I've written thousands and thousands of words about personal finance management (PFM) including seven deep dives in our Online Banking Report (see note 1) and 130 131 blog posts. However, I've never articulated the behavioral aspects as well as NY Times software developer Andre Behrens who pens the occasional post at NYTimes.com.

In his Tuesday article, Gamification Done Right, he uses (Bank) Simple as an example of a great use of game mechanics: 

Simple.com is the most beautiful bank site I’ve ever seen...but aesthetics are just a baseline. Because what Simple actually wants to do is get you to play a game. The game is called “Master Your Finances”....

He then describes a key part of this game, which Netbanker readers will recognize as Simple's Safe-to-Spend balance:

If there’s one number you’re guaranteed to see on a bank site, it’s your balance...I take this number for granted...what other number could there be? But once you start playing the Simple Game, you realize this is a number that matters to the bank much more than it matters to you. What you care about is how much money you can use right now.

He goes on to write about how Simple encourages users to keep savings in unique buckets associated with goals:

...saving has always felt to me like denying myself fun spending opportunities. In the Simple Game, the opposite has proven true. Because every goal has a name and a committed plan, and because the transactions are presented in small increments, saving has become an anticipatory pleasure.

Bottom line: Read the whole article. It may help reinvigorate your efforts to infuse basic PFM concepts directly into everyday online/mobile banking. Every customer should be able to reach the first level of the finance game simply by logging in. How do you take it to the next level? That sounds like the makings of post #132, 133, 134 .....      

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Note:
The OBR PFM library consists of three reports penned a decade ago on account aggregation, the PFM enabling technology pioneered primarily by Yodlee. Then four reports in the modern PFM era looking at features, benefits and bundles (subscription required):
-- June 2012: PFM 4.0 here
-- May 2010: PFM 3.0 here
-- June 2007: Social Personal Finance here
-- Aug 2006: Personal Finance Features for Online Banking here
-- July 2003: Account Aggregation 3.0 here
-- Aug 2000: Account Aggregation 2.0 here
-- Oct 1999: Account Aggregation

by Dr. Dan Geller

Dr. Geller is EVP of Market Rates Insight, which provides competitive research and analytics to financial institutions. He can be reached at dan.geller@marketratesinsight.com.

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One of the most significant findings from our  latest study on banking fee-revenue optimization (see note 1 below) is that the majority of consumers say they will pay monthly subscription fees for value-added financial services (see chart below and list right).

The average monthly fee that more than half (55%) of consumers are willing to pay ranges from $2.17 to $5.06 per month for each service. Of course, these stated amounts are an indication of relative perceived value rather than a pricing guide.

Furthermore, we found that consumers are willing to pay a higher overall monthly fee for the bundle than they would for each of the services individually. For example, study respondents indicated they are willing to pay $3.07 per month for a credit score report, $2.43 for account alerts and $4.27 for prepaid card for a total of $9.77. However, when the three were offered as a bundle, respondents valued them at $10.51, an 8% premium.

Bottom line: We believe there is a path for financial institutions to move customers "from free to fee" by bundling services in the optimal way.  

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Chart: Consumer Interest in Value-Added Banking Services

 
Source: Market Rates Insight, June 2013

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Note:
1. For more info on these finding, MRI is offering a free webinar on Tuesday June 18 from 2:00 PM to 3:00 PM Eastern Time. Click here to reserve your space. The full report will be available for purchase beginning June 21 at <marketratesinsight.com>.

It's no secret that a first-time online banking visitor has far different needs than the power user returning for login #1,712. But most banking sites provide the same visual login treatment for all users.

That forces new users to search out buried "getting started" or "register" links. Or they will make time-consuming, and expensive, phone calls to customer service for guidance.

And the one-size-fits-all approach is not optimal for experienced users either. As they skim by the static boilerplate in the banking version of banner blindness, power users miss the chance to learn more about new features and promotions.

The new design unveiled last week (4 June 2013; see old look in last screenshot below) from TD Canada Trust aims to solve both problems: 

• After selecting login on the homepage, new users are shown a page with prominent help on how to get started along with links to register, take a tour, get help and so on (see first screenshot below).
• Previously logged in visitors see a page featuring a banner below the login box emphasizing a single online banking feature and contextual links on the right (see second screenshot).

Bottom line: I like the concept. And eventually the bank can segment even tighter showing different looks for intermediate users, mobile-primary customers, French-speaking customers, and so on. Even in this first iteration, TD could make it better by:

• Greeting/welcoming the customer
• Providing more detailed instructions (e.g. What's the optional "description" box for?, Why are they asking for access card number or username?)
• Adding more graphical emphasis to draw the user's attention

For reference, see how Chase Bank handles new and existing visitors.

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TD Canada Trust login page: First-time user (4 June 2013)
Note: Getting started info placed in right column

TD Canada Trust login page: Existing user
Note: Online banking tips are displayed under the login box and contextual links are shown on right, in this case a link to the mobile app

Previous login page (3 June 2013)

There are a few dozen financial institutions I follow closely for inspiration. And one of my favorites is University of Wisconsin Credit Union. The 180,000 member, $1.6 billion asset CU, always seems to be at the forefront.

Its latest feat: Remote deposit capture from the mobile web <m.uwcu.org>. That's not a typo. Mobile deposit capture WITHOUT a (native) app!

UWCU is the first in the world (as far as we can tell), that allows smartphone users to deposit checks right from the mobile web (see the CU's blog post for more info). The CU taps new controls in mobile browsers (iOS and Android) to operate the mobile camera to capture paper checks. Image processing and fraud detection technology is powered by Ensenta (with Mitek IP).

The in-house UWCU dev team so far has eschewed downloadable apps in favor of mobile-optimized designs that work cross platform. They are working towards full responsive design, so any user can visit the UWCU site from any size device and receive the optimal design, complete with touchscreen controls when applicable. They are targeting year-end completion for the full package.   

But as much as Eric Bangerter (VP Ecommerce & Internet Services) and his team believe in the mobile web, they plan to bow to member pressure and offer a simple native app so they have a presence in the app stores (note 1). As Bangerter notes in a recent interview at BankInfoSecurity.com, "Not being in an app store today is kind of like not having a Google (search) result." 

Bottom line: I've been a huge believer in native apps. It's how legions of smartphone users have been trained to access services (see note 2). Many normal people don't even understand the "browser construct" in a mobile phone. That said, I see the logic in UWCU's approach. Like most businesses, they must prioritize their investments. And now that the mobile browser can tap the camera (and GPS), it makes sense to push its mobile power users to the mobile web. But I'm glad the CU is also creating a lightweight native app to satisfy the rest.

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UW Credit Union's mobile-browser based deposit capture in action (4 June 2013)
Note: Watch the full 90-second demo posted in the UWCU online banking blog, Source Code.

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Note:
1. The lack of a native app has seemingly not slowed down its mobile growth. The CU has 36,000 mobile users, an impressive 20% of its member base.
2. For more info, see our recent Online Banking Report: Digital & Mobile Wallets (published Feb 2013, subscription).

by Michael Nuciforo

Michael Nuciforo is a Mobile Banking Consultant at Keatan. He previously worked at ANZ on a number of developments, including goMoney, and more recently managed the UK retail portfolio as Head of Mobile Banking at RBS. Follow him @TheBoldWar.

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There were 2,277 of them last year totaling $45 billion. And no, that’s not last year’s football salaries. It was the volume and value of tech startup acquisitions. Yet banks barely participated. Could acquisitions be the mechanism for banks to rapidly innovate? Is it time for banks to shop before their profits drop?

Mergers and acquisitions have been part and parcel of the technology sector for over three decades. The industry wouldn’t be what it is today without it. Google Ventures invests over $400 million annually in a wide variety of startups. Facebook has already acquired over 35 businesses, with Instagram being the most notable at nearly $800 million alone. It’s big business indeed.

Why do the biggest, most successful and talented tech businesses, feel the constant need to acquire? It feels counterintuitive, but it makes perfect sense. The industry is so competitive that one day you’re My Space and the next day…well, you’re My Space. If executed correctly, acquisitions have four core benefits:

• New Capabilities: Acquisitions are the quickest way to shift the dial or plug gaps in your offering
• New People: It is a great way to bring on fantastic talent
• More Protection: By buying the competition you can protect the status quo.
• New Revenues: Acquisitions of cash-flow-positive businesses can immediately improve the bottom line

But where are the banks? Why do they seem to ignore the opportunity to acquire or partner? Of the 2,277 acquisitions in 2012, only three were by banks. We believe banks must start protecting their position by using strategic acquisitions to implement the new products and services.

For inspiration, banks needn’t look far. Capital One, which has the sixth-largest deposit portfolio in the US, is already taking up the fight. Off the back of Capital Labs, its own start-up investment venture, the bank has established three offices in the United States. Startups can work there, obtain support and use Capital One API programs. Oh, and of those three bank start up purchases last year, Capital One completed two of them.

In May 2012, Capital One acquired BankOns, a small San Francisco start up that won Best of Show at FinovateSpring 2011 (demo video here). It also purchased Bundle in late December (demo video).

BankOns provides a sophisticated offers and coupons program and Bundle is a data analytics and PFM platform. Besides acquiring the technology and intellectual property, CapitalOne has also had to find room for a new corner office. BankOns founder Joshua Greenough was installed as Director of Innovation immediately after the acquisition. Finally, Capital One has already made at least one acquisition this year, picking up Verifone’s Sail mPOS unit, and renaming It Spark Pay.

The other big banking acquisition came from Chase which spent $40 million late last year on Bloomspot, an offers and coupons platform. Bloomspot comes with a 100-strong team instantly boosting the Chase Offers service. Chase had plans to hire substantially over 2013, and through the Bloomspot acquisition, they filled that gap instantly.

While these deals represent some progress by banks, it will be interesting to see if they pay off. There are numerous risks and considerations for banks looking to play in the tech M&A game:

• Talent retention: Banks may have challenges integrating and retaining new talent. Entrepreneurs and startup talent may not find hierarchical banks the most exciting long-term place of employment. Banks should therefore place a premium on acquiring smaller start-ups with management teams with previous banking experience. They are more likely to take the step back into the industry and stay.
• Risk aversion: Banks typically only like to work with recognized quantities, hence the fast follower mentality. Banks may struggle to commit to deals considered high-risk. Therefore, it may be better to invest in a small portfolio of smaller businesses rather than a single large deal.
• Proving return on investment: It’s not easy to measure the true cost and revenues from a new business endeavour, especially within a large hierarchy of overlapping services. But showing that the deal paid off is the first step towards doing a sequel.

Ultimately, it is important to ensure that the vision and aspirations of both businesses are aligned. While fintech startups may not initially aspire to be acquired by a bank, money and scale talks loudest. Many of the giant payment companies such as American Express, Visa, and MasterCard have made numerous acquisitions.

With FinovateFall just three months away (Sep. 10-11), there is still time for banks to think strategically. Don’t go to just look around and swap a few cards. Don’t just think,”Can we replicate that?” Instead, go with a different point of view and figure out what businesses you could acquire or exclusively partner with. Decide whether you are looking for a particular capability, skillset, or to simply protect your turf. Look out for your own BankOns, Bundle or Bloomspot. In the banking industry, sometimes all you need is one other bank to do it and everyone follows. Oh, that’s already happened…