platform of Backbase. The Dutch supplier was selected in December 2012 and a new website was launched around three months after the project started in early 2013. However, a contact at the bank told IBS in September 2014, ‘Our bank’s overall strategy has changed significantly since we first
Mobile everything
As with the rest of the world, mobile banking is now a hot area in the US. Figures cited by Matt Wilcox, senior vice-president, director of e-business at Zions Bancorporation, showed the dynamics. Industry figures suggest each interaction at the branch costs $4, at the call center $3.75, ATM 85 cents, online 17 cents, and mobile 8 cents. Zions’ goal, he said, was to ‘right channel’ the customer, to cross-sell and increase loyalty. Zions had seen ever more interactions on the mobile, nearly all are for balance enquiries. Balance enquiries also made up 36 per cent of the contact center interactions and 80 per cent of people calling the contact center for a balance are doing so from a mobile phone, so here was a chance to persuade the consumer to switch channels, he pointed out. It was not all about cost savings. The bank made around
$350 per year from online banking customers and they were around $100 more profitable if they banked online and on the mobile. The customer attrition rate for online banking users was only four per cent but it was only 1.5 per cent among online and mobile banking users. Drew Sievers, CEO and co-founder of mobile banking specialist supplier, mFoundry,
felt there was now ‘strong
evidence that mobile banking actually saves financial institutions quite a lot of money’. For some services, he also saw the potential to charge. He listed potential areas for charging as bill payment, mobile deposits, business banking, personal finance management (‘some are giving it away, some are not’), person-to-person money transfers, security services, delivery of merchant-funded offers, credit scoring and gift card issuing. Wilcox confirmed that Zions had seen a willingness among customers to pay for bill payment on the mobile. Another mid-tier player, US Bank, has been proactive in new channels. It has retail operations in 25 states, around 3080 branches and 17.4 million customers. It has a group dedicated to ‘discovering, testing and assisting in commercialising new payment solutions’. This group’s role includes analysing anything that is at an early stage, not necessarily in banking, and is felt to be of potential relevance. It follows trends well beyond banking and payments, said chief innovation officer, Dominic Venturo. It asks, what’s next and what are the threat and opportunity levels. Areas of focus have included natural user interfaces, that respond to touch, voice, sounds and sight, and it was also looking beyond QR codes, where these are invisibly embedded into images, so these are scanned rather than the visible codes. It has also experimented with a digital wallet.
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engaged with Backbase and we have yet to implement all the features they offer’. This was hardly surprising, given the bank’s woes. The chairman, CEO and president were fired in April 2014 against a background of combined net losses of $84 million in 2012 and 2013.
On the card side, EMV introduction will keep US banks busy to the deadline of 2015. This can involve changes to quite a few systems so, while it might look fairly simple, it has brought some quite large technical projects. It took US Bank about one year to be ready, for instance. With the chip in the card, US Bank has been asking what else it might do. It has had a pilot on a couple of college campuses with a prepaid card that carries a magnetic stripe for Mastercard but also a second magnetic stripe for closed loop campus systems, such as for identification. There is different integration needed for each campus, pointed out Venturo, but it should pave the way for near- field communications (NFC). It already had location-based branch and ATM locator facilities, which include information such as opening hours. The bank added depositing checks on the mobile in 2010, mobile payments in 2011, had NFC for proximity payments in pilot in 2012 and added the ability to make location-based offers in 2013. It also has a mobile account acquisition app that includes a facility to instantly issue a temporary card onto the phone which can be used to make payments before the physical card arrives. The latter has the benefit of not being reliant on NFC adoption by the retailer or on any other changes to its point of sale (POS) devices. BMO is a major bank in the US, through its purchases of Harris Bank and M&I Bank. BMO provides application and fulfilment capabilities for loans and credit cards at ATMs, with tailored, targeted messages. This had been very successful, said senior vice-president, Andrew Irvine, with 20 to 30 per cent positive response rates in the initial pilot. BMO’s aim is to have 20 per cent of sales online by 2015, he said. Online is complementing the branch (he estimated that the bank spends more than $100 million on its branches per year) and he believed BMO was the first in the world to offer online appointment booking, with 18 per cent of appointments made by this route in the first 18 months. BMO was relatively late with mobile banking due to a
major core banking system project after the merger but since July 2012 it has offered remote deposit capture (RDC). It uses Clairmail (now owned by Monitise) for mobile in Canada and mFoundry in the US, with the latter partly due to its proven integration with the bank’s FIS back-end. This list of innovations on various fronts in the US market
is impressive and, of course, this puts pressure on others to follow. The technology is no longer a barrier and there are plenty of competitive and cost incentives for doing things differently.
US Financial Services Technology Market Report |
www.ibsintelligence.com
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