Thursday, May 30, 2013

Digital Marketing Capabilities Lacking At Many Banks

With continued rapid growth of both online and mobile banking, banks and credit unions need to come up with better ways of marketing through digital channels. 

The technology is readily available, and best practices can be found at companies like Google, Amazon and others, but many banks are still at the infancy stage in terms of digital marketing capabilities.

To succeed in the future, financial institutions need to have a single view of the customer across channels, be equipped with advanced analytics for predicting behavior, be able to deliver offers to customers in real time and effectively integrate social media into the marketing mix.

A just released study by Efma and Wipro Technologies entitled, 'Global Retail Banking Digital Marketing Report', found that only a few banks are prepared for the digital marketing revolution, with the potential for improvement significant at most organizations. This first ever study also revealed that social media is not yet a part of mainstream marketing and is not a key customer interaction channel for most banks.

According to Rajan Kohli, vice president and head of banking and financial services at Wipro, "Digital technologies, social media and the explosion of data are redefining customer engagement models. The CMOs that we spoke with made it clear that the role of the CMO is changing as banks adapt to the development of new channels and capabilities."

For most banks surveyed, digital delivery channels were seen as complimentary to branches, being more important for processing transactions than for customer service and advice. With this transition across channels, it is believed interactions will be more frequent, insight collection will be more prolific and communication opportunities will be more direct.

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Tuesday, May 28, 2013

Banks and Credit Unions Must Improve Cross-Selling Efforts

Despite the fact that banks and credit unions have talked about the importance of cross-selling for decades, few institutions have a disciplined process to take advantage of cross-selling opportunities that can grow operating revenue from existing customers. 

For those organizations that do have a process in place, studies show that many are not targeting the offers to reflect insights readily available, thereby annoying some of the best customers.

Outside of an improved interest rate spread (which is unlikely in the foreseeable future), banks can only create revenue by adding new customers or by deepening existing relationships. At a time when competition for new customers has never been greater from both traditional and non-traditional players, the only sustainable opportunity is to sell more to the customers a bank or credit union already has.

While the findings differ a bit by study, research shows that U.S. adults own between 8-12 financial products each, with ownership of services increasing with age (until age 54), by channel (online users have more products) and by type or institution (credit unions and smaller banks do better cross-selling).

Forrester: North American Technographics Benchmark Survey, 2009

Forrester: North American Technographics Benchmark Survey, 2009

While the number of products held by a typical household hovers around 10, most customers only hold 2-3 services at any one institution. Only the very best organizations sell more than four services to any one customer (not including 'go with' services such as debit cards). How can banks improve their penetration within their current customer base?

Monday, May 27, 2013

Musings of a Finovate Virgin

They say you always remember your first time. 

After years of being built up by a great amount of hyperbole, including being dubbed The Disneyland of Fintech™ by my friend Brad Leimer, I finally decided to experience Finovate for myself a couple weeks ago in San Francisco. Similar to many 'first times' in my life, my experience expended a lot of energy, ended too quickly, but definitely did not disappoint.

To those not familiar with Finovate, the event is a fast-paced showcase of financial technology vendors, who have only seven minutes to provide a live demo of their solution (Powerpoint not allowed). It’s produced by Online Financial Innovations, the people behind the excellent NetBanker blog.

Taking place several times a year across the globe, FinovateSpring included 72 demos in front of a record crowd of over 1300 bankers, investors, media and bloggers like me. (Video archives of this year's presentations are available here)

As opposed to focusing on only a few themes, Finovate has something for everyone. This Spring's event covered some familiar themes that would be expected (Mobile, Payments, etc.) as well as some newer themes that sparked conversation, debate and maybe even a bit of fear among traditional bankers (P2P Payments, P2P Lending, Virtual Currency, etc.). 

My Takeaways

Overall Impression: Bordering on sensory overload, Finovate should be on every financial marketers bucket list. While many of us spend countless hours dealing with some rather mundane challenges at times (compliance and other internal battles), it is refreshing to know that innovation is alive and well in financial services. It was difficult to keep up with the presentations at times since there is no apparent logic to the order of presenters, but I quickly realized the value of the live blogs and recaps from Finovate, Bank Innovation, PaymentsViews, the William Mills Agency, and others.

Tuesday, May 21, 2013

Augmented Reality in Banking: Google Glass or Through the Looking Glass?

In his novel, ‘Through the Looking Glass’ Lewis Carroll tells the tale of his heroine, Alice, as she tumbles through a mirror into a fantasy world. 

Will banks fall through Google Glass into a different fantasia? Is deploying augmented reality in financial services as useful as the Mad Hatter’s Tea Party – or does it offer a genuine opportunity for banks to improve customer experience, service and sales?

By Alex BrayRetail Channel Director at Misys
The banking industry thrives on buzz. When you work in a business that is founded on principles such as reliability, security and trustworthiness - where the manner in which you implement your risk management procedures can be the difference between solid success or spectacular failure – then the slightest hint of a sexy innovation can cause a dizzying rush of blood to the head. Today, it is the turn of augmented reality (AR) to leave many bankers in a fuddled state. But is AR all that? Or will augmented reality leave us wanting less? 

To review augmented reality in banking, I will be focussing on the device of the moment - Google Glass. Glass is Google’s first foray into wearable devices – augmented reality glasses. The user wears the device – which consists of a mini display screen attached to a metal frame, over the right eye. Simplistically put, it gives you a taste of life as the Terminator from the Schwarzenegger film series. 

Information is overlaid on to the environment that you see around you. So far, so what? Glass has been hyped as the new frontier in mobile banking. It has also been suggested that it could revolutionise how tellers deliver service in branch. These are big claims for a device that will weigh about the same as a normal pair of sunglasses. Can they be justified?

Monday, May 20, 2013

Migrating Banking Customers to Digital Channels

Today's banking customer can interact with their financial institution through more channels than ever, and the channels selected can have a significant impact on bank revenues as well as customer satisfaction. 

Gone are the days when a customer did all of their business in a branch. Today, most customers use multiple channels to research products, open, use and manage their accounts, resolve issues and receive notifications.

The key for banks is to determine the optimal channel mix for each customer that will maximize revenue (or reduce costs) without significantly reducing customer satisfaction or engagement.

To measure these impacts, the Gallup organization recently completed research on how customers prefer to interact with their bank for 14 of their most common needs. They also evaluated the difference between channel preference and actual channel use and the impact on satisfaction and engagement when a customer uses a channel they didn't prefer.

While this is some of the most detailed research on channel preference and use, Gallup only evaluated single channel preferences as opposed to researching how a customer may use multiple channels for some transactions (researching providers or services, opening an account, managing an account, receiving account information, etc.). Despite this weakness, the research is still helpful in determining how to best migrate customers to an optimal channel mix.

Financial Impact of Channel Use

Recent regulations that have impacted the ability for banks to generate fee income from retail customers has required banks to rethink their business models and even the customers they serve. In addition, banks and credit unions have had to reconsider the optimal mix of channels their customers use to interact with the institution and to transact their business due to the costs associated with different channels. 

According to a 2010 TowerGroup study, the costs of handling a customer transaction varies widely by channel, from as much as $3.75 for a call agent interaction and $1.34 for a branch transaction down to as low as $.60 for an ATM transaction and $.14 for a mobile transaction. Based on just these numbers, it would seem prudent to move as many customers as possible to automated or digital channels and away from branches and call centers. Unfortunately, it's not that easy.

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Tuesday, May 7, 2013

Building A Winning Mobile Banking Strategy

Mobile banking has moved quickly beyond being simply online banking using a smartphone. It is at the hub of the customer relationship and is quickly becoming a point of differentiation and a potential source of revenue for progressive banks.

As smartphone penetration continues to increase, so do consumer expectations. To keep up, banks need to continuously review the best mobile banking strategies worldwide, developing those solutions that address customer needs and leverage the benefits of the channel.

To assist banks with the development and implementation of a successful mobile banking strategy, Forrester Research is developing a 12 chapter Mobile Banking Strategy Playbook. Within this playbook, extensive research is being compiled around marketplace assessment, mobile strategy development, optimal organizational structures, technology selection, best practices, measurement benchmarks and ways to continuously improve the mobile banking experience.

As part of the review of mobile banking best practices, Forrester just released their 2013 Global Mobile Banking Functionality Rankings (with U.S. and U.K. breakout reports) ranking the mobile offerings from 15 of the largest banking organizations in the U.S., Canada and abroad.

While only ranking some of the largest banking organizations worldwide, this research is invaluable to any bank wanting to see what the best in our industry are doing. Beyond rankings, this research also provides extensive examples of innovative mobile banking apps and advanced functionality (Purchase report here).