turn
Yesterday I came home to a strange voicemail from ING Direct Canada. I decided to phone back right away because I noted the following 3 things about the message:
  • The toll free number provided was nowhere to be found on the bank’s web site
  • The message left was with regards to “my profile and information”
  • The reference number left on the voicemail was my online banking user ID
I called back the main toll free number provided on the bank’s web site. After a brief hold I was transferred to an agent who looked me up in their system. I was told that I had to be transferred to another department and that yes, the message that I received was legitimate. The person I was transferred to was polite and friendly and wanted to sell me an investment. WHAT??? The good news for the bank is that they got me to call back right away. The bad news is that I don’t even know or care about what she offered because I was so thrown off by the voicemail. I had questions. Why was I being directed to a toll free number that I can’t find on the bank’s web site or through a Google search? Why were the details of the voicemail so mysterious? Why was my user ID being divulged over the phone as a reference number? All of my comments were noted and the rep apologized. Granted I’m not a typical customer, but it’s customers like me that can help make a difference when it comes to these issues (or so I would hope!). There’s a lot that banks can learn here – on the security front and on the marketing front. This is particularly relevant in an age where banks are so focused on marketing and offers that are based on data:
  • You can have great data, but it’s useless if you don’t master things like privacy and security
  • Customers should always be directed to call back a primary telephone number that can be easily validated. Banks are so cautious about email communication with clients – they should be just as cautious with telephone communication
  • Under no circumstances should a user ID ever be divulged. It’s a key piece of an authenticated login. It of course takes a couple of other pieces to login but that’s not the point – why give away any pieces of the puzzle? Furthermore, if a bank or customer were to suffer a breach, a fraudster could attempt to gain access to other account credentials by leaving a convincing voicemail containing a user ID (that obviously did not happen here).
I welcome your thoughts and comments. UPDATE 4/7/2014: I was contacted by ING Direct last week. They have informed me that they will no longer use a user ID as a reference number. Kudos to them for reacting quickly and switching around the process.