My Digital Banking Nirvana

aMy Digital Banking Nirvana In many ways, there is no difference between what makes a great mobile banking application and what makes a great non-banking mobile application. The key components are:Simplicity: Does the app replace a non-mobile process I do often? Does it make my daily life easier? Is it easy to use? In the non-banking world, I love the KeyRing application because it stores multiple loyalty cards in one place on my mobile phone, eliminating the need to carry plastic cards. The app also links to digital offers I can redeem without cutting coupons.Engagement: Does the application stimulate positive interaction, and build a better application from this engagement? For me, my Marriott mobile application does a great job. Beyond providing the standard ability to make reservations and check my loyalty balances, it also allows me to check in early, receive notifications when my room is ready and informs me about special offers through multiple channels.Contextual: One of the benefits of a mobile application vs. an online tool is the ability to provide value based on where I am located. My favorite app from a contextual perspective is OpenTable. Using locational functionality, OpenTable provides suggestions of restaurants based on my current location and previous dining experiences. Reward points are provided for using the app and starting next year, the app will also allow me to pay for my meal using my phone and the OpenTable application.So, which mobile banking applications meet one or more of the above criteria and could become part of my digital banking nirvana? As could be expected, this list is fluid, since new innovations are being introduced every week, replacing previous applications that were once best-in-class.As an active mobile banking user, there is some functionality that must be the foundation for my best-in-class mobile banking relationship. First of all, as covered in a recent blog post entitled, Banking Innovation for the Fat-Fingered, leveraging mobile imaging technology and my phone's photo capability simplifies mobile banking by removing keystrokes and improving accuracy. Therefore, I expect my future mobile bank to provide the following:In addition to leveraging the photo capabilities of my phone to simplify my banking, I would prefer to eliminate many of my password and authentication steps, while not having to worry about security issues. One potential solution is to integrate Capital One's new SureSwipe login feature into my new mobile banking relationship. With SureSwipe, I remember a pattern as opposed to passwords, making my login easier as shown in this humorous video.I also do not want to go through a series of authentication steps just to see the balance in my account. In the U.S., GoBank provides me the opportunity to see my balances with a simple swipe of the finger. GoBank is still one of the few banks in the U.S. to provide this instant balance feature, even though Mapa Research found close to 20% of major banks worldwide offing this functionality. Banks overseas offering a similar capability included Commonwealth Bank's Kaching, Swedbank's 'balance shake' and Bank of New Zealand's mobile app that allows you to see your entire relationship without a full login.Other benefits of GoBank I would like to include as part of my digital banking nirvana include having a wide range of customized alerts, a negotiable monthly fee, and their 'fortune teller' that informs me when I might be spending money I will need later. (I covered the reasons I like GoBank in a Financial Brand blog post here) Going a step further, I would prefer not to type any information at all into my phone for basic mobile banking. If I had USAA's Virtual Assistant powered by Nuance, that would be possible since members are able to use voice commands to perform basic banking tasks. Nuance is also testing a similar solution at U.S. Bank.Beyond the basics, no other functionality of mobile banking is as important as payments. Despite high industry attractiveness and relatively low consumer acceptance (in the US at least), mobile payments is the Holy Grail of mobile banking and is the potential tipping point in the battle between bank and non-bank providers. From making payments to tracking payments, the diversity of payment applications globally is exciting.One of the most comprehensive mobile payment applications is from Commonwealth Bank in Australia. The CommBank Kaching application provides the ability to make P2P payments by bumping phones with another person, using a mobile phone number or email address, or even through Facebook. For bill or merchant payments, QR codes can be used and NFC payments are supported with internal Android functionality and with a CommBank Paytag on iOS devices.CommBank Kaching Mobile Payments FunctionalityOnce payments are made, some of the best mobile receipt capabilities I have seen have come from the new banking competition in the U.S. I am a user and a fan of the Moven digital receipt capability that provides me real-time feedback on my PayPass or debit card purchases as well as contextual transaction insights (the application also has spend tracking to compare spending to previous periods and the ability to pay friends by email, mobile or via Facebook).It would also be nice to include the ability to add pictures to my receipts as offered by Simple in addition to having real-time adjustments to my safe-to-spend and budgeting insight. Simple also provides a very comprehensive search capability that can assist the tracking of spending using 'Google-like' queries or hashtags for spending categorization. Poland's mBank also provides transaction search capability using Google-like queries supported by the excellent Meniga PFM platform.Simple Real-Time Receipts with Safe-to-Spend I understand that my mobile phone is not the best platform for enhanced budgeting, but I still want to be able to track how I am doing each month using my mobile device as an adjunct to the online banking capability on my desktop. This requires striking a very careful balance between form and functionality.As I mentioned, I am a fan of both Moven and Simple for their tracking and budgeting capabilities. Both allow me to see my financial position compared to previous periods and utilize a mobile-first design. The visualization of spending behavior is excellent with the use of easy to understand graphs on both the online and mobile platforms. For me, one of the best personal financial management (PFM) tools has been developed by MoneyDesktop. Using some of the most advanced user interface design capabilities in the industry, their MoneyMobile solution takes some of the best functionality from their online application and creates an excellent visual interface for mobile devices.MoneyDesktop Mobile PFM SolutionAs much as I am looking for the ultimate mobile banking experience, I realize that mobile may not be the best channel for all of my interactions with my bank. In those instances when I want to use online banking tools, talk to a customer service representative or visit a branch, I still use the same criteria of simplicity, positive engagement and contextual functionality.As I travel between online, mobile and my tablet, I don't want to relearn how to conduct my banking. While I may want added functionality that takes advantage of the tactile and interactive benefits of the tablet or the expanded canvas of the desktop computer, I want the 'feel' of the experience to be similar.Westpac New Zealand recently introduced an excellent device agnostic solution  that provides a similar look and feel across devices. In addition to using a responsive design (making the look conform to the device and how the device is held), the use of a 'central platform' will simplify changes in the future.WestPac Device Agnostic Central PlatformWhen I have a problem with my account, the last thing I want to do is search for the appropriate phone number for customer service or wait until I get home. Therefore, the ability to have an integrated customer service capability within my mobile banking application is a must.NatWest and RBS were the first two banks in the U.K. to offer in-app, real-time customer service whereby a customer can initiate a conversation with a dedicated Mobile Chat advisor. In addition, ING has a mobile application that allows for direct appointment setting with a specific agent in a few easy steps.Going one step further, Turkey-based Akbank became the first bank to offer video chat. Customers can make a one-click video call from within the bank's online banking site to one of the bank's video enabled service agents. No additional software is needed and the application will soon work on Android and iOS devices as well.Finally, for those potential instances I may want to use a branch, the traditional branch just doesn't meet my needs. I want to be in and out as quickly as possible and most likely won't need to see a teller. Banks globally are trying to address this change in customer behavior by scaling back traditional transaction-centric branches and replacing them with either advisory-centric units or technology-enabled branches that leverage video and advanced transaction capabilities.National Australia Bank (NAB) recently opened their first 'Smart Store' where traditional tellers have been replaced by full service machines. These new branches take less space, will potentially have longer hours and are geared to the lifestyles and digital-savvy nature of Customer 3.0. (This new branch format was covered by The Financial Brand here)As with any avid mobile banking user, I want even more from my mobile banking experience than just basic transactions, payments and basic money management. For instance, I have definitely come to enjoy my PNC Bank ATM/Branch Finder, that uses augmented reality to allow my phone to search and find facilities through the screen on my phone. Interestingly, while I find the app useful, I am intrigued as to why the app isn't integrated into my normal mobile banking application (PNC Finder is a separate app).With the demise of most points programs associated with debit card usage, more elaborate (and potentially more lucrative) merchant-funded rewards programs have taken their place. Unfortunately, the vast majority of these programs require a proactive opt-in on an offer level basis and are connected with the online banking relationship as opposed to mobile banking. This makes taking advantage of any rewards cumbersome at best and downright maddening most of the time.To address this problem and to provide locational rewards using my phone's GPS capability, Cardlytics is enhancing their merchant-funded reward program in early 2014 to include a much more user-friendly rewards program that will provide offers based on where the customer is located. This functionality is already available from American Express with their My Offers program that leverages both transaction history (what I do) with locational information (where I am).As long as I am trying to develop my digital banking nirvana, I might as well look a bit further into the future and make sure my mobile banking relationship can be supported by wearable technology. While definitely not for budgeting or more difficult mobile banking transactions, both Google Glass and SmartWatches can potentially be effective for mobile alerts, balances, simple transfers/payments and augmented reality ATM/Branch finding capabilities.Two banks are setting the pace globally for wearable technology integration. Banco Sabadell has already used an open app development forum to create mobile banking using Google Glass. As covered by The Financial Brand, the first iteration of 'banking by glass' includes balance inquiry, the ability to get alerts and find branches and eventually deposit a check by looking at it.In addition, Westpac New Zealand has created the first SmartWatch banking app that leverages the bank's Cash Tank application. Initially only providing balances without formal login, the application is expected to also include the ability to get alerts and do transfers in the future.It is clear that the development of innovative mobile banking applications is an ongoing process with new applications and capabilities being introduced almost every day. Therefore, it is important for those searching for digital banking nirvana to not only keep up with industry trends globally (much of the innovation is being done in the Asia Pacific region as mentioned in my recent blog post on innovation), but to also partner with those banks that have innovation ingrained in their culture.I was lucky enough to be surrounded by many banks at Next Bank Sydney that obviously do more than just talk the talk on innovation . . . they walk the walk. It was apparent that each institution put a high premium on future thought and were encouraged to think out of the box and not be afraid to fail. The energy level of people from these banks was high and there was an amazing willingness to share from each other as well as leaders globally.Beyond Australia, banks like CaixaBank and HanaBank, as well as USAA, Moven and Simple in the U.S. are ones to follow. I also am intrigued by BBVA, where their Innovation Center is both robust and very public. In addition to a public Innovation Center web site, there is also a LinkedIn and SlideShare page, sharing ideas that have been developed and discussing the innovation process at BBVA.It is clear that my digital banking nirvana will be a moving aspirational target. But, if I was to combine what is available globally today into a single mobile banking app, I would have a killer mobile banking relationship with my bank.

Big Day for Payments: Plastic vs. Digital

a Big Day for Payments: Plastic vs. Digital Maybe both will garner the support of the key involved parties. Maybe neither. Maybe another company will take the Coin concept mainstream sooner than the planned introduction. The one thing I am pretty sure of is that it is further evidence that financial institutions need to place multiple bets on alternative solutions to avoid being left behind.Despite all of the talk in the industry around mobile payments, acceptance of new digital innovations and platforms has been anything but a smooth ride. In addition to the seemingly insurmountable challenge around consumer's concern with security/privacy, getting merchants, consumers, financial institutions and even carriers on the same page has been close to impossible.At the end of the day, the biggest challenge may be the perception by many that there is no reason to fix something that isn't broken. The current card-based process for making payments, while not perfect, is relatively easy and definitely firmly entrenched in the consumer's daily life. Coin is a .84 mm thin plastic card-like device that can store any of your current cards (actually, 8 of them) and behave like the cards it replaces. Instead of carrying an assortment of debit, credit, gift, membership and loyalty cards from various institutions, you simply use the dongle provided (like the one used by merchants accepting Square) to capture your card information on your phone, take a picture of the cards and use the Coin app to load your Coin card. While only 8 cards can be loaded into the Coin card, an unlimited number of cards can be stored in the mobile app and switched in and out of the card as desired. "You don't need eight cards every day, so your phone is kind of like your drawer, and your Coin is kind of like your wallet," explains Parashar, founder and CEO of Coin. When you are ready to pay or use a loaded card, simply press a button on your Coin card to select the card you want to use (electronics imbedded within the Coin card itself), present your card to the merchant like you have done in the past, and the rest of the process is the same as it is today (see compelling video below).For those concerned about the security of the card should you leave the card behind (only happens to me about 4x a year), the Coin card uses Bluetooth low energy technology to inform you on your phone that you left your card behind. Better yet, the card completely disables itself if your phone and card are away from each other for more than 10 minutes. For those concerned about someone scanning another person's plastic into the app, Coin says that the app only accepts a card that includes the user's personal information. Further, the Coin app is protected with 128-bit or 256-bit encryption and the company is pursuing PCI compliance. The app is also password protected.From the video alone, it is clear that Coin is cool. I personally love it because it is another example of incremental innovation, based on simplifying a person's life seamlessly. It combines something that I am very familiar with (traditional magnetic swipe mechanics) and leverages very high tech digital technology to lighten my wallet. The public seems interested as well since, in the first 48 hours, almost 2 million people viewed the demonstration video on YouTube, making this financial product the number one trending video.No new hardware is needed since the device uses a traditional (or new form) credit card swiping device. In other words, Coin has done what mobile payments is hoping to do (eliminate wallet bulk) without changing my payments behavior. And until NFC, Isis, PayPass or any other mobile payment alternative gains the needed momentum to become omnipresent in my life, an incremental improvement works for me (even though I still love the integration of my Moven debit card and PayPass with mobile receipt and payment analysis).Initially, the Coin card is expecting to be released in either black ('Midnight') or white ('Snow'), with additional colors being introduced later (sound familiar?). The app will initially be able to run on both iOS and Android. Obviously, the Coin card would not be used for online purchases.While not the best way to judge a new payments alternative, even the Card website is cool. Here is a link to the product's FAQ page (be sure to read all of the questions . . . some are helpful in daily life).While already having raised funds from venture capital firms (and interestingly the backing of former Google Wallet head Osama), Coin hoped to raise the $50,000 it says it needs to start producing the card by pre-selling the cards to the public beginning immediately for $50 on their website. This method of pre-sale was to gauge the acceptance of the concept up front and underwrite the initial  offering. It is expected that the card will be priced at about $100 at introduction which is scheduled for next summer.According to representatives from Coin, the start-up surpassed their initial goal for funding . . . within 40 minutes. In addition, the buzz in the industry (while not always the perfect barometer) was unprecedented. Obviously, the consumer wants an alternative to the fat wallet, that is easy to use, acceptable everywhere and avoids a steep learning curve.To kickstart the process (pun intended), Coin is offering a $5 referral incentive for those who pre-order Coin. Once a person orders Coin, they will be provided a unique URL via email which can be used to tell friends and family about this unique payments solution. For each referred party (up to 10) who also pre-orders within 90 days, a $5 credit will be applied (up to covering the $50 cost of the service. Just like the card-based platform Coin is hoping to simplify, the solution is not without some potential drawbacks. For one, while the concept of connecting the smartphone and Coin card for security is a significant benefit, there may be some challenges during normal use when the bluetooth connection is lost (during airplane mode) or the card is out of contact with the phone for extended periods. Coin says that reactivating will be simple.Additional issues include the normal concerns around any card-based system such as potential skimming even though there is encryption, durability of the card (said to be 2 years of 'normal' use) and the fact that the Coin card is not waterproof. It is still to be seen how durable a computer embedded, less flexible card will be (especially in my pocket).From my perspective, there is one more drawback . . . Coin won't be available for at least another 6 months. Knowing the unpredictable payments world, the introduction will probably correlate with an announcement by Apple regarding their entry into the payments battlefield. As mentioned in the beginning of this post, another significant announcement occurred today with the long awaited launch of the Isis Mobile Wallet. According to the press release, customers with one of the more than 40 'Isis ready' smartphones can receive an enhanced SIM card from their wireless carrier and download the Isis Mobile Wallet for free from Google Play. The Isis Mobile Wallet will allow customers to pay at contactless payment terminals. Unfortunately, with only 200,000 local and national merchant locations (out of 8 million merchant locations in the U.S. market), this solution will continue to face an uphill climb. In other words, this might be a potential mobile solution if you live in the right place with the right phone.Not surprisingly, the newswires were buzzing with discussion and stories about payments innovations today. It just wasn't about Isis.

An Interview With Chris Skinner on Building a Digital Bank

AppId is over the quota
AppId is over the quota
An Interview With Chris Skinner on Building a Digital Bank I had a chance to speak to Chris Skinner recently about his perspective on the evolution of banking, the emergence of new competition, winning the mindshare of an increasingly connected consumer and on the release of his newest book, Digital Bank: Strategies to Succeed as a Digital Bank (available on Amazon for $9.99 for the Kindle version or $17.99 in paperback).

Best known as an independent commentator on banking and the financial markets through the Financial Services Club blog and Chair of the networking forum The Financial Services Club, Chis is the author of several previous books covering everything from emerging regulations to innovation and new currencies. He is also Chief Executive of Balatro Ltd, a research company and a regular commentator on BBC News, Sky News and Bloomberg on banking issues.

In reading an advance copy of Digital Bank, I found that Chris provides a great overview of the digital revolution in banking from channels to systems to emerging currencies. He also provides in-depth analysis of the how incumbent banks such as Barclays to new start-ups such as Metro Bank in the UK, Alior Bank in Poland and FIDOR Bank in Germany are building for a digital future.

As several noted fintech followers mention in online reviews of this book, Digital Bank is the most recent must-have for anyone wanting to help their organization stay relevent in banking or for businesses wanting to better understand the impact of digitalization on the marketplace. 
I've been blogging daily since the start of 2007 at the finanser.com. With the blog, I would write a series of four or five posts on a particular subject, like why branches were the wrong focus, how data is becoming the new banking battleground, why existing banks have challenges, what organizations are innovating in unique ways, etc. These posts were never edited or placed in any sequence, but provided a great foundation for potential chapters in a book. So, I finally got around to taking all of that experience and all those thoughts and personally editing them into a readable, digestible, logical book. The overarching theme of Digital Bank is that banks are being fundamentally restructured and challenged by the Digital Age. From physical services through physical branches, we have rapidly become a business that provides digital products through digital relationships. That leap is not happening fast enough, however, as most banks are tied to their traditional operational, technological and physical structures. This book provides a roadmap to take that old bank into the new world, how it can be achieved, proof points as to why it is needed and lessons of what to do and not do. Anyone dealing with digital bank distribution through the mobile, social internet will find it useful.
We talk about a Digital Divide between the Haves and the Have-nots, and the same divide exists within banks between the Believers and the Non-Believers. Some bankers believe the future is all digital, some believe it is just another channel added to the existing branch-based network. It is the Non-Believers who are the challenge, as many of them will dismiss and hold back change. 

By way of example, those that built the bank do not want to destroy the bank they built, so they will do all they can to defend it. If they built a branch-based bank, building a digital bank that destroys much of the reason for the branch-based bank's existence is unnerving. So, they will block all efforts to digitise the relationship. That is the core challenge . . . how to convert the traditionalist decision makers to really commit to digital. Once you have that commitment, it's still not easy, but no bank will succeed if the management team is not truly committed to the program.

There are quite a few stand-outs for me, from some of the major banks who are investing heavily in innovation projects, such as Citi, to regional banks who have reinvented their technologies, such as Commonwealth Bank of Australia (CBA), to smaller banks who are changing the rulebook, such as BRE Bank in Poland. The common theme in all of these banks is that they are truly commited to change. Citi has invested millions in innovation centers and proejcts across the world, as well as ripping open much of their processing to offer transaction banking as an API, for example. CBA has placed most of their core processing infrastructure in the cloud. Even though the internal management was pretty reticent about this change initially, once the CIO got the regulators endorsement and they moved forward, it made them far more agile as well as saving 35% of their cost base year-on-year for systems support. Finally, BRE Bank was being massively challenged by a new entrant called Alior Bank in Poland, a fully mobile-social networked bank. In response, BRE decided to reinvent the bank. They invested in a new core system, installed it over 14 months and, once completed, threw away the old bank and now call themselves mBank. You heard me . . . they shut down the old bank and replaced it with one fit for the Digital Age. I'm not saying everyone has to be so bold or brash, but when faced with bank competition fit for the Digital Age, you've got to do something fundamental to compete or your organization will no longer be relevant.



Yes and no. From a technology standpoint, newer organizations are obviously better fit for the future as they start from a clean operation. There's no legacy systems and there's no previous installs of branch networks, contact centers or online banking. So, they can really push the boat out for creating the right infrastructure and process for customer engagement at the outset. That's what Moven and Simple are doing in the USA, and we see other examples like FIDOR in Germany and Alior in Poland that are doing the same. 
However, new banks do not have the same bank relationships, branding, governance or knowledge of risk, compliance and audit that traditional banks have in their blood. That's why it took Metro Bank twice as long to launch in the UK as they wanted. They had to get the right management team, endorsed by the regulators, to open their doors. Then they had to get the capital to cover the guarantees of funds that the regulators demand for those customers they onboarded.

None of that is easy, and it takes deep pockets to get a bank licence and the guarantees that go with this. But, here's what stands out for Metro Bank . . . the fact that they were fit for the future with technology meant that they reinvented their digital bank services within three years of launch. They are on their second generation internet banking platform already. That's down to having the right technology operations from the get-go, to be able to be that nimble and quick. So, I would say that new players are fit for the future from a technology standpoint, but they need to be fit for the rules from a bank standpoint before they can really play.

That is the question all banks are asking. Where to begin. I would rather start with 'where do you want to end up'?  Then build the transition path between here and there. Where's your vision for the future of your bank?  How radical is that as a departure from the bank you have today? What will be involved to get from here to there? Who is going to make it happen and by when?

That's all simple management change program thinking, but the hardest part is to build the vision because often we will be hampered by the thinking of where we are today. We have branches, we have contact centers, we have an online bank. You have to just dump that thinking from the start, when building your vision, or you will fail. That means bringing in fresh thinking, which will not be dogmaed by internal constraints or history.

Ideally, create a new team with a leader from outside the bank who can look over everything with a fresh pair of eyes and create the future without constraint. The hard part is then taking that team's thinking back into the bank, as it usually means cannibalising or destroying parts of the old bank to build the new bank. But it can be done. Again, it all goes back to how committed the CEO is to the process. If the CEO is committed, then anything can be achieved.

The biggest change is from a number of perspectives. From a regulatory point of view, there's the dull stuff about banks withholding more capital for a rainy day, better management of risk (especially liquidity risk), increasing competition and transparency, and financial inclusion (open banking for all). From a customer point of view, the beat towards mobility will continue. All banks are focused upon delivering killer financial apps for corporate and consumers today, and that will pan out into a digital wallet fight. Then it gets interesting, as banks will soon drop the focus upon the device - the cellphone - and move on to focus upon the customer experience. This is because the world is rapidly moving into digitizing everything. Putting chips inside a pair of glasses or a watch so that Google Glass or Samsung Galaxy Gear Watch can replace the laptop or the phone. Then we will start to put chips into walls, floors, ceilings, gutters, handbags, clothes, jewellery and lightbulbs (We already are doing this, in case you hadn't noticed). Eventually, everything everywhere will be communicating. From you to intelligent systems and services all around you, in the air, all day long. Like the Minority Report, everything will be intellisensing everything, and service will be augmented to be relevant at the point of your customer's context. This means that banks will move from device to wallet to understanding how to be a proactive, predictive enabler of commerce at the point of relevance to the customer. That battle is going to be a tough one for banks stuck with branches, as that's a digital data war. And that's what the book is all about, how to win customer mindshare as your audience interacts digitally with everything.


Chris Skinner is best known as an independent commentator on the financial markets through the Finanser (http://www.thefinanser.com/) and Chair of the European networking forum the Financial Services Club, which he founded in 2004. The Financial Services Club is a network for financial professionals, and focuses on the future of financial services through the delivery of research, analysis, commentary and debate and has regular meetings in London, Edinburgh, Dublin and Vienna. 

He is the author of nine books covering everything from European regulations in banking through the credit crisis to the future of banking and is a regular commentator on BBC News, Sky News and Bloomberg about banking issues.