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Retail Banking Trends And Predictions For 2013

While The Financial Brand refrains from making any kind of annual forecast of trends in retail banking, there’s no shortage of experts weighing in with their predictions and resolutions for next year. What are some of the major themes that will dominate 2013? Here’s what they have to say.


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At the top of everyone’s 2013 list was something about mobile. And if predictions come true, this could be the year marketing finally embraces the mobile channel.

Go mobile or die. Marketing veteran Drew McLelland said if mobile banking wasn’t your top priority in 2012, it better be for 2013. “This isn’t optional for financial institutions that want to be in business in 2020,” said McLelland. “It’s really that simple.”

Branding consultant Sean McDonald agrees: “Mobile banking, remote deposit capture, and all of the technology associated with these things will continue to be the fastest-growing trend in our industry.”

Subscribe TodayEverything starts and stops with mobile. Jim Breune, CEO and founder of the Online Banking Report and founder of Finovate Conferences recommends that “every product enhancement, marketing initiative, branding play, pricing adjustment, customer service tweak, security improvement and even new brick and mortar investment should be viewed through an online/mobile lens in 2013 and beyond.”

Time to start marketing on the mobile channel. Peter Wannemacher, an analyst for Forrester Research, says mobile is going to be the hub of the customer relationship within five years. “It will be the way that most customers-particularly the young and the wealthy-interact with their bank most often,” Wannemacher says. “And it will be an increasingly important touchpoint for noncustomers, as they search for information.” So Wannemacher foresees an emphasis on sales and marketing in the mobile channel, which is largely absent so far.

“Facebook and Google will gain significant traction in mobile ad targeting… following on to targeted incentives… which will lead to mobile success,” notes Tom Noyes, an expert in the payments space. “Bankers, please read this again: success in mobile will begin with ad targeting and incentives.”

“An area where there is likely to be some innovation next year is in tying mobile to a bank’s broader marketing program,” writes Chantal Tode, an associate editor on Mobile Commerce Daily. “There have already been examples of mobile apps being featured in TV ads, but the examples of more integrated programs are likely to proliferate next year.”

Celent believes that the integration of mobile payments and merchant fund rewards will drive step changes in the payments landscape. Zil Bareisis, Senior Analyst with Celent’s Banking Group says the combination of payment data, location awareness, and immediacy will be “more than enough to put mobile offers over the top.”

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Demand for ROI from social media. Ad dollars will continue to shift to online and social media, and these channels will continue to grow in importance for banks, according to William Weidman, VP at Applied Predictive Technologies. He says financial institutions will look to better understand their return on investment and will choose carefully how they invest going forward.

Will big data really be the “top challenge?” Dr. Stuart Wells, EVP and CTO at FICO, says the top challenge facing the banking community in 2013 will be leveraging big data in a way that benefits their bottom lines. 2013 is the year that many bankers will turn to big data analytics to move their organization forward.

A new generation means a new approach to marketing. The folks over at SAP suspect the generation just starting their banking lives in 2013 may never visit a physical branch. In response, banks will need new ways to analyze and anticipate customers’ needs, tempt them with the right offers and services and reward their loyalty.

“Banks will combine existing and real-time information of a customer, transaction and product to integrate it with applications like location-based services,” says Rajashekara Maiya. “Transaction history will emerge as a way to identify new product and service requirements, or push contextual offers.”

Customers will take center stage. “Many of us have had a credit card transaction declined at some point, often for no clear reason. That’s an example of an embarrassing and inconvenient customer experience that is frequently avoidable,” writes FICO analyst Andrew Jennings. “Analytics gives banks the ability to use a scalpel more often than a hammer. In other words, to understand the context of a situation and act in a more personalized manner. Banks will utilize that scalpel more in 2013 as they search for ways to build relationships by offering more convenient and tailored services, and attempting to avoid driving away customers who don’t feel valued. In 2013, predictive analytics will play an increasingly important role in helping banks find the right balance.”

Talent shortage. “With demand for analytic talent growing, experts expect a shortage of 100,000-200,000 analytics positions in the U.S. alone within five years. I think the problem will be particularly acute in the banking sector,” says Jennings at FICO. “New regulations are forcing banks to modify business practices, restless investors are demanding a higher return on capital, and an unsettled economic picture is making it difficult to anticipate future market conditions. The need for analytic modeling in banking has never been greater.”

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In 2013, the team at MyBankTracker says we can expect major growth of mobile payment programs. Isis will expand its trials to more cities while Google Wallet tries to attract iPhone users through the launch of a “remotely controlled” physical card. And, the simple integration of barcode-based payments will lead to their increased adoption.

But does that mean will we all be packing mobile wallets? No, says Odysseas Papadimitriou, CEO of Card Hub. “There was a lot of buzz surrounding mobile wallets in 2012,” he says. “While consumers might be excited about this new technology, widespread adoption isn’t going to happen in 2013. There are just too many factors conspiring against it, from lingering security concerns to market fragmentation and unsatisfied infrastructure requirements. A number of dominoes will need to fall first.”

“Financial institutions have an opportunity to be a leader in the changing world of payments,” adds Ginger Schmeltzer, SVP of emerging payments at Fiserv. “But they need to act now.”


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Word-of-mouth marketing tied directly to the customer expierence. In PwC’s 2013 US Retail Banking Report, financial institutions are encouraged to see the marketing opportunities in both good and bad customer experiences. “Help your story get told,” they advise. “Fifty percent of recommendations are due to good experiences, not discounts or free products. Customers can become your best marketers.” But… “Fix the bad first. Two out of five customers shifted business to another bank after a bad experience. Turn issues into opportunities to build loyalty.”

Focus, focus, focus. “Retail financial institutions should resolve to focus,” says Tim McAlpine, CEO of Currency Marketing. “This could be a focus on a singular product or a singular type of customer. Don’t forget about everything else, just put 70% of your energy into one big thing that your institution can be the best at in your marketplace.”

Mergers create marketing opportunities for everyone. “Merger activity should accelerate, changing the competitive landscape in many markets,” says Joe Sullivan at Market Insights. “In those markets, there is opportunity — not just for buyers and sellers, but for the focused institutions who have a complete understanding of their market and the preferences of disaffected customers. You are leaving money on the table if you are not taking action.”

New changes, new competitors. “Retail banking is going through fundamental change,” observes Tom Noyes, an industry observer. “Bank brands, fee income and NRFF are declining. Big dedicated branches will be replaced by more self service. Mass market retail will see significant leakage into products like pre-paid. Retailers and mobile operators will find themselves in a better position to profitably deliver basic financial services to the mass market than banks.”

Themes du jour. “Mobile banking, onboarding and gamification may be some of the buzzwords marketing professionals in the credit union industry are using throughout 2013,” notes the Credit Union Times.

Cross selling. Industry observer Bradley Leimer says the single biggest resolution banks and credit unions should have for 2013 is a “focus on onboarding, acquisition opportunities, marketing automation, growing new customers, and cross-selling to existing customers.”

You can’t ignore your internal culture any longer. “Many institutions (by necessity) have spent the last four years confronting recessionary and regulatory challenges, while leaving issues of workplace culture for another time,” Joe Sullivan writes for Market Insights. “That time has now arrived. Employee behaviors, not just customer behaviors, are shifting and 2013 will be about building a passionate, committed workforce across multiple generations.”

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Comments

  1. Great article! Very comprehensive summary and both the challenges and opportunities in the year ahead. Thank you!

  2. Very comprehensive. Here is my two cents.

    Reread the above article but read it differently. Replace mobile with connected device. Mobile is too narrow. Many people think of mobile as only smartphones and not tablets. Additionally, the future is not just about what we know it is also about what we don’t know. Translation, connected devices is not just smartphones and tablets. It includes those devices that are not out yet. If you focus on connected devices you have a better chance of keeping up with the screens your clients use to connect with your company today and tomorrow. Having said that, in some contexts mobile is just perfect. Don’t forget context.

    In other parts of the article replace Big Data with just plain old data. Why? “Big Data” is just hype. All we have is data. Data is not big. Data is not small. The focus should be on the proper use of data. In simple terms the proper use of data requires systems that can talk to each other, relevant data actually being captured, some level of data governance, a data quality process, and the fortitude to actually use data in the work place. Bradley mentioned marketing. Data use in marketing is what I call a DUH strategy. Marketing has and always will be data driven. Sales needs to be data driven as does finance (I don’t just mean the old fashioned standard financial reporting), compliance, risk, and well everything in every business should be data driven. For many, the use of data throughout an organization will be a fundamental shift. Don’t get lost in the hype.

    My comments are simple and just scratch the surface. The take away a reader of the above article should have is we are in the midst of a fundamental shift. The way we conducted business in the FI space over the last several decades is dead. So adapt or die.

    P.S. What Zil and Tim said.

  3. Jay Kassing says:

    David,

    You are right on both accounts. Connected device is a more descriptive and accurate expression of “Mobile.” Also, your experience with mining “data” clearly comes through on your exasperation with the “Big Data” topic. What is the hullabaloo? I agree completely. If your institution can’t use the data you have now, what will having more data give you? Nothing. Unless you have someone who knows what the data means…

    Nice article.

  4. This is a great article. However I totally agree with David Gerbino.

    As the BDM of Australia’s biggest independent online trading desk I am involved daily in RTB advertising (or real time bidding) across online display, video, mobile and social arenas.

    Studies clearly show that that people are using their phone more for search and price/product comparisons. However we overwhelmingly prefer to complete our transactions in person or via PC/Laptop. Also mobile adverts are notoriously hard to monitise compared to mainstream display or search. So you realistically need to take a multi-device approach and optimise campaigns based on the channels that offer best audience reach, click through and conversion.

    Also missing is the low hanging fruit of online advertising – retargeting. typically only 1 – 5% of website visitors actually transact in some manner. That 95 – 99% of visitors are your quality prospects. They have shown interest and you have spent money, time and creative energy to get them there. Retargeting allows you to track them once they leave your website and re-serve them with relevant creative and offers to bring them back. Funbox has just introduced cookieless dynamic retargeting for the first time to Australia and elsewhere.

  5. Lisa Kuhn Phillips says:

    Excellent read. Great comments that get to the core of common sense business (and terms). I’ll add one more idea… The acronym: ECM. The real world words: Effective Communication Management. The successful differentiators will connect with context.

  6. Lauren Hand says:

    I am trying to find out what a good Marketing Analytics software is for our bank. We currently use a database that stores all our customer accounts and information but I do not have any program to use to identify our best customer, create leads or cross-sell to our current customers. I am not sure if an analytics software, marketing dashboard or CRM is the best for us to accomplish our needs. Any advice?

  7. Lauren,

    I am studying this issue and would like to compare notes. Please feel free to reach out to me at carl_izzi@yahoo.com. Thanks.

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