Execution: the Achilles Heel of cool new stuff

I’m heading into Finovate in a couple of hours. The UN general assembly is in town, and the only reasonable Starwood hotel I could find was the Aloft in Harlem. It’s amazing that this hotel has exactly the same feel as its counterpart at the Denver Airport…but I digress. I’m writing because Aloft has a cool feature called Keyless Entry. Very simply, I checked in on my SPG app, was given my room (which puzzled the clerk as I tried to check in again – apparently I didn’t even need to stop at the front desk), and my phone was to serve as my key. Brilliant in theory, but in practice I overshot my floor on the elevator because I couldn’t activate the security pad quickly enough, and getting into my room and the health club took several swipes (5-10 seconds) each time. So while I like ditching the plastic key, that convenience is more than outweighed by the hassle of having to call up the app (which takes 5-10 seconds itself to load) and then match it to the pad. I’m using a plastic key next time. Another great idea is using a phone’s camera to capture data, most notably a U.S. driver’s license. I love the demos I’ve seen at prior Finovate events, but when I’ve tried it to open new accounts, it simply didn’t work. Just to show I’m not wholly negative, I also activated my BofA TouchID login today. It worked beautifully, and now I can stop typing in a truly secure password with my thumbs! BofA waited until they got it right (at least for me!). What’s the moral? When rolling something new out, you’d better be sure that it works. Few consumers will give you a second chance, at least not anytime soon, particularly when the alternative is almost as good and the experience is tried and true.

Where Are The Android Tablet Banking Apps?

Banks aren’t the swiftest at keeping up with tech trends. It’s not a surprise,  particularly with the constraints imposed by compliance, risk, IT security, and legal. There is also the mess of legacy systems that eat up scarce IT resources. However, there are several key trends that simply can’t be ignored if banks want to stay relevant in the mobile banking space. Stephen Greer recently posted  about a recent report that we authored, Tablet Banking: An Evaluation of Tablet Apps at the Top US Banks. There is no doubt that banks have to move quickly and build full featured and engaging tablet apps. What’s fascinating to me is that only 7 of the top 13 banks have released apps. Even more interesting is that only 2 (Bank of America and PNC Virtual Wallet) have dedicated Android tablet apps. Android commands a staggering 67%  of the tablet market!  On a personal note, I’ve fully switched over to Android and have dropped my iPhone and iPad (more on that in a future blog post). tabletbank Addressing the Android space isn’t necessarily a quick and easy endeavor, and banks have to make sure their app is ready for mass market consumption. Bank of America is a great example of a bank that has released an Android tablet app, but it simply doesn’t work with a slew of devices on the market. Kudos to them for actually building an Android app, but I had to use 3 different Android tablets before I could get the Bank of America app and running. I first attempted to use the app on a Samsung Galaxy Tab 3 8.0 – nothing doing, Google Play indicated that the app was not compatible with this device. I tried again with an Acer Iconia A210 – same problem. The Bank of America app was finally evaluated using an Asus MeMO Pad Smart 10. It can certainly be a challenge for banks to build apps that are compatible with the spectrum of Android devices on the market. Different screen sizes, screen resolutions and hardware can pose challenges. With that said, it’s critical for banks to offer a smooth experience. Make sure your app is compatible before you release it to the masses. And let’s not forget that the masses are running Android.

BofA

New Celent Report: A Case Study of BankAmeriDeals Program

I wanted to share the exciting news that we have just published a new report called “Using Data to Create Value for All Customers: A Case Study of Bank of America’s BankAmeriDeals Program.” As many of you know, I have been following the merchant-funded rewards (MFR) space for some time now. The scale of BankAmeriDeals, Bank of America’s online and mobile cash back deals program, makes it one of the flagship implementations of MFR initiatives. I was very keen to understand what it takes to implement such a program at a large bank, what can be achieved, and what lessons can be learned. The objective of this case study was to explore these issues, specifically:
  • The genesis of the program: rationale, guiding principles, and vendor selection
  • Value proposition
  • Technical solution
  • Project timeline and program rollout
  • Project team and governance
  • Results and operational metrics
  • Running the program within “business as usual”
  • Plans for the future
If you are familiar with MFR programs, you might be wondering why the title talks about “all customers.” It’s true, many MFR programs focus mainly on the bank’s cardholders and often even on a specific portfolio of cards, such as debit. However, Bank of America from the outset wanted to build something that would be beneficial to all of its customers, both consumers and merchants. Furthermore, the program is available for nearly all cards and to all customers with access to online or mobile banking. These are just a couple of insights from this case study and there are plenty more. I would like to take the opportunity to thank Bank of America for making this case study possible; its executives were generous with their time and insights. We would also like to acknowledge and thank Cardlytics for its contribution. Celent’s existing clients can access the report here. If you are interested but are not yet a client, please contact info@celent.com.  

Using the Branch to Sell Mobile

American Banker published an article last week describing Bank of America’s quest to bolster the ranks of its mobile banking customer base. According to the article, the bank is outfitting its teller stations with quick response (QR) codes that can be scanned by mobile devices to download the mobile app. What a great idea! For too long, most financial institutions have limited the merchandizing of mobile banking capabilities. Even after investing in sought after capabilities such as mobile remote deposit capture, many banks enrol mobile banking users primarily through the online channel. Go figure! In-branch merchandizing is a logical way to leverage remaining foot-traffic for the mutual benefit of online banking enrolment, and QR codes at the teller line is a great way to do so in my opinion. After reading the article, I was eager to see them for myself at a local Bank of America Branch. Upon entering the branch, I was instantly greeted by a charming and enthusiastic employee who was quick to answer my query. She had no personal experience with the in-store merchandising though, and even asked me what app I use to read QR codes. The merchandising wasn’t at the teller stations, but at the deposit preparation desk (below) and also prominently positioned at each new account desk. Once scanned, the QR code directs the user to the appropriate app store to download the bank’s 4.2.69 version of the mobile banking app.

Selling mobile deposit right where customers fill out deposit slips is a great idea

Note that the merchandising didn’t simply advertise mobile banking, it sells the benefits of the bank’s newly released mobile deposit capability. Placement was perfect – right where in-branch depositors will be filling out deposit slips. Use of QR codes is smart for their ability to allow consumers to easily inquire without taking bank staff’s time. It reminds me of another clever application of QR codes. My wife is a first grade teacher. She enjoys the use of iPads in her classroom and integrates them into her curriculum. One way she does so is by loading a variety of educational games onto the iPads for use throughout the day to reinforce lessons. She makes a number of “low-technology” games available as well. Games are a great way to provide some educational fun while she is working with other students. Like new banking capabilities, the problem with games is that they must be explained. Having to do so in the classroom is distracting and diminishes the value of “self-service’ learning games otherwise provide. To address this problem, she recorded instructions for each game on YouTube and provides a QR code for each game that links to the explanation video. Students wishing to explore a new game simply scan the appropriate QR code and they’re off. It saves her countless interruptions.

Even First Graders think QR codes are easy

Apparently Bank of America tellers will soon be enjoying the same benefit.

How Many Bank Branches do we Need in the US?

Finextra published an article yesterday that was also picked up by American Banker and others. The news was twofold: 1. Bank of America announced it enjoys 10 million mobile banking customers, up about 3 million from a year ago – about 43,000 new active mobile customers per week. 2. Concurrent with its swelling ranks of active mobile banking customer, the bank is closing branches and unplugging ATMs. The bank closed 154 branches and eliminated 631 ATMs in Q1, citing the move to online and mobile channels as a contributory factor according to the Finextra article. Celent is not surprized by the branch closure news. As explained in a recent Oliver Wyman report, Branch Flexing: An Agile Approach to Cost Management, April 2012, “to maintain profit levels in the face of a post-crisis and regulatory-reform decline in net revenue of about 32%, US banks would need to increase revenues by 12% a year for the next three years or cut costs by 18% a year, or a combination of the two.” Cost cutting isn’t optional, particularly among larger US banks. Making material cost reductions will require a re-examination of branch networks, which typically contribute between 40% and 60% of a modern retail bank’s costs. Branch flexing refers to a strategic realignment of branch resources (and cost) with customer profitability. Ultimately, branch flexing involves investments in technology, training, culture and compensation. Celent has advocated departure from traditional, teller centric retail operating models for some time. But what about the total number of branches. Is there an argument that the industry has built an unsustainable number of branches, flexing or not? We think so. The argument begins with a simple observation that the US branch density (branches per million inhabitants) has nearly tripled since 1970. Thus, before consumers enjoyed the ATM, telephone banking, internet banking or mobile banking, the industry served consumer’s collective needs with less than 22,000 FDIC insured branches. Do we really need 90, 000 now? branch-density1 We think not. But it’s not so much if they’re needed (The Economist had a great debate about that topic earlier this week), but will they remain profitable? If indeed we’re in a “new normal” of sharply reduced retail banking profitability, than the answer – to one degree or another – is “no”. Celent is developing a more detailed perspective on how many bank branches the US is likely to support over the next ten years. Stay tuned.