netfinance vip think tank- the future of financial services in a mobile world
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The Future of FinancialServices in a Mobile World
Creating New Revenue Streams, and Driving Customer Loyalty
2
Contents
About this Whitepaper.................................................2
Participants in the DMI VIP Think Tank ................3
Introduction Of Key Themes .....................................4
Part I: Building a Winning Mobile Strategy........................5
Part II: New Revenue Generation Models ........................10
Part III: Building Customer Loyalty Through Mobile .....15
Part IV: A Coordinated Omni-Channel Approach...........19
Conclusion ......................................................................24
DMI Mobile Solutions for the Financial Industry ........................................................25
About NetFinance .......................................................26
The team behind Worldwide Business Research’s NetFinance conference, with help from 16
top industry experts and Digital Management, Inc. (DMI), participated in a closed board room
discussion at NetFinance 2013 to consider the future of financial services in a mobile world.
There’s no question that mobile is driving a complete reinvention of banking, revolutionizing the
way customers communicate and transact, elevating their expectations for immediacy, intimacy,
and service, and opening the door for new hybrid services and non-traditional competitors.
Banks need to be more agile than ever to keep up in this rapidly evolving environment.
As industry leaders discussed the impacts, opportunities and challenges of mobile technologies,
a fascinating polarization came to light. Some regarded mobile primarily as a vehicle to generate
additional revenue through new fee-based services. Other executives believed just as firmly
that mobile should be used to enhance customer experience and enhance loyalty. This
dichotomy was played out in lively discussion.
“You shouldn’t necessarily take the ‘focus group’ approach to talking about fees,” said one
participant. “At the end of the day, if you can provide a gizmo that amazes and delights the end-
consumer, the fact that you are charging for it becomes an after thought.”
The goal of the discussion was to understand where digital executives in financial services in
North America stand on the industry’s biggest issues. The following report delivers their
thoughts on key issues, as well as graphs and analysis from an anonymous survey of the
participants. The discussion spotlights trends, winning marketing and digital strategies, and
areas in need of further development and investigation in the mobile and omni-channel financial
services world.
About this Whitepaper
3
The VIP Think Tank was
comprised of 17 financial
services experts who
provided valuable feedback
on the major trends
discussed throughout this
report. Though their words
are not specifically
attributed, all quotes
through the report came
from these executives.
The Think Tank was moderated by:
Sam Ganga, EVP,DMI
Jeff Reid, Chief Digital Officer,Digital Strategy & Channels,TIAA-CREF
Jamie Armistead, Head ofMulti-Channel Banking, Bank ofThe West
Bradley Leimer, VP Mobile/Internet, Mechanics Bank
Aashir Shroff, VP, MobilePayments and Innovation, WellsFargo
Richard Char, ManagingDirector/Global Head ofInformation Services, CitiEnterprise Payments, Citigroup
Alejandro E. Carriles, EVP,Director Mobile BankingStrategy & Retail Innovation,BBVA Compass
Toby Russell, VP, EnterpriseMobile & EmergingTechnologies, Capital One
Participants in the DMI VIP Think Tank
Silu Modi, VP Digital Marketing,Macquarie Financial Services
Kevin Jackson, Director InteractiveMarketing, Discover FinancialServices
Ranjit Sarai,Director of Mobile, CIBC
Jeff Dennes, SVP, Head of Digital, Suntrust Bank
Jessica Turner, SVP BusinessDevelopment Senior BusinessLeader US Market Development,Mastercard
Kristy Brandon, VP eBankingChannel, Comerica
Mary T. Monahan, EVP/ResearchDirector, Mobile, Javelin Strategy &Research
Lamonte Leftenant, Director,Digital & Multichannel BusinessValue, Marketing &Communications, AXA Equitable
Om Kundu, VP, Financial ServicesCompany
Introduction of Key ThemesIn order to set the key themes for the Think Tank, Sam Ganga, EVP of DMI conducted several calls with participants to identifytopics of interest.
Everyone Ganga spoke with mentioned that financial institutions need to change. “We can’t be the financial institutions of thepast, telling the consumer how to do business with us,” said one individual. “We have to react much faster – we have to react atthe pace the consumer wants us to react.”
After the various calls, DMI laid out a four-part discussion model that the Think Tank would be structured around. Each themeconstituted one part of the discussion. They were as follows:
4
Building a Winning Mobile Strategy• It’s clear to all participants
that mobile technologies arerevolutionizing financialservices.
• The challenge is to leveragemobile to build competitiveadvantage, and effectivelycounter threats from newnon-traditional competitors.
Part I:
New Revenue Generation Models• As more traditional profit
centers fight to break even,due to high branch costs andincreased competition, manyare eager to tap mobile fornew revenue streams.
• New fees from servicesenabled by mobile devicesare tempting. But this is acontroversial issue.
Part II:
Building CustomerLoyalty Through Mobile • Mobile offers new
opportunities to buildcustomer intimacy andloyalty.
• Most participants were morecomfortable with mobile as avehicle for building loyalty, andwere eager to explore newways to achieve this goal…although not always for free.
Part III:
A Coordinated Omni-ChannelApproach • Creating a consistent user
experience across channelswhile having content specificfor each channel is recognizedas vital to mobile success.
• It is great to have a strategy,but ensuring it is customercentric and that institutionsact on it is key to success.
Part IV:
5
Mobile devices have revolutionized the way financial institutions interact with consumers. It was cited at the NetFinance conference that becauseof mobile, consumers now engage with financial institutions on average 30 times per month vs. one to two times per week in the pre-digital age.This has impacted financial institutions both positively and negatively and presents both challenges and opportunities.
ChALLeNGeS• Mobile has created new threats and competition. Non-traditional competitors including PayPal, Apple and major retailers now stand a chance
to gain market share through mobile payments. Disruptive innovators like Simple and Moven are using mobile as a way to create a morecustomer-centric banking experience. Most of these competitors also face less regulation and are much more agile, which means banks need tobe more innovative in order to keep up.
• A key management challenge identified by participants was the need to successfully advocate for the strategic allocation of resources to supportmobile initiatives. Unfortunately, it’s too easy for many financial services businesses to under-invest in mobile. Distributing resourcesproportionally based on revenue contribution was recognized by participants as a recipe for failure.
• The importance of demonstrating ROI on mobile investments to upper management was noted throughout the event and mentioned in theThink Tank. It’s clear that now is the time for institutions to seize the opportunity to build a strong mobile presence. But being able to effectivelymeasure and demonstrate the value of this channel is still a challenge. Without adequate vision and leadership, financial services companiesrun the risk of under-investing in mobile now – and losing a critical competitive edge in the future.
• Another challenge is the need to build new models for customer interaction. On the one hand, executives were clearly excited about the lowercosts and increased frequency of customer contact through mobile devices as compared with face-to-face interactions at branch offices. Andmany were considering how to make services available digitally that up until now have required in-person visits to a branch. But financial servicescompanies must work hard to re-think the role of the branch. Losing the “personal touch” of branch visits could come at considerable risk.
Part I:
Building a Winning Mobile Strategy
6
41% Mobile devices may offer new marketentrants an opportunity to siphon offmy business
23% Existing competitors may find ways toleverage technology to gain acompetitive edge
18% Security vulnerabilities will expose usto new liabilities and costs
18% Other
What’s the biggest threat mobile devices and technologies poseto ‘traditional’ financial services companies?
In a poll of the VIP Think Tank
participants, 64 percent of
attendees said they believed
the biggest threats mobile
poses to traditional financial
services, are business
threats, not technical or
security threats.
When asked about the threat
of non-traditional competitors
gaining material share from
traditional banks, 56 percent
of those surveyed said they
were either concerned or very
concerned. This demonstrates
how much banks need to
innovate to prevent loss of
market share.
Building a Winning Mobile StrategyPart I:
On a scale of 1 to 5, rate your level of concern about the potential forDigital/Direct institutions (i.e. Simple, Moven, Bluebird) to gainmaterial share from traditional retail institutions.(1=not concerned, 5=very concerned)
40%
1(not concerned)
2 3 4 5(very concerned)
30%
20%
10%
0%
19%25%
13%
37%
6%
7
The majority of participants
believed that mobile would
surpass other online usage
in as little as two to five
years. No one said that they
“don’t see it happening.”
OPPORTuNiTieS• Mobile offers more touchpoints with customers, the ability to better understand customer
behavior, and the opportunity to build deeper relationships with customers.
• Transaction costs via mobile devices are dramatically lower than in-person transaction costs.
• Real time data can be used to help customers more effectively manage their finances.
• Context-based offers through mobile devices can be effective incentives to retain loyalcustomers
In a poll of the VIP Think Tank participants, a majority (65 percent) of attendees said mobile is apart of their product/service experience. This statistic wasn’t surprising, but what was surprisingwas that 17 percent of participants stated that mobile already accounts for more than 5 percentof their sales. This high figure may be a result of differences in attribution. According to a leadingsearch engine provider, 25 to 40 percent of the searches of financial services brands are frommobile. One Think Tank participant pointed out that if a company links that mobile search trafficto acquisitions on site, it easily brings the number into a double digit percentage of sales comingfrom mobile.
17% Evaluating/not doing yet
12% Used for promotional activity
65% Mobile is part of product/serviceexperience
6% Mobile accounts for more than1% of sales
0% Mobile accounts for more than5% of sales
how much does Mobile factor into your business plans?
Building a Winning Mobile StrategyPart I:
8
56% Next 2-5 years
38% Next 5-10 years
6% Longer than 10 years
0% Don’t see it happening
how soon do you believe mobile usage of your company’sservices will surpass other online usage?
Identifying the greatest
area of value to consumers
through mobile is a
challenge. When
participants were surveyed
on what would be the
greatest value add mobile
could offer consumers,
there was no clear winner.
8
16% Providing enhanced/always available customer service
11% Always present platform for cross-selling/up-selling financial services
28% Driving transactions through offers based on location or other device-supplied data
17% Leveraging device features
28% Digital wallet
What mobile-device-enabled business activity will be of greatestvalue to your company over the next 5 years?
30%
20%
10%
0%
16%11%
28%
17%
28%
Building a Winning Mobile StrategyPart I:
99
69% Mobile technologies and deviceswill represent a net gain from mybusiness
0% Mobile technologies and deviceswill do damage to my business
31% No major business impact (if wekeep up) but customers will winthrough improved services
0% Ultimately won’t matter
What impact will mobile devices ultimately have on your business?Overall, executives believed
mobile is going to benefit
their financial institutions
either through improved
services or a total net
revenue gain to their
business. No one believed
that mobile would have a
net negative impact
or no impact.
9
Building a Winning Mobile StrategyPart I:
It’s interesting to note that a strong majority of participants were bullish about mobile, and noone believed mobile would be detrimental to their business in the long run. Clearly, mobile willmake some winners and losers, but for now, everyone’s expressing optimism that they’ll comeout ahead.
10
Traditional financial services value propositions are based on security and managing people’s money effectively. But with mobile creating a rapid
change, consumer expectations about how they interact with banking and financial institutions have completely shifted. Banks have to create
new value for consumers - especially through mobile - if they want to retain existing customers and build market share. Financial institutions
also have to figure out how to monetize this new landscape if they want to be sustainable entities in the future.
ChALLeNGeS• The VIP Think Tank participants alluded to the airline industry as a model for financial institutions to follow if trying to monetize mobile. The
idea of charging a fee for remote deposit capture or other value added services was seen as analogous to airlines charging for checked baggage.
• There was a mixed reaction among participants to such a model. Some executives were convinced that mobile should be leveraged primarily
as a means of enhancing user experience and driving loyalty. Many were concerned about customer reactions to new fees.
• Several alternatives were discussed for leveraging mobile to drive incremental revenue without alienating customers.
Part II:
New Revenue Generation Models
11
37% 6 months
19% 12 months
19% 24 months+
25% Never
how soon will the market and consumer be ready for institutions toinitiate charging premiums for value-added Digital Services?(e.g Mobile Deposits, OBP, etc)
75% of participants
believed financial
institutions would or
should start charging
premiums for value added
services within the next
24 months.Transaction Fee-Based Models
When discussing the airline analogy, some executives stated that there are inherentdifferences between financial institutions and airlines that can’t be ignored, whileothers praised airlines for taking a bullish approach that financial institutions shouldtry as well.
“When an airline does something that creates revenue, rather than pointing at thatairline and bringing it down, the other airlines say, ‘This is smart, let’s do the samething,’” stated one participant. “In the financial services business, we need to take thesame approach.”
“An example is when you have an emergency; you have a free clinic that is open nineto five, Monday through Friday,” said another. “If your kid breaks his arm on Saturdayevening, are you willing to pay extra for the after-hours care? Are you going to argue,‘Oh it’s too expensive, I’m going to wait till Monday.’ You think it’s well worth it.”
ChALLeNGeS
New Revenue Generation ModelsPart II:
1212
The Transaction Fee Debate
The fee-based approach generated a good deal of controversy and debate. It’s clearthat financial institutions are attracted by the revenue, but at the same time they aredeeply concerned about the impact of additional fees on customer satisfaction andloyalty. Hybrid models and alternatives abound. One participant suggested chargingfees for some services, but offering loyal customers ways to avoid the fees.
“It is about the value we provide,” said one participant. “I hesitate on [enacting] ad-hocpricing models. Every time we put one in front of our customers, they said no. Theydon’t mind if you charge $120 a year or on a month-to-month basis, just don’t chargeat the transaction level. It’s a better model for the customer. If they get charged pertransaction, it devalues it.”
Flat Fees
Another executive’s thoughts: “We did a survey a few years ago with bill pay. Insteadof paying per transaction, we asked, ‘What if we had a flat rate to pay and customerswould never be late on bills. We will do same day bill pay, $9.95 per month.’ Almosteveryone who was surveyed said yes because that solved a problem they had and is afair value and means they don’t have to worry about same day payment, or whetherthey’ve scheduled it properly, etc.”
eliminating Fees For Premier Customers
“One thing that is pretty reasonable that we came up with is when you have fees, itbecomes valuable to be a loyal customer,” added another. “With [my airline] I see thevalue I get as a member. When I fly, my bags are free vs. on other airlines where I pay.Like a flat rate, you are a premier customer; you don’t pay for any of this. Likewise, it’sworth bringing the rest of my money to my bank so I can be a premier customer.”
One participant suggested
charging fees for some
services, but offering loyal
customers ways to avoid
the fees.
New Revenue Generation ModelsPart II:
13
Advertising Models
One final thought that came from another participant was around advertising modelsand how they should be considered as an alternative way to generate further revenue.
“Another option is through an advertising model,” said one participant. “You can pay amonthly fee for ninety-nine cents a month, or you can have many annoying ads poppingup [if you choose not to pay]. If the customer perceives the value, they will be willingto pay to not have ads.”
In online services, companies make money from advertising, from transaction/usagefees, or both. Banking lends itself to the classic “freemium” model: the consumerdeposits money and they are offered a variety of services – some free, some paid. It isup to the financial institution to figure out how and where to make money. But chargingfees can devalue extraction, say some experts in the industry. In the digital ecosystem,one-off fees for incremental services can be problematic. “How often do you get hitwith a fee from Gmail?” posed one participant.
When looking at companies that have succeeded in consumer technology, relativelyfew have charged a transaction fee and been successful. Facebook doesn’t do it.Google doesn’t do it. Apple doesn’t do it. So why would consumers accept it if banksdo? This was the viewpoint expressed by some of the Think Tank’s participants.
When looking at companies
that have succeeded in
consumer technology,
relatively few have charged
a transaction fee and been
successful…so why would
consumers accept it if
banks do?
New Revenue Generation ModelsPart II:
141414
Mobile Payments/Digital Wallets Challenges
The two key challenges identified with mobile payments by participants were:• “I see benefit for mobile payments for industry, but not for consumers.”
• “Plastic (credit cards) is not broken, so people aren’t jumping for it. What is theadditional value we are providing?”
Opportunities And Benefits
“The plastic customer isn’t connected, but the mobile is, and the user experience isbetter,” said one participant. It’s about convenience. Consumers open an app, pay withthe phone and the app displays that the offer has been redeemed and the payment iscomplete. Building great offers that are contextually relevant are what ultimately willdrive adoption of mobile payments, the group agreed.
“I believe most customers want a personalized relationship,” said another. As anexample, the participant cited how Platinum Delta customers, or a bank’s VIP membersare welcomed by first name. Mobile payments allow financial institutions to generatedata and then through branch/electronic methods, offer personal services. Throughmobile payments, banks can execute offers, drive loyalty programs and evenauthenticate customers, which is ultimately what customers want.
“A digital wallet allows us to offer personalized services or personalized banking, andthose are all benefits,” added a participant during the discussion. “The averagecustomer will say, ‘This is cool,’ as there is more value for him/her. Sometimes you cancharge them for it or make money from offers for insight to that customer.”
Another participant asserted that customers will use mobile payments if it’s moreconvenient for them or if they get added value. The popular Starbucks app, forexample, could be made even more popular if they integrated extra value for users.If customers could use the app to order coffee then walk in and pick it up – so as toavoid waiting in lines – that would present extra value for the customer. “That is whenmobile payments will really take off,” said the participant.
“Banking lends itself to the
classic ‘freemium’ model:
the consumer deposits
money and they are
offered a variety of
services – some free, some
paid. It is up to the
financial institution to
figure out how and where
to make money.”
New Revenue Generation ModelsPart II:
15
Most participants were focused on mobile as a platform for value creation and building customer loyalty. Mobile offers an unprecedented,
real-time, always-on connection to customers. But location-based contextual offers must become more relevant. Effective leverage of Big Data
resources can get us there.
Offers And Big Data
Mobile offers an unprecedented, real-time, always-on connection to customers. The bank is now literally in customers’ hands. Customers are
making big and small financial decisions all the time regarding how they spend, what to save for, and everything in between.
The ancillary business models that financial institutions can now take advantage of will come through special offers. One of the core assets that
financial institutions have is their access to and housing of big data. There are millions of dollars to be made monetizing this data. However, in
order to capitalize on these opportunities, financial institutions must overcome a number of obstacles that stand in the way.
Part III:
Creating Value and BuildingLoyalty Through Mobile
161616
Being Contextual
A leading bank’s consumer app that gives consumers the option to choose certaincash back deals through online or mobile banking, was described by one participantas the ‘anti-Groupon.’ The participant said that this kind of deal presents greater valueto merchants. But the problem with such a model is that offers can be non-contextual.One participant said, “At our bank, it’s only contextual insofar as, ‘You look like youeat food, so here’s a discount at a restaurant.’”
“We have to improve contextual offers,” said one participant. “With [my credit cardapp] on my phone, I get an offer where I’m choosing to eat. It’s contextual, relevant,location-based and it’s right there. But the value is knowing specifics such as ‘I don’twant to eat there, I don’t ever eat there.’ Helping customers go where they want togo and when they want to go is the key to moving forward.”
Resources And Privacy
Other challenges include those to resources and privacy. “Smaller financial institutionsdon’t have the resources to call every merchant to set up deals,” said one participant.
Said another: “Our biggest fear for our bank is that we are going to appear on the frontcover of the New York Times saying that we are data mining our customers withouttheir permission. People will get fired over that and our reputation will be deeplydamaged. Consumers come to banks for the security and a trusted relationship.”
“We tell our customers that if they want deals they have to opt in three times,” saidanother industry executive during the Think Tank. “The three conditions are: you arewilling to see offers, we are data mining your spend data, and we are tracking you onyour phone. If the customer does not agree to these, they don’t participate.”
“Our biggest fear for our
bank is that we are going
to appear on the front
cover of the New York
Times saying that we are
data mining our customers
without their permission.
People will get fired over
that and our reputation
will be deeply damaged.”
Creating Value and Building Loyalty Through MobilePart III:
ChALLeNGeS
17
Transparency
“What is stopping financial institutions from being as clear about what data is beingused for as a company like Simple is?” asked one participant in making a point abouthow transparent Simple, Inc. is with its data mining. “Simple logs everything it doesright down to the code. The winners are those that are going to be open andtransparent. I have faith that as an industry, we will do a better job of communicatingvalue and creating value exchange that is of benefit to everyone in the industry. Rightnow the ecosystem, i.e. banks, payment networks, etc., isn’t thinking rationally aboutthe value we are creating for customers, especially in terms of data mining, targetedoffers, mobile payments, etc. The end game is to make the consumer more aware ofthe benefits these features will provide to them. But this change may take up to adecade.”
Simplicity
“A lot of these start-ups are operating on the edge,” said one participant. “Risk isgetting passed down the chain to the banks. New disruptive digital banks like Movenare prepaid; you just need an email address to sign up. If a customer needs lendingproducts, then they need to give more information. So this is disruptive as it’s a loteasier. With us it could take up to two weeks with two credit checks.”
Another participant cited an experience with Moven involving a transaction at acoffee shop. After the transaction, the app showed information about spend,characterization as a customer, as well as a message asking to “please come back.”The participant admitted that startups like these may not be going from zero to onemillion customers anytime soon, but that the value add to the customer and thePersonal Financial Management (PFM) opportunity presents concepts that financialinstitutions should be seriously evaluating.
“The end game is to make
the end consumer more
aware of the benefits
these features will provide
to them. But this change
may take up to a decade.”
SOLuTiONS
Creating Value and Building Loyalty Through MobilePart III:
18
Retargeting And Advertising
One executive in the Think Tank mentioned the idea of card linked offers. “We aretalking about how we create a closed loop ROI for an advertiser that demonstratesonline to offline efficacy,” this person said. “For instance, if you do an analysis oftransaction history through open-source software like Hadoop, you can discovercorrelations. You might see that people who fly Lufthansa are likely to pay for Skype.So if you can do that for a customer, can you basically do retargeting for Skype on aLufthansa user? And can you do the same when they come to your online bankingexperience? The customer isn’t aware, but doesn’t care, just as they don’t care if theysee advertising on the New York Times that is more relevant to them. This is a hugevalue add to everyone in the ecosystem.”
When industry looks at data mining and retargeting, it must ask the question, “Howmuch do consumers care,” as well as, “What do consumers care about?” If financialinstitutions can answer those questions, target the consumer based on theiranswers, “wow” their customers, and force them to real ize the benefits, consumerswill naturally want to opt in for subscription based deals, mobile payments and more.As one participant said, “If we get it right, privacy concerns will begin to go away.”
“If we get it right, privacy
concerns will begin to
go away.”
Creating Value and Building Loyalty Through MobilePart III:
19
Multi-channel or omni-channel customer engagement is a major emphasis for companies across the industry. As businesses struggle to deliver
cross-channel experiences, the stream of innovation continues to flow unchecked. In response, digital professionals must transform how they
market, transact, serve, and organize around changing customer experiences. These changes will continue to bring about a new era of agile
commerce. Digital leaders will optimize their people, processes and technology to serve today's empowered, ever-connected customers across
a rapidly evolving set of customer touch points.
Creating A Valuable Customer experience
As described by these executives, when businesses go through planning cycles, each line of business is given a certain share of budget with which
they can execute their strategies. There’s a line out the door for great opportunities within the industry, but institutions can only focus on so
much at a time, due to both time and budgetary constraints. Many executives expressed a desire for management focus on the financial
institution’s top three to five initiatives, with an eye toward achieving strategic wins, as opposed to spreading resources too thinly across the
board. In other words, executives would prefer to do fewer things better, instead of taking on multiple initiatives at once and delivering less
successful outcomes.
Part IV:
A Coordinated Omni-ChannelApproach
20
“If we can help customers
through the progression of
life financially, I think we
are going to win big time.”
“This is not a focus on
products or services, but
the overall experience. It’s
about adding value.”
A Coordinated Omni-Channel ApproachPart IV:
One of the biggest challenges cited by executives in the discussion, which is a cross-industry challenge in the digital age, was the siloed approach taken to digital initiatives.
“Customers don’t think in siloes,” said one participant. “They just think they areinteracting with their financial institution.”
The group agreed that the focus often falls too much on products and not on theoverall customer experience.
SOLuTiONS
“If we can help customers through the progression of life financially, I think we aregoing to win big time,” said one participant. “This is not a focus on products or services,but the overall experience. It’s about adding value.” Another participant likened theconversation to a scenario about buying a car, pointing out that consumers don’t buycars very often, but the dealers they transact with sell cars all the time. Already, thatputs the consumer at a disadvantage, claimed this participant. Financial institutionsare in the same boat. If they can recognize this relationship, they can head off anycustomer dissatisfaction by helping consumers and making information about pricing,lending, etc., transparent.
“If you can help me through this major event, you will gain my trust, most likely forlife,” said the same participant, likening financial institutions’ obligation to thepurchasing of a major item like an automobile. “If I find a better rate somewhere else,I probably won’t move. If you help me through something, you deserve my businessand I’ll probably tell five other people what a great experience it was.”
Continuing along the same scenario, the participant gave the example of United ServiceAutomobile Association (USAA). At USAA, customers can search for cars or houseswithin an app, and then follow up with a dealer or expert. “That is where the loyaltycomes from,” said the participant. “Digital created the initial discovery and it is usefulfor the consumer without a hard push. That, in the long run is the business model.”
ChALLeNGeS
21
One of the biggest
challenges with social
media, across industry,
continues to be
measuring return on
investment (ROI).
Social
The social revolution has completely transformed a back-office function and put itsquare in the limelight. Social media has caused a shift in power from the brand to thecustomer; transparency, customer service and an exceptional customer experienceare therefore vital, if you want to win with your customer and against yourcompetitors.
Listening to what consumers are saying via social media, and integrating thatfeedback throughout other channels is essential if you want to create a holistic,customer centric organization.
ChALLeNGeSOne of the biggest challenges with social media across industry is measuring returnon investment (ROI). Participants at NetFinance and during the Think Tank statedthat they are continuously challenged to define the ROI of their social media efforts.
“My CMO challenges me on ROI all of the time for social – that’s nothing new,” saidone participant in the Think Tank discussion. “But what is new is linking minorcommunities or contexts between mobile and social and measuring the ROI with that.The feel-good thing is starting to integrate that content. But is the customer going tobe more engaged and move toward the buying path?” That still remains a questionfor many institutions.
“The other challenge is we have permission issues,” the participant continued. “Thecommunity is designed to be separate from the company. We build trust if we don’tinterfere too much. Therefore how do we avoid acting like the police and not get inpeople’s way and lose their trust?”
SOLuTiONS“We take the top two conversations taking place in our small communities pages andwe link them to our login page. The integration of content between these channelshas been very effective.”
One participant brought up the enactment of a student blog for the financial institution,which has been very effective in starting conversations with potential customers.
A Coordinated Omni-Channel ApproachPart IV:
22
The integration of digital
has caused the role of
ATMs, branches and
offline channels to shift.
“Our team uses conversation starters to get students to think, create discussion andget the conversation in the forums flowing,” said this executive. “If there is gooddialogue, we link that with other channels including our online login page, other socialmedia channels such as Twitter and Facebook, etc. We also use it as customerfeedback to help us create better products.”
Role Of The Branch
A big advantage for traditional financial institutions as opposed to startup optionslike Moven or Simple, is the value of the branch network in building awareness andpresence. While the cost to serve in this channel is significantly higher, it does providea lot of selling and upselling opportunities.
At NetFinance 2013, a number of financial services companies said they have datawhich shows that fewer people are going to the branch today. However, given thecomplex nature of financial products, and the fact that people still do like humaninteraction, branches are not going away anytime soon. But the integration of digitalhas caused the role of ATMs, branches and offline channels to shift.
ChALLeNGeSThis Tweet from NetFinance 2013, sums up the challenge of branch networks very well:
“The branch infrastructure is a big challenge,” said one participant when this subjectwas broached during the Think Tank. “You still sell and service a lot through branches,yet there are a lot of lease/space issues and very high costs. It is a decades-longproblem. We would love all of our customers to be 95 percent digital and to get ridof branches. We would be ridiculously profitable if that was the case.”
A Coordinated Omni-Channel ApproachPart IV:
23
“Sales branches add value
to the bank. Using digital
to service and branches
to do complex sales
transactions - that is
where we are going
moving forward.”
In talking about this evolving issue, several participants agreed that the landscapewill look very different five to 10 years from now than it does today. One participantstated that many of the 93,000 bank branches across the US would be shuttered overthe next decade. What customers do in their bank branches is changing rapidly, andmost executives agreed that if financial institutions can move most of the branchservices to digital channels, the industry would be highly profitable.
SOLuTiONS“We are looking at how to streamline your experience at the branch through digital,”said one participant. “We want to make the branch smaller and create a moreintegrated approach. Depending on consumers’ outlook and where people are goingto go, a lot of opportunity could be created through digital only. A cross-sell or up-sell is a big opportunity too.”
Another topic that came up in discussion as a solution to the challenges of the branch,was the idea of integrating a more localized sentiment about branches through socialmedia and mobile banking. A local branch helps put the humanity back into banking,as one participant said. The branch plays a role in elevating the consumer’s emotionalconnection to the bank. This is a great opportunity to capitalize on through digitalchannels. For instance, creating social pages that relate to specific branches,moderated by employees within that branch, can help consumers connect to peoplethey know without having to visit the actual branch. The more that financialinstitutions can embrace the customer’s ability to build that relationship online, theless they will need to rely on the physical branch for that connection.
“The role of the branch is going to change,” stated another executive toward theconclusion of the discussion. “The cost of servicing is much cheaper digitally than in abranch. However, sales is still a big opportunity at the branch level. When you havesales representation that resonates with a customer and the customer leaves thebranch with a portfolio of products, they find things they didn’t even know they needed.Sales branches add value to the bank. Using digital to service customers and branchesto do complex sales transactions - that is where we are going moving forward.”
A Coordinated Omni-Channel ApproachPart IV:
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ConclusionLeading financial services companies are moving rapidly to
embrace mobile technologies and leverage them to deliver added
value, build loyalty, and extract additional revenue from customers.
Our discussion with executives from the industry clearly revealed
several factors contributing to the drive to go mobile:• Threats from new market entrants• Threats from existing competitors• A desire to leverage new technologies to enhance service and
customer experience• A desire to tap new revenue streams – as long as it can be
done without upsetting customers’ sense of value and
fairness.
Everyone is vying for leadership, playing both offense and
defense; struggling to improve multi-channel consistency and
ease-of-use, looking for new ways to add value. All institutions
are on the lookout for the “killer app” for mobile finance that
could catapult their company into the lead.
The good news for consumers is that financial services
companies are very tightly focused and in fierce competition
with one another to see who can crack the code on mobile
technologies first.
But financial institutions are not technology companies, and are
not accustomed to moving at “Internet speed.” Add to that the
fact that U.S. based financial services companies operate at a
global disadvantage when it comes to mobile commerce. Many
countries in Europe and Asia are years ahead.
In this environment, many financial services companies have
built substantial in-house mobile development organizations to
help them keep pace. But many would be well served to partner
with mobile solution and service providers who have in-depth
skills in user experience design, app development, back-end
integration, and application management and support, in order
to enable successful transitions into the mobile world.
A new breed of mobile solutions companies are emerging that
can tackle the complex challenges facing leaders in the financial
services industry. These companies offer a comprehensive set of
enterprise mobility services that span mobile strategy, managed
mobility services, mobile app and solution development, mobile
BI/analytics, and mobile security. DMI is a leader in this new,
emerging category of mobile enterprise service providers.
Please read on to learn more about the company’s services.
25
About DMI Mobile Solutions forFinancial Services
DMI is the world’s leading provider of enterprise mobility services and solutions. We
build enterprise-class mobile solutions that generate results for the world’s top
brands and businesses. Our mobile solutions combine the award-winning user
experience design that has made us one of the top creators of consumer apps, with
the deep middleware and engineering expertise that we’ve used to build and manage
enterprise applications for the most demanding IT departments in the world. DMI
mobility solutions improve business processes, tap new revenue streams, build
customer loyalty, and increase employee productivity. And we offer a full range of
managed services to securely set up, configure, and manage your mobile devices.
Our services include:
• Mobile Strategy: strategic planning, business case justification, and mobile visionand roadmap based on user-centric decision support tools
• Managed Mobility Services: smart device provisioning, roll-out, centralized over-the-air mobile device management and mobile help desk services
• Mobile App and Solution Development: mobile app development with a superioruser experience using native and cross-platform development capabilities withcomplete control over application data security
• Mobile BI/Analytics: Actionable insights and predictive analytics delivered viamobile devices, HTML5 visualizations and BI Dashboards
• Mobile Security: Data and Content Security Device Security, Application Security,and Security Infrastructure – network connectivity & devices
We OFFeR OuR CLieNTS
Financial Services expertise:• Customer Loyalty solutions that combine mobile
technology and big data insights to automaticallydeliver personalized offers that increase revenueand build loyalty
• Data Monetization solutions that enable youleverage the value of your data to createincremental revenue streams
Mobile experience:• 1500+ mobile sites and apps, crossing every
platform & OS
• 500,000 devices under management aroundthe world
• 24 x 7 helpdesk support
excellence:• “Best Branded App Developer” 2012 Mobile
Entertainment Award
• 250+ mobility experts skilled in UI design, agiledevelopment, enterprise integration, mobilitymanagement
• ISO certified and CMMI appraised developmentand service methodology
DMi headquartersOne Rock Spring Plaza6550 Rock Spring Dr.Bethesda , MD 20817
DMi Sales TeamU.S. Sales: 855.963.2099Intn’l Sales: [email protected]
Please click or call to learn more:www.dminc.com/NetFinance
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About NetFinanceNetFinance is the world’s numberone digital event for financialservices, featuring 70+ speakersand 350+ senior level attendees.
In just three days, attendees will learn, engage and
discuss all aspects of mobile, tablets, responsive
design, big data, multi-channel restructuring, cross-
selling, customer engagement and creating the branch
of the future. The complete agenda, list of speakers
and registration details are available at
www.netfinanceus.com
www.netfinanceus.com • [email protected] • 888-482-6012 or 646-200-7530
“The show has been fantastic. The biggest thing about an event like this is the people that
you meet and the speakers that are here. So you get the top people from Moven, big banks and small banks.
You get to understand what is changing the industry: social, mobile, payments. The collaboration amongst people
here and the type of conversations you have here is also top notch. The executives making the critical
changes to our industry are here onsite. I would highly recommend to anyone.”
Bradley Leimer, VP Mobile/ Internet, Mechanics Bank