Are You Uncomfortable?

I happened to catch part of an interview with Paul Azinger on ESPN’s “Jim Rome is Burning.”  They were discussing Tiger Wood’s decline and possible return to the PGA tour.  Paul mentioned that since Tiger became a professional, he only plays on familiar courses.  Now I understand why I never hear of him being at minor tournaments.  His whole game plan has been to master the few courses he plays on.

This sounds very similar to the banking industry.  Decisions are still being made based on what happened in the past.  Ron Shevlin posted a graphic on his blog recently about the declining branch channel.  Yet executives still have increasing branch goals as though branch traffic is going up, not down.  There also isn’t much emphasis on other channels that customers obviously seem to prefer.

Like Tiger, they just want to stick to what they know and what worked in the past.  Well, Tiger now has the lowest ranking he’s ever had in his career.  Banking is going through a similar struggle.

The question is, will executives actually start to make decisions based on the changes in the industry?  Telling the rank and file that “banking has changed” doesn’t mean much when your strategic plan is to do more of what you did in 2002.  Just like Tiger needs to heal and improve his fundamentals, bankers need to do the same.

I think playing new courses could help Tiger, and capitalizing on the changing environment can help bankers.  Going outside your comfort zone is how you grow and become better.

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Categories: Strategy Tags: ,

Mining Online Gold

Watching the keynote from yesterday’s Apple WWDC gave me a whole lot of ideas for cool banking apps.  One thing that stood out to me was the $2.5 billion that had been paid out to developers since the launch of the App Store.

One reason that developers have stayed on the Apple bandwagon is that they make it so easy to get paid.  Apple tries to make everything is simple as possible.  Giving developers tools that help them get paid quickly and view reports about sales is one way to keep them happy.  If only banks and credit unions did the same.

Lately I’ve been working on my secret project, code phrase “Rice Krispie Treat.”  With some of the planned features, I have need of a merchant account.  Every single bank and credit union that I viewed online offers business services.  Unfortunately, I have to call someone and set up an appointment to get started.

Compare this with companies such as PintPay, Chargify, Recurly and CheddarGetter.  In about thirty minutes, I can sign up and be ready to accept payments on my website, all from the comfort of my couch at home.  Actually, it would take that long if I wanted to fully integrate their gateway into my site.  For basics, it’s less time than it would take to open a checking account.

Commercial customers are the lifeblood of a financial institution.  Giving them tools that help them run their business better should be a higher priority.  They need more than online banking.  Besides, if I can sign up my business for online banking while online, I should be able to obtain other services online also.

Why I <3 My Big Bank

Steve Topper, over at Financial Marketing Insights, brought up an interesting question a few days ago: why would anyone with a lick of common sense continue having their checking account with any of the nation’s four largest banks?  Well, I happen to think that I’m smarter than the average bear, so I’d like to respond to that question.

First, let me say that I do understand where Steve is coming from.  I used to work for a large community bank and I’m also a fan of credit unions.  But I still do a majority of my banking with one of the big four.  There are really only two reasons that I stay there:

1. They have ATMs coast to coast
Years ago, I used to travel a lot.  Now, I anticipate traveling even more.  It’s nice to know that wherever I go in the US, I can find an ATM for my bank.  I do realize that credit unions actually have a larger network (which is something they DON’T play up enough, if you ask me.)  It all comes down to location, location, location. 

With my former employer, as soon as you left the coast (and I mean a county or two over), you were subject to ATM fees.  Actually, that’s no longer true.  There is just a perception that you have to pay a fee.  You can use an ATM if it’s in the MoneyPass network.  However, it’s not really advertised, so they are like credit unions in that regard.

2. Better technology

How many banks and credit unions have mobile banking through the mobile browser?  How many have an app?  How many have text banking?  Now, out of the ones have text banking, how many offer transaction alerts? Let’s be clear, mobile banking through the browser doesn’t have a big adoption rate for a reason.  The FIs that are really growing mobile banking faster than the industry rate have text banking with transaction alerts. 

With very little marketing, my former employee blew away Bank of America’s adoption rate because they had text alerts.  However, most FIs don’t offer this feature.  The big four all have text banking.  They also have apps for smart phones and have either launched or plan to launch a tablet app.  Here are some other services they offer:
– Online loan applications
– Online account opening
– External transfers
– Deposit through ATM
– RDC using a smart phone
– PFM

In customer segments, I think I fall into the “tech-savvy and prefer self-service” segment.  I want to perform my bank transactions through any channel that suits me.  I also want to be able to go an ATM without incurring a fee, no matter where I am.

The smaller banks and credit unions aren’t there yet.  Heck, I have a feeling that most of them are still trying to push through the business case for better technology to upper management.  But to most people, a checking account is a commodity.  Although my account doesn’t say “free”, it is free, provided I stay within the required conditions.  For the life of me, I don’t see what is so bad about this.

At the end of the day, customers just care about whether their money is safe or not.  Also, can they get to it any time/way they want?  I have never been charged a fee that I didn’t know about.  But then, I tend to read the fee schedule on my account.  For the times I was charged a fee, I was able to get it reversed most of the time.  For the times that I wasn’t, there was a lesson learned.

I think that as an industry, we need to get past this “no free checking” = “bad bank/credit union”.  There are a lot of happy customers that are willing to pay for peace of mind and multiple banking channels.  Odds are, these are the customers banks and credit unions would want. Offering a free checking account isn’t going to make them open an account.  That’s just one of the many bullet points they’ll be looking at.  They also know that “free” doesn’t necessarily mean better.

Categories: Marketing, Strategy Tags: ,

Banking On Rails

Over the years, I’ve watched the Ruby on Rails (RoR) community really grow.  Being a Delphi (and classic ASP) programmer, the language really appealed to me.  I still think Delphi has the best object-oriented implementation in the client/server environment.  Because RoR seemed similar to me, I started reading up on it a few years ago.

RoR is open source, which wasn’t an option for use at work, but I loved the potential of the language.  Now that I’ve started on my magical journey, I’ve decided to dive head first into the language.

Over the years, I’ve built quite a library of books and PDFs on the language.  However, I’m more of a “hands-on” kinda guy.  So last month I attended the Ruby on Rails course offered by Pragmatic Studio.  This class included three days of hands-on training and was taught by Chad Fowler and Dave Thomas.  Considering the contributions of these two to the Rails community, I’m not sure I could have had better instructors.

I highly recommend this course and will be taking Part II once I have a bit more experience under my belt.  The only criticism I had was, there wasn’t an “answer key” given at the end for all the exercises.  It would have been nice to use as a reference.

My friend Tom Wilson, over at Jack Russell Software, also recommended Code School, which is developed by Envy Labs.  There are two Rails courses available on the site, Rails for Zombies and Rails Best Practices. Both are split into five lessons with multiple exercises that you complete in the browser.  If you get stuck, you are able to get hints that will help you complete the exercise.

I went into these courses thinking it would be about basic stuff that I can read in any Rails book.  However, I was pleasantly surprised.  Quite a few of the exercises dealt with material that was more advanced than the material reviewed with Pragmatic Studio.  I think it would be in the best interest of any level Rails developer to go through both of these online courses.  I’m sure you’ll come away with something new that you’ve learned.  Rails for Zombies is free while Rails Best Practices is currently being offered at a discount for $45.

I’ve already started to apply the knowledge I gained from Code School into the project I’m working on.  One thing I’ve learned from the courses at Pragmatic Studio and Code School is, I really need to start digging into the Rails framework.  Also, I need to live on GitHub.  Looking over the code from other people is another great way to learn.  I always seem to find that in Rails, there’s an easier way to accomplish your goal.

If you’ve been thinking about incorporating Ruby and/or Rails into your development environment, you’ll be in good company.  There are quite a few FinTech companies that use Ruby on Rails.  Some examples are The Garland Group, Geezeo, Jwaala, and BankSimple. If things work out, my start-up will be another.

Security Questions Are The Devil

Sign-up for your bank or credit union’s online banking and you’ll most likely be asked to select some security questions and answers.  This is one of the safeguards used to cut down on fraudulent access to customer accounts.  This is also the security feature that I hate the most.

Well, let me amend that.  I hate the current, typical implementation of security questions.  The problem is, all the questions are easy to figure out if you know the targeted customer.  Lately, what I’ve seen is instead of selecting from ten questions, you now have twenty to choose from.  All this means is someone I met after I finished college may not know the answers, but a childhood friend might.

There have already been plenty of high profile examples of celebrity online accounts being hacked through security questions.  The generic choices given aren’t that hard to figure out.  A quick search on Facebook (who uses security questions in typical fashion) will answer a majority of them.  All you have to do is dig through a person’s wall posts and their profile.

A simple solution to all this is to let the user come up with their own questions.  There could even be a list of generic questions to use as a guide.  But it’s a lot better if the user types “What is your favorite cartoon episode” instead of selecting “What was your high school’s mascot”.

More Reasons Your FI Should Be On Twitter

Hubspot posted an article about facts that can help justify companies using Twitter. A few of them stood out as being important to banks and credit unions:

5. Twitter users are more educated than the general population.
63% of Twitter users have a 4-year college degree or higher, as compared to only 40% of the general population. If your product/service/company is targeting a more educated customer, there’s a good chance they’re tweeting—or will be soon.

6. Twitter users have higher incomes than the general population.
47% of Twitter users earn $50k or more per year; 24% earn more than $75k. Compare that to 33% and 18% among the general population, respectively.

8. Twitter plays an active role in purchasing decisions.
42% of Twitter users rely on this channel to learn about new products/services, and 41% of them share opinions about products/services via Twitter. Soliciting opinions about products/services and seeking out discounts/coupons/sales are also popular Twitter-based activities.

9. 67% of Twitter users are more likely to buy brands that they “follow”.
Whether interaction on Twitter is the cause of this greater allegiance or not is unclear—but it certainly seems that extra Twitter love doesn’t hurt.

10. Companies that use Twitter average 2x more leads per month than those that do not.
This, perhaps, is the most compelling reason of all to invest some time on Twitter—particularly if your target customer is educated, affluent, and tends to be an early adopter.

Read more: 10 Essential Twitter Stats

Square Gets Boost From Apple

Square, the mobile payments company, is now featured in Apple’s online store. You will also be able to purchase their device in Apple retail stores. You can read more over at TechCrunch.