Banking Leaders Predict Major 2013 Trends
Trying to predict what is going to happen in the banking industry is like trying to predict tomorrow’s weather. While you may get the forecast right, it could be more a case of luck than skill. And what you see today could quickly change tomorrow.
With that as the backdrop, I asked almost fifty industry leaders who author blogs I read, post on Twitter, speak at industry trade shows or make banking a career for their thoughts on what may be the most important trends in retail banking in 2013.
The predictions ran the gamut from what may occur in payments to how bank distribution could begin to transform. While some focused on larger megatrends, others had a narrower scope. In all cases, however, the predictions provide food for thought for bankers and industry providers. It is clear the one forecast that is guaranteed to be accurate is that the industry will be different this time next year.
Battle For Payment Supremacy Will Continue
Ron Shevlin, senior analyst from Aite Group and publisher of the Snarketing 2.0 blog believes the most significant trend in 2013 will be the evolution of the digital wallet concept. According to Shevlin, “The digital wallet will be the new battleground – for technology companies, financial services firms, and retailers/merchants. They say that politics makes strange bedfellows – but so will digital wallets. The evolution of the concept will involve a lot of interesting partnerships and joint ventures.”
Delivering On The Promise of ‘Big Data’
Finally, Nate Gardner, vice president of strategic partnerships at Provo Utah based MoneyDesktop, believes that intuitive data visualization will begin to deliver on the promise of big data for banks in 2013. According to Gardner, “Intuitive analytics will make it easier for bank executives and marketing teams to customize the user experience and deliver tailored messaging, product offers and solutions that best meet specific consumer needs and interests.”
Transformation of Delivery Channels
Consumers want a convenient, secure and familiar experience when they interact with their bank using mobile, online, phone, ATM or their branch. They also want their bank to realize that they may use multiple channels at the same time. This channel agnostic interaction has been recently referred to as an ‘omnichannel’ experience in the retail industry.
According to Mary Monahan, EVP and research director at Javelin Strategy, “To correct current shortcomings, FIs will focus on changing their perception of omnichannel banking as necessary rather than novel. Moreover, for FIs to increase or even maintain their competitive positions in the coming years, they will need to invest in developing an integrated architecture wherein data and platforms can seamlessly converge while enhancing the quality of the brand experience.”
Mobile Banking
According to Leimer, “We need to engage our customers with their own data, and drive new levels of personalized service to help them create their own value from their transactions. Our mobile applications will see renewed focus on engaging and simplified customer experiences, and improved contextual offer placement. We’ll see more applications leveraging voice, as well as the social graph, because individualized preferences are critical.”Matt Wilcox, from Zions Bank agrees, “I believe we will see the proliferation of “fat apps” that allow for a convergence of multiple applications as well as enhanced personalization for an enhanced customer experience.”
Online banking will improve as well in 2013 if the industry leaders are correct. The online banking experience will be holistically reviewed this year according to Bryan Clagett, the chief marketing officer at Geezeo. “The user experience will finally take precedent, and the definition of a ‘banking website’ will be re-written. Products like PFM will help consumers make better decisions, save money and leverage the vast merchant data that lies within.”
Serge Milman, CEO and founder of Optirate sees the focus on new and enhanced delivery channels as being a requirement to stay relevant, but not an inexpensive proposition, especially for smaller institutions. “Mobile and other delivery decisions will become ‘infrastructural’ initiatives”, states Milman. “Banks will spend significantly to implement technology, but smaller organizations may find these expenditures prohibitive and will be slow to see returns.”
Marketing and Technology Converge
Significant changes in marketing have been occurring for the last couple years, allowing bank marketers to leverage new technologies to improve targeting, offers, timing and the marketing channels used to communicate. The ability to combine structured and unstructured data described above, with the digital channels available, are a powerful combination for those bank marketers able to keep pace with change.According to Nicole Sturgill, research director at CEB TowerGroup, “The embrace of digital channels as primary to the customer experience is significant for two reasons. First, it acknowledges the fact that the branch is no longer primary in many customer’s eyes; and second, it places digital sales at the top of the technology priority list for 2013.”
Bank website design will also improve in 2013, enabling sites to become better selling tools. Tim McAlpine, president and creative director of Currency Marketing, believes that the use of HTML 5 will flourish saying, “Firms will put more weight into building websites that work on every screen size, versus the current trend of building dumbed-down mobile versions of corporate websites.”
David Gerbino, digital product, marketing and strategy manager at Provident Bank in New York agrees. As he stated in my recent post on bank marketer resolutions, “Bank need to rapidly say goodbye to the web. The web of decades past is dead. Today’s web needs to be responsive and device agnostic with one website supporting all devices.”
These changes will improve the customer experience as is mentioned by Jelmer de Jong, global head of marketing for Netherlands based Backbase and editor of the BANKNXT blog. “Banks have to focus on creating ONE unified superior customer experience, across devices, across channels. Multi-channel strategy and creating a cross channel journey will be key.”
While some banks are just beginning to utilize digital channels for their marketing efforts, some have found the power of new strategies such as search engine optimization for digital ads and retargeting for reaching people who are ready to buy.
According to Lloyd Lee, SVP, Integrated Services for direct and digital agency New Control, “The benefit of retargeting is clear – among all offline and online channels, retargeting is often the most efficient acquisition strategy on a cost-per-approved account basis.” Lee added, “In 2013, retargeting will become much more widely used by banks as it ensures that banks are capitalizing on all of the traffic being driven to a bank’s site from both offline and online acquisition efforts. It will be at the core of the most progressive bank’s digital strategies.”
The technology will also allow lifecycle and multichannel marketing efforts to merge, providing bank marketers to know who should get what offer, in which channel, in addition to WHEN they should receive the offer according to Bill Secrest, director of Datamyx. “New data solutions are emerging that can add context around when to target a consumer for marketing treatments.”
Many of the industry leaders emphasized that these new tools and strategies will be more important in 2013, as the industry moves further away from the industry meltdown of a few years ago and into a period where shifting market share will be needed to grow top line revenue.
J.P. Nicols, CEO of wealth management consultancy Clientific, was rather blunt when he said, “All of the popular buzzword talk of improving client experience, optimizing channel preference and engaging clients on social media is now being viewed through the filter of ‘how quickly can we see the impact in our results?’ In 2013, this emphasis will put additional pressure on marketers, vendors and partners to prioritize the right projects and the right products and features that will yield results quickly.”
On a more fundamental level, Mark Arnold, President of Market Strategies in Dallas, sent me the following trends which will be required as marketers implement new customer-facing technologies:
Product and Segment Opportunities
With regard to which products and services will be most important in 2013, some leaders believe there are untapped opportunities that will emerge in 2013. “Business account acquisition will be – or should be – a top priority for most FIs in 2013 since hardly any bank has been aggressive in this space or made many positive product changes in response to the repeal of Reg Q” offered Mark Zmarzly, vice president of financial services for ACTON Marketing.
Salil Ravindran, lead solutions architect for Oracle in the Netherlands agrees, “Banks will start focusing more and more on servicing the business banking segment through digital channels. The extent of services required by this segment is largely an extension of retail banking and not as complex as those required by the higher end wholesale segment, and hence banks should be able to largely leverage existing digital channel infrastructure to extend these services.”
Credit union leaders provided the following tweets regarding where financial organizations may focus in 2013:
New Entrants and Non-Bank Competition Increase
At the same time, Walmart continues to innovate, leveraging partnerships like those with American Express for Bluebird, focused initially on the middle class consumer. And there is no reason why Walmart should stop with a prepaid offer according to Emily McCormick from Bank Director Magazine. “If successful with Bluebird, I’d look at what Walmart’s next move would be, especially if they can dodge the regulatory hurdles than encumber banks.”Of greater concern in the longer run could be those offerings that bypass traditional banking channels completely. The rise of alt-lending (p2p lending, crowdfunding) in both the consumer and small biz space could present interesting challenges according to Jim Breune, CEO and founder of the Online Banking Report and founder of The Finovate Group. “Lending Club’s $600-million-year (in loan originations) shows that US investors are buying into the concept and the British Governments recent announcement that they will lend 10 mil (GBP) through Zopa and 22 mil (GBP) through Funding Circle demonstrates that at least one government understands the economic potential of alternative forms of banking.”
Continued Focus on Compliance and Security
Viewpoints differ on whether banks have fully adjusted to the impact of increased compliance and the CFPB. On one hand, a mid-sized bank executive stated, “The CFPB will still be a factor in 2013 for retail bankers. The question is, will it help add transparency and customer choice to the market for financial services or will their actions end up stifling choice and innovation because banks will be afraid to try creative new approaches to products or processes for fear of criticism or fines?”
Steve Cocheo, executive editor of the ABA Banking Journal has a more positive perspective when offering, “I believe that bankers will get over their compliance shell-shock in 2013, understandable as it is. While the regulations they face are often overwhelming, many will figure out new ways to meet their regulatory obligations with creativity and some fresh ideas. Not every institution will follow this path, but I believe more will than some think.”
Management consultant Steven Ramirez from Beyond The Arc Consultancy sees potential for banks that embrace the context of the CFPB when he said, “Banks that expand the scope of their Voice of the Customer efforts will see an added benefit: mitigation of regulatory risk.”
The impact of regulations is not just being felt in the U.S. Of particular concern for banks in the U.K., and potentially the rest of the EU, are proposed ‘ringfencing’ proposals that are focused on separating a banks’ day-to-day retail banking arms from riskier investment bank activities. With the intention of protecting taxpayers from the potential of bailing out banks, these pending rules impact larger banks more significantly and will cause additional distractions similar to what has occurred in the U.S.
While the impact of the CFPB may be stabilizing and many banks are prepared for the impact of ringfencing, the same can’t be said for the preparation for cyber attacks. This disturbing trend, which is impacting banks worldwide, may define issues ranging from consumer trust in banks to channel usage in 2013.
Mary Beth Sullivan, managing partner of Capital Performance Group, LLC stated, “I believe the cyber security threat will continue to increase, and retail banking organizations across the country will need to adopt more sophisticated security protocols and educate customers about it much more in 2013.”
Bryan Yurcan, associate editor of Bank Systems and Technology agrees with his rather pessimistic post:
Change is Inevitable . . . Or Is It?
As mentioned by Bryan Clagett from Geezeo in development of this post, “Those in traditional retail banking need to realize that banking, as we know it, is evolving largely due to new disrupters in the space. I say, embrace the inevitable and look from within and outward at ways to build better, more efficient experiences.”Jeff Marsico, banking consultant and publisher of his own industry blog, referenced a sentiment similar to Jelmer de Jong’s ‘Just Do It’ resolution for 2013 regarding the hopeful trend regarding the way bankers should look at the future:
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