Banks Sit On Sideline As Tablet Growth Continues

 In a just released report from Celent entitled, Tablet Banking: An Evaluation of Tablet Apps at the Top 13 Banks, it was found that only seven of the top thirteen US Banks have a live iOS tablet app, and only two of the top banks have a native Android app. In many cases, banks are using their online banking platform as the foundation for tablet users or are making adjustments to their web portals for tablet use.“Consumers are rapidly growing more accustomed to interacting with their financial institution through devices other than PCs,” says Jacob Jegher, Research Director with Celent’s Banking Group and co-author of the report. “Celent believes that tablet banking represents a tremendous opportunity. However, banks aren’t exactly scrambling to release tablet specific apps.”As part of the Celent study, it was found that many banks remain unclear as to how the channel should be classified. Is the tablet platform an offshoot of online banking? Is the platform better supported by the mobile banking team? In reality, tablets are a unique platform that deserve individualized attention. According to Stephen Greer, Analyst for Celent and co-author of the report, "Tablets take the best of the PC and the best of mobile and combine them into a device that offers functionality, portability and a rich user experience."Use cases also need to be taken into consideration when working with multiple platforms according to Greer. "Online banking is functional, complex, and a daytime/work activity, while mobile is quick, contextual and on-the-go. Tablets, in contrast, are often leisure devices, catering to casual couch browsing and intermittent time killing." In addition, since many people multi-task with a tablet device (watching TV, etc.), the visual and tactile functionality of the tablet must be leverage to optimize the user experience.Because of the interactive dynamics of this platform and the large number of device manufacturers and dimensions need to be supported, a larger investment in development and testing is required. In addition, to date, many organizations have had difficulty measuring the incremental financial impact of this investment. This may be the reason supporting this platform has been so slow.While the primary emphasis of the Celent report was a very thorough review of each of the top 13 US banks' tablet application(s) with detailed visual support and commentary on each bank's execution, there was also a review of key trends in the tablet banking marketplace. These trends were reinforced by other research done by Mapa Research in March and Fiserv in a report last month.Interactive dashboards that leverage the tactile benefits of the tabletPFM tools that add value through unique visualizations of financial insightsSocial media integration beyond customer support and promotionUnification of devices to provide common looks for basic functionsEasily accessible insight such as balances, ATM/branch locations, etc.Focus on simplicity using photo capability for account opening, mobile deposit and bill paySpeech recognition to minimize keystrokes and improve user experienceEnhanced security potentially leveraging biometricsSimilar to the excellent analysis Celent has done for mobile banking, they believe that tablet banking is in an ever-changing evolution of functionality and applications. As with mobile banking, each bank is in a different stage within this evolutionary process, with a goal to move to even smarter tablet banking capabilities as shown below. As mentioned, in the Celent evaluation of the top 13 banks in the US, only seven currently have iPad apps and only 2 have Android apps. This is obviously a surprisingly low number for banks that should be setting the pace for the industry. Most of the banks evaluated are working feverishly to innovate on their smartphone platforms which has impacted the ability to focus on tablets at all, while others have only updated their initial tablet application one or two times.Celent found that most of the tablet applications evaluated were 'transaction enablers' as opposed to leveraging the visualization and tactile nature of the tablet platform. Of special interest would be the inclusion of more PFM applications since Raddon Research found that tablet owners (27 percent) are found to be twice as likely to use PFM tools than non-tablet owners (12 percent).While the scoring, final rankings, screen shot evaluations and final 'Xcelent' awards for the top 13 US banks can only be shared with subscribers to Celent research, a less robust ranking of iPad banking applications is available by viewing the top 200 apps in the iTunes store. In 2011, only 7 banks were ranked in the top 200 iPad apps in the finance category. The good news is that Bank of America, Chase and Wells Fargo are now the top 3 downloaded free iPad finance apps on iTunes according to padgadget.com, with Citibank (13), U.S. Bank (19) and PNC (22) ranking in the top 25 (28 banks are in the top 200). The bad news is that most of the largest banks are not rated very highly by users (First National Bank of Omaha (5) and Peoples United Bank (8) are the highest ranked iPad finance apps according to Padgadget.com here). It is clear that digital channels are no longer 'alternative' channels. In fact, they are the fastest growing financial channels in the history of banking and are supporting an ever changing consumer who is more connected than ever. As more tablets are purchased and the capabilities of the devices expand, banks and credit unions must evolve to meet customer expectations. This will require a clear, focused and integrated strategy for tablet banking as well as for all digital channels. Institutions of all sizes can't continue to sit on the sidelines, providing vastly underdeveloped tablet applications or 'canned' solutions. While it can be expected that mid-sized and smaller institutions will lag their larger counterparts in this development process, monitoring best in breed in the US and overseas is one of the keys to success. This evaluation of what is possible should be done by product managers, marketers, as well as other senior executives in the organization to set the foundation for future strategies and development.

Note: The Celent research on the tablet banking applications at the top 13 banks in the US is a report that complements a similar series of evaluations done by Celent on mobile banking. Analysis of this report Celent was done by Bank Marketing Strategy in August 2013 entitled, Today's Mobile Banking Apps: Table Stakes or Cutting Edge.

It's Time for Banks & Credit Unions to Embrace Change

I agree. While the details behind these goals have changed, why have the overarching themes stayed the same? Is it because the planning process usually begins with broad financial requirements and many involved in the process simple dust off last year's plan and hit the restart button? Or is it because, despite a lot of talk around embracing change, the industry (and the regulators) frown upon the potential risk associated with innovation and doing things differently? In a new report just published by KPMG entitled, Reshaping Banking in a Dynamic Business and Regulatory Climate, the author emphasizes the importance of getting out of 'survival mode' and embracing change, creating new strategies, crafting new infrastructures and focusing on the customer. While there is no denying the importance of each of these issues, this report is not much different than similar reports I read in the 1990's. The primary difference is that the risk of ignoring these issues has far greater implications.Dusting off last year's planning document and making small alterations is not enough. It will take more than simply finding ways to 'do more with less', cost-cutting and operational improvement. According to Brian Stephens, national leader of KPMG's banking and capital markets practice and author of the report, "There must be acceptance among the entire leadership team that the rapid, unpredictable, and profound change we are witnessing is structural -- not cyclical." He continues, "The debate in not about the need for change, but what changes should be made."As in the past, the issues that must be addressed are many. The difference is that today, while the issues may look similar to the past, the issues are more interconnected than ever before and the environment where these changes need to be made is evolving at breakneck speed.The KPMG report provides a perspective into the following critical areas as banks and credit unions plan for 2014 and beyond:Culture of embracing change – In today's environment, change is constant, so banks must be nimble and innovative. "Banking leaders must choose to adapt and evolve, or risk irrelevance," says KPMG. "In the future, when banks look back on this time of change, an organization's resilience will not be measured by how much adversity it endured throughout the financial crisis and this period of recovery; rather, it will be measured by how well it adapted to it." The challenge is a tradition of rigid internal resistance to change and a consequent inability to execute. The change in culture must come from the top, starting with the board and senior leadership. And it must me more than just words.Focus on customers, not products – To increase revenue, banks must determine the appropriate customers to target and how best to package the products and services for which they are willing to pay. The challenge, related to the first issue above, is that banks have a legacy of talking to the masses and giving services away for free. Without better segmentation and an understanding of what customers will pay for, the impression of any revenue initiative will be negative. Alternatively, bundling services such as mobile bill pay, alerts, ID protection, payment services, etc. using a customer-centric perspective can results in a win-win.Deriving value from data – Banks and credit unions that can extract more value from all available data sources to develop a better understanding of customer needs can serve customers more effectively and profitably, while developing a competitive advantage and staving off threats posed by new market entrants. The challenge is that all internal product-centric data silos (retail deposit, credit card, small business, mortgage, commercial, etc.) must be integrated to provide a single customer view. Once data is integrated, the customer insights need to be leveraged for better product development, new cross-sell and revenue opportunities and reduced risk.M&A/Alliances – Despite many predictions around increased M&A activity in the past that have not come to fruition, the environment today is prime for consolidation due desires for geographic expansion, product enhancement and cost reduction. The immediate issue is that organizations need to strategically evaluate whether they are a buyer, a seller, or neither, while also examining the possibility of developing alliances where strategic fit warrants.Technology – At a time when costs are being cut, the appetite for investment in technology is usually tainted by the memories of previous IT upgrades that never met expectations. Nonetheless, the ability to effectively support the integration of new delivery channels and a customer-centric view leaves most banks no choice but to upgrade aging infrastructure. "The promise of harnessing technology advances can help banks streamline operations to reduce operating costs, connect future and existing customers across a multitude of new and emerging channels, tap new revenue streams, enhance customer loyalty, and build better defenses against cybercrime and denial-of-service attacks," says KPMG. In the end, ignoring or putting off the inevitable is a risky strategy, especially with the risk of noncompliance, losing market share or not being able to support an ever more important mobile strategy.Cybersecurity – The increasing scope, frequency, and sophistication of cyberattacks on banks means institutions need to be better prepared to address a risk with implications that both enormous and unknown. With the public's trust in banks finally recovering from the impact of the financial crisis, this trust can be shattered if life savings (or even access to funds) are at risk. In addition, there are some who believe that we are at the tipping point in the acceptance of mobile banking (and mobile payments) without greater ID protection and mobile security in place. 2014 will be a year when most of these issues need to be addressed (if not sooner).Capital & Compliance – Banks will continue to need to prepare for stress testing, while also monitoring various capital adequacy and liquidity requirements and associated staffing and compliance costs. For many banks, the issue of capital adequacy may be secondary to the ongoing costs and internal 'friction' that is associated with the added staffing associated with meeting regulationsAccounting for Credit Losses – Banks will need to understand revisions to accounting for credit losses on financial assets and other rules. These changes could not only have a significant impact on an institution's reported earnings, but also on its capital ratios due to the need to carry larger loan loss reserves.While the list of issues may not be new to any banker who has been in the business more than 6 months or more than 20 years, the risk of not proactively addressing these issues has never been greater. So, if you are in the midst of planning for 2014, make sure your team is just not listing these in a SWOT analysis without building strategies to address the risks and opportunities. If you are 'done' with the formal strategic planning process, it may make sense to review the strategies and tactics planned for 2014 to make sure some version of 'status quo' is not your plan.