Pushing beyond apps

Pushing beyond apps
It struck me while I was driving this morning: First-gen mobile apps are fine, but virtually everyone is missing high-volume opportunities to engage with their customers. Allow me to back up a step. I was stuck in traffic. Not surprisingly, that gave me some time to ponder my driving experience. I found myself thinking: Why can’t I give my car’s navigation system deep personalizations to help it think the way I do? And how do I get around its singular focus on getting from Point A to Point B? I explored the system while at a red light. It had jammed me onto yet another “Fastest Route,” disguised as a parking lot. My tweaks to the system didn’t seem to help. I decided what I’d really like is a Creativity slider so I could tell my nav how far out there to be in determining my route. Suburban side streets, public transportation, going north to eventually head south, and even well-connected parking lots are all nominally on the table when I’m at the helm. So why can’t I tell my nav to think like me? I’d also like a more personal, periodic verbal update on my likely arrival time, which over the course of my trip this morning went from 38 minutes to almost twice that due to traffic. The time element is important, of course. But maybe my nav system should sense when I’m agitated (a combination of wearables and telematics would be a strong indicator) and do something to keep me from going off the deep end. Jokes? Soothing music? Directions to highly-rated nearby bakeries? Words of serenity? More configurability is required, obviously, or some really clever automated customization. Then an even more radical thought struck. Why couldn’t my nav help me navigate not only my trip but my morning as well? “Mr. Weber, you will be in heavy traffic for the next 20 minutes. Shall I read through your unopened emails for you while you wait?” Or, “Your calendar indicates that you have an appointment before your anticipated arrival time. Shall I email the participants to let them know you’re running late?” Or (perhaps if I’m not that agitated), “While you have a few minutes would you like to check your bank balances, or talk to someone about your auto insurance renewal which is due in 10 days?” What I’m describing here is a level of engagement between me and my mobile devices which is difficult to foster, for both technical and psychological reasons. And it doesn’t work if a nav system is simply a nav system that doesn’t have contextual information about the user. But imagine the benefits if the navigation company, a financial institution, and other consumer-focused firms thought through the consumer experience more holistically. By sensibly injecting themselves into consumers’ daily routines—even when those routines are stressful—companies will have a powerful connection to their customers that will be almost impossible to dislodge. Firms like Google have started down this path, but financial institutions need to push their way into the conversation as well.

The challenges of the new neo bank

The challenges of the new neo bank
Since the launch of neo-banks like Moven, Simple, and GoBank, financial institutions in the US have been avidly monitoring their popularity. Some have written them off as non-starters; others have praised them as disruptors. In recent months, however, the neo-bank model has hit a few stumbling blocks that call into question the promise of the digital-only model, and gives credence to the sceptics. GoBank recently announced that it was going to stop allowing account opening via the mobile device. Users will now have to purchase an account opening “kit” from a store, adding significant friction to the process. Simple has experienced a number of issues related to payment scheduling, the “safe-to-spend feature,” and service outages or delays. Moven received $8 million to begin moving their app overseas in an effort to garner higher adoption. The promise of these new start-ups was a drastic improvement on customer experience, ditching traditionally stale financial services with improved digital offerings, social media integration, and a familiar/casual communication style. Yet these recent issues serve as a reality check for the neo-bank model—when your value proposition is customer experience, technical issues look 10x worse. It´s far from clear what will happen to these new market players, but Celent envisions a couple of different paths over the next few years.
  • Neo-banks are acquired and rolled into larger digital channels offerings: I wrote earlier this year about banks acquiring technology companies, thereby acting more like tech companies than traditional banks. The neo-bank model and acquisition of innovation are not that dissimilar, and BBVA´s acquisition of Simple is the conflation of both strategies. Through acquisition, BBVA is able to jump the steps of creating a culture for digital channels innovation, establishing a customer base (albeit small), and aligning internal resources required to launch a new service. There aren´t many neo-banks, but digital channels start-ups are numerous. This could be the way forward for institutions that are struggling with adapting the existing operating model to digital financial services.
  • Traditional institutions begin offering their own neo-bank, digital-only services: Fundamentally, there`s nothing truly disruptive about a neo-bank. There´s no secret algorithm, intellectual property, or disruptive idea at work, and many banks are more than capable of offering similar levels of service. Indeed some of them have already begun offering digital services through a separate digital brand. Examples globally include NAB´s UBank, ASB BankDirect, Banamex´s Blink, Hello Bank by BNP Paribas, and Customer Bancorp’s new mobile brand. With new brands, and often new platforms, these banks are testing the digital model. This should satisfy a growing number of digitally driven consumers, as well as provide a clear path for banks looking to move accounts to more digitally-focused services.
  • Neo-banks never become viable stand-alone business models, but they influence the way banks think about digital channels: Currently, most neo-banks aren´t banks–they rely on other institutions to handle the deposits, making them simple prepaid services with additional functionality. The reliance on third-parties is becoming a bottleneck for delivering the value neo-banks have come to represent. Without diversified financial offerings that encompass the entire financial need of the consumer, these “prepaid” services are pressed to create enough value to validate adoption. This is a major question when assessing viability.
There´s even a fourth scenario that could play out over a longer period of time: neo-banks become the primary way digital natives interact with financial institutions as they mature into adulthood. No matter which scenario plays out, neo-banks have undoubtedly moved the conversation around user experience and digital channels forward in a way that would not have happened otherwise. They are setting the bar high, with the big question being whether they will be able to gather the adoption needed to make their services sustainable. What do you think? Will the concept of neo-banks have a place within traditional banking?

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.

Wearables in Banking: Google Glass

Wearables in Banking: Google Glass
Not too long ago I was at a client event and had the pleasure of trying on Google Glass for the first time. The presentation used a simulation of how it might work to make a payment using the voice commands of the device. I found the experience to be much less intrusive or distracting as I expected, but the applications within banking were still too immature to be useful. The much-anticipated technology went public earlier this year, and the industry is already abuzz about specific applications. In October 2013, Banco Sabadell in Spain became one of the first banks to create a retail app that allowed users to locate the nearest ATM, check account balances, and use video conferencing for technical support. PrivatBank in the Ukraine released a video in July 2013 previewing some of the features it plans on releasing for its own Google Glass app (see video below). The device is receiving a lot of hype, and it’s a natural fit for functionality that hasn’t taken off through mobile, such as voice recognition or augmented reality. Financial Institutions and vendors like Fidelity, Discover, La Caixa, Wells Fargo, Westpac New Zealand, Intuit, MasterCard, and LevelUp have already voiced interest in Google Glass or other wearables. But should banks take Google Glass seriously as a possible channel? There are two ways to look at it. Google Glass, and more broadly wearables, should be taken seriously inasmuch as they COULD represent what the future of banking might look like. Wearable smart technology is indicative of the growing number of devices and channels. Whether those devices will be smart watches, Google Glass, a smart fridge, or whatever else is anyone’s guess. As banking becomes more digital, however, banks are going to be pressed to meet the customer on their terms, no matter the device. It’s the culmination of customer-centricity that’s so often talked about in the industry, and which forms the basis for most retail banking strategies. https://www.youtube.com/watch?v=YwMzg0keYOs Simply put, these devices are not yet worth the investment by banks. As with most new technologies, hype precedes real value, inflating expectations. A TNS survey from January 2014 found that, between August 2013 and January 2014, awareness of wearable technology grew in direct proportion with lack of interest, while adoption hovered around 1%. For head-mounted devices, awareness grew from 52% to 64%, while lack of interest went from 34% to 46%. At a time when many banks lack dedicated tablet or smartphone apps, it would be foolish to rush into a wearable app. Even the largest banks have struggled to keep up with number of smartphone and tablet devices that have much higher adoption. Why complicate the process by releasing or developing functionality for wearables? Banks are better served dedicating time to figuring out and overcoming the challenges of a unified customer experience, or building out existing, proven channels that are popular today. Multichannel banking will assuredly get more complicated in the future, especially as transactions move out of the branch and become more digital. Banks looking to plan for the future, one that may necessitate a Google Glass or smartwatch app, would be wise to design a multichannel strategy that is agile enough to move with the market. For many institutions, this kind of timing will allow them to stay up-to-date with the trends, while not allocating resources too quickly to devices that may become liabilities.

NCR & Digital Insight – Trouble in Paradise?

NCR & Digital Insight – Trouble in Paradise?

Late last year, NCR announced the acquisition of Digital Insight (DI). It’s been quite the ride for DI as they are on their third owner in a very short period of time. Apparently the ride hasn’t been very smooth for DI bank customers – we have heard from a number of them regarding digital banking outages. The press has gotten wind of this as well – Fairwinds Credit Union customers cope with online-banking outages.  

Take a peek at the list of disruptions notices posted on the Fairwinds CU Facebook page.

Kudos to the CU and its President for being transparent and communicating with their customers.

What Does the BBVA Acquisition Mean for Simple?

What Does the BBVA Acquisition Mean for Simple?
The financial world is abuzz about the recent acquisition of Simple by the Spanish banking giant BBVA.  The news is surprising, but not unusual for a banking group that has invested in other innovative companies such as Freemonee, SumUp, and Radius.  The deal also legitimizes a financial start-up that has garnered quite a bit of skepticism among some in the industry, despite a small yet dedicated and growing customer base.  Banks are clearly considering these innovators to be significant enough to validate their acquisition.  Simple is a brand, not simply a product offering. It has recognition outside of the industry, and the effect on existing customers makes this acquisition different from the norm. As the relationship unfolds, it will be interesting to see how Simple responds to the following:
  • Will Simple really remain independent? The statements released by both parties claim it will. Recent acquisitions of Nest by Google and WhatsApp by Facebook also made similar claims of maintaining autonomy, but that doesn’t mean it will remain the case.  Yahoo acquired Flickr in 2005 with similar promises of independence, yet in the subsequent years drove an up-and-coming innovator straight into the ground.  The fear for Simple customers is that the unbeatable user experience and exceptional customer service that made it so appealing will slowly be lost as the two companies integrate. Accounts will remain at Bancorp bank for the time being, but the inevitable move to BBVA must be graceful, or a once innovative product is liable to lose the only edge it had in the market
  • Does this deal allow Simple to become more complex?  The big attraction of this deal for Simple is that it gives them access to the resource of BBVA, a massive multinational financial institution with a clear penchant for funding innovation.  The main complaint with the start-up since launch was the limitations that came with not actually being a bank.  Simple didn’t do mortgages, it didn’t do investments, and there were no credit cards.  For the PFM features to be truly useful, users would have to go ‘all in’ with Simple.  More resources could allow for more development into a more diverse set of products and financial offerings, increasing the potential of the already well designed PFM platform.  The test will be the following: will Simple be allowed to continue its own brand with its own products, or will it simply become (pun intended) a funnel to push BBVA’s core business?
The acquisition of Simple, no matter what happens, is a good sign for financial start-ups, especially those that compete directly on Banks’ turf.    The industry could learn from the way BBVA has taken a page from tech giants and big pharma. There are hundreds of innovative Fintech companies out there, and great ideas don’t always have to come from internal development—in fact for large banks they rarely do. But Simple has now become part of the traditional banking world they used to decry.  Will the financial services industry’s challenging record of financial innovation rub off, or will the resources of a megabank allow Simple to grow into a true disruptor?  Only time will tell.

Finovate Europe 2014: Some Key Takeaways

Finovate Europe 2014: Some Key Takeaways
Finovate just ended yesterday, and it was great to see all the new and interesting ideas floating around the financial services space.  For those who may not know, Finovate is a two-day event that showcases some of the best new and innovative things happening in financial services technology.  Over 60 companies coming from all over the world  presented this year, taking part in the rapid format that gives each presenter 7 minutes to show why their product is worth the viewers’ attention.  The event can also be a great networking opportunity, as many of the attendees are from large institutions or influential VCs.

Figure 1: Number of Presenter Products with Aspects of Each Category

 Untitled Here are some key takeaways after watching most of the presentations:
  • PFM is still going strong:  Banks have been declaring the end of PFM for years now, yet the topic is still one of the most talked about at every Finovate.  At Finovate Europe, PFM was the most prevalent.  What does this mean for the institutions?  Well, first off, it’s obvious that entrepreneurs still see the value in PFM tools.  Banks, many of which adopted PFM solutions long ago, have shrugged at the lackluster adoption, subsequently declaring PFM a failed experiment.  Financial institutions themselves are partly to blame, hiding these platforms in menus, barely showing any desire to market the products. Yet the biggest problem with PFM is shared by all, vendors and banks alike.  PFM doesn’t add value!  Let’s just assume most people want to know how much they spend on coffee each month (I don’t!). What comes next?  Where’s the action?  The fundamental problem with PFM is that the way the data has been leveraged to truly provide value has been disappointing at best.  Until the quality of the data is there, PFM won’t be in the mainstream.  A secondary concern—the misconception that most vendors buy into—is that PFM can be fun, succeeding through cleverly designed games and well-designed UIs.  I hate to say it, but PFM will never be fun! Nevertheless, there were some interesting takes on PFM this year that could offer some new ways to think about it going forward. A company called Tink takes financial data and creates insights for the user like where you spent the most money in the last year, largest one-time purchase, most frequent spending location, and others.  The difference is that these are non-intrusive ‘stats’ that show up only if a user scrolls down from the landing page on the mobile app.  Three takeaways from Tink’s product: everything is done on the bank side, it’s is more interesting than visualizations of spending categories, and the analysis requires nothing from user.  Meniga, a PFM success story in Europe, uses demographic data to help small businesses find market opportunities. It provides competitors’ sales data, locations, profitability, among other things.  It’s not PFM is the strictest sense, but that’s probably a good thing.  PFM needs a little shaking up
  • Moving Mobile Banking Beyond Transactions:  While not a new topic, this was a common theme across a variety of presentations.  The most common involved using the camera to assist in account opening or paying bills (see Kofax, Top Image Systems, and Axa Banque).  Mitek and US Bank have been at this for some time, but the rush of new start-ups looking to fill the gap in the market is telling.  As mobile banking becomes more common, and adoption increases, consumers’ appetite for mobile-based interactions will broaden.  Banks are not only beginning to offer consumers the ability to do more complex transactions via the mobile device, but they’re opening up ways for financial institutions to monetize the channel.  This will effectively make ROI much more tangible, doing away with the misconception that the value of digital channels is ambiguous
  • Replace the Password: Is the password dead? That was the question asked by Wired Magazine in November of 2012, and something that has been on the mind of Celent for quite some time. Finovate produced no shortage of companies looking to innovate on financial security.  Finovate veterans, Behaviosec, continue pushing their gesture-based biometric product that learns how the user moves and interacts with the device to create a confidence score for use behind the scenes.  Encap uses the mobile phone as an authentication device for approving transactions or logging into digital banking.  This was the second most discussed topic at Finovate.  While biometrics is already used in some places globally, the practicality of such solutions is dubious at best.  Security needs to start becoming a little more practical.  One of my favourite presentations was from Feedzai, where they use social media data scraping to assess fraud risk.  For example, if I just checked in at a restaurant in San Francisco, then it’s likely that a transaction from somewhere else is fraudulent.  A few took to twitter to question whether customers would be ok granting banks access to their social media lives.  If Citibank starts poking people, then maybe I could see the point, otherwise, it’s a practical application for enhancing security.  Besides, most social media information is already public anyway
  • Lots of Front-end, Little Back-end:  One thing Finovate teaches us all is that there is no shortage of great UI designers.  One thing Finovate doesn’t teach us is that banking is messy once you start connecting that nice-looking front-end to the messy back-end.  Are most of these front-end products from Finovate really bank-ready? I’m not convinced.  Large vendors like Misys, Fiserv, and Temenos may not have won best in show, but with integrated backend products, they’re in a much better position to succeed. One of my favorites was Five Degrees, a Dutch back/mid-office solution that runs in the cloud and offers a truly innovative BPM product.  Other than that, good examples of back-end innovation were scant
  • Social Collaboration:  It was interesting to see different idea behind leveraging crowd-sourcing and social collaboration.  Nous presented a product for investments that incentivizes users to play a game that aggregates data based on the players’ outcomes.  A company called MyWishBoard uses collaboration, similar to SmartyPig, for goals and wishlists list that can be shared via social media with friends.  Leveraging the power of crowds has been difficult to accomplish in financial services, and most social strategies have revolved around marketing and customer support. While some of these ideas may not be the best business ideas, it’s nice to see different takes on leveraging the power of social
  • No Branch Channel Innovation: Absent from the Finovate line-up were any innovative ideas around branch technology.  Celent has written a number of reports looking at branch technology, and there is undoubtedly still much to talk about in this space.  The closest the show came was with JHA’s Luminous, a Dropbox-like secure storage cloud application for bank documents.  Branches are changing, but they aren’t going away, at least not anytime soon.  Banks have been doing some interesting things in the branch channel, but there are still plenty of innovative ways to maximize the brick-and-mortar experience. Celent did a recent consumer survey showing that branch channel adoption is still very high among consumers, and the first choice for important decisions. Considering the adoption gap between PFM and the branch, the low activity is surprising
 

Does native advertising have any future in mobile banking?

Does native advertising have any future in mobile banking?
A new trend in the digital publishing world is a shift toward ‘native advertising.’  Advertisers are beginning to make ads more subtle, blending them into the actual content of the website.  The ads are presented in a way that flows seamlessly with the voice and style their environment.  Sites like Facebook, Twitter, Google, and others have been doing this for a while, but only recently has editorial media adopted the style.  Some predict native ads will dominate digital channels across all industries in 2014. See below for examples from Twitter and Facebook.

Native ads in mobile emphasize minimal disruption in UX

   Pic Pic1
Source: Facebook iPhone App; Twitter
Unsurprisingly, banner ads have proven to be increasingly ineffective.  The unnatural placement of banner ads makes them all too easy to block or simply ignore, and the flashing lights, noises, ridiculous promises, or distracting mini-games can be extremely annoying.  In mobile apps, where real estate is more limited, native advertising has allowed for a much more natural flow for the marketing (as shown in the figure above), and the effectiveness has been impressive.  A study by IPG Media Labs showed that users looked at native ads 53% more than display ads.  They also were 32% more likely to recommend the product to a friend. Banks can learn important lessons from the way native ads effectively gain the attention of the user while still respecting user experience, especially in mobile app design.  Financial institutions are understandably wary about trying to push anything through mobile that might be considered an annoyance.  Adopting some of the principles of native marketing and integrating them into a cross-selling strategy may be a much more effective route to take. A couple of key takeaways:
  • Native ads don’t disrupt user experience: The key principle of a native approach to advertising is a seamless integration of the advertisement into the user experience.
  • Marketing can be well designed to fit into existing interfaces: Evernote (seen in the figure below) uses this principle to show that a properly design user interface can make ads appear very natural.

Evernote’s UI Allows for Ads While not Sacrificing UX

 pic2
Source: Evernote iPhone App
To drive adoption, banks have often been hesitant to heavily push marketing, fearing the disruption in user experience.  User experience is clearly one of the most important aspects of digital channels, but applying some principles of native advertising could enhance sales effectiveness.   Could this be the logical next step for banks with strong mobile adoption and a proven digital strategy?