Banking Industry Leaders Discuss Findings of Intuit Financial Management Survey

In conjunction with the release of Intuit Financial Services' 4th Annual Financial Management Survey, Banking.com hosted a Twitter Town Hall yesterday, bringing together financial industry leaders to discuss loyalty and channel migration as well as some of the challenges and opportunities facing the banking industry. The following is a recap of the very robust one hour dialogue. (the complete transcript can be found using #IFSsurvey on Twitter)

The Town Hall discussion began around the issue of customer loyalty and the finding that many consumers thought their financial provider was not 'in touch' with their needs. Given the events of the past week, where many large banks reversed decisions around the implementation of fees due to highly vocal negative sentiment amplified by social media and credit union trade group support, most participants believed that banks are not leveraging current insight and technology to make better decisions and provide value added service. 

Tobin Lee (@Tobin_Lee), Intuit Financial Services spokesperson stated, "It is time for a banker mindset shift; cultivating deeper relationships, more meaningful engagement and stronger advocacy for growth". Campbell Edlund from EMI (@EMI_mktg4sales) added, "These findings provide a very strong argument for a communications plan around the customer lifecycle". 

The already robust dialogue really took off as the discussion moved to the acceptance and utilization of banking channels (especially mobile and tablet banking). Bradley Leimer (@leimer) from Mechanics Bank in the San Francisco Bay area believed mobile strategy will be the key to future engagement due to the portability and 'always on' nature of the device. He also believed that the correlation between mobile banking and smartphone use (41% of respondents owned a smartphone) could indicate a lower engagement with financial technology in general for non-smartphone users.

Edlund added that while there is currently a higher penetration of smartphones than tablets, tablets can not be ignored by banks since Oracle found that tablet ownership is expected to increase significantly in the next year. She also warned that we need to be cautious not to get ahead of the acceptance curve. . . "we always underestimate inertia". Brett King (@brettking), author of Bank 2.0 and founder of Movenbank went a step further stating that within 3 years all bank websites will need to be built for tablets first. He also believed that branches will continue to diminish in presence and utility (according to the study, 27% of respondents still visit their branch once a month in addition to ATM visits).

Mark Zmarzly (@BankMarketing) did not believe bricks and mortar would completely go away, but definitely felt the relevance of branches will change. "It's easy to say branches will go away, but is that realistic? They have to evolve, but customers will never let them become 100% irrelevant." King responded that with the drop in branch transactions, the economics of the branch are not working. I (@jimmarous) illustrated the model of Boeing Employees Credit Union in Seattle, where only 2 of the 40 branch network have tellers, while the installation of multiple ATMs at offices and around the city have an average of 10,000+ transactions each. 94% of the transactions at BECU are done electronically, according to Howie Wu (@howie_wu) from the credit union.

"Relevance is the key to banking for tomorrow," stated King. "By 2015, mobile will be the #1 day-to-day channel, OLB #2 with the branch network being #5. The challenge for mobile and online will be developing great customer journeys". King doesn't believe these journeys exist today and believes the goal should be to have banking so pervasive that it is not tied to a branch, device or website, but is everywhere customers are.

Edlund pointed to the retail industry as a forerunner for what we will see in financial services. "Social and tablets will change the landscape in banking as they have in retailing", Edlund stated. (During the Twitter Town Hall, there was even a discussion of the integration of TV as a channel for banking). Representatives from EMI in Boston (EMI_mktg4banks) emphasized that we will continue to see a blurring of all channels with social media providing some of the glue for enhanced communication. Gamification and location-based rewards were also seen as a key elements of engagement by Leimer and Edlund.

A conundrum was discussed with regard to the needs of small businesses where checks still prevail and the need for branches. King believed that we will see significant attention paid to mobile payments for businesses in the next couple years, while I added that tablet apps for business are also being developed to respond to the needs of the business community. NFC was also seen as a game changer with regard to the need for branches for small businesses. Bob Williams (bob_williams) from Harland Clarke believed that, while check usage is definitely dropping, there are much greater efficiencies today than in the past with RDC and other electronic tools.

It was clear from the Intuit research that was just released, the Bank 2020 research released in April, and the discussion during the Twitter Town Hall today that there is significant disruption in the banking industry with regards to channel support and device utilization. The consumer movement to new banking channels is mirroring the movement to more sophisticated devices such as smartphones and tablets. Many consumers are NOT choosing one device or channel over another, but are using multiple devices depending on their personal needs.

Consumer desire for an integrated banking experience without friction will need to be supported by banking organizations in the future. Distribution networks (whether tangible or intangible) will need to support an expanding array of capabilities that may include integration within retail or social sites as opposed to standing alone.

As I stated to the participants of the Twitter Town Hall at the end of today's discussion, "If banks are not prepared for the channel migration that is already underway, they may experience the impact of 'Bank Transfer Decade'".

Note: A summary of the findings of Intuit Financial Services' 4th Annual Financial Management Survey and recently released related research is available in my previous Bank Marketing Strategy blog post.

If you weren't able to join us, what are your thoughts around the impact of channel shift away from the branches and towards other media? Will we see the elimination of branches completely? Will another device or technology unseat smartphones and tablets?

I would love to hear from you.

Kaching Ushers In New Era of Mobile Banking

The Commonwealth Bank of Australia has broken new ground in the advancement of mobile payments by introducing a new iPhone application that allows users to pay friends or businesses using Near Field Communication (NFC), Facebook identification, an email address or a mobile phone number.

Kaching (pronounced like the cash register sound Ka-Ching)  will initially only be available for users of the iPhone 4 and 4S (with soon to follow Android support) using a specially designed case with built in NFC chip. With this case, the phone will allow the user to simply tap and pay at a PayPass terminal. 'This banking breakthrough marks a significant milestone in the evolution of how people pay and receive money from each other," stated Commonwealth Bank of Australia chief information officer Michael Harte.

According to a CBA spokesperson, the use of a specially designed NFC case is only an interim solution until iPhone, Android and other smartphones introduce new versions of phones with NFC integration built in. In what some believe could be the beginning of the end for plastic credit and debit cards and potentially even cash, this form of electronic payment would be conducted 24x7 in real time if both sides of the transaction are CBA customers and one to two days if the payment is made to a customer of another bank.


CBA has more than 6.2 million online banking customers and is the seventh largest bank in the world. According to the bank, more than 16 million logons from a mobile device were made in August (a 229% increase from last year) with close to 80 percent of these from an iPhone.

The integration with Facebook is a first in the payments world, but is felt to be a logical extension due to the acceptance of Facebook and the very strong smartphone usage by Facebook users. The iPhone application even integrates other iPhone features such a GPS function to find branches and ATMs.

Kaching iPhone Mobile Payments Screen

The Kaching app will include password encryption technology to ensure a lost or stolen phone would not be compromised and not banking information will be stored on the phone. Payment recipients will also be protected, with all un-retrieved funds credited back to the payer after 14 days the bank said.

While this technology or integration has yet to be introduced in the United States as a mobile banking application, it is expected that new virtual banks such as BankSimple and MovenBank will leverage this technology as part of their rollouts. According to Brett King, founder of MovenBank and author of the bestselling book Bank 2.0, the use of Facebook for payments or even to complete the new account application process is not so far fetched as security and acceptance of Facebook continues increase. In addition, King believes virtual currency like Facebook credits  may replace today's physical currency ('The Bank of Facebook: How Will Facebook Interact With the Global Economy' Fast Company Expert Blog by Brian Solis).

NFC support is increasing in the U.S. with the launch of the Google Wallet last month that allows for consumers to pay in select stores with phones running its open source platform. NFC is expected to gain much wider acceptance with the anticipated integration within the next generation of smartphones, especially the iPhone 5.

So, is this the beginning of the end for credit cards, debit cards, checks and cash? Will this introduction hasten the full scale introduction of new banks and bank platforms that leverage new technology and payment  methods? Will branches and ATMs even be needed in the future?

I would love to hear your thoughts.

The Changing Definition of Convenience in Banking

Historically, one of the reasons people have chosen big banks has been their large network of branches and ATMs. Especially for people like myself, who travel across the country frequently, finding a place to conduct basic transactions without a fee was a competitive advantage for those institutions with a wide distribution network.

Recently, however, small institutions have been working on ways to erode this advantage, closing the gap through expanded ATM networks, improved online banking and now mobile banking services. In short, technology is quickly changing the definition of convenience for bank customers.

A recent study, The New Banking Value Proposition, from market research firm Chadwick Martin Bailey, finds that credit unions and smaller banks are maintaining their perception of having high levels of personalized service while also catching up with their larger competitors in terms of banking convenience. For those smaller institutions who are focusing on new technologies, this can allow them to more effectively compete for the increasing number of accounts in motion. Additional findings include:

• While 42% of consumers state that they use a large national bank (21% regional, 13% community, and 21% credit union), the tenure of relationship (and the value received) is inversely correlated to the size of organization.

• Online and mobile banking have quickly become key components of banking convenience. While consumers still value the branch and ATM access, 43% agree that banking convenience and having good online services are synonymous. As shown below, while large bank customers place a higher value on branch and ATM convenience, the customers of credit unions place a higher value on online services. It is expected that mobile banking service convenience will mirror or surpass the convenience value of online banking in the future.

• Somewhat surprisingly, the research found that credit unions receive very high marks on the access to and performance of new technologies from their customers. While some of this rating may be related to the type of services desired through online and mobile channels by credit union customers (balance inquiries as opposed to more sophisticated uses), this does go against the typical perception of credit unions being less technologically advanced. It should be noted, however, that community and regional banks did not fare as well on technology performance.

In an interview with Bank Marketing Strategy, I asked Jim Garrity, Managing Director of Chadwick Martin Bailey’s Financial Services practice why he believes there is such a difference in offerings as well as consumer perception of technology innovation between credit unions and small banks? His response was, "Much of what you describe can be attributed to differences between the customer bases; credit unions are pulling customers from further away than small banks. A function of this is credit union customers wanting and needing remote access solutions more than the typical community bank customer." He also believed that credit unions often have larger pockets of young members than community banks and these customers are simply more comfortable with remote transactions.

I questioned Jim further around the introduction of new technologies in the mobile wallet and payment areas, and whether this may make differentiation between larger banks and their smaller competitors even less pronounced. Garrity responded, "The speed of technology adoption at credit unions and smaller banks is definitely quickening, but larger banks continue to have the advantage of being able to build this functionality 'to order', whereas small banks and credit unions need to purchase this functionality 'off-the shelf.'  So, while the pace of implementation is undoubtedly quickening, that doesn’t mean that big banks don’t retain the advantage being able to get there first."

Finally, I wondered if digital innovation and the importance of 'have it now' convenience could be the Achilles heel for an entire segment of the industry? Jim believed that what all banking players need to worry about is if banking is following the same path as bookstores —where many small players were selling a commodity product, then the conglomerates (the Barnes and Nobles and the Borders) dominated and forced many small bookstores out of business except in those cases where the business wasn't valuable enough or there was an unserved niche.

According to Garrity, "What we have here is that several players are vying to become the next 'Amazon of banking,' with an online presence supported by products produced by others (i.e. Simple and Movenbank)." 

There is no doubt that this research, combined with the learnings of the bookstore industry, provides some lessons to be learned from around the changing nature of convenience, the impact of commodity price pressures, the importance of service differentiation, and the relevance of community connections, etc. The key will be whether the distribution disruption continues at the same pace, how consumers will respond to the changes in the marketplace, and whether banking can alleviate concerns around security and perceived risk with digital channels.

Video overview of The New Banking Value Proposition

Are Bankers Ready For The Bank 3.0 Reality?

In an exclusive interview about his newest book, Bank 3.0, Brett King discusses how change occurring in the banking industry is inevitable, speeding up and disruptive. 

From the mobile wallet wars to the impact of social media, tablets and the 'de-banked' and digital consumer, Bank 3.0 shows why banking is no longer a place you go to, but something you do.

A great deal has happened since Brett King wrote Bank 2.0 in 2010. Two years ago, banks were under siege as the foundation of the banking system was close to collapse and the image of the industry as a safe and secure environment was being challenged. The impact of social media was just beginning to be understood by the financial services industry and mobile technology as we know it today was in its infancy. Heck, King even referenced his (now long gone) Blackberry in the first chapter of Bank 2.0.

With Bank 3.0, King discusses how consumers are less likely to view their retail banking provider in terms of capital adequacy, branch network, products and rates. Instead, customers are more likely to determine their banking partners by how easily they can access their accounts when they need to, and how much they trust their provider to execute business on their behalf. For those who read Bank 2.0, King's new book retains some of the foundation and case studies, but updates several areas based on what has occurred (and will be occurring) relative to digital delivery, payments, social media, and the power of 'big data'.

On the eve of the introduction of Bank 3.0 in the U.K. (introduction in the U.S. is scheduled for early November), I interviewed Brett King about his new book and about how he views the banking industry today.

What has occurred in the marketplace that warranted the publishing of Bank 3.0 just 2 years after your successful book, Bank 2.0?

Brett King: The marketplace has changed significantly around how consumers are engaging with their financial institutions. Compared to two years ago, traditional banks are challenged more than ever from a distribution perspective because of the movement to mobile and digital channels, and because they are not well positioned with their current bricks and mortar networks for a positive customer experience. 

The philosophy of banks, with their secure firewalls, operational structure and compliance mindset, is counter to how any other industry engages with customers in the digital space. Since Bank 2.0, the competitive environment has also changed a great deal, with partnerships being developed, alternative players and new bank start-ups being introduced, underbanked segments emerging, and social media merging with bank service engagement. People are beginning to take a functional and utility view of banking, which is why I say in the subtitle of the new book, 'banking is no longer a place you go to, but something you do'.

In Bank 3.0, you discuss that despite these marketplace and behavioral changes, traditional banks in the U.S. have made only minor changes to their distribution models. Where do you see bank branch distribution going in the near and mid-term?


Brett King: We have already seen a number of new players enter the market, especially in the payments space such as Isis, Square, PayPal, Google Wallet, etc. In addition, prepaid cards have become much more popular and represent the fastest growing deposit product in the U.S. This is significant since most bankers do not consider the product to be 'real banking'. From the consumer's perspective, however, prepaid cards are real banking. This is the mistake traditional bookstores and movie distributors made when new distribution alternatives emerged. They didn't take the challenge seriously. Bankers need to realize that prepaid cards are changing the way people are viewing bank relationships on the grassroots level. 

Finally, as transactions continue to migrate to online and mobile channels, we will see more and more banks reconfigure their traditional branches to reflect the new digital reality, with many banks also starting to close unproductive (and economically deficient) branches. These trends will only escalate going forward due to the costs of delivery and the reduced revenue potential.

No new U.S. bank charters have been issued in the recent past. What challenges are faced by start-ups like Movenbank related to regulations and other outdated barriers to entry?

Brett King: The challenges we've had have not been from regulators, but from the risk and compliance areas of the financial organizations we are trying to partner with. In fact, we've met with the Fed, the Treasury and the CFPB and they have all been overwhelmingly supportive of what we are doing. They understand the changes occurring in the marketplace, and have liked the financial literacy built into our product, our engagement model and the value we bring to the overall banking experience.

Alternatively, the banks themselves are having difficulty innovating . . . moving from the way they have done things in the past, using paper applications, signature cards, etc. to using web signatures and online authentication (which is much safer).

Do you see the cost of mobile innovation discussed in Bank 3.0 being an additional 'market disrupter' impacting the ability for smaller institutions to succeed and ultimately survive?

Brett King: The problem is that there are so many start-ups in the financial services and payments space that are impacting the way people view financial services that significant technology projects need to be undertaken by traditional banks just to keep pace. Investing in a technology layer, combined with the new costs of compliance, will be a challenge for smaller institutions. That doesn't eliminate the potential for smaller organizations to collaborate or to build partnerships to respond to market realities, but I don't see this happening.

With the rapid acceptance of tablets, how do you see tablets changing the way people do banking and the services banks may provide leveraging this technology?

Brett King: As we have seen in the retail space already, mobile will change the context of banking including where and how a consumer conducts business. For instance, the process of buying a home and securing a mortgage becomes much different when the shopping for the mortgage is done online significantly before a customer enters a branch (if they do so at all). A tablet can also provide a rich user experience due to the real estate of this device compared to a smartphone and the tactile capabilities compared to online interaction.

Turning this around, if a customer can get this experience on a tablet, why can't that level of experience be replicated at the ATM, as part of online banking and even in the branch? In the end, I think the growth in tablets will force banks to build enhanced customer experiences across all channels.

You have a section in your book dedicated to the impact of social media in financial services. How do you see social media changing banking in the future?

Brett King: Currently social media is impacting banking in a couple ways, including servicing and social dialogue. Customers are increasingly expecting to be able to reach their bank regarding service issues using Facebook or Twitter and get a response immediately. Many banks are falling short in this area, not providing adequate support for 24/7 social channel access.

In addition, consumers are using social media to follow and engage in dialogue about brands (both positively and negatively). If a brand performs well, this can lead to advocacy which in turn can lead to referrals and new business. This positive dialogue becomes critical in restoring trust in an individual bank's brand.

At the end of each chapter in your book, you provide key lessons and recommendations for banks willing to embrace change and take advantage of market opportunities. What is the biggest risk facing traditional banks as they move forward?

Brett King: The biggest risk facing traditional banks is the distribution and cultural bias towards physical branches. The difficulty in unwinding this investment is extremely difficult due the vast scale of branch networks. How do you turn such a ship in such a short time when you are so used to doing things in a certain manner? Leasing and rental contracts present a hurdle, but changing the branch-based culture at most banks may be a bigger challenge.

Your book contains dozens of case studies and references to financial institutions around the world that are innovating and developing new ways to engage with customers. Where is the greatest banking innovation occurring today?

Brett King: The countries that I believe are the best at this would include Australia, many of the Latin American countries like Brazil, some of the countries in the EU including some of the Danish banks and Swedish banks. In my opinion, the U.S. is definitely at a disadvantage due to their over investing in branch networks. The non-banks and new start-ups provide the best examples of innovation in the states."

Commonwealth Bank of Australia - Kaching Facebook Banking

Bank 3.0 is about the transition from banking dependent on a physical structure to banking that can be done at a time and place most convenient to the customer. It is about a new form of engagement and experience that harnesses the power of the internet without sacrificing the 'human touch'. It is about leveraging the potential of big data for better 1:1 interactions and more powerful marketing. 

Brett King's newest book emphasizes that consumer behavior is changing faster than ever before and that banks need to decide if they will embrace the change or be a victim of the change. Innovation and experimentation are no longer an option. They are the only way to do business.

Bank 3.0 was released today in the U.K. and is scheduled to be released in the U.S. in early November. In addition, Brett King mentioned that he will be offering free copies of his new book to Twitter followers over the next couple weeks on a first tweet, first served basis. Brett's Twitter handle is @BrettKing.

Banking Leaders Predict Major 2013 Trends

CROWDSOURCING SERIES

Trying to predict what is going to happen in the banking industry is like trying to predict tomorrow's weather. While you may get the forecast right, it could be more a case of luck than skill. And what you see today could quickly change tomorrow.

With that as the backdrop, I asked almost fifty industry leaders who author blogs I read, post on Twitter, speak at industry trade shows or make banking a career for their thoughts on what may be the most important trends in retail banking in 2013.

The predictions ran the gamut from what may occur in payments to how bank distribution could begin to transform. While some focused on larger megatrends, others had a narrower scope. In all cases, however, the predictions provide food for thought for bankers and industry providers. It is clear the one forecast that is guaranteed to be accurate is that the industry will be different this time next year.

Battle For Payment Supremacy Will Continue

The past few years has seen a massive amount of change in the payments world, with a reduction of interchange fees, the infiltration of retailers and non-banks like Starbucks, PayPal, Square, MCX, etc. and the beginning of a shift from plastic to smartphones as the payment device of choice. While past predictions around NFC, an Apple mobile wallet and a cash-less society have not yet come to fruition, there are still no lack of industry luminaries placing bets on how we will transact in the future.

Tom Noyes, author of the mobile, payments and advertising blog, FinVentures, states, "Retailer friendly value propositions (MCX, Square, Levelup, Fishbowl, Google, Facebook, etc.) will get traction . . . but MCX will not deliver for another 2 years."

Ron Shevlin, senior analyst from Aite Group and publisher of the Snarketing 2.0 blog believes the most significant trend in 2013 will be the evolution of the digital wallet concept. According to Shevlin, "The digital wallet will be the new battleground – for technology companies, financial services firms, and retailers/merchants. They say that politics makes strange bedfellows – but so will digital wallets. The evolution of the concept will involve a lot of interesting partnerships and joint ventures." 

Matt Wilcox, senior vice president of Zions Bank and financial industry blogger believes we will begin to see the separation of contenders from pretenders in the payments space. "While there will still be multiple players vying for position, I believe a few companies will begin to emerge as leaders in this space." Alex Bray, retail channel solutions director at Misys in London agrees, saying "I think we will see the market coalesce around a standard form of mobile payments - and contrary to what PayPal may say, I think this will involve NFC."

Delivering On The Promise of 'Big Data'

There is no doubt that 'big data' was overused and misunderstood as a term and underutilized as a tool in 2012. There is also little disagreement among industry leaders that banks will be aiming to use both structured and unstructured data more extensively in 2013 as the collecting, storage and processing capability becomes easier and less costly.

As David Gerbino, digital product, marketing and strategy manager at Provident Bank in New York told me, "The big trend for me every year is data. Not big data, not small data, just the right data". He went on to say, "Once the data elements needed are identified, the challenge becomes using these components correctly to drive success."

Rod Witmond, SVP of rewards platform provider Cardlytics, emphasized the trend of utilizing data from the consumer perspective in 2013 but warned, "Big data can be incredibly insightful but, if it isn't leveraged in a simple way that allows the consumer to maintain their current habits – or adds enough value that the consumer is willing to change their habits – the value of the big data will be lost because consumers don’t ‘try something new or different’ if what they have already is working."

Some of the Twitter responses I received regarding banks improving the utilization of both structured and unstructured data at their disposal included:

Finally, Nate Gardner, vice president of strategic partnerships at Provo Utah based MoneyDesktop, believes that intuitive data visualization will begin to deliver on the promise of big data for banks in 2013. According to Gardner, "Intuitive analytics will make it easier for bank executives and marketing teams to customize the user experience and deliver tailored messaging, product offers and solutions that best meet specific consumer needs and interests."

Transformation of Delivery Channels

Consumers want a convenient, secure and familiar experience when they interact with their bank using mobile, online, phone, ATM or their branch. They also want their bank to realize that they may use multiple channels at the same time. This channel agnostic interaction has been recently referred to as an 'omnichannel' experience in the retail industry.

According to Mary Monahan, EVP and research director at Javelin Strategy, “To correct current shortcomings, FIs will focus on changing their perception of omnichannel banking as necessary rather than novel. Moreover, for FIs to increase or even maintain their competitive positions in the coming years, they will need to invest in developing an integrated architecture wherein data and platforms can seamlessly converge while enhancing the quality of the brand experience.”

Branch Delivery

Under the heading of 'traditional branch banking', there was no hesitancy for industry leaders to provide warnings. Serief Meleis, a partner at Novantas warned, "Continued overcapacity of branch distribution resembles the airline industry of the early 80's. Fundamental restructuring must begin sooner rather than later." Not surprisingly, Brett King, author of the new book Bank 3.0 and founder of branchless start-up Movenbank added, "Market analysts will start to discount retail banking stocks with large branch networks as poor branch performance becomes visible."

Andy Will, senior vice president of deposit products and card services at BMO Harris agrees that the traditional mid-sized branch has too much real estate and staff costs to be viable going forward. Discussing a trend he believes will extend beyond 2013 Will states, "I believe branches will get simultaneously bigger andsmaller. There will be the addition of regional 'Apple store' sized branches in prime locations combined with micro branches to 'fill in' the rest of the markets." Will adds, "Both the large and small branches will be highly automated with two-way video, touch terminals, etc."  

None of the experts put the trend in perspective better than Bart Narter, SVP of Celent who stated, "The branch is banking's new alternative channel."

Mobile Banking

In a report just released by Juniper Research entitled, 'Mobile Banking: Handset and Tablet Strategies 2013-2017', it was estimated that more than 1 billion mobile phone users will have used their device for banking purposes by 2017. In addition, it was projected that more banks will have multiple mobile offerings, maximizing customer penetration potential. These trends were reflected in many of the predictions for 2013.

Fred Hagerman, CMO of FirstMark Credit Union out of San Antonio, TX emphasized, "Mobile is a freight train coming down the tracks - and it's here to stay. Banks that need proof only need to look at their web analytics from the holidays to see a significant bump in mobile device usage in the days after holiday gift-giving."

Some believe that banks, in an effort to speed delivery to market, have created fragmented mobile apps that served limited purposes. Bradley Leimer, Vice President of Mechanics Bank and publisher of The Discerning Technologist feels that 2013 will be the year we move the mobile banking conversation beyond transactions (transfers, bill pay, a brief snapshot of transactions, maybe some financial management) to include enhanced engagement through personalization . . . and more. 

According to Leimer, "We need to engage our customers with their own data, and drive new levels of personalized service to help them create their own value from their transactions. Our mobile applications will see renewed focus on engaging and simplified customer experiences, and improved contextual offer placement. We’ll see more applications leveraging voice, as well as the social graph, because individualized preferences are critical."

Matt Wilcox, from Zions Bank agrees, "I believe we will see the proliferation of “fat apps” that allow for a convergence of multiple applications as well as enhanced personalization for an enhanced customer experience."

Online banking will improve as well in 2013 if the industry leaders are correct. The online banking experience will be holistically reviewed this year according to Bryan Clagett, the chief marketing officer at Geezeo. "The user experience will finally take precedent, and the definition of a 'banking website' will be re-written. Products like PFM will help consumers make better decisions, save money and leverage the vast merchant data that lies within."

Serge Milman, CEO and founder of Optirate sees the focus on new and enhanced delivery channels as being a requirement to stay relevant, but not an inexpensive proposition, especially for smaller institutions. "Mobile and other delivery decisions will become 'infrastructural' initiatives", states Milman. "Banks will spend significantly to implement technology, but smaller organizations may find these expenditures prohibitive and will be slow to see returns."

Marketing and Technology Converge

Significant changes in marketing have been occurring for the last couple years, allowing bank marketers to leverage new technologies to improve targeting, offers, timing and the marketing channels used to communicate. The ability to combine structured and unstructured data described above, with the digital channels available, are a powerful combination for those bank marketers able to keep pace with change.

According to Nicole Sturgill, research director at CEB TowerGroup, "The embrace of digital channels as primary to the customer experience is significant for two reasons. First, it acknowledges the fact that the branch is no longer primary in many customer’s eyes; and second, it places digital sales at the top of the technology priority list for 2013."

Bank website design will also improve in 2013, enabling sites to become better selling tools. Tim McAlpine, president and creative director of Currency Marketing, believes that the use of HTML 5 will flourish saying, "Firms will put more weight into building websites that work on every screen size, versus the current trend of building dumbed-down mobile versions of corporate websites."

David Gerbino, digital product, marketing and strategy manager at Provident Bank in New York agrees. As he stated in my recent post on bank marketer resolutions, "Bank need to rapidly say goodbye to the web. The web of decades past is dead. Today's web needs to be responsive and device agnostic with one website supporting all devices."

These changes will improve the customer experience as is mentioned by Jelmer de Jong, global head of marketing for Netherlands based Backbase and editor of the BANKNXT blog. "Banks have to focus on creating ONE unified superior customer experience, across devices, across channels. Multi-channel strategy and creating a cross channel journey will be key."

While some banks are just beginning to utilize digital channels for their marketing efforts, some have found the power of new strategies such as search engine optimization for digital ads and retargeting for reaching people who are ready to buy.

According to Lloyd Lee, SVP, Integrated Services for direct and digital agency New Control, "The benefit of retargeting is clear - among all offline and online channels, retargeting is often the most efficient acquisition strategy on a cost-per-approved account basis." Lee added, "In 2013, retargeting will become much more widely used by banks as it ensures that banks are capitalizing on all of the traffic being driven to a bank's site from both offline and online acquisition efforts. It will be at the core of the most progressive bank's digital strategies."

The technology will also allow lifecycle and multichannel marketing efforts to merge, providing bank marketers to know who should get what offer, in which channel, in addition to WHEN they should receive the offer according to Bill Secrest, director of Datamyx. "New data solutions are emerging that can add context around when to target a consumer for marketing treatments."

Many of the industry leaders emphasized that these new tools and strategies will be more important in 2013, as the industry moves further away from the industry meltdown of a few years ago and into a period where shifting market share will be needed to grow top line revenue.

J.P. Nicols, CEO of wealth management consultancy Clientific, was rather blunt when he said, "All of the popular buzzword talk of improving client experience, optimizing channel preference and engaging clients on social media is now being viewed through the filter of 'how quickly can we see the impact in our results?' In 2013, this emphasis will put additional pressure on marketers, vendors and partners to prioritize the right projects and the right products and features that will yield results quickly."

On a more fundamental level, Mark Arnold, President of Market Strategies in Dallas, sent me the following trends which will be required as marketers implement new customer-facing technologies:

Product and Segment Opportunities

With regard to which products and services will be most important in 2013, some leaders believe there are untapped opportunities that will emerge in 2013. "Business account acquisition will be – or should be – a top priority for most FIs in 2013 since hardly any bank has been aggressive in this space or made many positive product changes in response to the repeal of Reg Q" offered Mark Zmarzly, vice president of financial services for ACTON Marketing.

Salil Ravindran, lead solutions architect for Oracle in the Netherlands agrees, "Banks will start focusing more and more on servicing the business banking segment through digital channels. The extent of services required by this segment is largely an extension of retail banking and not as complex as those required by the higher end wholesale segment, and hence banks should be able to largely leverage existing digital channel infrastructure to extend these services."

Credit union leaders provided the following tweets regarding where financial organizations may focus in 2013:

Roger Conant, curator of the original credit union tweet tracker site out of Houston believes that focusing on the women's segment will move beyond a niche play in 2013, while Salil Ravindran and J.P. Nicols both believe banks will focus more than ever on the mass affluent market in 2013. In referencing trends in both the EU and US, Ravindran says, "I believe more banks will start offering financial planning services over digital channels, thereby scaling the scope of digital channels from simple products and services to much more complex ones."

New Entrants and Non-Bank Competition Increase

Competition in and beyond the payments marketplace will continue to grab headlines and customers in 2013, making it imperative for traditional banks to keep a watchful eye on both new entrants and new forms of competition. As Simple continues to grow by providing streamlined banking to a growing list of consumers standing in a virtual queuing line to open accounts, Movenbank will open their virtual doors in early 2013>

At the same time, Walmart continues to innovate, leveraging partnerships like those with American Express for Bluebird, focused initially on the middle class consumer. And there is no reason why Walmart should stop with a prepaid offer according to Emily McCormick from Bank Director Magazine. "If successful with Bluebird, I'd look at what Walmart's next move would be, especially if they can dodge the regulatory hurdles than encumber banks."

Of greater concern in the longer run could be those offerings that bypass traditional banking channels completely. The rise of alt-lending (p2p lending, crowdfunding) in both the consumer and small biz space could present interesting challenges according to Jim Breune, CEO and founder of the Online Banking Report and founder of The Finovate Group. "Lending Club's $600-million-year (in loan originations) shows that US investors are buying into the concept and the British Governments recent announcement that they will lend 10 mil (GBP) through Zopa and 22 mil (GBP) through Funding Circle demonstrates that at least one government understands the economic potential of alternative forms of banking."

Continued Focus on Compliance and Security

Viewpoints differ on whether banks have fully adjusted to the impact of increased compliance and the CFPB. On one hand, a mid-sized bank executive stated, "The CFPB will still be a factor in 2013 for retail bankers. The question is, will it help add transparency and customer choice to the market for financial services or will their actions end up stifling choice and innovation because banks will be afraid to try creative new approaches to products or processes for fear of criticism or fines?"

Steve Cocheo, executive editor of the ABA Banking Journal has a more positive perspective when offering, "I believe that bankers will get over their compliance shell-shock in 2013, understandable as it is. While the regulations they face are often overwhelming, many will figure out new ways to meet their regulatory obligations with creativity and some fresh ideas. Not every institution will follow this path, but I believe more will than some think."

Management consultant Steven Ramirez from Beyond The Arc Consultancy sees potential for banks that embrace the context of the CFPB when he said, "Banks that expand the scope of their Voice of the Customer efforts will see an added benefit: mitigation of regulatory risk."

The impact of regulations is not just being felt in the U.S. Of particular concern for banks in the U.K., and potentially the rest of the EU, are proposed 'ringfencing' proposals that are focused on separating a banks' day-to-day retail banking arms from riskier investment bank activities. With the intention of protecting taxpayers from the potential of bailing out banks, these pending rules impact larger banks more significantly and will cause additional distractions similar to what has occurred in the U.S.

While the impact of the CFPB may be stabilizing and many banks are prepared for the impact of ringfencing, the same can't be said for the preparation for cyber attacks. This disturbing trend, which is impacting banks worldwide, may define issues ranging from consumer trust in banks to channel usage in 2013.

Mary Beth Sullivan, managing partner of Capital Performance Group, LLC stated, "I believe the cyber security threat will continue to increase, and retail banking organizations across the country will need to adopt more sophisticated security protocols and educate customers about it much more in 2013."

Bryan Yurcan, associate editor of Bank Systems and Technology agrees with his rather pessimistic post:

Change is Inevitable . . . Or Is It?

As mentioned by Bryan Clagett from Geezeo in development of this post, "Those in traditional retail banking need to realize that banking, as we know it, is evolving largely due to new disrupters in the space. I say, embrace the inevitable and look from within and outward at ways to build better, more efficient experiences."

Jeff Marsico, banking consultant and publisher of his own industry blog, referenced a sentiment similar to Jelmer de Jong's 'Just Do It' resolution for 2013 regarding the hopeful trend regarding the way bankers should look at the future:

Alternatively, maybe we could all step back and hope that Chris Skinner's slightly cynical prediction could become a reality.

Are there any trends you believe will be significant in 2013?

Additional Resources:

Financial Services Analyst Firm Announces Top Ten Trends in Banking, Payments, Mobile and Security for 2013: Javelin Strategy and Research, January 3, 2013

Top Trends in Retail Banking 2012: Celent Research, December 2012