Author: Deborah Matthews, AAP, Director of Payments Strategies, firstname.lastname@example.org
With the recent passing of Steve Jobs, dozens of articles paying tribute characterized him as a brilliant visionary who changed the world. He may arguably have been one of the most creative minds of our era. Part of his genius was in his ability to connect elusive threads to see opportunities invisible to the average guy on the street. Another part was in his drive for excellence. Most notable was his boldness in blazing new trails by inventing new markets, innovating to address consumer needs before consumers were even aware they had those needs, and in teaching consumers to expect great products. Jobs could imagine the future because he helped to define it.
The indelible impact of one of Jobs’ most recognized contributions, the iPhone, is undeniable. Apple defined the smartphone market. More than a quarter of the 82.2 million smartphone users have an iPhone.
Smartphones have become the contemporary equivalent of a Swiss army knife, changing life as we know it in countless ways, including the way we manage our bank accounts. Nearly 14 percent of U.S. mobile users (32.5 million) accessed banking services on their devices. There are 12.7 million mobile banking app users as of June, up 45%, according to comScore.
If you’re wondering how your institution can stake a claim in the mobile payments game, hang on. While we now take for granted the elegance of combining a cellular phone with a camera, this innovation has the potential to make 24/7/365 deposits an everyday occurrence. Mobile remote deposit capture (RDC) is another “bridge” application on the precipice of a tipping point.
The intersection of smartphone ownership, the efficiencies of self-service channels and customer demand for convenient mobile access, is driving the mandate for mobile RDC. It doesn’t take Jobs-like vision to read the handwriting on the wall. A recent study by Mitek and AlixPartners reveals some compelling statistics:
• The percentage of consumers extremely likely or likely to adopt mobile RDC has doubled since 2009
• 38% of U.S. adults will be using mobile RDC by 2016
Now, here’s the part about why you should care:
• 43% of consumers state mobile RDC is the number one mobile banking feature for which they would switch banks
• 81% of mobile RDC users are extremely or very satisfied with their bank
• The mobile RDC revenue opportunity is forecasted to reach approximately $500 million by 2016
• Mobile RDC offers potential cost-savings at the branch: Industry-wide cost savings are projected to reach $1.6 billion based on 2.1 billion checks migrated by 2016
• The cost to serve mobile RDC users is 18% lower than non-adopters: Mobile RDC users leverage this cost-effective channel by depositing 73% of their paper checks with their phone
Most importantly, to effectively compete in today’s marketplace, offering the latest mobile technology is an imperative. Recent research by Aite Group states that 85% of the largest banks are already offering mobile RDC, or have plans to do so soon.
In reflecting on his success at Apple, Steve Jobs said, “Our belief was that if we kept putting great products in front of customers, they would continue to open their wallets.” Be bold in blazing new trails by embracing opportunities like mobile RDC. Be decisive in defining your markets and by providing great products to your customers… they will reward you with their business and their loyalty.
Author: Greg Adelson, group president, iPay Technologies
The four-day Thanksgiving weekend can be both a shopping enthusiast’s paradise and a marathon of extended hours and large crowds for many retailers. Millions of consumers take part in the annual Black Friday and Cyber Monday festivities, as well as the days in between, to officially jumpstart the holiday spending season. Despite the early mornings and often frigid temperatures, advertised sales continue to draw shoppers out of bed before dawn to fight the crowds and score that extreme deal.
I challenge you this holiday season to think a bit more strategically about where you allocate your dollars and consider this thought: Shop SmallSM, starting with Small Business Saturday®. The Saturday following Thanksgiving – Nov. 26 – will be the second Small Business Saturday, an event designated to present shoppers with an officially organized effort that encourages them to dedicate a portion of their holiday spending to local, independently owned small businesses.
It can be a win-win for everyone: area merchants receive a little boost from community patrons and consumers get money to spend. FedEx, for example, is giving customers $25 to use on Small Business Saturday. American Express is also giving a one-time $25 statement credit to card members who register their eligible American Express card for the Small Business Saturday offer and use their registered card to spend $25 or more at a small business on Nov. 26.
As of 2007, small businesses have generated 64 percent of net new jobs in the previous 15 years and employed just more than half of all private-sector employees, according to the Small Business Administration. These companies are the backbone of their communities and help define the surrounding culture. They are integral to sustaining local economies across the country as well as to preserving those neighborhoods.
For those reasons, iPay Technologies has joined the Small Business Saturday initiative as an extension of its ongoing support of small business owners everywhere. Our company personally recognizes the contributions of small businesses and has long devoted itself to helping financial institutions serve their unique needs.
In 2010, the first ever Small Business Saturday generated 1.2 million Facebook fans, 30,000 tweets using hashtags #smallbusinesssaturday or #smallbizsaturday, and more than 3,000 media placements in such reputable outlets as USA Today and Forbes. One hundred thousand small businesses downloaded Small Business Saturday marketing materials. American Express, a founding partner of Small Business Saturday, also revealed small businesses saw a 28 percent increase in sales on AMEX cards compared to the same day in 2009.
Revitalizing our national economy starts at the community level, with first reinvigorating the sustainability and success of small business owners. Aligning with Small Business Saturday furthers iPay’s goal of powering the performance of these local organizations by driving consumer sales and revenue.
Both consumers and business owners can visit http://www.facebook.com/SmallBusinessSaturday to learn more about how they can get involved. For example, small business owners can create a personalized, geo-targeted ad to run on Facebook. They can also download online promotional materials that will help them drive sales to their business on Small Business Saturday. Help rally your community using Twitter hashtags #SmallBusinessSaturday and #ShopSmall2011.
It’s not too late to commit yourself to spending at small businesses this holiday and into the future.
Author: Karen Crumbley, email@example.com
In recent conversations with financial institution (FI) employees, I have received varied responses when asking, “What are your plans for your customer education program in regard to the FFIEC’s Supplement to Authentication in an Internet Banking Environment?” Usually, their response is something along the lines of “that is yet to be determined.” I gather that the reason this initiative is not quickly run through the decision-making process is because there are several stakeholders involved. Plus, the outcome will be customer-facing, so it would seem logical that FIs would want to proceed carefully, giving the subject careful consideration.
I am concerned that because customer education enhancements are not an easy item to check off of the “to do” list, the final outcome may suffer as a result. Some FIs may decide to stay the course using traditional communication channels regarding education initiatives. For example, an FI may invest in brochures and statement stuffers and simply “go through the motions” of fulfilling a regulatory directive. Unfortunately, this method of education is not compelling, and I speculate that statement stuffers and brochures likely find their way to the bottom of customers’ reading lists, and then eventually to the bottom of the trash bin. The guidance released recently in June 2011 by the FFIEC strongly suggests that regulatory agencies are looking for something more…education efforts that go beyond the basic statement stuffer.
Be aware that various other “typical methods” of educating customers may be less than ideal, as well, including:
Posting information to the FI’s website
Let’s face it; this is really just a statement stuffer in electronic form. It is not as if customers are lacking things to do and so will turn to their FI’s website for a quick reading break on malware. If you choose to go with this option, I recommend strategically placing the info on the online banking logon page.
The positive aspect of using these events to educate customers about the latest online banking threats is that you are giving them an incentive; however, realistically, these events only involve a small percentage of the customer base.
Including information along with the customer agreement
Customers often neglect to read the fine print of customer agreements and so often sign and turn them in without paying much attention to detail.
Newsletters can be a creative way to provide information if done well and distributed via email, but many FIs lack the expertise and resources for this undertaking.
The recent FFIEC Guidance gives us every indication that the bar has been raised as far as expectations regarding enhancing your existing customer education program, so FIs need to address this matter. Since many traditional educational methods are uninspired, I encourage you to “think outside the box” and consider non-standard methods to engage customers. Having documentation to demonstrate this effort to examiners would be optimal. For instance, what about trying out technology-driven educational methods such as social media communications, online training that tracks activity, or recorded webcasts?
How will you demonstrate your FI’s commitment and enhanced customer education program to auditors, examiners, and most importantly, to customers?
Author: Chris Sutherland, firstname.lastname@example.org
A question was recently asked of me as follows, “I am familiar with the concept of VM (Virtual Machine) which IBM invented back in the early 1970’s. How would using VM provide greater security? And why would a bank customer want this?”
Let me begin my response by saying there are a number of good reasons to choose virtualization that make sense from a business standpoint (you can refer to my blog post, “Is Virtualization the Right Choice for your Financial Institution?”) With the appropriate setup and VMware’s virtualization solution, you get a secure and robust solution that has both the technology and the processes to ensure that the high standard is maintained in all current and future products. VMware virtualization gives you the following:
• Secure Architecture and Design: Based on its streamlined and purpose-built architecture, vSphere (the VMware Hypervisor) is considered by many experts as the most secure virtualization platform.
• Third-party Validation of Security Standards: VMware has validated the security of its software against standards set by Common Criteria, NIST, and other organizations.
• Proven Technology: More than 250,000 customers – including all of the Fortune 100 as well as military and government installations – trust VMware to virtualize their mission-critical applications.
Because VMware uses what is called a “Bare-Metal Virtualization,” meaning that the hypervisor (virtual machine manager) resides on the physical server, there is no dependency on an operating system that could add a layer of insecurity as well.
Another point to consider is the “Thin Virtualization” concept. “Thin” virtualization was started with VMware’s release of ESXi 3.5 and continues to improve and dramatically strengthen security and manageability as follows:
• Reduced size makes the attack surface much smaller and reduces the potential for vulnerabilities.
• Independence from the parent partition or console based on a general-purpose Operating System means far fewer interfaces to exploit and less malware threats, which is especially important given the path of device drivers from the Virtual Machine to the physical hardware.
• Unstructured, console-based interaction from administration is replaced by authenticated and audited interfaces.
As an added point for securing the environment VMware has a security suite of software called vShield. The vShield Product Family is the foundation for trusted cloud infrastructures. vShield enables adaptive and cost-effective security services within a single management framework. Three of the benefits are:
1. Reduce Complexity with Unified Security Policy Framework for the Cloud. vShield provides a comprehensive set of services for securing the datacenter at any level – host, network, applications, data and endpoints, in a single management tool integrated with vCenter Servers.
2. Secure Applications and Data with Adaptive Trust Zones. vShield allows organizations deploying cloud infrastructure to create adaptive trust zones that securely isolate applications with different trust levels and also quarantine applications that may have been compromised.
3. Accelerate Compliance and Automate Remediation. Exposure or leakage of such data – for example stolen credit card information – can cost an enterprise millions of dollars and/or harm its reputation. VMware vShield also provides organizations with the ability to identify sensitive business information and ensure it is protected. This includes over 80 pre-built templates for the most common standards of protecting sensitive data.
So what have we concluded? The reasons we have cited here, plus the fact that many companies (including financial institutions) are using virtualization in production environments lead us to the realization that virtualization is not only good for testing, but it is secure and makes sense in everyday production environments for business-critical applications, as well as servers.
Author: Amy Aldrich, AAldrich@jackhenry.com
Recent studies have proven that small business customers are a highly valuable, yet under-served target market for financial institutions. If you’re missing out on securing relationships with these vital customers, it’s time to think about new ways to anticipate their needs and respond before they even know they have them. One strategic way to anticipate the demands of small business customers is to offer an online bill pay solution that is specifically targeted to their unique needs.
In a recent study, iPay Technologies™ examined the market for business online bill pay and discovered that there is a significant number of small business owners that are ready to sign up for this service right now. So what are you waiting for? Below are the top five reasons you should adopt a tailored bill pay solution for small businesses – and do it fast!
Reason No. 1 – A big market is up for grabs.
In the referenced study, iPay discovered that approximately 5.9 million small businesses have a need for business online bill pay and the desire to adopt this service now. This figure represents 23 percent of America’s small businesses – a substantial small business market that is up for grabs for banks nationwide.
Reason No. 2 – This technology serves an immediate need.
Business moves fast, and small business owners want more convenient ways to manage their finances. They want more control, flexibility, and convenience, and they want it now. In fact, 91 percent of those surveyed by iPay were ready to immediately adopt small business online bill pay as soon as they were able to visualize the tangible role it would play in their day-to-day operations.
Reason No. 3 – Your bank can make more money!
Small business customers don’t just say that small business bill pay is valuable – they’re willing to put their money behind it. In fact, 72 percent of the small business owners targeted in iPay’s study said they were willing to pay a monthly fee for business online bill pay.
Reason No. 4 – You can attract and retain a lucrative segment of business customers.
Today’s small businesses are increasing their expectations of their banks and want easier and more convenient financial management. According to the iPay study, 78 percent of small businesses surveyed were willing to switch institutions to get business online bill pay. Additionally, customers who adopt business online bill pay from a bank have a more tangible connection to that institution and more reasons to continue doing business with them.
Reason No. 5 – You’ll have a competitive advantage over other banks.
Offering business online bill pay makes financial institutions more appealing in the eyes of small business owners. As a result, providing this service can give banks a competitive advantage when they are trying to capture a greater share of the small business market. The iPay study reported that 97 percent of banks would think more favorably of an institution that offers business online bill pay.
As technology changes, the economy recovers, and the dynamic segment of small business customers evolves, one thing seems certain – small businesses want simple, convenient financial management options and they rely on their banks to provide the services that will work best for them.
If you’re not currently offering a small business bill pay solution, it’s time to formulate a plan of action to adopt this solution right away.
Author: Dan Roderick, email@example.com
A great deal of attention has been paid in the financial press to the decline in loan growth and the resulting impact on bank financial performance. It is inarguable that lack of loan growth is having an adverse impact on revenue and profitability across the industry. In fact, for community banks in aggregate this harsh economic reality may be even more pronounced.
Based on data published by the FDIC, loan growth for all banks has been positive during only two of the past eleven quarters. One of those quarters – first quarter 2010 – can be explained by a change in accounting rules that primarily impacted loan growth reported only by the largest banks. The most recently reported quarter – second quarter 2011 – reflects an increase of approximately $64 billion (0.9 percent) and is effectively the first time since the second quarter of 2008 where real organic loan growth has been achieved. Two main categories drove the second quarter 2011 increase; Commercial & Industrial loans increased for a fourth consecutive quarter, rising by $34.3 billion, and loans to depository institutions increased by $27 billion. Other categories reflecting an increase include auto loans, credit card balances, and closed-end first lien residential mortgages.
A glance at these statistics for second quarter 2011 provides some insight into results achieved by community banks during the same period. Several of the growth categories; loans to depository institutions, auto loans, credit card balances and first lien residential mortgages are not typically drivers of portfolio loan volume at most community financial institutions. Digging into the FDIC data in greater detail by excluding most banks over $20 billion in assets, bankers banks, and specialty banks like credit card issuers or foreign banking entities, we see that loan growth was actually slightly negative (down $4.3 billion or 0.20%) for the community banking industry. The good news is the decline in this most recent period is significantly less than the average decrease over the prior nine quarters. The bad news…we’re still not out of the woods. Lack of new loan volume continues to hamper our ability to grow top line revenue and increase the bottom line.
So, do we conclude that improvement in profitability is hopeless until loan volume begins to pick up across the industry? Of course not – plenty of opportunity still exists to generate profitable new loan volume and improve profitability within our existing loan portfolio. You just have to know where to look! Improved analytics and innovative thinking are key in the current environment. Also remember, even if new loan volume is scarce we have a significant existing book of business that can be tapped for profit improvement.
Customer profitability is far more concentrated than most of us probably expect – and pricing practices represent one of the key culprits driving this outcome. Most community banks over-price their largest, most profitable customers – and under-price their smallest least profitable customers.
What specific pricing challenges are you currently facing in your market?