This Week in Engagement Banking Steve Dance tries to educate bankers about the importance of social networks to the future of their business and debit cards get bitcoin funding. Also, Dwolla reaches out to banks and Edo uses location data that can spur more consumer purchasing.

Steve Dance for The Financial Services Club Blog
In Finance, Facebook is Just a Phase We’re Going Through
My grumpiness just got 10 times worse at this treasury conference, as I stood up and started talking about how I use Facebook, Twitter, blogging etc. to leverage my business. I could see a veil of abandonment enter the faces of the room as they struggled to get what I was saying, so I asked if any of them use Facebook, Twitter, Flickr, Tumblr, Groupon, et al. No. One person piped up and said they use Facebook to keep abreast of what their children are doing, and that was it. I just unfriended the lot of them. But then I thought, hey ho, they’re corporate treasurers.  Why should they be interested in social media? So I gave it a chance and launched into my spiel about micropayments, bitcoin, Facebook credits, the challenge to security and privacy, the world of change from Square and mobile payments and more. More…

Forbes
Bitcoin Funded Debit Cards
Yes, it’s entirely possible to fund your existing debit card, or credit card, with your accumulated bitcoin. And I don’t mean that you are shipped a generic, low-limit prepaid VISA or Mastercard from some anonymous reseller. I mean that you convert bitcoin online to dollars or euros and the funds are available to spend with a card that you are most likely already holding in your wallet. Why is this so significant? It’s important because it leverages a little-known type of transaction that is available on the VisaNet system called ‘Original Credit Transaction’. The other major card payment networks have a similar feature too. These transactions act like a refund or credit transaction when you return an item to a store except that they don’t have to be associated with an original purchase. Essentially, they enable your card to be a two-way payment device. Surprisingly, not many financial institutions have taken advantage of this feature yet but I expect that to change. More…

Bank Innovation
Dwolla Needs You, Banks
Startup payment network 
Dwolla is looking to make friends with banks and credit unions to make its dream of real-time transfers a reality. In a  blog post today, Dwolla revealed innovations to its FiSync platform that it will allow money to move from one bank account to another, providing an alternative to the automated clearinghouse. Banks can offer Dwolla payments after Dwolla connects to its payment processing system. Even with the innovation, Co-Founder and Chief Executive Ben Milne said pricing and fees at Dwolla will remain the same. Currently, Dwolla charges $0.25 for any transaction over $10. But in order for FiSync to work, the platform needs banks’ support. As such, Milne announced today that he is offering FiSync to financial institutions for free. Bankers can apply for the API 
here.
 Veridian Credit Union, Iowa’s largest credit union, will be the first to come online with FiSync on June 4.
More…

Bank Technology News
Edo to Harness Payment Data to Spur Consumer Spending
Can banks turn a single payment into a shopping spree? With mobile offers, Edo Interactive says it’s possible. The Nashville company is announcing Tuesday that it is testing a service called Geocommerce, which analyzes the location data in consumer transaction information. As soon as a consumer makes a purchase, the Geocommerce service provides an offer for a merchant that is within walking distance of where the first payment took place. The goal is to encourage the consumer to make another purchase right away. After buying a book, for example, a consumer could receive an offer at a nearby cafe where she can go to start reading. “Geocommerce offers a new level of targeting,” Steve Kietz, general manager and executive vice president of Strategic Partnerships at edo told American Banker in an interview on Monday. Edo’s location-based Geocommerce offers are designed to spur immediate purchases in part by having a limited shelf life: they typically expire within a few hours, according to Kietz.  More…

Tech Day
Smartphone ownership skyrocketing: IDC
Technology industry analysts IDC have released a new report suggesting smartphone ownership in New Zealand households has risen from 13% in 2011 to a massive 44% in 2012. High demand and increased competition in the mobile market are cited by Glen Saunders, senior analyst, Telecommunications for IDC NZ, as the factors driving the trend. “The average customer now gets more value for their dollar than they did at the beginning of 2011,” Saunders says, “with more minutes, text and data available for more customers. “It’s been an extremely exciting year with cheaper smartphones, a broader range of promotional and product offers from all the mobile operators, and of course more and more people are starting to understand what ‘apps’ are.” IDC is forecasting that mobile data usage will grow 16.6% year-on-year until 2016. Mobile operator 2degrees recently launched a service allowing users to share their data between multiple devices, recognizing the growing importance of data to consumers.  More…

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Image courtesy of the anti-social network.

American Banker
Simplicity, Usefulness Should Guide Mobile Wallet Development
As banks contemplate extending payments to mobile wallets, they would be wise to keep things simple to encourage more adoption. Citigroup Inc. learned this lesson in various partnerships and experiments around the world; consumers respond best to simpler mobile-payment offerings that build on established habits and behaviors, according to Robert Schlaff, Citi’s global product manager for mobile solutions. “We need to build adoption from very specific-use cases, like buying a cup of coffee,” he told attendees at NACHA’s Payments 2012 conference here during a panel discussion about shaping the future of mobile wallets. If an institution throws a complex mobile wallet at consumers that “does everything right now,” it likely won’t take hold, Schlaff warned. More…

Lendio Blog
Lendio Sets Record Numbers; Eases Burden of Getting Business Loans
Lendio sees nearly 500 percent increase in matching businesses with small business loans. The pain of securing business loans is easing, according to Lendio, which set record numbers this quarter in matching business owners with the right types of business financing.  “In 2012, we’ve seen almost a 500 percent increase in successfully matching small business owners with the right lender,” said Brock Blake, Lendio CEO. “Once you’re matched to a lender, it is significantly easier to land a business loan.” After being matched to a lender through Lendio’s platform, there’s about a 70 percent chance of getting funding. More…

The New York Times
The Post-Cash, Post-Credit-Card Economy
YOU walk into a cafe, order a macchiato, give your name to the barista and let him give you the once-over. That’s it. Payment made. At Home Depot on a purposeful Sunday, you load your cart with lumber and light bulbs and instead of pulling out your wallet, you type in your cellphone number and a PIN. Payment made. In London, travelers can buy train tickets with their phones — and hold up the phones for the conductor to see. And in Starbucks coffee shops here in the United States, customers can wave their phones in front of the cash register and without even an abracadabra, pay for their soy chai lattes. Money is not what it used to be, thanks to the Internet. And the pocketbook may soon be destined for the dustbin of history — or at least if some technology companies get their way. More…

Bank Innovation
Innovation as a Road to Banking Nirvana
I hope you watched Frontline’s latest installment of “Money, Power & Wall Street,” a multi-episode investigation into the credit crisis. The credit crisis is now far enough away that the show offered a stark reminder of just how horrid was the experience and the circumstances surrounding it. The show reminded me that banks — particularly large banks — still have a way to go before they have redeemed (and that really is the right word) themselves with consumers, particularly over the derivatives nightmare they wrought. It got me wondering: How to continue to do so? How to satisfy the base anger expressed by Occupy Wall Street and other evidences of consumer anger? You might think I have an agenda here — and forgive me for that — but I think innovation is the best course of action. More…

The Financial Services Club’s Blog
In the future … HSBC might not be a bank
Flying around all the time, you sometimes forget to absorb the ads around you. There’s one particular ad I’ve spotted for some time now, but only today got around to investigating. It’s HSBC’s latest campaign. Moving on from the world’s local bank, they’re now heavily into the future. That’s my space (not myspace). In fact, it was a bit weird as I presented at a conference this week and realized that I’ve been studying future financial trends for twenty years now. And to show you that I’m not that bad at it, here’s a video I made in 2000 – 12 years ago – predicting some future fintech changes to our world. More…

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The report, from My Private Banking, benchmarked over 200 mobile apps offered by 50 significant international banks. Besides showing which banks were performing best from a mobile standpoint, it also highlighted which mobile platforms and devices have been most used for mobile banking. Deutsche Bank and the French bank Caisse d’ Epargne were praised highest  for the qualities their apps provided such as comprehensiveness and integration with other online media.

Not surprisingly, a majority of the banking apps available have been created for the iPhone, but Android apps are hard to find. What was most striking about the report, however, was the sheer number of available apps (and they continue to grow) that, regrettably, banks aren’t even using.

Banks are quite simply not utilizing the power of client connection that mobility could provide them. In the not so distant past this would be just  another, ‘oh well’ moment, but in light of how mobility has become the de facto way to connect with clients under the age of thirty and the only way to connect with potential customers on some continents – it’s now a reason for real concern.

Mobile apps are here to stay. How banks set up their use now could have far reaching consequences for future mobile policies and even influence a bank’s overall online experience. Banks would do well to use mobility to ‘engage customers, market their products and strengthen their brand.’ Soon, those using mobile to interact with their bank will eclipse those using PCs.  It seems to me that the time to create an engaging mobile experience for banking customers is right now.

BANKNXT
The Horseless Carriage
The way most financial services firms are exploring mobile, makes you think you’ve travelled back to 1995, to the early days of the internet. The first applications we saw back then on the internet were typical examples of what Marshall McLuhan called the “Horseless carriage syndrome”. The first car looked like a carriage without a horse. When we try to grasp a new medium, we always do so within the confines of a medium we already know. Financial institutions are still in this stage. They are currently replicating existing regular processes to the mobile channel; enabling customers to conduct their financial transactions, or filling out a claims form. Don’t get us wrong: we think this is good. But we feel – like everyone – that so much more is possible. We really need to think beyond the horseless carriage.

ReadWriteWeb
Why Would a Financial Services Firm Want to Use Pinterest?
“PINTEREST: Can financial services firms use this new platform effectively?” That was the subject line of an email in my inbox this morning. It came from Corporate Insight, a financial services consulting firm. The email went on to note that “Pinterest values imagery over text and incorporates many social aspects of Twitter and Facebook to connect users and spread content.” While admitting that “no financial services firm uses Pinterest today,” nevertheless Corporate Insight thinks that financial institutions should have a presence on Pinterest. At first I scoffed at this: a financial services firm on Pinterest!? But on reflection, we are in an online world that is increasingly visual. So why shouldn’t a financial services firm use one of the leading image-based social networks? Tumblr was probably the first social media service to exploit the Visual Web trend on a mass scale, but it’s been Pinterest that has captured the public imagination in 2012. Pinterest is a place to store and share images (and videos, although that is a much less used feature of the site).

Bloomberg Business News
Why Half the World Doesn’t Have Bank Accounts
In the U.S., bank accounts are nearly ubiquitous, with almost 90 percent of adults having formal accounts. But in poor countries, only a quarter of people report having have accounts. All told, more than 2.5 billion adults around the world—about half—are unbanked, according to a new World Bank data project funded by the Bill & Melinda Gates Foundation and based on Gallup polling in 148 countries. The World Bank launched the Global Financial Inclusion initiative, which it calls Global Findex for short, with both a database and a white paper on the new stats. A leading reason for the disparity between rich and poor countries is both dispiritedly intractable and painfully obvious: poverty itself. Two-thirds of people without accounts said they simply don’t have enough money to use a bank. The data, though, show some less daunting problems to tackle. People said financial institutions are too far away and too expensive to use. In some regions, including Latin America, people said the institutions required too much documentation. The white paper says fully 35 percent of the unbanked report barriers that are solvable.

Backbase White Paper
The Future of Banking
Banks are facing rapid change. Customer behavior, technology and competition are all in transition. The most challenging part? It’s all happening at the same time. Companies  like Facebook have made the world social and given customers a voice. Only three years ago Apple launched the iPad, and created a whole new product class. Tablets and smart phones are taking the world by storm, soon eclipsing traditional PC sales. And in a move that no one could have predicted even five years ago, companies are branching out from their native industries to compete with traditional banks. These competitors are also composed of innovative entrants such as Simple, Movenbank, Google and PayPal – to name only a few. Whatever their origins, all of them show that a physical banking presence does not necessarily equal success. It also means that banks must act now to engage their customers, or risk losing them to those who will.

Bank Innovation
2020 Mobile Vision
Mobile has long been a talked about strategy for the financial industry.   But finally it is moving beyond simple online banking tasks of just being able to check account balances or receive mobile account alerts to providing sticky applications that will change a consumer’s lifestyle.   Cases in point are the Google Wallet and Pay by Square.  I have both.  They are both fabulous and easy to use.  I wish more merchants would embrace NFC (Near Field Communications) technology so that I can ditch my “real” wallet. Based on the results of a recent survey conducted by Pew Internet & American Life Project, a lot of people share my sentiment. Nearly two out of three respondents to the survey (65%) told the Pew Internet & American Life Project that they think most people will have fully adopted the “mobile wallet” as their day-to-day means of paying by 2020.…By 2020, most people will have embraced and fully adopted the use of smart-device swiping for purchases they make, nearly eliminating the need for cash or credit cards. People will come to trust and rely on personal hardware and software for handling monetary transactions over the Internet and in stores. Cash and credit cards will have mostly disappeared from many of the transactions that occur in advanced countries. The mobile payments market gained a lot of traction last year thanks to Square and other mobile merchant acquirers like NA Bankcard giving a lower cost alternative for merchants to accept credit card payments.  This is broadening consumer awareness about mobile apps and uses for their smart phones and tablets. All the activity around mobile and payments is really heating up with the big brands.  Here’s a short summary list to catch you up to date.

See the Charlie Rose Show with Square’s Jack Dorsey talking about the company’s move beyond payments.

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The Financial Brand
10 Of the Best Banking Brands To Watch
There are some banks that consistently pop onto The Financial Brand’s radar, those that bang out new ideas in financial marketing — many of which are successful — on a regular basis. These are the brands you want to study. Whenever you hear their names, you should pay attention. Take every opportunity to read articles, review case studies and attend presentations focused on these brands. This isn’t a list of “The Best Bank Brands.” There are at least a half dozen different research organizations with models ranking financial brands. Most of these rank banks according to their estimated brand valuation using proprietary (and arbitrary) formulas. This is not one of those lists.

TechCrunch: Guest post written by Uzi Shmilovici
UX and poison on the tip of the arrow
I used Path twice. None of the people that I know are using Path. I even checked with an early adopter of social media recently and one of Path’s earliest users. She told me that she doesn’t see a lot of people using it. Generally, this is not a good indication. Maybe there are millions of secret Path users (or users in another geography that I don’t know about) but it seems that Path just doesn’t pick up. Sure, Path 2.0 design is amazing. However, amazing design is not enough. It is like fashion. Everybody is excited about it at the beginning, but then people are getting used to it and eventually it wears out. After it does, the user is left with the essence of the user experience and what Path misses most is a compelling and unique user experience that will make using it worthwhile. “Amazing” design won’t get you anywhere.

Android Central
Google Wallet updated with improvements and enhancements across the board
Google Wallet has seen another update, and this time Google has made all sorts of improvements and enhancements to the app.  Per the change log in the Google Play store: Prepaid Card top up forms more flexible; Citi Mastercard management improvements; UI improvements; Privacy enhancements; Bug fixes; and Updated Terms of Service. The most interesting, on the surface anyway, would be the UI improvements. They must be very subtle, because we’re not really seeing any. It’s the same fluid and simple UI that has been there for a while, and while we’re not complaining, we just don’t see any improvements. We’re pretty sure that some of this change log is just leftover from the last update. It’s OK, Google. We all slip. We can certainly get on board with improvements, though. Bug fixes are always welcome, as are privacy enhancements. Anything to keep our money safer is a good thing. You’ll also be faced with the new terms when you update, and we suggest you read them carefully. There’s nothing there you wouldn’t expect, but it’s always wise to stay informed.

The Telegraph
Orange turns Android phones into credit cards
Although the company has yet to announce which Android handsets will be compatible, only the latest models include the required ‘near-field communications’ technology. ‘Quick tap’ is a system that allows transactions of up to £15 each to take place simply by waving a phone near a reader, which can also be used for contactless credit cards. The maximum amount will rise to £20 in June, and more than 15 million such contactless cards are already in circulation in the UK. Retailers including Subway, McDonalds and Prêt a Manger are among the 70,000 outlets that accept the technology. Data about their use, however, is not public. By 2013 there is expected to be over 130,000 places across the UK where people can make contactless payments as the technology extends into brands such as Tesco, Waitrose, Boots and Co-Op. Other similar applications, such as Barclays’ PingIt, link bank accounts directly to handsets, and are expected to also drive the adoption of ‘mobile banking’.

Mobile Commerce Daily
Back to basics: Lessons learned from the mobile Web
Let us talk about the way that mobile devices are changing every user interface from tablets to digital music services, and more. . . .To illustrate this point, I would like to share a personal experience. My wife is a stay-at-home mom who drives our toddlers to various activities, chases them around the house and barely has any time for anything else. When she finally has a chance to breathe, her interaction with the world begins through her mobile phone. With a few simple taps, Facebook provides her what she needs—the ability to quickly and easily catch up with friends, family and maybe even a few brands. All of the content she wants is readily available to her in a simple format.

Yes, she used to log in to Facebook on her computer, but after being bombarded with ads, event notifications, birthday alerts, game requests and even Spotify telling her what music I listen to, she decided she did not need any of the “extras” Facebook offered outside of the mobile platform. And why should she when it is easier and faster to get exactly what she wants through her mobile device?  It is important to remember that giving someone everything is not always best. Mobile devices are shaping and helping to create a new set of (old) interface best practice, not just for the small screen, but across all interfaces.

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This Week in Engagement Banking

Finextra
Ogaki Kyoritsu Bank ditches cards for biometrics at ATMs
In what it claims is a first, Japan’s Ogaki Kyoritsu Bank is rolling out ATMs that use palm-scanning biometric technology from Fujitsu to identify customers instead of cards. Biometrics technology at cash machines is widespread in Japan but has previously been used in conjunction with cards or bank books.From September, Ogaki Kyoritsu Bank customers will be able to register to use the system by associating their biometric palm details at a machine with their PINs and birth-dates.They will then be allowed to withdraw money, check balances and make deposits at ATMs in 10 branches, as well as mobile sites and drive-throughs, by placing their hand on readers. Explaining its decision to roll out the technology, Ogaki Kyoritsu cites the devastating earthquake that hit Japan last year, suggesting that during future disasters, people who lose their cards would still be able to access their money.

Snarketing 2.0
Are Credit Unions Ready To Increase Member Business Lending?
Many folks in the credit union industry are lobbying for an increase in the MBL cap from 12.5% to 25%, and to raise the ceiling on the definition of a microloan from $50k to $250k.
Without getting in the political issues involved here, there is this question; If the lending caps were to be loosened, would credit unions be well positioned to provide banking services to small businesses? In the research my firm has done on small business banking, we’ve found that there are three things — to varying degrees — that small business owners are looking for from the banks (or credit unions) they do business with.

Bank Innovation
Smaller, Faster, Lighter — Transforming Differently
I have seen several different forms of transformation programs and software development programs.  Some have been small, one person (me) writing software and talking to customers. There was a time when I wrote software in the morning and met with customers in the afternoon.  In the afternoon I would show the advances from the previous day and share some of my ideas of what I could do by the next meeting.  In the end I knew that the customer saw the benefits from the software because their face lit up when they saw it working. I’ve also seen programs where there are hundreds of people all trying to achieve that same end result.  The majority of the people assigned to the program are trying to create some order in the chaos and provide some structure.  At the core there are people wanting to develop, people trying to figure out what to build, people interpreting what they think the business needs and ultimately a business customer that is hoping that all of this activity is going to yield some results.

Chris Skinner’s Financial Services Club Blog
The Crowdsourced Bank
I’ve been thinking about how to build a bank for a while, and have been partly inspired by the examples of (bank)simple and movenbank. Both new bank startups began with a call to interested commentators to give their two-penneth worth of input about how a bank should operate.  I never saw results of this input but assume that the simple startups demo gives us a few clues. The theme of crowdsourcing expands further as we see new startups like CivilisedMoney’s launch in the UK, with all of its funding from crowdsourced channels and all of its offer based upon crowdsourcing peers.

TekFin
The Core of the Machine – Banking as a Utility  
I have been a strong partisan of Banking as a Service and posted several times on the topic on this blog. Recently I have posted more on the shiny outer layers that could be / are created in such a stack but not so much of the core services under it. So it was with interest that I saw @giyom‘s tweet: A banking utility doesn’t buy debts, issue liabilities nor do maturity transformation, it only is a trusted accountant between borrowers and debtors It’s an interesting view, a pure banking utility would provide the pipes to connect depositors and borrowers and maintain the accounting trust between the two, whether direct, in a P2P lending type model, or indirect by reporting aggregated assets and loans. @giyom pointed me also to Dan Kaminsky analysis of  Bitcoin: http://www.slideshare.net/dakami/bitcoin-8776098 – slide 14 and 15 are interesting in his analysis that supernodes in Bitcoin are effectively banks.

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Happy Easter!

Banking Business Review (BBR)
Google buys payment technology firm TxVi
Google has acquired mobile payments technology company TxVia to enhance its digital payments service. TxVia provides mass-market prepaid cards, general purpose re-loadable cards as well as more B2B-focused initiatives like incentive payments, government disbursements, payroll and expense management. The company said that the acquisition will assist it to counter balance the growing impact from its arch rival such as PayPal. It also potentially gives Google a whole new raft of products that can be plugged into its payments service.

Bank Innovation
BI2012: Outsiders Rule Banking Innovations
In innovating banking, it is not the American financial institutions doing the creative work. (From BankInnovation 2012) At least that’s what fintech startups believe. “Financial institutions tend to solve their problems and force it on customers,” said Shawn Budde, co-founder and chief risk officer at short-term loan provider ZestCash, during a panel at last week’s Bank Innovation 2012. “Frankly, almost all innovation is coming outside of the banks. Banks aren’t doing the innovating for the most part.” Budde pointed out that even the development of credit cards came from outside traditional banks decades ago.

American Banker
Bump Pay Nudges Mobile P-to-P Market
The apps provided by Bump Technologies, which let people share data and photos by touching their phones together, have proven popular — the app has attracted 80 million users in three years. While the technology’s use as a payments enabler has been slowly developing for the past couple of years, Bump believes there’s enough of a current opportunity to spin off a Bump app dedicated entirely to payments. Bump Pay, which is currently available for the iPhone through a Bump Technologies subsidiary called Bump Labs, enables two smart phones using Bump apps to transfer card or account payments data by tapping against each other. The transactions require physical contact, rather than the near-field communication wireless technology that drives most tap-and-pay mobile phone payments and is the favored technology of large mobile payments initiatives such as the Google Wallet and the Telecom-driven ISIS.

VentureBeat
PayPal announces new pricing model, creates suite of mobile products
PayPal announced that it has consolidated its payments system today, with some upgrades to the way small businesses accept payments online, offline, and in the mobile world. “PayPal Here was just part of a fundamental change for small businesses,” said Peter Karpas, PayPal’s vice president of customer engagement, in an interview with VentureBeat. “Small businesses are the heart of PayPal, just like they’re the heart of the country.” The new, tiered system is called PayPal Payments, a small departure from its original “Website Standard” and “Website Pro” offerings. The company is dropping “website” in a move that it compares to Apple dropping “computer” from Mac Computers to define itself a broader technology company.

Mobile Payments Today Blog
The high stakes world of mobile payments
When we created our immensely popular and wildly informative infographic last year explaining just what a mobile payment is, we were gratified that so many people found it useful. Now we’re being asked about all of the companies that seem to be jumping into the mobile payment game. It’s a good question. Almost every day a new player enters the market. And why is that? Because so much is at stake. The expectation is that a large percentage of the $6.2 trillion in credit card transactions is going to migrate to mobile. (And that doesn’t even include other transaction types that could be supplanted by mobile payments.)

PayPal’s New Leader: How He Handled a Crisis at His Startup
Bloomberg
David Marcus is taking over PayPal, a business that accounted for more than 40 percent of EBay’s sales last year. Here’s one way to restore “startup energy” to a 13-year-old business: Put an entrepreneur who has been there less than a year in charge.

EBay Chief Executive John Donahoe will relinquish his role as the interim president of PayPal to David Marcus on April 2. Marcus founded mobile payments company Zong, which EBay bought for $240 million in August. So, what type of “startup energy” does Marcus bring? Dana Stalder, a venture capitalist at Matrix Partners and former PayPal executive, recounted one day when Marcus received an unwelcome phone call: One of the “world’s largest telecom companies” said it was cutting off its relationship with Zong — effective the next day.

Behavioral Change: Is There An App for That?
Banking.com
To some of us, it might seem that people who don’t know about mobile banking must be living in a cave somewhere. But here’s the reality: Only 10 percent of mobile banking users were prompted to use their bank’s mobile channel by their actual bank.

This is not some revelation from years ago, when mobile features and capabilities were still mostly a novelty, and understandably accompanied by some trepidation. It’s actually a key finding from a survey of 1,527 mobile banking users, encompassing more than 240 banks and credit unions. It was commissioned by ath Power Consulting, a provider of customer experience solutions for the financial services industry. That’s not the only bad news in the report. It turns out that only one in five users were offered any option to customize their user interface, and fully 40 percent failed to find links for technical support.

An Industry of Plumbers, and Other Opportunities in Banking
Bank Innovation
It’s an honorable profession, plumbing. Plumbers, they make a nice living. No, not those plumbers; I write of banking plumbers. One of the themes from Day One of Bank Innovation 2012 was the idea that banks can increasingly provide the “plumbing” for more adventurous financial services ventures. There’s something to this. We have noted that many a startup runs off the back office of more established banks. One is PerkStreet Financial, the founder of which, Dan O’Malley, participated in a panel discussion at Bank Innovation yesterday.

Heck, wholesale banking has been around for a long time. Yet, the “Intel Inside” notion of banking rarely gets discussed. It did yesterday, and I was struck by the wide-ranging implications. Iker Marcaide, founder of Peer Transfer and someone I think highly of, pointed out that banks have increasing opportunities to provide that financial plumbing, as startups blossom. Peer Transfer itself works with many banks to facilitate its international cash transfer business. Even Todd Sandler at ING Direct said during his panel discussion that ING Direct doesn’t consider itself a bank, but a marketing and technology company. In other words, and I am paraphrasing here, the banking part is just plumbing.

Experience Is The Next Frontier In Marketing
Jacob Braude writing on Fast Company Blog
As antithetical as it may seem in a hyper-digital word, experience–how we interact in the physical world–is the biggest buzzword in marketing today. Here’s how smart companies are considering customer experience when they look to the future.  ”Experience” is the marketing buzzword of our time. It seems like every week someone is extolling the vast untapped potential of experience to move your customers: Starcom recently created a Chief Experience Officer position; SMG Global CEO Laura Desmond has called experience the “future of advertising,” and Starbucks is revitalizing through a focus on moments of “human connection.” And they’re right–experience is the future of marketing. The problem with these ideas is that they are fuzzy. They are more a call to arms built around a smattering of case studies than a real, concrete understanding of what we mean when we say “experience,” and how exactly experience is going to shape customer behavior.

If you are cashless, can you survive?
The Financial Services Club Blog
I recently blogged about less cash and less branches, rather than cashless and branch-less, and thought I’d follow it up with two quick stories. First, is my experience in New York this week. Went to the ATM and, as usual, my bank blocked me using my card as it was in the USA and not in some backwater in the Middle East (my usual hangout). Trouble was that I’d gone out touring for the day and had no cash, only one cash card, no phone and no way of clearing the problem. [In fact, it would have been worse than that, if not for Skype, as the five minute telephone call to clear the security flag would have cost me $10 to make – my bank is so last century]. Shoot. Luckily I had one other card in my pocket. A credit card. Could I survive for a day in New York with no cash?

What aren’t they? Customer friendly. Yes, and customer friendly banks must be in a Bank 2.0 world. Customers are expecting ease-of-use, attractive interfaces and well-integrated functions that work seamlessly. Apple is ordinarily referenced as the exemplar of this type of computing. Today, banks are moving to all-digital, self-service customer interaction that requires ease of use and simplicity that are just not possible with complex legacy systems. So how can you leverage your legacy systems and at the same time offer easy to use apps? Below some basic suggestions:

1)  Search for a solution in the front-end:  create a flexible, user experience layer (multi-device presentation) and a well-defined, integration layer (convenient integration points). The buzzword today is APIs, but the SOA movement fulfilled this need 10 years ago. The difference between now and then is that before it was a ‘should,’ i.e., “We should have a well-defined, integration layer with standardized interfaces because that’s the most elegant way to do it.” Today, it’s a ‘must,’ i.e., “To support easy customer interactions across the plethora of devices that accompany them, we must have a convenient integration point that can be easily used in the presentation (or customer interaction) layer.”

2)  Build user experience DNA into your organization. In the old enterprise application days, if users were unhappy, so what? They were employees. Even if they griped, no one resigned because an application was clunky. Even if they did, there was always someone else who would take their place. Today, your users are fickle. They’ll try an app, and if they can’t get it to work right away, they’ll go on to another. If people can’t do what they want with two or three clicks, you’re going to end up with a gaping wound in your company’s forecast. You have to learn from the best out there. Examine the most popular mobile business applications. I use Dropbox and Evernote apps all the time. They’re elegant, single-purpose, applications that I rely on every day. Find your own application exemplars. Learn from them. Your Bank 2.0 applications should deliver value on the opening page–without someone having to do more than enter some simple information. Your applications should make even more valuable information available via progressively deeper interaction.

This User Experience trend is far more profound than slapping a pretty interface on a decade-old enterprise application. That’s just lipstick on a pig. It’s all about recognizing that the boundary between your company and the rest of the world is getting blurry–and that’s a good thing. Letting end users engage with your systems can transform your business relationships and your economics.

-Jouk

Innovators break the rules: here comes Apple’s iWallet
Chris Skinner on his Financial Services Club Blog: I did a speech about innovation yesterday. As usual, the opening question was: “which is the most innovative company in the world?” and, as usual, the answer shouted back was: “Apple”. Apple. The firm everyone wants to be like because they are cool, successful, the world’s most valuable company by market capitalization and because they are what we all want to be. But it wasn’t always this way. Some of us remember 1997 when the company was on its knees. Back then, when asked what he would do with Apple, Michael Dell was famously quoted as saying that he would “shut it down and give the money back to the shareholders”. Instead, Steve Jobs came in and took the company into the stratosphere. The result is that $1,000 invested in Apple in 1997 would be worth $58,000 today. Not a bad return on investment. What did he do?

From Mobile Bill Payment to Mobile Wallet
Mobile bill payment can be the stepping stone to consumer adoption of mobile bill payments at the point of sale while keeping banks at the center of those transactions. Over the last year, media attention and overall interest in mobile payments has surged dramatically. While point-of-sale (POS) payments and mobile wallets have grabbed most of the headlines, the real story may be the growth of mobile bill payments. Consider these finding from the 2011 Fiserv Billing Household Survey: Almost six million U.S. online households make a mobile bill payment each month; Bill payment via mobile banking increased by 33% in 2011 from 2010; Fifty-eight percent of smartphone owners are interested in paying bills on their mobile device and cite the ability to make expedited payments as a top reason.

Google Said to Rethink Wallet Strategy Amid Slow Adoption
Google Inc. is weighing changes aimed at improving its Google Wallet mobile-payment system following slow adoption and the departure of two key managers, according to people with knowledge of the project. The company is considering sharing revenue with carriers such as Verizon Wireless and AT & T to get them to embrace the technology, which lets users pay for items at checkout by tapping phones on a reader device, said the people, who asked not to be named because the discussions are private. “They are in a bit of a re-evaluation pattern right now,” said Rick Oglesby, an analyst at Boston-based research firm Aite Group. “It’s going much slower than anticipated.” Google said it’s enthusiastic about Google Wallet’s progress so far.

How Austria’s ZUNO Cross-Sells on Mobile Devices
Delivering the perfect marketing pitch via mobile or web at the point of sale is one of the primary upselling goals of mobile banking, one which requires sales pitches and marketing campaigns to be delivered faster, and with more user-appropriate content. For Zuno Bank, which is running a vast bundle of marketing programs — more than 60 in each country in its footprint — matching the right program to the right consumer requires quickly navigating a maze of data and delivering the cross-sell message.

To do this, the bank is turning to a business rules management system that accumulates transactions to quickly update consumer profiles, then matches daily event-based marketing pitches based on those changes in profile.  Peter Fusek, head of CRM for ZUNO, which is the direct banking arm of Vienna-based Raiffeisen Bank International says: “We wanted something flexible enough so the business line users wouldn’t have to ask IT for help to use the product.” ZUNO, which was launched by Raiffeisen in 2010 to target primarily web and mobile banking consumers.

American Express Sync: What is it and how does it work?

Photo courtesy of: homepuzz.com