Online Customers Aren't the Only Target for Mobile Banking Services

While attending the 2009 Mobile Financial Services Congress in Miami a little over a month ago, there was a consistent message from almost all of the speakers that a mobile banking customer is less likely to attrite, more likely to use additional engagement services such as bill pay, and less costly to serve.

Interstingly, it was also emphasized that while most banks have promoted the use of mobile banking to their current online banking customers, the real financial benefit is realized when a customer who is not as heavy a user of online banking is converted to the mobile channel. In other words, it makes stronger financial sense to try to segment offline customers and implement a proactive channel migration strategy to convert channel usage.


Some of the presenters at the Mobile Financial Services Congress suggested that offline customers who are quickly purchasing the newest wave of smart phones may actually bypass the online channel in favor of mobile banking services.

M-Com and Fiserv presented the findings from recent research that reinforced this trend. Nearly two-thirds of those surveyed reported contacting their financial institution once a week or more through traditional bank channels. Nearly half of survey respondents use their bank's call center or interactive voice response to help manage their finances. These are among the costliest channels for the bank to support, with each call center transaction costing an average of $3.75 and each automated voice response system transactions costing an average of $1.25. Conversion of even a small percentage of these transactions to the mobile channel would bring high returns. The study also found that the offline customer not only is aware of mobile banking (70%), but also have an interest in these services (60%). The primary area of interest is in checking balances (46%), contacting customer service (37%) or locating a nearby ATM or branch (30%).

It is clear there is a tremendous untapped opportunity for converting offline customers to the mobile channel with enhanced targeting, expanded enrollment opportunities (channels other than online) and improved communication of benefits of this channel. The banks that are the most aggressive in reaching out to these households will reap the greatest rewards

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.

Mobile Banking Popular Among Smart Phone Users

According to the "Mobile Money Study" published last month by Data Innovation Network almost 70% of US smartphone users had used at least one mobile banking and/or payment service on their phone in the previous three months.

As has been found in previous studies and reinforced by Doug Brown from Bank of America at last year's BAI Retail Delivery Conference in Boston, the Mobile Money Study found that checking account balances was the most popular banking application (82%) followed by looking for posted transactions (62%). Account alert features were also popular (46%), with roughly 40% of those surveyed transferring money between accounts.


Interestingly, an overwhelming majority of smartphone users accessed mobile banking using their mobile browser (66%) as opposed to a mobile app (20%), with a large number of respondents interested in a mobile wallet concept where they could swipe their phone like a credit or debit card. This possibility was also found to be popular with a Gen Y panel when I attended last year's BAI Transpay Conference in San Diego.

As the penetration of smartphones continues to increase, consumers will become more and more comfortable with and demanding of mobile banking services. I expect the availability and ease of use of mobile banking to become a significant competitive differentiator in the coming 12-18 months for financial institutions.

Why People Leave Their Bank

According to seventh annual household banking survey of 5,000 households conducted by Javelin Strategy and Research, it appears that fees and customer service continue to be the primary reasons a person leaves their bank (in addition to moving). What may be surprising to some, however, is that many millennial (ages 18-24) leave their bank due to the lack of ATMs while there is a growing percentage of households moving to a new bank to get mobile banking services. In fact, according to the study, 'ATM availability' edged out 'online features' as a factor that can predict customer attrition.


According to the study, there is one factor that does not predict whether a customer will leave a bank . . . errors by the financial institution did not move the needle as a reason why a customer attrites. This may be because banks have gotten much better over the years on not making as many errors in the first place and quickly addressing errors made as part of their focus on the customer experience.

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.

Banking on Social Sites Unlikely

According to a new research report by Forrester, Banking On Social Sites Is A Work In Progress, while social networking sites have a 30-day active population of more than 400 million users of which more than half visit on any given day, that love doesn't extend to banking through social networks. In fact, more than 70% of online households surveyed showed little or no interest in accessing their accounts through social sites like Facebook. Not surprisingly, the reasons for the lack of interest revolves around privacy and security concerns more than anything else.

So, while the majority of large financial institutions continue to look for more ways to leverage social networking's ability to engage customers, resolve problems and ultimately build loyalty, the reach of these sites beyond stronger interactive communication remains to be seen. At the very least, consumers will need the stronger security guarantees, authentication and more that is already afforded customer who use online and mobile banking.

Seven Predictions for the Future of Banking

Today, Susan Wolfe, Vice President of Financial Services from Mintel Comperemedia, presented a webinar entitled, "Seven Predictions for the Future of Banking" where she explored trends in the industry based on the research and direct marketing examples from their custom consumer surveys and mail panel. Each of these trends correlate with what I have seen in the marketplace even though many trends have been impacted by the massive influence Reg E has had on the focus of many bank marketing departments over the past few months.

The predictions presented in the Webinar were:

1. More Aggressive Focus on 'Relationship Banking': Even though trust in banks has waned lately, banks are emphasizing the building of a stronger relationship through integrated accounts like Fifth Third's Relationship Savings Account and with rewards programs like PNC Bank's points.
2. Increased Promotion of Account Builder Programs: Responding to a much higher savings rate, especially by higher income segments, new products are being introduced such as SmartCents by Capital One and U.S, Bank's S.T.A.R.T. program.
3. More Debit Card Marketing: With the loss of overdraft fee income, banks will encourage debit card use for automatic bill payments and will begin to share interchange income with per use rewards programs and sweepstakes.
4. Continued Importance of Incentives: As mentioned my recent Blog, incentives for opening new checking accounts have increased and are becoming more widespread. BBVA Compass also offers incentives through an offline and online refer-a-friend program.
5. Mobile Banking is the 'New' Online Banking: While the adoption of mobile banking currently is inversely correlated to age, this trend could easily reverse as offline sign-up expands and promotion of text messaging and electronic alerts increases. Bank of America has around 3 million subscribers with the majority using an iPhone or iTouch. Online money management tools also continue to become more sophisticated such as those from Mint.
6. Proliferation of Financial Literacy Programs: Banks are focusing efforts on new programs to help customers better understand and manage their finances such as Chase's Blueprint and Bank of America's financial education website.
7. Expanded Testing and Use of Social Media: Financial services firms continue to test ways to leverage social media such as American Express's online booking app on Faceboook, Bank of America's help page on Twitter, Chase's Facebook charitable giving event and Stagecoach Island from Wells Fargo.

Chase Introduces Instant Action Text Alerts to Allow Customers to Avoid OD's Immediately

In the February 2010 Javelin Strategy and Research report on financial alerts, some of the major flaws of current alerts included difficulty of setting alerts up, lack of timeliness, not actionable enough and poorly marketed. In addition, the research found that one of the highest utility features from both a customer and bank perspective is the ability to alert and respond to potentially insufficient funds.

Expanding on their very popular low balance alert mobile banking feature, Chase Bank just introduced a new feature that addresses many of these flaws by allowing customers to easily respond to a low balance alert from the bank by immediately transferring funds through text messaging.


The new feature will allow customers to transfer funds from any eligible checking, savings or money market account simply by typing the letter "T" followed by the dollar amount of transfer desired (for instance, to transfer $100, the customer simply types "T 100"). If the customer has more than one eligible account with adequate funds, both accounts with the balance available to transfer will be shown, along with the option to use either account to fund the low balance account.

To be eligible for this service, a customer simply needs to be a Chase Mobile customer, have the ability to send and receive SMS texts, and sign up for the Instant Action Alerts. As an added benefit, the customer can even set the time they want to receive notification during the day.

While not promoted on the Chase homepage as of this writing, an animated landing page (shown above) is being used in conjunction with Google AdWords using search terms like "overdraft alerts" and "mobile banking alerts".

Payments innovation is becoming more and more commonplace with Chase Bank as indicated in several of my Blogs this year, including the introduction of Chase Blueprint. These innovations in most cases enhance the customer experience while also reducing operating costs. It will be interesting to see what other innovations are on the way from Jamie Dimon's team.

Mobile Banking Can Improve Customer Acquisition by Sixty Percent

One of the more startling takeaways from the Mobile Banking and Emerging Applications Summit this week was when Bob Hedges from Mercatus mentioned that mobile financial services could improve customer acquisition rates by as much as 60% in key customer segments (age under 50) for early moving banks. In fact, according the research findings which were presented at blinding speed at the conference, a bank's mobile presence was more important than online banking, ATM presence or even the convenience of local branches in a customer's decision to select a bank.

Combined with the statistic that more than 30% of U.S. consumers are either using or considering using mobile financial services in the next year, and it is understandable why the best quote from Hedges at the conference was that, "Making a business case for mobile banking is like making a business case for oxygen"!

Other findings shared by Hedges at the conference included that mobile financial services users have higher incomes than traditional customers, use more services and have up to 12% lower attrition (which has been supported by other findings provided by banks recently at other conferences).

Finally, Hedges emphasized to the more than 300 bankers in attendance that the rate at which consumers are adopting mobile banking is must faster than originally anticipated, with an expectation that the number of mobile banking consumers could surpass those who use online banking by 2015.

Given the positive impact that introducing the mobile channel could have on acquisition efforts, servicing costs, utilization of services and attrition, there is no doubt that mobile banking will be emphasized by banks over the next 18 months. Obviously, the spoils will go to those fast moving banks that can introduce mobile banking to their customers and prospects the quickest and who can continue to promote and enhance their offerings to a increasingly technology driven target audience.

The Mobile Banking Response to Reg E

In a June 9 webinar entitled, Mobile Alerts and Reg E presented by Javelin Strategy & Research in conjunction with ClairMail, there was a great discussion of how mobile banking and financial alerts can play an integral role in both the opting-in process and the enhancement of the customer experience after August 15.

By providing enhanced information about the customers accounts and allowing the customer to be 'in control,' the perceived value of mobile banking can be enhanced. In addition, the ability to use mobile banking alerts to help avoid OD and NSF fees enhances the value of the device even more. It was mentioned that as many as 90% of customers who receive alerts will actually take action based on the alert (through signing on to their online banking account (33%), calling (33%) or visiting the branch (14%)).


The ways mobile banking can assist a customer would be real time alerts, real time account balances, two-way interactive alerts and transfers (like the Chase Bank introduction recently), and mobile PFM tools. In other words, mobile enables a highly personalized, proactive interaction with the bank when an overdraft occurs.

From the bank's perspective, Clairmail emphasized that the mobile channel enables banks to generate new revenue, increase satisfaction, drive adoption and retention and help to eliminate customer distrust of the bank thanks to enhanced transparency. In addition, the mobile channel can allow the bank to cross-sell overdraft solutions at the time the customer can relate the most . . . when they about to have a transaction rejected or a fee imposed.

Mobile Banking Summit Illustrates Topic is Hot

You don't need to look any further than the attendee list to realize the importance of mobile banking to our industry. Not only is almost every major institution in attendance at this year's Mobile Banking and Emerging Applications Summit, but the number of participants has increased by more than 50% according to officials from SourceMedia.

The program kicked off Sunday with a workshop by David Eads, Founder & CEO of Mobile Strategy Partners LLC where he discussed the basics of getting a Mobile Banking strategy off the ground. He also shared the first of a wave of industry statistics that made it clear to the SRO attendees that this year and next will be pivotal to the mobile banking industry. He also shared keys to developing a business case for introducing mobile banking. He emphasized that while cost reduction (mainly from offloaded balance inquiry calls) could many time justify the investment in mobile banking by itself. a drop in attrition and an increase in revenue from increased interchange and cross-sales will also improve the ROI.


A parade of speakers including Pam Joseph and other players from U. S. Bank, Bob Hedges from Mercatus, several panel discussions, and Jeff Dennes from USAA provided an amazing array of customer research, case studies and predictions for the future of this channel. During the U.S. Bank presentation, there was discussion of a new Mobile Shopping Concierge application where coupons, offers and even store layouts may be provided and the discussion of upcoming introductions of both a Remote Deposit Capture application as well as a P2P application (probably the most discussed new application of the day from many organizations including Bank of the West).

The best line of the day came from Bob Hedges, who began his presentation of a ton of industry research by saying, "Making a business case for mobile banking is like making a business case for oxygen"! One of the more unusual moments came from 10-11 AM PT, when it was obvious many in attendance were using their phones (and a surprising number of iPads) to get immediate updates on today's speech by Steve Jobs. Another helpful use of phones came throughout the day when pictures were taken of the slides in the presentations  by many since SourceMedia does not include the presentations in the conference materials, and then only partially share presentations 2-3 weeks after the event.

I will be digging much deeper into my notes over the next couple days to share insights from this great conference that ends tomorrow. In addition to key research, I will be sharing marketing ideas that were discussed as well as significant trends that we will probably see in 2010 and 2011.

By the way, for those unable to attend, the location of the conference was at the M Resort which was beautiful, but seemed like it was in LA due to the distance from the strip and the temperatures today approached 110 degrees. So yes, the conference was HOT!

DDA Under Siege

As part of the planning committee for this year's BAI PaymentsConnect 2011, I would love to take credit for the great title of this program track, but I am not sure even the great minds at the BAI could have foreseen how apropos "DDA Under Siege" would be for bankers attending this year's conference that wraped up today in Phoenix.

If there was a unifying theme from the many sessions I participated in this week, it was that revenue lost from last year's Reg. E and this year's Durbin amendment can not be completely recaptured through repricing. Instead there needs to be a stronger focus on targeted customer acquisition, share of wallet growth strategies, retention, product innovation and cost containment. While everyone at the event seemed to be interested in what others were going to do around checking repricing, the energy was definitely focused on building a stronger platform for the future.

Sessions at the conference started with a review of the BAI/Finacle Innovation Imperative Customer Sentiment Study completed last Fall, which found that while there is still a ways to go in the customer's confidence in the economy and the banking industry in general, the view of bankers is more closely aligned with the consumer than in the past couple years. This uniformity of beliefs should assist as banks try to build messaging around their checking repricing and try to improve the customer experience. The study also found that the customer's perception of their bank being 'innovative' tends to correlate with satisfaction, product ownership and overall confidence in their bank.

Steve Mott from BetterBuyDesign followed the BAI research presentation with a very fast paced competitive overview of the payments industry, including a discussion around Google, PayPal and several potential payments platforms from the U.S. and even China. His message was that it will be up to the banks to leverage their customer relationships, distribution network and trust advantages to maintain some level of ownership of the consumer payments continuum. He emphasized, however, that the bank 'ownership' of payments is anything but guaranteed.

David Stewart, Senior Expert from McKinsey & Co. expanded on his recent BAI Banking Strategies article, emphasizing the continued importance of the debit card in the bank's payment product arsenal. In addition to providing financial metrics around the value of the debit customer and the real impact of repricing with net interest margin and other fees are included, he emphasized that trying to move mindshare or marketshare from debit to credit may be close to impossible in today's economic environment. David also shared the view of McKinsey that the potential for merchants to 'steer' payments from one payment vehicle or another was unlikely since doing so may actually cost the merchant more in discounts than could be retrieved in interchange savings.

David also left the attendees with the following strategies for trying to reposition the debit product in the future:

• Base debit strategy on new debit economics as opposed to the old economics
• Price products for competitive advantage
• Rationalize customers on the relationship level not just checking level
• Remember that the debit product is still sticky and builds customer engagement

Ending the morning sessions was a presentation by Hitachi Consulting around the findings of their semi-annual Consumer Payments Preference Study released last Fall. Some of the highlights included:

• The millennial generation provides a good opportunity for growing payment volume (especially around mobile)
• Ease of use and convenience drive payments behavior
• Debit is still the preferred payment method
• Credit for online purchases expected to increase
• Micropayments will continue to increase

Hitachi also emphasized that security continues to be a concern of consumers and is impacting the take up rate of mobile for payments.

The afternoon sessions revolved around ways that banks are trying to take back the payments franchise and extend relationships beyond just the DDA, with speakers from the Federal Reserve, Fiserv, Comerica, Fifth Third, Peak Performance Consulting, Novantas, TD Bank and Huntington Bank all providing unique viewpoints. It was clear during these sessions that the days of every bank having close to the same product set are over. While some of the larger banks may retain a Free Checking program (PNC's decision was referenced often during the conference), many are completely revamping their deposit product portfolios in a way that reinforces their brand and leverages their customer franchise. All of the banks were also bullish on credit products as well as the need to continue to capture increased share of wallet.

Hank Israel from Novantas stated that banks should segment their customers based on channel preference and will most likely price their product set in one of the following ways:

• Keeping Free Checking (hoping to make it up on volume)
• Fee for services (make it up within the checking product set)
• Product bundling (packaging product sets based on customer needs)
• Relationship pricing (drive value from relationship perspective)

A strong case was made for all banks to move more to a relationship focus that can optimize customer profitability and focus on customer needs.

Tuesday's sessions focused on how banks can go on offense through mobile banking, prepaid debit and mobile payments as well as how institutions can better defend their customer base through onboarding and rewards. Some of the key takeaways from the mobile banking session presented by FIS and M&I Bank included:

• Smart phones will be used by the majority of consumers by the end of 2012
• Mobile banking will surpass online banking by 2015
• Remote deposit capture is the 'power app' that engages the customer (more are needed)
• Mobile banking customers have a 53% lower attrition rate (Tower Group)
• Mobile banking customers decrease VRU use by 55%

The speaker from M&I Bank also emphasized the need for banks to build mobile banking critical mass quickly, with a focus on expanding the solution set coming after 'getting the basics done right'. He referenced that mobile banking customers at his bank had higher balances, increased check card usage, and a better bill pay adoption rate than similar customers without mobile banking.

Greg Schreacke from First Federal Savings Bank and Robert Gitner from Velocity Solutions discussed the market potential for prepaid debit and how a bank could build a checking product set around the card. Research was presented that showed the following characteristics of a prepaid debit user:

• 53% have a checking account
• 50%+ want a prepaid debit because of overdraft fees
• 47% want immediate access to funds
• 46% believe they can get better service at a retailer than a bank
• 43% have had a previous problem that limits their ability to open a traditional checking

In the mobile payment presentation done by Calvin Grimes from Fiserv and Emmett Higdon from Forrester Research, the impact that mobile banking has on the customer relationship was again emphasized. It was shown that not only is a customer who uses mobile banking 30% more likely to stay with a bank, but the customer is also 26% more likely to recommend their bank. The team emphasized that now was not the time for banks to stand on the mobile financial services sidelines, but instead should be searching for ways to move their mobile solutions from being simply informational to being more transactional.

While many banks are still trying to build the business case for mobile payments, the following benefits were shared:

• Customer acquisition and retention benefits
• Lower cost of servicing
• Revenue generation potential and revenue retention
• Competitive parity
• Better customer experience
• Deeper customer engagement

It was also mentioned that, while security and privacy concerns still remail around mobile payments, these concerns will eventually work in favor of traditional financial institutions since customers inherently trust banks more than companies like Google, Apple or even their phone company.

The presentation that I did in partnership with Bill Stamp from KeyBank focused on the market trends around onboarding as well as the basics on development and implementation of a successful onboarding program. Interestingly, when the attendees were informally polled as to their current onboarding programs, while the majority were doing something, less than half were using more than one communication channel, very few were leveraging three channels, and only one bank was communicating with their customers more than 5 times in the first 90 days. It was stressed that this lack of a focused and consistent onboarding process could hamper organization's objectives of improving customer engagement, increasing fee income and definitely hurt cross-sale and retention efforts.

Bill's presentation around KeyBank's onboarding program illustrated that developing and managing an onboarding initiative is an ongoing process where testing of offers, channels, and communication sequence and cadence is continuously needed. Bill also shared how an onboarding process can reinforce cross-selling done at the new account desk and the importance of reinforcing engagement with services before the cross-selling of other products.

To further reinforce the importance of engagement and retention in a highly competitive and revenue challenged marketplace, Tom Brooks from Regions Financial Corporation, Lynne Laube from Cardlytics, and Aaron McPherson from IDC Financial Insights showed how a highly innovative merchant-funded rewards program may be the answer for banks looking to move away from a 'reactive' interchange funded program to a 'proactive' program that could be bring higher value to the customer and even make money for a bank.

Lynne Laube discussed two macro trends in the banking industry that has paved the way for a merchant-funded program:

• Digitization of payments (where and how payments are made)
• How customers relate to banks (>50% have online banking with 7 visits a month to their online banking site)

The benefits of a program like Cardlytics offering shared by the panel included the ability to target actual transactions for incremental growth and engagement. The benefit to the customer is that offers will always be relevant, while the merchant benefits from only providing offers to people very likely to be interested in their services. Since the targeting potential is so strong, more valuable offers can be developed as opposed to when a merchant is discounting to the masses.

While the program at Regions is relatively new, the benefits included:

• No enrollment is required (all customers with online banking and electronic statements are included)
• Ease of value transfer (no coupons are needed since the customer can electronically 'activate' an offer and 'redeem' the offer simply by using their debit card)
• Immediate notification of earnings/rewards
• Rebates deposited directly into account
• Offers are targeted and relevant
• Integrated user experience
• Fully funded as opposed to being a contingent liability like with points programs

The success of this innovative rewards program was probably best illustrated when Lynne mentioned that Cardlytics is partnering with 2 of the top 5 banks already and expect their customer base to grow from 15M today to more than 60M by the end of the summer. For more information on Cardlytics, read my earlier blog on the company done last year.

Without a doubt, this was a well-timed conference covering a broad range of topics on the front burner of many banks. On each attendee 'to do' list upon leaving, I am sure there will be a review of any pricing changes not yet implemented, a strong focus on ways to engage and retain new and existing customers we can ill afford to lose, and a much more accelerated movement to future payment products like mobile and even P2P.

I would love to hear from other attendees about their experience and takeaways.

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.

Siri: My Bank 2.0 Concierge

The introduction of Siri as the star feature of the new iPhone 4S already appears to be setting the stage for a major change in the way people interact with their phones. By combining insight reminiscent of IBM super computer Watson and the voice of a willing assistant, marketers from all industries can leverage this technology to simplify the way we complete tasks with voice commands. There is no doubt that Siri's introduction represents the mainstreaming of voice recognition and natural language interface in much the same way that the introduction of the iPad mainstreamed tablet computing.

Siri represents something of a paradigm shift in how we will interact with mobile devices going forward, and there are few places where this movement from keystroke to voice command will impact business more than banking. While today's voice technology in banking does fairly well in being able to recognize basic transaction commands and process rudimentary transactions, leveraging the technology and humanized tone of Siri and similar programs will allow banks to process an endless array of interactions seamlessly from the convenience of the phone.

Much like you would use a hotel concierge to ask various local-themed questions, imagine a world where my future banking concierge based on Siri technology will be able to work on my behalf and answer questions such as:

• Where is the closest ATM where I won't have to pay a fee?
• Where is the nearest restaurant with an NFC enabled payment device?
• Please transfer $600 into my checking account from my money market account and make my mortgage payment at XYZ bank.
• When will the most recent deposits I made clear?
• Are there any merchant-funded reward offers that I am eligible for at Southfield Mall?
• Where is the closest branch with Saturday hours (assuming I would ever need to visit a branch)

What is nice is that my future banking concierge would process all of my questions with the pleasant nature of my current GPS system, listening intently and not getting frustrated if my question seems trivial or repetitive. In fact, the intelligence behind applications like Siri would get more intelligent over time and evolve based on my behavior. And instead of receiving a link, search box, application or an ad, I will receive a verbal confirmation or a direct answer.

Leading banking organizations will most likely also find a way to allow me to open a new account without ever picking up a pen, typing in personal information or meeting a new account representative face-to-face. By taking insight already available within my mobile applications and various social media sites I use, my banking concierge could easily fulfill the requirements for establishing a new account whenever I desired. This capability will obviously hasten the potential reduction of vast branch networks.

While Siri only works with the iPhone 4S, alternative voice recognition applications like Vlingo (available on Android as well as iOS devices) and Nuance (which recently acquired Swype) will definitely benefit from the re-introduction of Siri by Apple as well. In fact, last week, Boston-based Vlingo saw activations increase by 50% daily, according to GigaOm at a time when usage overall has skyrocketed.

Source: PC Magazine, October 17, 2011

The key to success of Siri and other voice applications is the natural language interface, or the ability to add context to words spoken that enable the application to figure out what the user wants to do. That requires a semantic engine and artificial intelligence that continually gets better over time. In the banking world, however, the combination of transactional processes and questions are comparatively simple. In addition, with the heightened competition for the best interface, the capabilities of these systems will continuously improve while the investment needed to leverage these capabilities will become less.

Do you think Siri and related applications will be integrated into banking by legacy financial organizations? Will the integration be fast enough to fend off the new entrants into the industry such as BankSimple and MovenBank or even current online banking providers such as Ally?

I would love to hear your opinion.

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.

Banking Industry Leaders Discuss Findings of Intuit Financial Management Survey

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

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

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

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

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

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

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

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

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

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

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

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

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

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

I would love to hear from you.

Kaching Ushers In New Era of Mobile Banking

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

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

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


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

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

Kaching iPhone Mobile Payments Screen

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

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

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

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

I would love to hear your thoughts.

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.