If My Phone Was My Wallet: Reflections from NACHA Payments 2010

If My Phone Was My Wallet: Reflections from NACHA Payments 2010
It’s hard to imagine a business trip without a Smartphone. This week at NACHA Payments 2010, an embarrassing event caused me to consider the practical risks of overreliance on mobile devices. Mobile payments were a hot topic in Seattle this week. Multiple sessions argued the coincidence of factors that will bring about the ascent of mobile payments in North America. Few need convincing that mobile devices are increasingly becoming the primary point of contact for a growing segment of the population. Most nod in agreement that mobile devices would be a great mechanism for P2P convenience payments for example – but wholesale replacement of plastic? Is this really a good idea? While assertions about the superior security and convenience of mobile payments abounded at the conference, I didn’t hear much discussion about a rather obvious risk. What happens if one’s phone stops working? Perhaps I’m a bit of a curmudgeon about this trend, but I’m reluctant to place even more dependence on mobile devices than we already have. Consider airline electronic check-in for example. Like many, I find it convenient to check-in from the office and print boarding passes ahead of time in return for faster navigation once at the airport. But, I’m not yet ready to trust my next business trip to an eBoarding pass for its incremental convenience. Once again, what happens if your phone stops working and the boarding gate is about to close? The first evening at Payments 2010, I was scheduled to meet a colleague at a reception event. The room was large and crowded and I was unable to find him. Sending him a quick text seemed like a reasonable next step. This posed a modest problem for me, however because I had just graciously accepted a glass of fine Washington State Merlot and there was no convenient place to set it down in order to operate my device. (My fine motor skills aren’t advanced enough to operate the HTC device without using a stylus. It therefore takes both hands for me to send a text message.) Unwilling to risk the fine wine, I simply tried to hold both the wine and my HTC for the quick text. Be forewarned – it’s not a bright idea. My device ended up in the glass and most of the merlot onto my previously white shirt. Three days later, my phone still hasn’t recovered. All this has been both an embarrassment and inconvenience. Heck, I stopped wearing watches long ago since phones keep decent time. Mine used to. But, if my phone was my wallet, I might be sleepless – and stranded in Seattle.

AFP Conference Highlights and Review

AFP Conference Highlights and Review
I spent most of last week at the AFP conference in San Francisco. Although attendance seemed to be rather dismal (I am still waiting to hear some actual figures), it was a great conference for me with very productive meetings. Most of my meetings were centered around online corporate banking and payments – hot topics these days. It did give me great satisfaction to learn that the estimates we came up with for IT spending earlier this year are on the money. IT spending on wholesale/corporate banking is skyrocketing (see the report, IT Spending in Banking: A North American Perspective) and some of the figures shared with me are staggering. I will actually be hosting a webinar on Bank IT spending on Oct 29th for those of you who are interested. Aside from IT spending growth, I noted several trends:
  • Next generation online cash management solutions are here. Bank of America, Citi, and some of the software vendors showed off some great online cash management solutions. For more info see my recent blog post, Peeking Out From Under The Hood – Next Generation Online Cash Management.
  • Online cash management will continue to evolve. Analytics, social media (primarily closed groups for corporate clients), interactive online training/education, desktop and online widgets, and MUCH more will start to peek out in 2010. I will cover some of these trends in the next iteration of our IT Spending report (due out in January 2010) as well as a future cash management report.
  • Payment hubs are transitioning from concept to reality. There has been lots of talk about payment hubs over the years, with few compelling live examples. Solutions that clean up the mess of back-end systems coupled with clean, simple and intuitive front ends are on the horizon.



Any other trends worthy of noting? Please feel free to chime in, your comments are welcome.

Corporate Banking in Asia is Heating Up

Corporate Banking in Asia is Heating Up
The press seems to focus a lot of its coverage on competition for retail banking business in Asia, but from where I sit it looks as though the corporate banking side is at least as hot, if not more so. One reason is that retail products and services are already fairly well developed in the region, leaving much of the action on the retail side to the marketing and branding of increasingly commoditized offerings. Corporate banking services, on the other hand, are still developing. There is a lot of room for improvement in the way banks in Asia are packaging and delivering their corporate banking services. This is particularly true for transaction banking services, including cash management, treasury, trade finance and supply chain management products and services. The large global banks have been investing heavily in developing comprehensive suites of services, often on a worldwide basis; many banks in Asia are now starting to see the value in developing a full range of transaction banking services for their corporate customers. I was recently invited to speak at an event in Hanoi, Vietnam for Asian banks organized by Citi, where this trend was readily observable. The venue was packed with managers from banks throughout Asia, large and small. They came to see what Citi had to offer in the way of web-based delivery, global payments solutions, trade finance and supply chain finance services, etc etc, and to think about how to offer these services to their corporate clients. Many banks in the region are likely to use the white labeled services of global banks such as Citi, ABN AMRO or HSBC, to name a few. Banks will be faced with choices in what mix of services, both outsourced and home grown, to offer in their particular market. I was struck by the number of banks I spoke with at the conference that were feeling challenged in developing their strategies for corporate banking services. Celent has followed developments and strategies in transaction banking for some years, and is now covering the market from the corporate side as well with our new corporate treasury research service. I look forward to working more closely with banks in Asia as they consider their options in this rapidly developing area.

Financial Technology Startups: Giving Banks a Run for Their Money

Financial Technology Startups: Giving Banks a Run for Their Money
At the end of April I had the opportunity to attend Finovate Startup in San Francisco. I already blogged about my experience the day after returning. I also decided to writeup a report on financial technology startups – that report will be coming out next week. I decided to produce the report because much of the competition (to banks) and innovation in the financial services sector is coming from non-banks. The report singles out the innovative startups that Celent believes will have an impact on the banking space and/or the consumer market (many of these startups bypass the bank channel and market their products directly to consumers). Celent has selected the following companies to profile in this report: I am curious to hear your comments on these firms as well as your thoughts on innovation in the banking industry. Please feel free to post your comments and interact!

2009 Banking Innovation & Insight Day Roundup

2009 Banking Innovation & Insight Day Roundup
Celent held its 2nd Banking Innovation and Insight Day last Wednesday. The event was a great success, and attendance was up 10% over the 2008 event. That’s a mighty impressive feat given current economic conditions. The Celent/Oliver Wyman team delivered very interesting and captivating presentations:
  • We opened up with a great presentation by Celent SVP, Bart Narter, who gave a comprehensive summary of the top technology trends in the banking space.
  • Celent Senior Analyst, Red Gillen, captivated the audience with his review of the healthcare banking space. This was no easy task as Red’s presentation was just after lunch
  • Oliver Wyman Partner, Aaron Fine, gave the audience a fresh perspective on deposit gathering
There were also 2 interactive panel discussions. Both had a great set of panelists
  • Alternative Payments Go Mainstream, moderated by Bart Narter. This eclectic group provided an innovative take on the payments space and explained how the market is evolving:
The event concluded with the Model Bank Awards. I had the honor of handing out awards to the 18 banks who were selected for our recent Model Bank Report. We would like to thank those that attended, and we look forward to seeing you all next year! If you would like to submit a nomination for the 2010 Model Bank Report, we invite you to visit www.celentmodelbank.com

PSD: Payment Services Directive or Payment Services Distress?

PSD: Payment Services Directive or Payment Services Distress?
I have recently attended a European conference on the Payment Services Directive (PSD), the legal foundation for the creation of an EU-wide single market for payments. As stated on the European Commission’s site, the PSD “aims at establishing a modern and comprehensive set of rules applicable to all payment services in the European Union. The target is to make cross-border payments as easy, efficient and secure as ‘national’ payments within a Member State”. Impressions from the conference Although all the major European PSD experts were in the room, there still was plenty of uncertainty, confusion, and open items I supposed were to be already resolved. The PSD has principally focused on consumer protection. For this market sector it is not too problematic for banks to adapt their rules to the Directive’s mandatory guidelines. Different story is when it comes to corporations. The PSD does not provide clear provisions and guidelines on how to deal with issues that have emerged since the Directive principles have been brought to the public. Bank representatives have argued about the difficulty of implementing some provisions into local legislation. In all response I heard, more than once, legislators saying that “the law is the law, and cannot be changed”. Looks like regulators and banks have for all this time worked in parallel without sharing views and without committing themselves to find the right compromise. This impression was further on validated after I heard regulators in the room lament they were “surprised” of the negative comments they heard from banks. Would banks have “raised the issue before, things could have been worked out”. Bottom line Although all parties claim this not to be the case, the Payment Services Directive is still perceived as a compliance exercise. The European Commission is completely missing the point of providing a clear business case for adoption. On their side, banks are still in a guilty “wait-and-see” mode. In either case, distress seems to be the right sentiment that surrounds the PSD program.

NACHA Payments – Trends and Thoughts Related to Online Banking

NACHA Payments – Trends and Thoughts Related to Online Banking
I got back late last night from the NACHA Payments conference in Orlando. It was a good event, although not surprisingly, it was apparent that attendance was down. Sessions seemed to be well attended, although exhibit hall traffic was light (and much smaller this year to boot). I spent most of my time at the conference in meetings with our clients – a mix of banks and software vendors. Most of my meetings centered around online banking and payments, particularly for small businesses and large corporates. A few noticeable trends emerged:
  • Web 2.0 is finally arriving to the business online banking space. Almost all the vendors I met with either talked about or showed me fresh GUIs with better navigation and layout. This is long overdue. A couple of the vendors have been working on this for a little while, and their advances made it into my upcoming online cash management vendor evaluation report (the report is complete. It’s now time for it to be edited and for the vendors to review their profiles prior to publication). Bank of America had an interesting but basic presentation on next generation Web 2.0 cash management solutions. I was quoted in the presentation, and it’s nice to see a bank thinking about the next generation of solutions.
  • Dashboards are a key component of next generation online banking solutions. This was definitely the buzzword. I discussed this at length in my report, Web 2.0: A Quantum Leap for Wholesale Banking .
  • Banks still don’t get the importance of PFM for small business. I seemed to be the one asking the questions about this. I would have liked to see greater emphasis on PFM, particularly with the Web 2.0 demos and discussions.
I also gave a presentation together with Bremer Bank and Fiserv called, Courting a New Kind of Customer: Serving Small Business Online. The session was well attended and there were a few good questions at the end.