- Banks are rolling out channels and touchpoints without necessarily teaching the customer how to best use them. When ATMs (or ABMs, north of the border) first came out, bank personnel would walk customers over to them and give them a basic tutorial. There is precious little analogous activity in our new digital channels; we simply assume that customers will pick up on how to use them. Apple has trained us to think that really good experiences need no tutorial, but that’s not necessarily the case in banking, particularly when it comes to security concerns.
- The session didn’t address Personal Financial Management (PFM) directly, but when we touched on it, the group took off on a twenty-minute tangent! There’s clearly a lot of interest in PFM despite anecdotal adoption rates that continue to hover around 10%.
- Piggybacking off existing infrastructure, e.g., the AppStore ratings engine and comments section, is a great way to garner customer feedback. The key, obviously, is to listen and act on the comments that customers provide, and at least one bank watches its ratings assiduously and uses the feature requests and complaints as a key driver of release improvements.
- As in the U.S., the fate of the branch network is an important strategic issue. One component that will have some bearing on this is video banking, whether through hardpoints or consumer devices (laptops or tablets). Bankers are clearly keen to determine how video can supplement other channel experiences.
- A sneak peek of a Celent survey of Canadian banking customers showed their behavior to be remarkably similar to Americans’. While there were a couple of exceptions (to be detailed soon in an upcoming report), there were no huge disconnects. Despite some of the differences in the structure of our two banking systems (oligopolistic vs. fragmented, and cooperative on infrastructure vs. wildly independent), our consumers tend to view and use their banks similarly.
November 26, 2013 by Leave a Comment
We recently held a banks-only roundtable at our offices in Toronto to discuss “New Imperatives for Omni-Channel Delivery.” With representation from Canadian and US financial institutions, we had a robust conversation around the movement from “multi-channel” (old and siloed) to “omni-channel” (integrated and mutually reinforcing). Some of the attendees had interesting – and fairly recent – titles: “Director, Multi-Channel Experience” and “Director, Multi-Channel Strategy” were two that were particularly noticeable, while two others had “Channels” in their title. Taking an integrated view of the channels portfolio appears to be catching on in Canada! Some interesting observations surfaced.
October 22, 2013 by 1 Comment
Mobile banking is clearly a huge trend. Financial institutions have embraced mobile and are slowly but surely moving forward with updated apps, features and functions. I spend a lot of time talking to banks of all sizes about digital banking. From tablets to smartphones, mobile banking has dominated most of my conversations with banks and software vendors in 2013. Whatever happened to good old online banking? Are banks working on improving it? Are they spending money on online banking enhancements? Whatever happened to the promise of PFM? How is this all going to play out as we move into 2014? Banks can’t afford to drop the online banking ball. There are several key reasons for this:
- The online channel is still the most popular with consumers of all ages. The results of our most recent consumer survey (September 2013) are quite clear. While mobile is certainly growing in importance and popularity, online still rules.
- Most tablet banking apps are pitiful. Kudos to the banks that have ventured down this road as it’s an interesting and exciting space. However, we recently reviewed the tablet apps of the top banks in the US, and most can’t compete with the features, functionality or experience of classic online banking. I recently spoke with a bank that had just finished doing some customer research to evaluate how customers were using their tablet app. Some customers had 2 programs running simultaneously on the tablet – the banking app and the online banking site in the browser – the simplistic nature of the standalone app simply wouldn’t cut it.
- Digital banking needs to be more than a transaction hub for balance checks, bill pay and transfers. Commerce / shopping, PFM, financial education, and so much more belong in online banking. They also belong in tablet banking, and pieces belong in smartphone banking – but that’s a different yet complementary story.
July 17, 2013 by 3 Comments
I was very intrigued by an American Banker article that was published yesterday – Answering Call for PFM, Tenn. Bank Rewarded with 25% Adoption Rate. The article talks about a 25% PFM adoption rate at Wilson Bank & Trust. This stat certainly sounds positive given some of the adoption figures we have seen to date. The article did however raise a key question. What really is PFM adoption? If banks succeed at
PFM online banking they are going to be measuring online banking adoption and engagement. Yes, usage of specific PFM tools can be tracked, but I am more interested in how PFM is blended into the overall online banking experience.
The good news is that American Banker has done a great job at digging a little deeper into the figures:
The bank has seen more than 25% of its roughly 20,000 active online banking users adopt the tool. (People sign up through online banking.) Wilson defines active online banking users as those who use online banking during the month.The bad news is that this metric can be very misleading. I am impressed by the use of a 30 day active statistic for online banking – it’s a good metric. Many banks will use a 60 or 90 day term when referring to active users. I did however get stuck on the PFM adoption stat of 25% of active online banking users. What does adoption mean in this case? That the user clicked on the tool? Signed up? Set up a budget? Viewed a demo? I don’t know the answer but I am skeptical that the PFM adoption metric and online banking metric are an apples to apples comparison. In other words, I am questioning if 25% of PFM users are actually 30 day active for PFM tools. Perhaps Wilson Bank & Trust can shed some additional light on this. 25% active use of PFM tools (as a subset of active OLB users) is a pretty decent stat. This would be worthy of further exploration if Wilson Bank & Trust has achieved this.
July 11, 2013 by 2 Comments
Celent recently hosted a client event called New Imperatives for Omni-Channel Delivery. Motivated by the convergence of channels, we designed this forum to explore banks’ need to coordinate all the ways they touch customers across the entire set of organizational silos. Celent’s belief is that in the New Normal, retail delivery will never be the same. Retail banking customers are driving the most fundamental change in delivery that the industry has ever seen; these empowered consumers have new knowledge and expectations that are forcing banks to up their game. Additionally, because the way that banks make money is changing radically, banks have no choice but to reconsider their overall system of retail delivery. A large expense for retail banks is their branch network. It will have to change. The branch of the not so distant future is more than just talk this time; it’s not optional. It will entail transaction and sales/service automation; physical re-design; and cultural and organizational change. Moving to this new branch mindset is a journey, not a destination. Results will almost always delivered in increments, not via a “big-bang.” Additionally, branch transformation needs to be executed in a multichannel context, and quickly. Ultimately, this will result in fewer, smaller, more efficient and more effective branches. On the more technology-oriented side, Celent surveys show that mobile banking and multi-channel delivery are “top retail banking technologies.” The tablet will act as a catalyst to the redesign of online banking as online and mobile are growing rapidly in priority. Tablets are unique devices that provide a unique experience and shouldn’t be thought of us simply larger phones. Digital startups are challenging the status quo with slick experiences and innovative business models. In response, banks have to become digital powerhouses; they must take advantage of emerging opportunities and use them complement physical channels. We opened up a free-flowing discussion with a few questions for our banking attendees. We think retail bankers of all stripes will do well to ponder them.
- What is the customer’s perspective?
- How do you coordinate between the branch, digital and other channel teams?
- Do you watch other industries? Who and how?
- What are you doing to grow digital sales?
- How will the role of the branch change in an omni-channel environment?
http://www.regonline.com/builder/site/?eventid=1256874 Additionally, we’ll be hosting a bankers-only roundtable called “Evolve or die: the future of the bank account” in London on October 17. Details at http://www.regonline.com/builder/site/Default.aspx?EventID=1259271 Finally, we’ll be hosting a broader cross-industry event on October 3 in San Francisco. Entitled “What’s Next: The Search for Disruptive Innovation,” you can find out more at http://www.regonline.com/builder/site/Default.aspx?EventID=1237201 Hope to see you there!
July 1, 2013 by 1 Comment
Big news today from Intuit, as it sells off its financial services business unit (formerly known as Digital Insight) to Thoma Bravo. The press release points to most assets being sold, though interestingly Intuit will hold on to Mint.com and a connectivity piece:
The transaction includes an Internet banking platform, digital payments, mobile banking, Purchase Rewards, FinanceWorks, and digital banking add-on solutions as well as third-party solutions. Certain assets that are currently included in the IFS division, including OFX connectivity and Mint.com, will remain with Intuit.There has been a flurry of transactions lately that involve online banking players:
- ACI picked up S1 and Online Resources
- GTCR acquired Fundtech
- Bottomline Technologies purchased Intuit’s small business online banking assets
- Fiserv acquired Open Solutions
- What happens to the newly announced mint.com for banks? Intuit is hanging on to Mint but selling the online banking piece, so this is unclear.
- What are the implications for present online and mobile banking customers?
- Is Intuit going to be a friend or foe to banks? They used to play both sides, but with the sale of IFS it appears that they are going to be competing with or complementary to banks.
- What is Thoma Bravo’s 12-24 month plan for IFS?
April 8, 2013 by 5 Comments
There is a reason that user adoption of PFM is so low. Well several reasons in fact, and you can read about it in this report. Thankfully, steps are being taken to more tightly couple PFM and online banking – one of the MANY key elements required to improve adoption. Intuit announced last week that the time has come for them to integrate aspects of their popular Mint.com consumer offering with Intuit online banking. I think it’s a great move, and it’s high time that Intuit moved forward with a more cohesive approach to online banking that includes PFM. The big question on my mind – is this move too little too late? Celent has been promoting the concept of an integrated online banking/PFM for several years now. There are a number of banks that have already gone down the more tightly coupled online banking/PFM path, some in more depth/detail than others. Why has Intuit waited so long to make this move? It’s also important to note that this is just an announcement. According to an American Banker article, “pilot tests with banks are starting later this spring, with general availability expected to hit by early next year.” Early next year? I think it’s great that Intuit went ahead and made an announcement – I’m all in favor of stirring up excitement for refreshed online banking. However, assuming Intuit sticks to its timeline, this announcement is still roughly a year in advance of us seeing a generally available solution. A lot can happen in a year, particularly with the constant flow of non-bank startups, innovation and updates to competing online banking solutions, and moves by other financial institutions. Don’t get me wrong, I’m excited about the next generation of Intuit online banking, but things have to move faster if they want to remain a relevant player. A few key questions need to be answered:
- Will Intuit’s existing online banking customers move to this new version? The overwhelming majority likely will if this becomes a standard component of online banking (Intuit’s online banking is run in an ASP model). Those that won’t want to move, and that number could be substantial, are ripe for being poached by other digital banking solution providers. This could also be examined from a different angle. Perhaps Intuit’s bank customers have been pushing for these types of changes. If so, then this could be a great way for Intuit to retain existing customers and go after new ones. Too bad it’s approximately a year away, as that still makes Intuit’s customers ripe to be poached by other providers.
- How will Intuit’s online and mobile banking customers feel about the changes to the solution? The pilots will provide more information. Intuit has been making iterative changes to its online banking solution, and the frequent changes could prove challenging and frustrating to banks and their customers.
- Will Intuit be successful at selling this revamped offering to larger financial institutions? That’s difficult to say at this stage. Some of the larger banks are pretty deep into the PFM space already, and they are working with other providers. There are still quite a number of mid-tier and large banks that haven’t touched this space that could be great prospects. Intuit will however need to differentiate itself in a very crowded market.
March 28, 2013 by 6 Comments
For years, I’ve been able to schedule an appointment with my healthcare provider, barber, pastor and friends, but never my banker. What’s up with that? That’s because banks have historically relied on a 100% walk-in model for in-branch sales and service. Things are finally beginning to change. They need to. With branch traffic declining at most banks by more than 5% CAGR, sales leads aren’t just walking through the doors like they used to. And that traffic won’t return unless banks take proactive steps to generate those leads. Banking by appointment is one great way to do so. Why this is such a good idea: • Customer convenience. Rather than rolling the dice with an unannounced branch visit, consumers make their appointment knowing staff with the requisite knowledge and experience will be ready and waiting (at least in theory). • Improved channel capacity. Demand for sales and service staff is hard to predict accurately. This creates several problems. As more customer interactions are scheduled, channel capacity improves along with customer satisfaction. • More effective customer engagement. Done well, front-line staff knows who is coming and what their needs and interests are prior to their arrival. This provides staff the ability to be well-prepared for the appointment, rather than reacting to walk-in visits. Bank of America and Bank of Montreal are two excellent examples of well-executed banking by appointment initiative in my opinion. Bank of America’s capability extends to online, mobile and Facebook customer touchpoints and invites both in-person and telephone appointments. Bank of Montreal (BMO) was a 2013 Celent Model Bank winner for its initiative. BMO Online Appointment Booking (OAB) Initiative BMO launched its new Online Appointment Booking (OAB) functionality in May 2012 allowing personal and small business banking customers and prospects to book appointments in real time, quickly and conveniently directly into branch employees’ calendars through Online Banking and BMO.com. The capability is being extended to mobile devices in 2013. Through the first six months since launch, OAB booked nearly 19,000 appointments, resulting in 8,355 product sales. Roughly half appointments were booked through BMO’s public website. On average, 1.8 products were sold per appointment. Based on these results, the project payout is less than 7 months (net of estimated cannibalization – sales that would have otherwise been made). The sales mix (below) reflects significant complex products, suggesting that OAB has been effective in bringing in foot traffic among prospects not likely to purchase online. Staff response to OAB has been favorable. Apart from exercising discipline in maintaining Outlook calendars, no additional staff effort is required as a result of OAB – other than keeping appointments booked on their behalf. Celent regards OAB as a model example of making a significant business impact with a relatively simple and low-cost technology investment. So much so, we awarded BMO a Celent Impact Award last month. Celent Impact Awards As Celent reviewed the unprecedented number of Model Bank nominations this year, we were struck in several instances by initiatives that were impactful but were not particularly innovative or difficult. Rather, we were left with the sentiment, “Why aren’t more banks doing this?” In recognition of the wisdom demonstrated by these initiatives, Celent chose to honor three financial institutions with a unique distinction among Model Bank Components. Hence, the Celent Impact Awards. The report, Celent Model Bank 2013: Case Studies of Effective Use of Technology in Banking is packed with 20 detailed case studies. Celent is accepting nominations for Model Bank 2014 through November 29, 2013.
February 12, 2013 by 4 Comments
I recently stayed at a Sheraton in London. On arrival I was intrigued by a card that offered me 500 points for not having my room cleaned. This was a different approach than the old, and not particularly effective, exhortation to hang my towel if I wanted to save water – in that scenario, there was nothing in it for me but the potential for some vague good feeling. But this – this was real, this gave me something that I valued. So I opted to go without my room being made up for two nights, was 1000 points the richer, and the hotel saved on labor, detergent, water, and the like. It was a true win-win situation. When I remarked on it when checking out, the clerk said that the initiative was only a couple of weeks old, but had received very favorable responses. Count me as a fan! What’s the analog for banks and other senders of paper statements? The plea to go paperless. We’re told it’s green, and might reduce the risk of identity theft. But I know that the bank will save a lot of money by not sticking that statement in the mail (in round numbers, 50 cents per customer per month). So why not just offer to split that (relatively small) amount with me, or offer some other incentive? When added to those other worthy reasons, it might be enough to tip certain customers over the edge of going paperless. The goodwill it generates will certainly help from a marketing perspective. And finally, it’s a great example of a win-win for the bank and its customers. I love to ponder why we do what we do. The rapidly evolving world of behavioral economics is particularly relevant to financial services, and I’ll be exploring on an ongoing basis some of the lessons that banks can draw from this emerging field. If you’ve got your own interesting examples of changing behavior, let us know.
January 31, 2013 by Leave a Comment
This morning, ACI announced that it is going to acquire Online Resources. It’s a bold move on the part of ACI, especially after their recent acquisition of S1. ACI is clearly working on growing market share, and adding to it’s vast treasure trove of fintech assets. My initial feelings regarding the acquisition are mixed. What works:
- ACI picks up a bill payment solution, a critical component of a digital banking arsenal. Fiserv (Checkfree) and FIS are the dominant players here and it will be interesting to see how they will use their newly acquired bill pay asset. In other words, can they tightly couple bill pay to their existing online and mobile banking solutions and attempt to oust the dominant competitors?
- ACI now has consumer online assets that complement their S1 acquisition. Examples include PFM (MoneyHQ), and online account opening.
- ORCC works primarily with smaller institutions. This speaks well to ACI’s direction over the last little while, particularly after acquiring S1 and their community bank and credit union clients.
- Business online banking / cash management overload. Prior to acquiring S1, the only solution ACI had was Enterprise Banker. With the S1 acquisition they added Business Online Banking for Community Banks and Credit Unions, Business Online Banking for Regional, National, and International Banks, and WebFederal for Credit Unions. With the ORCC acquisition they add Business Banking and Quotien Small Business Banking. If my math is correct that adds up to 6 online banking solutions for businesses. That’s no small portfolio to manage! ACI has already made some decisions regarding the S1 portfolio. For the midsize to large bank market, ACI has announced that both Business Online Banking and Enterprise Banker are strategic components of its long-term vision. They have positioned S1’s larger bank solution (now known as ACI Universal Online Banker) as the global product of choice and the ACI solution (Enterprise Banker) as a US-centric hosted solution.
- Consumer online banking overload. ACI did not have it’s own dedicated consumer solution, but with the S1 acquisition they added Online Banking for Community Banks and Credit Unions, Online Banking for Regional, National, and International Banks, and WebFederal for Credit Unions. Now they are adding ORCC’s Advantage (ASP) and Architect solutions (on premise or hosted). A total of 5 consumer online banking solutions.