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Trends 2013: Five Trends Shaping The Next Generation Of North American Digital Banking

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Released: May 2013 …

Released: May 2013

In this report, Forrester explores five trends that will affect the next generation of digital banking. Rising digital customer expectations, advances in technology, and continued digital disruption threats from outside the industry will change the game for banks and credit unions.

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  • 1. Forrester research, inc., 60 acorn Park Drive, Cambridge, Ma 02140 usa tel: +1 617.613.6000 | Fax: +1 617.613.5000 | www.forrester.com Trends 2013: Five Trends Shaping The Next Generation Of North American Digital Banking by Catherine graeber, May 1, 2013 For: eBusiness & Channel strategy Professionals Key TaKeaWays Customers’ digital Financial expectations are high With the proliferation of digital devices, consumers are highly connected to their financial providers. And with adoption of each new device comes higher expectations of those providers, especially among the younger generations. Get it wrong and you risk losing their loyalty. our app-driven World Will Require Flexible and extensible digital platforms Creating a durable competitive advantage, one that can’t easily be copied, includes a move to open platforms. An open platform strategy will allow financial firms to use third-party providers to create app solutions that will create differentiation through a personalized user experience and segment-specific capabilities. successful Firms Will identify and design For Cross-Channel experiences Customers move between channels during complex sales and service interactions. But channels are not integrated, causing broken experiences. The next generation of digital banking will identify when human assistance is needed and help customers start a process in one channel and finish in another, gracefully passing information between the channels.
  • 2. © 2013, Forrester Research, Inc. All rights reserved. Unauthorized reproduction is strictly prohibited. Information is based on best available resources. Opinions reflect judgment at the time and are subject to change. Forrester® , Technographics® , Forrester Wave, RoleView, TechRadar, and Total Economic Impact are trademarks of Forrester Research, Inc. All other trademarks are the property of their respective companies. To purchase reprints of this document, please email clientsupport@forrester.com. For additional information, go to www.forrester.com. For eBusiness & Channel Strategy Professionals Why Read This Report In this report we explore five trends that will affect the next generation of digital banking. Rising digital customer expectations, advances in technology, and continued digital disruption threats from outside the industry will change the game for banks and credit unions. eBusiness and channel strategy executives who succeed in their efforts will be those who understand the urgent need to reinvent today’s digital financial services to both stay relevant to digital customers and thwart disruptors determined to take over those customer relationships. Table Of Contents Five Trends Will Affect The Next Generation Of Digital Banking 1. Rising Expectations Of Digital Banking Customers 2. Use Of Open Platforms To Differentiate Digital Offerings 3. Mobile Innovations That Solve Customers’ Real Problems 4. The Digital Customer Need To Cross Channels For A Single Interaction 5. Continued Threats From Digital Disruptors Supplemental Material Notes & Resources Forrester interviewed vendor and user firms, including: Fiserv, Intuit Financial Services, Moven, Personetics, and Simple. We also used data from our global Consumer Technographics® surveys in this report. Related Research Documents Three Disruptive Payment Trends In 2013 April 1, 2013 2013 Mobile Trends For eBusiness Professionals February 13, 2013 Digital Customer Experience Trends To Watch, 2013 January 30, 2013 Global Financial Behaviors, 2012 January 28, 2013 Next-Generation Digital Financial Services March 11, 2011 Trends 2013: Five Trends Shaping The Next Generation Of North American Digital Banking by Catherine Graeber with Benjamin Ensor, Tiffani Montez, Peter Wannemacher, and Douglas Roberge 2 15 May 1, 2013
  • 3. For eBusiness & Channel Strategy Professionals Trends 2013: Five Trends Shaping The Next Generation Of North American Digital Banking 2 © 2013, Forrester Research, Inc. Reproduction Prohibited May 1, 2013 FIVE Trends Will affeCT THE NEXT GENERATION OF DIGITAL BANKING Two years ago Forrester laid out our vision of the next generation of digital financial services, arguing that eBusiness and channel strategy executives needed to build a new generation of services that are simple, ubiquitous, personal, empowering, and reassuring.1 Changing digital financial customer behavior, advances in technology that we see in the marketplace, and our work with clients all make clear that those trends are already shaping digital banking in North America in 2013. 1. Rising Expectations Of Digital Banking Customers Getting digital banking right is more important than ever. Digital customers aren’t just comparing your offerings against other financial firms; they are comparing the experience you deliver against all other firms that are using digital channels to sell and service. It is critical that digital banking teams understand the people they are developing for when they create digital solutions. Digital banking teams can get this right by understanding: ■ Digital financial adoption and behaviors. Consumers continue to connect to their financial providers wherever they are, aided by the growth in mobile device ownership. Seven in 10 North American online adults are active online bankers, while one in five is an active mobile banker (see Figure 1-1). The activities that mobile bankers conduct mirror what we see in online banking — for now. As long as mobile banking functionality mirrors online banking functionality, mobile bankers don’t have the opportunity to do more. The top three mobile banking activities in the US are: 1) checking a balance; 2) viewing a recent transaction; and 3) transferring funds between accounts.2 With many remote deposit capture (RDC) offerings coming to market last year, 13% of online adults who have done mobile banking activities in the past three months reported depositing a check by taking a picture with their mobile device (see Figure 1-2).3 ■ The most mobile-savvy generation. Gen Yers (ages 24 to 32) are the most mobile-savvy generation, followed closely by the younger Gen Z group (ages 18 to 23) (see Figure 1-3).4 In terms of activities done on a mobile phone at least monthly, Gen Yers lead in almost every category. They are the generation most likely to use a mobile device to research products for purchase and to apply for the product. This is key for financial firms developing mobile solutions — know your target customers, and understand where they are in their financial lives. Digital banking teams developing mobile sales capabilities will need to include life-stage-appropriate products for these segments, such as credit cards and auto loans. Other banks should follow the example of leaders like USAA that have begun to promote their products and generate sales leads through mobile. ■ The cost of not taking mobile seriously. In our Technographics research, we found that roughly one in eight online Canadians say they would consider switching banks if “another firm offered better mobile banking services.”5 Google recently did a study on mobile banking that found that two in five mobile users will turn to a competitor’s site if their bank is not mobile-optimized.6 And 48% of US mobile users report they feel frustrated and annoyed and believe “the company doesn’t care about my business” when a site doesn’t work well on a mobile phone.7
  • 4. For eBusiness & Channel Strategy Professionals Trends 2013: Five Trends Shaping The Next Generation Of North American Digital Banking 3 © 2013, Forrester Research, Inc. Reproduction Prohibited May 1, 2013 Figure 1 Digital Banking Adoption And Behaviors Source: Forrester Research, Inc.94621 The majority of online adults in North America use online banking1-1 Base: 57,449 US online adults (18+) *Base: 5,359 Canadian online adults (18+) Source: North American Technographics® Online Benchmark Survey (Part 1), Q2 2012 (US, Canada) US Canada* US Canada* Used online banking in the past three months: Used mobile banking in the past three months: 76%73% 22%26% Sixty-nine percent of US mobile bankers check their balances, and 13% have deposited a check1-2 Base: US online adults (18+) who have done mobile banking activities in the past three months Source: North American Technographics Financial Services Online Benchmark Recontact Survey, Q3 2012 (US) Note: Not all responses shown The top mobile banking activities done in the past three months: (Seven of the top 10 responses shown) Checked bank account balances Viewed a recent bank transaction Transferred funds between bank accounts at the same firm Deposited a check by taking a picture of it with mobile phone Paid bills at a bank’s or credit union’s site Paid bills at a biller’s own site Received text-message (SMS) alerts from bank or credit union 69% 42% 28% 15% 13% 12% 11%
  • 5. For eBusiness & Channel Strategy Professionals Trends 2013: Five Trends Shaping The Next Generation Of North American Digital Banking 4 © 2013, Forrester Research, Inc. Reproduction Prohibited May 1, 2013 Figure 1 Digital Banking Adoption And Behaviors (Cont.) Source: Forrester Research, Inc.94621 Gen Yers are the most mobile-savvy generation1-3 Source: North American Technographics Online Benchmark Survey (Part 1), Q2 2012 (US, Canada) Gen Y (24-32) Gen Z (18-23) Activities done on primary cell phone at least monthly: Total US Younger Boomers (47-56) Older Boomers (57-67) Golden Gen (68+) Gen X (33-46) Base: 53,427 US online adults (18+) with a mobile phone Send or receive SMS/ text messages Access the Internet Send or receive personal email Access social networking sites Research products for purchase Check financial accounts Purchase products 0% 100% The data associated with this figure is located in the spreadsheet online. 2. Use Of Open Platforms To Differentiate Digital Offerings Face it: Financial products became commoditized long ago. In the early days of the Internet, a web presence could set apart a financial firm. And being an early leader in mobile banking had the same effect. But now solutions offered through digital channels have become pretty much commoditized, too. Few banks in North America have proprietary digital platforms; the vast majority use vendor platforms. The downside to that? Banks have similar solutions with minor user experience differences and struggle to differentiate their offerings. Being able to offer something different from the competition is an important step in creating a durable competitive advantage that can’t easily be copied. Doing this requires uncovering important, unsolved customer problems that you can solve well and bring to market (see Figure 2). A move to more open platforms will help digital banking teams innovate faster and differentiate by more easily incorporating solutions by third-party providers — or a bank’s internal developers — via application programming interfaces (APIs). Open platforms and the associated APIs will help digital banking teams:
  • 6. For eBusiness & Channel Strategy Professionals Trends 2013: Five Trends Shaping The Next Generation Of North American Digital Banking 5 © 2013, Forrester Research, Inc. Reproduction Prohibited May 1, 2013 ■ Personalize a user’s experience. Consumers already use technology to get and create personalized experiences across their lives — updating their Facebook profiles, building their own music playlists on iTunes, and downloading tablet apps to match their interests. The next generation of digital banking will need to be just as accommodating. We believe there is a prime opportunity to do this for the micro-small business customer who wants to mingle personal and small business accounts and wants an integrated experience when it comes to money management and cash flow forecasting. ■ Deliver segment-specific capabilities. Open platforms allow for the introduction of functionality that can be provided to specific segments of digital users. A large credit union serving high-net-worth employees of several high-tech firms uses Intuit Financial Services’ digital banking open platform. The credit union needed to meet the sophisticated investment needs of its members. Rather than waiting for Intuit to develop a wealth management solution for all of its clients, the credit union was able to use Intuit APIs to quickly bring its members access to Raymond James’ Investor Access Portal. ■ Bring new solutions to market faster. Another benefit to open platforms? Reducing the time to market for new solutions. With slim internal development resources and a history of long delivery times, banks can’t react to market changes quickly enough. But all this can change with open platforms, as Crédit Agricole, the largest retail banking group in France, found. The bank opened up its platform to external developers. Those developers created 19 new apps in six months, compared with the two years it took the bank to create its own mobile banking app. Figure 2 What Is A Durable Competitive Advantage? Source: Forrester Research, Inc.94621 . . . and bring the solution to market. A durable competitive advantage gets created here. . . . that you can solve well . . . Find an important, unsolved customer problem . . .
  • 7. For eBusiness & Channel Strategy Professionals Trends 2013: Five Trends Shaping The Next Generation Of North American Digital Banking 6 © 2013, Forrester Research, Inc. Reproduction Prohibited May 1, 2013 3. Mobile Innovations That Solve Customers’ Real Problems Mobile’s momentum continued to accelerate in 2012 — with more than 1 million apps available, more than 150 million tablets sold, and more than 1 billion smartphones in consumers’ pockets globally. Most banks have just scratched the surface of mobile’s potential by moving online banking functionality to the mobile device. Smart firms will create a mobile competitive advantage by understanding how smartphones can solve the needs customers have today. Consider how the following firms have innovated to do just that: ■ U.S. Bank makes it easier for consumers to switch banks with mobile photo bill pay. Why do banks love online bill payers? Because they’ve got their electronic hooks into them and know these customers will be hesitant to switch banks because of the hassle of having to unwind online bill pay and establish all of their payees all over again at their new bank. U.S. Bank recently introduced a mobile photo bill pay solution from Mitek Systems to knock down that barrier. All a switching customer needs to do is use her mobile phone to take a picture of her bill and the app does the rest — correcting for image distortion, reading relevant data, and autopopulating all of the payee info (see Figure 3-1). The simplicity of the process will also help U.S. Bank encourage existing bill payers to increase the number of bills they pay digitally. ■ Simple answers the question customers really want to know. Being able to quickly check a balance on a mobile phone before attempting to make a debit card transaction is a real convenience, especially for younger consumers. But that capability is a commodity these days, not a competitive advantage. Simple, one of the newer US direct banks, understood that the customer’s hidden need was to find out “What can I spend right now?” The bank’s Safe-to- Spend feature does just that by using a customer’s current balance and subtracting pending transactions and upcoming payments to create a forecast that can automatically show the user what he can safely spend without overdrawing the account (see Figure 3-2). ■ Intuit solves the needs of mobile tax filers with simple returns. Through ethnographic research, Intuit’s TurboTax group discovered a hidden need of young US taxpayers with simple returns who wanted to use their mobile phone to quickly prepare and file their return.8 To meet those needs, Intuit developed TurboTax SnapTax (see Figure 3-3). For the 2010 tax year Intuit began offering the free iPhone and Android app in all US states. Rather than tax filers having to input all of the salary and tax withholding info found on their annual W-2 form, they can use their mobile device’s camera to snap a picture of the W-2. The form’s data is then imported to the tax form. The tax filer answers a few questions and can file her return via her mobile phone or on the Web.
  • 8. For eBusiness & Channel Strategy Professionals Trends 2013: Five Trends Shaping The Next Generation Of North American Digital Banking 7 © 2013, Forrester Research, Inc. Reproduction Prohibited May 1, 2013 Figure 3 Mobile Solutions To Solve Real-Life Problems Source: Forrester Research, Inc.94621 Adding a payee is a snap with a mobile device3-1 Source: Mitek Systems website Steps 1 - 4 User logs in using two factor authentication, selects“Pay Bills”then taps“Use Photo Bill Pay.” User then takes a photo of the bill for the payee they want to add.
  • 9. For eBusiness & Channel Strategy Professionals Trends 2013: Five Trends Shaping The Next Generation Of North American Digital Banking 8 © 2013, Forrester Research, Inc. Reproduction Prohibited May 1, 2013 Figure 3 Mobile Solutions To Solve Real-Life Problems (Cont.) Source: Forrester Research, Inc.94621 Unsolved customer need:“What can I spend right now?”3-2 Source: Simple website
  • 10. For eBusiness & Channel Strategy Professionals Trends 2013: Five Trends Shaping The Next Generation Of North American Digital Banking 9 © 2013, Forrester Research, Inc. Reproduction Prohibited May 1, 2013 Figure 3 Mobile Solutions To Solve Real-Life Problems (Cont.) Source: Forrester Research, Inc.94621 SnapTax uses the mobile camera to speed up tax filing3-3 Source: TurboTax website 4. The Digital Customer Need To Cross Channels For A Single Interaction A multichannel strategy is a given in today’s digital financial services world. But multiple channels bring challenges. Consumers are increasingly using multiple channels on a single financial journey (see Figure 4-1).9 Six in 10 US consumers who researched online and applied for a checking account or a life insurance policy subsequently applied for the product in an offline channel (see Figure 4-2). Typically a cross-channel user begins by serving himself but moves to a different channel to obtain human assistance. But the reality is that a cross-channel journey often results in a broken customer experience. And it is critical to maintain the loyalty of cross-channel users. Wells Fargo recently reported that its customers who use four channels are 1.8 times as profitable as customers who use one.10 Few firms dissect the customer journey across channels to determine where developing a cross- channel experience is warranted. For example, offering human assistance to an online researcher to select the right product and apply makes sense for complex products like mortgages. But for credit cards — a simpler, lower-value product that customers apply for often — developing a cross- channel experience would not be warranted. To adequately serve the cross-channel customer, digital banking teams will identify the cross-channel opportunities that can:
  • 11. For eBusiness & Channel Strategy Professionals Trends 2013: Five Trends Shaping The Next Generation Of North American Digital Banking 10 © 2013, Forrester Research, Inc. Reproduction Prohibited May 1, 2013 ■ Help online researchers get offline human assistance on complex products. Forrester has long advocated the strategy of right-channeling — getting customers to use the right channels for the right interactions by balancing technology efficiency with human effectiveness.11 Consumers look for human assistance to apply for a product when the process or the product is complex.12 State Farm Mutual Automobile Insurance built a cross-channel experience that allows auto insurance applicants to switch channels at any time for human assistance (see Figure 4-3). In the transition to an offline channel, the online researcher can forward his quote to his local agent. ■ Make it easy for those researching a product via mobile to transition to the Web to apply. A cross-channel sales experience won’t always be online-to-offline. Expect to see mobile phones play a role in the initial research process. But with its limited screen size, a mobile phone won’t always cut it to apply, especially if a customer is not an existing client of the firm, so many mobile researchers will want to switch to the Web to submit an application. Commonwealth Bank of Australia offers its credit card applicants that functionality (see Figure 4-4). Mobile researchers can use a credit card selector tool to find the best card product. They can continue to use the mobile device to apply, but if they prefer, they can transition to the bank’s website to complete the application process.13 ■ Deliver intelligent contextual help in digital channels. When Isracard, the largest credit card issuer in Israel, analyzed its call volume, it found that one-third of its calls related to specific credit card transactions. To reduce the cost of those calls, the firm rolled out Personetics’ Digital Banker virtual assistant in June 2012, embedding it in its online and mobile applications with a chat-like interface.14 Think Siri for the iPhone and you’ve got the picture. Isracard receives about 1,000 inquiries a day through Digital Banker, helping customers get service assistance without incurring the cost of talking to a call center agent. In the US, BBVA Compass Bancshares worked with SRI International to develop a “Virtual Personal Assistant” to bring the simplicity and reassurance of in-branch banking to the digital world using conversational natural language understanding, reasoning, and an in-depth knowledge of banking.15
  • 12. For eBusiness & Channel Strategy Professionals Trends 2013: Five Trends Shaping The Next Generation Of North American Digital Banking 11 © 2013, Forrester Research, Inc. Reproduction Prohibited May 1, 2013 Figure 4 The Need For Cross-Channel Experiences Source: Forrester Research, Inc.94621 The percent of online researchers who move offline to apply differs greatly by product4-2 Source: North American Technographics® Online Benchmark Survey (Part 1), Q2 2012 (US, Canada) Checking accounts 64% Life insurance 55% Mortgage (refinance) 54% Savings accounts 57% IRA 35% Brokerage 18% Credit cards 24% Base: US online adults (18+) who researched online and applied for the above financial products in the past 12 months Online researchers who applied offline: (Branch, phone, mail) Customers typically use multiple touchpoints in a single sales journey4-1 Source: September 29, 2011,“Best Practices In Multichannel Financial Services Sales”Forrester report Consideration Decision PurchaseAwareness Multichannel sales Starts purchase Gets product information Asks a question Finishes purchase Email/mail Internet Mobile Call center Branch/agent Receives product offer
  • 13. For eBusiness & Channel Strategy Professionals Trends 2013: Five Trends Shaping The Next Generation Of North American Digital Banking 12 © 2013, Forrester Research, Inc. Reproduction Prohibited May 1, 2013 Figure 4 The Need For Cross-Channel Experiences (Cont.) Source: Forrester Research, Inc.94621 State Farm built a seamless cross-channel experience into the online application process4-3 Source: State Farm website State Farm provides contact info for the user’s local agent on every page in the quote process. The users can send a State Farm agent their online quote at any point in the process.
  • 14. For eBusiness & Channel Strategy Professionals Trends 2013: Five Trends Shaping The Next Generation Of North American Digital Banking 13 © 2013, Forrester Research, Inc. Reproduction Prohibited May 1, 2013 Figure 4 The Need For Cross-Channel Experiences (Cont.) Source: Forrester Research, Inc.94621 Commonwealth Bank allows mobile researchers to move to the Web to apply4-4 Source: Commonwealth Bank of Australia mobile website
  • 15. For eBusiness & Channel Strategy Professionals Trends 2013: Five Trends Shaping The Next Generation Of North American Digital Banking 14 © 2013, Forrester Research, Inc. Reproduction Prohibited May 1, 2013 5. Continued Threats From Digital Disruptors Digital disruptors are unleashing a storm of innovation that is disrupting every industry, including retail banking.16 The question for banks is this: Will you disrupt or be disrupted? In some ways banks are at a disadvantage, in that they can’t always easily disrupt or quickly react to a disruptor because they are in a highly regulated environment built on inflexible legacy systems. Expect to see disruptors upset the status quo in 2013 in the following areas: ■ Direct banking. While disruptors like Moven and Simple are focused on taking customers’ primary checking accounts away from traditional banks with an “all digital” approach, we don’t see that happening. Direct banking makes sense for products like high-yield savings, credit cards, and mortgages — but not for checking, where the branch remains important even to digital customers.17 But we do believe these firms are disrupting the industry with their focus on simplicity and robust digital money management tools that are the hub of a user’s digital experience. Traditional banks can take a lesson from these firms on how to simplify today’s banking experience and deliver best-in-class usability. ■ Payments. Dramatic transformation in the payments industry is rare. But firms like PayPal, the leader in online payments, and newer entrant Square, with a flat monthly fee for small businesses to process unlimited card payments, have disrupted traditional payment providers. Banks and card issuers did not address the payment needs of micro-small businesses, which wanted a cheaper alternative to establishing a merchant relationship and did not want to be tied to a terminal to take card payments. Banks and card issuers can expect more to come. Digital banking teams serving the small business segment face a dilemma on how to win digital payments revenue: Either reduce fees or invent a faster, cheaper, simpler alternative to disruptors such as Square, Intuit GoPayment, and PayPal Here. ■ Lending. Firms like Prosper Funding, Zopa, and LendingClub were “digital disruptors” back in 2006 before anybody was even using that term.18 In mid-2012, P2P lending passed the $1 billion mark.19 We believe the next disruption in the P2P space is crowdfunding, the funding of startup companies by selling small amounts of equity to many investors.20 Firms like Kickstarter, SoMoLend, and Rebirth Financial are a few of the crowdfunding firms. While banks may not want to be directly involved with crowdfunding, smart firms will figure out how to leverage P2P firms as an alternative referral source for small business startup customers that don’t meet traditional underwriting criteria. If younger consumers and small business startups start their lending relationships with bank alternatives, how will banks garner their loyalty down the road as their credit needs increase?
  • 16. For eBusiness & Channel Strategy Professionals Trends 2013: Five Trends Shaping The Next Generation Of North American Digital Banking 15 © 2013, Forrester Research, Inc. Reproduction Prohibited May 1, 2013 Supplemental Material Methodology For its North American Technographics® Online Benchmark Survey (Part 1), Q2 2012 (US, Canada), Forrester conducted an online survey fielded in April and May 2012 of 58,068 US and 5,635 Canadian online adults ages 18 to 88. For results based on randomly chosen samples of these sizes (N = 58,068 in the US and N = 5,635 in Canada), there is 95% confidence that the results have a statistical precision of plus or minus 0.4% of what they would be if the entire population of US online individuals ages 18 and older had been surveyed and plus or minus 1.3% of what they would be if the entire population of Canadian online individuals ages 18 and older had been surveyed. Forrester weighted the data by age, gender, income, broadband adoption, and region to demographically represent the adult US and Canadian online populations. The survey sample size, when weighted, was 57,499 in the US and 5,347 in Canada. (Note: Weighted sample sizes can be different from the actual number of respondents to account for individuals generally underrepresented in online panels.) Please note that this was an online survey. Respondents who participate in online surveys generally have more experience with the Internet and feel more comfortable transacting online. The data is weighted to be representative of the total online population on the weighting targets mentioned, but this sample bias may produce results that differ from Forrester’s offline benchmark survey. The sample was drawn from members of MarketTools’ online panel, and respondents were motivated by receiving points that could be redeemed for a reward. The sample provided by MarketTools is not a random sample. While individuals have been randomly sampled from MarketTools’ panel for this particular survey, they have previously chosen to take part in the MarketTools online panel. Forrester also used data from the North American Technographics Finance And Customer Experience Online Survey, Q4 2011 (Canada). This was an online survey fielded in October 2011 of 5,502 Canadian individuals ages 18 to 88. For results based on a randomly chosen sample of this size (N = 5,502), there is 95% confidence that the results have a statistical precision of plus or minus 1.32% of what they would be if the entire population of Canadian online individuals ages 18 and older had been surveyed. Forrester weighted the data by age, gender, income, broadband adoption, and region to demographically represent the adult Canadian online population. The survey sample size, when weighted, was 5,302. (Note: Weighted sample sizes can be different from the actual number of respondents to account for individuals generally underrepresented in online panels.) Please note that this was an online survey. Respondents who participate in online surveys have in general more experience with the Internet and feel more comfortable transacting online. The data is weighted to be representative for the total online population on the weighting targets mentioned, but this sample bias may produce results that differ from Forrester’s offline benchmark survey. The sample was drawn from members of MarketTools’ online panel, and respondents were motivated by receiving points that could be redeemed for a reward. The sample provided by MarketTools is not a random sample. While individuals have been randomly sampled from MarketTools’ panel for this particular survey, they have previously chosen to take part in the MarketTools online panel.
  • 17. For eBusiness & Channel Strategy Professionals Trends 2013: Five Trends Shaping The Next Generation Of North American Digital Banking 16 © 2013, Forrester Research, Inc. Reproduction Prohibited May 1, 2013 Companies Interviewed For This Report We would like to thank the individuals from the following companies and others who generously gave their time during the research for this report. Fiserv Intuit Financial Services Moven Personetics Simple Endnotes 1 Rising customer expectations and the growing importance of the Web and mobile as sales and service channels mean that financial services eBusiness and channel strategy executives need to fundamentally improve the way they serve customers via digital channels. eBusiness and channel strategy executives need to develop a new generation of digital financial services that are SUPER: simple, ubiquitous, personal, empowering, and reassuring. See the March 11, 2011, “Next-Generation Digital Financial Services” report. 2 Consumers primarily use mobile banking for information. See the August 13, 2012, “The State Of Mobile Banking 2012” report. 3 US mobile bankers mainly use basic services like checking account balances, viewing recent transactions, and transferring funds via their mobile phones. See the January 28, 2013, “Global Financial Behaviors, 2012” report. 4 Gen Zers live and breathe the Internet. Member of this generation — ages 18 to 23 — grew up with digital technologies as a major part of their lives. Gen Yers — ages 24 to 32 — are at the age where they appreciate and are interested in new devices and technology. They also (finally) have the financial means to buy them. See the December 19, 2012, “The State Of Consumers And Technology: Benchmark 2012, US” report. 5 Source: North American Technographics Finance And Customer Experience Online Survey, Q4 2011 (Canada). 6 Source: “Our Mobile Planet: Global Smartphone Users,” Google, February 2012 (http://services.google.com/ fh/files/blogs/final_global_smartphone_user_study_2012.pdf). The study included survey data from 1,000 smartphone users. 7 Source: “Our Mobile Planet: Global Smartphone Users,” Google, February 2012 (http://services.google.com/ fh/files/blogs/final_global_smartphone_user_study_2012.pdf). The study included survey data from 1,000 smartphone users. 8 TurboTax is a division of Intuit. TurboTax estimates that 88% of 1040 and 1040-EZ tax filers will be able to use the TurboTax SnapTax solution. Source: Intuit interview, March 2013
  • 18. For eBusiness & Channel Strategy Professionals Trends 2013: Five Trends Shaping The Next Generation Of North American Digital Banking 17 © 2013, Forrester Research, Inc. Reproduction Prohibited May 1, 2013 9 Customers often switch channels when buying financial products. Empowered with more information, they increasingly expect a connected experience across all touchpoints. Most financial services firms built their channels one by one, which results in poor customer experiences and lost sales when customers try to switch channels. See the September 19, 2011, “Best Practices In Multichannel Financial Services Sales” report. 10 Jonathan Velline, executive vice president at Wells Fargo in charge of ATMs and branches, recently spoke at the Best Practices in Retail Financial Services Symposium about the firm’s multichannel strategy. In terms of managing channels, he stated that the bank looks at channel and enterprise loyalty metrics, rather than cost-cutting measures. Its goal is to increase customer engagement within all of its channels. Source: Best Practices in Retail Financial Services Symposium, March 13-15, 2013. 11 CRM efforts won’t fix cross-channel experiences. Right-channeling — getting consumers to use the right channels for transactions and interactions — will deliver superior experiences, retain customers, and lower costs. This was outlined in a June 20, 2002, report titled “Right-Channeling Financial Transactions.” 12 We continue to believe that human beings remain the best sales and service channel for many high-value interactions — such as converting mortgage researchers. See the March 11, 2011, “Next-Generation Digital Financial Services” report. 13 Commonwealth Bank of Australia assigns a unique application number to every product application that is started — via any channel. The bank ran a two-year project to integrate digital channels with in-person channels and the bank’s multichannel customer relationship management (CRM) system. See the August 13, 2009, “Case Study: How Commonwealth Bank Of Australia Redesigned The Secure Site For Sales” report. 14 Customers who need help identifying a card transaction can use the virtual assistant to get information as to when and where a purchase was made, any other purchases that were made that day, and if they’ve purchased something from that merchant before. Think Siri for the iPhone and you’ve got the picture. 15 In 2012 BBVA announced it had been working for several years with SRI International to develop the next generation of virtual personal assistant (VPA) technology beyond Apple’s Siri. In the future, BBVA plans to expand VPA-based assistance to other channels. 16 Thanks to digital platforms, your customers live in a world of heightened expectations and abundant options; they can get more of what they want, in more places, at more times, than ever before. Seizing this opportunity, digital disruptors threaten to make you irrelevant by delivering a more compelling product and service experience than you can and at a lower cost, often without even knowing that they’re upending you. See the October 27, 2011, “The Disruptor’s Handbook” report. 17 The branch is the most used banking channel in the US. Sixty-eight percent of US adults visit a bank branch at least once a year. See the July 26, 2010, “How US Banking Customers Use Different Channels” report.
  • 19. For eBusiness & Channel Strategy Professionals Trends 2013: Five Trends Shaping The Next Generation Of North American Digital Banking 18 © 2013, Forrester Research, Inc. Reproduction Prohibited May 1, 2013 18 These pioneers were actually like virtual banks, taking in deposits (from individual investors) and then turning around and lending money out to individual borrowers. At first, government regulators were unsure of how to oversee these firms, but that changed in 2008. Both Prosper and Lending Club spent time in “quiet periods” in 2008 and 2009, where the firms operated but didn’t take in new money from individual investors. This was due to the U.S. Securities and Exchange Commission (SEC) requiring that they register all of the loans on their platforms with the government as promissory notes. Now all notes are registered with the SEC, and financial results for both companies are publicly available. 19 The pace of P2P lending continues to grow for some firms like Lending Club. In February 2013, the firm reported funding more than $120 million in loans for the month. Source: John Shinal, “Lending Club’s peer-to-peer lending business growing,” USA Today, March 10, 2013 (http://www.usatoday.com/story/ tech/2013/03/10/lending-club-peer-to-peer-skype-e-trade/1974147/) 20 Crowdfunding is booming. Forecasts called for $2.8 billion to be raised worldwide in 2012. There are more than 450 crowdfunding platforms. Source: “The new thundering herd,” The Economist, June 16, 2012 (http://www.economist.com/node/21556973).
  • 20. Forrester Research, Inc. (Nasdaq: FORR) is an independent research company that provides pragmatic and forward-thinking advice to global leaders in business and technology. Forrester works with professionals in 17 key roles at major companies providing proprietary research, customer insight, consulting, events, and peer-to-peer executive programs. For more than 29 years, Forrester has been making IT, marketing, and technology industry leaders successful every day. For more information, visit www.forrester.com. 94621 « Forrester Focuses On eBusiness & Channel Strategy Professionals Responsible for building a multichannel sales and service strategy, you must optimize how people, processes, and technology adapt across a rapidly evolving set of customer touchpoints. Forrester helps you create forward-thinking strategies to justify decisions and optimize your individual, team, and corporate performance. ERIC CHANG, client persona representing eBusiness & Channel Strategy Professionals About Forrester Global marketing and strategy leaders turn to Forrester to help them make the tough decisions necessary to capitalize on shifts in marketing, technology, and consumer behavior. We ensure your success by providing: n Data-driven insight to understand the impact of changing consumer behavior. n Forward-looking research and analysis to guide your decisions. n Objective advice on tools and technologies to connect you with customers. n Best practices for marketing and cross-channel strategy. for more information To find out how Forrester Research can help you be successful every day, please contact the office nearest you, or visit us at www.forrester.com. For a complete list of worldwide locations, visit www.forrester.com/about. Client support For information on hard-copy or electronic reprints, please contact Client Support at +1 866.367.7378, +1 617.613.5730, or clientsupport@forrester.com. We offer quantity discounts and special pricing for academic and nonprofit institutions.