Mintel Comperemedia Looks at Financial Service Mega-Trends

In a Mintel Comperemedia presentation recently, Economic Psychologist, Susan Menke, PhD. presented the trends that are expected to have the greatest impact on consumer financial behavior and the banking industry during 2010. Based on tracking of direct marketing programs during the last half of 2009, the following predictions were made:

• The end of Free Checking: Banks such as Fifth Third and BBVA have already eliminated the account while Free Checking leader TCF announced the end of their Free Checking program at their investor meeting this week.
• Explosion of reward banking: The decline in Free Checking will most likely result in an increase in checking programs with rewards, especially in light of the increased importance of direct deposit, online bill payment and debit card interchange.
• Account builder program introductions: Following the trend started by 'Keep the Change', 'Way2Save' and PNC's 'Virtual Wallet', automatic transfers from checking to savings and the linking of credit lines to checking will be two ways to expand relationships beyond a single service.
• More aggressive debit card marketing: The importance of interchange income to the financial viability of many relationships will lead to many more debit card activation and utilization promotions in 2010.
• Cash will continue to be king of offers: The offering of cash incentives for opening new accounts ramped up in the latter part of 2009 after a short hiatus. Chase continues to offer different bounties ranging from $100 to $200 and more with many other large banks following.
• Increased popularity of prepaid cards: While larger banks have not yet focused on prepaid cards, changes brought on by Reg E may change the way banks serve the underserved and unbanked segments.
• Expansion of mobile banking: There are still several large banks that have only rudimentary mobile banking initiatives while others such as Bank of America, Wells, USAA and Chase have created innovative iPhone Apps. The financial incentive to move more expensive transactions to the mobile channel and the rapidly increasing acceptance of smart phones is expected to fuel rapid growth of this channel.
• Proliferation of financial literacy programs: Customer experience research for years has indicated the importance of being more transparent, building trust and educating customers on how to make informed financial decisions. Mintel believes that 2010 will be a watershed year for banks to use customer advocacy as a competitive differentiator.
• Increased use of social media sites: The popularity and growth of social networking sites has made it impossible for financial institutions to sit on the sidelines. One firm is offering a service where customers can receive alerts through social networking sites rather than email while many banks are using these sites for enhancing or reinforcing their brand. Twitter is also used to broadcast changes in rates and to introduce new products.

Unlike 2009, where most banks significantly scaled back marketing efforts and were on the defensive, proactivity seems to be the norm in 2010. Product innovation, changes in pricing models, utilization of new channels and an increased emphasis on the customer experience will definitely put the spotlight on marketing.

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.

The Impact of the iPhone 5 on Bank Marketing

So, the anticipation is over and the newest version of the iPhone has been introduced. When all was said and done, there were few surprises left as to what the iPhone 5 would offer, and for those of us who were crossing our fingers for the possibility of NFC integration (and further payments disruption), there may have even been a bit of disappointment.

And while additional enhancements to the Passbook app provides a glimpse into the potential for a head on competition with Google Wallet for payments supremacy in the future, the shop-with-your-phone coupon capability is not applicable to most bank marketers. What should be of more importance to bank marketers is the additional marketing real estate provided with the new phone and the growth in sales that may be on the horizon.

Bank marketers should see promise with the iPhone 5's larger, 4-inch screen with Retina display which provides 18% more pixels for delivering enhanced mobile ads, banners, landing pages and interactive campaigns. While the extra pixels may not seem like much, it moves the iPhone experience closer to that of the iPad, which has already proven itself to be a major tool for consumer consumption. And for those who are still tablet-less, it is possible that this new device will a bridge for engaged behavior.



According to Rachel Pasqua, vice president of mobile at digital agency iCrossing, "the enlarged iPhone is enough to make mobile creative a little more eye catching and get more users more deeply engaged." She mentioned that there will also be less potential for mis-clicks leading to better potential interaction. The potential for greater speed through the LTE and the new iOS6 also will help.

Charles Golvin from Forrester Research noted in a recent post that while other competitors already offer a larger canvas in some cases, "Apple still outpaces the competition when it comes to the entire package -- the new iPhone unites significant improvements in industrial design, imaging, audio and connectivity, along with the wealth of new capabilities that iOS6 enables."

The key for bank marketers is that iPhone 5 users, and smartphone users overall, will be spending more time with content on their phone. It is therefore important to provide the level of content that optimizes both the customer experience and marketing potential of the new devices. Consumers are no longer content with static web pages and difficult to use links and landing pages. Content (web pages, banners, ads, landing pages, etc.) will need to be easier to interact with and be more dynamic. 

There is no way of knowing how popular the new iPhone 5 will be in the marketplace, but if the past is any indication of the future, not only will many current iPhone users upgrade to the new model, but the overall iPhone penetration will increase as well. As shown below, nearly 2 in 5 of the 38.2 million Americans using iPhones are on the iPhone 4, which was released just 2 years ago. More impressive than that is the fact that 35% of iPhone users today are on the iPhone 4S, which was introduced less than 12 months ago.

Just as with the tablet, bank marketers should realize that simply 'super sizing' a current app or website is no longer enough from the customer's perspective. It is important to leverage the tools and advancements that are available with the newest generation of phones. 

And even though our industry does not have products that are as visually appealing as in retail and other industries, the challenge to differentiate our offerings may be greater, but the opportunity is still significant.