It’s no secret that the retail bank marketing industry is going through a significant upheaval. Read the headlines in American Banker, or ABA Bank Marketing, or BAI, or Financial Brand, and you’ll see common themes such as mobile adaptation, mobile payments, social media, the future of the branch, banking for the unbanked … the list goes on. Some of these trends are long-term, but a number of changes are on the horizon that will affect you in 2013. Here, then, are my 10 predictions for what will really matter in the year that’s unfolding.
1. Mobile Banking Growth and Expansion
There is no doubt in my mind that mobile banking is taking off like a rocket. Here are some basic stats to support my belief:
- More smartphones than feature phones
- Customer demand for mobile banking and adoption rates
- Availability of technology
One thing that I believe will change in 2013 is the table stakes of what it means to have a mobile banking presence. It will no longer be enough to just provide the basics, such as looking at transactions, scheduling bill payments, performing intra-bank transfers and looking up location information. The stakes will be elevated to include things such as remote deposit capture, interbank transfers and bill pay setup.
When you think about how the bill-paying process works right now, it usually means going to your bank’s mobile website or mobile app and typing in all your information before you can make a payment. How about this: why can’t I take a picture of my bill to provide all the necessary information, then just type in the account number? Simple, right? I believe these kinds of experiences will become part of the landscape in 2013, and those institutions that embrace them will chart the course for what the table stakes in mobile banking really are.
2. Tablets Replace Home PCs
Currently, tablets fall under the broad-reaching category of ‘mobile’, and I think in 2013 we will definitely have to define the difference between mobile phones and tablets. I believe that tablets are replacing desktops and laptops at home as a primary vehicle for going online, but I question whether you need a separate experience for them via the app. I can see that if you’re accessing a lot of data and speed becomes an issue, or you’re trying to take advantage of some of the native capabilities that tablets offer, there could be enough need to create a native app for the tablets. Otherwise, I believe this is an opportunity for financial institutions and FISs and Fiservs of the world to create new online banking experiences with responsive design in mind that will deliver great banking experiences regardless of which device customers use. From a maintenance and portability standpoint, there are multiple advantages. You will have one code base to maintain and future upgrades would be rolled out on both platforms simultaneously.
Notice how I left ‘phone’ off the list here. I believe the mobile phone is a different device, and responsive design centered around it won’t necessarily work; packing the same amount of information onto the smaller screen is not a recipe for success, it’s a recipe for disaster! The bottom line is that you have to design for the specific device and for how your customers use it. An app may be the right thing for your tablet and your customers. However, before you invest a lot of money, do some research and check with the current customer to gauge the interest, and determine whether there is a need. What I’ve seen over the years is that, when asked, customers want it all, but actually, they only need a few things. More importantly, use your relationships with your online banking vendors to influence your vendors’ future roadmap.
3. Fee Replacement Opportunity
Two of the most hated words in the banking industry are Frank and Dodd (or is it Dodd and Frank?). We all recognize the need for the financial services reform, but that reform and government intervention has left a pretty hefty hole in a financial institution’s ability to generate fee revenues that, in the past, comprised a significant portion of net income.
With the changes over the years, I believe that offering reward programs such as BankAmeriDeals and partnering with companies such Cardlytics to power your transactional data are simple ways to provide more value to your customers, thus increasing retention and generating additional revenue. Will it replace fee revenue? The answer is probably no, but it could be a nice win-win for the customers and FIs. No more mani-pedi deals from Groupon; how about some real deals from companies whose services you can actually use?
4. Mobile Wallet – Coming Soon!
This is still Wild Wild West territory. I believe it’s too early to tell if there’s a clear winner, or even one that’s emerging. There are so many competing players. Who will win? Considering that I’m in the prediction business with the requisite MBA, I will use my standard MBA response to this question: it depends!
I believe that we, the customers, will ultimately choose the winner by embracing their methodology and technology. Am I still going to bring my wallet with me to hold my driver’s license and cash or will that go into my mobile wallet? What will law enforcement think when they pull you over and you dutifully show them your driver’s license … on your phone? Or will the ultimate solution live in the cloud? I believe that there are too many cooks in the kitchen vying for that head chef position, from device manufacturers to wireless carriers to technology providers. I don’t think there’s going to be a clear winner in 2013. Au contraire, this will be the year of test and learn in the mobile wallet space, and the winners will start bubbling up to the surface in 2014 and 2015. If I were an FI, I would take a wait-and-see approach, and on a quarterly basis I’d review the players, technology partners and customer sentiments before choosing a path to developing a mobile wallet.
5. Customer-Centric Approach is Here to Stay
It’s not even worth arguing anymore: the shift from brands to customers has already happened whether we like it or not. As Forrester Research Inc’s Gina Sverdlol says in What Drives Retention and Sales in US Banking, “Gone are the days when companies could simply offer their services and customers could choose to take them or leave them – today, companies need to be customer-obsessed.”
I believe we’re approaching a seismic shift in how we market to the customers, moving from having a single offer and choosing the customer who receives it, to having a customized offer for each individual. OK, true 1:1 offer-to-customer match is nirvana, but this is a Big Data problem that will be at the center of the customer-obsession approach. Companies that can harvest all customer data and be able to match the right customer experience (offer, context, content) to the right customer will emerge as clear winners.
6. Integration of Social into Channel Strategy
I still think it’s too early to tell. There aren’t yet enough successful examples of social media that either delivered successful sales or helped with retention, but I also think there’s a misnomer out there about what social really is. We often forget that ratings and reviews are part of social channel strategy; it doesn’t all have to be Facebook and Twitter. Forrester did a great case study on USAA and how it improved application rates across various lines of business.
Twitter is known for taking down governments, but how many FIs have successfully integrated Twitter as part of their customer service channel? Most of the time, FIs simply tell their customers to contact the customer service center, but why can’t you take care of my needs now? I know it’s not that simple. There are a lot of issues that may surface when FIs use Facebook and Twitter, but there’s nothing wrong with using ratings and reviews on your own website. Engage your users to not only help cross-sell and up-sell, but also attract new prospects. I believe that if you provide good products and services, your best customers will advocate for you and drown out the noise that a few disgruntled customers are making. But when that noise is generated from somewhere other than your website, your best customers may not hear it and may not be able to jump in and protect you. Trust me, if there’s dirty laundry out there, people are airing it anyway.
7. Future of the Physical Branch
It’s shifting … the branch isn’t going to disappear anytime soon, but its role may be different from what it was a decade ago, or what it is now. Some of the high-touch transactions that can’t be completed online will still conclude in the branch, some of the servicing may still occur in the branch, but the basic transactional needs of the branch will become automated. Think about the evolution of ATMs: initially, they were there to dispense money, then we could do some basic transfers, then we could start making deposits with an envelope. Nowadays, you don’t even need an envelope.
I can see branch automation where you deposit your check with a remote deposit capture station via an iPad. I can see the bank teller evolving into more of a financial concierge, helping guide branch customers to the right product and/or person, lending a hand in basic problem-solving. But don’t worry about this yet, as it’s something that will take years to put in place. I anticipate a great deal of testing and experimentation over the next three to five years, so this is really a 2018 prediction at the earliest.
8. Digital Vault, Not Hard-Drive Backup
I see branch-like services moving online. The first thing that comes to mind is a service like a lockbox. Imagine a digital lockbox online, often referred to as a digital vault. But the way I see it, it wouldn’t be just a backup service like Carbonite for documents. It would be a repository of all important, physical documents (such as birth certificates, marriage certificates, insurance policies, mortgage information, etc.), all in one place. The difference between offline and online is that you would have the capability to enable your digital vault to share individual pieces of information with others in a secure way.
I believe that this would be an easy way to further engage and interact with current customers. When the customer wants to extend his relationship with you – for example, a checking account customer who is interested in a mortgage – he could just give you access to the digital vault with all its relevant information. No more hunting for that W-2 or 1040. Products such as mortgage refinancing would take on a different context from the customer perspective. I think that features/functions and ease of use is what will make a difference in a product like this, and customer experience will really benefit. So, make it easy and make it simple. Don’t turn it into a backup solution for your hard drive, and customers will flock to it. It should be a high-margin product, something that can easily be tacked on to the online account opening, as an add-on service for a fee or as an account differentiator.
9. Online Account Opening – the Next Generation
The only thing I want to say about online account opening is that I hope you’re paying attention to it and scrutinizing it on a regular basis. Often, we see banks tracking application starts to account openings only, without really understanding what happens in the middle. We know that account openings are shifting online, so wouldn’t you want to see where the drop-offs are in your process? Are your qualifications too stringent (different online from in the branch?), are there too many steps, do you have the right funding options available, can you track the marketing sources that are delivering the best customers?
I believe 2013 will be the year in which analysis and scrutiny of this process become a critical component of where and how you spend your marketing dollars. If you don’t know what’s driving online acquisition, if you don’t understand the costs of that acquisition, if you don’t understand how customers flow through your process, you may be leaving millions of dollars on the table and driving prospects away. Make sure you have analytics running on your account opening site, and make sure you review it on a regular basis. I believe this is often the most overlooked process in the online environment and that it’s rarely scrutinized enough.
10. Content Strategy – Now More Important than Ever
You may ask yourself, what the heck is content strategy? For the definition, I suggest looking it up on Wikipedia. Content is still king online and if you don’t have a strategy on how to develop content your customers will want to consume, you’re probably killing your customer experience and missing opportunities around SEO, and you’re probably missing opportunities around merchandising. In addition to breadth, depth and relevance of content, it’s imperative to make it accessible, understandable (please don’t have footnotes in four-point type on the bottom of the page in gray font. Instead, work with your compliance team to integrate it into the content itself), and what I deem most important, human. Google engineers spend a lot of time ensuring that the right search results are presented to the users. They now reward sites that write content for humans instead of Google Bots. With the right content strategy, you can also guide customers to additional products and services. More importantly, you can ensure that your products are presented in the right way, regardless of which channel the customer used to find them.
Content strategy isn’t just website content. Content strategy ensures that you have the right processes and governance for content creation, distribution, and measurement. Yet, it’s critical to get a handle on it, otherwise your customer will leave your site confused about what you’re offering.
I’m sure I’m not the only one out there saying these things. Whether you disagree with me or not, drop me a note. I’d love to hear your point of view.