Much of what bank-technology strategists will focus on in 2013 can be summed up in single words: Mobility. Synchronization. Self-service. Collaboration.
Perhaps the most important single word to which bankers will focus their technology plans in the coming year is this: Customers.
In more than a dozen interviews with bankers, technology providers, and financial-industry analysts, the message is clear: In 2013, bank-technology strategy has to concentrate on knowing one’s customer base and what that base really wants; negotiating with technology professionals on how to provide that to the customer; and making it all as seamless—or as several people termed it, “easy”—for the customer as possible.
“We have to make sure it’s very convenient for our customers to do business with us,” says Bryan Van Dyk, executive vice-president, BBCN Bank, a $5 billion-asset bank in Los Angeles, which focuses on lending to the Korean-American population across the country. “We want to be very adaptable, innovative, and yet secure, but we want to make sure it’s easy for our customers to do business with us.”
Similarly, Bob Gibson, vice-president for branch operations, Cummins Allison, says: “Banks want to be responsive to the customers’ needs and their demands for convenience . . . The goal here is to make it easier for that customer to do business with [the bank].”
Such an overall goal is affected by a number of relatively new technologies that many believe will start to mature in 2013. Among them: mobile banking and the rise of tablets; analytics, particularly in figuring out customer-base characteristics and tailoring targeted messages; channel synchronization to make customer experience consistent, whether it’s through digital or brick-and-mortar means; and self-service enablers to satisfy a growing customer preference, while driving down costs.
In all these areas, however, there is agreement that bankers and vendors should communicate aggressively with each other as to exactly what services bank customers want and how best to provide them.
MOBILITY: Can you deliver when they “ping” you?
Suzanne Galvin, vice-president, Elan ATM and Debit Services, says, “It would be foolish to presume that mobile is anything but a promising area for banks. Similar to the internet boom, this channel, if executed correctly, represents a unique opportunity to establish a tight and growing relationship with one’s customer base, in a manner previously unknown. The ability to connect in real time,” she adds, “changes the dynamic and opens the door to new services and a deeper relationship.”
“Mobility is right at the head of [these strategies],” says Sam Kilmer, vice-president for market development, Harland Financial Services. “It might be the transactional part for mobile banking, but, to me, that’s not even the greatest opportunity. The greatest opportunity is ‘interactional’ mobile—being able to do things like open up accounts, provide advice, service the customer, answer their questions.”
Even as consumer mobile is taking hold, this year likely will see increased development for mobile commercial banking. “Many businesses are still in the transitional phase, really grasping and taking on the technology,” says Craig Roper, chief deposit officer, Bank of Utah, Ogden. “We are constantly getting feedback for enhancing those tools, [such as] positive pay for their check processing, finding ways to help protect them against ACH fraud, helping them understand how to better process their wires, how to collect their funds sooner, . . . and also help them manage their payables and their cash flow better.”
Van Dyk says BBCN is pursuing commercial mobile aggressively. “What I see happening with mobile is the ability to approve wires, the ability to approve ACH batches, that sort of thing, through a tablet or through a phone, because small business owners are out calling on customers . . . Maybe they don’t have a lot of time to run into their office, log on to a PC, and do that work.”
Coming on strong in the mobility arena is the advent of tablets—bigger versions of smartphones, but with greater data-entry and graphic capabilities.
“There is a lot more screen size, a lot more viewable area,” says Andrew Tilbury, chief marketing officer, BluePoint Solutions. “If you’re on your phone, you’re probably walking around. If you’re doing something on a tablet, you’re probably sitting down. It’s a noticeably different experience . . . I’d trade stocks on my iPad, but I probably wouldn’t do that on my phone.”
Tablets aren’t just for customers. “Everybody is starting to orient toward tablets,” says Robb Gaynor, chief product officer, Malauzai, who gives this example: “Many banks have signature pads for collecting electronic signatures. Some of these are mobile, but they are an inch-and -a-half thick. Imagine that being replaced with an iPad signature application. The cost of buying and maintaining that is cheaper . . . and you could have many other applications on that same device.”
John Jones, president of Data Center Inc., sees a gradual adoption of tablets into banks. “I think they will continue to develop and obtain more banking functionality.”
ANALYTICS: Tap that gold, don’t just collect it
The treasure trove of customer data banks collect and maintain isn’t any good unless it’s analyzed properly. “It’s not just chasing after the next great thing or the next shiny object, but really focusing on what your specific customers want and your growth objectives at the bank, and how technology can help you meet those initiatives,” says Steve Shaw, vice-president of strategic marketing for digital channels at Fiserv.
One option with which to put analytics to use is in marketing. “With the gold mine that they are sitting on with data and other things—knowledge that they have around the customers—[banks] can do the target-marketing approach,” says Bret Skousen, vice-president, strategic partnerships, MoneyDesktop.
Taking that a step further comes the potential—already seen in other parts of the world—of using customer data to offer “dynamic pricing.” Nicholas Brewer, senior analyst at Aite Group, explains: “[The price] could be calculated according to the customer and the bank, or performance, or whatever it is you want. Then you could extend that into things like next-best-offer pricing. If they have a checking account, could you offer them something else that’s prebundled proactively in a way that’s driven by analytics?”
This capability, others note, while it often benefits the customer, has to be done with an eye to the evolving regulatory focus on fairness.
SYNCHRONIZATION: Time to medal in “synchronized banking”
With the proliferation of channels—mobile, online, ATM, interactive voice, and branch—comes the compelling need to make sure they all interact smoothly with each other, ensuring the customer is comfortable doing business across each one.
“It’s important to synchronize the different channels so that if [customers] start a new account on the internet or through a smartphone, they can finish it in the branch if they have to,” says Randy Roth, CEO of Vitex.
“One of my biggest strategic pieces is making sure that the experience—whether you come into the branch, you’re at an ATM, you’re mobile, or you’re online; however you interact with us—the look and feel of everything you’re doing is the same,” says Bank of Utah’s Roper.
But not everything should be provided to the customer on every channel. Catherine Graeber, vice-president and principal analyst at Forrester Research, says: “You need to determine what it is that that device is good for. The challenge is we’ve launched all these channels one by one. Now, it’s really time to take a look at not only the integration between those channels ... not just as technology for technology’s sake. [But rather,] what does your end user, your customer, your consumer, your small-business customer, what are they really trying to do, and how can you enable the technology to allow them to do that?”
The reality is that customers “are not going to flock to one specific channel and use just that channel,” says Fiserv’s Shaw. “[But] they are going to expect the kind of experience and information to be contextual for each one of those channels.” The key, he says, is to address the needs of each customer and deliver “a tailored experience that consumers can interact with in those respective channels.”
As one example, says Malauzai’s Gaynor, “there are certain things you can’t do except for mobile, such as take a picture of a check to deposit. Or take a picture of a bill to pay a bill. Or turn on and off a debit card in the line when you are checking out, as a way of fighting fraud.”
SELF-SERVICE: It’s a plus again
There’s a fine distinction between providing self-service capabilities and providing mobile or online banking. Both depend greatly on automated processes on the front and/or back end of the systems. Indeed, there is cross-over, as BluePoint’s Tilbury says. “When you’re looking at some of the mobile technologies, you’re really talking about the self-service channel.”
Self-service includes enabling customers to do things faster and with more convenience, while costing the bank less. It includes new services that are starting to take hold. “Just look at remote deposit capture, for example,” Tilbury says. “That’s now in the reach of any size bank. They need to start thinking in terms of those sorts of things.”
Self-service extends to other channels as well. “We’re starting to see more specialized self-service devices, such as ATMs with video capability, becoming much more than just a cash-dispensing machine,” says Vitex’s Roth.
It comes down to making services available to customers, both consumer and commercial, in ways they find suitable. “The bank’s role is to be open to those kinds of technologies as a way to satisfy their customers’ need for the timing of their interactions with their bank, which would be on their schedule and . . . also fit the convenience factor,” says Gibson of Cummins Allison.
Put another way, “[The question is] how can you have that self service, 24/7/365, across any number of different channels? This is what customer expectations are across all other industries,” says Matt Friend, managing director, North American payment services, Accenture. “Community banks, in particular, should be able to get and provide that level of service at an appropriate price point from a lot of their banking-technology providers.”
COLLABORATION: Bonding with your vendor
Speaking of providers, it’s always been essential for community banks to establish a partnership with their technology vendors. Now, it has become absolutely essential for banks to aggressively express their customers’ changing preferences and for the vendors to respond.
“It’s all customer driven,” says Bank of Utah’s Roper. “We hold focus groups and talk with our customers to find out what it is they like or don’t like about our processes, and what we do, and what they need. From that it’s really easy to go to your vendor or those that you are working with, or even the vendors that you’re considering, and doing a comparison—to say, ‘Okay, how do you match up? How are you going to deliver this for me?’”
BBCN’s Van Dyk, who also used to work as a vendor, says: “First of all, you need to negotiate, and negotiate hard going in. You need to get the best deal that you can. Once you’ve signed that deal, you need to partner with that vendor. You need to attend their conferences, their training. You need to understand the systems that you’re in.”
From the vendor’s point of view, it’s similar. “A vendor ought to have a dynamic user group, and not just one where the client is wined and dined by the vendor, but [where the client] can come in and talk about the product, talk about needs, and be able to give feedback,” says DCI’s Jones. Vendors can then take and improve on those ideas, and “deliver them in the next release of the solution. Users value that.”
Absent such a group, how a bank interacts with vendors makes a difference. According to Forrester’s Graeber, it’s less effective for a bank to demand an offering that a competitor has than to say, “Here’s what we’re hearing from our customers. Here’s what they would like to do. Can we get up to speed on that?”
In the same way, both vendors and banks are finding higher-tech ways of working with each other. “Collaboration is the key word here. Many partners are opening their platforms and providing developer toolkits, so banks can create their own apps and interfaces with the provider’s platform,” says Joe Zappa, who leads Elavon Financial Institution Solutions. “This will ease development costs on both sides and allow for greater customization more quickly.”
BOTTOM LINE? Same as the top—it’s the customer
In all of these and other technologies yet to emerge, the key thing—the theme throughout this article—is to stay in tune with the customer. Fiserv’s Shaw sums this up: “Financial institutions have an opportunity to leverage technology to be the financial hub for their customers. If they can deliver the right experience and meet their expectations, consumers will stay with them. If not, there are some very innovative companies out there that are looking to take over wallet share, and leverage the technology to do that.