Seeking Success Through Innovation

seeking-success-article.pngBanking is not known for its innovative qualities, let’s face it. One could argue convincingly that the last great innovation in commercial banking was the ATM machine, first introduced in the United States in 1969. Many mobile banking apps leave something to be desired and checks take too long to process, while non-bank competitors such as PayPal and Wal-Mart Stores Inc. are gobbling up market share for everything from payments to loans.

Commercial banking—I’m not talking about the wild ride of investment banking—is conservative for good reason. Banks have long enjoyed special status as the safe house for everybody’s money, not to mention the source of a great deal of the economy’s funding—status that has led to heavy regulation to protect that system. That conservative bone inside the body of nearly every commercial banker leads to a reluctance to spend unnecessarily on technology, or waste shareholder investment, as well as skepticism toward new-fangled products.

But technology has an important role to play in attracting and retaining customers. Boards and management teams should not sit around and watch their customers go elsewhere as the competition installs new technology and steals market share. In an age where customers are increasingly comfortable with mobile banking applications, or shopping online for auto or home loans, your bank will need to pay attention to trends. It is possible to lose customers because you assumed the old way was the best way. Do you really think people under the age of 40 are going to real estate agents to get referrals to mortgage lenders? Or are they going to Yelp, or Angie’s List or Facebook? Some community bankers have expressed a fear to me that their banks might soon become irrelevant.

Bank boards clearly have to define their bank’s strategy as it relates to technology. There is no need to be an early adopter if you don’t want to be. The biggest banks use technology to enhance customer service and improve the bottom line, including person-to-person payments and online chat, but smaller banks are definitely finding these technologies useful as well. Banks well below the $50-billion asset mark offer coupons with mobile banking, mobile picture pay and personal financial management tools. “If you are a community bank, it’s unlikely that you are going to have a world leading platform,’’ says The Boston Consulting Group’s Corey Booth. “You don’t have the resources. You might want to keep up with the Jones’ or whatever Fiserv gives you. You have to decide your posture.”

seeking-success.pngAll of this makes writing a special section on innovation in banking a challenging task. We wanted to show ways that new technology or innovative ideas really were changing the game for some banks in terms of retaining customers, increasing market share or improving efficiencies and profits. We looked for innovations, not necessarily technological ones, that made a measurable improvement. Of course, mobile banking is clearly changing the way banks deliver services. More transactions are conducted remotely than ever before, and branch traffic is dwindling. Everyone knows that. But what new mobile applications make some banks stand out in terms of ease of use and efficiencies? For some banks, mobile photo bill pay is attracting new customers. Personal financial management tools hold the promise of generating fee income. How are some banks achieving efficiencies with innovative branch designs that allow for a combination of self-service and a personal touch? At Extraco Banks in Temple, Texas, for example, image-enabled ATMs are handling about 20 percent of the $1.2-billion asset bank’s deposits. Data analytics is another innovation that banks are increasingly using to effectively target marketing campaigns. Minneapolis-based U.S. Bancorp, for example, tracks customers’ online behavior and transactions, so the bank can send personalized messages or even call them on the phone when the data “flags” them as good sales prospects. The data analysis is so sophisticated that the bank can prioritize prospects based on the likelihood of closing a sale and adjust the delivery message based on that. And finally, voice biometrics at Barclays is quickly handling security so customers don’t get bogged down in a call center “miserable moment”. And the customers love it.

While it may be a few more years before we see anything revolutionize the efficient delivery of services across the board like the ATM did in 1969, we can at least take a look at truly innovative designs and solutions that are changing the experience for some banks, and for their customers. We hoped to find those nuggets of change that are making a real difference.

Mining Data to Make Money

mining-data.pngAt U.S. Bank, big data is not an abstract concept. It is making real money for the Minneapolis-based $371-billion asset bank. The bank tracks transactions and customer online interactions to flag those for a personalized marketing message, people who might be a good prospect for a loan, for example. Recently, a branch manager used such flags to call a business customer who had recently moved a large sum out of the bank. It turned out that the customer, a business owner, was planning to apply for a loan for his business at another bank, hence the money transfer. Instead, the banker was able to persuade him to apply for a loan at U.S. Bank.

“Not only were they able to get that customer the funding that customer needed to expand his business but they were able to give him a line of credit for operating expenses as well,’’ says Richard Martino, senior vice president of enterprise data and analytics at U.S. Bank.

Big data is no longer a futuristic concept for technicians and marketers to fantasize about. Credit card companies have used data analysis to make sophisticated fraud detection and credit offers for years, but such analysis wasn’t widely used by banks for other purposes. That is changing. Even small banks now buy slices of information for targeted marketing campaigns that hit on their core strategies, rather than worrying about compiling and understanding unwieldy databases of information. The cost of such information for a variety of companies is now much more affordable than it used to be and easier to use. Driving this is data warehouses that know everything about you and that you have never heard of such as Acxiom in Little Rock, Arkansas, and credit rating agencies such as Equifax in Atlanta. The sheer amount and scope of information that can be purchased on consumers across the country is unfathomable. Data warehouses can basically find customers for you to target in marketing campaigns based not only on where they live, but what their shopping habits are, their income levels, their debt and how much investable assets they have. You can basically underwrite them before you offer them a loan via an email campaign.

Do you want to know which of your customers are getting ready to buy a home? No sweat. Buy the data. Which ones are shopping for an automobile? Check. Would you like to contact all the people who move within a mile of one of your branches within a week of their move (before they have a chance to sign up with a different bank or tell the post office)? Check again. Data analytics can be used in customer service and relationship management, as well as risk and compliance. The challenge is deciding what data your bank needs, interpreting it correctly, and executing your plan to use that data well.

“Banks and credit unions struggle with this so much,’’ says Patrick Grosserode, director of product management for Deluxe Marketing Services, a division of Deluxe Corp. in Shoreview, Minnesota. “They can’t find the mix that works. It seems like you are trying to boil the ocean.”

Big banks have hundreds of employees who work in data analysis, just trying to figure out what their data says about their customers. Some work in marketing or fraud detection or compliance management. The biggest banks might have 40 people looking at branch analytics, 50 people doing pricing analytics and 100 people doing market analytics, says Sherief Meleis, a managing director at the New York-based financial services consulting firm Novantas, who estimates that banks that use customer analytics to drive marketing, distribution and pricing can improve revenues by 3 to 4 percentage points per year, and earnings by 10 to 15 percentage points per year.

“The big [banks] have armies the size of our company churning through the data,’’ says Equifax’s Retail Banking Leader Brad Jones. “They are myopic. They don’t even know what their companies are doing [with it.] They are just looking at the data.”

To protect consumers, agencies such as the Federal Deposit Insurance Corp. require banks to issue privacy statements to consumers letting them know how their personal information will be used, and letting them opt out of certain kinds of use. According to the Office of the Comptroller of the Currency, Regulation DD—which implemented the Truth in Savings Act—established standards for marketing content for deposit accounts. The Fair Credit Reporting Act spells out the permissible uses of consumer credit reports and prescreened consumer reports. Prescreening consumer report lists is only permitted if a bank is making a firm offer of credit or insurance, for example.

The key to good data marketing is targeting your customers without making them feel like they are being spied upon. In the U.S. Bank example, where the bank was using internal data rather than prescreened consumer report lists, the banker didn’t mention the large transaction to the business owner when he called. He just asked the guy if he was happy with the bank.

Banks can also use outside vendors to drive the marketing campaign. For example, if a credit rating agency can see you are making a car payment every month for a certain amount, they can surmise what your rate is, when you will be buying another car, and tell your bank when it’s time to make a better offer. Banks have a lot more information on their customers than they can possibly sift through. But data compilation is much simpler than it used to be. Core processors such as Fiserv, FIS and Jack Henry & Associates are holding on to much of this data that their banks could use. “The great thing about data analytics these days is, it is much cheaper than it used to be,’’ says Corey Booth, managing partner of The Boston Consulting Group in Boston. Cloud-based solutions can help store data. Start-up technology firms are trying to take advantage of cheaper software. “It’s so hard, but it’s not as hard as it used to be.”

For example, StrategyCorps, which sells a checking account product called BaZing, will use the bank’s own data to help banks determine which of their customer households are profitable based on everything from debit fee income to loans. Profitable customers get the value-added checking account with coupons and other services for free. Unprofitable customers can pay $6 per month for the checking account (or opt for a no-frills account that is free if a minimum deposit amount is met). Banks from $500 million to $750 million in assets typically use BaZing. [Full disclosure: StrategyCorps is partially owned by the same investor who owns Bank Director magazine.]

Grosserode says there are several important issues that banks must sort through first if they are going to use data well. You have to define what you are trying to do. Then, you have to ask yourself if that is even possible to measure. If not, you should stop right there. Ask yourself the next question: Is it possible to generate a profit from this campaign? If there are only seven people you end up going after, that might not be so profitable. Is the segment you want to focus on stable enough not to vanish over time? How will you measure and track your success? Is your success, for example, based on the number of people who click on an online ad or the number of people who actually go through the process of filling out an application online and getting approved? Establish a control, as if you were conducting a scientific study. What might happen if you don’t do this marketing campaign, and how will you know that? Banks that don’t have sizeable marketing departments will probably have to hire a marketing firm to help make decisions and devise a campaign.

What happens if you don’t get into data analytics? After all, it sounds time consuming and expensive. The old fashioned way to generate home mortgage leads is to generate relationships with real estate agents. But those traditional avenues may not cut it anymore. People do a lot more research online than they ever used to, both for auto loans and mortgages. Younger consumers rely on recommendations from friends more than they do real estate agents, says Stephen Ramirez, the CEO of Beyond the Arc, which does data analytics for banks. People will price their mortgages and get offers online. “These innovations are beginning to take root now,’’ he says. “It is even more vitally important to develop the business strategy and match the strategy to your priorities.”

Paul Schaus, the president, CEO and founder of consulting firm CCG Catalyst, says it’s a critical time now for banks to address how they want to use data, and not get left behind. “Technology has allowed us to pinpoint our clients and attract them to our bank. If you don’t do that, your competitors are going to get those customers and you are going to be left with the customers nobody else wants.”

Will Video Kill the Teller Line?

kill-the-teller-line.pngWhen asked about technology, many bankers are quick to tell you that they want to be on the cutting edge—not the bleeding edge. But banks are slowly, if perhaps begrudgingly, adopting new technology in bank branches. And while this technology may not be the flashiest, its adoption could spell the end for that stalwart of the banking industry—the teller.

Sixty-eight percent of consumers visited a branch in June 2013, according to the Boston-based research firm Celent, and more than one-quarter of Americans cite branch convenience as a factor when they choose to switch banks. But foot traffic is declining by as much as 5 percent annually. In the age of digital banking, it’s clear that the industry’s approach to the branch must change. For many banks, this means the implementation or expansion of self-service technology.

Bob Meara, senior analyst at Celent, sees the industry heading towards an increased self-service model, with staff available when needed. “I think the teller line [will be] extinct sooner rather than later,” he says, but since sales typically occur within the branch, “the last thing [bankers] want to do is close branches.”

When it comes to technology in the branch network, “the single biggest sea change I see in branch technology…is the image-enabled ATM,” says Kevin Travis, managing director at New York-based bank advisory firm Novantas. Unlike a traditional automated teller machine, these ATMs scan images of customer deposits, whether cash or check, speeding the process for bank staff and providing confirmation to the customer that the deposit was accepted accurately. Image-enabled ATMs have been around for about a decade, but adoption has not been universal by the industry so far. Celent estimates that about 1,300 banks and credit unions in the U.S. use them—about 10 percent of the industry.

In 2005, Kennebec Savings Bank, a $792-million asset financial institution headquartered in Augusta, Maine, was just the third bank in the U.S. to deploy image-enabled ATMs, by Duluth, Georgia-based technology firm NCR Corp. In addition to four traditional branches, two 24-hour unstaffed electronic banking centers with image-enabled ATMs allow the bank to reach communities within the its geographic footprint in a more cost-effective way, processing transactions at about 10 percent of the cost of the bank’s full-service branches, says Andrew Silsby, the bank’s president and chief operating officer. He says that the bank’s 12 image-enabled ATMs handle about one-third of its deposits.

Despite the success of its electronic banking centers, Kennebec Savings Bank is still on the fence when it comes to virtual tellers, which allow consumers to interact with a member of bank staff operating from another location. According to Celent, as few as 150 banks in North America use virtual tellers—a small fraction of the industry.

“I think it’s going to take another couple of years for the vendors to work out the kinks,” says Meara, and video tellers may not be the right solution for all banks. Unless the bank wants to extend service hours or geographic reach, many don’t see a need for a remote teller.

Conestoga Bank, with $679 million in assets in Chester Springs, Pennsylvania, uses virtual tellers, also by NCR, at two locations in the Philadelphia area. Transactions at these branches are handled entirely by virtual teller machines, so branch staffing at those locations is minimal. “Anything that a traditional teller could process through the teller window, the machine can handle,” says Lori Adamski, chief operating officer at Conestoga Bank. In addition to deposits and withdrawals, customers can make loan payments and print certificates of deposit and cashier’s checks.

Conestoga CEO Richard Elko says sales have increased at these branches. The office on Walnut Street in downtown Philadelphia, once a traditional branch, now opens two-to-three times more accounts each quarter with virtual tellers than with live ones, enabling branch staff to handle more complex services. And while the bank has yet to see a significant cost savings, Elko says that expansion of the new concept by one or two additional locations without hiring additional remote staff will generate the efficiencies that the bank is seeking.

Banks should take a careful look at how self-service technology is deployed within the bank, says Cris Gunter, director at Seattle-based architecture firm Callison. He recommends moving technology to the front of the office. “Make technology the first step available to the customer,” he says.

Extraco Banks, a $1.2-billion asset financial institution headquartered in Temple, Texas, locates cash recyclers, which automate cash handling by branch staff, at the front of the branch. Transaction times have been reduced by half, according to Vice Chairman James Geeslin. Extraco designed branches to be “open and flexible, and they went all-in in terms of automating routine transactions as much as possible, whether it’s check cashing or cash handling of any sort or even opening modest loans,” says Meara. Extraco also uses machines to issue debit cards within minutes, and image-enabled ATMs account for 20 percent of bank deposits.

The successes seen by banks like Kennebec Savings, Extraco and Conestoga reveal that community banks might actually have an advantage in implementing new branch technology. “Smaller banks have been more radical,” says Travis, because they aren’t hampered by extensive branch networks and are well-connected in their communities. “When you go to make a radical change, you’re less likely to lose customers if your customers are already highly loyal to you.”

Technology is not limited to transactions. It can also help familiarize customers with a bank’s many products and services.

“The typical bank has 50, 60, 70 different products, but how do you convey that? How does the customer actually discover that you offer all those different things?” says John W. Smith, CEO at DBSI, a branch design firm. “One of the things that work is interactive digital.” Marketing messages can be quickly updated and even customized to educate consumers on the bank’s products and services.

Customers scan their ATM cards to access the electronic banking center at Kennebec Savings Bank, which not only gives them a sense of security, but allows the bank to experiment with digital signage. “We actually display a personalized message up on the digital signage welcoming that particular customer,” says Silsby. The bank has future plans to tailor the messaging to target the right products and services to the customer.

DBSI worked with $14-billion asset Rabobank N.A. to transform the bank’s Roseville, California headquarters, focusing on the bank’s client base in the agricultural community. The centerpiece of the branch is a table with an embedded interactive touch screen. While the table brings back the nostalgia of a farmer meeting his banker in his kitchen, the modern interactive screen provides information about the bank’s products, including how to open an account and sign up for online banking.

With the continuing evolution of technology, one of the biggest challenges for banks is deciding what technology to adopt. JPMorgan Chase & Co. plans to introduce palm scanners, a type of biometrics, in branches later this year, according to Chase spokesperson Trish Wexler. The palm scanners not only examine the vein patterns in the customer’s hand, but a personal identification number is still required, adding another level of security. And in the near future, it’s likely that smartphones or wearable devices could identify customers who enter a branch. “A banker could understand in an instant who it is that walks through the door…and be alerted to sales opportunities,” says Meara.

In an industry with few innovators, “if you can differentiate yourself, if you can align yourself to your target market more effectively, you have a massive opportunity to win,” says Smith. Banks that find and implement flexible and efficient solutions that please the consumer will be the winners.

Voice Authentication Takes Hold

voice-authentication.pngThe joint regulatory body known as the Federal Financial Institutions Examination Council has not updated its guidelines for authentication security since 2011, so it’s not regulatory pressure that’s causing so many forward-thinking banks to adopt voice biometrics. Nor is fraud prevention the big reason even though the technology’s primary function is to confirm identities.

The main push behind today’s voice efforts is to improve upon verification routines that have not evolved since the late 1990s. The simple act of accessing an account has turned into a potentially painful and frustrating event, with customers confronted by passwords and challenge questions they have likely forgotten. “At Barclays we called them ‘miserable moments,’” says Iain Hanlon, head of change delivery at the $2.5-trillion asset London-based institution.

Barclays knew from ongoing surveys that customers were dissatisfied with the way their identities were verified when calling into the call center. Though in line with industry standards, customers found the procedures time-consuming, unfriendly and cumbersome. “We found that we were depersonalizing our relationships,” Hanlon says.

Voice biometrics, which Barclays rolled out to its high net-worth clients in 2012, has changed the experience entirely. Now customers engage in natural conversation with agents, during which time their voice is matched against a stored voiceprint in a process that takes eight to ten seconds. Creating the initial print takes about 45 seconds. Ninety-seven percent of customers who have called in have agreed to enroll in what Barclays calls its “voice security” program once agents explain it to them.

Since the rollout, dissatisfaction with authentication routines has dissipated. Seventy-five percent of high net-worth clients say they would recommend the bank to others, up from around 40 percent before the bank began using voice authentication. In a first for a technology implementation, clients have pushed the bank to expand voice authentication beyond the call center, for example, to the relationship managers and private bankers whom they also occasionally call. “It’s been a transformational implementation,” Hanlon says.

An improved customer experience is also a primary driver for Toronto-based Tangerine Bank, formerly ING Direct Canada and now a subsidiary of $410-billion asset Scotiabank, which is currently conducting a pilot of voice authentication for its mobile banking customers. As voice authentication begins to get rolled out over the next year or so, customers won’t have to input passwords on the small screens of their devices, sometimes a tricky proposition for glove-wearing customers trying to beat Canada’s cold. “It may sound small, but these small things add up,” says Charaka Kithulegoda, the bank’s chief information officer.

Despite all the focus on user experience, security is not a secondary consideration. Bankers agree that voice biometrics offers greater security than traditional methods, although they did not share metrics on fraud reduction. “We are very comfortable in saying that this is much stronger than using a password and much more difficult to break,” Kithulegoda says.

Beyond improved security and a better user experience, many banks are finding they can greatly reduce call times through voice authentication. On a five-minute call, eliminating the minute of time typically spent on passwords and challenge questions can save $1, estimates Tamar Sharir, director of fraud and real time authentication at Nice Systems, an Israeli provider of compliance and security systems, with offices worldwide.

Voice biometrics’ three-pronged business case, combined with advancements in the technology, is leading to a spurt of investment. Opus Research, an advisory firm based in San Francisco, estimates spending on voice biometrics increased 74 percent between 2011 and 2012, and will continue to expand at a compound annual rate of 35 percent over the next five years. It helps that the technology has matured. A high rate of false positives in its early days was a negative, according to Julie Conroy, research director at Boston-based Aite Group. The ubiquity of smart phones provides another spark, she says, making it possible for customers to perform voice authentications anytime, anywhere. “Voice, without question, is here to stay,” Conroy says.

Nuance Communications, a Boston-based provider of voice software, sells its software for a one-time fee (ranging from $1 to $2 per customer) or on a pay-as-you-go basis (on the order of pennies per authentication). So, a large bank with millions of customers opting for the one-time fee will be looking at a multi-million dollar investment. Despite the potential expenditure, all of Nuance’s banking customers have realized cost savings within the first year of deployment, says Brett Beranek, solutions marketing manager at Nuance.

Regulators may not be pushing voice biometrics as an added layer of security, but it seems customers are. “It’s become a very seamless interaction,” Tangerine’s Kithulegoda says. “The big advantage is giving our customers choice and making the whole banking experience simpler and more relevant.”

Embracing a Mobile Mentality

mobile-mentality.pngInnovation in mobile banking can be big and bold, transforming customer activities into completely novel experiences. Or its scope can be narrow, aimed simply at automating tedious manual tasks. Either way, the effect is powerful. “Mobile features are definitely disrupting our user base and the industry,” says Jim Simpson, senior vice president and chief information officer at City Bank of Texas, a $2-billion asset bank based in Lubbock, Texas.

Under the category of big and bold is a mobile payment service currently in pilot at Minneapolis-based U.S. Bank, a unit of $371-billion asset U.S. Bancorp. Designed to eliminate even the smallest barriers to online shopping, the new service, called Peri, alters how consumers interact with print, radio and TV ads. Through QR codes as well as digital and audio watermarking, which embeds digital information into audio, digital and printed materials, consumers can simply point and click their phones at ads, leading them directly to a mobile web page where they can purchase the product. Customer and credit card information is preloaded, so customers don’t even have to enter their data. The time from when a consumer sees an ad for a product and then purchases it is practically nil.

U.S. Bank plans to roll out Peri this fall as a white-labeled product with one or more partners, and expects fashion retailers to be particularly interested. A product of the bank’s merchant processing unit, Peri will likely be embedded into other consumer shopping apps, say for purchasing fashion, with the goal of winning over new merchant customers and boosting processing volumes. Though the U.S. Bank name will not appear front and center with customers, the Peri app definitely pushes the bank into aspects of payments that go well beyond the usual back-end processing. “It’s a broader way of thinking about things,” says Dominic Venturo, chief innovation payment officer for payment services at U.S. Bank. “It’s different from where payment companies and banks have been involved before.”

Venturing into new areas and redefining the role of the bank is different from the approach taken by City Bank of Texas, where the more modest goal is to move simple, everyday processes onto mobile devices. “We’re not going to solve the payments equation,” Simpson says. “In the short term, we’re focused on everyday features.”

City Bank’s straightforward goal has not prevented it from introducing several leading-edge mobile applications. Simpson says City Bank was the first to let customers deactivate their debit cards via mobile. For customers who fear their card may be lost or somehow compromised, the turn-off feature offers immediate peace of mind. Once the card has been located or replaced, it can be turned back on again. “We’ve had a ton of success with that,” Simpson says. Similarly, users who are traveling can block or enable foreign card transactions. Another new City Bank service is the ability to re-order checks via mobile, rather than have to go to a branch or online.

Perhaps the biggest feather in City Bank’s cap is its early entry into mobile photo bill pay. Similar to the increasingly popular mobile check deposit, mobile bill pay lets users snap a picture of a bill to initiate payment. The data captured on the picture serves to set up the payee, eliminating the slow, frustrating process of typing in a name, address, account number and other information on a mobile phone. “There’s no manual set-up,” Simpson says. “That’s the magic of it.”

Easy set-up has a lubricating effect on bill pay usage. Ralph E. Marcuccilli, president of Fort Wayne, Indiana-based Allied Payment Network, which offers a mobile photo bill pay solution known as Picture Pay to 25 institutions so far, notes that users are more apt to pay one-off bills like doctor and dentist visits if they can simply take a picture of the bill, rather than do a manual set-up.

The hassle of incorporating bills, especially irregular ones, into online bill-paying routines has caused online bill payment usage to stagnate. Despite its long history, online and mobile bill payments executed through financial institutions account for only about 25 percent of all payments, according to Marcuccilli. He expects that number will expand to 40 percent within five years, as people warm to the idea of using photos to facilitate bill payments, and also come to appreciate the value of having all their bills stored and executed at a bank-owned site.

City Bank of Texas, which uses Allied Payment Network’s Picture Pay, has seen “tremendous growth” in the service after one year, Simpson says. Many customers are “just abandoning” the traditional online bill payment service for the mobile one—at a nearly double-digit percentage rate month over month, he says. New customers are also flocking. “We’ve documented case after case of customers who have come to us based on the mobile app,” he says, without revealing numbers. “We feel it’s an extreme competitive advantage.”

Mobile banking at City Bank has advanced so far, it has outpaced what the bank can offer through its traditional online services. As a result, the bank recently signed an agreement to use the extensive online banking system of Austin, Texas-based Q2 Holdings Inc., a provider of virtual banking solutions, which will allow it to deliver its new mobile-based services, like the on-off debit card switch, through the online channel, something its previous online banking provider was not able to fulfill.

U.S. Bank is similarly devoted to mobile. It is so taken by the power of mobile imaging to improve the customer experience that it has introduced a family of mobile-photo based services under the umbrella, Photo Banking. Photo bill pay, introduced in March 2013, is one of three related services available so far, along with photo check deposit and photo balance transfer. The photo-based services are part of a larger effort to inject more sizzle into banking. “We need to build amazing customer experiences,” says Niti Badarinath, senior vice president and head of mobile banking and payments. “So why not use imaging as a really powerful way for customers to get information into accounts?”

Improving the customer experience has led to hard and soft benefits, including more engaged customers and higher retention rates, Badarinath says. Clearly, the service has caught customers’ attention; transaction volumes for photo bill pay are expanding at a rate of 300 percent annually, although from a small base. In addition to strengthening current relationships, photo bill pay has unexpectedly come to serve as a switch kit for new customers, as they discover how easy it is to enter all their biller information. Even without a kit, mobile in and of itself is a good enough reason for many customers to switch banks, making U.S. Bank determined to stay ahead of the curve. “The better we get at cool innovations, the more we think we’ll be the bank of choice,” Badarinath says.

Topping U.S. Bank’s agenda for 2014 is photo account opening. As it has with all its photo banking efforts, U.S. Bank will work with San Diego, California-based Mitek, which provides mobile imaging to banks, to allow customers to open bank accounts using photos of driver’s licenses or other documents that are stored in their phones. In addition to imaging, the new app will likely take advantage of other features specific to mobile devices and tablets, such as the ability to touch, swipe and incorporate voice.

With more than 2,200 financial institutions already using its mobile check deposit application, Mitek is continuing to push the boundaries of mobile imaging. Its mobile account-opening app became available at the end of April, and while it has yet to be rolled out at any institution, interest is high, according to Mike Strange, Mitek’s chief technology officer. Early adopters are most interested in using the app to bring the feel of an Apple store into their branches. Instead of sitting at desks and typing in codes, roving greeters could swipe screens and snap pictures, opening accounts immediately. And by using mobile check deposit, accounts could be funded right away.

A streamlined method of account opening fits in with the industry’s push toward reduced branch footprints. Banks could even take the show on the road, pushing account openings out to community events, like baseball or football games. Wherever it occurs, the high-tech account-opening process sets the tone for the rest of the relationship. “Customers are thinking mobile first,” Strange says. “Banks need to have a process that mimics what customers are looking for.”

Infusing a bank with a mobile-first mentality requires a much larger commitment than simply rolling out a few applications. Support from the very top of the management structure is vital. U.S. Bank, for example, has benefitted from the creation of a 13-person group, headed by chief innovator Venturo, that is devoted to long-term, research-driven product development. “We need permission to be able to try new things,” Venturo says. “Without the right environment, it would be really hard to get anything done.”