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By Lee Wetherington

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the future

So, how can banks know the future?There are many techniques andapproaches, but a simple place tobegin is with interactive graphicsthat plot the technologies that futur-ists worldwide project to arrive.For example, trend forecasting

firm Envisioning Technology pro-vides a data visualization thatneatly charts and categorizes varioustechnologies that will be arrivingfrom 2012 through 2040. One ofthose categories is “User Interfaces.”

At a glance, we see the progressionfrom multitouch in 2012, to gesturerecognition in 2014, to speech recog-nition in 2015, to augmented realityin 2017.But how will these technologies

impact banking? Do we have toinvoke the spirit of Steve Jobs foranswers? Of course not – just lookaround. Innovative companies havealready leveraged all of these UserInterface (UI) technologies in bank-ing applications, giving us a clearfirst-hand look at what the futureholds.

Multitouch banking

Even though multitouch technologyhas been around since the advent ofthe smartphone in 2007 and itextended with the introduction oftablets, banks have been slow to cap-italize on the simplicity of this newmode of UI. The Money Bar® in PNC’s Virtual

Wallet®, however, is a great exampleof leveraging multitouch to simplifybasic banking. On the average onlinebanking site or mobile banking app

The Great Recession left banks with two bad habits: a head-down focus

on the short term and a pessimism about future prospects. The latter rein-

forces the former, and both blind banks to opportunities here and now.

Ever shortening cycles of technology adoption, diffusion and disruption

lead many to assume that you cannot know the future, much less plan

for the long term. Such assumptions are incorrect, not to mention

dangerous.

As the pace of change accelerates, the long-term view becomes more

important. Without it, banks inch uncertainly in directions that can ulti-

mately prove inconsistent with, and irrelevant to, the emergent

expectations and demands of both consumer and business clientele.

Done right, bank strategy must work from the future backwards. And

while no one knows exactly what form the future will take, a close look at

today’s trends — and the consensus surrounding where those trends

lead — can provide banks with a reliable vision of the size, shape and

scope of tomorrow’s opportunities. In short, banks can know the future

and strategically align themselves with it.

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today, customers must take severalsteps to transfer money from oneaccount to another; i.e., choose the“From Account,” the “To Account,”the amount to transfer, the date totransfer and “Submit.”With PNC’s Money Bar®, a simple

interactive visualization allows thecustomer to see at one glancewhether she has enough money tomeet this month’s bills and otherobligations. Better still, if she doesn’t,she can free up money in reserve tocover those obligations with onetouch, using the Money Bar® slider.One touch. One step. It’s radicallysimpler and visually much moreintuitive, meaningful and contextual.

tablet banking

The importance of multi-touch bank-ing is now front and center in tabletbanking. Many financial institutionsare tackling the question of tabletbanking — how important it is orwill become, and how it compares tobanking on mobile phones. According to Alejandrao E. Carriles,

executive vice president and directorof mobile strategy and retail innova-tion at BBVA Compass, a leader intablet banking development, 5 percentof BBVA customers are tablet users,but those users represent 22 percentof BBVA’s mobile banking usage.Additionally, BBVA tablet users usetablet banking four times more thanmobile banking. The reason?“Tablets are not large-screen smart-

phones,” says Carriles. Tablets areused mostly at home in the evenings ina leisurely environment, whereassmartphones are used everywhere formore urgent, time-critical needs.Smartphones are personal devices,while tablets are typically more com-munal and shared by the family. And although tablets are physi-

cally portable, the reality is only 38

percent are truly mobile devices. Andthis is why 53 percent of tablets areWi-Fi only and are primarily used onhome networks. Even so, iPads already generate

25 percent of all mobile Internettraffic, according to Mark Jamisonwith Capital One’s DigitalInnovation Lab, and many analystspredict tablet banking will eventu-ally overtake PC-based onlinebanking.

speak to bank

And what about speech recognition?How will voice activation improveand simplify banking? Again, youdon’t have to use your imagination— the first generations of these technologies are already here.Similar to Apple’s Siri, Nuance’s

Nina and Personetics’ DigitalBanker are voice-enabled mobilebanking assistants. Unlike Siri,Personetics’ predictive analytics anddecisioning make for a much easierand more productive customer expe-rience. Digital Banker not onlyrecognizes natural languagerequests spoken by the bank cus-tomer, it also predicts what thecustomer might want to know or donext based on account data and his-torical behavioral analysis,

proactively providing prioritizedprompts for those options. It alsoenables personalized messaging andpromotions.The bank customer may simply

question, “What’s my balance?” or“What is my available credit?” andsay “Pay my power bill.” Balancesand other non-public, private infor-mation are presented visually ratherthan audibly to protect privacy. Byrecognizing speech and predicting orprioritizing next steps, customerinquiries are dramatically stream-lined, and thumbing on tinykeyboards virtually eliminated.Nuance’s Nina is unique in that it

also leverages voice recognition toauthenticate the customer’s mobilebanking session. To begin, the cus-tomer has only to speak hispassphrase. If the passphrase is cor-rect, spoken in a manner consistentwith the customer’s voiceprint on fileand uttered into a mobile device reg-istered to the customer, the mobilebanking session begins. Three factorsof authentication, and all the cus-tomer had to do was speak hispassphrase. According to recentpress releases, Nina will be the tech-nology behind USAA’s new mobilebanking app in 2013.

Mobile payMents: What,

When, hoW

The biggest buzz today is aboutbanks’ role in mobile payments andwhether a consensus exists regard-ing when, how and what form mobilepayments will take. While there arediverging opinions about which tech-nologies and mobile wallet models(NFC, cloud, QR code) will prevail,there is broad agreement on the con-vergence of banking, shopping,payments and geo-location via themobile device.There is also broad agreement

that NFC will not be the only, muchless best, means of facilitating mobilepayments in different settings:

PNC’s Money Bar® allows a user to get an at-a-

glance view of scheduled payments and money

available.

Voice-enabled banking assistants are already

available for consumers to use.

Personetics’ Digital Banker is an automated

customer service solution that anticipates

customers' banking needs and approaches

them with relevant solutions.

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in-person (proximity), remote(online) and hybrid (in-aisle or onthe way to the store). Moreover,there will likely be not one, butmany wallets on each customer’smobile device. In this flux lies bothgood news and bad.

the bad neWs

The most likely NFC models formobile wallets do not put card-issu-ing banks squarely in control. Forexample, if your bank issues yourcustomer’s card on Google’s Wallet,Google secures all rights to the mar-keting data surrounding thepayments function of the wallet. Likewise, Isis, the joint venture

of the bankcard networks and majortelecom carriers, will control themobile marketing functions sur-rounding its NFC wallet. The fear isthat banks, particularly smallerissuers, will be relegated to passivetransaction processing with noshare in the marketing revenue sur-rounding mobile payments. Andmobile marketing, not mobile pay-ments, is where the real revenueopportunities lie. Steve Mott ofBetter Buy Design places the poten-tial value of mobile marketing at $1 trillion.

the good neWs

According to recent research,almost half of consumers want touse their mobile phones to shop forthe best price, and a third of con-

sumers want deals offered in realtime based on where they are.Informing such decisions, however,will be the account balances, auto-budgets and personal financialmanagement tools provided andmaintained by the consumer’s primary bank.Real-time decision assistants that

help bank customers decide whetherto make particular purchases in realtime will be a part of second-genera-tion mobile banking apps. To thisend, Cedar Falls, Iowa-based Bannorecently launched a “Help MeDecide” feature in its mobile PFMapp, Grip, that enables the bank cus-tomer to scan an item in a store, findthe best price, then see the potentialimpact of the purchase on the vari-ous bank or credit card accounts thecustomer may choose to fund thepurchase. The customer may alsoadd the item to a “Wish List” for purchase later. And herein lies the good news for

banks. Banks possess the accountand payments data that is central tothe future of the mobile era.Moreover, merchants value banks’data and are willing to compensatebanks with revenue shares on mer-chant-funded rewards extended tobank customers by way of mobileapps that leverage geo-location toalert customers to nearby rewards.Better still, these rewards areindexed to the very debit card

transactions on which communitybanks worry they are, or will soonbe, losing fee income due to Durbinand Reg II compression of debitinterchange.

What toMorroW deMands

today

No matter the form or adoptiontimeline of mobile payments, banksmust maintain the long-term view.The end game of mobile banking andmobile payments is mobile market-ing, and banks would do well toleverage their native assets to main-tain control of their future.What are banks’ assets in this

pursuit? First, banks enjoy a 3-to-1trust advantage over companies likeGoogle, Apple and Amazon. Second,mobile bankers are almost twice asinclined to adopt mobile payments asare other mobile consumers. Third,banks possess the holy grail ofbehavioral data; e.g., who the con-sumer is, what resources theconsumer has, what risk the con-sumer presents and how/where/withwhat purchases have been madeacross merchants.The strategic question will be how

well banks align their technologydecisions with the mobile conver-gence of banking, commerce andpayments. Regardless of the pathchosen, banks must work from thefuture backwards. Lee Wetherington, AAP, is director of strategic

insight for ProfitStars.

Real-time decision assistants help customers

decide if they can afford to purchase items.

Keeping up with technology can present new

revenue avenues for banks.

Merchants partner up with banks to offer

customers rewards for purchases.