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.
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.”
Everything 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.”
Add those mobile features as fast as you can. “Adding remote deposit capture, mobile alerts and enhancing mobile app features will be a focus for smaller to mid-sized banks,” says Mike Panzarella at Perficient. “Look for large banks to expand on their mobile strategies to include smart phone capabilities around imaging, payments and location-based services. The mobile banking experience is the foundation for a bank’s digital persona.”
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.”
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.
“Big data continues to be a controversial, yet growing technology in banking,” notes Elizabeth Dias at Perficient. “In financial services, the ability to use tools to understand and interpret Voice of Customer (VOC), risk and fraud patterns, and, in concert with mobile banking apps, offers real-time segmentation to build customer loyalty and retention, and the highest return in terms of value.”
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.
A big part of the digital future is data. “Financial institutions must become more data-centric to be able to transform their business models and support both new and existing products and services,” cautions Mike Panzarella at Perficient. “Data governance and master data management will be fundamental to an organization’s success in the years to come.”
“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.”
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.”
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.”