Facebook Banking: Don’t Bank on it

On May 5th 2014, La Caixa, one of Spain’s largest financial institutions, officially announced the launch of a Facebook app that provides users access to online banking features through the Facebook platform. It’s just the second bank in North America and Europe to launch a Facebook banking app, and, as far as Celent is aware, the seventh globally. In the weeks following the announcement, I was able to speak with a few different banks about the news, and surprisingly, while they were aware that Facebook banking existed, most were unaware how many banks around the world supported it. This couldn’t come at a better time, as Celent’s recent report, Banking on Facebook: An Overview of Banks with Transactional Facebook Apps, provides detail and analysis of the current offerings, highlighting interesting use cases and opining on the broader applicability of Facebook banking apps in financial services. Efforts are in the early stages, and even the most mature Facebook banking applications have not come close to replicating what’s possible through mobile apps. But are customer customers ready to adopt Facebook as a channel? Not really. In the figure below, taken from a Celent consumer survey last year, only 1% of respondents favored Facebook and Twitter as methods for engaging with their financial institution. In 2012, Citibank asked users about Facebook banking. The response was a resounding ‘NO.’ Users made it clear that they were not ready, echoing long-held sentiments about the perceptions of social media, and illuminating the challenge banks face in developing the channel. Consumers Preferences For Engagement Do Not Include Social Media Untitled Source: Celent US/ Canada Consumer Survey, July 2013/ November 2013; If you had an important topic you would like to discuss with a banker, how would you prefer to do so? N=1028 Celent believes that Facebook banking is only going to be the right choice for a very small group of institutions, given the following:
  • Banks don’t have unlimited resources to dedicate to throwing things against the wall in order to see what sticks
  • Most banks have a long way to go in other channels
  • Social media popularity is a guessing game
  • Despite the popularity of social media, consumers and banks are still uneasy about conducting transactions over social channels
This isn’t an indictment against innovation in social media. Social media is becoming a bigger part of financial services, and many, including Facebook themselves, are investing in social transactions. Social media and banking have a bright future together, however many in the industry are having a hard enough time developing functionally rich and well-designed mobile or tablet apps. Institutions should prioritize those investments for the time being. Banks like ASB Bank, DenizBank, FNB Bank, GTBank, ICICI Bank, La Caixa, and Tangerine (ING Direct Canada) have made Facebook banking applications an integral part of a broader social media strategy. FIs will gain the most value not by mirroring these applications, but by looking at what these institutions have done through social media. Celent found that banks supporting Facebook banking tend to have robust and highly innovative social media strategies. ASB Bank hosts a virtual branch through Facebook, GTBank allows for ‘instant account opening,’ and FNB Bank has created a social media persona that unifies the customer experience across all social platforms. The convergence of social media and banking marches on, despite the uphill battle that many institutions face validating some of the concerns consumers have, and the inherent challenges of each platform. Facebook banking isn’t going to work for all (probably most, at least for now), but lessons can be learned from the ways in which these banks have crafted solid social media strategies. Institutions looking for social inspiration need only visit their pages.

Striking consensus at the NetFinance conference

I spoke recently during the mobile track at the annual NetFinance conference in Arizona.  My slot at the end of the first day meant that by the time my turn rolled around, I was faced with good news and bad news.  It was good that there was so much agreement among all the participants, and that the messages that I’d prepared were consistent with those of other presenters.  The bad news was that few of my messages were new, and I didn’t want to bore my audience by repeating what they’d already heard.  So I started by recapping the threads that kept appearing over the course of a stimulating day. Key takeaways on what was important:
  1. Mobile: Critically important; the change from just a year ago is stunning
  2. Location:  Especially as a distinguishing feature of mobile
  3. Customer experience: You’re competing against expectations set by non-financial firms. It’s not just mobile, it’s not even just digital, it’s the unified customer experience, across the bank.  And that’s not easily quantifiable
  4. Business case:   Those in the room agree it’s a little squishy, but make-able, but it’s critically important to executive leadership. Many of the exhibitors and speakers are working toward providing solutions that will make capturing that data easier
  5. Data: Capturing insights and measuring / analyzing results is critical; it’s best to build in these capabilities at the beginning; experiments are even better so that the causality / correlation puzzle can more easily be solved
  6. Regulation: Serving customers digitally is harder for banks than, say, retailers, but that’s no excuse – customers still expect a great and valuable service
  7. Customer: The number of banks who touted putting the customer first was extraordinary.  Now we have to see whether their actions follow through on these encouraging words.  Is mobile a chance to teach them new habits?
The degree of consensus around the importance of mobile was striking.  The challenge for the bankers attending, and for the vendors helping them, is to move from preaching to the choir who attended NetFinance to bringing new members into a broader congregation.  Business cases coupled with compelling anecdotes, examples and case studies will help with this. Before embarking on any new digital strategy today, firms should embrace experimentation and data analysis. Here’s the NetFinance link: http://www.wbresearch.com/netfinanceusa/home.aspx

ING Direct Canada – TV Commercial Ignites Social Outcry

ING Direct Canada recently launched a new marketing campaign in order to promote RSPs (Retirement Savings Plan). The campaign includes a TV commercial that depicts someone suffering from anxiety and depression during RSP season. The commercial has resulted in a rash of negative comments and complaints (see ING’s Facebook page below) alleging that the commercial is inappropriate as it pokes fun at mental illness. I noticed only a handful of online users that have no problem with the advertisement, with one Facebook user saying, “Are you serious? I’m sorry, but people get offended *way* too easily, nowadays. And this is coming from someone who has dealt with a mental illness for more than half their life.”

ING Direct Canada is a very social media savvy institution. Their CEO is a frequent Tweeter and they regularly leverage social channels for marketing and promotions. Given the public outcry, they are now faced with a social media crisis and it will be interesting to see how they deal with it. Their social media skills are about to be put to the test. ING Direct announced earlier today that the TV spot will be pulled.

How do you think banks should deal with social outcry? Yes, this is about to become yesterday’s news but it still needs to be dealt with. Financial institutions can learn a lot from this situation, as banks are regularly bashed in social channels. It’s important to know how to listen to and engage with the public and also send out the appropriate messaging. Please weigh in with your thoughts and opinions.

Are Bank Facebook Apps the Future of Digital Banking?

Should banks have a Facebook presence? What should they actually offer to customers via Facebook? Should it be informational or dare I say it, transactional? A couple of interesting announcements and feelers have surfaced lately:

A handful of banks have already gone wild on Facebook , a notable example is ICICI.


Is Facebook going to be a viable access point for consumer transactional needs? In my opinion, banks that are enabling or attempting to enable transactions via a Facebook app are barking up the wrong tree. I’ve seen nothing to suggest that customers want this or would even use this. In fact, I’ve seen evidence of the contrary. Security concerns are without a doubt the number one issue. Furthermore, most US and Canadian banks have to jump through multiple compliance and legal hoops simply to post basic info on Facebook. My quick take – banks have so much room to improve across digital channels. Time and money are better spent improving online, mobile, and tablet experiences. Even if banks do go the route of offering Facebook transactional banking apps, they are likely to suffer the same fate as iGoogle. The web is boundless, and I don’t see Facebook as the primary “portal” for transactional banking. Facebook is still primarily about interacting with friends and family. Brands clearly have some sort of home on Facebook, but hey, we all know what the value of a “like” is really worth on Facebook (or do you?). Please chime in. Are Facebook banking apps the future of digital banking?

I’m A Twitter Influencer? Huh?

Yesterday, I was informed by Obopay that they have ranked me in their top 10 Twitter influencers in North America. Before I pat myself on the back, and get you to congratulate me, I’d like you all to consider what this really means. I’d like to thank Obopay for the accolade, but the answer is it means nothing. There are all kinds of fun ways to measure social “influence.” The most popular one is Klout, and Obopay uses the Klout score in its methodology. Klout’s got a convoluted mechanism of gauging your so called influence. I’m just an occasional tweeter, and my interactions are what contribute to my score. If I spent my entire day tweeting out news and links, who knows, maybe I’d reach #1 on the Obopay list! These scores are easily gamed, and don’t measure an individual’s true interactions or influence. Plus, Obopay’s list is incomplete as I can easily identify several individuals from Celent and other firms that aren’t even listed. I could go on with this but I have to get back to the report I am writing. What an analyst does on Twitter represents only a fraction of their role and potential to influence. Would you make a business decision based on my Klout score or Obopay influencer rank? I hope not.

Should Social Sign-in be Used For Financial Services?

Earlier this week, startup Movenbank came under fire for allowing users to its alpha site to sign in using Facebook credentials. Should Facebook be used to identify and authenticate users at a banking site? I commend the Movenbank team for trying something different and for attempting to use a standard that’s already in place. I understand the concept and the idea behind using a social tool. However, I don’t believe that a Facebook Connect login has a home on a secure banking site. Firstly, Facebook and privacy don’t exactly go hand in hand. Even more importantly, Movenbank is a front end solution and is going to require bank partners sitting in the background. I’m not aware of too many banks that are going to be comfortable with the notion of a Facebook login. Facebook and banking are still like oil and water and it’s going to take quite some time before that changes. There’s good reason for this. Facebook is still too much of an open book and Facebook Connect isn’t exactly the most secure thing around. The online video site Hulu is an excellent example. Earlier this year, a small number of Hulu users found this out the hard way – users were being erroneously logged into the accounts of other users. Hulu claimed, “that it was a coding and configuration error on Hulu’s side, and not the result of hacking, or other third party actions, or a vulnerability in Facebook Connect.” Sure Hulu, this had nothing to do with the third party tool… Facebook Connect isn’t ready for prime time for online or mobile banking. There are many who are going to disagree with me here, particularly given the popularity of Facebook Connect. Sure, it’s cheap and fast to get up and running. Cheap and fast doesn’t equate to secure or private, particularly once the FFIEC gets into the picture. To be fair Movenbank does plan to, “supplement the registration and login features with additional authentication channels, including a private, Movenbank-specific user identity.” Now I’m not sure what “supplement” means here exactly, but I take it to mean that the user will have options and a second factor of authentication. I hope one of the options is not Facebook.

Social Media Best Practices for Banks – “Be Cool.” Good Luck With That!

I’m still inundated with inquiries from financial institutions regarding social media. Everyone seems to be so concerned with getting on Facebook or Twitter. It’s as if that would solve all the woes of the banking industry. A very popular website, Mashable, put out an article yesterday titled, 5 Best Practices for Financial Institutions on Facebook. Needless to say I read it with great interest and much disappointment and disdain. My favourite is best practice #4, “Be Cool.” I can already see the catch phrase emblazoned in the social strategy of every financial institution in America. Good luck with that! The article misses the most fundamental point that every financial institution must take into account – banks need to focus on business goals and incorporate social media into the process. It’s not about Facebook or Twitter, or whatever the flavour of the week is. Am I opposed to social media? On the contrary. I think it’s critical and something that banks need to take very seriously. Social media, is but one of the elements to be used in satisfying business objectives. I’m happy to chat more about this topic, it’s an important one. It was the subject of a presentation I gave at the NACHA payments conference earlier this year. Feel free to reach out or comment here. I’d love to hear your thoughts on the Mashable article, it was the subject of a healthy conversation on Twitter yesterday.

NACHA Payments 2011 Roundup

It’s been a busy few weeks. I rounded out a stretch of business travel with a visit to Austin, Texas for the NACHA Payments Conference. Bob Meara and I spent most of the time catching up with our clients and meeting some new and exciting prospects. My first day in Austin was a doozy, as I had a couple of speaking engagements to take care of weaved in between back to back meetings. I started off the day bright and early with a speaking engagement at a breakfast hosted by Fundtech. The topic on the agenda was, Achieving Competitive Advantage With Cash Management User Experience. Those of you familiar with my research know that I spend a lot of time emphasizing the importance of user experience in online banking, and I was happy to bring this message to the group. In the afternoon, I presented at the NACHA Payments conference along with Leslie Klein, Global Head of Marketing for Citi GTS. The topic of our presentation was, Demystifying Social Media: A Call to Action For Banks. The session was very well attended and there were lots of questions from the audience. There was a particular buzz in the room when I stated that I don’t believe banks presently belong on Facebook (more on that later, probably a good topic for a separate blog entry). Overall it was a good conference. The energy was positive and there appeared to be an increase in attendance. I noted an interesting shift regarding conference attendees and topics. Historically, most of the sessions were related to business or corporate banking with emphasis on payments. This year there appeared to be a lot more retail content, with sessions on mobile banking, mobile payments, regulatory issues, etc. There also was quite the focus on healthcare payments with a dedicated healthcare track. All in all it was a good event and I was glad to have made the trip down to Austin. On a personal note, I particularly enjoyed watching the mentalist at the Fiserv booth. Bob Garner has been a fixture at the Fiserv stand for some time now, and I always do my best to steal away and watch him perform for a few minutes. Bob has been able to tell me some pretty uncanny things about myself and my family (with no prior knowledge or prompting), and I have watched him do the same to others. It’s a great show – mind boggling, and highly entertaining. I’m thinking of recruiting him to be a Celent analyst – his IT spending predictions and forecasts would be spot on : ) Next stop on my conference calendar is Finovate Spring in San Francisco. Hope to see you there!

Payoff.com – more noise in the crowded PFM market?

I came across the following article yesterday about Payoff.com, a new fintech startup that, “turns financial planning into a game.” The blending of savings goals, badges, and social features piqued my interests and I headed over to take a look. The intro video explaining the solution is really slick and does a good job at explaining the service. Once inside however, things get a tad confusing and I can’t say that I get the value of the badges or the provided social features. First off – is it secure to provide my banking credentials to this site ? I think the Rudder and Blippy mishaps have taught us enough about this. This startup doesn’t have the bank-level security that would be required for a PFM solution (and I’m not referring to account aggregation here). Long time readers of this blog know that I believe PFM belongs at a bank for numerous reasons. I think savings goals are great. SmartyPig still has the best implementation of this in my opinion, the higher interest rate coupled with the retailer bonuses are very compelling. At Payoff you earn badges for your goals and there are “Sur-Prizes” that can be won as you earn more badges. Personally, I don’t get the added value of the badges when it comes to savings goals. That is unless you are taking part here in order to play a game. To me, this site looks as if it is geared towards a younger audience. Is financial planning a game? Certainly not. Can it be fun? Absolutely, but there has to be some knowledge transfer and education involved. Firms that will be successful in the PFM space have to find simple ways of providing financial education to their customers. This is especially important for younger users as they are at a stage in their lives where financial literacy is crucial.

BAI Retail Delivery 2010 Roundup

The BAI Retail Delivery conference is just coming to a close, and I attended along with the my colleagues in the Celent banking team. Attendance definitely appeared to be up over last year. The 2009 event was depressing from an attendance perspective, and I was happy to see the ramp up. The Las Vegas venue is certainly a draw, but based on conversations, there also seems to be more flexibility over last year with regards to travel budgets. With that said, the keynote sessions had tons of empty seats, indicating that either the “Vegas effect” is in play, and/or that there is still plenty of room for attendance to grow. I spent most of my time at the event in productive meetings with clients and prospects. I gathered a ton of information for research. A few key trends emerged from the conference, none of them are all that surprising. They do however point to what folks are thinking about and prioritizing for 2011.
  • Alternative revenue sources. There is lots of scrambling going on given regulatory shifts and the need to grow revenues in the retail banking sector. Many of my discussions were about how banks can grow using the online and mobile channels. There were lots of questions regarding merchant funded rewards and how they can be integrated into online banking using vendors like Cardlytics or BillShrink.
  • Analytics. This is a subject that everyone always seems to be talking about but isn’t doing all that much with. Banks are sitting on tons of data, sitting being the key word. A number of discussions centered around how to leverage this data to build more complete customer views and cross-sell other products.
  • Online banking platform upgrades and PFM. This is now trickling down to the retail front, following a ton of activity in the corporate banking space. Banks are realizing that their online banking offerings are stale, and don’t provide the experience that customers are looking for. This will be a slow moving boat, but the exploration phase has certainly started. Much of this is being fueled by interest in PFM and the desire to integrate it with online banking.
  • Mobile initiatives. Mobile is still a raging topic and was the focus of many discussions. A few key questions came up. Are mobile devices replacing the PC? What role do tablets play? Both these questions were also tied to the biggest dilemma – should I prioritize investment in the mobile channel, online channel, or both? My colleague Red Gillen will address these questions in more detail in a blog entry next week.

A couple of things surprised me:

  • Lack of emphasis on social media. This has been a huge topic lately, and I found that the conference had little emphasis on this. Yes, the founder of Twitter was a keynote speaker, and there were other sessions on this topic, but I didn’t find that banks at the event had that many questions here. Many banks are still clueless when it comes to social media. I actually had one banker tell me that he doesn’t believe that social media will affect his customers. There is obviously a lot of learning for banks to do here in order to grow into the shifts that have already taken place in the online world.
  • Limited concerns and discussions about online banking security and threats. All kinds of fraud has hit the business banking sector this past year. There is a lot that banks can learn from this, and additional safeguards need to be put into place for consumers.

For some further reading, Jim Bruene at NetBanker has compiled his Best of BAI Retail Delivery 2010.

I welcome all comments and thoughts. I also encourage those of you who were in attendance to share your experiences.