The five biggest retail banks—recognized by the brand names U.S. Bank, Chase, Bank of America, Citi and Wells Fargo—control over 50 percent of total assets in the U.S. and are driving the mobile banking agenda. In a race to meet the mobile transaction needs of their customers, these banks have all conquered the most basic services that soon almost all banks will have—mobile banking, mobile bill pay, mobile deposit, ATM and branch locators and P2P payments. Now in phase two of mobile banking, these banks are in an arms race to further engage with customers’ mobile lifestyles, particularly by helping people save money when they shop.
U.S. Bank has been previewing Peri, a mobile app that will launch soon that allows customers to instantly purchase products from what they hear on the radio and television or see in a print ad. For example, if you’re watching a TV commercial, Peri can simply “listen” to it to identify the product and find the place where you can buy it.
On the surface, apps like Peri seem a bit futuristic, but many of us actually already have these types of features on our phone right now. The Amazon app uses its “flow” image recognition technology to allow iPhone users to find the product in the app just by pointing the phone’s camera at it. U.S. Bank is simply taking the best in class, “for the future” shopping features and ensuring they can deliver that functionality in a way that helps their customers.
In a recent presentation to bank executives, Dominic Venturo, chief innovation officer for U.S. Bank Payments Services, shared another pilot program that will allow the bank to be a connector between its retail customers and small business customers. With this technology, merchants can see in real time where consumers are using the app and asking to receive discount offers.
If a customer decides “I want coffee,” or “I want lunch,” they just click in the app to request a discount offer. That message is sent to small businesses in the area, which can access a portal showing all the customers who are currently requesting a deal. The merchants that rise to the occasion will pop up on a map on the customer’s app in real time.
According to Venturo, it’s an entirely different way of thinking about search and awareness offers than banking has produced in the past. The program was tested in Minneapolis and saw offer-to-conversation rates in the mid-double digits, which is an extremely impressive redemption statistic.
In late 2012, Chase Bank acquired Bloomspot, a start-up company that used credit card data to allow merchants to target their best, most loyal customers with offers tailored to their specific interests. Bloomspot was started in 2010, and by the time it was acquired, it had around 2 million members and 500,000 merchants, while raising $46.1 million in venture funding. Chase bought Bloomspot for $35 million, taking in both its technology as well as its team. While Chase has yet to announce their exact plans, they’re likely to use the tools that Bloomspot built for their own debit and credit cards and mobile app experience.
Other big banks are also snatching up or partnering with start-ups that offer shopping assistance in the form of budgeting. When BBVA acquired Simple in 2014 for $117 million, they gained only 100,000 new customers but gained the technology that’s likely to steadily grow a massive audience. TD Bank also partnered with Moven in 2014 to offer customers more advanced financial management tools in their mobile app—tools that the online bank Moven had already built for its customers.
The rest of the world, particularly investors, are beginning to take notice of this growing sector. Just last year, there were 250 investment deals involving Fintech start-up companies, and that number has been growing since 2008. More and more, big banks are funding as well as buying some of these best in class start-ups so they can use their fresh new ideas.
While many other banks are just now catching up, U.S. Bank, Chase and other big banks are now on their way to offer products and services that go beyond the basics to impact their customers’ financial wellbeing.