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.

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!

Monetizing Mobile Banking

As consumers are becoming more comfortable with mobile banking and mobile payments, financial institutions and technology providers are beginning to develop and deploy more innovative solutions with a focus on gaining market share, reducing costs and realizing new sources of revenue. It is clear that the question is no longer whether mobile banking and mobile payments will be important to a bank's business (84% of respondents to a recent KPMG survey said that it is). The question has become, can banks realize the full potential of the channel from a customer development and revenue perspective.

To this end, one of the best sessions I attended last week at the BAI Retail Delivery Conference was around the opportunity for banks to monetize mobile banking. Presented by Matt Wilcox, senior vice president of eBusiness strategy for Zions Bancorporation and Drew Sievers, CEO of mFoundry, the session focused on the opportunity for mobile banking to move from simply reducing costs to actually being the foundation for revenue generation. 

Mobile Banking Evolution

At the beginning of the presentation, Wilcox presented an overview of the mobile banking evolution that has occurred over the past several years. According to Wilcox, mobile banking has evolved from being simply a channel innovation to providing the potential for significant channel migration cost savings as shown below. He noted, however, that banks should not build business cases around 1:1 transaction displacement, since many consumers increase their overall transaction volume as they move to more automated channels. This is similar to what occurred with ATM volumes that increased at a much higher rate than branch transactions decreased in the past.

Source: TowerGroup and Fiserv (2010)

Wilcox also provided a look at the differences in profitability and attrition that has been attributed to mobile channel engagement at Zions Bank. As shown below, customers with both an online and mobile banking relationship generated close to 30 percent more revenues than an online customer, while having an attrition rate that was more than 60% lower. 

Source: Zions Bank

While Carl Tsukahara, CMO from Monitise stated in another BAI session that, "the wallet wars will be over in the next two years and that banks need to get off the sideline", Drew Sievers emphasized that banks still are in an extremely strong position relative to other players. According to Sievers, "Banks control the key elements of funds, identity and authentication. In addition, banks have consumer trust and millions of pieces of software on mobile phones, positioning themselves strongly in the mobile wallet market."

Mobile Revenue Potential

This session continued with Matt and Drew discussing the significant revenue potential of mobile banking. The potential was put in context of mFoundry's new mobile banking platform (Fin.X), that provides banks a choice of mobile apps from a Service Provider Network of 30+ companies including FIS, Diebold, Dwolla, Micronotes and Blackhawk Network. According to the presenters, there are 14 categories of revenue that banks can leverage in the future, including more traditional sources such as bill pay, mobile deposit, PFM and security services along with less traditional features such as expedited payments, credit scoring, gift card issuance, insurance quotes and even integrated retail bar-code scanning and bank product cross-selling.

Based on preliminary estimates, close to $100/customer annually can be generated mobile enhancements as shown below. According to Wilcox, "I believe services such as expedited payments take a proven model and revenue stream and make it more convenient on the mobile banking app. In addition, many of the other revenue streams place a value on customer convenience and integrate products that the customer already purchases through other channels such as gift cards, insurance, etc. I think we have only scratched the surface here." Sievers added, "Integrated services like those provided through Fin.X have the potential to transform mobile banking into an institution's most profitable channel."

• Bill Pay: $20
• Online Account Opening: $15
• Merchant-Funder Rewards/Offers: $15
• Enhanced P2P: $6
• Credit Scoring: $8
• Gift Card Issuance: $12
• Insurance quotes/Referral Revenue: $15
• Cross-Selling: $7

Initial mFoundry Fin.X Partnerships

The following is a sampling of partnerships announced last week my mFoundry to be included in their Fin.X cloud-based partnership solution.

Blackhawk Network: Will offer digital and physical gift cards from hundreds of brand name merchants to smartphone users which can later be redeemed electronically.

Micronotes: Will deliver individually tailored and actionable promotions to a customer's smartphone using big data analytics and customer insight improving relevance, timing and offer delivery. 

WAUSAU Financial Systems: Will provide the convenience of mobile remote deposit capture (RDC) capabilities using WAUSAU’s Deposit 24/7 Mobile™ functionality. Institutions can choose from two additional providers of mobile RDC solutions as part of the Fin.X solution.

Dwolla: While mFoundry is already recognized as the company powering the biggest and most successful mobile payments program to date, Starbucks Card Mobile, this partnership allows for a low-cost P2P money transfer service and a real time alternative to ACH payments which can take 2-3 days.

Diebold: Will allow users to scan a Quick Response code on the ATM and enter an authentication code to initiate withdrawals and deposits without a card. The smartphone will be used as an authentication device, reducing the security risk associated with lost cards, stolen cards and skimming. 

"With mFoundry's new service, banks and credit unions can select as many, or as few, extensions as they want", according to Sievers. "We will be adding new partners into the ecosystem in order to create an even larger and richer offering."

Untapped Opportunity

The key to monetizing mobile banking is to aggressively move people from traditional channels to mobile. I asked Wilcox how banks should encourage customers to use the mobile channel when many banks have had limited success moving beyond getting early adopters to engage? According to Matt, he believes getting clients to handle their balance checking on the mobile device is still a huge initial opportunity that will build engagement over time. "Moving clients from the IVR or contact center to the mobile device is still a great opportunity", he stated. "I also believe banks have an opportunity to engage clients within mobile by removing the tie to online banking. We are only now seeing banks decoupling these services, with those banks doing so realizing a larger growth in adoption."

Sievers added, "The future of mobile banking is how you generate more revenue for the financial institution. It's not only about saving money since mobile banking pays for itself. It's about making the channel a revenue generating tool."

Additional Insights

1. Monetizing Mobile: How Banks are Preserving Their Place in the Payment Value Chain (KPMG 2011)

2. New Research Reveals Untapped Market for Mobile Banking Among Offline Customers (Fiserv, 2009)

Musings of a Finovate Virgin

They say you always remember your first time. 

After years of being built up by a great amount of hyperbole, including being dubbed The Disneyland of Fintech™ by my friend Brad Leimer, I finally decided to experience Finovate for myself a couple weeks ago in San Francisco. Similar to many 'first times' in my life, my experience expended a lot of energy, ended too quickly, but definitely did not disappoint.

To those not familiar with Finovate, the event is a fast-paced showcase of financial technology vendors, who have only seven minutes to provide a live demo of their solution (Powerpoint not allowed). It’s produced by Online Financial Innovations, the people behind the excellent NetBanker blog.

Taking place several times a year across the globe, FinovateSpring included 72 demos in front of a record crowd of over 1300 bankers, investors, media and bloggers like me. (Video archives of this year's presentations are available here)

As opposed to focusing on only a few themes, Finovate has something for everyone. This Spring's event covered some familiar themes that would be expected (Mobile, Payments, etc.) as well as some newer themes that sparked conversation, debate and maybe even a bit of fear among traditional bankers (P2P Payments, P2P Lending, Virtual Currency, etc.). 

My Takeaways

Overall Impression: Bordering on sensory overload, Finovate should be on every financial marketers bucket list. While many of us spend countless hours dealing with some rather mundane challenges at times (compliance and other internal battles), it is refreshing to know that innovation is alive and well in financial services. It was difficult to keep up with the presentations at times since there is no apparent logic to the order of presenters, but I quickly realized the value of the live blogs and recaps from Finovate, Bank Innovation, PaymentsViews, the William Mills Agency, and others.


What Was Hot: In an industry quickly moving to the mobile platform, but impacted by security and privacy breaches, it was not surprising to see an abundance of mobile authentication and security solutions. Almost 20% of the 72 presentations at FinovateSpring were focused on security and/or authentication of mobile or merchant transactions. These solutions included:

• EyeVerify: Uses camera on smartphone to match 'eye prints'
• Usher from Microstrategy: Uses QR code for single use identity
• AuthenticID: Uses private data sources (not public records) to verify user
• OneID: Secure digital identity without usernames or passwords (two factor authentication)
• Internet Biometric Security Systems (IBSS): Four-factor authentication tool including voice and face
• TrustedKnight: Software that protects all browser entered data from malware
• Sygnifyd: Automates validation of card-not-present transaction with guarantee 
• Encap: Two or three factor authentication including mobile device, PIN and keypad biometrics
• Kofax: Image-based authentication using traditional IDs at time of account opening
• Curaxian: Helps merchants quickly spot fraudulent transactions
• Arxan: Protects mobile apps in a way that was described in a way too technical way for Finovate audience
• ValidSoft: Uses voice biometrics and other tools to authenticate wallet transaction

What Also Was Hot: While not all are ready for prime time, there were several P2P and crowdfunding solutions presented. Realty Mogul aims to create a marketplace for investors to pool funds for investments in commercial real estate. P2B Investor, which definitely had the best tag line at the show ("I want to fund your brains out"), arranges for online investors to extend small businesses a line of credit on the basis of their receivables.

In addition, there were some interesting solutions for the wealth management sector, with a focus on better reporting and improving the client/advisor relationships. Examples of these solutions included: 

• Jemstep: Helps to secure funds for retirement
• TrustEgg: Simplifies setting up a child's trust
• Tradeslide: Independent advisor performance evaluation
• TipRanks: Evaluates 'buy' recommendations
• Balance Financial: Advisory PFM on steroids
• Bright Funds: Evaluates charitable giving options
• Finect: Compliant social media networking tool
• Narrative Science: Automatically converts data into narrative insight
• Quantopian: Allows user to easily test investment algorithms

What Was Not: Unlike previous Finovate conferences, this Spring's event had a relatively minor number of mobile wallet and rewards platform presentations. There was also much less mention of 'big data' than I expected (thankfully) and virtually no mention of near field communication (NFC).

The Venue: While having visited San Francisco many times, I had never visited the Concourse Exhibition Center. Perfect sized for this event, the elongated shape with multiple levels allowed for 'booth' displays, presentations and food service to flow easily as needed. Unlike many events I attend, the team from Finovate went out of their way to provide ample electricity, uninterrupted WiFi and a number of big screens so that all in attendance didn't miss a thing.

The Format: Bordering on sensory overload, attendees can't let their guard down as the presentations are face-paced and rapid fire coming from two stages to avoid any down time until scheduled breaks. Imagine trying to tell what makes your company special in seven minutes using a demo format as opposed to Powerpoint slides. Jumping from a mobile solution to digital authentication to a crowdfunding platform can be tough to follow if you're not paying attention. As a result, it appeared that everyone was in their seat before each session started and that nobody left until the session was completed.

The Presentation Style: I realized very quickly that if the presenting company didn't discuss the 'why' of their solution before the 'how', they could quickly lose the audience (even in a seven minute demo). In addition, while a bit of humor is rewarded by higher scores, not providing a business case for the solution hurt when the attendees cast their votes. Finally, while the audience definitely was tech-savvy, that didn't mean that the presentation should be tech-heavy. When in doubt, show the user interface as opposed to the back office operations.

Audience Engagement: Maybe I am biased since I am a rather heavy user of Twitter, but I have always wondered why participants in banking conferences don't use this tool to interact, post opinions, etc. This is definitely not the case at Finovate. The audience was not shy to interact with each other (and the presenter) by raising questions, providing support, evaluating the solution, and at times critiquing the presentation. The tweets were not always positive in nature, but it added to the engagement level of the 1300 in attendance.

Cash becoming electronic at POS locations through @paynearme - cash as an electronic peer. One to watch here at #finovate - visit @warobins.

— Bradley Leimer(@leimer) May 15, 2013

@refundo mobile banking app available in Spanish day one, not someday...Glad someone is stepping up to serve this market! #finovate

— Tiffani Montez (@tiffanimontez) May 15, 2013

#finovate #moneydesktop PFM UX that makes you swoon, #visa prepaid partner, card-linked targeted deals. can you check any more boxes?

— Xin Wang (@xinisterlayer) May 9, 2012

Finovate Audience Hijacking: In the middle of day two, the Google's annual developer's conference 'hijacked' the Twitter conversation at Finovate, by announcing a new payment option using Gmail. For the next two hours, as details emerged, the Finovate audience provided perspectives on the new solution.

Now You Can Send Money Through Gmail, Google Announces huff.to/19usnZa via @huffposttech - Pretty big non-#finovate announcement

— Raph J. (@dninjaraph) May 15, 2013

The Power of Networking: While the format of the event certainly is set up for the networking between vendors and banks/investors, the most robust discussions at the event seemed to take place between attendees at breaks, meals, scheduled cocktail hours and after hour events. For many, it seemed to be a twice-a-year meet-up among fintech followers who love to share their thoughts of the show and their takes on innovations that are taking place outside the Finovate walls.

Thanks to several of the friendships I have created over the years who attended FinovateSpring and made my maiden voyage a success.

My Criteria for 'Best of Show': While I have no idea about the vote count, I got 4 out of the 5 'best of show' winners correct based on the following personal criteria:

• Quality of presentation: Illustrated why their solution had value in a clear style
• Market need: Did the solution meet a scalable market demand
• Market ready: Could the solution be rolled out today
• Evolution vs. Revolution: Is the solution really different
• 7 minute tweet factor: Volume of positive tweets during the presentation
• Floor 'buzz': Was there a positive impression beyond the 7 minute presentation
• Booth traffic: Did attendees want to see more

The Winners: While it was obvious that all 72 presenters put everything they had into their demos at FinovateSpring 2013, the winners really did stand out from the rest in various ways as listed above. It was pretty amazing to see virtually all of the 1300 in attendance who didn't have early planes to catch waiting to see if their favorite would win. When announced, each winner got significantly more than just a round of applause, with many getting very loud (and well deserved) ovations.

The winners in alphabetical order (with their winning 7 minute video presentations) were:

• FamZoo: Moving beyond a virtual family bank account with educational tools to include a family set of prepaid cards with limits and tools for refunding. The team from FamZoo had one of the longest lines at their booth and had a great deal of positive buzz during and after their presentation.
• LendUp: Combining gamification with a better alternative to payday loans that will help the underbanked build credit. This was a very unique solution to a problem many FIs are trying to address.
• MoneyDesktop: A three time Finovate winner, MoneyDesktop wowed the audience by going beyond their highly popular PFM solution to introduce a marketing solution that would leverage the same PFM insight for a powerful targeting and communication tool for financial marketers. Probably because of my marketing background, this was my favorite solution at the show.
• PayNearMe: With by far the most unique presentation style (think human powerpoint), this solution takes P2P to a new level by allowing for cash payments at convenient retail locations.
• TipRanks: As described above, this is an independent evaluator of 'buy' recommendations that allows users to determine how accurate tips have been in the past to predict future performance.

While not everything I do once is worth repeating, Finovate is definitely habit forming and worth many more visits. It is one of the best run events in the financial services space and, for the most part, the presenters did an amazing job. 

Living up to the moniker, 'The Disneyland of Fintech', Finovate captures the imagination and overwhelms you with sights and sounds not felt elsewhere. Everyone around you looks like they are having a great time, and you leave the event totally exhausted (in a good way).

Probably the most exciting part of this amazing show is that 80% of the participants change with each event, allowing for a totally unique experience each time you participate. And even if you are not a creator or avid follower of financial service innovations, it is great to network with those who are.

Additional Resources

FinovateSpring Recap and Ratings: Bank Innovation (by Phillip Ryan)

Day one morning recap

Day one afternoon recap

Day two morning recap

Day two afternoon recap

Live Blogging Finovate Spring 2013 San Francisco: PaymentsViews (by Erin McCune)

Live Blog: FinovateSpring 2013 San Francisco by William Mills III: William Mills Agency

Day One

Day Two

5 Most Intriguing Companies at Finovate: American Banker (by Sean Sposito)

The Buzz at Finovate: New Security Tech: American Banker (by Sean Sposito)

Digital Marketing Solutions Stand Front and Center at Finovate Spring: Bank Systems and Technology

(by Jonathan Camhi)

5 Things You Don't Know Because You Weren't at Finovate: Credit Union Times (by Robert McGarvey)

Press Coverage at FinovateSpring 2013: Finovate

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