What Banking Needs to Become

In this quarter's Strategy + Business Magazine, Vanessa Wallace and Andrew Herrick discuss the significant changes in the banking industry over the past few years and how bank's business models, capabilities and practices must change as well. In their very good article, they emphasize that the purpose of banking and the needs of the customer have remained relatively consistent with regards to safe havens for savings and consistent access to credit for investment.

The environment has changed, however, with the competitive landscape changing, the regulations increasing and the public trust eroding. In addition, the times of high growth have ended.
They argue that banks will need to revert back to a much more simple value chain, where there are far fewer intermediaries between the customer and the bank. In short, banks will need to get closer to the customer.

From a marketing perspective, they propose that leading banks will need to sharpen their capability for capturing customer information in a timely manner. This means analyzing customers’ product holdings, cash flows, behaviors, and personal circumstances. Depth of relationship will be more important than breadth. It will be more valuable for a bank to have an 80 percent wallet share of 1 million customers than a 10 percent share of 8 million customers. Greater wallet share permits greater insight into buying patterns, credit risk, and loyalty, enabling a stronger, more profitable lifelong customer relationship. For their part, customers will find that scarce credit lines are more accessible when they concentrate their banking activities among fewer providers.

In addition, banks will have to innovate to better serve the needs of their more loyal customer base. This will take the form of better cash flow management tools that utilize multiple channels. In addition, the emphasis on insurance and investment services will most likely increase since the goal will be to serve all of the client's financial service needs.

Consumers will be rewarded for their loyalty with better rates, fewer fees and easier access to scarce credit.

Campaign Trail :Is Birla Sunlife Exploiting Yuvraj ?

A small controversy is brewing in the ad world regarding the latest campaign of Birla Sunlife featuring India's youth icon Yuvraj Singh. Yuvi was endorsing the Birla Sunlife brand for some time now. The campaign runs on the theme of highs and lows of the life and how one should prepare for such events. The last campaign was aired when Yuvi was in a bad patch and was kept out of the team because of poor form. The ad really struck a chord because here was one famous cricketer who was criticized by all for his poor form. The series of ads featured cricketers like Sewag who also faced similar performance issues.

Watch the ad here : Yuvraj Birla old ad

This time around, things were different. Yuvraj was diagnosed with cancer and is undergoing treatment in US. There is a huge wave of sympathy, prayers and sadness among the millions of cricket lovers for this flamboyant young cricketer. 

Surprisingly the ruthless marketer in Birla Sunlife Insurance began to flood the channels with the followup campaign featuring  Yuvraj. The new campaign is in the same line of the older version but very striking and all the more disturbing. 

 Watch the new ad here : Birla sunlife new ad

My initial response was surprise and disgust. How can a brand run a campaign like that when he is sick and undergoing treatment ? - this was the question that came to my mind .My conclusion was that Birla Sunlife is exploiting a very sad situation to its advantage. 

Now ET and Business Standard newspapers have reported that the entire campaign is done with the concurrence and support of Yuvi and even Yuvi wanted to change some dialogues to reflect the current state.

Here the question is whether Birla Sunlife has done the right marketing move to run such a hard-hitting campaign when the entire cricket loving Indians are praying for this cricketer's health.

My take is that Birla Sunlife has messed up the entire campaign so much so that consumers began to question the intention of the brand in running this campaign at this point in time. 

It is true that many brands have used celebrities for their campaigns when these celebrities were recovering from such serious health issues. Celebrities like  Lance Armstrong  and Lisa Ray were featured in brand campaigns when they were recovering from such serious health issues.

The recent controversy has occurred because of the following reasons :

1. Many viewers including myself thought that Birla Sunlife has tried to gain advantage of this current situation by re-running the old ad. I was not aware of the fact that it was done with the active support of  Yuvraj Singh. This is a glaring error in term of the execution of the campaign because the agency or the client didnot thought of such a perception. The campaign managers should have given lot of indications that this ads were released with the active support of the celebrity.

2.The timing of the ad could not have been worse. The brand could have waited for some time before jumping into releasing the campaign. This ad would have been a huge hit had the release coincided with Yuvraj's complete recovery.  

3. The brand bombarded the channels with high frequency which gave the impression that it was trying to make maximum mileage of the entire episode.

4. Even if the celebrity would be supporting such a campaign, the brand should have resisted the temptation to take advantage of the situation. The ultimate aim of this campaign is to build the brand and that reason make the timing of the campaign a very bad choice.

What ever be the rational decision of the brand to run this campaign, common sense would vote against such a high frequency campaign. The entire campaign theme is highly negative and that negativity messed up the ad campaign for the brand. Unlike the ads featuring Lance Armstrong or Lisa Ray which was positive, this Birla sunlife ad was much like  " I told You So " kind of stuff. 

The " intention " of the brand is a very powerful factor that influence the customer. Here the brand failed to convey its good intentions . Otherwise this could have been one of the most remarkable campaigns in the category.. Alas.....

Banking Innovation For The Fat-Fingered

Financial services innovation takes many forms, but Mitek Systems believes simplifying a customer's banking life is best. A leader in the category of using the smartphone camera to simplify normally complex processes, Mitek's mobile deposit solution set the stage five years ago for innovations to follow.

Since 2008, Mitek has had a laser focus and a broad passion for using the phone's photo capability to eliminate the keystrokes that are the bane of consumers in a hurry, who are spelling challenged or have a hard time using oversized fingers on an undersized keypad.

As I have written about frequently over the past several months, I believe some of the best innovations in banking are not the result of added features and benefits to existing financial products and services, but the simplification of everyday processes that can improve the lives of a banking customer. This is what makes me such a fan of Mitek. 

Mitek has created solutions that allow customers to use the camera on their smartphone and tablets to deposit checks and reload prepaid cards, pay bills, get insurance quotes, open new accounts and transfer balances . . . all with a snap of a picture. No data entry is required. With mobile imaging technology, the image is captured with error correction and adjustments made, then data is extracted and put into pre-set fields on the mobile banking app instantly.

What is interesting when I watch Mitek and their bank and credit union partners is that every time I think there is no more that my phone's camera can do, Mitek finds a new solution or enhances a previous innovation.

In an industry where the growth of mobile banking is mirroring the growth in smartphone ownership, the benefits of using one of the most easily understood functions of a smartphone and leveraging it to facilitate a better mobile banking experience are enormous. These capabilities can attract new customer, build engagement, increase cross-selling and enhance loyalty.

While what may follow may sound like a commercial for Mitek, it probably is. With so little true innovation being done by traditional banking organizations in the U.S., it is refreshing to see a company that makes innovation part of their overarching company mantra. The good news is that Mitek continues to build new solutions that banks can implement quickly and easily (i.e. U.S. Bank), making them innovators as well.

To illustrate my point about the focus of Mitek on innovation, I have included a video where Jim DeBello, president and CEO of Mitek discusses innovation at his company.

Mobile Deposits

In a recent Forrester research paper entitled, 2012 US Mobile Banking Functionality Rankings, Peter Wannemacher wrote, "No mobile feature has made as big of an impact as quickly as the mobile remote deposit capture (RDC) functionality". The benefits of offering mobile deposit include:

• Mobile customer engagement: Moving the customer beyond simply checking balances.
• Cost reduction: While the amount of cost reduction is certainly up for debate due to the ability to reduce staff and physical facilities, there are definitely lower costs with mobile deposit than for a branch-based transaction.
• Revenue potential: As I outlined in a recent blog post entitled, From Free to Fee: Monetizing Mobile Deposits, U.S. Bank, Regions Bank and others have found a way to generate fee income from this value-added service.
• Enhanced customer experience: Anytime, anywhere simple mobile convenience to make a deposit, generate a receipt and access funds.

Rather than resting on their laurels, Mitek has continued innovation within their mobile deposit solution. In the Spring of 2012, Mitek introduced the ability to leverage their mobile deposit platform to load prepaid cards using a smartphone, freeing underbanked customers from needing to use costly check cashing facilities.

At the Remote Deposit Capture conference I attended in Orlando this September, Scott Carter introduced enhanced capabilities including endorsement analytics that can reduce risk, improved business intelligence that increases the ability to investigate processing exceptions, and a real-time image capture technology that provides instant feedback to the customer as to the quality of their image during the capture process (MiSnap™ SDK).

Mobile Photo Bill Pay

In May of 2011, Mitek won their first 'Best of Show' award at Finovate for their Mobile Photo Bill Pay solution. At the event, JJ Hornblass, publisher of Bank Innovation gave the service an A+ for the 'cool factor', an A+ in the category of 'I want it' and an A+ for 'profit potential'. Nice report card at a highly competitive financial innovation showcase including dozens of other innovation introductions.

The Mitek Mobile Photo Bill Pay solution enables users to pay their bills anywhere, at any time, simply by taking a picture of the paper bill with their iPhone or Android smartphone. Regardless of format of the bill, the relevant information from the bill is extracted, with fields within their mobile banking application being auto-populated. The customer simply confirms the information, schedules the payment and clicks 'pay'. Address barcodes can also be read which results in faster address verification.

Beyond paying a bill, the solution allows for very easy addition of a new payee for either one-time or recurring payments. With bill payments being one of the most important engagement services to make a new or existing account 'sticky', this service is a major benefit to the bank wanting engaged customers.

“As mobile banking applications have increasingly become ‘table stakes,’ it is even more critical for financial services providers to understand which new applications are truly value-added and should become a part of their core suite of mobile banking offerings,” said Bob Hedges, managing director at AlixPartners and co-lead of the firm’s financial services practice. “The valuable consumer functionality and convenience provided by Mobile Photo Bill Pay provides banks with a critical marketplace differentiator they need.”

Partnering with Mitek, and leveraging its Mobile Photo Bill Pay product, U.S. Bank was the first leading financial institution to offer this innovative service to customers in early 2013. Since this announcement, several other major banks have partnered with Mitek on their bill pay solution including BBVA Compass.

Mobile Insurance Solutions

Mitek's mobile photo imaging technology is the foundation for a suite of solutions for the insurance industry as well including the following:

• Mobile Photo Quoting™- By entering a zip code and taking a picture of a drivers license, insurance ID card and the Vehicle Identification Number (VIN), a customer can get a quote in a matter of moments.
• Mobile Photo Payments™- By taking a picture of a blank check, automatic payments or reimbursements can be made directly using a customer's personal checking account.
• Mobile Photo Claims™- Filing a claim is simplified by using the phone's camera to take a picture of the drivers license, insurance card and the license plate, eliminating hundreds of possible keystrokes.

Progressive Insurance was the first to market with Mitek's Photo Quoting supporting their mobile rate comparison application. Below is a video that describes the insurance industry suite of services.

MiSnap™ SDK

Enhancing the functionality of all of Mitek's solutions, MiSnap™ SDK is a technology that knows when all conditions are optimal and automatically snaps a photo of the check for mobile deposit or a bill coupon for the bill pay solution. This capability provides real-time visual feedback to the user in an intuitive and fun way, eliminating time and effort in the capture process. 

MiSnap is supposed to be twice as accurate as the previous manual capture process because it eliminates human error which can occur as a check or bill is being captured. This also decreases time to complete and increases satisfaction and adoption.

Mobile Photo Account Opening

In September of this year, Mitek again won the 'Best of Show' award at FinovateFall for their unique Mobile Photo Account Opening™solution. Mobile Photo Account Opening enables banks and credit unions to reduce the time and effort needed to open an account through the use of photo imaging. This solution could be used for mobile self-service account opening or in branches by new account personnel.

By taking pictures of the front and back of a drivers license, vast amounts of validated data can automatically populate the new account application, eliminating many of the errors that occur during this process. This frees up valuable time for better customer interaction and cross-selling and eliminates mobile opening abandonment that can be as high as 70%.

The Mobile Photo Account Opening solution can seamlessly integrate with a bank or credit union's  existing account opening process, assisting with identity proofing and fraud prevention through a partnership with Experian.

According to the July 2013, Javelin Research & Strategy report, How to Upgrade Online and Mobile Account Opening for an Omnichannel Era, “the fact that 88.5 million Americans attempted to open an account online or with a mobile device in the past 12 months underscores how far digital account opening has come in a few short years. Nonetheless, its potential remains largely untapped, especially as consumers place growing importance on mobile capabilities.”

In the same report the firm also noted, “The number one job for financial institutions should be to enable applicants to open and fund an account in one session.” 

Mobile Photo Balance Transfer

In just the past couple of weeks, Mitek continued the ongoing wave of innovation by partnering with U.S. Bank to offer Mobile Photo Balance Transfer to U.S. Bank mobile banking customers.

Mobile Photo Balance Transfer allows U.S. Bank customers to easily take advantage of credit card balance transfer offers from U.S. Bank by snapping a photo of an exisiting credit card payment coupon from another bankusing their mobile device and sending it to U.S. Bank to apply for a balance transfer to a U.S. Bank credit card.

Using the photo capability of a mobile device simplifies the process of account transfer as well as eliminating many of the errors that can occur in the process.

What's Next?

I am not sure what could be down the road with Mitek Systems, but it is definitely fun to watch as the ubiquity of the smartphone camera photo is used to simplify banking and improve the customer experience. 

Possibly, the next innovation will move beyond transactional functionality to provide a virtual safe deposit box for important documents stored electronically by the bank. Or maybe the solutions move into the payments space, allowing a customer to snap a photo of a barcode on a high priced item to enable the almost instantaneous approval of a loan for the customer. 

The good news is that I am sure the innovation isn't done.

Additional Resources

Mobile Remote Deposit Capture: Changing How Consumers Bank and Banks Compete - AlixPartners (2011)

Mobile Deposit: Why Now. . . and How - Mitek Systems (2012)

Broadening Mobile Bill Payment Adoption with Photo-Based Payment: Quantifying the Benefits _ Aite Group (2013)

Consumer Market Outlook for Mobile Photo Bill Pay - AlixPartners (2012)

The Next Generation in Bill Payment - TowerGroup 

Five Trends Shaping the Next Generation of Digital Banking - Forrester Research (2013)

The ROI of Mobile Photo Bill Pay - Aite Group and U.S. Bank (2013)

How to Increase Net Profits with Mobile Photo Account Opening - Mitek (2013)