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Beyond Online Banking: The Next Generation of Online and Mobile Financial Services

By Jim Bruene on April 8, 2009 4:03 PM | Comments (2)

image It has become obvious with recent events that banking and lending fuel much economic activity, both good and bad. And like it or not, banks and card issuers play an enormous role in consumers' lives. It's why online banking took off relatively quickly on the Web and will do so in the mobile channel as well.

As I reviewed the 57 applications to demo at our upcoming FinovateStartup conference (company list here), it became clear to me that these companies are the face of a new generation of online banking. One that will result in much richer and more valuable financial services than anything we've seen before.

Here are a few areas where financial institutions can help consumers help themselves: 

  • Saving/(over)spending: Too many people fail to build a cushion for the inevitable rainy day.
    • Display spending data, modeled against likely future needs, to help consumers resist the temptation to overspend
    • Encourage long-term systematic saving with tools, rewards programs, and incentives
    • Help consumers manage and minimize health care expenses
    • Automate and systemize bill payments
    • Talk about retirement planning, asset allocation, investment management, etc.
  • Credit health: Like it or not, the credit score is becoming a de facto estimate of a person's responsibility and maturity. It impacts where you can work, whether you can buy a home, how much you'll pay for insurance and loans, and even who you can date and marry. Yet, too few people, especially younger ones, understand these profound ramifications to poor credit.
    • Integrate credit scores into their online and mobile platforms, displaying the score at every login and alerting users to downward shifts in scores
    • Educate customers, especially younger ones, on the importance of good credit and how their scores can be improved
    • Provide tools to help parents introduce various financial concepts and products to their children
  • Debt management: While the "latte factor" is widely understood (e.g., don't spend too much on fancy coffee drinks), a much bigger factor is the overuse of expensive credit options and overpaying for loans on homes, autos and other major expenditures.
    • Help consumers find the most cost-effective debt financing, even if it's not at your financial institution
    • Help consumers avoid late payments, interest penalties, with alerts and automatic payment/transfer systems
  • Security/privacy/risk: This is a tricky area, but much needed. Consumers have a growing dread of loss of privacy and potential financial losses from identity theft and other financial frauds. And even though many are motivated to take measures to protect themselves, it's hard to know who to trust. Although, their brands have been tarnished for a generation by the recent crisis, most financial institutions still have relatively high esteem in matters of fiduciary duties.
    • Help customers shield private data online through security add-ons, temporary card numbers and similar tools
    • Help customers monitor their private information with tools such as credit bureau monitoring, public database monitoring, scanning the Internet for private info and so on
    • Provide resources for helping customers through fraud situations and data breaches
    • Provide safe ecommerce environments where users can navigate to vetted providers of goods and services online
    • Guarantee the safety of financial transactions initiated in recommended environments
    • Secure, offsite file storage and backup
    • Reduce risk exposures through an efficient mix of various insurance products
  • Purchase decisions: One of the things that Jason Knight and Marc Hedlund at Wesabe have taught me is the power of aggregated purchasing data. Retailers have long mined point-of-purchase data to drive marketing, pricing and sales-support decisions for retail goods. But all this data helps the seller while only indirectly assisting buyers (for example, to help keep inventory costs down). Financial institutions have the ability to turn this equation on its head by arming retail consumers with aggregated purchase data so they can see what goods and services consumers with similar tastes prefer.
    • Rank local service providers by sales volume
    • Allow users to rate purchases/providers, and provide popularity ratings
    • Help users locate others who frequent the same places (social networking)
    • Help users identify fraudulent transactions, overcharges, or overlooked subscriptions
    • Assist comparison shopping at the point of sale
  • Startup/small business management: Banks have many services for established businesses, small and large. However, startups and very small "micro" businesses are usually stuck with consumer tools that are not always as robust as needed.
    • Package of free or low-cost startup business tools and advice
    • A full-featured online accounting and CRM system that grows in complexity with the needs of business
    • Human guidance on all things financial, including accounting, expense management, taxation, payroll, retirement plans, and so on
    • Credit card processing and ecommerce services
  • Climate change/waste reduction: Banks can help reduce fuel consumption and waste on several fronts.
    • eStatements, remote deposit capture and online/mobile communications eliminate the paper used in billing, statements, marketing and routine correspondence
    • Online/mobile services reduce the need to visit branches, eliminating fuel use and pollution.
    • Leveraging payments data to guide consumers towards lower-impact products and services.
    • Expanding personal finance tracking features to encompass gas, electricity, water and fuel consumption

I'm sure I haven't covered it all. Please add to the list in the comments below.

Note:
1. These themes are primarily what we write about each month in Online Banking Report. For specific topics, refer to the list of recent reports.

Comments (2)
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2 Comments

Great post, Jim.

When I read about the firms you talk about here, I can't help but wonder: Why didn't the banks do this?

My answer: The firms you talk about are helping people manage their financial lives, while the banks are [still] focused on helping people manage their financial accounts.

Big difference.


The banks in S.KOREA are interested in the spending report service,just like "MUST-HAVE" service.

But, that service is useless for users.
They're trying to keep up with the joneses.


I'm honored.
3 years ago, I met your's site.
Your posts inspired me to work much useful financial online service.

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