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The Impact of Mobile on the Future of Retail Banking
 

The Impact of Mobile on the Future of Retail Banking

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A presentation discussing how mobile innovation is creating a new phase of competition in financial services

A presentation discussing how mobile innovation is creating a new phase of competition in financial services

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    The Impact of Mobile on the Future of Retail Banking The Impact of Mobile on the Future of Retail Banking Presentation Transcript

    • The Impact of Mobile on the Future ofRetail Banking21 June, 2013 Confidential 1Ron ShevlinSenior Analyst, Aite GroupJohn BalosePrincipal Market Manager, ACI WorldwideOur software underpins electronic paymentsthroughout retail and wholesale banking,and commerce, all the time, without fail.Debi Harrison, Director Customer andOperations Manager, Watford
    • © Copyright 2013 Aite Group, LLC 2@rshevlin
    • © Copyright 2013 Aite Group, LLC 3@rshevlinThemeMobile innovation is creatinga new phase of competitionin financial services
    • © Copyright 2013 Aite Group, LLC 4@rshevlinAgenda• Why change now?• How will mobile change FIs?• What is the new phase of competition?
    • © Copyright 2013 Aite Group, LLC 5@rshevlin-2%0%2%4%6%8%10%12%14%16%1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009Source: Federal Reserve BankBank return on equity
    • © Copyright 2013 Aite Group, LLC 6@rshevlinBridging the ROE gapSource: Boston Consulting GroupCurrentROECostreductionPricing Growth8%HistoricalROE+3-4%+1-2%+1-2% 13-16%
    • © Copyright 2013 Aite Group, LLC 7@rshevlinDeposit account service charges32.034.036.038.040.042.044.02008 2009 2010 2011 2012US$ (in billions)-19%Source: Novantas
    • © Copyright 2013 Aite Group, LLC 8@rshevlinThe NII challengeSource: http://www.bankregdata.com/allIEmet.asp?met=NII2.62%1.27%1.46% 1.42%>$50B(n=35)$5B to $49B(n=125)$1B to $5B(n=471)<$1B(n=5,881)2012 Non-Interest Income (% of assets)
    • © Copyright 2013 Aite Group, LLC 9@rshevlinI have seenthe future…
    • © Copyright 2013 Aite Group, LLC 10@rshevlin
    • © Copyright 2013 Aite Group, LLC 11@rshevlinHow mobile changes FIs• What FIs market: NeoChecking accounts• Where FIs market: Mobile apps• When FIs market: Mobile shopping
    • © Copyright 2013 Aite Group, LLC 12@rshevlinThe DebankedMainstream consumers whowillingly opt out of thetraditional banking system
    • © Copyright 2013 Aite Group, LLC 13@rshevlinNeoChecking accounts
    • © Copyright 2013 Aite Group, LLC 14@rshevlinNeoChecking accounts• Mobile-first design• Point-of-decision input/feedback• Blend prepaid, debit, and credit
    • © Copyright 2013 Aite Group, LLC 15@rshevlinDigital receiptprovides real-timefeedback toconsumers on theirpurchase along withcontextualtransaction insights.Spend trackingtracks how fastconsumers spendmonth-to-datecompared tohistorical spendingpatterns.
    • © Copyright 2013 Aite Group, LLC 16@rshevlin
    • © Copyright 2013 Aite Group, LLC 17@rshevlinMobile apps:The new marketing platform
    • © Copyright 2013 Aite Group, LLC 18@rshevlin
    • © Copyright 2013 Aite Group, LLC 19@rshevlin
    • © Copyright 2013 Aite Group, LLC 20@rshevlinFrequencyof useper weekAverage User Retention (90 days)3.515% 55%Streaming musicSocial gamesDatingSocial networkingPhoto & videoDealsCommunicationNewsSports scoresWeatherFinancialMusicHealth/fitnessRetailEducationFood & drinkTravelSource: FlurryFinancial apps “loyalty”19
    • © Copyright 2013 Aite Group, LLC 21@rshevlinPeople pay to download apps…Source: Gartner5.028.1411.8516.4321.672012 2013 2014 2015 2016Worldwide mobile paid apps downloads (billions)
    • © Copyright 2013 Aite Group, LLC 22@rshevlin…just not finance appsSource: Distimo2,28035027021030Games Entertainment Photography Utilities Finance# of paid apps within category to reach the Top 25
    • © Copyright 2013 Aite Group, LLC 23@rshevlinWhy not?• Financial services customers are used to free• Not important as games, entertainment• Inadequate marketing
    • © Copyright 2013 Aite Group, LLC 24@rshevlin“When we speak with app developers, many areconcerned about monetization or platformfragmentation, but the number one problemthey face is getting their apps noticed.”Canalys Senior Analyst, Tim Shepherd
    • © Copyright 2013 Aite Group, LLC 25@rshevlinApps: The new marketing platformIn-app purchasesfrom free apps71%iPhone Apps Revenue(February 2013)Paid revenue24%In-app purchasesfrom paid apps5%Source: Distimo, March 2013
    • © Copyright 2013 Aite Group, LLC 26@rshevlinNo data in the selected period
    • © Copyright 2013 Aite Group, LLC 27@rshevlin
    • © Copyright 2013 Aite Group, LLC 28@rshevlin
    • © Copyright 2013 Aite Group, LLC 29@rshevlinMobile apps revenue triple play• In-house developed• Third-party developed• In-app purchases
    • © Copyright 2013 Aite Group, LLC 30@rshevlinThe old moments of opportunity
    • © Copyright 2013 Aite Group, LLC 31@rshevlin
    • © Copyright 2013 Aite Group, LLC 32@rshevlinThe new moments of opportunity
    • © Copyright 2013 Aite Group, LLC 33@rshevlin
    • © Copyright 2013 Aite Group, LLC 34@rshevlinJIMMY CHOO$400Can I afford it?How should I pay?Can I get an offer?What did others pay?
    • © Copyright 2013 Aite Group, LLC 35@rshevlin
    • © Copyright 2013 Aite Group, LLC 36@rshevlinHow mobile changes FIs• What FIs market: NeoChecking accounts• What/Where FIs market: Mobile apps• What/Where/When FIs market: Mobile shopping
    • © Copyright 2013 Aite Group, LLC 37@rshevlinThemeMobile innovation is creatinga new phase of competitionin financial services
    • © Copyright 2013 Aite Group, LLC 38@rshevlinThird wave of competition1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2025LocationRatesPerformance
    • © Copyright 2013 Aite Group, LLC 39@rshevlin• Monthly feesCosts Benefits• Penalties• Service fees• Interest earned• Rewards redeemed• Savings generatedTBO: Total Benefits of Ownership
    • © Copyright 2013 Aite Group, LLC 40@rshevlin
    • © Copyright 2013 Aite Group, LLC 41@rshevlinHow mobile changes marketingDemographics BehaviorCreative AnalyticsOld NewDataSkillCompetencyPersuasion EngagementPhilosophy
    • © Copyright 2013 Aite Group, LLC 42@rshevlinNew changes=New challenges• Analytics• Data integration• Application integration
    • © Copyright 2013 Aite Group, LLC 43@rshevlinThemeMobile innovation is creatinga new phase of competitionin financial services
    • © Copyright 2013 Aite Group, LLC 44@rshevlinAite: Partner, CounterpartAite Group (eye-tay) is an independent research and advisoryfirm focused on business, technology and regulatory issues andtheir impact on the financial services industry.Ron ShevlinSenior Analystrshevlin@aitegroup.comwww.aitegroup.comTwitter: @rshevlinBlog: Snarketing2dot0.com
    • Mobile is the New Opportunity21 June, 2013 Confidential 45
    • What challenges do you face?• Internal Challenges – ROE and NII‒Multiple channel management platforms‒Multiple secure user messaging systems‒Inconsistent user experience‒Different call center support capabilities‒Varying levels of risk management and security• External Challenges‒Evolving technology and devicerequirements‒Changing consumer preferences‒Fraud threats‒Lack of brand differentiation‒Customer acquisition andretention46
    • Why does a good mobile banking strategy matter?• Drive business results andaddress challenges‒(OLB Only vs. OLB +Mobile)• Improve operationalefficiencies with a singleplatform• Support the consumerexperience to the channelof their choice47*Zions Bank Mobile Banking Impact Study
    • TransactionalHistoryAccount toAccount xFerPlatform Convergence48User AdminAccountServicesAccountTransactionsUser ProfileEntitlements BalancesSecurityStopChecksPayments andTransfersBill PayOnlineServicesReportsSecureMessagingDesktop Banking FeaturesMobile Banking Features Faster implementation Easier FI administration andconfiguration Lower TCO Create and deliver new functionalityacross all channels / user interfaces Desktop features available tomobile usersPFMUserExperienceTargetedMarketingCommonInterfaceNextGeneration
    • Enable Consumers with aFeature Rich User Experience49
    • Consumer Preference with the Triple Play50Fully Integrated Browser,Downloadable App andText BankingControl All User InterfaceswithCommon Admin andConfiguration Tools
    • Smartphone Features with the Downloadable App51Downloadable App• Account andTransaction History• Bill Payment• Account to AccountTransfers• PFM• User ProfileAdministration• Remote DepositCapture• ATM/Branch Locator
    • Drive Transactions to the Mobile Channel with RDC52Integrated RemoteDeposit Capture (RDC)utilizing SmartphonehardwareReduce routine tellercheck transactions atthe branch whichreduces costsEnable for bothconsumer andbusiness segments
    • Sales and Service Channel ofPreference53
    • Enable Smartphone Technology with a DownloadableApp• Market your brand with an app storepresence• Serve the demand for downloadable apps• Leverage smartphone features54
    • Targeted Offers to Maximize Your Marketing EffortsTarget just mobileusers with specificoffersBuild, deliver andmanage yourpromotions with selfservice tools
    • Service Your Consumers56Enable your users tocomplete their selfservice needs in theirchannel of preferenceControl their rights withentitlements specific tothe mobile userMaximize yourinvestment in yourdigital channels andminimize your supportcosts
    • Thank You!Questions?Ron ShevlinSenior Analyst, AiteJohn BalosePrincipal Market Manager, ACIWorldwide
    • For more information, emailcommunityfinancial@aciworldwide.com