Consumers Are Increasingly Using Multiple Devices to Support Banking Needs

Traditional bricks and mortar facilities are being visited less as the use and importance of online and mobile devices continues to increase according to Intuit Financial Services' 4th Annual Financial Management Survey released yesterday. According to the survey, while a large percentage of consumers still manage their finances offline (45%), the percentage of consumers using online services from their financial institution has continued to increase annually; increasing 11% since 2009 to 38% in 2011.

The main reason consumers said that they don't visit their bank branch as often as they used to is because they are visiting their FI's website and use their online banking tools (76%). These online banking tools are so important that one-third (33%) said they would switch their relationship to another institution if there were better online tools offered elsewhere.

Source: Intuit Financial Services' 4th Annual Financial Management Survey

The importance of online tools was reinforced by Brett King, author of the bestseller Bank 2.0 and founder of direct mobile banking start-up Movenbank at this year's BAI Retail Delivery Conference in Chicago. "Banking is quickly changing from a place you go to something you do everyday," stated King. He provided a chart from the American Bankers Association and Nielsen Research that illustrated the channel migration occurring today and projected in the future.

Source: ABA, Nielsen Research

It appears that the growth of mobile banking is only limited by the growth of ownership of a smartphone according to the Intuit study. Forty-one percent of all respondents indicated ownership of a smartphone, 23% said they used a mobile banking solution, and an additional 17% intend to try mobile banking in 2012. The primary reason consumers indicated that they do not use mobile banking was because they do not own a smartphone (25%) followed by the fact that they prefer to bank online (22%).

Source: Intuit Financial Services' 4th Annual Financial Management Survey

These findings are similar to the findings last week from comScore that drew a correlation between mobile banking and smartphone adoption. "The investments in mobile made by financial service institutions, along with the continued growth in smartphone adoption, have had a positive effect on the use of mobile financial services," states Sarah Lenart comScore vice president for marketing solutions.

As expected, the adoption rate of mobile banking is demographically skewed. Young adults (aged 18-32) are three times more likely to carry their bank in their pocket, compared to Gen X, baby boomers or seniors. And while 65% of mobile banking users access their accounts through the internet/Web, 28% use a mobile application. "Regardless of age, each customer expects to connect to their financial institution in their own way," said CeCe Morken, president and general manager of Intuit Financial Services.

In another Intuit study of more than 50,000 mobile banking customers, it was found that consumers tend to interact with their financial institution 45% more often if they use a combination of both mobile and online tools. These customer also tended to have larger relationships and a better retention rate.

"While we anticipate that there will be some mobile-only consumers, most people will be using multiple devices on any given day in the future," said Intuit spokesperson Tobin Lee in a conversation yesterday. "Financial institutions must be prepared to deliver financial information and insights across multiple devices (PC, phone, tablet), optimized to the merits of each device it they are going to meet customer's needs. If they don't, someone else will . . . probably displacing a bank's relationship."

The desire for 'anywhere app access' is also supported by a just released study from Oracle entitled, Opportunity Calling: The Future of Mobile Communications - Part Two which found that while there was a stronger preference to use a tablet for mobile banking (34%) compared to a mobile phone (11%), the majority of consumers (55%) would prefer to use both devices. This is important to prepare for since the same study found that almost 30% of the U.S. mobile customers that do not already have a tablet device plan to purchase one in the next 12 months. These findings were also reinforced in last April's, Intuit 2020 Report: The Future of Financial Services.

As customers continue to use multiple channels to connect with their bank, it will be increasingly important to have a 360-degree view of customer device touch points and to leverage the advantages of each device to provide an optimum customer experience. The current anxiety over online and mobile security needs to be addressed at the same time as innovations such as near field communication (NFC) and location based services get integrated into online and mobile solutions. Bankers will need to get ahead of the payments innovation curve and prepare for major distribution channel disruption. In short, banks will need to do a paradigm shift by becoming nimble at a time of increased regulation and consumer scrutiny.

Are today's banks prepared for the massive changes ahead? Or will new online organizations such as Ally, BankSimple, Movenbank and others steal the hearts and wallets of Gen Y and device savvy consumers?

I would love to hear from you.

Banks Must Develop Apps for Tablet Banking

According to Javelin Strategy and Research's just released third annual report, '2011 Mobile Banking Financial Institution Scorecard - Money Begins to Move on Mobile', tablets are the next wave of technology that will have a major impact on mobile banking. Similar to the smartphone, consumer adoption of the tablet is increasing rapidly and financial institutions will need to quickly accommodate this platform with a user experience that is unique and different from any other platform.

"The tablet is going to be a game changer.", according to Mary Monahan, executive vice president and research director at Javelin who oversaw the development of the new research. "Eight percent are already on a tablet, which is a huge amount when you consider how long the tablet has been out. . . . We think, with the mobile tablet, we will see much more mobile banking. " Link to Bank Info Security interview with Mary Monahan, Tablet: A 'Game Changer for Mobile Banking.

Of the top 25 banks reviewed in the study, 23 offered at least one form of mobile banking services (92%) compared to only 63% in June of last year and 48% in July 2009. In addition, 65% of the banks offered 'triple play' support (SMS text banking, mobile browser and downloadable apps). This was the first time more than half of the top banks supported all types of mobile phones for consumers to access their accounts whenever, wherever and however they wanted.

Financial Institution Mobile Banking Offerings, Javelin Research 2011

Compared to the growth in development of mobile banking applications, the support of downloadable apps for tablets is much slower. According to Javelin, only 30% (7) of the FIs surveyed provided a downloadable tablet app for the iPad, with Bank of America having a 60% market share. No bank currently offers a downloadable app for the Android or any other type of tablet. "FIs need to step up and provide mobile banking services specifically designed for tablets, because that’s where mobile banking is heading.”, said Monahan in an interview. 

The experience definitely needs to be enhanced on the tablet since the consumer will spend more dedicated time on the device at a sitting and expects the interactive capabilities of the device to be fully utilized. Being something of a cross between a computer and a smartphone, tablets benefit greatly from applications being written specifically for them so users can easily move through touchscreen menus. "It's an entirely new kind of device, and needs a new type of user experience to go with it," says Carl Tskahara, vice president of Clairmail. "It can't be smartphone banking, only bigger. And it can't be a shrunken version of online banking.".

One of the main differences between tablets and smartphones when it comes to banking is the time users have (and spend) with the device. Tablet banking is usually done at home where there are fewer user distractions and where a richer visual experience is expected. While banks develop native apps for the tablet, they also will need to make the transition between devices seamless. Citibank, for instance, just relaunched their homepage and online banking application, making the PC experience similar to an iPad application (see video here)

From a perspective of growth potential, 8% of mobile consumers own a tablet (it has only been 18 months since the iPad was released in April 2010). Since the introduction of the iPad, many new tablets have entered the marketplace including Android-based and Windows supported tablets that compete directly with the iPad as well as more moderately priced options such as the Nook Tablet (Wi-Fi and 3G) and soon to be released Kindle Fire (Wi-Fi). These developments are important to watch since Javelin indicates that 51% of current tablet owners have conducted banking on their tablet in the past year, with 34% doing so in the past 7 days.

Brand new research from eMarketer indicates that one in three online consumers will be using a tablet by 2014, representing 90 millions users or 35.6% of all internet users. In addition, the research indicates that iPad growth will continue. And while the share of market will decrease (to 68%), the number of users will double by 2014. Finally, the research indicates that the disparity between male and female users will decrease and that the average age of a tablet user will decrease (due to lower costs).

This holiday season could mark the tipping point for tablet ownership, with Retrevo Research indicating that as many as 69% of consumers are considering the purchase of a tablet. Potentially more interesting, the research finds that 44% would consider buying the smaller Kindle Fire, while 12% say they would not consider anything other than an iPad. This could threaten the tablet ownership dominance enjoyed by Apple and could indicate that tablet ownership is reaching the mass market consumer. 

It was also found that the presence of dual tablet families is increasing, with 20% of current iPad owners indicating they would buy another iPad and 27% saying they may buy a Kindle Fire. The question remains if owners of either the Kindle Fire or Nook will conduct banking on their devices or whether they view them as only e-readers, browsers or game units or if the less expensive units will be for children. 

The demographics of the Fire owner are likely to be different from those of the Apple iPad or other Android tablets, says Monahan. For instance, the age of e-reader owners skews older than that of the more robust tablets, with about 14% being 65 and older compared to 10% who are between 18 and 24 years old. "One of the problems banks will have with this group is that many in the older demographic are content with doing paper banking and are not even online." Monahan says. But as the capabilities and quality of experience of the higher end e-readers continues to increase, the potential to convert this base to mobile/tablet banking increases. 

Intuit Financial Services research found that consumers tend to interact with their financial institution 45% more often if they use a combination of both mobile and online tools. These customer also tended to have larger relationships and a better retention rate. "While we anticipate that there will be some mobile-only consumers, most people will be using multiple devices on any given day in the future," said Intuit spokesperson Tobin Lee in a recent interview. "Financial institutions must be prepared to deliver financial information and insights across multiple devices (PC, phone, tablet), optimized to the merits of each device it they are going to meet customer's needs. If they don't, someone else will . . . probably displacing a bank's relationship."

The desire for 'anywhere app access' was also discussed in one of my previous blogs and just released study from Oracle entitled, Opportunity Calling: The Future of Mobile Communications - Part Two which found that while there was a stronger preference to use a tablet for mobile banking (34%) compared to a mobile phone (11%), the majority of consumers (55%) would prefer to use both devices. This same study found that almost 30% of the U.S. mobile customers that do not already have a tablet device plan to purchase one in the next 12 months.

Obviously, providing a point-and-click online banking experience on a PC is no longer enough. Natural user interfaces need to be developed for newer devices with unique capabilities. Just like the rapid development of apps for phones has occurred over the past two years, banks need to move quickly as consumers seek out slicker and more transformational options on their tablets. While porting an online banking experience on to a tablet may work in the short-run, we need to adjust to a consumer base that lives with touch-based interfaces.

Is your organization building unique user interfaces for tablet banking? Is anyone building a new app for Android supported devices? Is there a market for a tablet banking application for use on the Kindle or Nook?

I would love to hear from you.

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.

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.

From Passbook to Mobile: The Evolution Of The Bank Account

"Some might argue that nothing replaces a face-to-face relationship. That assumes that a digital, mobile experience is inferior to face-to-face. And while that may have been true in the past, that's not going to be the case in the future. Welcome to the total disruption of retail banking".

By Brett King, Bestselling author of Bank 3.0 and founder and CEO of Movenbank.

In 2009, I was visiting the head of retail for a major retail banking brand headquartered in Asia, and with a growing presence in the Middle East. This was 2 years after Apple's phenomenal launch of the iPhone, and by this time the iTunes store already had close to 100,000 apps and had surpassed a billion downloads. 

People were clamoring to get the iPhone, with unlocked 'grey market' phones available everywhere you looked in Hong Kong, Dubai, Shanghai and Singapore, because to that point, Apple had not launched the iPhone anywhere outside of countries like the U.S. But sitting in this executive's office, you'd never realize it.

I spoke about the impact that mobile and social media was having on consumer behavior, and how dominant apps would become in respect to the way consumers would do their banking over the next 3-5 years. I discussed the breakout success of Bank of America, the first bank in the US to launch mobile banking, with millions already using the bank's app daily to access their bank (and with 10,000 mobile users currently being added each day). 

This executive didn't buy my message. They insisted that nothing they were seeing was showing a shift in behavior. If anything, they believed the branch was getting stronger and the Gen-Y segment was just like any other demographic.

Within 3 years, this bank would be in serious trouble with their mobile positioning. Well behind the competition on the mobile and social front, shrinking acquisition statistics and lagging cross-sell results on the retail side would all be early warning signals that this bank was not only out of touch, but that their entire historical business model was under threat.

This was not an isolated experience. In 2009, just 3% of all banks in the US had mobile banking propositions. And, while the number of banks with mobile has increased to 80% of the 100 banks today, as an industry in flux we just can’t afford to wait 5-6 years before technologies like mobile are widely adopted. 

Today, we see tablet computing growing at 3 times the rate the iPhone grew in its first 3 years. Through the success of phones like the Samsung Galaxy III and others, Android smartphones are now growing at 6 times the rate the iPhone did during it’s early dominance of the industry. 

The problem facing the banking industry is that this technology shift is really only just getting started. What comes next is going to change the way we do banking forever. How can I make that claim?

Prior to the launch of the iPhone we’d never even heard of apps, and yet today, just four and a half years later, here are a few of the phenomenal stats in relation to mobile computing platforms like the iPhone, iPad and Android phones:

• 1,000,000 Apps for Apple and close to 700,000 for Android[1]
• Approaching 50 billion downloads for Apple, and already 25 billion for Google Play (previously known as the Android Marketplace)
• Daily downloads 48.6 million per day - Apple

In the past, it might take years for new technologies like the first PCs, Mobile Phones (Feature Phones) or even Internet adoption to become mass market and to have an impact on the way we do business. Today, new technologies such as the iPad and new interaction platforms like Facebook and Instagram are being adopted by consumers en masse in a period measuring just months.

To illustrate that this change is speeding up, here’s a great stat from Apple. In 2011 alone, Apple sold more iOS devices than all the Macs it had ever sold in the 28 years prior.

“This 55m [iPads sold to-date] is something no one would have guessed. Including us. To put it in context, it took us 22 years to sell 55 million Macs. It took us about 5 years to sell 22 million iPods, and it took us about 3 years to sell that many iPhones. And so, this thing is, as you said, it’s on a trajectory that’s off the charts…”  -Tim Cook, Apple CEO during February 2012 reporting call

In Q1 of 2012, Apple then went on to sell more iPhone 4S devices than in the entire preceding 12 months. Samsung has recently done even better with the Galaxy SIII smartphone.

The reality is that over the next 3-5 years, mobile will not only continue to dominate changes in retail positioning and consumer behavior, but will become increasingly accessible to all parts of the economy. 

By the end of 2014, smartphone adoption is expected to reach 80% of the population in markets like the US, UK, Australia, Singapore, Hong Kong, UAE, and other developed economies. But this is not limited to developed economies and the mass affluent or middle and upper-class.

By 2016, low-end smartphones will cost less than $20, and Gilder’s Law dictates that basic Internet access will come bundled in your monthly plan at no additional cost. Today, Internet access via mobile devices has already surpassed wired internet access[2]. Put these trends together, and by the end of the decade, 80-90% of the world’s population will have access to the Internet via a smartphone.

This adoption of mobile will fundamentally change how retail banking and payments work in our economy going forward.

For 60% of the world’s population that today does not have a bank account, their mobile phone will likely be their very first banking experience. In markets like Kenya and the Philippines, the majority of the population has had their first electronic payments experience via their phone, and their first deposit account was simply a balance carried on their phone. 

The fastest growing use cases for mobile in emerging markets like these have been payments and remittances. In markets like Kenya, this has changed the day-to-day flow of cash in the economy. The same will soon be true for India, China, Indonesia and other such emerging markets.

By 2020, the world’s bank account will be indistinguishable from the functionality you find on your mobile phone. Your mobile device will allow you access to your money (in the form of an available balance), send and receive money, pay at a store, pay online and to exist fluidly in the world of commerce. 

In the past, we have tended to characterize our bank account by its physical form factor. Initially, a passbook was our ‘bank account’. Then in the 80s, the checking account was the primary form of banking relationship. Today, our debit card (attached to an online account number) is how most of us do our day-to-day banking. Very soon, however, banking will be dominated by the mobile phone.

2013 will be a big year for mobile payments. Many of the mobile wallet projects currently in development will hit the market. The first mobile-only banks, such as Movenbank, will go live with products and interactions designed for an enhanced customer experience around the mobile device. ISYS will launch, and other players like Google Wallet, PayPal and Square will duke it out for merchant dominance in mobile payments space. 

NFC deployment will start to be highly visible, and more banks will announce PayPass and v.Me (Visa) deployments to capitalize on this emerging mobile trend. When we look back on 2013, we’ll recognize it as the year the biggest players realized that mobile was the game changer it was projected to be.

By 2015-16, mobile banking use will dominate day-to-day banking interactions in most developed economies, being the preferred channel for the majority of customers. This is unlikely to have a significant impact on Internet banking utilization, however, since tablet computing will still be widely used for managing day-to-day portfolios, bill payments and transfers. In fact, comfort levels with digital interactions will rise such that consumers will manage most of their banking relationships entirely through digital devices, with more than 60% of retail banking revenue coming through non-human channels. 

This mobilization of banking will put extraordinary pressure on branch systems. Initially, many banks will move to reduce their branch network by up to 20-30%, retooling and retasking remaining branches to focus purely on sales and service as transactional activity moves digitally. Branches that remain will either be brand flagship and showcase stores, or smaller footprint stores designed to support sales and service metrics without the large network expense. 

Financial analysts watching bank stocks will start to discount retail banking brands who aren’t aggressively dealing with excess capacity in the branch network. For the first time, we’ll see stock markets penalize banks for having branches.

Mobile has been consistently underestimated in terms of its impact on retail banking since the emergence of the “app” phone. The lack of enthusiasm and adaptation by major banking players, and the over reliance on traditional physical distribution, is opening up many doors for new non-bank players to own emerging banking and payments experiences on the mobile device. 

With the certainty that mobile will dominate the future of banking, it’s clear that banking won’t look much like it looks today in a decade’s time. It’s also clear that bankers like the one I mentioned at the start of the post, may very well be casualties of this disruptive change.

About the Author

Brett King is the bestselling author of 'Bank 3.0: Why Banking Is No Longer Somewhere You Go, But Something You Do' and the founder and CEO of New York-based Movenbank, the world's first direct mobile-only retail bank. King was voted American Banker's BTN Innovator of the Year for 2012 and is a strategic advisor on the future of financial services to clients like HSBC, Citigroup, Commercial Bank, UBS and Emirates NBD.

Additional Resources

Smartphone-Based Bank Helps Customers Make Better Use Of Their Money: Springwise (January, 2013)

Two Big Predictions: Banking 4 Tomorrow (January 2013)

The Future Of Banking Is All About Context: American Banker (January 14, 2013)

Bank of America Is Adding 10,000 Mew Mobile Users Each Day: Bank Innovation (January 2013)


References

[1]Sources: http://148apps.biz/app-store-metrics/, http://www.androidtapp.com/android-apps-statistics-summary-for-2010/, http://techcrunch.com/2012/05/07/google-play-about-to-pass-15-billion-downloads-pssht-it-did-that-weeks-ago/, http://venturebeat.com/2011/01/26/mobile-app-revenue-2011/and http://bits.blogs.nytimes.com/2012/06/11/apples-stash-of-credit-card-numbers-is-its-secret-weapon/

[2] Source: Mary Meeker 2012 Report

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