The Future of Financial
Services in a Mobile World
Creating New Revenue Streams,
and Driving Customer Loyalty
2
Contents
About this Whitepaper.................................................2
Participants in the DMI VIP Think Tank ...
3
The VIP Think Tank was
comprised of 17 financial
services experts who
provided valuable feedback
on the major trends
disc...
Introduction of Key Themes
In order to set the key themes for the Think Tank, Sam Ganga, EVP of DMI conducted several call...
5
Mobile devices have revolutionized the way financial institutions interact with consumers. It was cited at the NetFinanc...
6
41% Mobile devices may offer new market
entrants an opportunity to siphon off
my business
23% Existing competitors may fi...
7
The majority of participants
believed that mobile would
surpass other online usage
in as little as two to five
years. No ...
8
56% Next 2-5 years
38% Next 5-10 years
6% Longer than 10 years
0% Don’t see it happening
how soon do you believe mobile ...
99
69% Mobile technologies and devices
will represent a net gain from my
business
0% Mobile technologies and devices
will ...
10
Traditional financial services value propositions are based on security and managing people’s money effectively. But wit...
11
37% 6 months
19% 12 months
19% 24 months+
25% Never
how soon will the market and consumer be ready for institutions to
...
1212
The Transaction Fee Debate
The fee-based approach generated a good deal of controversy and debate. It’s clear
that fi...
13
Advertising Models
One final thought that came from another participant was around advertising models
and how they shoul...
141414
Mobile Payments/Digital Wallets Challenges
The two key challenges identified with mobile payments by participants w...
15
Most participants were focused on mobile as a platform for value creation and building customer loyalty. Mobile offers ...
161616
Being Contextual
A leading bank’s consumer app that gives consumers the option to choose certain
cash back deals th...
17
Transparency
“What is stopping financial institutions from being as clear about what data is being
used for as a company...
18
Retargeting And Advertising
One executive in the Think Tank mentioned the idea of card linked offers. “We are
talking a...
19
Multi-channel or omni-channel customer engagement is a major emphasis for companies across the industry. As businesses ...
20
“If we can help customers
through the progression of
life financially, I think we
are going to win big time.”
“This is n...
21
One of the biggest
challenges with social
media, across industry,
continues to be
measuring return on
investment (ROI)....
22
The integration of digital
has caused the role of
ATMs, branches and
offline channels to shift.
“Our team uses conversat...
23
“Sales branches add value
to the bank. Using digital
to service and branches
to do complex sales
transactions - that is...
24
Conclusion
Leading financial services companies are moving rapidly to
embrace mobile technologies and leverage them to d...
25
About DMI
Mobile Solutions for
Financial Services
DMIistheworld’sleadingproviderofenterprisemobilityservicesandsolution...
26
About NetFinance
NetFinance is the world’s number
one digital event for financial
services, featuring 70+ speakers
and ...
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NetFinance VIP Think Tank- The Future Of Financial Services In A Mobile World

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  • Interesting presentation but really very little in terms of strategic outlines or tactics as to how Banks can leverage Mobile to drive loyalty, revenue or ROE. Many of the ideas presented have been discredited (for example, considering OBM and mobile deposit as value-added and charging for these services) while others are conceptually interesting but implementation is likely at least 2-3 years away (for example, pay to remove annoying advertising from online and mobile, and merchant funded offers that are relevant to the consumer).

    I am also surprised that no one focused on the cost savings opportunity of online & mobile. There is an opportunity to save 30% - 50% of a typical Bank's operating expense through Branch consolidation, and relocation of high-end production offices (think wealth management offices) into off-street office locations to serve high-value customers, and provide advisory services on high-complexity products.

    There is a real need for fresh thinking.
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NetFinance VIP Think Tank- The Future Of Financial Services In A Mobile World

  1. 1. The Future of Financial Services in a Mobile World Creating New Revenue Streams, and Driving Customer Loyalty
  2. 2. 2 Contents About this Whitepaper.................................................2 Participants in the DMI VIP Think Tank ................3 Introduction Of Key Themes .....................................4 Part I: Building a Winning Mobile Strategy........................5 Part II: New Revenue Generation Models........................10 Part III: Building Customer Loyalty Through Mobile.....15 Part IV: A Coordinated Omni-Channel Approach...........19 Conclusion ......................................................................24 DMI Mobile Solutions for the Financial Industry ........................................................25 About NetFinance .......................................................26 TheteambehindWorldwideBusinessResearch’sNetFinanceconference,withhelpfrom16 topindustryexpertsandDigitalManagement,Inc.(DMI),participatedinaclosedboardroom discussionatNetFinance2013toconsiderthefutureoffinancialservicesinamobile world. There’snoquestionthatmobileisdrivingacompletereinventionof banking,revolutionizingthe waycustomerscommunicateandtransact,elevatingtheirexpectationsforimmediacy,intimacy, andservice,andopeningthedoorfornewhybridservicesandnon-traditionalcompetitors. Banksneedtobemoreagilethanevertokeepupinthisrapidlyevolvingenvironment. Asindustryleadersdiscussedtheimpacts,opportunitiesandchallengesofmobiletechnologies, afascinatingpolarizationcametolight.Someregardedmobileprimarilyasavehicletogenerate additionalrevenuethroughnewfee-basedservices.Otherexecutivesbelievedjustasfirmly thatmobileshouldbeusedtoenhancecustomerexperienceandenhanceloyalty.This dichotomywasplayedoutinlivelydiscussion. “Youshouldn’tnecessarilytakethe‘focusgroup’approachtotalkingaboutfees,”saidone participant.“Attheendoftheday,ifyoucanprovideagizmothatamazesanddelightstheend- consumer,thefactthatyouarechargingforitbecomesanafterthought.” Thegoalofthediscussionwastounderstandwheredigitalexecutivesinfinancialservicesin NorthAmericastandontheindustry’sbiggestissues.Thefollowingreportdeliverstheir thoughtsonkeyissues,aswellasgraphsandanalysisfromananonymoussurveyofthe participants.Thediscussionspotlightstrends,winningmarketinganddigitalstrategies,and areasinneedoffurtherdevelopmentandinvestigationinthemobileandomni-channelfinancial servicesworld. About this Whitepaper
  3. 3. 3 The VIP Think Tank was comprised of 17 financial services experts who provided valuable feedback on the major trends discussed throughout this report. Though their words are not specifically attributed, all quotes through the report came from these executives. The Think Tank was moderated by: Sam Ganga, EVP, DMI Jeff Reid, Chief Digital Officer, Digital Strategy & Channels, TIAA-CREF Jamie Armistead, Head of Multi-Channel Banking, Bank of The West Bradley Leimer, VP Mobile/ Internet, Mechanics Bank Aashir Shroff, VP, Mobile Payments and Innovation, Wells Fargo Richard Char, Managing Director/Global Head of Information Services, Citi Enterprise Payments, Citigroup Alejandro E. Carriles, EVP, Director Mobile Banking Strategy & Retail Innovation, BBVA Compass Toby Russell, VP, Enterprise Mobile & Emerging Technologies, Capital One Participants in the DMI VIP Think Tank Silu Modi, VP Digital Marketing, Macquarie Financial Services Kevin Jackson, Director Interactive Marketing, Discover Financial Services Ranjit Sarai, Director of Mobile, CIBC Jeff Dennes, SVP, Head of Digital, Suntrust Bank Jessica Turner, SVP Business Development Senior Business Leader US Market Development, Mastercard Kristy Brandon, VP eBanking Channel, Comerica Mary T. Monahan, EVP/Research Director, Mobile, Javelin Strategy & Research Lamonte Leftenant, Director, Digital & Multichannel Business Value, Marketing & Communications, AXA Equitable Om Kundu, VP, Financial Services Company
  4. 4. Introduction of Key Themes In order to set the key themes for the Think Tank, Sam Ganga, EVP of DMI conducted several calls with participants to identify topics of interest. Everyone Ganga spoke with mentioned that financial institutions need to change. “We can’t be the financial institutions of the past, telling the consumer how to do business with us,” said one individual. “We have to react much faster – we have to react at the pace the consumer wants us to react.” After the various calls, DMI laid out a four-part discussion model that the Think Tank would be structured around. Each theme constituted one part of the discussion. They were as follows: 4 Building a Winning Mobile Strategy • It’s clear to all participants that mobile technologies are revolutionizing financial services. • The challenge is to leverage mobile to build competitive advantage, and effectively counter threats from new non-traditional competitors. Part I: New Revenue Generation Models • As more traditional profit centers fight to break even, due to high branch costs and increased competition, many are eager to tap mobile for new revenue streams. • New fees from services enabled by mobile devices are tempting. But this is a controversial issue. Part II: Building Customer Loyalty Through Mobile • Mobile offers new opportunities to build customer intimacy and loyalty. • Most participants were more comfortable with mobile as a vehicle for building loyalty, and were eager to explore new ways to achieve this goal… although not always for free. Part III: A Coordinated Omni-Channel Approach • Creating a consistent user experience across channels while having content specific for each channel is recognized as vital to mobile success. • It is great to have a strategy, but ensuring it is customer centric and that institutions act on it is key to success. Part IV:
  5. 5. 5 Mobile devices have revolutionized the way financial institutions interact with consumers. It was cited at the NetFinance conference that because of mobile, consumers now engage with financial institutions on average 30 times per month vs. one to two times per week in the pre-digital age. This has impacted financial institutions both positively and negatively and presents both challenges and opportunities. ChALLeNGeS • Mobile has created new threats and competition. Non-traditional competitors including PayPal, Apple and major retailers now stand a chance to gain market share through mobile payments. Disruptive innovators like Simple and Moven are using mobile as a way to create a more customer-centric banking experience. Most of these competitors also face less regulation and are much more agile, which means banks need to be more innovative in order to keep up. • A key management challenge identified by participants was the need to successfully advocate for the strategic allocation of resources to support mobile initiatives. Unfortunately, it’s too easy for many financial services businesses to under-invest in mobile. Distributing resources proportionally based on revenue contribution was recognized by participants as a recipe for failure. • The importance of demonstrating ROI on mobile investments to upper management was noted throughout the event and mentioned in the Think Tank. It’s clear that now is the time for institutions to seize the opportunity to build a strong mobile presence. But being able to effectively measure and demonstrate the value of this channel is still a challenge. Without adequate vision and leadership, financial services companies run the risk of under-investing in mobile now – and losing a critical competitive edge in the future. • Another challenge is the need to build new models for customer interaction. On the one hand, executives were clearly excited about the lower costs and increased frequency of customer contact through mobile devices as compared with face-to-face interactions at branch offices. And many were considering how to make services available digitally that up until now have required in-person visits to a branch. Butfinancialservices companies must work hard to re-think the role of the branch. Losing the “personal touch” of branch visits could come at considerable risk. Part I: BuildingaWinningMobileStrategy
  6. 6. 6 41% Mobile devices may offer new market entrants an opportunity to siphon off my business 23% Existing competitors may find ways to leverage technology to gain a competitive edge 18% Security vulnerabilities will expose us to new liabilities and costs 18% Other What’s the biggest threat mobile devices and technologies pose to ‘traditional’ financial services companies? In a poll of the VIP Think Tank participants, 64 percent of attendees said they believed the biggest threats mobile poses to traditional financial services, are business threats, not technical or security threats. When asked about the threat of non-traditional competitors gaining material share from traditional banks, 56 percent of those surveyed said they were either concerned or very concerned. This demonstrates how much banks need to innovate to prevent loss of market share. Building a Winning Mobile StrategyPart I: On a scale of 1 to 5, rate your level of concern about the potential for Digital/Direct institutions (i.e. Simple, Moven, Bluebird) to gain material share from traditional retail institutions. (1=not concerned, 5=very concerned) 40% 1 (not concerned) 2 3 4 5 (very concerned) 30% 20% 10% 0% 19% 25% 13% 37% 6%
  7. 7. 7 The majority of participants believed that mobile would surpass other online usage in as little as two to five years. No one said that they “don’t see it happening.” OPPORTuNiTieS • Mobile offers more touchpoints with customers, the ability to better understand customer behavior, and the opportunity to build deeper relationships with customers. • Transaction costs via mobile devices are dramatically lower than in-person transaction costs. • Real time data can be used to help customers more effectively manage their finances. • Context-based offers through mobile devices can be effective incentives to retain loyal customers In a poll of the VIP Think Tank participants, a majority (65 percent) of attendees said mobile is a part of their product/service experience. This statistic wasn’t surprising, but what was surprising was that 17 percent of participants stated that mobile already accounts for more than 5 percent of their sales. This high figure may be a result of differences in attribution. According to a leading search engine provider, 25 to 40 percent of the searches of financial services brands are from mobile. One Think Tank participant pointed out that if a company links that mobile search traffic to acquisitions on site, it easily brings the number into a double digit percentage of sales coming from mobile. 17% Evaluating/not doing yet 12% Used for promotional activity 65% Mobile is part of product/service experience 6% Mobile accounts for more than 1% of sales 0% Mobile accounts for more than 5% of sales how much does Mobile factor into your business plans? Building a Winning Mobile StrategyPart I:
  8. 8. 8 56% Next 2-5 years 38% Next 5-10 years 6% Longer than 10 years 0% Don’t see it happening how soon do you believe mobile usage of your company’s services will surpass other online usage? Identifying the greatest area of value to consumers through mobile is a challenge. When participants were surveyed on what would be the greatest value add mobile could offer consumers, there was no clear winner. 8 16% Providing enhanced/always available customer service 11% Always present platform for cross-selling/up-selling financial services 28% Driving transactions through offers based on location or other device-supplied data 17% Leveraging device features 28% Digital wallet What mobile-device-enabled business activity will be of greatest value to your company over the next 5 years? 30% 20% 10% 0% 16% 11% 28% 17% 28% Building a Winning Mobile StrategyPart I:
  9. 9. 99 69% Mobile technologies and devices will represent a net gain from my business 0% Mobile technologies and devices will do damage to my business 31% No major business impact (if we keep up) but customers will win through improved services 0% Ultimately won’t matter What impact will mobile devices ultimately have on your business? Overall, executives believed mobile is going to benefit their financial institutions either through improved services or a total net revenue gain to their business. No one believed that mobile would have a net negative impact or no impact. 9 Building a Winning Mobile StrategyPart I: It’s interesting to note that a strong majority of participants were bullish about mobile, and no one believed mobile would be detrimental to their business in the long run. Clearly, mobile will make some winners and losers, but for now, everyone’s expressing optimism that they’ll come out ahead.
  10. 10. 10 Traditional financial services value propositions are based on security and managing people’s money effectively. But with mobile creating a rapid change, consumer expectations about how they interact with banking and financial institutions have completely shifted. Banks have to create new value for consumers - especially through mobile - if they want to retain existing customers and build market share. Financial institutions also have to figure out how to monetize this new landscape if they want to be sustainable entities in the future. ChALLeNGeS • The VIP Think Tank participants alluded to the airline industry as a model for financial institutions to follow if trying to monetize mobile. The idea of charging a fee for remote deposit capture or other value added services was seen as analogous to airlines charging for checked baggage. • There was a mixed reaction among participants to such a model. Some executives were convinced that mobile should be leveraged primarily as a means of enhancing user experience and driving loyalty. Many were concerned about customer reactions to new fees. • Several alternatives were discussed for leveraging mobile to drive incremental revenue without alienating customers. Part II: NewRevenueGenerationModels
  11. 11. 11 37% 6 months 19% 12 months 19% 24 months+ 25% Never how soon will the market and consumer be ready for institutions to initiate charging premiums for value-added Digital Services? (e.g Mobile Deposits, OBP, etc) 75% of participants believed financial institutions would or should start charging premiums for value added services within the next 24 months. Transaction Fee-Based Models When discussing the airline analogy, some executives stated that there are inherent differences between financial institutions and airlines that can’t be ignored, while others praised airlines for taking a bullish approach that financial institutions should try as well. “When an airline does something that creates revenue, rather than pointing at that airline and bringing it down, the other airlines say, ‘This is smart, let’s do the same thing,’” stated one participant. “In the financial services business, we need to take the same approach.” “An example is when you have an emergency; you have a free clinic that is open nine to five, Monday through Friday,” said another. “If your kid breaks his arm on Saturday evening, are you willing to pay extra for the after-hours care? Are you going to argue, ‘Oh it’s too expensive, I’m going to wait till Monday.’ You think it’s well worth it.” ChALLeNGeS New Revenue Generation ModelsPart II:
  12. 12. 1212 The Transaction Fee Debate The fee-based approach generated a good deal of controversy and debate. It’s clear that financial institutions are attracted by the revenue, but at the same time they are deeply concerned about the impact of additional fees on customer satisfaction and loyalty. Hybrid models and alternatives abound. One participant suggested charging fees for some services, but offering loyal customers ways to avoid the fees. “It is about the value we provide,” said one participant. “I hesitate on [enacting] ad-hoc pricing models. Every time we put one in front of our customers, they said no. They don’t mind if you charge $120 a year or on a month-to-month basis, just don’t charge at the transaction level. It’s a better model for the customer. If they get charged per transaction, it devalues it.” Flat Fees Another executive’s thoughts: “We did a survey a few years ago with bill pay. Instead of paying per transaction, we asked, ‘What if we had a flat rate to pay and customers would never be late on bills. We will do same day bill pay, $9.95 per month.’ Almost everyone who was surveyed said yes because that solved a problem they had and is a fair value and means they don’t have to worry about same day payment, or whether they’ve scheduled it properly, etc.” eliminating Fees For Premier Customers “One thing that is pretty reasonable that we came up with is when you have fees, it becomes valuable to be a loyal customer,” added another. “With [my airline] I see the value I get as a member. When I fly, my bags are free vs. on other airlines where I pay. Like a flat rate, you are a premier customer; you don’t pay for any of this. Likewise, it’s worth bringing the rest of my money to my bank so I can be a premier customer.” One participant suggested charging fees for some services, but offering loyal customers ways to avoid the fees. New Revenue Generation ModelsPart II:
  13. 13. 13 Advertising Models One final thought that came from another participant was around advertising models and how they should be considered as an alternative way to generate further revenue. “Another option is through an advertising model,” said one participant. “You can pay a monthly fee for ninety-nine cents a month, or you can have many annoying ads popping up [if you choose not to pay]. If the customer perceives the value, they will be willing to pay to not have ads.” In online services, companies make money from advertising, from transaction/usage fees, or both. Banking lends itself to the classic “freemium” model: the consumer deposits money and they are offered a variety of services – some free, some paid. It is up to the financial institution to figure out how and where to make money. But charging fees can devalue extraction, say some experts in the industry. In the digital ecosystem, one-off fees for incremental services can be problematic. “How often do you get hit with a fee from Gmail?” posed one participant. When looking at companies that have succeeded in consumer technology, relatively few have charged a transaction fee and been successful. Facebook doesn’t do it. Google doesn’t do it. Apple doesn’t do it. So why would consumers accept it if banks do? This was the viewpoint expressed by some of the Think Tank’s participants. When looking at companies that have succeeded in consumer technology, relatively few have charged a transaction fee and been successful…so why would consumers accept it if banks do? New Revenue Generation ModelsPart II:
  14. 14. 141414 Mobile Payments/Digital Wallets Challenges The two key challenges identified with mobile payments by participants were: • “I see benefit for mobile payments for industry, but not for consumers.” • “Plastic (credit cards) is not broken, so people aren’t jumping for it. What is the additional value we are providing?” Opportunities And Benefits “The plastic customer isn’t connected, but the mobile is, and the user experience is better,” said one participant. It’s about convenience. Consumers open an app, pay with the phone and the app displays that the offer has been redeemed and the payment is complete. Building great offers that are contextually relevant are what ultimately will drive adoption of mobile payments, the group agreed. “I believe most customers want a personalized relationship,” said another. As an example, the participant cited how Platinum Delta customers, or a bank’s VIP members are welcomed by first name. Mobile payments allow financial institutions to generate data and then through branch/electronic methods, offer personal services. Through mobile payments, banks can execute offers, drive loyalty programs and even authenticate customers, which is ultimately what customers want. “A digital wallet allows us to offer personalized services or personalized banking, and those are all benefits,” added a participant during the discussion. “The average customer will say, ‘This is cool,’ as there is more value for him/her. Sometimes you can charge them for it or make money from offers for insight to that customer.” Another participant asserted that customers will use mobile payments if it’s more convenient for them or if they get added value. The popular Starbucks app, for example, could be made even more popular if they integrated extra value for users. If customers could use the app to order coffee then walk in and pick it up – so as to avoid waiting in lines – that would present extra value for the customer. “That is when mobile payments will really take off,” said the participant. “Banking lends itself to the classic ‘freemium’ model: the consumer deposits money and they are offered a variety of services – some free, some paid. It is up to the financial institution to figure out how and where to make money.” New Revenue Generation ModelsPart II:
  15. 15. 15 Most participants were focused on mobile as a platform for value creation and building customer loyalty. Mobile offers an unprecedented, real-time, always-on connection to customers. But location-based contextual offers must become more relevant. Effective leverage of Big Data resources can get us there. Offers And Big Data Mobile offers an unprecedented, real-time, always-on connection to customers. The bank is now literally in customers’ hands. Customers are making big and small financial decisions all the time regarding how they spend, what to save for, and everything in between. The ancillary business models that financial institutions can now take advantage of will come through special offers. One of the core assets that financial institutions have is their access to and housing of big data. There are millions of dollars to be made monetizing this data. However, in order to capitalize on these opportunities, financial institutions must overcome a number of obstacles that stand in the way. Part III: Creating Value and Building Loyalty Through Mobile
  16. 16. 161616 Being Contextual A leading bank’s consumer app that gives consumers the option to choose certain cash back deals through online or mobile banking, was described by one participant as the ‘anti-Groupon.’ The participant said that this kind of deal presents greater value to merchants. But the problem with such a model is that offers can be non-contextual. One participant said, “At our bank, it’s only contextual insofar as, ‘You look like you eat food, so here’s a discount at a restaurant.’” “We have to improve contextual offers,” said one participant. “With [my credit card app] on my phone, I get an offer where I’m choosing to eat. It’s contextual, relevant, location-based and it’s right there. But the value is knowing specifics such as ‘I don’t want to eat there, I don’t ever eat there.’ Helping customers go where they want to go and when they want to go is the key to moving forward.” Resources And Privacy Other challenges include those to resources and privacy. “Smaller financial institutions don’t have the resources to call every merchant to set up deals,” said one participant. Said another: “Our biggest fear for our bank is that we are going to appear on the front cover of the New York Times saying that we are data mining our customers without their permission. People will get fired over that and our reputation will be deeply damaged. Consumers come to banks for the security and a trusted relationship.” “We tell our customers that if they want deals they have to opt in three times,” said another industry executive during the Think Tank. “The three conditions are: you are willing to see offers, we are data mining your spend data, and we are tracking you on your phone. If the customer does not agree to these, they don’t participate.” “Our biggest fear for our bank is that we are going to appear on the front cover of the New York Times saying that we are data mining our customers without their permission. People will get fired over that and our reputation will be deeply damaged.” Creating Value and Building Loyalty Through MobilePart III: ChALLeNGeS
  17. 17. 17 Transparency “What is stopping financial institutions from being as clear about what data is being used for as a company like Simple is?” asked one participant in making a point about how transparent Simple, Inc. is with its data mining. “Simple logs everything it does right down to the code. The winners are those that are going to be open and transparent. I have faith that as an industry, we will do a better job of communicating value and creating value exchange that is of benefit to everyone in the industry. Right now the ecosystem, i.e. banks, payment networks, etc., isn’t thinking rationally about the value we are creating for customers, especially in terms of data mining, targeted offers, mobile payments, etc. The end game is to make the consumer more aware of the benefits these features will provide to them. But this change may take up to a decade.” Simplicity “A lot of these start-ups are operating on the edge,” said one participant. “Risk is getting passed down the chain to the banks. New disruptive digital banks like Moven are prepaid; you just need an email address to sign up. If a customer needs lending products, then they need to give more information. So this is disruptive as it’s a lot easier. With us it could take up to two weeks with two credit checks.” Another participant cited an experience with Moven involving a transaction at a coffee shop. After the transaction, the app showed information about spend, characterization as a customer, as well as a message asking to “please come back.” The participant admitted that startups like these may not be going from zero to one million customers anytime soon, but that the value add to the customer and the Personal Financial Management (PFM) opportunity presents concepts that financial institutions should be seriously evaluating. “The end game is to make the end consumer more aware of the benefits these features will provide to them. But this change may take up to a decade.” SOLuTiONS Creating Value and Building Loyalty Through MobilePart III:
  18. 18. 18 Retargeting And Advertising One executive in the Think Tank mentioned the idea of card linked offers. “We are talking about how we create a closed loop ROI for an advertiser that demonstrates online to offline efficacy,” this person said. “For instance, if you do an analysis of transaction history through open-source software like Hadoop, you can discover correlations. You might see that people who fly Lufthansa are likely to pay for Skype. So if you can do that for a customer, can you basically do retargeting for Skype on a Lufthansa user? And can you do the same when they come to your online banking experience? The customer isn’t aware, but doesn’t care, just as they don’t care if they see advertising on the New York Times that is more relevant to them. This is a huge value add to everyone in the ecosystem.” When industry looks at data mining and retargeting, it must ask the question, “How much do consumers care,” as well as, “What do consumers care about?” If financial institutions can answer those questions, target the consumer based on their answers, “wow” their customers, and force them to realize the benefits, consumers will naturally want to opt in for subscription based deals, mobile payments and more. As one participant said, “If we get it right, privacy concerns will begin to go away.” “If we get it right, privacy concerns will begin to go away.” Creating Value and Building Loyalty Through MobilePart III:
  19. 19. 19 Multi-channel or omni-channel customer engagement is a major emphasis for companies across the industry. As businesses struggle to deliver cross-channel experiences, the stream of innovation continues to flow unchecked. In response, digital professionals must transform how they market, transact, serve, and organize around changing customer experiences. These changes will continue to bring about a new era of agile commerce. Digital leaders will optimize their people, processes and technology to serve today's empowered, ever-connected customers across a rapidly evolving set of customer touch points. Creating A Valuable Customer experience As described by these executives, when businesses go through planning cycles, each line of business is given a certain share of budget with which they can execute their strategies. There’s a line out the door for great opportunities within the industry, but institutions can only focus on so much at a time, due to both time and budgetary constraints. Many executives expressed a desire for management focus on the financial institution’s top three to five initiatives, with an eye toward achieving strategic wins, as opposed to spreading resources too thinly across the board. In other words, executives would prefer to do fewer things better, instead of taking on multiple initiatives at once and delivering less successful outcomes. Part IV: A Coordinated Omni-Channel Approach
  20. 20. 20 “If we can help customers through the progression of life financially, I think we are going to win big time.” “This is not a focus on products or services, but the overall experience. It’s about adding value.” A Coordinated Omni-Channel ApproachPart IV: One of the biggest challenges cited by executives in the discussion, which is a cross- industry challenge in the digital age, was the siloed approach taken to digital initiatives. “Customers don’t think in siloes,” said one participant. “They just think they are interacting with their financial institution.” The group agreed that the focus often falls too much on products and not on the overall customer experience. SOLuTiONS “If we can help customers through the progression of life financially, I think we are going to win big time,” said one participant. “This is not a focus on products or services, but the overall experience. It’s about adding value.” Another participant likened the conversation to a scenario about buying a car, pointing out that consumers don’t buy cars very often, but the dealers they transact with sell cars all the time. Already, that puts the consumer at a disadvantage, claimed this participant. Financial institutions are in the same boat. If they can recognize this relationship, they can head off any customer dissatisfaction by helping consumers and making information about pricing, lending, etc., transparent. “If you can help me through this major event, you will gain my trust, most likely for life,” said the same participant, likening financial institutions’ obligation to the purchasing of a major item like an automobile. “If I find a better rate somewhere else, I probably won’t move. If you help me through something, you deserve my business and I’ll probably tell five other people what a great experience it was.” Continuing along the same scenario, the participant gave the example of United Service Automobile Association (USAA). At USAA, customers can search for cars or houses within an app, and then follow up with a dealer or expert. “That is where the loyalty comes from,” said the participant. “Digital created the initial discovery and it is useful for the consumer without a hard push. That, in the long run is the business model.” ChALLeNGeS
  21. 21. 21 One of the biggest challenges with social media, across industry, continues to be measuring return on investment (ROI). Social The social revolution has completely transformed a back-office function and put it square in the limelight. Social media has caused a shift in power from the brand to the customer; transparency, customer service and an exceptional customer experience are therefore vital, if you want to win with your customer and against your competitors. Listening to what consumers are saying via social media, and integrating that feedback throughout other channels is essential if you want to create a holistic, customer centric organization. ChALLeNGeS One of the biggest challenges with social media across industry is measuring return on investment (ROI). Participants at NetFinance and during the Think Tank stated that they are continuously challenged to define the ROI of their social media efforts. “My CMO challenges me on ROI all of the time for social – that’s nothing new,” said one participant in the Think Tank discussion. “But what is new is linking minor communities or contexts between mobile and social and measuring the ROI with that. The feel-good thing is starting to integrate that content. But is the customer going to be more engaged and move toward the buying path?” That still remains a question for many institutions. “The other challenge is we have permission issues,” the participant continued. “The community is designed to be separate from the company. We build trust if we don’t interfere too much. Therefore how do we avoid acting like the police and not get in people’s way and lose their trust?” SOLuTiONS “We take the top two conversations taking place in our small communities pages and we link them to our login page. The integration of content between these channels has been very effective.” One participant brought up the enactment of a student blog for the financial institution, which has been very effective in starting conversations with potential customers. A Coordinated Omni-Channel ApproachPart IV:
  22. 22. 22 The integration of digital has caused the role of ATMs, branches and offline channels to shift. “Our team uses conversation starters to get students to think, create discussion and get the conversation in the forums flowing,” said this executive. “If there is good dialogue, we link that with other channels including our online login page, other social media channels such as Twitter and Facebook, etc. We also use it as customer feedback to help us create better products.” Role Of The Branch A big advantage for traditional financial institutions as opposed to startup options like Moven or Simple, is the value of the branch network in building awareness and presence. While the cost to serve in this channel is significantly higher, it does provide a lot of selling and upselling opportunities. At NetFinance 2013, a number of financial services companies said they have data which shows that fewer people are going to the branch today. However, given the complex nature of financial products, and the fact that people still do like human interaction, branches are not going away anytime soon. But the integration of digital has caused the role of ATMs, branches and offline channels to shift. ChALLeNGeS This Tweet from NetFinance 2013, sums up the challenge of branch networks very well: “The branch infrastructure is a big challenge,” said one participant when this subject was broached during the Think Tank. “You still sell and service a lot through branches, yet there are a lot of lease/space issues and very high costs. It is a decades-long problem. We would love all of our customers to be 95 percent digital and to get rid of branches. We would be ridiculously profitable if that was the case.” A Coordinated Omni-Channel ApproachPart IV:
  23. 23. 23 “Sales branches add value to the bank. Using digital to service and branches to do complex sales transactions - that is where we are going moving forward.” In talking about this evolving issue, several participants agreed that the landscape will look very different five to 10 years from now than it does today. One participant stated that many of the 93,000 bank branches across the US would be shuttered over the next decade. What customers do in their bank branches is changing rapidly, and most executives agreed that if financial institutions can move most of the branch services to digital channels, the industry would be highly profitable. SOLuTiONS “We are looking at how to streamline your experience at the branch through digital,” said one participant. “We want to make the branch smaller and create a more integrated approach. Depending on consumers’ outlook and where people are going to go, a lot of opportunity could be created through digital only. A cross-sell or up- sell is a big opportunity too.” Another topic that came up in discussion as a solution to the challenges of the branch, was the idea of integrating a more localized sentiment about branches through social media and mobile banking. A local branch helps put the humanity back into banking, as one participant said. The branch plays a role in elevating the consumer’s emotional connection to the bank. This is a great opportunity to capitalize on through digital channels. For instance, creating social pages that relate to specific branches, moderated by employees within that branch, can help consumers connect to people they know without having to visit the actual branch. The more that financial institutions can embrace the customer’s ability to build that relationship online, the less they will need to rely on the physical branch for that connection. “The role of the branch is going to change,” stated another executive toward the conclusion of the discussion. “The cost of servicing is much cheaper digitally than in a branch. However, sales is still a big opportunity at the branch level. When you have sales representation that resonates with a customer and the customer leaves the branch with a portfolio of products, they find things they didn’t even know they needed. Sales branches add value to the bank. Using digital to service customers and branches to do complex sales transactions - that is where we are going moving forward.” A Coordinated Omni-Channel ApproachPart IV:
  24. 24. 24 Conclusion Leading financial services companies are moving rapidly to embrace mobile technologies and leverage them to deliver added value, build loyalty, and extract additional revenue from customers. Our discussion with executives from the industry clearly revealed several factors contributing to the drive to go mobile: • Threats from new market entrants • Threats from existing competitors • A desire to leverage new technologies to enhance service and customer experience • A desire to tap new revenue streams – as long as it can be done without upsetting customers’ sense of value and fairness. Everyone is vying for leadership, playing both offense and defense; struggling to improve multi-channel consistency and ease-of-use, looking for new ways to add value. All institutions are on the lookout for the “killer app” for mobile finance that could catapult their company into the lead. The good news for consumers is that financial services companies are very tightly focused and in fierce competition with one another to see who can crack the code on mobile technologies first. But financial institutions are not technology companies, and are not accustomed to moving at “Internet speed.” Add to that the fact that U.S. based financial services companies operate at a global disadvantage when it comes to mobile commerce. Many countries in Europe and Asia are years ahead. In this environment, many financial services companies have built substantial in-house mobile development organizations to help them keep pace. But many would be well served to partner with mobile solution and service providers who have in-depth skills in user experience design, app development, back-end integration, and application management and support, in order to enable successful transitions into the mobile world. A new breed of mobile solutions companies are emerging that can tackle the complex challenges facing leaders in the financial services industry. These companies offer a comprehensive set of enterprise mobility services that span mobile strategy, managed mobility services, mobile app and solution development, mobile BI/analytics, and mobile security. DMI is a leader in this new, emerging category of mobile enterprise service providers. Please read on to learn more about the company’s services.
  25. 25. 25 About DMI Mobile Solutions for Financial Services DMIistheworld’sleadingproviderofenterprisemobilityservicesandsolutions.We build enterprise-class mobile solutions that generate results for the world’s top brands and businesses. Our mobile solutions combine the award-winning user experience design that has made us one of the top creators of consumer apps, with thedeepmiddlewareandengineeringexpertisethatwe’veusedtobuildandmanage enterprise applications for the most demanding IT departments in the world. DMI mobility solutions improve business processes, tap new revenue streams, build customer loyalty, and increase employee productivity. And we offer a full range of managed services to securely set up, configure, and manage your mobile devices.   Our services include: • Mobile Strategy: strategic planning, business case justification, and mobile vision and roadmap based on user-centric decision support tools • Managed Mobility Services: smart device provisioning, roll-out, centralized over- the-air mobile device management and mobile help desk services • Mobile App and Solution Development: mobile app development with a superior user experience using native and cross-platform development capabilities with complete control over application data security • Mobile BI/Analytics: Actionable insights and predictive analytics delivered via mobile devices, HTML5 visualizations and BI Dashboards • Mobile Security: Data and Content Security Device Security, Application Security, and Security Infrastructure – network connectivity & devices We OFFeR OuR CLieNTS Financial Services expertise: • CustomerLoyaltysolutionsthatcombinemobile technologyandbigdatainsightstoautomatically deliverpersonalizedoffersthatincreaserevenue andbuildloyalty • DataMonetizationsolutionsthatenableyou leveragethevalueofyourdatatocreate incrementalrevenuestreams Mobile experience: • 1500+ mobile sites and apps, crossing every platform & OS • 500,000 devices under management around the world • 24 x 7 helpdesk support excellence: • “Best Branded App Developer” 2012 Mobile Entertainment Award • 250+ mobility experts skilled in UI design, agile development, enterprise integration, mobility management • ISO certified and CMMI appraised development and service methodology DMi headquarters One Rock Spring Plaza 6550 Rock Spring Dr. Bethesda , MD 20817 DMiSalesTeam U.S.Sales:855.963.2099 Intn’lSales:204.200.5848 sales@DMInc.com Please click or call to learn more: www.dminc.com/NetFinance
  26. 26. 26 About NetFinance NetFinance is the world’s number one digital event for financial services, featuring 70+ speakers and 350+ senior level attendees. In just three days, attendees will learn, engage and discuss all aspects of mobile, tablets, responsive design, big data, multi-channel restructuring, cross- selling, customer engagement and creating the branch of the future. The complete agenda, list of speakers and registration details are available at www.netfinanceus.com www.netfinanceus.com • netfinance@wbresearch.com • 888-482-6012 or 646-200-7530 “The show has been fantastic. The biggest thing about an event like this is the people that you meet and the speakers that are here. So you get the top people from Moven, big banks and small banks. You get to understand what is changing the industry: social, mobile, payments. The collaboration amongst people here and the type of conversations you have here is also top notch. The executives making the critical changes to our industry are here onsite. I would highly recommend to anyone.” Bradley Leimer, VP Mobile/ Internet, Mechanics Bank

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