“Dear Banker, I would like a MasterCard, please”

“Dear Banker, I would like a MasterCard, please”
Many industry commentators who attended MasterCard’s Worldwide Media and Analyst Symposium on September 23rd in Purchase, NY noted the confident tone of the company, the energetic and fired-up management team and how the firm views some of the major challenges for the industry (e.g. the Frank-Dodd act) as opportunities. However, I think one of the more subtle shifts in MasterCard’s priorities has attracted a lot less attention – the increased company’s focus on the end consumer. Of course, the schemes have always spent significant amounts on marketing (~3-5c per transaction) building up the brands and consumer awareness – Visa’s sponsorship of the Olympics or MasterCard’s “priceless” campaigns are a testimony to that. However, it would be fair to say that it was largely aimed at ensuring the consumers are comfortable at using the card once they have it. In order to ensure that more consumers actually have the cards, the schemes competed for the banks’ portfolios. Of course, banks continue to issue the cards, and therefore remain absolutely key for getting the cards into the hands of the consumers. However, it seems that in addition to a “push” from the schemes, MasterCard is trying to bolster the demand for its cards by creating a “pull” from consumers as well. MasterCard’s Marketplace (http://marketplace.mastercard.com) is a perfect example of such strategy. More features continue to be added, but it is already an impressive “Web 2.0”-style shopping experience with lots of clever personalisation and “social media” features transferred to the retailing world. The site is “open” – other payment methods are accepted for most purchases. However, some of the best offers, such as Overwhelming Offers (OO), are reserved only for MasterCard cardholders. OO’s often feature large discounts on branded merchandise, which is available in strictly limited quantities for a limited period of time. In fact, some of the more attractive offers sell out in a matter of seconds (e.g. 2o Yankees ALDS Post Season Tickets sold out in 4 seconds!). Sometimes customers can even choose themselves between different products to be featured as a next OO – for example, recently the shoppers had the opportunity to vote whether they wanted to get a large discount on a Sony Playstation 3 or Nintendo Wii (the Playstation won and sold out in 7 seconds). This is consumer engagement strategy at its best, creating a powerful rationale for the consumer to actually have a MasterCard in their wallet. American Express also has a similar proposition with its ‘daily wish’ offering (https://dailywish.amexnetwork.com), but for MasterCard, this certainly represents an interesting strategic development designed to get closer to the end consumers. So, a message to bankers – don’t be surprised if the next time your customer has strong views which card brand he or she prefers.

Celent Banking Innovation and Insight Day Recap

Celent Banking Innovation and Insight Day Recap
Last Thursday, we hosted our annual Banking Innovation and Insight Day at the Westin Times Square in NYC. Celent Senior Analyst Bob Meara opened up to a packed house with his presentation on top tech trends. This set the stage for the day as we moved into more specific subjects including, social media, risk management, core banking, mobile payments, and more. We had a good number of journalists in attendance to cover the event. Bank Systems & Technology was first out of the gate with a story, and wrote up a detailed piece on the social media panel that I moderated (Citi, USAA Execs Share Social Media Best Practices). I also had the honor of presenting awards to the 18 banks that were selected for our 2010 Model Bank initiative (group photo below). If you would like to obtain a copy of the 2010 Model Bank report please click here. If you are interested in submitting a nomination for our 2011 Model Bank report, or for more information on Model Bank, please visit www.celentmodelbank.com.

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All presentations from the event are available for Celent clients to download on our web site. We invite you to review what folks had to say about the event on Twitter If you would like to see a few photos from the event please visit our Flickr photostream.
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Feedback on the event has been extremely positive. I would like to thank all of our attendees, distinguished panelists, and dynamic presenters for contributing to a successful event!

Can banking really be simple? Twitter engineer quits to become co-founder of Banksimple.net

Can banking really be simple? Twitter engineer quits to become co-founder of Banksimple.net
The folks at Twitter must have a secret love for financial services. First Jack Dorsey goes off to start Square and now Alex Payne jumps ship to become co-founder of banksimple.net. What is banksimple.net? A recent TechCrunch post led me to some interesting info on the firm. Their web site states that they are “an easy, intuitive, and social bank for people who appreciate simple online services. Unlike other banks, we don’t trap you with confusing products nor do we charge any hidden fees. No overdraft fees. We use sophisticated analytics to help you better manage your finances by providing you a individualized service, catered to your needs and goals.“ A recent blog entry further expands on their intentions. “We have absolutely no intention of spending your money on high-budget ads. The best way to sell a product is to have a kick-ass product. And for us this means no hidden fees, fantastic online experience, awesome customer service and, a much simpler, personalized financial service.” Does their idea sound great – absolutely. Is it as simple to pull off as they make it sound? Not even close. Startups consistently underestimate the requirements of jumping into the banking space (as was recently demonstrated by Square at their NACHA Payments keynote address). Banksimple.net has lofty goals. It sounds like Nirvana and I’ll believe it when I see it.

A Major Blip in Blippy’s Security

A Major Blip in Blippy’s Security
If only it were just a blip. Mashable just reported that a simple Google search reveals Blippy users’ credit card numbers. As much as I love the social web, I could never wrap my head around the concept of folks providing their credit card number in order to share info on what they are purchasing. While this may be fun and “cool,” it is a great example of what not to do. This is obviously a major error on Blippy’s part, but I also blame users who so easily give up confidential info. If this type of practice continues, card companies are going to stop reimbursing customers. It’s one thing if a merchant or a processor is a victim of fraud. It’s another issue if a startup does something inexcusable, even if it is unintentional. Interestingly, just yesterday Techcrunch announced a new round of funding for Blippy, bringing their valuation to a whopping $46.2 million.
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Image courtesy of Mashable

Update 2:06pm EDT. Blippy issues a reply. Celent believes that this issue is far more serious than Blippy is making it out to be. Pointing fingers at Google’s cache and claiming that consumers are protected is not the right approach. I am sure Blippy will improve their security efforts, but this is nonetheless an incorrect approach to take with the public.

Citi is First Financial Institution to Have a “Verified” Twitter Account

Citi is First Financial Institution to Have a “Verified” Twitter Account
A while back I blogged about the security risks associated with social networks (see http://173.203.189.67/banking/?p=430). One of the risks of social sites like Twitter is the ability for a fraudster to pretend they are Bank XYZ in order to steal customer information and credentials. While there are many factors required to curb potential fraud, an easy one would be for a bank to have a “Verified” Twitter account. Verified accounts are certified by Twitter to be the real deal, thereby permitting the public to know that they are interacting with the actual individual/company. Twitter has been quick to hand out verified accounts to celebrities and politicians. Interestingly, everyone else including banks and other financial institutions have been left behind. In late October 2009, The Financial Brand even started a petition to verify Twitter accounts of financial firms. At long last Twitter has decided to verify the account of a financial institution. To my knowledge, Citi (@askciti) is the first bank to receive this designation, one that is a must have in the treacherous online world. It’s only a matter of time before other banks receive verified accounts, and I encourage banks who have yet to apply to do so immediately.

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Jaime Punishill spearheads Citi’s social media efforts. He will be part of a panel that I am moderating at Celent Innovation & Insight Day on May 13th. The importance of security and social media will be part of our discussion. I invite you all to come out to the event and learn more.

Can the Huffington Post persuade consumers to sever their relationships with large banks?

Can the Huffington Post persuade consumers to sever their relationships with large banks?
Late last week the Huffington Post published an article called, Move Your Money: A New Year’s Resolution. It’s an interesting read, and is attracting a lot of attention in the online world. The folks involved went ahead and setup a web site, www.moveyourmoney.info. This site allows individuals to search for a community bank in their neighborhood. Can this site and popular article persuade the masses to move away from large banks? I think it is making a lot of people think more seriously about their banking relationship but I doubt that it will have a noticeable impact on the large banks. I also think it is a great way for community banks to market and promote their offerings. Celent identified a trend back in late 2008 that pointed to consumers opening up additional accounts at smaller financial institutions. This practice is still ongoing. This doesn’t mean that consumers have severed ties with large financial institutions. It is more of a step toward increasing personal financial security by spreading funds across multiple banks and establishing secondary banking relationships. What intrigues me the most about the Huffington Post article is the interest it is generating both online and offline. I was quoted in the American Banker this morning regarding the social media implications of the Move Your Money campaign. Influential web sites, bloggers, etc. have the ability to pass along powerful messages to the public and persuade decision making. Banks can do the same as many have the audience, but they aren’t exploiting the potential. They need the right mix of message, products, customer service and pricing. A tall order for banks, particularly some of the the larger ones.

Demystifying Social Media and Next-Generation Online Banking

Demystifying Social Media and Next-Generation Online Banking
Last week, just in time for the BAI Retail Delivery conference (see my conference summary here, and Red Gillen’s great P2P payments observations here), I released a report called, Demystifying Social Media and Next-Generation Online Banking. The report has been receiving a lot of attention as social media is a subject that is on the minds of many financial institutions. The overwhelming majority of banks don’t understand or know what to do with social media. Social media activities need to be blended into a bank’s day-to-day activities and customer relationships. They also need to be integrated into online banking and a bank’s website presence. The days of pushing data and information out to the consumer are over. It’s now a two-way street, and banks should capitalize on the stream of data, information, and interactivity that is headed their way. Some banks are doing this, most are struggling. This is a subject that banks cannot ignore. The report presents several scenarios and gets into detail about what banks should and shouldn’t be doing on Twitter, Facebook, communities, their own web sites, etc. The report also provides details about how non-banks in the financial services industry are harnessing social media. This is described by presenting a case study on SmartyPig, a firm that has blended social media with next-generation online banking. I encourage you all to take a look at the report. I am of course interested in your feedback and comments. Please feel free to post them here.

Customer Service on Twitter – Proactive or Reactive?

Customer Service on Twitter – Proactive or Reactive?
A flurry of banks have joined Twitter and setup their presence in an effort to communicate with customers, market products and solve customer service issues (see my blog entry on What Banks Can Do With Twitter). It’s a great idea and has made many customers quite happy, particularly if they get an instant response to a problem they are encountering. As Twitter evolves and more people join the fray, a new type of user has emerged – the anti bank. A slew of Twitter users have emerged with the sole purpose of tweeting about how much they dislike their bank. I have noticed a growing trend of twitter user names comprised of “bank name” followed by the word “sucks.” I did a quick search to test my hypothesis and was quite surprised at how many users popped up with this naming convention. I found anti-bank users for BofA, Wachovia, Wells, SunTrust, Chase, TD Bank, etc. It appears to apply to credit unions as well (e.g. Navy Federal). Many of these have just a few followers, while others have a large following. For example, @BankOAmericaSux has over 1,200 followers! The goal of this post is not to single out these banks, but rather to point them to what they should do:
  • Banks need to monitor for new anti-bank Twitter Users. More anti-bank users will pop up and their follower base will grow. It is important for banks to manage their brand and make sure their company name is being used appropriately. Banks also need to watch for username squatters who will try to social engineer credentials from unsuspecting customers (see my post, Social Networks Are Not Secure!)
  • Banks should reach out to followers of anti-bank Twitter users. It’s one thing to be proactive when dealing with a customer who approaches you on Twitter, it’s another to go after those who are expressing and publicizing their problems. Banks need to reach out to these people and solve their issues before they draw too much negative attention to themselves or get into a “United Breaks Guitars” situation.











It’s impossible to make everyone happy, but if a bank has established a Twitter presence they need to understand and react to these types of situations.

SmartyPig is Social

SmartyPig is Social
I love innovation, particularly when it takes place in the financial services industry. It’s what prompted me to write my most recent report, Financial Technology Startups: Giving Banks a Run for Their Money. I have been following the activities of SmartyPig for some time now, and I must say that I am taken by their approach. Deposits are held at West Bank (FDIC insured) for US customers, and at ANZ for Australian customers. In addition to the high interest rate they offer, SmartyPig takes advantage of social media and networking.
  • SmartyPig takes advantage of social media. The firm makes excellent use of Twitter, Facebook, Vimeo, etc. to get the word out, provide demos, keep in contact with customers, and recruit new ones. They run frequent contests on Twitter, and maintain a blog that discusses issues related to saving. CEO Mike Ferrari was profiled recently in a BusinessWeek article on CEOs Who Use Twitter.
  • SmartyPig facilitates social banking. One of the most interesting aspects of SmartyPig is the ability to publicize your savings goal. If I am saving (for example) for an LCD TV, I can invite my friends and family (by email) to contribute to my goal. Users can also place a SmartyPig widgets on their Facebook or Myspace page as part of this process.



SmartyPig’s approach is interesting and different. NetBanker recently reported that deposits in the US have reached $100 million. This is an impressive feat, and is no doubt due in part to the attractive interest rate offered by SmartyPig (currently 2.75%).

Banks have a lot to learn when it comes to social media and banking. SmartyPig is a great example of a non-bank in the financial services space that has integrated social media into it’s day-to-day business. I am currently working on a new report on social media in banking. Stay tuned for additional details.

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Next Generation Online Banking Solutions

Next Generation Online Banking Solutions
I have been receiving many inquiries from banks about what to do with their aging online banking platforms. They recognize the need to upgrade but question what their provider is suggesting or simply would like to know more about where the market is headed. I have spent a lot of time researching the market and I have a pretty strong opinion regarding the types of features/functions that banks need to offer. Usability and customer experience are paramount. Some of the key areas of discussion lately have been:
  • Vendor solutions. Should I stick with my current vendor or switch to a new provider? Who has the best solution out there? This is not a simple question to answer, and one that requires plenty of investigation. Celent has recently evaluated the vendors of retail online banking solutions (see the following report). Banks have been approaching us for custom evaluations where we plug in their specific requirements. I enjoy these projects as they always produce different results and I get to meet a lot of interesting and knowledgeable people.
  • Web 2.0 Rich Internet Applications. Banks are trying to sift through the hype. They want to build Rich Internet Applications (RIA) but are having a hard time defining the business case. It’s a slow-moving process, but banks are recognizing the shift and the need to remain competitive. Non-banks are leading the Web 2.0 charge and banks are realizing that they are playing catch-up when it comes to customer experience.
  • PFM. I have blogged about this extensively. Banks know they need to jump on the PFM bandwagon. Should they build a solution, buy pieces, outsource the entire thing? They also want to know how to integrate PFM properly into online banking. Lots of questions here.
  • Social Media. Twitter is the talk of the town. I am receiving a ton of inquiries about how banks can leverage Twitter and other forms of social media. Banks also want to know how to integrate this into online banking and customer support.
While retail online banking has been the subject of most inquiries, small business online banking has proven to be a popular topic as well. Most banks tend to lump their small business customers onto retail solutions and ignore their unique requirements. The last thing a bank wants to do is let a small business customer fall through the cracks. They require customized features, some of which will need to be scaled down from cash management solutions (e.g. ACH, wire transfers, entitlements). The same can be said for high net worth customers who may require sophisticated capabilities. In any case, I have been conducting a lot of online banking research lately and I am enjoying the fresh perspective that certain banks are thinking about or even starting to take. If you would like to discuss any of these please comment or feel free to send me a note (email / Twitter).