Banks Introduce New iPhone and iPad Applications

As was predicted late last year at the Mobile Financial Services Congress held in Miami, not a week goes by without another bank introducing a smart phone mobile banking application. And with the introduction of the Apple iPad, many banks have expanded their mobile innovation to include the new device.

For instance, TD Bank has recently introduced TD Mobile Ap for both personal and small business customers covering banking, insurance and wealth management products. In addition to providing a mapping tool for branches, ATMs and TD Waterhouse Investor Centers for both the iPhone and iPad, there are must-have applications for viewing balances and activity, paying bills and transferring funds. TD also provides a way to access TD Waterhouse Investment Reps and TD Insurance Agents and provides a seamless link to their Easyline telephone banking services.


What is interesting is that as more and more banks expand their mobile offerings and are including the iPad as a supported device, I have yet to see any functions customized just for the iPad. Most banks are simply taking what they are developing for the iPhone user and formatting the functions for the new tool. While I suspect specialized applications such as loan forms, new account documents and personal financial management reports will eventually be available for the iPad, more innovation is needed to take mobile banking to the next step. Maybe I will just have to wait for Bank of America to make the first move.

SIFMA Asset Management Account Roundtable Recap

I would like to thank the people from the Securities Industry and Financial Markets Association (SIFMA) as well as co-chairs Jennifer Byrd from Morgan Stanley Smith Barney and Steve Newcamp from Federated Investors. As always, the event was well attended and the sharing of ideas and insights from the speakers and participants was great. I would be remiss if I didn't also thank my own company, Harland Clarke for the amazing dinner at the Battery Park Gardens Restaurant where, even with the rain, the view of the Statue of Liberty was super.

Some interesting takeaways from the meeting:

• Lucy Suarez (Fiserv): The impact of mobile can not be overlooked and the demographics of mobile banking users is trending older over time. As referenced in some of my previous blogs, a majority of iPhone owners and a large percentage of smart phone owners use mobile banking monthly. She also referenced that deployment by financial institutions of all sizes is growing rapidly. The future of mobile will definitely go beyond balance inquiries and transfer of funds to include mobile deposits, person-to-person payments and the ability to sign-up for the service without online banking required.
• During the product development breakout session, it became apparent that, while a case can be made for the development of mobile banking applications for the AMA product, virtually none of the firms in attendance even have a mobile banking product in development. This may end up being a competitive disadvantage in the marketplace or a significant advantage for the two firms who have mobile capabilities today.
• One of the major advantages of a robust AMA product also seems to be a hurdle for product development. Highly customized and information laden paper statements seems to limit product innovation in the areas of rewards, household PFM and product integration. To combat this challenge, Wells Fargo Advisors provides an annual rebate of fees if a customer agrees to a more flexible online statementing option.
• Margaret Henry, Ph.D. (Scantron): Margaret discussed the significant differences between a 'satisfied' client and a client that will be loyal and will refer business to a financial institution. She compared different survey techniques and survey results in the marketplace while sharing results from some of Scantron's clients who have experienced improvements in scores as a result of a robust measurement process.

There was a great deal more learned at this program which I have been lucky enough to present at three times over the past five years. What always amazes me is the amount of sharing that is done by this rather tight knit group of organizations that serve the most desirable of clients.

Use of Online Banking and Bill Payment Continues to Grow

According to the 2010 Consumer Billing and Payment Trends survey published this week by Fiserv, the number of households that use online banking increased more than six-fold between 2000 and 2010, and the number that use online bill payment increased nearly eight-fold. In fact, 72.5 million U.S. households (80 percent of all households with Internet access) use online banking, while 36.4 million households (40 percent of all households with Internet access) use online bill payment.

Illustrating that online bill payers are not just the youngest and wealthiest demographic, in 2010, consumers age 21-34 made up 28 percent of online bill payers, consumers age 35-54 made up 48 percent, and consumers over age 55 made up a surprising 24 percent of all online bill payers, while more than a third of online bill payers had a yearly household income of less than $50,000.

In addition, as other studies have shown, consumers who pay bills online consistently use more services from their financial institution than the average customer, with usage of additional services becoming even more pronounced in recent years. Loyalty is also strong, with 49 percent of customers who use online bill payment saying they were less likely to switch to another financial institution as a result of their experience with the service.

Fiserv suggests that with the similar benefits of biller direct and emerging technology alternatives (such as PFM), it will be more important than ever to illustrate the benefits of bank-based online bill payment including the consolidation of billing and payment into a single site and the ability to eliminate the need to remember multiple passwords.

Banks Slow to Embrace Potential of Tablet Computing

One year ago yesterday, Apple announced it had shipped it's first million iPads. Since then, it sold 14 million more in 2010 and is expected to sell between 30 and 40 million units in 2011 despite supply challenges in Japan. New research from Gartner predicts that global tablet sales will increase from 17.6 million in 2010 to nearly 70 million in 2011 and close to 300 million by 2015. During this time, the average price should fall to about half of the current level, which is just under $500 for entry level models.

Given this growth trajectory, and with banks continuously touting their desire to 'enhance the customer experience', how has the industry completely fallen asleep at the developmental control switch when it come to leveraging the tablet computer for engaging the customer? Given the demographic profile of the early adopting tablet owner (higher income, technology savvy, business traveler), and the retention experience found with mobile banking, it is even more surprising that only a handful of banks have even introduced iPad banking applications.

According to a recent ranking of financial and banking iPad apps by Netbanker, there are only 7 banks ranked in the top 200 apps related to finance and only 2 banks (Chase at #9 and USAA at #20) ranked in the top 20. Chase was not only one of the first banks to develop a native iPad app (as opposed to a converted iPhone app), but they have leveraged the camera included on the iPad2 to facilitate their remote deposit capture service. USAA rebuilt their already industry leading iPhone application for the iPad, providing users with the ability to manage a wide range of financial transactions such as paying bills, transferring funds, placing trades, getting real-time stock quotes and viewing their USAA insurance policies. Members can also electronically add or replace a car on their policy, receive an electronic auto insurance ID card and receive free financial advice in the form of stories and videos customized for a unique iPad experience.

USAA iPad Financial Literacy Library

In the past week, Bank of America also introduced an iPad banking application that leverages the capabilities of tablet computing. Highlights of the new app include an enhanced bill pay calendar, a ledger format for showing account balances, some transactional enhancements and other functions that come closer to mimicking their online banking site as opposed to their mobile banking app. While not providing remote deposit capture capabilities within the iPad app, the app is already ranked in the top 50 in the finance category.

Another bank that was quick to introduce a native iPad banking application with enhanced functionality was BBVA Compass. According to Alex Carriles, SVP and director of mobile and internet strategies for BBVA, "One of the first goals that we had when we decided to develop something for the iPad was to avoid the mistake of looking at the iPad as a large iPhone".

The most noticeable difference between the bank's iPad app and its iPhone app is its appearance. The iPad app's display looks like a bound book with an image of a staple on the center of the page and the image of a ribbon separating different sections. There is a tool that lets customers scroll through images of cashed checks much like albums on iTunes and allows a customer to look at pie charts that illustrate distribution of funds in various accounts.

While a bit cumbersome for everyday transactions such as balance transfers, balance inquiries, and online bill pay, the larger, tactile screen and increased navigation are just perfect for Personal Financial Management (PFM) functions like self-serve wealth management, financial literacy and investing. Many of the more progressive investment firms such as TD Ameritrade and Charles Schwab have already developed robust apps that allow customers to conduct research and conduct more complex transations on the tablet.

In the same way that investment firms can use the enhanced capabilities of the tablet to illustrate charts, graphs and investment recommendations, banks could apply the same logic to engagement and cross-sell messaging and the building of financial dashboards specifically for the iPad. Comparison charts, links to third party financial service firms, illustration of rewards program benefits and even opportunity alerts are perfect for the tablet user. Another unique capability of the tablet is the ability to leverage high definition video or even face-to-face chat in the sales or relationship enhancement process. This provides for an excellent expansion into the small business and commercial customer space where financial advice can be delivered via either online or offline webcasts to executives on the go.

Based on a recent study by eMarketer, tablets provide the perfect online shoping experience where owners are both highly engaged as well as more captive than with smartphone applications.

So, what will it take for more banks to build native tablet banking applications that take advantage of the functionality of the tablet as opposed to trying to expand a mobile app or compress an online banking app onto a tablet? With the introduction of the Blackberry Playbook (with enhanced data security features), numerous Android supported tablets and other players entering the market, how can banks not allocate resources to provide their customers an enhanced experience?

As a avid user of my iPad, I am disappointed my bank has not moved beyond an already market leading online and mobile banking application to support my expanded expectations on my iPad. As was the case with mobile banking, the institution that is first to create the 'WOW' factor will grab the lion's share of the lucrative first adopter market that has already fallen in love with their tablet.

But, I want more than what traditional mobile banking applications can provide. I am looking for financial statistics, financial advice and financial management tools all provided in both an engaging and entertaining package. Kind of like Angry Birds for banking.

Maybe the yet to be introduced BankSimple or MovenBank will surprise me.

Will PFM Engagement 'Tricks' Be A Customer Experience Treat?

It's Halloween. You've stocked up on the best candy and your house is decked out in ghoulish decorations as you prepare to handle the rush of excited children. Unfortunately, despite all of the preparation, nobody is knocking at your door.For many financial institutions, this is the same feeling they have had as they have introduced personal financial management (PFM) tools to a less than overwhelming consumer response.  

Arguments across the industry continue over the potential impact and adoption of PFM tools. Despite topping the charts in hype and media coverage over the past several years, some believe that PFM may always fail to deliver in terms of usage rates.

A 2012 survey by the Federal Reserve shows that 21 percent of consumers currently use a PFM tool (this includes any program or website used to track household finances). Aite Group shows that the percentage may be closer to 27 percent when all PFM options are taken into account. However, there is still potential for growth in this area, with an additional 14 percent of consumers indicating a desire to use PFM tools.

Aite Group, Sept. 2012

According to Javelin Strategy and Research, nearly two thirds of consumers in the U.S. would like to see all of their financial accounts consolidated in one place (which continues to be a challenge for many PFM applications). Javelin also reports positive consumer feedback to the primary features of a PFM solution as shown below.

Studies also emphasize the value a financial institution can generate by providing a PFM solution that is adopted and utilized by its account holders. These studies show that on average, retention of account holders that use PFM improves by 4% over those that use online banking alone. From a customer acquisition perspective, this can make a huge impact on the financial institution’s bottom line since the industry average for acquiring a new account holder is around $250.00. Assuming an online user base of 100,000 account holders, this equates to $1,000,000 in savings.

PFM Hurdles to Adoption

So, if the benefits are there from both the consumer and financial institution perspective, why are a relatively few taking advantage of these 'treats'? Some point to a lack of functionality within the early PFM offerings that have driven the trend since about 2005. Others say that the financial institutions offering PFM as a complement to online banking have not correctly packaged and sold the service. Still others point to the fact that, while people say they want to manage their finances, a significant proportion of those households simply want reports around what they have done as opposed to what they should do (See Ron Shevlin's Snarketing 2.0 'PFM is Dead, Long Live PFM').

According to Celent, the barriers are multifold and include technology, experience and behavioral hurdles.

Could an Enhanced User Interface (UI) Help?

When I attended this year's BAI Conference in Washington, I was impressed with a firm that is taking a different look at PFM. Provo, Utah-based MoneyDesktopis relying on a unique, eye-catching and dynamic user interface to drive adoption of PFM through consumers’ relationship with their FI. While this may not seem revolutionary, after engaging with the product, I understood how this product could potentially improve the take-up rate at institutions struggling with PFM sign-up and usage. 

MoneyDesktop is doing more than just putting lipstick on a pig – its patent-pending BubbleBudgets combines colors, variable sizes and movements to give users an undeniably clear picture of their budget status on a yearly, quarterly, monthly, weekly, or even daily basis.

Use this link to understand the power of this highly visual and engaging solution.

While initially introduced as an online PFM application, MoneyDesktop now includes an even more robust MoneyMobile™ application for smartphones and tablets (demo below). Each application leverages the highly engaging visual elements that made the online application a success. “User experience is absolutely critical no matter what the device,” said Caldwell. “That, paired with the power of our software, is what makes it work. Our mobile and tablet solution have accelerated the path that MoneyDesktop was already on - which was to make sure that peoples’ experience of managing their personal finances was an amazing one.”

As opposed to viewing all of the delivery channels independently, MoneyDesktop introduced it's Sync Engine at FinovateFall in New York this year. With this tool, data is synched in real-time across all of a user’s devices, and intelligently updated when one device is disconnected from a data signal. The firm also is about to introduce HTML 5 Widgets that will emulate the design available for phones and tablets on a bank's online banking site. Widgets erase the line that has historically divided PFM from online banking, providing compelling data visualization that is displayed front and center on the Fi’s online banking interface.

Working With Financial Institutions and Outside Providers

According to MoneyDesktop founder Ryan Caldwell, "While many of the PFM providers were trying to copy the success of standalone solution Mint.com, we saw more opportunity in creating a cohesive slew of benefits for consumers, financial institutions and online banking partners." Taking this approach of partnering for an enhanced offering, MoneyDesktop has forged close to 25 partnerships, including industry powerhouses such as First Data, Sybase and Visa.

According to Caldwell, “Our number one goal is to offer the ultimate user experience for a financial institution's customers through strong partnerships with core providers that provide the most innovative financial technology solutions. Research shows that users want to dive deeper into their finances, and we are creating an experience that allows them to do that. This, in turn, creates an increase in customer loyalty - making it a win-win for both parties.”

Additional Enhancements

Like a few financial institutions have done with standalone services, MoneyDesktop is working on an augmented reality solution that leverages augmented reality to visually guide a user, using the camera view, toward the closest and best accessible branch or ATM locations. Imagine a portable GPS system that allows you a 360 degree view of locations and distances as you move your mobile device in different directions combining computer generated data with your actual surroundings.

Will Consumers Respond?

Will this combination of enticing form and powerful functionality be enough to move the needle and get customers to embrace a tool they have so far only accepted marginally? Is there a revenue potential to this offering that product developers and marketers can take advantage of? Has MoneyDesktop found the secret formula to success? 

The team at MoneyDesktop definitely believes they have found the code to the customer's heart (and hopefully wallet). They firmly believe that the old style of plugging in numbers and watching bars move up and down is dead. They feel that consumers want to interact with their money and they want to do more than look in their financial rearview mirror. 

To date, MoneyDesktop has proven this with FI and consumer adoption rates that trump the industry norm. In the company’s FinovateSpring demo, Caldwell stated that the industry targets PFM adoption rates of 10 to 15 percent, while some MoneyDesktop customers have reached adoption rates as high as 65 percent within a year.

As Ron Shevlin and Aite highlighted in their study, Strategies for PFM Success, the goal is to provide forward looking, executable goals to help consumers get out of debt, or simply spend money more wisely. To succeed, the tools also must create a seamless integration between the financial data and the myriad of devices people rely on these days.

“At the end of the day, users need to accomplish the objective for which they are using the product:  'I need to understand my finances, so I can make smart financial decisions.’ If we can make that experience visually appealing, compelling and fun to use, it will draw the end user back into the product,” confirmed Jason Cragun, Product Development Director at MoneyDesktop. "Particularly in a mobile or tablet device we can emulate real world experience like never before…a swipe, a touch, a gesture - these make the money management experience more tangible and engaging in a way that consumers have come to expect based on their other digital experiences."

The Marketer's Role

Obviously, the first role as a marketer will be to effectively market the PFM service to customers. I believe the best way to accomplish this is to immerse all employees into the product first so they can provide compelling examples of the benefits of the product to customers. In addition, it is important to provide 1:1 demonstrations of the product since it is difficult to show the benefits of how a customer can manage their finances through even the best video.

Finally, once you have 'sold' the PFM solution to your customer, what are your objectives now that you’ve just become the hub for their financial data? With the account holder as the central focus, all of their other checking and savings accounts, credit cards, lines of credit, home loans, etc. are now associated with your institution, even if they are held elsewhere. You have an invaluable 360 degree view of your account holder that opens the door to nearly unlimited cross-sell opportunities, as well as the chance to take their business away from your competitors. That should make any multichannel strategy easier to implement.

Additional Insights

Consumers and Mobile Financial Services - Federal Reserve (March, 2012)
How PFM Can Set the Stage for One Stop Online Banking and Define Mobile Banking - Javelin Strategy and Research (Dec. 2011)
Strategies for PFM Success - Aite Group (Sept 2012)
Personal Financial Management 4.0 - Online Banking Report (June 2012)
Personal Financial Management: The Devil is in the Details: Celent (August 2011)

Note:
I am not the only person who has been impressed with what MoneyDesktop offers. MoneyDesktop has left an impression after virtually every show at which it has presented its products, garnering six out of six Best of Show awards in the past year, including FinovateSpring and FinovateFall 2012, CUNA Technology 2011 and 2012, CU Water Cooler Symposium 2012 and BAI Retail Delivery 2012. While awards do not necessarily lead to success in the marketplace, I feel this approach to PFM could help move the needle on both acceptance and usage.

Lipstick on the PFM Pig?

In an industry that is sometimes slow to innovate, Personal Financial Management (PFM) is one of the few banking applications where innovation has outpaced consumer demand. A 'hot' topic for over a decade, the ability to help consumers better manage their money through applied analytics, contextual design and visual tools has provided a battleground for financial institutions and direct-to-consumer applications.

With a quest to be at the center of account holder's lives, developers of PFM applications are moving from add-on applications to integrated solutions that can help define lifestyle segments. At the same time, the definition of PFM has evolved to include everything from basic visualizations to advanced engagement tools.

The question remains however . . . will these innovations capture the consumer's attention or simply be lipstick on the PFM pig?

In the newest in their PFM Insight Series entitled, Designing PFM Tools With The Customer in Mind, Mapa Research investigates the latest and most innovative PFM developments from around the world. Featuring in-depth quantitative and qualitative research from 60 banks, with examples from 23 banks and interviews from leading providers, the study hopes to provide guidance for banks and credit unions trying to decide if a business case for PFM can be made and if so, what should be the focus of development?

Building on the findings of the second edition report from Mapa Research entitled, Is PFM Still Worth Considering, the newest research found the following themes emerge:

• Customer centricity is as relevent as ever: A number of banks have integrated PFM within the overall digital experience, delivering added value through intuitive functionality.
• Leveraging new technology for cross-channel integration: While there are still only a few examples of exceptional integration across the online, tablet and mobile channels, more seamless tablet and mobile experiences are evident. Visuals have been improved, with more interactive tools including some available pre-login.
• Development and innovation must continue: For those banks and credit unions committed to PFM, more must be done to provide real time and even future views that help customers understand finances and improve their overall financial performance.

PFM offerings have expanded and have the potential to become increasingly important as a financial literacy tool, account aggregator, financial performance tool and in some cases, a non-interest income opportunity for banks and credit unions. 

Acceptance of PFM

You'd think that with the rapid adoption of smartphone and tablet technology, people would quickly embrace digital money management. Especially given the fact that spending on the development of PFM tools is expected to double between 2010 and 2015, according to CEB research.

Nothing could be further from the truth according to recent research from Aite Group, Javelin Strategy and Research, Celent and Forrester. The challenge for banks and credit unions is that, in reality, most customers do not proactively monitor or manage their finances, and few look to their bank for support.

According to Ron Shevlin, senior analyst at Aite Group, "Almost half of Americans say they don't look to their primary financial institution for help managing their finances and therefore don't care if the FI offers tools to help them do so. In fact, 80 percent of households don't even do budgeting."

According to a September survey conducted by Aite Group, 58 percent of U.S. consumers have not used online PFM tools and don't plan to. Another 14 percent said they planned to do so, with 15 percent saying they use PFM tools exclusively at their bank or credit union site. The rest said they use a non-financial institution site or multiple sites. A Celent research report was even more dismal, with only 4 percent of online banking customers being active PFM users.

Interestingly, the percentage of users by age category in the Aite Group study skewed towards younger consumers, with 44 percent of PFM users coming from the Gen Y segment, 28 percent from Gen X, 16 percent being Baby Boomers and 15 percent being seniors. This may indicate the take-up of mobile tools is exceeding online PFM applications.

All of the recent studies point to the importance of integration of tools within current banking applications, ease of use, social media engagement, better mobile and tablet applications, and potentially rewards integration. If done well, PFM has been proven to be a gateway to deeper and more profitable relationships. The key, according to most studies, is to prove the value to the customer first and the value to the bank will follow.

"If you're looking to improve the relationship with the 80 percent (or more) of the households not fully engaged with PFM tools, you've got to rethink the definition of PFM and what's going to be offered," says Shevlin. As Shevlin wrote in a September 2012 Snarketing 2.0 blog post entitled, 'PFM is Dead, Long Live FPM', PFM should become FPM (Financial Performance Management), moving from 'oversight' (budgeting and expense) to 'insight' (how is money performing) and ultimately to 'foresight' (how can performance be improved).

Even then, a  broad-based PFM (or FPM) may fall short according to JJ Hornblass, publisher of the Bank Innovation blog. "The problem is the lack of data, and the inability to tell a financial story beyond just one financial institution", says Hornblass. "PFM must tell the full data story. Until it does, only 27 percent of American consumers will find it "useful".

PFM Evolution

So, how are financial institutions and PFM vendors moving beyond the first generation of PFM offerings to be more valuable to the consumer and a better business case for the financial institution? How is PFM moving beyond 'slap on tools' to being integrated within products themselves? How is PFM being redefined to include benefits that the consumer will embrace?

According to the new findings from Mapa Research (executive summary of report available here), PFM offerings have become more diverse and that the redefinition (or breaking apart) of PFM components allows for a categorization of PFM functionality into three levels of progression as shown below:

• Basic Visualizations (Entice): Real-time feedback in relation to day-to-day finances including visualization of balances, transactions, etc.
• Analysis (Educate): How does customer spend/save relative to peers, categories, merchant, geolocation and holistic view of finances.
• Engagement Tools (Activate): Engaging tools to help customer improve financial situation through intelligent budgeting, goal development, forward-looking assessments.

With the progression above, the analysis of PFM functionality within this report illustrates a financial institution and vendor focus on improved simplicity, greater customer centricity and less 'friction' (seamless integration) between channels. In addition, greater attention to personalization and alert functionality was evident.

The current state-of-play was developed by reviewing 48 retail banks offering PFM tools across 10 countries. As can be seen, there continues to be opportunity to expand PFM capabilities across devices, with only 21 percent of banks surveyed offering PFM across all three channels.

Source: Mapa Research (PFM Insight Series Edition #3; Designing PFM Tools With The Customer in Mind)

Basic Visualizations

While basic visualizations are taking on many forms globally, there are some unique ways to illustrate basic balance and transaction insight, such as with BNP Paribas, where customers get an indication of their account status with weather visuals (sunny, cloudy or thunderstorm depending on account balance). 

A number of banks, such as PNC, Capital One and Barclays Bank, use bar charts to indicate balances in different categories (spend, save, credit available, etc.) while some vendors, such as MoneyDesktop leverage bubbles to illustrate basic insights.

Capital One (UK)

Analysis

Similar to the analysis reports offered by investment firms for years, retail banking PFM analysis tools provide a rather extensive review of financial wellbeing using strong visuals and optional widgets for different types of information (inflows, outflows, goals, budgets, etc.). In most cases, the widget options are prominently displays so a customer can customize their financial analysis.

Because of the extensiveness of the information available for analysis, only a few institutions globally have a smartphone app for in-depth analysis. This insight usually is across the online and, on occasion, tablet platforms. Danske Bank was considered to be one of the best cross-platform applications for analysis, allowing customers to easily view money coming in or going out by category across all platforms.

Another example of an excellent analysis PFM application found by Mapa was at BNP Paribas, where great iPhone and iPad visuals are used to provide simple analysis capabilities that are easy to comprehend (even if you don't understand French).

BNP Paribas (FR)

Enabling customers to compare spend and allocation with peers is a way that could eventually improve a person's finances by seeing how they are doing compared with others like them. In Mapa research, examining 48 leading retail banks across 10 countries, four banks of the five banks globally (all Dutch) enable customers to compare spending with peers (and only within internet banking). OCBC (SG) is now providing this feature as an iPad application.

Take Action

The most frequently used technique for banks to encourage 'action' is by setting saving goals. It was found that not only was this functionality easy to set up and grasp by the customer, but it could be applied across all platforms relatively easily. In some cases, the sharing of savings goals could be done across social channels like Facebook, even enabling the customer to ask friends for contributions toward a goal.

In some cases, such as with Simple, a customer can divert funds from a goal to make the desired purchase, increasing the engagement and functionality of the 'goals' PFM tool.

One of the more unique capabilities within the 'action' category was ING's tool that allows customers to see how much could be saved over time by making small sacrifices. For instance, by using certain assumptions, a customer can see the impact of forgoing a cup of coffee, packing a lunch, walking to work, etc. With a simple click, the customer can redirect an amount they would have usually spent on an item to their savings account.

According to ING research, 52 percent of Canadians said that they could change their spending habits if they could visualize the impact of sacrificing non-essential purchases.

ING 'Small Sacrifices' PFM Tool

Dozens of illustrations from leading banks across the globe are available in the very extensive 56 page report on PFM developed by Mapa Research. The report includes commentary as well as vendor interviews around the future of PFM.

Increasing PFM Engagement

As mentioned, getting customers to use the new tools that have been developed and are continuing to be innovated remains a challenge. Each of the PFM vendors interviewed for the Mapa report (Yodlee, Figlo, Meniga, Strands Finance) and subsequent to the publishing of this report (MoneyDesktop and Geezeo) emphasized their commitment to greater enrollment and engagement (beyond trying to get banks and credit unions to offer PFM services).

Innovative approaches used to improve use and engagement of PFM tools by Mapa Research included:

• Seamless integration within regular banking services: Optional PFM add-ons will not be embraced by a populace that doesn't like budgeting. Instead, functionality should be part of the digital experience.
• Intuitive and pleasing visuals: To appeal to a broad customer base, the PFM tools should be easy to understand and highly visual.
• Segmentation of base: Instead of a one-size-fits-all approach, PFM features should be aligned with different segments of the customer base (mass, affluent, Gen X, Gen Y, investors, etc.)
• Make it social: Allow users to engage with others through social platforms. It was found that this was effective when building and sticking to goals even though the integration of social channels and banking is by no means commonplace in the U.S.
• Provide encouragement: People respond to ongoing encouragement and instant feedback. Moven is a great example of a bank that provides this form of engagement.
• Leverage Big Data: As mentioned by JJ Hornblass as well as reports from Cap Gemini and others, data must be leveraged more effectively to combine overall financial relationships, better understand customer needs and build engagement.

Moven Immediate Feedback to Generate Engagement and Encouragement

PFM Vendor Perspectives

To better understand recent and future developments in the PFM category, Mapa Research interviewed four PFM vendors in the development of the report (Figlo, Meniga, Strands Finance and Yodlee). In addition, I supplemented these interviews by allowing two additional vendors (Geezeo and MoneyDesktop) to provide insights to the same questions advanced by Mapa Research. A full copy of the questions and responses from Mapa are available in the appendix of the report.

Recent Developments

All six vendors questioned indicated a very similar emphasis around where current efforts are focused. The key areas of development included:

• Tighter integration of PFM functionality within current banking functions
• Focus on mobile and tablet platforms
• Better use of data for budgets
• More financial analysis and forecasting
• Ability for improved aggregation and categorization
• Better goal and advice functionality (including buy/no buy decisioning tools)
• Increased segmentation and customization (including small business)
• Better marketing capabilities within offering
• Alert functionality

Common Objection From Banks Around Implementing PFM

The PFM vendors were asked what banks view as the primary stumbling block to the implementation of a PFM solution.

• Lack of internal resources to implement and deliver a PFM solution
• Lack of proven demand, ROI and business case support
• Internal development of primary PFM functionality
• Internal data issues (inability to consolidate customer information)

How Can Customer Adoption Rates Be Improved

Each vendor in the survey as well as the two additional vendors I interviewed agreed with many of the ways that can improve customer adoption and engagement.

• Improved training of the front line
• Proactive marketing of the service through direct and digital channels
• Online videos illustrating benefits and use
• Simplify and improve UX/UI all components of PFM for the customer
• Move beyond online platform to mobile and tablet
• Target potential user groups

Evolution of PFM Over Next 12 Months

The vendors were asked how PFM will evolve and how consumers will/or won't embrace PFM in the future.

• Better cross-channel integration
• Better data integration
• Better insight and analytics moving towards 'tool of empowerment'
• Continuous enhancement of user experience (simplicity)
• Segment-based PFM (small business, wealth management)
• Potential as fee-based service

Lipstick on the PFM Pig or a Brand New Pig?

After years of simply trying to take an overarching money management concept and add more and more functionality (PFM lipstick), it appears that the PFM marketplace is beginning to take specific components of personal financial management apart and integrate the tools within the banking services. In other words, instead of focusing on putting PFM on steroids, banks, credit unions and vendors are finding ways to bring the benefits of money management within the platforms and accounts in a more simplified manner.

More importantly, PFM is becoming part of what banking is in real time. And instead of being only a rearview mirror view of finances, tomorrow's PFM will look ahead with advice as to how to prepare for the future and provide 'foresight' for a stronger financial well being.

It appears that the biggest change around the definition of PFM is that bigger may not be better after all. Instead, the original concept of PFM is being broken down into easier to swallow pieces of insight that are more desired and more valuable to the consumer and the bank. 

Maybe we have moved from putting lipstick on the PFM pig to serving delicious pieces of PFM bacon, sausage, pork chops, etc. The question may now become . . . will the consumer pay for these new treats?

Additional Insight

PFM Insight Series Edition #3; Designing PFM Tools With The Customer in Mind - Mapa Research (August 2013)

PFM Insight Series Edition #2: Is PFM Still Worth Considering - Mapa Research (June 2012)

The Business Case for Personal Financial Management - Forrester Research (Sept. 2012)

Strategies for PFM Success - Aite Group (Sept. 2012)

PFM is Dead, Long Live FPM - Snarketing 2.0 (September 2012)

Personal Financial Management (PFM) 4.0 - Online Banking Report (June 2012)

Personal Financial Management 2011 - Javelin Strategy and Research (December 2011)

Personal Financial Management: Five Things FIs Need to Do in 2011 - Yodlee & Javelin Strategy and Research (January 2011)

Personal Financial Management: The Devil is in the Details - Celent Research (August 2011)

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Six Years of Financial Services Innovation

Anticipation is building as FinovateFall 2013 is returning to Manhattan on September 10 and 11 for the seventh consecutive year. With more than 70 cutting edge firms doing 7 minute demos in front of a sellout crowd of more than 1,000 bankers, investors, analysts and the press, it is the premier showcase and networking event for what is new in the world of fintech.

While the overarching innovation theme remains the same, it is interesting to see the ebbs and flows of presenting categories and companies through the years. It is more interesting to realize how fast things have changed in the financial services industry.

Finovate 2007: When Mobile Was Young

The brainchild of the Online Banking Report and NetBanker blog publisher, Jim Bruene, the very first Finovate conference was held in New York City on October 2 of 2007, when 20 of the most innovative companies in the financial, banking and lending space gathered in front of a handful more than 200 banking executives, analysts, investors and the press to offer a glimpse of the future using the now familiar 7 minute demo format (no PowerPoint slides allowed!). The one-day event was quickly sold out, with overflow space provided for late registrants to view presentations via a video feed (see all 20 videos from the first Finovate conference here).

While only six years ago, a lot has changed in the financial marketplace. In 2007, mobile banking was in its infancy, with just a few hundred thousand users across three different platforms ('mobile website' was the most popular). Interestingly, the discussion at the time was whether mobile banking would be a standalone profit center or just another cost center for banks (still up for debate by many). And despite a lot of hype at the time, only one bank (Citibank) and one vendor (mFoundry) had launched a fully downloadable, custom mobile banking app.

The themes for the 2007 show and number of companies presenting were PFM (5), mobile banking (5), payments/billing(4), P2P Lending (2), online tools (2), mortgage lending (1) and security (1).

The presenter list included (in alphabetical order); Andera, Billeo, CheckFree (acquired by Fiserv), Clairmail, Firethorn (now Qualcomm Retail Solutions), Geezeo, Digital Insight (an Intuit company), Identity Theft 911, iPay Technologies, Jwaala, Lending Club, Metavante (acquired by FIS), mFoundry, Mint, Monitise, MortgageBot (now part of Davis + Henderson), MShift, Online Resources (acquired by ACI Worldwide), Prosper Marketplace and Yodlee.

The Best of Show winners of the first Finovate were a two-week old online personal finance start-up named Mint, a mortgage marketplace from MortgageBot named Marvel and the peer-to-peer lender Prosper. The biggest winner, however, may have been the financial community, since the success of Finovate 2007 was the foundation for a growing series of global Finovate events that now include an expanded 2-day FinovateFall event in Manhattan, a second two-day U.S. event, FinovateSpring in California, a one-day FinovateAsia (30+ firms) and the two-day FinovateEurope (60+ firms).

With technology always at the forefront, Finovate 2007 was the first financial services conference to proactively court the blogging community, with bloggers from four countries covering the 2007 event (live blogging and a ton of tweeting continues during all events). In addition, all of the presentations are streamed for later viewing for attendees and non-attendees on the Finovate web site.

FinovateStartup 2008 - The First West Coast Show

Only three months after the the success of the first Finovate show in NYC, Jim Bruene announced a slightly modified version of Finovate2007 called FinovateStartup to be held in San Francisco in late April of 2008. With a focus on showcasing the hottest financial technology start-ups, the format of 7-minute fast-paced demos remained the same as did the opportunity for the attendees and innovators to network.

With an original goal of securing 20 cutting edge fintech firms for the second Finovate conference, Jim and his team quickly surpassed their goal with a final lineup of 40 startups despite a tightening credit market and bigger financial industry storm clouds on the horizon. Included in this lineup were several firms using this event to introduce new products. (recap of presentations available thanks to Scott Loftesness of Glenbrook Partners with video archives of the presentations provided by Finovate)

Compared to the first event held 6 months prior, the second event's diversity and expansion of themes was apparent, with new savings/checking products, financial comparison tools and investing/asset management being new themes. In addition, while PFM tools still were prominent at the event, security services and investment/asset management firms had greater representation. As can be seen from the word cloud below, the industry still lacked significant mobile/payments discussions.

Riding The Storm Out: Finovate 2009 - 2011

There is not a banker alive who doesn't remember the financial crisis that started in 2007, 'peaked' in 2008, and is with us to a degree still today. Some of the many impacts of this period were that budgets were highly scrutinized and cut, investment in the future was scaled back and innovation at many financial organizations took a back seat . . . except at Finovate. 

While it would have been easy for Jim Bruene and his team to fold up the tent in late 2008 and restart the Finovate concept a few years down the road when times were better, Finovate continued to provide the premier forum for innovation. Despite the economic conditions (or because of it), companies wanting to showcase their new products increased, registrations multiplied and the trade and business press took notice. Maybe it was the ripple effect of the introduction of the first iPhone in 2007 and the rapid increase in acceptance of mobile apps, but interest in financial innovation increased during this difficult period.

During the shows from 2009-2011, innovation trends continued to be in flux (at least if measured by the products being showcased). Some interesting trends included:

• Twelve companies at the 2009 FinovateStartup did demos on PFM solutions (representing close to 25 percent of presenters).
• Small business solutions began to appear in early 2009 and have continued to be a steady category today.
• Search and comparison tools were strong during the period.
• Mobile solutions became the break-out category in late 2009 and early 2010. That trend continued in 2011, with the emergence of mobile photo bill pay and other tools.
• Safety and security tools remained in the spotlight, reflecting the fiscal conservatism that prevailed and the need for safe havens for funds.
• Alt-payments and alt-lending became a more popular category during this period.
• The emergence of real-time information distribution.
• Rewards platforms and savings tools emerged (and won Best of Show honors) beginning in 2011

As the presenting themes continued to grow and change, the interest in financial innovation continued as well. Finovate grew exponentially to meet this need. 

• FinovateFall 2010 was the first two-day event, reflecting the extraordinary desire to both demo and participate in this unique forum. Despite (or possibly because of) this expanded forum, sold out events became the norm.
• The number of demos at the FinovateSpring and FinovateFall events reached more than 60 per show.
• Audiences multiplied from the first Finovate shows, surpassing 800 at FinovateSpring 2011 and reaching 1,000 in NYC for the FinovateFall 2011 show.
• FinovateEurope was introduced, reflecting the worldwide scope of fintech innovation. While being held in London, presenters came from Europe, North America and Asia. The first show had 3 dozen presenters over 400 participants.
• Coverage in both the financial and mainstream business press exploded during this period. In addition, Twitter became an excellent micro blog of highlights as they occurred.
• All demos continued to be catalogued for future viewing on the Finovate site.
• FinovateSpring 2009 (58 presenters)
• FinovateFall 2009 (32 presenters)
• FinovateSpring 2010 (36 presenters)
• FinovateFall 2010 (56 presenters)
• FinovateEurope 2011 (35 presenters)
• FinovateSpring 2011 (64 presenters)
• FinovateFall 2011 (63 presenters)

FinovateSpring and FinovateFall 2012

The Finovate events for 2012 were filled with familiar categories, new subcategories of previous themes, and categories that didn't even exist when Finovate began in 2007. FinovateSpring 2012 highlighted firms presenting payments and rewards platforms, new mobile solutions and the beginning of social media integration. In addition, solutions emerged in response to new government compliance needs as well as in response to the reduction of fee income.

It is amazing how much change can occur with innovation themes in six short months. Possibly because of rapid changes in the acceptance of mobile devices and related apps, the increased concern around authentication and security, the beginning of marketing's emergence from the financial crisis of 4-5 years prior, and the slow acceptance of certain innovations by the public and financial institutions, the word cloud of FinovateFall 2012 themes looks nothing like the themes of the Spring.

Not only have the themes continued to change, the subcategorization also illustrates the micro segmentation of new solutions.

My First Finovate: FinovateSpring 2013

FinovateSpring 2013 was the first Finovate that I attended in person (previously, I live vicariously through others by following the live blogging and twitter mentions). As has become the norm, the event was again sold out, and you could feel the energy upon entering the venue (see my recap 'Musings of a Finovate Virgin). It also had the feeling of a class reunion since, while presenters may come and go, those who attend the event try to make it every year.

As was true with the themes in 2012, the changes in key categories seemed to evolve based on consumer demand (security services, small business), new tools and visualizations (wealth management, investing and mobile applications), new segments (underbanked) and even some advanced applications (P2P lending and B2B payments). 

Most interestingly was the emergence of so many crowdfunding solutions compared to previous shows and the disappearance of PFM in the traditional sense. As could be expected, the categories of mobile, payments and security/authentication solutions remained strong.

FinovateFall 2013: Fintech Innovation is Alive and Well

With FinovateFall 2013 a week away, there is no doubt that innovation in financial services continues unabated. Finovate will have another sell out crowd in Manhattan on September 10-11, and there will be another exciting roster of 60+ companies ready to demo their solutions.

While some may have a strong business case and a pent up demand for their solution, others may be trying to 'make a market' for their innovation. Some are hoping that their demo will spur new funding for their innovation, while others are extending a product category by an established vendor.

As in the past, there will be more than 1,000 registrants who will cast their ballots for their favorite presentation, naming them 'Best of Show'. Some of the votes will be cast based on presentation style. Others will be cast based on the 'cool factor' (which doesn't always reflect a desire or need to buy). Still others will cast their ballot based on which solutions they believe have a valid chance in the marketplace.

The networking will be one of the primary side benefits with end of day cocktails and even the introduction of the Bank Innovators Council on the Monday evening before the FinovateFall 2013 kickoff.

No matter the outcome of the voting, the diversity of innovation is broad and the excitement in the industry is strong. Innovation is a differentiator in an industry that often feels 'me too'. It is a way to potentially grow market share, retain current customers, cut costs and/or increase revenue. 

Innovation is risky but necessary. It is exciting yet frustrating. It is not for the faint of heart, yet it builds corporate character. Fintech innovation is, by definition, the future. And based on the themes for FinovateFall 2013, innovation is as different from six months ago as it will be six months from now . . . and yet many of the themes sound familiar.

While mobile, security, small business, lending and payments remain strong themes, the underbanked category all but disappears. In addition, we see the somewhat surprising reemergence of PFM and loyalty/rewards (maybe there really is something new in these spaces) at the same time that mobile wallets and customer experience get zero love.

As Bradley Leimer stated upon returning from his first Finovate . . . It is the 'The Disneyland of Fintech'™. For those attending or joining the event through social media, Finovate is definitely an 'E-Ticket' ride to the future.

Additional Resources

Finovate 'Best of Show' Winners 2007 - 2011

FinovateSpring 2012 'Best of Show' Winners

FinovateSpring 2012 Twitter Transcript

FinovateFall 2012 'Best of Show' Winners

FinovateFall 2012 Twitter Transcript

FinovateEurope 2012 Presentations (35 presenters)

FinovateAsia 2012 Presentations (35 presenters)

FinovateEurope 2013 Presentations (64 presenters)

FinovateSpring 2013 'Best of Show' Winners

FinovateSpring 2013 as Seen Through Twitter

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It's Time to Reinvent Mobile Banking

MOBILE STRATEGIES

It's time to shut down the mobile banking operations at most banks. I say this after watching the development of mobile banking sites worldwide and realizing that most traditional banks don't understand the needs of the consumers they serve or the competition they face.

Mobile banking should not be a delivery channel for branch-based banking. It should be a contextual experience, with a clean design, simple interface and engaging platform to manage money. Unfortunately, most mobile banking sites look like miniaturized online banking websites. This is a problem as we try to serve Customer 3.0.

Last week, AXA Banque in France launched a new 'mobile-first' offering called Soon (website translated to English). Similar to other pure-play mobile banks worldwide like Moven, Simple, GoBank, Fidor, Hello, etc., Soon was initially introduced using a registration/invite model to allow for orderly scalability. Not a bank as such, Soon is a set of services accessible via a mobile application and backed by AXA Bank.

In an exclusive interview with Raphaël Krivine, head of direct banking for AXA Banque, "We started to engage with users in mid-2013, presenting the concept of the offer and the main functionalities to get feedback and comments (especially via our introduction video). It was very useful for us to validate the overall concept and to finalize developments in the right direction." He continued, "The offer is now available for the people who registered last year as a way to thank them for having been supportive from the very beginning.

Unlike virtually all traditional mobile banking sites, Soon (and the neo-banks mentioned above) rethinks the way mobile banking is done by designing a bank for the smartphone as opposed to simply providing access to banking products through a mobile device. This was done at AXA by creating an entirely different brand and mobile platform within the bank. This allowed for an alternative digital infrastructure, a lean start-up mode, open architecture and the ability to view banking from the customer's (as opposed to the bank's) perspective.

With a significantly lower cost structure, the emergence of pure-play mobile banks feels like a similar trend in the 1990s when direct online banks were in vogue. Some of these banks still exist such as First Direct and ING overseas and Capital One 360 (originally ING Direct US), USAA, Ally and Discover Bank in the U.S.

While many traditional banks have imitated some of the direct bank advantages, deposits at the top four direct banks have grown at three times the industry average according to TNS Global. Interestingly, while once having a pricing advantage compared to traditional banks, consumers also rate these direct organizations as 'more convenient' than traditional bricks and mortar banks.

The question is, will traditional banks ever fully embrace the process of managing money through mobile as opposed to simply providing mobile access to accounts? Will they lose the 'convenience advantage' with the mobile channel also?

The Soon Difference

As with other pure-play mobile banks, Soon provides an entirely different user experience than traditional mobile banking. You can see it immediately in the simplicity of the design, the ease of interaction and the approach of the application. In fact, you can see it on the mobile banking sign-in page where the interaction is personalized (can even be seen in the French version).

"Soon has got the same mindset as Moven, GoBank or Simple because it aims to totally change the way to do banking, with a strong focus on UX," said Krivine in our interview. "Unlike some of the new mobile banks in the U.S., however, Soon is launched by an existing bank, with the strength of existing business processes and potential access to our wide range of products (i.e loans, mortgage)."

Comparison between sign-in page of Soon and Wells Fargo

Opening an account is as simple as snapping a picture. No more long forms or extended account opening process. With Soon, a new customer simply takes a picture of their identification, proof of residence (a bill sent to their home) and a evidentiary signature and the account is opened. Opening of associated savings account and a credit card is just as easy.

Once an account is opened, the experience leverages many of the unique benefits of a pure-play mobile application. If the customer wants to save for a project or future expenditure, Soon uses a 'nudge' behavioral science approach, which encourages a customer to behave responsibly with encouragement provided along the way. Not only does the application help a customer save, but it looks at future planned expenses and upcoming revenue to determine if a current purchase should be made.

The dynamic vision of providing a projection of purchasing power in real time is similar to the GoBank 'fortune teller' and Simple's Safe-to-Spend features and very unlike a traditional mobile banking application that simply shows balances based on cleared items. An analogy would be the difference between looking out a front window to the future as opposed to the rearview mirror.

As opposed to simply a current balance, Soon provides a Safe-to-Spend value

Each transaction or project can be associated with a document or an image for better record-keeping and security. The simplicity of using the photo capability on a mobile phone adds to the convenience. Moreover, each purchase can also be associated with a comment, geolocation or even a 'mood' (smiley face or frown). Unlike many mobile banking applications, the Soon mobile app allows a customer to find previous expenses using natural language search.

Transactions can be associated with pictures, comments and even emotions

Similar to Bluebird from American Express, Soon provides its customers with both a checkbook and Visa card (debit) with an NFC functionality. P2P transfers between individuals can be done via PayPal automatically within the application for ease of payment (a partnership avoided by almost all U.S. banks).

P2P is made easy with the PayPal integration

Customer support is one area I believe Soon falls a bit short from a mobile app perspective. Soon will provide support via advisors 24/6 by chat and 24/7 by email, but will not support calls or live chat (like Amazon's Mayday).

Mobile-First Target Audience

As with most pure-play mobile banks, Soon is targeting smartphone users, (which is to say nearly everybody as the smartphone market continues to expand rapidly). There may be a challenge for Soon, however, since recent research suggests that the French seem to still be attached to the proximity of their physical bank, even if the general craze for online and mobile seems to increase.

The benefit of being a division of AXA is clear in the Soon offer. "We expect our first customers to be among the digital natives, because they are used to do anything with their smartphone, including banking," stated Krivine. "Nevertheless, we know that especially for the young people, it is very important to receive advice and support (for instance for loans), so Soon customers will benefit from the expertise of AXA branches (our core business model relies on insurance tied agents that choose to diversify their business with banking in order to develop customer loyalty). This is a fall-back option, but customers will have an option to go to a branch (using Soon apps that will integrate geolocalisation to find an agent)."

Soon - English subtitles from Soon on Vimeo.

The Reinvention of Mobile Banking

Customer's behaviors are changing as they become more comfortable with the web and mobile devices. They are looking for simplicity, availability, real-time insight, contextual engagement and the ability to leverage social networks and enjoy gamification. They expect far greater transparency with the type of personalization they receive as they interact with other industries.

Smartphones provide the technology and contextualization never before available. These devices open the door to a completely new way to manage money on the go. Instead of providing mobile access to an array of branch-based banking services, there is the potential to provide advice and real-time financial insight.

Soon is not the first, but it is the latest in a string of mobile banking offerings where the design, functionality and customer experience is central to the offering. The question is whether traditional banks globally will embrace the potential of the mobile device to deliver much more than just balances and a narrow span of capabilities.

Best selling author, speaker and founder of Moven, Brett King wonders if traditional banks can meet this challenge. "US Banks are avoiding the digital trend worryingly. We have the BIG banks who are too big and too fragmented to come up with a pure-play digital brand that might cannibalize their main brands. We have regional players who are too traditional in their approach. And we have smaller players who might be too small to think they can do this." "The U.S. right now is really slipping behind the Asia Pacific region and much of the rest of the world in terms of industry-wide innovation."

With regard to the introduction of another mobile-first offering, King adds, "It is great to see that organizations like AXA are embracing digital engagement of customers. I think Soon is another great example of why simple, easy to use user experience is still a strong differentiator in retail banking today. While some might think that Soon.fr is a competitor to Moven, the reality is that we are part of an exclusive new club of disruptors creating an entirely new category of banking experience. We stick together, because it is the other banks who still insist on account opening in a branch, or think that mobile is about putting internet banking on a smaller screen who are the guys we're trying to unseat."

Marketing Opportunity

Marketing needs a seat at the mobile banking design table. You need to have input as to whether your organization is going to continue to deliver mobile banking as an access tool or a money management tool. 

In the meantime, it is marketing's responsibility to promote mobile banking sign-up and usage whenever (and wherever) possible. Mobile banking customers are more engaged, own more services and are more loyal than customers without mobile banking.

Additional Resources

Direct Banks and the Future of Consumer Banking - TNS Global (Apr. 2013)

Banking in a Digital World - AT Kearney (Aug 2013)