What Should Your Internet Banking Platform Look Like?


internet-banking-06-24-15.pngInternet banking is undergoing a transformation. In many ways, this evolution of the legacy Internet channel is being driven by the emergence and potential prominence of mobile banking. According to a report from the Federal Reserve, Consumers and Mobile Financial Services 2015, “the prevalence of mobile banking continued to increase, reaching 39 percent of mobile phone users with bank accounts and 52 percent of smartphone users with bank accounts.”

As Internet and mobile channels continue to evolve, so does the proliferation of other device categories, such as wearables, including smart watches. The expansion and convergence of these new categories give financial institutions the ability to better service customers and create a consistent user experience regardless of channel.

This is not about a single channel handling all customer interactions; users will likely choose all channels, and some will likely lead over others. Rather, it is about a blended experience across channels. Ask the management team of any community bank if they still offer telephone touchtone banking and the answer is yes. Channels rarely go away and there is nothing wrong with that. Again, the challenge is blending all these categories.

How Does This Impact Internet Banking Today?
The Internet channel can be classified as legacy technology. The way a customer uses the channel, the screens they see, the features available to them, are all “set-in-their-ways” and reflect a certain very specific design sensibility. No doubt this is a powerful legacy, so much so, that when the industry started creating the mobile banking experience, it was highly influenced by the Internet. Internet led the charge. Internet defined the standards. Then something changed. Mobile devices became ubiquitous.

According to the Federal Reserve study, as of December 2014, 87 percent of the U.S. population ages 18 and older owned or had regular access to a mobile phone. The smartphone was the most popular type: It runs applications in addition to accessing the Internet and functioning as a phone. The application is the single most significant part of this evolution toward smartphones. Easy to use, much more fun than the Internet and reflecting a new design sensibility, the smartphone marked a departure.

Mobile Is Now Driving the Evolution
The Internet needs a refresh. It is a somewhat old and stale legacy technology that has not been seriously refreshed in a decade. This technology and design refresh is being led by mobile. Internet banking will start to look like mobile banking apps, which have proven to be “cooler” and easier to use. And all of them will start to have a consistency in the features offered and their look. The customer wins. They get to do whatever it is they are trying to accomplish, via whichever channel they choose. The end result is a platform that is convenient, consistent and engaging.

The Best Customer Experience
There are many industry terms that try to encapsulate the concept of the many customer channels. The phrases “digital channel” and “omni channel” represent some of this industry jargon. We all generally agree that the goal is to have mobile, Internet and other systems provide a consistent experience for a customer. Bank boards and management teams should demand that the channels converge around whatever makes the best sense for the customer. The technology and the design sensibility are all avenues to the primary goal of creating satisfied and delighted customers.

The good news is that this is attainable today in a way that was never imagined a decade ago. The technology involved in delivering customer channels, such as Internet and mobile, have matured and in many ways blended due to industry forces and the regular movements of the technology markets. This is good for bankers and good for customers. This next step of transforming Internet banking will create the next big opportunity for banks to differentiate their digital strategies.

Banks Try On Wearables


5-6-15-BryanCave.pngHaving the world at your fingertips—that’s been a common description for the advent of the Internet. But now there’s talk of technology taking on a different part of the hand: the wrist. The growing popularity of wearable technology is causing some banks and other financial companies to try on systems for this twist on the ticker. How far banks ultimately go will be tested by time. 

Modern wearables have been on the market for at least a couple years in forms such as glasses and fitness bands, but analysts are crediting more recent interest from banks and other companies to the introduction of the Apple Watch. Apple officially announced prototypes last September, and the product released into the market on Friday, April 24. It has been reported that more than 1 million of the devices were pre-ordered, and some models are on back order until June. As noted in a March 2015 article in The Economist on the wearables trend, Apple has a history of popularizing existing technologies: first with the Macintosh computer in 1984, then the iPod in 2001, the iPhone in 2007 and the iPad in 2010. And it may very well do the same for wearable technology.

Not surprisingly, much of the banking foray into wrist wearables so far—which is still small but growing daily—has involved partnering with software companies or labs to create banking apps compatible with the Apple Watch. In March, New York-based Citigroup was the first banking company to announce an Apple Watch app, Citi Mobile Lite. On the day the Apple Watch released, TD Bank Group in Toronto, Canada, publicized the launch of an Apple Watch app that will be an extension of its current iPhone app. But it’s not just national banks participating. The Greater TEXAS Federal Credit Union and the Alabama Teachers Credit Union are among the early launchers of “SmartwearApps” for the Apple Watch.

Banks and other financial companies also are branching out beyond Apple Watch. Notably, Wright-Patt Credit Union in Beavercreek, Ohio, has developed an Android Wear app that will automatically sync a user’s device with the latest version of its existing banking app. Further, American Express in New York is teaming up with Jawbone, a consumer technology and wearable-device company, to give U.S. customers the ability to tap to pay with a Jawbone fitness tracker.

Banks introducing wearables generally have given similar reasons for entering the market, such as:

  • Customer Convenience. Wearables give consumers quick, easier access to some of their most-used banking features, including the ability to check balances and transaction history, receive payments alerts and locate branches. Some apps even have voice-recognition technology.  There are banks that see smartwatch apps enhancing customer loyalty, particularly among millennials, who are expected to use wearables more.
  • Increased Profits. This month Fortune Magazine noted that the growth of mobile payments is good for banks and credit card companies because they encourage spending, citing a CNBC study that mobile payments could result in spending increases of 12 to 18 percent. Smartwatch apps may be a key part of the wave.
  • Fraud Reduction. Wearable devices like the Apple Watch are equipped with near-field communication (NFC) payments technology, touted as a secure payments system less vulnerable to attack.  As wearable technology also is being noted as a means for consumers to track personal data, banks potentially accessing the collected data to verify customer identity in transactions has been cited as a possible benefit.

But the very reasons banks are giving wearables a try are among the ones that may prevent them from catching on in the industry large scale: despite the convenience of smart watches, for example, customers may not see a value long term in a device that, at least at this point, does only some of what the ubiquitous smartphone already can do. Twenty percent of Americans currently own some form of wearable device, PricewaterhouseCoopers noted in connection with its report, The Wearable Future, released in October 2014. Although this number is expected to rise, it is not yet clear by how much. The level of popularity of products such as the Apple Watch and Android Wear likely will determine if more banks invest in wearables. Moreover, if the payments technology associated with the devices proves not to be as secure as expected, banks may be less inclined to see a value in wearables. These are all indicators to watch for.