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New OBR Published: The Rise of Mobile Banking

By Jim Bruene on June 11, 2014 7:24 AM | Comments

clip_image002Seven years ago we published our first full report on mobile banking. At that point, you could see that it would be widely used to access current balances and transactions. However, the broader services powered by the camera (remote deposit); GPS (location-aware alerts); and the audio jack (Square) were practically unimaginable back then.  

But now it doesn't take much of an imagination to see that banking is best done on a smartphone. The screen size is perfect for managing the small amount of data needed to understand your current financial position. And the always-on, always-with-you device is ideal for handling issues that just can't wait until you are home in front of your desktop computer.

So let's no longer think of mobile as a support channel. It's the other way around. Branches, call centers, and even online banking will support mobile banking, which is destined to be the dominant form of money management for the next 20 to 30 years.

Last month, we looked at a key missing ingredient in mobile banking, the new account application. This month, we look at the advanced capabilities banks must support to make the mobile UX superior to online.


About the report


image Advanced Features for Mobile Banking (link)
A guide to the important smartphone features coming in 2015 and beyond

Authors: Julie Schicktanz, Research Analyst &
Jim Bruene, Editor & Founder, Online Banking Report

Published 9 June 2014

Length: 44 pages

Cost: No extra charge for OBR subscribers, USD $395 for others (here)


Companies mentioned: ABN AMRO (Netherlands), Amazon, Apple, Bank of America, BBCN Bank, Blippar, BNP Paribas (France), Chase Bank, Cluster, Emirates NBD Bank, First National Bank (South Africa), Fiserv, Fitbit, Google, Greater Texas Federal Credit Union, Halifax Bank (UK), Isis, Malauzai, Mitek, PayPal, Pixeliris (France), PrivatBank (Ukraine), Rabobank (US), Royal Bank of Canada, Samsung, Simple (BBVA), Square, Southern Bancorp, St. George Bank (Australia), Starbucks, USAA, Verity Credit Union, Wells Fargo, Westpac (New Zealand)

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Report excerpt:

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New OBR Published: Mobile Account Opening

By Jim Bruene on May 13, 2014 3:01 PM | Comments

image One of the biggest debates in banking today is the role of the branch. And especially its significance in new account opening. Many analysts, this firm included, see remote account opening as a better experience for the customer and potentially much cheaper for banks (thought it requires downsizing branch networks to achieve meaningful cost savings).

But so far most of the debate has been around the pros and cons of online/desktop account opening vs. the human-guided experience in branch. What’s missing in this discussion is the key role that MOBILE account opening will play going forward.

With superior technology (think OCR via smartphone camera, instant funding by taking a picture of your debit card, and real-time access to new deposits) mobile opening is much more compelling than desktop alternatives. And the technology is here today, from the likes of Mitek, Jumio and others.

Now it takes the hard work to execute via mobile channels. This report will help you get started.


About the report


Mobile Account Opening (link)
Port online account opening to smartphones to reach the sizable mobile-only segment

Author: Jeanne Capachin, Principal & Founder, CAPACHIN Research  
Jim Bruene, Editor & Founder, Online Banking Report

Published 9 May 2014

Length: 28 pages

Cost: No extra charge for OBR subscribers, USD $395 for others (here)


Report excerpt (p. 12 of 28)

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Categories: Online Banking Report

New OBR Published: Mobile Banking Security

By David Penn on March 17, 2014 4:01 PM | Comments
OBR_Mobile_Security_cover.jpg

What do financial institutions need to keep in mind when it comes to mobile security?

Our latest report Mobile Banking Security examines how banks and other financial institutions can balance safety and convenience in pursuit of a seamless and secure mobile experience for their consumers and clients.

We list fifteen different themes that will dominate the conversation on mobile banking security in 2014. From authentication to premium products for niche markets, we look at the innovations and the actual deployments that are providing safer networks for e-commerce and financial transactions for the increasingly "mobile-only" user.

Will the "wild west" that is the Android app ecosystem ever be won? How does the rise of the mobile channel make biometric security almost inevitable? Will promising security startups continue to be the target of larger tech acquirers in 2014 as they were in 2013?

These are a handful of the questions we provide answers to in our latest report on mobile banking security from OBR.

About the report

Mobile Banking Security (link)
The new channel is a boon for improving security, both real and perceived

Author: David Penn
Editor: Jim Bruene, Editor and Founder

Published 14 March 2014

Length: 28 pages

Cost: No extra charge for OBR subscribers, USD $395 for others (here)


Report excerpt:

#6 See Me, Hear Me: Senses in the Service of Mobile Security

OBR_excerpt_page13.jpg
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Categories: Online Banking Report

New OBR Published: Money 3.0

By Julie Schicktanz on February 5, 2014 9:44 AM | Comments
OBR223Cover.jpg
The report, Money 3.0: Payments Go Mobile examines the evolution of money beyond cash, check and credit cards. We also take a look at the biggest story in payments over the past six months, the rise of bitcoin. If you believe the proponents, we’ve been witnessing the founding of the “internet for money.” 

That may be true, but like Napster when it created the “internet for music” there will be substantial push-back from existing players. And this time, legacy providers will have the full support of the government to keep the newcomers in check. 

But as the music industry changed post-Napster, we expect the rise of bitcoin, and digital financial transfers in general (especially mobile), to have lasting impact on the financial services industry. The rapid rise of mobile payments at PayPal, the original alt-payments disrupter, illustrates the speed of change in the space.

This report looks at the latest developments and recommends potential courses of action for financial institutions of all sizes.


About the report
Money 3.0: Payments Go Mobile (link)
Apple, Bitcoin, & mobile apps are changing the game. What’s a bank to do?

Author: Julie Schicktanz, Research Analyst
Editor: Jim Bruene, Editor & Founder

Published: 4 February 2014

Length: 36 pages

Cost: No extra charge to OBR subscribers, US$395 for others here


Report excerpt:


A look at Fidor Bank's recent involvement in bitcoin:

OBRExcerpt2.jpg
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New OBR Published: Digital Banking Forecast Through 2023

By Jim Bruene on January 15, 2014 5:29 PM | Comments

image Alright digital banking fans (note 1), it's that time of year again for our annual look-back at the previous year, along with a fearless forecast for the rest of the decade and beyond.  

The report, Digital Banking Forecast: 2014 to 2023, includes our take on future U.S. household penetration levels of online banking, mobile banking and billpay. While online banking has been relatively flat, with low-single-digit growth, mobile has exploded, expanding ten-fold in the past 5 years and now reaching about one-third of U.S. households. We are four or five years away from the tipping point where more households bank via smartphone than by desktop.

It also includes a revised 10-year forecast for U.S. peer-to-peer lending. After growing almost eight-fold in the past two years, we expect continued strong growth of 30% compounded annual through 2023. And with the expected blockbuster IPO of Lending Club (note 2), the area will receive a LOT of attention in the press this year.

Finally, we update our list of top-10 project priorities for 2014.

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Top developments of 2013
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The report includes a summary of the top-10 developments during the year (in alphabetic order):

  • Bitcoin proves there is demand for a global virtual liquid asset
  • Coin's programmable credit card is a viral hit
  • Crowdfund investing, both debt and equity, gains serious traction globally
  • Mobile-first banks such as GoBank, Moven and Numbrs arrive on the scene
  • Mobile login gets simplified at Bank of the West, Capital One, GoBank and others
  • P2P lending moves beyond a niche as Lending Club originates $2 billion
  • Photo billpay launches at US Bank and First Financial
  • Regions Bank adds time-based fees to remote mobile deposit
  • Square and Google enable true email-based peer-to-peer payments
  • Yodlee shows the power of mobile in financial collaboration with Tandem

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New entrants into the OBR Hall of Fame
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Each year we rank the top online/mobile innovations of all time (North America). A total of 50 achievements are listed from 51 companies:

  • 18 banks
  • 5 credit unions
  • 11 non-bank financial services companies
  • 17 fintech companies

Two new entrants were added this year:

  • Capital One's non-alphanumeric mobile login, SureSwipe
  • Yodlee's mobile financial collaboration tool, Tandem 

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About the report
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Digital Banking (Online/Mobile) Forecast (link)
The next 10 years: 2014 through 2023

Author: Jim Bruene, Editor & Founder

Published: 9 Jan 2014

Length: 36 pages, 29 tables, 13,500 words

Cost: No extra charge to OBR subscribers, US$495 for others here

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Report excerpts:

Left: GoBank and Moven set the mobile bar high
Right: 10-year P2P lending forecast

image        image

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Notes:
1. Can we agree that "digital banking" equals online and/or mobile banking?
2. Lending Club could be the biggest fintech startup IPO of all time.

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New Online Banking Report Published: Digital Small Business Banking

By Jim Bruene on December 16, 2013 11:20 AM | Comments

image

There is no other issue that ignites our passion like the lack of attention paid to small- and micro-businesses by many mainstream banks. With more than 20-million small businesses, 1 in 5 U.S. households owns a small business. And that doesn't even count all the independent sales reps and part-time contractors that need help managing their more complicated finances.

There are many reasons why the smallest businesses continue to fly under the radar: smaller balances, more complex needs, widely varying expertise, challenging underwriting issues and so on. Traditionally, this segment has been difficult to serve cost-effectively.

But with technology readily available to monitor daily financial performance, respond to service requests via email, outsource credit via crowdfunding and alt-lending (see note 1), and customize online banking services, the "it's too expensive" excuse is less and less believable.

That said, it's not easy determining how best to serve the varying needs of the elusive microbusiness segment. In this report, our sixth deep-dive (see note 2) into serving small biz online (and now mobile too), we outline what to look for and how best to get started.

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About the report
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Digital Small- and Micro-Business Banking (link)
How to use mobile and online services to capture more share in this huge market

Author: Ray Graber, Graber Associates

Editor: Jim Bruene, Editor & Founder

Published: 12 Dec 2013

Length: 32 pages, 7,500 words, 6 tables

Cost: No extra charge to OBR subscribers, US$395 for others (here)

Companies mentioned: Alabama Credit Union, American Airlines CU, American Express, Aptys, Bank of America, Bank of Montreal, Bank of New Zealand, Barclays (UK), BBVA Compass, BCSG, California Bank, CAN Capital, Columbia Bank, Deluxe, FirstData, Frost Bank, iBank, Illinois National Bank, Luminous, MB Financial, Mitek, Mineral Tree, P2B Investor, PNC Bank, SaaS Markets, Square, Swift Capital, The Receivables Exchange, Vancity, Vantiv, VerifyValid, Webster Bank, Yodlee

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Notes:
1. Crowdfunding/P2P lending may well be an area that finally begins to impact traditional banking revenues. But that's still a ways away. See our May 2013 report for more info (subscription).
2. Buyers of this report will also receive a free copy of our previous Small Business Report (OBR 172/173) published in 2009. It contains additional material still valid for today’s strategists and small-biz product managers.

Comments

New Online Banking Report Published: Finovate Report Q3 2013

By Jim Bruene on October 16, 2013 2:06 PM | Comments

image We've just published our latest report, Finovate Quarterly: Q3 2013. It focuses on the latest fintech developments, especially those at FinovateFall, with full profiles of our eight Best of Show winners.

The report highlights the important funding, milestones, metrics and product launches during the past three months. In addition, there is a section on new banking business models for the next 10 years and beyond.

The Finovate Quarterly is complimentary for our Online Banking Report subscribers and is automatically delivered to them via mail. Anyone else can purchase here.

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About the report
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Finovate Quarterly  (link)
Highlights of Q3 2013, including a look at the best new products from FinovateFall

Author: Julie Schicktanz & David Penn, Finovate Group Research Analysts
Editor: Jim Bruene, Finovate Group Founder

Published: 14 October 2013

Length: 76 pages; 16,000 words

Cost: No extra charge to OBR subscribers, US$195 for others here
The printed version will be mailed to subscribers this week.

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Comments
Categories: Online Banking Report

New Online Banking Report Published: 2014 Guide to Remote Banking Products, Marketing & Strategy

By Jim Bruene on September 24, 2013 9:04 PM | Comments

imageimageHas anyone started their 2014 plan? We didn't think so. But with only 141,000 minutes until the new year (see inset), it's high time to start working on it.

And we are here to help. Our annual reference, OBR's 2014 Product, Pricing, & Strategy Guide is now available. It's a thorough resource for financial institution product/marketing managers prioritizing next year's remote-banking efforts.

The latest version was posted online last a few days ago.

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About the report
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2014 Product, Pricing & Strategy Guide for Remote Banking (link)
Embracing new business models for a digital world

Author: Jim Bruene, Editor & Founder

Published: 20 Sep 2013

Length: 76 pages (39,000 words)

Cost: No extra charge to OBR subscribers, $595 for others here

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Table of Contents

The report contains a list of every idea that has appeared in Online Banking Report or this blog (sample page, below). There are more than 1,000 possible online/mobile tactics listed in the current report, divided into the following categories:

1. Product tacticsclip_image002
A. Checking & transaction cards
B. Deposits & savings
C. Loans & credit
D. Personal finance management
E. Insurance
F. Investing
G. Payments & transfers
H. Mobile services
I. Family (children, teens, tweens)

2. Sales & marketing tactics
A. Increase online sales
B. Selling behind the password
C. Enter new markets & segments
D. Attract new residents (movers)
E. Increase referrals and word-of-mouth
F. Social media and Web 2.0
G. PR: appeal to community

3. Service, security & retention tactics
A. Increase satisfaction levels
B. Enroll more online banking users
C. Encourage/reward self-service
D. Encourage paperless adoption
E. Address security concerns

4. Small business products and services

5. Pricing: Fees and subscriptions

6. Messages & alerts

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Categories: Online Banking Report

New Online Banking Report Published: Opportunities with Prepaid & Gift Cards

By Jim Bruene on August 8, 2013 6:20 PM | Comments

image Many pundits like to talk about how banks have dropped the ball in digital (online/mobile). We take a different view. Banks, especially in the United States, have lost essentially zero market share to Internet-based incumbents (note 1). It's a hyper-competitive market and banks have pushed forward to defend their turf from other big traditional brands. Way to go capitalism.

Of course, it's easy to find things that could have been done better. That keeps us in business. But if you compare the pre- and post-Internet market share in banking to almost any other industry, it's amazing just how well the big brands have fared, at least against web-based upstarts (note 2). 

But there are certain product areas where traditional financial institutions have lagged. And one of the most obvious is prepaid/gift cards. Banks have understandably clung to the checking/debit card model with its river of fees, penalty and otherwise. But new regulations are severely restricting the revenue flow, so it's time to look elsewhere. 

There is a multi-hundred billion market for prepaid and gift cards globally, and banks have just scratched the surface. Partly, it's because Safeway and other large bricks-and-mortar retailers have more foot traffic to sell the plastic. But it's also because banks just aren't geared to sell things that don't require a 30-minute session at the new-accounts desk.

But as prepaid card sales, distribution and account management moves to mobile, banks can put themselves back into the picture in a big way. We encourage you to download our latest report to help you make the case to boost your investment in prepaid. Good luck!

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About the report
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New Opportunities with Prepaid & Gift Cards (link)
How banks can best tap into this massive market

Author: Ray Graber, Graber Associates

Editor: Jim Bruene, Editor & Founder

Published: 8 Aug 2013

Length: 28 pages, 9,000 words, 15 tables

Cost: No extra charge to OBR subscribers, US$395 for others (here)

Companies mentioned: American Express, BlackHawk Network, Chase Bank, Chemical Bank, GoBank (Green Dot), MasterCard, Navy Federal, Credit Union, netSpend (TSYS), State Credit Union, U.S. Bank, Visa, WalMart

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Notes:
1. ING Direct is the one exception on the deposit side. Before being acquired last year by Capital One, they'd built an impressive franchise through the online channel. However, they were also an offshoot of a very traditional European bank, so you can't really call ING Direct an upstart.
2. Crowdfunding/P2P lending may well be an area that finally begins to impact traditional banking revenues. But that's still a ways away. See our May 2013 report for more info (subscription).

Comments

New Online Banking Report Published: Finovate Quarterly

By Jim Bruene on July 8, 2013 2:48 PM | Comments
FinovateQuarterly Q2_2013.jpg

We've just published our latest report, Finovate Quarterly: Q2 2103. It focuses on the latest fintech developments, especially the innovations presented at FinovateSpring and the Best of Show winners.

We also look deeper at several recent industry developments including:

  • Bitcoin & Digital Currencies
  • The Authenticators (digital security)

The report contains a rundown of the quarterly highlights and milestones of Finovate alums and other fintech companies.

The Finovate Quarterly is complimentary for our Online Banking Report subscribers and is automatically delivered to them via mail. Anyone else can purchase here.

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About the report
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Finovate Quarterly  (link)
Highlights of Q2 2013, including a look at the best new products from FinovateSpring

Author: Julie Schicktanz & David Penn, Finovate Group Research Analysts
Editor: Jim Bruene, Finovate Group Founder

Published: 30 June 2013

Length: 75 pages; 16,000 words

Cost: No extra charge to OBR subscribers, US$175 for others here
The printed version will be mailed to subscribers this week.

Comments

New Online Banking Report Published: Crowdfunding Small Businesses

By Jim Bruene on May 27, 2013 11:09 PM | Comments

clip_image002We believe crowdfunding has the potential to materially impact banking market share in the next 20 years. Tapping the massive capital and higher risk tolerances of institutional and individual investors, these platforms will provide funding to segments currently underserved by traditional lenders (e.g., small and micro businesses).

We've written extensively about the consumer debt-based crowdfunding, which we've called P2P, or peer-to-peer, lending (note 1). Now, we turn to the new crop of startups arranging funding for small businesses and startups.

The report covers the three variations that promise financial returns to investors (note 2): 

  • Debt-based financing (crowdlending)
  • Equity-based funding (crowdinvesting)
  • Receivables-based funding (crowdfactoring)

Sixteen crowdfunding platforms are profiled, eight in the United States and eight in the United Kingdom:

Debt:

  • Abundance Generation
  • Bolstr
  • Funding Circle
  • Mosaic
  • RealtyMogul
  • Relendex
  • Sofi
  • SoMoLend
  • ThinCats

Equity:

  • AngelList
  • CrowdCube
  • FundersClub
  • Seedrs

Receivables:

  • Market Invoice
  • P2Binvestor
  • PlanetBlack

Finally, we look at specific opportunities for retail banks to leverage the new technology.

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About the report
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Crowdfund Investing Platforms: Debt & Equity (link)
Payments in the smartphone era

Author: Andy Davis, U.K. Financial writer

Editor: Jim Bruene, Editor & Founder

Published: 21 Feb 2013

Length: 68 pages, 24,000 words, 5 tables

Cost: No extra charge to OBR subscribers, US$495 for others (here)

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Notes:
1. We have published three reports in this area (OBR 127 in 2006, 148/149 in 2007, and SR-5 in 2009). In addition, we've created a 10-year forecast for U.S. P2P lending in each of our last six year-end reports.
2. We do not cover the donation or rewards models, such as Kickstarter. While those are effective ways for businesses to raise money and/or visibility for new products, they have fewer parallels and opportunities for retail banks.

Comments

New Issue Published: The Finovate Quarterly from Online Banking Report

By Jim Bruene on April 2, 2013 6:33 PM | Comments

image For the past year, we've been publishing a wrap-up of each Finovate event. Since there is now a Finovate every quarter, we are rolling event coverage into a quarterly publication and expanding it to include other significant fintech developments.

The Finovate Quarterly is complimentary for Online Banking Report subscribers and is imageautomatically delivered to them via mail. Anyone else can purchase here.

The report focuses primarily on the highlights from FinovateEurope, including profiles of the Best of Show winners:

  • Credit-Agricole for its app store where it is wooing outside developers
  • ETRONIKA for its BANKTRON e-channel management platform
  • mBank with Efigence for their Facebook & social platform 
  • Meniga for its PFM platform, including "buy" vs "not buy" feature
  • Moven (Movenbank) for the worldwide launch of its mobile-optimized bank
  • Pockets United for its group purchasing mobile solution
  • SumUp for its mobile point-of-sale system
  • Virtual Piggy for its kids' payment system with parental controls

The report also contains a run-down of the quarterly highlights and milestones at Finovate alums and other fintech companies. 

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About the report
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Finovate Quarterly  (link)
Highlights of Q1 2013, including a look at the best new products from FinovateEurope

Author: Julie Schicktanz & David Penn, Finovate Group Research Analysts
Editor: Jim Bruene, Finovate Group Founder

Published: 31 March 2013

Length: 64 pages; 10,000 words

Cost: No extra charge to OBR subscribers, US$150 for others here
The printed version will be mailed to subscribers next week.

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Note:
1. See Best of Show methodology here.

Comments

New Online Banking Report Published: Breaking Down the Digital/Mobile Wallet Hype

By Jim Bruene on February 22, 2013 9:19 AM | Comments

image We now have digital wallets, cloud wallets and mobile wallets. There's the Google Wallet, PayPal wallet, ISIS, Serve, MCX, V.me, PayPass, Lemon, Pageonce, Wallaby,  Passbook, LevelUp (see screenshot below) and 280 mobile payment startups listed on Angel List. NFC is coming, or is it? Why not just use the QR code? Or do we wait until EMV, Oct 2015?  Does this make money or just add another layer of costs? Are we having fun yet? 

Bottom line: With consumers carrying a powerful computer on their person, the days of the dumb mag-stripe are numbered. No one debates that. But what is a financial institution to do today?

That's what we set out to answer in our latest report on Digital & Mobile Wallets.

If you are not a major credit-card issuer, you may choose to ignore the issue until the dust settles. That’s a valid strategy, but it won’t help you pick up market share during the upcoming market confusion.

We believe every bank and credit union with a mobile app should dip its toes into the wallet space now with some relatively low- to no-cost positioning moves, while waiting for the tech questions to be answered this year and next.

And if you are a big issuer, you have a very interesting few years in front of you. Do you build or buy? Which of the major wallets, if any, do you throw your marketing support behind? And how do you explain any of this to your shell-shocked customers who just want to pay their tab and get away from the cash register as fast as possible? 

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About the report
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Digital & Mobile Wallets (link)
Payments in the smartphone era

Author: Jim Bruene, Editor & Founder

Published: 21 Feb 2013

Length: 36 pages, 10 tables, 12,000 words

Cost: No extra charge to OBR subscribers, US$495 for others (here)

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Report excerpt:

First Trade Union Bank partners with LevelUp for mobile wallets

First Trade Union Bank is teasing its LevelUp mobile wallet partnership on its homepage (19 Feb 2013).

Comments

New Online Banking Report Published: Online & Mobile Forecast Through 2022

By Jim Bruene on January 8, 2013 4:15 PM | Comments

imageOur latest research is now available: Online Banking Report 2013 to 2022 Forecast. The report includes our latest 10-year online banking, mobile banking and bill-pay forecast for the U.S. market. Online banking remains relatively flat, growing less than 5%, while mobile expanded by 40% last year (see note 1).

Based on recent mobile growth, we now project that in 2019, mobile account access will equal online account access in the United States (based on household penetration of each service).

The report also includes a revised 10-year forecast for U.S. peer-to-peer lending. After growing almost fifteen-fold in the past three years (2012 vs. 2009), we expect continued strong growth of nearly 30% compounded annually through 2022.

Finally, we took one last look at 2012 and documented the top-10 innovations or trends of the year (see below). We also updated our top-10 project priorities for 2013.

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Top innovations & trends of 2012
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The report includes a summary of the top-10 innovations or trends during the past year (in alphabetic order):

  • Alt-biz lending disrupts commercial lending for the smaller business
  • Balance forecasting launched by Simple and Key Bank
  • Banking websites get “simple” makeovers
  • Digital (cloud) wallets find a value proposition, best-case routing
  • iPads appear at the POS and new accounts desk
  • Mobile deposit goes mainstream
  • P2P lending pops!
  • Pay As You Go auto insurance launched by MetroMile
  • Prepaid cards gain as “basic checking”
  • Virtual gift cards get a boost as Square launches 200,000 in a single day

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New entrants to the OBR Hall of Fame
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Each year we rank the top online/mobile innovations of all time (North America). A total of 48 achievements are listed from 50 companies:

  • 17 banks
  • 5 credit unions
  • 11 non-bank financial services companies
  • 17 fintech companies

The class of 2012 included two new entrants:

  • City Bank of Texas's mobile on/off switch for debit cards (powered by Malauzai)
  • Simple and Key Bank both launched real-time balance forecast tools 

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About the report
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Online & Mobile Banking Forecast (link)
The next 10 years: 2013 through 2022

Author: Jim Bruene, Editor & Founder

Published: 7 Jan 2013

Length: 32 pages, 26 tables, 12,000 words

Cost: No extra charge to OBR subscribers, US$495 for others here

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Report excerpt:

Lending Club is the biggest fintech startup success of 2012 
The company originated nearly three-quarter billion dollars in new loans in 2012 and surpassed $1 billion in cumulative originations in November.

 image

Comments

New Report Published: The Best of FinovateAsia 2012

By Jim Bruene on November 26, 2012 9:39 PM | Comments

image Our first Finovate in Asia did not disappoint. With 350 attendees, it was smaller than recent U.S. shows, but it had a ton of energy. While that made it hard to herd folks back to the auditorium amidst all their animated conversations, it's  exactly what we hope for. And we are looking forward to a return next year.

FinovateAsia featured 35 companies, each delivering a seven-minute demo. As is our habit, we've summarized the innovations from the crowd favorites and are deliver it to subscribers in the latest report:

The Best New Products at FinovateAsia 2012

Each of the four companies voted Best of Show by the attendees at the event (note 1) are profiled:

  • CurrencyFair showed off its new Marketplace for
    peer-to-peer international transfers
  • Finantix launched Sharp digital banking platform to
    improve sales and service interaction
  • SocietyOne debuted its ClearMatch technology used
    to streamline the loan application process 
  • Ubank, a unit of National Australian Bank (NAB), launched 
    its  peer-spending comparison tool, People like U

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About the report
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The Best New Products at FinovateAsia (link)
A look at the four "Best of Show" winners

Author: Julie Schicktanz, Finovate Group Research Analyst
Editor: Jim Bruene, Finovate Group Founder

Published: 21 November 2012

Length: 32 pages; 7,000 words

Cost: No extra charge to OBR subscribers, US$125 for others
The printed version will be mailed to subscribers next week.

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Note:
1. See Best of Show methodology here.

Comments

New Online Banking Report Published: Digital Overdraft Protection

By Jim Bruene on October 30, 2012 3:21 PM | Comments

clip_image002I've been wanting to write about overdraft protection for more than five years. It's a $30 billion market (note 1) with a number of serious issues, but I wasn't quite sure how it fit our mission of identifying opportunities in online and mobile banking. I finally realized the always-on digital connection to the customer fundamentally changes the overdraft equation. 

In the pre-digital age, a "bad check" was a labor-intensive process. Manually handling the item with slow snail-mail and/or phone calls to the customer was a hassle and a significant cost. The $8 NSF/OD fee in place when I started in banking (late 1980s) barely covered the variable costs, and certainly wasn't a major profit center.

clip_image002[8]Fast-forward 25 years. With sophisticated balance forecasting ala Simple (note 3), real-time debit authorizations, and virtually free instant customer communications, not to mention a hostile political environment, the days of $30+ penalty fees are numbered.

The transition will not be an easy one for banks. But there are ways to create customer-friendly overdraft-protection services, primarily delivered digitally, that win back a good portion of the lost revenue while making customers MUCH, MUCH more satisfied.

Our new 36-page report includes:

  • 25 promising overdraft-protection enhancements for the digital age
  • Pricing overdrafts and overdraft-protection services
  • Gallery of overdraft-protection websites at banks and credit unions  
  • Profile: Bank of Internet's OD-free checking account
  • Size of the U.S. market for overdrafts

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About the report
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Digital Overdraft Protection (link)
Making it a customer benefit again

Author: Jim Bruene, Editor & Founder

Published: 29 October 2012

Length: 36 pages, 12 tables, 7,600 words

Cost: No extra charge to OBR subscribers, US$395 for others here

----------------------------------------

Notes:
1. United States fee income to banks and credit unions
2. Graphic from Southwest Missouri Bank
3. For more on balance forecasting, see our recent PFM report (June 2012, subscription).

Comments

New Online Banking Report Published: The Best of FinovateFall 2012

By Julie Schicktanz on October 1, 2012 8:39 PM | Comments
Thumbnail image for Thumbnail image for Thumbnail image for FFReportCoverIMG.jpg

We wrapped up FinovateFall in New York City about a week ago. Over the course of two days, 64 companies gave 7-minute demos to an audience of around 1,100. We've summarized the information and presented it in our latest Finovate Report, Fall Edition.

Introducing:

The Best New Products at FinovateFall 2012

This post-show wrapup is designed to help those that weren't there get a better understanding of the major themes. And for those who were in attendance, it's a box score to compare with your own notes and impressions.

In the report, we looked at three big trends that emerged at FinovateFall:

    • Small businesses get the same financial tools as bigger businesses
    • Security moves past the PIN 
    • Beyond plastic, the mobile wallet is here
Thumbnail image for SKIMGsmall2.jpg

And we profiled each of the seven companies voted Best of Show by the attendees at the event (note 1):

__________________________________________________________________

About the report
__________________________________________________________________

The Best New Products at FinovateFall (link)
Includes a look at all eight Best of Show winners

Author: Julie Schicktanz, Finovate Group Research Analyst
Editor: Jim Bruene, Finovate Group Founder

Published: 28 September 2012

Length: 59 pages, 12,000 words

Cost: No extra charge to OBR subscribers, US$195 for others

The printed version will be mailed to subscribers next week

_________________________________________________________________

Note:
1. See Best of Show methodology here.

Comments

New Online Banking Report Published: 2013 Guide to Remote Banking Products, Marketing & Strategy

By Jim Bruene on August 29, 2012 11:30 AM | Comments

image Alright everyone, take a deep breath, summer is over and it's time to get down to business. You are now officially behind on all the 2012 "stretch goals" that still seemed possible a few months ago.

And for many, September marks marks the beginning of the 2013 planning cycle. We are here to help. First, we moved FinovateFall up three weeks (to Sep 12/13) so you have more time to get those new ideas in to your plans.

Then there's our annual reference, OBR's 2013 Online/Mobile Banking Planning Guide. It's a thorough resource for financial institution product/marketing managers prioritizing next year's remote-banking efforts.

The latest version was posted online last night. 

______________________________________________

About the report
______________________________________________

2013 Product, Pricing & Strategy Guide for Remote Banking (link)
Embracing new business models for a digital world

Author: Jim Bruene, Editor & Founder

Published: 29 Aug 2012

Length: 76 pages (36,000 words)

Cost: No extra charge to OBR subscribers, $595 for others here

______________________________________________

Table of Contents

The report contains a list of every idea that has appeared in Online Banking Report or this blog (sample page, below). There are more than 1,000 possible online/mobile tactics listed in the current report, divided into the following categories:

1. Product tacticsclip_image002
A. Checking & transaction cards
B. Deposits & savings
C. Loans & credit
D. Personal finance management
E. Insurance
F. Investing
G. Payments & transfers
H. Mobile services
I. Family (children, teens, tweens)

2. Sales & marketing tactics
A. Increase online sales
B. Selling behind the password
C. Enter new markets & segments
D. Attract new residents (movers)
E. Increase referrals and word-of-mouth
F. Social media and Web 2.0
G. PR: appeal to community

3. Service, security & retention tactics
A. Increase satisfaction levels
B. Enroll more online banking users
C. Encourage/reward self-service
D. Encourage paperless adoption
E. Address security concerns

4. Small business products and services

5. Pricing: Fees and subscriptions

6. Messages & alerts

_________________________________________________

Comments

New Online Banking Report Published: Personal Financial Management 4.0

By Jim Bruene on June 26, 2012 2:43 PM | Comments

image While personal financial management (PFM) may be THE most important feature of online/mobile banking going forward, it's time to stop thinking of it as "product."

PFM is part of every thing you do when communicating account info to customers. The paper statement is a PFM tool. The call center offers PFM. Even the branch helps certain customers with their financial management.

But those old-school tools have limitations. They are expensive, difficult to customize, and aren't always timely or available.

So online banking has been a boon to personal financial management. Can you imagine going back to the world where you actually had to keep track of your balance in your check register?   

But 17 years after Wells Fargo put the first customer statement online, most customers are still stuck looking at an online rendering of their circa-1960 paper statement. It's an area ripe for disruption, and Mint.com, with 3% to 4% penetration of U.S. households, proved that users want better-looking, more functional online info.

However, unlike record stores, newspapers, and travel agents, incumbent banks and credit unions have a much better chance to stay relevant and hold on to their market share. Other than early-adopter types, few customers will entrust their money to Internet-based startups (Bank Simple may be poised to prove me wrong, we'll see). And even if consumers have the desire, it's often too much of a hassle to make the switch. 

As long as financial institutions stay up-to-date in online/mobile delivery, keep prices in check, and provide decent service, there are no compelling reason for customers to ever leave.

For banks, a big part of staying current is helping customers stay apprised of their financial situation, and helping them improve it. We are lumping those things together and calling it PFM. One of the biggest changes coming, thanks in part to Bank Simple making it central to their UI, is the forward-looking "balance forecast" (or Safe-to-Spend balance in Simple-speak). See last Friday's post for more on that.

But that's just the tip of the PFM iceberg. There are dozens of needed new features to bring online banking up to 2012 "web standards." 

In our new 54-page report we cover:

  • 23 primary PFM functions
  • 40 promising PFM features
  • Another 100 potential features
  • PFM forecast (U.S. household usage by PFM type)
  • The business case
  • Putting it all together in multiple service bundles, including fee-based premium options
  • PFM availability at the 30 largest U.S. banks and credit unions including our first look at Citibank's Financial Tools
  • Mobile PFM
  • PFM for couples

__________________________________________________________________

About the report
__________________________________________________________________

Personal Financial Management 4.0 (link)
Moving forward with the most misunderstood financial
service of the online era

Author: Jim Bruene, Editor & Founder

Published: 25 June 2012

Length: 56 pages, 12 tables, 16,000 words

Cost: No extra charge to OBR subscribers, US$495 for others here

__________________________________________________________________

Sample screenshot
__________________________________________________________

HelloWallet combines budget status (e.g., at "coffee shops") and a macro "left to spend" balance on its mobile view

HelloWallet "left to spend" balance

Comments

New Online Banking Report Published: The Best of FinovateSpring 2012

By Jim Bruene on May 24, 2012 5:15 PM | Comments (1)

clip_image002Since we started the Finovate conference series we've spent considerable time before each show selecting the companies, walking through demos, and blogging/tweeting about each one. But we've never done a full wrap-up and analysis afterwards.

Until now. Introducing our latest report:

The Best New Products at
FinovateSpring 2012

This post-show wrap-up is designed to help those that weren't there get a better understanding of the major themes. And for those that were in attendance, it's a box score to compare with your own notes and impressions.

In the report, we looked at the three big trends that emerged at FinovateSpring:

  • Mobile 2.0: The feature set expands
  • Ad-supported banking gets real
  • Alt-banking: The rise of the “near bank” catering to the underserved

At Finovate, Personal Capital's CEO Bill Harris (right) and Jim Del Favero, VP Products, demo its new product And we profiled each of the seven companies voted Best of Show by the attendees at the event (note 1):

__________________________________________________________________

About the report
__________________________________________________________________

The Best New Products at FinovateSpring (link)
Includes a look at all seven Best of Show winners

Author: Jim Bruene, Editor & Founder

Published: 22 May 2012

Length: 48 pages, 12,000 words

Cost: No extra charge to OBR subscribers, US$195 for others here

The printed version will be mailed to subscribers next week

_________________________________________________________________

Note:
1. See Best of Show methodology here.

Comments (1)

New Online Banking Report Published: Delivering that Secure Feeling

By Jim Bruene on April 5, 2012 6:07 PM | Comments

image OK, let's think this through. Consumers have been concerned about the security of online banking for more than a decade. Technology tools are available to ease their anxiety. So, why aren't these tools readily available?

The answer is that most security enhancements don't pay their own way in terms of reduced fraud. Therefore, these "nice to have" features languish in the priority queue with little hope of getting implemented.

So do we just let customers continue to needlessly fret about the security of their financial accounts?

No, that just irritates already fed-up customers and invites more independent competitors to the table to provide the missing benefits (e.g., BillGuard, Credit Karma, Mint).

Instead, why not move to the win-win solution: Charge an optional subscription fee for extra "peace of mind," but only to customers who want it. Or offer the value-adds free of charge for customers who help you lower costs by using self-service channels and foregoing printed statements.  

But wait. Aren't fees dead after the BofA debacle a few months ago?

While that was a very real customer backlash, optional fees are still possible. Just keep these rules in mind:

  • Fees for extra security should NEVER be mandatory; instead, offer a "security bundle" that goes above and beyond the normal state of the art
  • Do not charge a fee for any security feature you already offer free of charge (the big problem with the ill-fated debit card monthly fee)
  • Do not charge for a security feature that is typically delivered free of charge by others in the industry
  • It's better to bundle a group of extra security features into a relative low-priced subscription bundle

In our new 48-page report we cover:

  • 12 design elements to make your website feel more secure
  • 7 potential positive elements for your business case
  • 5 talking points for staff education before implementing a subscription fee
  • 37 potential security enhancements to bundle into an "extra security" subscription offering
  • 72 additional security features to consider
  • 5 customer segments to target with a fee-based package account
  • Overview of three promising security services:
    -- Anti-virus for transactions from BillGuard
    -- Self-service suspicious activity reporting from Bank of America
    -- Virtual safe deposit from Northwest FCU, powered by DigitalMailer

__________________________________________________________________

About the report
__________________________________________________________________

Delivering that Secure Feeling (link)
Help consumers reduce perceived risks (for a price)

Author: Jim Bruene, Editor & Founder

Published: 4 April 2012

Length: 48 pages, 8 tables, 12,000 words

Cost: No extra charge to OBR subscribers, US$395 for others here

__________________________________________________________________


Sample screenshot

: Barclays (UK) offers online banking customers free anti-virus software from Kaspersky

clip_image002

Comments

New Online Banking Report Published: Banking on Facebook

By Jim Bruene on February 29, 2012 4:03 PM | Comments

image We just published our latest report, Banking on Facebook, which looks at why you should establish a presence on the social network. And more importantly, what you can do to make the effort pay off.

To some extent, this report was overdue. Facebook has been a major social force for four or five years. However, it wasn't until recently that brands have taken the platform seriously.

And while soft drinks and social games may dominate Facebook brand pages now, every major brand will be there eventually, financial services included. The opening to our report lays out the opportunity:

If there was a neighborhood that 90% of your customers visited frequently, many every day, how much would you pay to have a presence there? If you were small, maybe $10,000; if you were Chase, maybe hundreds of millions.

But what if it cost almost nothing to set up shop there? Basically, that’s Facebook: a place most of your customers frequent and where brands can establish a page for exactly zero dollars.

clip_image002In the 56-page report we cover:

  • 12 main reasons you should invest in a Facebook brand page
  • 12 primary components of a Facebook brand page (see screenshot below)
  • 42 advanced tactics for your Facebook page
  • 47 financial institutions worldwide with more than 100,000 Facebook fans/likes
  • Consumer interest in viewing bank account info, spending info, and credit info within their Facebook page
  • The importance of Facebook's new "Action" buttons for banks (inset)
  • 23 Facebook terms you need to understand (e.g. social plugins)

__________________________________________________________________

About the report
__________________________________________________________________

Banking on Facebook (link)
It's time to set up shop in the dominant social network

Author: Jim Bruene, Editor & Founder

Published: 28 Feb 2012

Length: 56 pages, 10 tables, 12,000 words

Cost: No extra charge to OBR subscribers, US$495 for others here

__________________________________________________________________


Sample screenshot
: We use Lending Club to illustrate the basic components of a Facebook brand page

Sample Facebook brand page from Lending Club

Comments

New Online Banking Report Published: Online & Mobile Forecast Through 2021

By Jim Bruene on January 9, 2012 2:31 PM | Comments

imageThe latest research is now available: Online Banking Report: 2012 to 2021 Online & Mobile Banking Forecast. The report includes our latest 10-year online banking, mobile banking and bill-pay forecast for the U.S. market. Online banking remains relatively flat, growing less than 5%, while mobile expanded by more than 40% last year (see note 1).

We still believe mobile is on a path to surpass online banking in the United Sates by the end of the decade (note 2). Although by then, the two will be very similar, if not identical.

The report also includes a revised 10-year forecast for U.S. peer-to-peer lending. After growing five-fold in two years (2011 vs. 2009), we expect continued strong growth of nearly 40% compounded annually through 2021.

Finally, we took one last look at 2011 and documented the top ten innovations or trends of the year (see below). We also updated our top-10 project priorities for 2012.

__________________________________________________________________

Top innovations & trends of 2011
__________________________________________________________

The report includes a summary of the top ten innovations or trends during the past year (in alphabetic order):

  • Ad-supported banking gains a foothold
  • BillGuard launches transaction-monitoring tool (screenshot below)
  • Capital One acquires ING Direct USA
  • Mobile banking goes Android
  • P2P lending doubles 
  • PFM turns its attention to debt management
  • Square re-engineers off-line POS
  • Social media-fueled banking backlash
  • Truly virtual banks arrive
  • Youth banking gets a powerful new entrant

__________________________________________________________________

New entrants to the OBR Hall of Fame 
__________________________________________________________________

Each year we rank the top online/mobile innovations of all time (North America). There are a total of 46 achievements listed from 45 unique companies:

  • 15 banks
  • 5 credit unions
  • 10 non-bank financial services companies
  • 15 technology companies

The class of 2011 included three new entrants:

  • BillGuard for creating a PFM application (transaction scanning) that provides tangible value to the mass market
  • Doxo launches first full-featured virtual billing file cabinet 
  • Mint for putting all the pieces together to create a compelling online personal financial management system (note 3)
  • Personal Capital, for doing for wealth management what Mint.com did for retail customers

__________________________________________________________________

About the report 
__________________________________________________________________

Online & Mobile Banking Forecast (link
The next 10 years: 2012 through 2021

Author: Jim Bruene, Editor & Founder

Published: 6 Jan 2012

Length: 40 pages, 27 tables, 14,000 words

Cost: No extra charge to OBR subscribers, US$495 for others here

-------------------------

BillGuard is one of four new companies added to the OBR Hall of Fame in 2011 (9 Jan 2012)
Note: Powerful homepage message: Protect Your Money

 

BillGuard's homepage has a powerful call to action

-----------

Notes
1. The penetration of online banking into U.S. households is relatively flat going forward. However, because each household accesses a larger number of financial accounts, growth at individual financial institutions is still growing on average. 
2. Forecast is for the United States. Mobile has already surpassed all types of banking in some developing countries. 
3. Mint.com is being added four years past its 2007 launch. Since it didn't pioneer any specific new features, we hadn't put it on the list. But, we've decided its legacy of improving the user interface for online banking is worthy of making it into the OBR hall of fame.

Comments

New Online Banking Report Published: Selling Insurance Online (for Banks)

By Jim Bruene on December 12, 2011 6:42 PM | Comments

image We just finished issue number 199 of our Online Banking Report. Given that it's a monthly publication, you can do the math, and see that we've been at this for a while. We've covered a lot of ground, but until now, we'd never taken an in-depth look at the insurance side of online delivery.

Why? There have been so many opportunities with core deposit/credit products that the "insurance report" kept getting pushed out into the future. From the looks of it, the same dynamic has played out in the banking industry. Sure, U.S. banks took in $7 billion brokering insurance last year (and a similar amount in underwriting). But "insurance" isn't even mentioned on the websites of 7 of the largest 15 banks. 

It's time to rethink where insurance fits in your product roadmap. Here's why:

  • It's a huge expense with premiums amounting to more than 7% of global GDP
  • Consumers are uncertain about their insurance needs and options
  • New types of insurance are even less understood
  • Online/mobile delivery (will) make it much easier to compare prices and purchase
  • Mobile delivery is especially valuable for the claims process for automobiles
  • Potential commissions and revenues are many times the $5/mo ill-fated debit card fee
  • Consumers are actually willing to pay for risk reduction/peace of mind provided

It's a win-win for banks and their customers. And we expect a burst of activity in this area during the next few years (note 1).

__________________________________________________________________

About the report
__________________________________________________________________

Selling Insurance Online (link)
Can insurance help fill the fee-income gap at banks/credit unions?

Author: Jim Bruene, Editor & Founder

Published: 9 Dec 2011

Length: 48 pages, 24 tables, 11,000 words

Cost: No extra charge to OBR subscribers, US$395 for others here

__________________________________________________________________


BB&T mentions insurance three times on its homepage

clip_image002[10]

----------------------------------------

Notes
1. In addition to upping our insurance coverage here, we hope to bring more insurance innovations to our Finovate conference as well. Know a cool insurance startup with new technology? Email jim@netbanker.com for info on Finovate

Comments

New Online Banking Report Published: True Virtual Banking Has Arrived

By Jim Bruene on November 3, 2011 9:05 PM | Comments

image I still remember the day in early 1999 when I met with Elon Musk and his 3-person team in a borrowed conference room in Palo Alto. They were plotting the complete and total disruption of the banking industry and fully expected to be one of the largest five U.S. banks by now.    

The startup was named X.com and its original business plan was to acquire one or more existing banks to provide the credibility, and deposit insurance, of a traditional bank. While I was in awe of their ambition, I thought the plan had a flaw. I told them they'd be better off staying virtual, with no bank ownership slowing down their decision making and ability to take risks.

I'll never know if they would have listened to me, because soon thereafter X.com began experimenting with P2P payments via email, and they saw that it was going to be huge. So they jettisoned banking, merged with PayPal, and the rest is history.

Why the reminiscing? That was the last attempt by a major tech startup to take on the U.S. retail banking industry via virtual channels (note 1).

Fast-forward to 2011: At this year's FinovateFall, we saw the launch of not one, but two well-funded attempts at disrupting the incumbents. One through debit/checking/savings and the other through wealth management:

  • BankSimple: DNA from Twitter, analytics, and consulting
  • Personal Capital : DNA from Intuit, PayPal, Everbank and Fidelity Investments

Both companies are what I call True Virtual Financial Institutions, meaning they are complete front-ends to your money, including transaction capabilities and customer service, but they outsource the actual holding of customer funds to fully-regulated partners which pass FDIC/SIPA protections. This allows the newcomers to focus on user experience and service while moving much faster without the regulatory friction experienced by traditional financial institutions.

Others well-known companies using virtual models: Betterment (also profiled in the report), iBankUp.com (Plastyc) and Perkstreet.

Note to bankers: True virtual banking needn't be limited to tech startups. These techniques can be employed by traditional companies to expand beyond regional or industry boundaries. The report outlines seven models for doing just that.

__________________________________________________________________

About the report
__________________________________________________________________

True Virtual Banking Has Arrived (link)
BankSimple, Personal Capital, Betterment and others go branchless,
paperless and "bank-less"

Author: Jim Bruene, Editor & Founder

Published: 1 Nov 2011

Length: 48 pages

Cost: No extra charge to OBR subscribers, $395 for others here

____________________________________________________________________

Notes:
1. I should add that Lending Club, Prosper, Zopa qualify as major entrants bound on disrupting banking from the lending side.   
2. BankSimple, Betterment, Personal Capital and Plastyc FinovateFall 2011 demo videos are available here.

Comments

New Online Banking Report Published: 2012 Guide to Remote Banking Products, Marketing, & Strategy

By Jim Bruene on August 29, 2011 6:11 PM | Comments

It's 479 days, 2 hours and 54 minutes until the end of the Mayan calendar* and you know what that means? Yep, it's time to start putting together your 2012 business and marketing plans. imageAnd don't think that the end of the world is any excuse to hold back. 

As usual, we've got your back. Announcing OBR's 2012 Online/Mobile Banking Planning Guide. Its goal: to provide a resource for financial institution managers (product and/or marketing) to help prioritize potential remote-banking projects for the coming year.

The latest version was released just this afternoon.

______________________________________________

About the report
______________________________________________

2012 Product, Pricing & Strategy Guide for Remote Banking (link)
Preparing for the mobile-first future

Author: Jim Bruene, Editor & Founder

Published: 29 Aug 2011

Length: 76 pages

Cost: No extra charge to OBR subscribers, $695 for others here

_______________________________________________

 

The report contains a list of every idea that has appeared in Online Banking Report or this blog. There are more than 1,000 possible tactics listed in the current report, divided into the following categories:

1. Product tactics
A. Checking & transaction cards
B. Deposits & savings
C. Loans & credit
D. Personal finance management
E. Investments & insurance
F. Payments & transfers
G. Mobile banking/payments
H. Family (children, teens, tweens)

2. Online sales tactics
A. Increase online sales
B. Selling behind the password
C. Enter new markets & segments
D. Attract new residents (movers)
E. Increase referrals and word-of-mouth
F. Social media and Web 2.0
G. PR: appeal to community/shareholders

3. Service, security & retention tactics
A. Increase satisfaction levels
B. Enroll more online banking users
C. Encourage/reward self-service
D. Encourage paperless adoption
E. Address security concerns

4. Small business

5. Fee-based planner

6. Messages & alerts

--------------------------------------------------------

*We don't want to feed into the Mayan calendar hysteria, but you might want to pick up these super cool keychains here.

Comments

New Online Banking Report Published on Youth Banking: Attracting Tween, Teens, & Under-25 via Online/Mobile

By Jim Bruene on July 18, 2011 1:05 PM | Comments (2)

clip_image002We were still in the Web 1.0 world when my kids (teenagers now) started their first savings accounts. So there were few youth banking services available to facilitate online savings and spending.

Fast forward 10 years. We have Facebook, we have Twitter, we have mobile weather info. But we still have virtually no youth banking tools at the major U.S. banks (Wells Fargo is furthest along, see screenshot below).

And that makes no sense.

There are 100 million people under age 25 in the U.S., and obviously, 15 to 25 years from now, a good portion of your profits will come from this group. However, in the next five years, this cohort will generate exactly zero percent of profits.

In the branch-based past, it made business sense to wait another five years to start selling to this group. After all, high-school graduates closed their bank accounts when they moved to college. College graduates closed theirs when they moved to their first job. And first-time job holders switched accounts when they landed a better job, and so on.

But that was a different time. In today's remote-banking world, THERE IS NO REASON TO EVER CLOSE YOUR ACCOUNT. You just send in a change of address and keep logging in to the same place.

A 12 year-old girl today is expected to live another 70 years (boys, only 65 more). So if those kids won't ever need to close their accounts, it stands to reason that getting them hooked to their parents' online banking becomes pretty important.

That's why we are seeing interesting startup activity in this area including (from recent Finovates):  image

  • Bobber Interactive
  • Kiboo
  • MatchFund
  • MoneyIsland (from BancVue)
  • Thwakk
  • Tile Financial 

And there is a rush to social media, such as the brilliant Young & Free campaigns invented by Canada's Currency Marketing.

Finally, the report includes articles from two industry experts:

  • Justin Hosie of Chambliss, Bahner, & Stophel PC on the importance of bank compliance with the Children's Online Privacy Protection Act (COPPA)
  • Matt Cullina, CEO of Identity Theft 911, writes about the importance of protecting your kids against identity theft

______________________________________________________________

About the report
______________________________________________________________

Family Banking: Online/Mobile Services for Tweens, Teens & their Parents (link)
In a remote banking world, your most-promising prospects aren't even driving yet!

Published: July 15, 2011

Author: Jim Bruene, Editor & Founder, Online Banking Report

Length: 52 pages (10,000 words), 52 Figures, 7 Tables

Cost: No extra charge for OBR subscribers, $495 for everyone else (here)

Abstract here

---------------------------------

Wells Fargo offers up solutions for four age groups (18 July 2011; link)

Wells Fargo's offers up solutions for four age groups (18 July 2011)

Comments (2)

New Online Banking Report Published: Creating Fee-Based Online & Mobile Banking Services

By Jim Bruene on May 23, 2011 2:46 PM | Comments (1)

image The scariest thing about being a banking industry analyst, besides boring your family & friends, is looking back at the advice you handed out 5, 10 or even 15 years ago. While I've had my share of hits and misses, one thing I've been particularly adamant about, is the need to create fee-based online financial services. Sadly, this is one that's been completely ignored so far (see note 1).

If U.S. financial institutions had charged an average of $1 per month per user (note 2) over the past decade, it would have generated $10+ billion in incremental profits, much of which would have been reinvested into the channel. 

Had that happened, we'd already have:

  • Ironclad security
  • Highly personalized 2-way alerts & messaging
  • Integrated PFM and credit monitoring
  • Responsive online/email customer service
  • Killer mobile banking and iPad apps
  • And much more

But what matters now is where do we go from here? Consumers have been trained to expect everything, even costly services such as online billpay, to be free of charge. Anyone who tries to charge fees for the existing state of the art risks massive backlash from customers and the media.

The way to introduce fees after the fact is to charge only for new value-added services such as those listed above. That way, no one pays fees unless they want the new benefit. It's the classic freemium model, and it works well across a number of industries, just ask LinkedIn.

Our latest report lays out 33 value-added modules that could support a la carte subscription fees. We look at eight use cases where these modules are bundled together for various-high value segments:

  • Power mobile users
  • Road warriors
  • Families/parents
  • Small/micro business
  • Homeowners
  • Financial trackers
  • Empty nest/retirees
  • VIPs

Currently, the best examples of multi-tiered pricing in the United States is business online banking where a number of banks and credit unions have a basic free option and at least one higher-end "cash management" solution (see Western Bank screenshot below).

______________________________________________________________

About the report
______________________________________________________________

Creating Fee-Based Online & Mobile Banking Services (link)
Pricing 2.0: How new revenue models will propel online/mobile banking to the next level

Published: May 18, 2011

Author: Jim Bruene, Editor & Founder, Online Banking Report

Length: 44 pages (10,000 words), 17 Tables

Cost: No extra charge for OBR subscribers, $395 for everyone else (link)

---------------------------------

Western Bank's online banking pricing matrix (link, 15 May 2011)

Western Bank's online banking pricing matrix

--------------------------

Notes:
1. At least in North America. Financial companies in other areas of the world have been more successful with fee-based services.
2. This is an average amount. Most users would pay zero, but with 20% paying $5/mo, you get to the $1/mo average. 

Comments (1)

New Online Banking Report Published: Delivering "Live Help" Online

By Jim Bruene on April 5, 2011 6:52 PM | Comments

image At Online Banking Report we've written a few reports about online customer service over the years (see note 1). However, we'd never looked in-depth at so-called "live help," (note 2) which includes:

  • Live chat: predominantly audio, but can also be one or two-way video
  • Click-to-call: a button used to request a call-back from an agent
  • Co-browsing: sharing a screen between user and agent

Co-browsing is still a little too out there for most customers, so we focused primarily on live chat and click-to-call, both relatively widely adopted and proven money makers for online retailers.

clip_image002Bottom line: After reviewing dozens of white papers, talking to a number of industry experts, looking at a hundred websites, and live chatting with service reps in the wee hours, I've come to a definitive conclusion on the value of live chat.

It depends. 

Clearly, live chat delivered perfectly can cut costs and lift revenues. But it can also confuse customers, drive up support costs, and get in the way of moving from point A to point B on a website.

clip_image002[10]But as generation text moves into their prime banking years, banks will be chatting more and more with customers, both online and via mobile messaging. So eventually, most financial institutions will need to offer some variation of Live Help to remain competitive (note 3).

______________________________________________________________

About the report
______________________________________________________________

Delivering "Live Help" Online (link)
Live chat and click-to-call promise to increase sales, make customers happy, and save money; what's not to like?

     Published: April 5, 2011

     Authors: Jim Bruene, editor & founder, Online Banking Report 
                    with Philip Britt, founder, S&P Enterprises

     Length: 60 pages (12,000 words), 14 Tables

     Cost: No extra charge for OBR subscribers, $495 for everyone else here

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Notes:
1. The most recent Online Banking Report on email customer service is here (2004)
2. Our inspiration for the latest issue was Jeffry Pilcher's post in The Financial Brand (Jan. 2011).
3. However, the first order of business remains turning email into the valued support tool it needs to be. See Email Banking: Revitalizing the Channel (Aug. 2010)

Comments

New Online Banking Report Published: Merchant-Funded Rewards Programs

By Jim Bruene on March 1, 2011 12:25 PM | Comments

image While I like a deal as much as the next person (note 1), I've never been much of a coupon clipper. To me, coupons are a hassle to collect, impossible to organize, and mildly embarrassing to redeem. 

But I love frequent flyer miles. Once registered, they pile up automatically, are maintained at the airline or card site, and there is no stigma to redeeming them. However, miles are pretty worthless unless you spend a lot and have the flexibility to use them during the off season.

That's why financial rewards programs have moved away from a sole reliance on airline miles and towards broader programs with cash and merchandise rewards. However, with falling fee revenues, especially interchange, these programs are becoming harder to justify cost-wise.

But customers have grown to expect them, especially the big-spending households that drive banking and card profits (note 3). And this is not a time when you want to irritate a lucrative segment of your customer base.

What to do?

imageEnter a new breed of loyalty program called "merchant-funded rewards." Instead of financial institutions buying goods and services to give away, the system is turned around. Merchants pay direct cash rebates to your customers. And they may even pay you for the privilege of giving away money.

The catch? Because the cash-back offers are targeted to customers who shop at the competition, merchants need actual cardholder-level spending data to make the right offer, e.g., a $25 rebate offer to Home Depot customers who come to Lowes and spend at least $50 on your card (note 2). And to boost awareness, they need to plug directly into your online banking and statements. 

Making this work takes sophisticated integration between spending data and merchant offers. Enter an important new vendor in the banking world: the rewards service provider. In the report, we look at the five biggest, each with 100 or more financial institution clients:

  • Access Development
  • Affinity Solutions
  • Cardlytics
  • Cartera Commerce (recently merged with Vesdia)
  • RewardsNow

While these companies have the early lead, clever newcomers are creating their own hybrid programs connecting APIs with ad-serving and social networks. It's a wide-open field with dozens of players, including Finovate alums Billeo, BillShrink, Micronotes, and Segmint as well as others such as Clovr Media, DBG Loyalty, EDO Interactive, and OffermaticMasterCard and Visa also have rewards programs that issuers can plug in to.

____________________________________________________________________________

About the report
______________________________________________________________________________

Merchant-Funded Rewards Programs (link)
Rewards 2.0: Turning a money pit into a profit center

Author: Daniel Thomas, principal consultant, Mindful Insights

Editor: Jim Bruene, editor & founder, Online Banking Report

Published: 28 Feb. 2011

Length: 32 pages

Cost: No extra charge for OBR subscribers, $495 for everyone else (here)

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Notes:
1. Probably more, as the son of a frugal Iowan (thanks Dad!)
2. Of course, private cardholder data is not revealed to merchants or service providers. It's done through computer matching programs.
3. According to COLLOQUY, the average U.S. household is enrolled in 18 rewards programs, and nearly a quarter of those are financial.

Comments

New Online Banking Report Available: Online & Mobile Banking Forecast through 2020

By Jim Bruene on January 24, 2011 7:46 PM | Comments

image The latest Online Banking Report: 2011 to 2020 Online & Mobile Banking Forecast is now available. It was mailed over the weekend to all OBR subscribers. It's also available online here. There's no charge for current subscribers; others may download it immediately for US$495.

The report includes our latest 10-year online & mobile banking and bill-pay forecast. While our reading of the tea leaves is unlikely to be perfect, it seems clear that the demand for online banking in the United States has reached a plateau (note 1); in fact, we are likely within a year or two of online banking penetration peaking and slowly heading down.  

How could that be? Mobile of course. In fact, through the end of 2020, we project an increase of 40 to 45 million U.S. households using mobile banking, to a total of nearly 60 million. During the same period, online banking penetration is actually expected to drop by a few million households.

If we are right, sometime near the end of the decade mobile banking will surpass online (note 2), although by then, the two will look pretty similar. 

The report also includes a revised 10-year forecast for U.S. peer-to-peer lending. After more than doubling in 2010, we expect continued strong growth of around 40% compounded annually through 2020.

__________________________________________________________________

Top innovations & trends of 2010
__________________________________________________________

The report includes a summary of the top ten innovations or trends during the past year (in alphabetic order):

  • In-statement merchant rewards goes from zero to 100 financial institutions
  • Loan preapproval wizards reduce uncertainty for applicants
  • Location-aware mobile services for banking debut
  • Mobile banking goes mainstream
  • Mobile capture removes the paper from commerce
  • Mobile payments gains real momentum
  • Online personal financial management (outside of the bank) struggles
  • P2P lending solidifies its niche
  • Social media proves it can have real impact in financial promotions
  • Transaction streaming and sharing gain a foothold

__________________________________________________________________

New entrants on the list of the top 43 innovations of all time
__________________________________________________________________

Each year we rank the top online/mobile innovations of all time (North America). There are a total of 43 products listed from 42 unique companies:

  • 15 banks
  • 5 credit unions
  • 9 non-bank financial services companies
  • 13 technology companies

The class of 2010, which was unusual for being all technology companies rather than financial institutions (note 3):

  • Blippy for its automated transaction-sharing network
  • Cardlytics for its merchant-funded in-statement online rewards service
  • Finsphere for its location-aware fraud-targeting service, PinPoint
  • Mitek Systems for its mobile photo bill pay

-------------------------

Notes:
1. The penetration of online banking into U.S. households is relatively flat going forward. However, because each households accesses a larger number of financial accounts, growth at individual financial institutions is still growing on average.
2. Forecast is for the United States. Mobile has already surpassed all types of banking in some developing countries.
3. Perhaps this can be explained by the necessary focus of financial institutions on getting through the global banking crisis beginning in 2008.

Comments

New Online Banking Report Published: Paperless Finance, Banking & Billing

By Jim Bruene on November 29, 2010 6:11 PM | Comments

imageWhen I first began writing about online banking in 1995, there were many unknowns. But by the late 1990s, most people were pretty sure of three things:

  • Online would trump the ATM, call center, and branch for routine information queries and simple transactions.
  • Alerts would keep users informed of account activity and status.
  • Bills would be paid online and delivered the same way.

Most of this vision has come to pass. The only holdout is bill/statement delivery, which has remained stubbornly paper-based, despite a decade of trying to coerce consumers to do without the paper security blanket.

imagePaper bills and statements are an enormous waste of resources, costing $40 billion or more annually in paper and postage. Plus, there's all the time customers spend storing, sorting, and rummaging through paper statements. And there's the tens of thousands of calls to customer service that could have been avoided with better organization.

But consumers will continue to cling to the paper until there are:

A.) Clearly better alternatives
and/or
B.) Tangible incentives to turn off the paper

Both of these themes are addressed in the latest Online Banking Report (link). Financial institutions, situated at the intersection of the bill and the payment, are in a great position to drive paper out of the system. But so far, it's not happening as fast as it should.

Doxo, which launched an ebilling hub last month, could be the catalyst for change, at least on the billing side. It's encouraging to see two billing innovators, Sprint and Kansas City Power & Light teaming with the startup, even before the service gets out of private beta (see previous posts).

So what can you do to take part in the inevitable movement away from paper? Read our latest report for 34 ways to convince customers to part ways with paper.

About the report:
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Paperless Banking & Billing (link)
Cloud computing combined with mobile capture mark
the beginning of the end of paper statements

Author: Jim Bruene, editor & founder

Published: 26 Nov. 2010

Length: 40 pages

Cost: No extra charge for OBR subscribers, $495 for others here

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Comments

New Online Banking Report Published: 2011 Guide to Online & Mobile Products, Pricing & Strategy

By Jim Bruene on October 11, 2010 2:37 PM | Comments

Washington new years license plateIn case you hadn't looked at your calendar, it's Q4 everyone.  Time to sharpen your pencil, fire up your spreadsheet and create that glorious semi-fictional piece of work, the business plan.

And we at Online Banking Report are on your side. That's why every year we put every online/mobile idea we can think of into our Annual Planning Guide for Online & Mobile Banking.

Online Banking Report 2011 Planning Report coverThis year, it's 84 pages long with a thousand or so possible tactics, tips, and strategic endeavors for your online and mobile services. But we don't make you wade through all 1,000 to find the six you need. The ideas are separated into three buckets:

  • Best practices (5% of total): Must-have features to maintain parity with the competition
  • Best tactics for competitive advantage (25% of total): Ideas that will help you stand out from the pack and/or drive incremental revenue/profit
  • The rest (70% of total): Every company has different strengths and weaknesses; these tactics could be perfect for you

And we've also taken our favorite 20 and isolated them in their own section. Here is their alpha order:

  • Activity dashboard/ticker
  • Archives, long-term  
  • Automatic alert enrollment
  • Blog/Twitter and other social media
  • Credit score/report zone
  • Email channel
  • Home equity center
  • In-statement merchant ads
  • Lending center
  • Micro/small-business services
  • Native mobile app (iPhone/Blackberry/Android)
  • Personal finance functionality 
  • Premium/VIP online services
  • Prepaid/gift cards
  • Retirement planning center
  • Student banking/financial education center
  • Text (SMS) banking
  • Transaction streaming
  • Ultra transparent (flat fee) mortgages
  • Usage-based contests/rewards

 

About the report:

----------------------------------------------------------------------------------------------

2011 Product, Pricing & Strategy Guide for Online & Mobile Banking (link)
Will online banking fees make a comeback?

Author: Jim Bruene, editor & founder

Published: 30 Sep. 2010

Length: 84 pages

Cost: No extra charge to OBR subscribers, $695 for others here

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Comments

ActivePath Named OBR Best of the Web for Email Banking System

By Jim Bruene on September 13, 2010 4:56 PM | Comments

obr_bestofweb In our most recent report, Email Banking: Revitalizing the Channel, ActivePath was named the third OBR Best of the Web winner in 2010. The company was cited for its unique plugin software that turns the user's email inbox into a mini online-banking center.

We believe that the future of banking information delivery is outside the website. Increasingly, users will rely on information pushed to them through Facebook, Twitter or RSS feeds, to mobile phone apps, and to the email inbox. ActivePath's solution plays into that trend.

The just-launched Israeli startup becomes the 78th company to win the designation since we began awarding it in 1997. The other two winners this year:

----------------------

Note: OBR Best of the Web awards are given periodically to companies that pioneer new online or mobile banking features. It is not an endorsement of the company or product, just recognition for what we believe is an important industry development. Recent winners are profiled in the Netbanker archives.

Comments

New Online Banking Report Published: Email Banking - Revitalizing the Channel

By Jim Bruene on August 23, 2010 4:44 PM | Comments (3)

image Each day, the typical consumer household completes several banking and credit/debit card transactions. And 99% of the time, the transactions require little extra attention other than mentally checking them off to ensure you aren't a victim of fraud, or more likely, human error.

But to stay on top of that routine activity, Americans collectively make hundreds of millions of visits to banking websites each month. This, my friends, is not an efficient use of time.

And it's mostly unnecessary. There's really no reason to log in every week to manage my accounts. All the info I really need could be sent to me via email.

That would eliminate the need for most website visits. And if I could initiate transactions right from the email, I'd only need to visit the website every few months to tweak my settings (even that could potentially be done through email interactions).

But as pervasive as email (and text) alerts have become, they are often cryptic messages that make you feel less certain of your finances, creating more anxiety and more website visits (see note 1). This is not what you want from financial providers.

What's missing is a rich email experience, where a balance summary message can be expanded into a full statement with the click of a link. Where key supporting actions, such as paying a bill, are imbedded in the message. And where it's easy to resolve issues immediately while you are thinking about them, rather than moving to another channel later on.

That's the promise of Email Banking that we explore in the current report (see below). We also look at a new Israeli startup, ActivePath, that is delivering much of this vision with its new email banking service launching in the U.S. later this year (note 2). The screenshot below shows how a password-protected daily account-summary email can become a full-featured account-management tool with numerous links to act on the information presented. 

Finally, in an addendum to last month's report on email/text alerts, we look at the alert-control panels at five major banks: Bank of America, Capital One, Chase, U.S. Bank and Wells Fargo.

About the report:

----------------------------------------------------------------------------------------------

Email banking: revitalizing the channel (link)
New technologies and more thoughtful design could elevate email
to a central role in account management

Author: Jim Bruene, Editor & Founder

Published: 19 Aug 2010

Length: 40 pages

Cost: No extra charge to OBR subscribers, $395 for others here

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Daily account summary email from ActivePath
Note: Embedded buttons to a.) view transactions, b.) role money into a CD,
c.) transfer funds, d.) view transaction detail, e.) chat with customer service

clip_image002

Notes:
1. For more on email alerts, see last month's Online Banking Report: Email Alerts & Transaction Streaming.
2. See ActivePath, along with 55 other innovators, at FinovateFall, Oct. 4/5 in NYC.

Comments (3)

New Online Banking Report Published: Bank Transaction Email Alerts & Real-Time Streaming (Feeds)

By Jim Bruene on July 8, 2010 1:13 PM | Comments (1)

image Two months ago when we were sketching out the next Online Banking Report (see note for links to the report), I thought it would be useful to look at the real-time Web and how consumers were becoming accustomed to status update feeds through Facebook and Twitter.

Old-school alerts: Email
As I wrote the report, I realized that most online banking users still want to consume transaction data the old-fashioned way, through email and over the Web. We did a quick consumer survey that confirmed our hypothesis, with email preferred 2-to-1, over text and voice messaging. Even among the under-35 crowd, email and text alerts were tied.

So we also took a detailed dive into email alerts, developing 22 recommendations for state-of-the-art email messages. And we graded 16 alert examples from 13 financial institutions. Overall, our sample scored very well with Bank of America, Lending Club, Mint, ING Direct, PayPal all earning A grades. Also U.S. Bank, Schwab, Wells Fargo and Prosper were just slightly lower, each with a B+. 

The future: Real-time streams/feeds/updates
While email, text or voice messages work well for alerts, they are not as desirable for keeping users informed of all their transactions. Once you start getting multiple emails each day from your financial accounts, it becomes overwhelming and you stop opening them. That's why transaction feeds are a promising means for keeping customers up-to-date on an ongoing basis. In a world where so many consumers are following a Facebook news feed, Twitter feed, or good old RSS, it's only natural that financial transactions will join the mix.

But it's still a long way off. For the most part, consumers do not want commercial messages cluttering their news feeds. And they are understandably confused about privacy/security settings, and don't feel confident that bank transactions delivered via Twitter direct message, are not being displayed to the world.

However, once we get past that educational challenge, we believe a significant number of consumers will prefer tracking their finances via feed (mostly via mobile) instead of logging in to online banking multiple times per month.

To learn more about what could happen in this area, we looked at three transaction-feed startups:

Bottom line: Real-time feeds are the future, but many years away from making it past even the earliest of adopters. For most financial institutions, the important thing now is to make sure you have great email and text alerts. But for those looking to differentiate with technology, feeds provide an intriguing opportunity. 

------------------------------------

Note:
1. The report is available at no extra charge to OBR subscribers here; and can be purchased for US$495 by others here. See the Table of Contents here (PDF). 

Comments (1)

New Online Banking Report Available: Online Personal Financial Management (OFM) 3.0

By Jim Bruene on May 24, 2010 7:46 PM | Comments

image

Online Personal Financial Management 3.0
Taking online banking to the next level with personal financial management tools and guidance (note 1).

It's been almost four years since our last full report on online financial management (OFM). At that time (summer 2006), there was no Mint, no My Portfolio from Bank of America, and few offerings from major fintech vendors.

Yodlee was the only major player with a true OFM product, one that by year-end 2006 would be on the map in a serious way as the machinery behind BofA's new offering (2006 post).

Back then, users that wanted financial management features still relied on desktop software, primarily Intuit's Quicken and Microsoft Money.

The market has changed dramatically since then:

  • Microsoft discontinued its desktop PFM altogether in 2009.
  • Mint launched in 2007, quickly picked up a million users, and was acquired by Intuit for $170 million in late 2009.
  • Intuit put Quicken online, then discontinued it, in favor of its new Mint.com brand.
  • Intuit purchased Digital Insight and is now providing Quicken-like functions to more than 200 banks and credit unions.
  • More than two dozen online personal finance companies have launched. And other than Mint, most have struggled to gain users. Many of the startups are now pursuing distribution deals through banks and credit unions.  

That's a lot of change in less than four years. But it's nothing compared to what will happen in the next four. In the report, we look at the increased role OFM features will play in future online and mobile offerings from financial institutions, specifically:  

  • The key tenets of online money management, and why less is more for many banking customers
  • How to mix and match features to develop the ultimate OFM package
  • How the mobile channel fits in to the mix
  • OFM website traffic (U.S.) for the past three years
  • Current number of OFM users and a 10-year forecast
  • The unique user experience of PNC Bank's Virtual Wallet (see previous post)
  • Why banks and credit unions have the upper hand in the battle for OFM users, but the rise of social networks creates interesting opportunities

Future file: The rise of the Virtual Credit Union?
In all our reports, we try to shed light on what's around the corner. From where we sit today, it seems likely that most money-management activity will take place through online/mobile channels at traditional financial institutions. But we also consider an alternate future where the social networks rise up to become powerful brokers of financial services (think Facebook Credits) and become what we call "virtual credit unions."

While it's too soon to predict whether the social networked-fueled virtual credit union takes root -- regulatory issues are a huge wildcard -- there's no doubt the social networks will have a dramatic impact on payments and financial services consumption.  

------------------------------

Notes:
1. The latest report is available at no extra charge to OBR subscribers here; and can be purchased for US$495 by others here. See the Table of Contents here (PDF). 
2. In this report, we use OFM as the acronym for online financial management. But these features are also referred to as PFM (personal financial management) in many sources including previous OBR and Netbanker articles.

Comments

New Online Banking Report Available: The Case for Mobile Banking

By Jim Bruene on March 15, 2010 6:49 PM | Comments

image The latest Online Banking Report: The Case for Mobile Banking is now available. It will mail next week to OBR subscribers. It's also available online here. There's no charge for current subscribers; others may download it immediately for US$395.

There is little doubt that mobile is the next online, not just in banking, but with many information-rich, time-sensitive services. Even in the online-centric United States, we expect mobile banking to eclipse online by the end of the decade. 

Another way to look at it: Starting from essentially zero just three years ago, more than half of the U.S. online banking population will be using mobile banking, by 2015. That's zero-to-40 million households in just eight years.

Most financial institutions should be making their mobile bets during 2010/2011. The report outlines ten ways that mobile banking supports overall strategic goals at financial institutions. It also includes our ten-year forecast for U.S. mobile adoption (note 1).

This report is number four in a series we've published on the mobile area during the past three years:

Num Date Title
177 Mar. 2010 The Case for Mobile Banking: Ten strategic reasons for investing in the channel
163/164 Mar. 2009 Mobile Banking 2.0 the iPhone Edition: How to build a smartphone app even your CFO will love
140/141 Apr. 2007 Mobile Money & Payments: Why credit & debit card issuers should embrace mobile delivery now
138/139 Feb. 2007 Mobile Banking: Leveraging the third screen

Note:
1. The mobile forecast was originally published last month in our year-end recap.

Comments

New Online Banking Report Available: Ten-Year Online & Mobile Banking Forecast and 2009 Recap

By Jim Bruene on January 22, 2010 5:31 PM | Comments (1)

image The latest Online Banking Report: 2010 to 2019 Online & Mobile Banking Forecast is now available. It will mail next week to OBR subscribers. It's also available online here. There's no charge for current subscribers; others may download it immediately for US$495.

The report includes our latest 10-year online banking and bill pay forecast. For the third year in a row, the forecast was bumped up a few percentage points to reflect a more robust outlook for adoption, thanks primarily to mobile banking. For example, we now project 73 million U.S. households banking and/or paying bills by online or via mobile in 2013 (note 1). 

The report also includes a revised 10-year forecast for U.S. peer-to-peer lending. After experiencing a 30% decline in 2009, we expect healthy growth next year with a record amount of loan originations.   

Top ten innovations & trends of 2009 and of the decade
The report includes a summary of the top ten innovations of the past year, including the surge in mobile banking usage, the amazing tools coming out of the iTunes App Store, and of course, the surprising adoption of Twitter, with nearly 1000 financial institutions worldwide tapping the real-time info stream (note 4). 

We also listed the top 25 innovations of the decade topped by the invention of simple online payments by PayPal ten years ago (note 2) and the advent of modern mobile banking (note 3) which appeared in the United States just three years ago at Citibank (powered by mFoundry) and BancorpSouth (powered by Firethorn).

Notes:
1. Mobile banking access is included in the overall online banking numbers, but it's also shown as a separate line item. 
2. Technically, this launched in mid-Nov. 1999, but that seems close enough to 2000 to make the all-decade list.
3. There were a number of earlier mobile efforts, including from Citibank, in the 1999 to 2001 period, but they were ahead of their time and shuttered in 2001/2002 for lack of interest. The "modern era" began in 2007 in the United States.
4. Follow them all on Twitter via The Financial Brand's financial institution lists.

Comments (1)

New Online Banking Report Published: Making the Case for Person-to-Person (P2P) Payments

By Jim Bruene on December 15, 2009 3:13 PM | Comments

image

We just published the latest Online Banking Report:

Making the Case for Person-to-Person Payments
Does mobility provide the tipping point for bank-branded P2P?

Author: Jim Bruene, Editor & Founder
Published: 10 Dec. 2009
Size: 40 pages, 10,000 words
Author: Jim Bruene, Editor & Founder
Cost: For OBR subscribers: $0, all others US$495
Abstract/Table of Contents: Here (PDF)
Download or purchase: Here

Background:
If you've been around the industry a while, you probably remember the last time there was a lot of hype around person-to-person (P2P) payments. It was ten years ago and PayPal had just launched and was competing with three well-funded efforts from large banks: Wells Fargo, Bank One (now Chase) and Citibank.

The battlefield at the time was eBay, which desperately needed a trusted payment mechanism, to remove the friction from person-to-person commerce. Well, PayPal won that battle, taking out all three bank competitors and becoming the payment standard at eBay.

But the incumbent banks and credit unions have not lost the war, yet. They still own the customer payments relationship. And even though more than 70% of U.S. online shoppers already have a PayPal account, there are millions of customers that still want an easy way to transfer money to family members, friends, or acquaintances. And increasingly, they will want to send the money via their mobile phone.

While PayPal can handle that type of transaction, it's not necessarily top of mind with consumers when considering how to send $65 to their sister to pay their share of mom's birthday party. 

This is something PayPal recognizes, so they are actively pursuing bank partners to offer co-branded Powered by PayPal P2P payment services. Just last month, PayPal announced deals with S1, FIS, and First Data to make PayPal solutions available to their thousands of clients. The first S1 client to publicly announce the program is Mercantile Bank of Michigan, which is already telling customers about its Q1 2010 launch of PayPal-powered mobile payments (see previous post).

About the report: Published last week, the latest Online Banking Report includes: 

  • An overview of the product and market size
  • Analysis of features and benefits
  • A look at potential revenue streams
  • Forecast for online and mobile P2P payment usage (United States only)
  • Review of the offerings from key solutions providers and financial institutions, including the latest launch from Univest National Bank & Trust, which just launched a home-grown P2P payments service (see screenshot below)
  • Project priority guidance for various types of financial institutions

Companied mentioned: Amazon Payments, American Express, Bank of America, Bank One (Chase), BECU, CashEdge POPmoney, CircleUp SmartPay, First Hawaiian Bank, Fiserv, Geauga Credit Union, ING Direct, iPay Technologies, MasterCard MoneySend, Mercantile Bank of Michigan, Mobile Money Ventures, mPayy, MoneyGram, Obopay, Nokia Money, Patelco Credit Union, PayPal, Revolution Money, TwitPay, Univest Bank & Trust, US Bank, Wells Fargo, Western Union

Univest's new P2P service featured on its homepage (15 Dec 2009)

image

Note: The report will be mailed to subscribers later this week.

Comments

New Online Banking Report Published: Serving Small Businesses with Online & Mobile Banking

By Jim Bruene on October 30, 2009 2:30 PM | Comments

image Since we began publishing Online Banking Report in 1995, we've taken a deep dive into the small- and micro-business online banking market five times. The latest was published yesterday (here). Online Banking Report subscribers can access it now as part of your subscription  (note 1). Others may purchase it for US$495 (abstract here).

Small business banking is one of my favorite subjects. It's near-and-dear to our hearts because we've experienced first-hand the frustration of trying to manage our business with neither the resources, nor frankly the interest, to tap sophisticated business-management tools.

So, we've hobbled along over the years using Word, ACT, Excel, Microsoft Money, a hand-written ledger, and a moderately customized ecommerce back-end on our website. But we've clearly paid a price (note 2) for our lackadaisical approach to business finance.  

The reason I share our foibles is to point out the need for banks (note 3) and others to look at the opportunity more broadly. You can do so much more than simply help small businesses manage their checking accounts and credit lines. It's the day-to-day business drudgery, billing, account receivables, record-keeping, tax prep, payroll, compliance, and so on, where small and micro businesses really need help.

As I've said many times over the past decade, I'd gladly pay $500 per MONTH for an online, small-business financial management service that handled ALL our needs. Ultimately, it would save us thousands per year, while delivering much more timely info about the health of our business.

Our latest report is a true product-manager's guide to small-business product/service development with 76 pages of ideas plus examples from leading banks worldwide. We tie it all together with detailed descriptions of four levels of small-business package accounts (starting on p. 45 in the OBR Small Business Report; note 4):

  • Virtual Checking Account: A transaction-oriented service priced at $25 or so per month
  • Virtual Business Manager: Organizes most financial management duties for $50 to $100 per month
  • Virtual CPA: Handles most business-management functions including customer relationship management and billings for a monthly fee of $100 to $250
  • Virtual CFO: The works for $500+ per month

The report also includes data on the size of the U.S. market and a forecast for online banking usage for the next 10 years.

Notes:
1. Printed copies will be mailed late next week.
2. According to our accountant, we've spent well into five-figures more than necessary, mostly in extra taxes. Then again, we've avoided paying bookkeeping and software expenses that could have been just as high. 
3. Why do I think this is an opportunity for banks and credit unions, when it is outside of their core deposit and credit offerings? Very small businesses have neither the time nor resources to search for solutions, and then perform the due diligence necessary to determine whether the solution provider or professional services firm is trustworthy. On the other hand, while business owners may not always hold their bank in the highest regard, they at least trust them to safeguard their info. An army of regulators and class-action lawyers makes sure that the bank does not take its fiduciary responsibilities lightly. 

But few financial institutions will look to build sophisticated financial management features in house. Most will look to outsiders, both startups such Outright.com and established bank-tech firms such as Intuit, to build and maintain the business-management features.
4. See also, our recent post on small-business dashboards. 

Comments

New Online Banking Report Published: 2010 Guide to Online & Mobile Products, Pricing & Strategy

By Jim Bruene on August 27, 2009 5:27 PM | Comments

imageBelieve it or not, there are just 23 business days left before Q4 2009. That means planning season is just around the corner. To help ease the pain, we offer you the ultimate idea-generation tool; our 15th annual Planning Guide for Online & Mobile Banking.  

imageThe 80-page report is packed with more than 500 product and marketing tactics designed to help you generate new ideas, plans, and strategies for 2010 and beyond.

Online Banking Report subscribers, may download it (here) free of charge. Others may purchase it (here).

Note: Yes, that's USAA's awesome native iPhone app on the cover. Mobile banking, specifically via the iPhone and text messaging, are top opportunities for next year.  See below.

  Twenty projects from the report were selected for our 2010 hot list (in alpha order):

  • Activity dashboard/ticker
  • Archives, long term  
  • Automatic alert enrollment
  • Blog/Twitter and other social media
  • Credit score/report zone
  • Friends-and-family loan facilitation
  • High-yield online savings/checking
  • Home equity center
  • Micro/small-business services
  • Native mobile app (iPhone/Blackberry/Android)
  • Personal finance functionality 
  • Premium/VIP online services
  • Prepaid/gift cards
  • Problem mortgage resource center
  • Retirement planning center
  • Service standards/guarantees for online/mobile interactions
  • Student banking/financial education center
  • Text (SMS) banking
  • Ultra transparent (flat fee) mortgages
  • Usage-based contests/rewards
Comments

New Online Banking Report Published: Online Account Opening

By Jim Bruene on June 23, 2009 11:26 PM | Comments

imageWe just completed our latest Online Banking Report. It will be mailed to subscribers this week.
It's also available online here. There's no charge for current subscribers; others may access it immediately
for US$495.

---------------------------------------------------------

Improving Online Account Opening ROI
Ten strategies to increase online application conversion rates

102 pages (published 21 June 2009)

In this report (abstract PDF), we focus on ways to increase conversions and improve your results when opening financial accounts online or over a mobile phone.

clip_image002The online application is the new branch new-accounts desk. And, just as you provide ongoing support, training and incentives to branch-based sales staff, you must continually fine-tune your online sales process.

In our experience, this is an area that needs attention at most financial institutions. Things have greatly improved during the 10+ years we've been tracking online applications. However, during the research for this report, we reached dead-ends at three of the 10 applications tested (note 1). That just can't happen.

The report outlines a 10-step approach to improving the process: 

  • Direct users to the application
  • Set expectations
  • First things first
  • Guide customers
  • Bundle mobile access & alerts
  • Upsell
  • Fund
  • Ask for referrals
  • Stay in touch
  • Humanize the process

We reviewed the online applications of the following companies:

  • Bank of America
  • BECU (powered by uMonitor)
  • Capital One
  • Chase Bank
  • First Arkansas Bank & Trust (powered by FirstROI)
  • Flagstar Bank (powered by uMonitor)
  • HSBC Direct
  • Huntington Direct (powered by CashEdge)
  • M&I Bank
  • National City
  • Verity Credit Union (powered by Andera)
  • Wells Fargo
  • Zions Bank

Finally, a 10-year forecast for online account-opening volumes in the United States is presented.

M&I Bank has an attractive and informative application start page (9 June 2009)
Note: The online banking guarantee at the bottom is a good way to improve user trust.

M&I Bank online application start page

Note:
1. Granted, user error was the problem in two of the three failed apps; however, we weren't purposely trying to make mistakes. The online application should have provided assistance in correcting them, rather than leaving us hanging.

Comments

New Online Banking Report Published: Selling Behind the Password

By Jim Bruene on April 24, 2009 6:14 PM | Comments

image

We just posted our latest Online Banking Report.
It will be mailed to subscribers tomorrow. It's also available online here. There's no charge for current subscribers; others may access it immediately
for US$395.

---------------------------------------------------------

Selling Behind the Password
Unlocking the marketing potential within
online banking

48 pages (published 21 April, 2009)

In this report (abstract), we go behind the login screen and report on the marketing and cross-selling practices of 15 financial institutions and card issuers.

Even among large banks, there's a huge disparity in the amount of cross-selling efforts within online banking. Wells Fargo is the most prolific, with nine marketing messages and product placements alone on its main account-management page. The bank also uses login and logoff activities to display promotions (see screenshot below). On the other hand, US Bank has just a single link to an "offers page" buried below the fold. Most FIs fall somewhere in between.

We looked at the opportunities within six different areas:

  • Interstitial pages (splash screen) inserted after performing any online activity, especially after the initial login.
  • Banner and keyword promotions within the secure online banking area
  • Product placement within online banking and bill pay
  • Transactional upgrades
  • Page displayed after an online banking session has concluded (either through logout or inactivity)
  • Product/shopping/discount portals and third-party ads

The following financial companies were analyzed by logging in to actual accounts and documenting their sales and marketing efforts:

  • American Express business gold
  • Bank of America online banking
  • Chase credit card
  • Citibank business card
  • Citibank online banking
  • Discover Card
  • Everbank
  • First Tech Credit Union
  • ING Direct
  • Jwaala (demo only)
  • Mint
  • Netflix (non-financial)
  • PayPal
  • Revolution Money
  • US Bank
  • WaMu
  • Wells Fargo

Wells Fargo promotion displayed after logging out from online banking
(27 March 2009)

clip_image002

Comments

New Online Banking Report Published: Mobile 2.0 -- iPhone Edition

By Jim Bruene on March 16, 2009 5:55 PM | Comments

image This is a report I've been meaning to write for a few months, but it kept getting pushed back for more pressing (Growing Deposits in the Digital Age) or timely (Year-end Wrap and Forecast) reports.

But a few days ago, we put the finishing touches on the latest Online Banking Report. It will be mailed to subscribers by the end of this week. It's also available online here. There's no charge for current subscribers; others may access it immediately for US$495.

--------------------------------------------------------

Mobile Banking 2.0: iPhone Edition
How to build a smartphone app even
your CFO will love

In the report (press release), we outline the reasons why every financial institution should consider an iPhone app, even if it's just a simple surcharge-free-ATM/branch finder like 1st Mariner Bank (iTunes link; see note 1) or a one-screen interface to your mobile website, essentially what Bank of America started with last year. Being on the iPhone is like having a website in 1995. Just by being there, even if it's crappy, you are ahead of the curve. And for the rest of time, you can brag that you were an early adopter of all things mobile.

And the icing on the cake, you get to slap Apple iPhone pictures all over your website. Baltimore, MD-based 1st Mariner, a bank that doesn't appear to even support basic mobile banking (note 2) has the most iPhone-ish website in the land (see screenshots below).

The report also looks at:

  • Mobile banking application market (Apple's App Store, RIM's Blackberry App World, and Google's Android Market)
  • Mobile banking forecast (U.S.)
  • 33 features to consider for your mobile banking app
  • Leveraging iPhone hype to increase interest in financial products and services
  • Legal issues in mobile banking from our guest columnists at Chambliss, Bahner & Stophel

1st Mariner Bank homepage (16 March 2009)
Note: Nice job with the St. Patty's day theme too!

image

1st Mariner iPhone landing page (16 March 2009)

image

Notes:
1. The 1st Mariner app, built by PointAbout, identifies the nearest of 16,000 surcharge-free MoneyPass ATMs. It also features other integrated apps for local weather, lowest gasoline prices, accident alerts, traffic (powered by MapQuest), grocery stores, and Zagat restaurant listings (but not reviews or ratings).
2. Ironically, if you navigate to the bank's website on your iPhone, you cannot even see its iPhone homepage graphic (shown above) because the graphic is Flash-based which is not supported by the iPhone's Safari browser

Comments

Pertuity Direct Launches Financial Mashup: Consumer Loans + Mutual Funds + Social Finance

By Jim Bruene on February 15, 2009 12:43 PM | Comments (1)

clip_image002Last month I wrote about Pertuity Direct's impending launch. It's been live for a few weeks, and I've had a chance to review it in detail. The model is so unique, we created an entire special report on the company. It is available to our Online Banking Report All-Access subscribers here. Others can purchase for $195 here. And if you just want the executive summary, read on.

Overview
Pertuity Direct is an amalgamation of two financial services plus a social lending community:

  • Mutual fund: Retail investment assets are gathered via the National Retail Fund, an interval mutual fund created by Gemini Fund Services. The fund plans to invest primarily in consumer loans originated by Pertuity Direct (see note 1). At the outset, there are two mutual funds to choose from: one will invest only in loans to prime customers with credit scores of 720 or higher; the other will take on more risk and invest in loans to borrowers with 660 or higher scores. Minimum investment is $250 and current estimated fund expenses are 3.1%.
  • Consumer loans: Three-year installment loans of $1,000 to $25,000 will be originated by Pertuity Direct under state licensure. The loans will be sold to The National Retail Fund who will hold them until they pay off. Pertuity Direct will be paid a 1% servicing fee from the fund. Borrowers also pay a 1% to 2% loan fee at funding. The company is currently licensed in 37 states.
  • Social lending: The last, and least, piece of the product is a social lending forum, where mutual fund investors can purchase Pertuity Bucks to give to already-funded borrowers to help them repay their loans.

Analysis
Whether this should be called "peer-to-peer lending" is open for debate. Pertuity Direct makes all the loan decisions and sets the rates. Investors have no direct influence over which borrowers are funded. However, there is a social element because investors can donate to borrowers through the community area. The model probably most resembles a member-owned credit union or mutual savings bank.

From an investor's standpoint, it's a unique opportunity to capture banking interest margin without actually buying shares in a commercial bank. The mutual fund is more like a bond, so it should be less volatile than owning equity. Although current estimated management fees of just over 3% are a drag on earnings, the company hopes the percentage falls as the funds gain assets.

However, the mutual fund doesn't have the liquidity or upside of an equity investment. It's an interval fund, meaning they will allow some redemptions each quarter (note 2), but it's not publicly traded. There's also the matter of how they value the underlying assets of the fund. A proprietary model will value the consumer loan portfolio each day, but since the assets are not publicly traded, there is no way to really understand if that model is working until there is a performance history. 

Summary
Pertuity Direct does a credible job weaving these three disparate businesses together and its management team, with experience at PNC Bank and E*Trade, have great ideas on taking this business to the next level. But much remains to be done to educate the market and overcome the hesitancy of jittery investors. We will be following them closely (note 3). 

Screenshot: Pertuity Direct homepage (2 Feb. 2009)
The company posted a 3.5-minute YouTube video of founder Kim Muhota explaining the company's offering.

image

Notes:
1. While the intention is to invest in Pertuity Direct-initated loans, the funds can also invest in other vehicles.
2. The prospectus says that it will allow 5% to 25% of its funds to be redeemed each quarter.
3. CEO/founder Kim Muhota will be participating in our FinovateStartup 2009, so you'll be able to hear directly from him.
4. For more info on P2P lending, see our Online Banking Report on P2P Lending.

Comments (1)

New Online Banking Report Available: Ten-Year Online & Mobile Banking Forecast and 2008 Recap

By Jim Bruene on January 28, 2009 6:47 PM | Comments (1)

image The latest Online Banking Report: 2009 to 2018 Online & Mobile Banking Forecast is now available. It was mailed yesterday to subscribers. It's also available online here. There's no charge for current subscribers; others may access it immediately for US$495.

The report includes our latest 10-year online banking and bill pay forecast. This year we again bumped our long-term usage forecast to 6%, up from 3%, to reflect a more robust outlook for adoption, primarily from mobile-only users. For example, we are now projecting 71 million U.S. households banking and/or paying bills online by 2013 compared to last year's forecast predicting 66 million for the same period.

Mobile banking (see note 1) access is included in the overall online banking numbers, but it's also shown as a separate line item. Based on the new open-platform standards ushered in by the iPhone and App Store, we increased both our short- and long-term adoption forecast by 10% to 20%. For example, by year-end 2011 we now predict there will be 18 million U.S. mobile banking households. A year ago we forecasted 16 million.

We also included a revised forecast for U.S. peer-to-peer lending. We cut back our short-term estimates by more than 50% due to regulatory and economic constraints on the business. A full 10-year forecast is included in the report.

Top ten innovations & trends of 2008
The report also includes a summary of the top ten innovations of the past year including the surge in mobile banking demand and the marked increase in traffic to personal finance speciality sites such as Mint and SmartyPig.  

Note:
1. A mobile banking household is one where someone has used a mobile device to access bank or credit card account info within the past six months. Includes text-based queries, but not simple broadcast alerts.

Comments (1)

New Online Banking Report Published: Growing Deposits in the Digital Age

By Jim Bruene on December 16, 2008 5:59 PM | Comments (1)

image Every banker talks about the importance of core deposits, but in most years it's hardly front-page news: 2008 changed that.

As demonstrated by the shocking downfall of WaMu, Wachovia, and others, a stable deposit base is crucial to your profitability, your brand, and even your viability as an organization.

As a result, deposit product marketing is on the forefront of many bank and credit union marketing plans for 2009 and beyond. With that in mind, we offer the latest issue from Online Banking Report:

Growing Deposits in the Digital Age:
Seventeen smart strategies for gathering core deposits while building your brand

The report includes 72 pages of ideas, tactics, and strategies to expand retail deposits in 2009 and beyond. It was written by guest author Jeffry Pilcher, a branding and marketing guru who recently launched his own brand consultancy, ICONiQ. Pilcher joins OBR Editor Jim Bruene in looking at seventeen promising deposit-building strategies. Many are tried-and-true techniques, such as sweepstakes and rewards, updated with a digital touch. While others, such as bidding on deposits at auction at MoneyAisle, are pure Internet-enabled inventions.

Online Banking Report subscribers may download the report (here) free of charge. Others may purchase (here).

The seventeen strategies explored in Growing Deposits in the Digital Age:

  • Customizable accounts
  • Debit savings rewards
  • DIY online-only accounts
  • Deposit auctions
  • Gen-Y checking
  • Green banking
  • High-yield/big rate
  • Instant online depositing
  • Mobile savings apps & online widgets
  • Online savings buzz
  • Rewards checking
  • Savings automation & incentives
  • Social savings contests
  • Socially conscious banking
  • Sweepstakes & giveaways
  • Social "friends & family" savings
Comments (1)

New Online Banking Report Published: 2009 Planning Guide

By Jim Bruene on November 6, 2008 1:36 PM | Comments

image With the financial crisis still in full swing, it's not easy to concentrate on the 2009 plan. But focus you must.

You can bet that companies emerging from this mess as winners are working overtime right now, plotting how they will grab your market share next year. Yes, budgets will be down, but thanks to the Web and social media, there are more cost-effective opportunities than ever to get your message out.

With that in mind, we offer the latest issue from Online Banking Report, our 14th annual Planning Guide for Online & Mobile Banking (see note 1).  

It includes 72 pages of ideas, tips and tools to help you generate new ideas, plans, and strategies for 2009 and beyond. Subscribers, Online Banking Report subscribers, may download it (here) free of charge. Others may purchase (here).

While more than 500 online banking product and marketing ideas are published in the report, we hand-selected 20 projects for the 2009 hot list (in alpha order):

  • Activity ticker
  • Balance conversions
  • Credit score/report zone
  • Flat-fee mortgage
  • Green banking
  • High-yield deposit accounts
  • Home equity center
  • iPhone/Android native app
  • Long-term archives
  • Micro/small-business services
  • Peer-to-peer loan facilitation
  • Personal finance functionality 
  • Premium/VIP online services
  • Prepaid/gift cards
  • Problem mortgage resource center
  • Retirement center
  • Service standards/guarantees
  • Social media/blogging
  • Usage-based contests/rewards
  • Widgets

Note:
1. The Netbanker blog (established 2004) and Online Banking Report (established 1994), are written and published by the same company.

Comments

Online Banking Report Looks at New Security Technologies that Promise More Peace of Mind

By Jim Bruene on September 18, 2008 5:25 PM | Comments

image With bad news pouring down from all corners of the financial services world, it's a difficult time to be a bank marketer no matter what condition your financial institution is in (see note 1).

imageBut besides sending reassuring emails to your customers, highlighting your strong balance sheet on your website (see inset), and for the few with blogs, dropping the occasional rosy post into the RSS or Twitter feed (note 2), what's a banker to do?

When fear is rampant, little things can make a difference. Your customers have long been nervous about banking online. Most aren't afraid enough not to use it, but lingering doubt remains.

Now might be a great time to follow the lead of ING Direct, Firstrade, and Muriel Siebert and introduce a software solution that provides extra security for online banking. While it won't make a Fannie Mae shareholder any happier, it's reassuring in these times that at least there are no crooks stealing your username and password.

obr_bestofwebOnline Banking Report publishes Security 4.0 (note 3)
In the latest Online Banking Report, we look at several promising software solutions that allow even malware-infested users to connect safely to their bank. Both solutions earned OBR Best of the Web designations (note 4): 

  • Rapport from Trusteer, now being distributed by ING Direct in the United States and Canada (previous post here)
  • SafeCentral from Authentium, being distributed by Firstrade and in testing at several major banks (Finovate Startup demo video here)

Online Banking Report: Security 4.0 Tabl of Contents Sep 2008We also take a closer look at Bank of America's SafePass (previous post here), which is an easy way for customers to add an extra security layer to their login, although it won't prevent certain malware to hijack the session. See the inset for the complete Table of Contents.

Online Banking Report subscribers may download it now here. Others may download abstract here, or purchase here. Cost is US$495. 

Notes:
1. But be thankful if your financial institution is not in the headlines right now. I'm in the hometown of WaMu and the headlines this morning were not pretty.
2. Blog post from Verity CU on 16 Sept.; Twitter update from First Federal today   
3. Our fourth full Online Banking Report on security/privacy; previous reports were #119, #93/94, and #48
4. OBR Best of the Web awards are given periodically to pioneering online banking features. It is not an endorsement of the company or product, just recognition for what we believe is an important development. Trusteer and Authentium were the 71st and 72nd recipients of the designation since we began awarding them in 1997.

Comments

New Online Banking Report: New Models for Lead Generation

By Jim Bruene on July 9, 2008 5:17 PM | Comments (2)

imageOur parent publication, Online Banking Report, has published a new report: New Models for Lead Generation: How auctions, community recommendations, product placements, and specialized search provide alternatives to Google AdWords.

Not only is this the longest report title in our history, it's the first time we've looked specifically at lead gen sites (click on the Table of Contents right, to download the abstract).

obr_bestofwebThe report was inspired by MoneyAisle, an auction-based retail deposit market, that debuted June 9. Although a few kinks need to be worked out, we are impressed by its work and are awarding it the second OBR Best of the Web this year (see note 1 and Credit Karma below).

But auctions were not the only new lead-gen model we looked at. Others included:

The report, which includes a 10-year forecast for auction and personal finance community involvement, is available as part of an annual Online Banking Report subscription or it can be purchased individually for $495 here.

Next month: New security technologies your customers are going to love, or not.

Screenshot: Credit Karma offer page: Countrywide's high-yield savings offer is rated positively by 53% of Credit Karma users and earns a composite score of 63% which also factors in clickthrough rates and exclusivity, see box in upper right (9 July 2008)

image

Note:
1
. The first winner in 2008 was SmartyPig (here). Best of the Web awards are given for new products/features that "raise the bar" for online banking. It is neither an endorsement of the company, nor the product itself. See previous coverage here.

Comments (2)

New Online Banking Report Published: Social Investing Communities

By Jim Bruene on May 12, 2008 8:49 PM | Comments

imageThe latest research from our Online Banking Report division is now available. It's a double issue (#152/153) released today entitled:

Online Investing Communities: Will social networking revolutionize saving & investing?

We believe social networking will eventually play a large role in online investing, and evidently we are not alone. We found 54 companies involved in investment-information exchange and only six of those have monthly traffic of 100,000 or more.

So, while we like the idea, it will take awhile to catch on. Only about 25% of the U.S. population owns individual stocks, and only a small subset of those make a trade every year. Furthermore, the prime social networking demographics, those younger than 35, are less likely to own or follow stocks. As a result, we project that it will be well into the next decade before adoption passes the 10% mark.

In preparing the report, we asked 400 U.S. online users their thoughts about the idea of sharing investment info in a social network setting setting such as Zecco Share or Motley Fool CAPS (see note 1). While there was a decent amount of interest from the under-30 group, 30% were somewhat or very interested, the overall enthusiasm for the idea among all U.S. adults (21+) was only 22%. See the full report for more research results and the resulting 10-year social investing forecast.

About the report
Subscribers may download the report here as part of their annual subscription plan. Others may purchase it here. The printed version will be mailed to subscribers later this week. 

For more information read the abstract here.

Note:
1. We asked U.S. online users for their opinions about social networking for investment information (fielded April 18-19, 2008, n = 401). The top-level results are including in the report. For more detail, All-Access subscribers may download a complete summary PDF document of all questions and answers or download an Excel file of the raw data. In addition, All-Access subscribers may use our online research tools to run their own cross-tabs and filters on the dataset. The dataset will be available next week through subscriber accounts at OnlineBankingReport.com.

Comments

New Issue of Online Banking Report Published Today

By Jim Bruene on March 10, 2008 10:06 PM | Comments (1)

obr_cover_oct07We just finished the latest from our Online Banking Report, entitled Searching for Customers 3.0 (see note 1). The report takes a fresh look at search engine marketing for financial institutions including local search, financial keyword selection, how to leverage social media such as blogs to improve your organic results, and more.

It's 36 pages long with 11,000 words and 28 tables. The report includes overall search marketing trends and metrics. We also dive deep into the most popular financial search terms and to help you uncover new ideas for your own search marketing tactics.

Online Banking Report subscribers may download the report here. All other may purchase it for US$245 (single user) here. The abstract is available here.

Note:

1. The "3.0" in the report title means it's the third time we've covered this subject during the 13-year history of Online Banking Report. We also looked at search in April 2003 (OBR 95) and June 2001 (OBR 69) when Google AdWords was just getting rolling.

Comments (1)

New Online Banking Report Available: 2008 to 2017 Forecast

By Jim Bruene on February 5, 2008 5:46 PM | Comments

image The latest Online Banking Report: 2008 to 2017 Online Banking & Bill Pay Forecast, is now available. It was mailed yesterday to subscribers. It's also available online here. There's no charge for current subscribers; others may access it immediately for a charge of US$395.

The report includes our latest 10-year online banking and bill pay forecast. This year we bumped our long-term usage forecast by 10% to 15% due to a more robust outlook for adoption, especially from mobile-only users (see note 1). For example, we are now projecting 64 million U.S. households banking and/or paying bills online by 2012 compared to last year's forecast predicting 56 million in the same period.

We're still not quite as bullish as Forrester, who's calling for 72 million online banking households by 2011 (post here), but we've closed the gap (note 2). 

In addition to the forecast, we summarized the top ten innovations of the past year. Thanks for the input from all the readers who answered our call for nominations in late December. We'll publish the list here in a few weeks, after subscribers have a chance to see it first.

Note:

  1. While we show mobile usage as a separate line item in the forecast, mobile-only banking users are included in the overall online banking forecast. 
  2. By comparison, our forecast for 2011 is 62 million. 
Comments

New Online Banking Report Published: Person-to-Person Lending 2.0

By Jim Bruene on December 18, 2007 11:41 AM | Comments (1)

For much of the past four or five weeks I've been researching and testing person-to-person lending sites. I've become a lender and have gone through the borrowing process at all three major U.S. P2P lending exchanges: Prosper, Zopa, and Lending Club. Plus I set up friends and family with loans at Virgin Money USA and LoanBack.

It was all part of the research process for the latest Online Banking Report entitled, Person-to-Person Lending 2.0: Disruptive service or market niche? That report is now available at our main website (here).*  

I had originally intended on publishing it in early December. But as I was trying to wrap things up, Zopa launched its new U.S unit. So I stopped the presses and added an analysis of its unique model. Then as I was finishing that, Lending Club made a significant change last week, becoming a national lender instead of state-sanctioned one. That too is now in the report. 

Here's a summary of the major fourth quarter activity in the person-to-person lending sector:

  • Oct. 2: Prosper overhauled a number of its lending tools, which were announced at our FINOVATE conference Oct. 2 (video here
  • Oct. 6: Virgin Money (formerly CircleLending) launched its revamped friends-and-family service with a splashy debut in Boston with Virgin founder Richard Branson leading the parade (coverage here)
  • Dec. 3: Zopa launched its U.S. version, an entirely new way of looking at the P2P space (coverage here)
  • Dec. 13: Lending Club went national in a unique partnership with WebBank

________________________________________________

*Subscribers may download the report free of charge.
Others may purchase it as an individual report.

Comments (1)

New Online Banking Report Published: 2008 Planning Guide

By Jim Bruene on October 18, 2007 4:44 PM | Comments

Link to Online Banking Report 2008 Planning Guide Over at Online Banking Report, we just posted the latest report, our 13th annual Online Banking Planning Guide (2008 version). It includes 60 pages of ideas, tips and tools to help you generate new ideas, plans, and strategies for 2008 and beyond. Subscribers, you may download it now (here) as part of your subscription. Others may purchase (here).

While there are more than 500 online banking product and marketing ideas in the report, we hand-selected 15 to put on the hot list for next year:

  • Alt-mortgage zone
  • Balance transfers
  • Fraud monitoring
  • Green banking
  • High-yield savings
  • Home equity center
  • Long-term archives
  • Microbusiness services
  • P2P loan servicing
  • Personal finance
  • Premium/VIP online banking option
  • Prepaid cards
  • Problem mortgage help
  • Web 2.0
  • Widgets
Comments

New Online Banking Report Now Available: A Look at Online Delivery of Credit Report Monitoring Services

By Jim Bruene on August 16, 2007 5:15 PM | Comments

Online Banking ReportJust a quick note to let you know that the latest Online Banking Report has just been uploaded to our website. It's title: Online Credit Monitoring Services: The robust business case for financial institution distribution. I'll post some conclusions from the report later, but you can read the abstract here

Subscribers, you can download it now (here) free of charge. Everyone else, it's US$595 on its own, or for "just" $500 more you get the new report plus a stack of others, including our report on Social Personal Finance, Mobile Banking, Mobile Payments, the latest online banking forecast and more

Comments

MySpace Meets Quicken: What's Happening in Social Personal Finance

By Jim Bruene on June 12, 2007 3:56 PM | Comments (3)

Link to Online Banking Report

Last week, I promised to provide more details on the conclusions in our latest Online Banking ReportSocial Personal Finance: Will social networking revolutionize personal finance? It was mailed to subscribers last Friday, so it should be making its way through inter-office mail as we speak (or download here). 

Here are the major themes/conclusions from the report:

  1. Social networks are the new main street; so banks that want to be where their customers are should NOT ignore social networks.
  2. There are many ways to bring social networking concepts into mainstream banking sites, for instance blogs and forums allow conversations to take place with both customers and employees participating.
  3. The leaders in the space now are startups such as Wesabe and Lending Club. But what they gain in social networking savvy, they more than give back in lack of trust. So financial institutions are still incredibly relevant in social personal finance.
  4. In the future, social networks may become so trusted that they can function as a virtual credit union, bringing together members to provide each other with financial services (e.g., P2P lending) or using their clout to negotiate deep discounts with financial providers (e.g., affinity credit cards).

 Social personal finance innovators profiled in the report include:

  • Buxfer -- Named OBR Best of the Web in the report for several pioneering features, including login via third-party APIs, transaction input via email, file appending, Google gadget, and budget alerts
  • Wesabe -- Also named OBR Best of the Web for its integration of personal spending records with the wider community

We also looked at Mint, Geezeo, Lending Club, Wells Fargo, and Intuit's new Personal FinanceWorks and Small Business FinanceWorks.

----

For more information on the report see the landing page here or download the abstract here. And for Colin Henderson's take at The Bankwatch, go here.

 

 

 

 

 

Comments (3)

New Online Banking Report Now Available: Social Personal Finance

By Jim Bruene on June 4, 2007 3:18 PM | Comments (1)

Link to Online Banking Report Wow, I can breath again. I just loaded the latest Online Banking Report on to our website, Social Personal Finance: Will social networking revolutionize personal finance? I'll post a summary later. Subscribers, you can download it now (here) free of charge. Everyone else, it's US$395 on its own, or for "just" $700 more you get the new report plus a stack of others, including our report on Web 2.0-ing your Bank, Mobile Banking, Mobile Payments, the latest online banking forecast and more.

Thanks to Scott at Payments News and Colin at The Bankwatch, who've already given the report a mention. And thanks to the Bryan Donovan and the folks at Compete, who provided a new online financial services data snapshot that I know you are going to find extremely valuable. More on that tomorrow.

Now, back to our regularly scheduled blog.  

Comments (1)

Mobile Money & Payments 2.0 Released: The Latest from Online Banking Report

By Jim Bruene on April 12, 2007 11:59 AM | Comments

Mobile Money & Payments 2.0 from Online Banking ReportOur parent publication, Online Banking Report, has just released its latest in-depth report: Mobile Money & Payments 2.0: Why credit & debit card issuers should embrace mobile delivery now

  • Link to the full report here
  • Link to the abstract here

The report builds on last month's Mobile Banking Report (report here), this time looking at the rollout of mobile payments in North America. The report recommends tactical and strategic options for financial institutions both in the short-term and into the next decade. In addition, several innovators are highlighted including Obopay, PayPal Mobile, and NTT DoCoMo.

Comments

Back Story: Wall Street Journal's Article on Online Financial Planning Tools from Banks

By Jim Bruene on March 13, 2007 12:13 AM | Comments

The Wall Street Journal published an extra section yesterday on personal finance entitled, Your Money Matters. Online financial tools were highlighted in Jane Kim's, "Check it Out: New online tools from financial institutions can help consumers manage their money." 

Here's the back story on several of the items mentioned in the article:

  • Our sister publication, Online Banking Report, was cited as the source of the following statistic: "About 16% of U.S. households used some personal-finance feature at least once in 2006. That percentage is expected to climb to an estimated 33% by 2016, with nearly three-quarters of those households using personal-finance tools offered by their financial institution online."

    The information cited in the WSJ story was contained in the report we published last fall in Personal Finance Features for Online Banking (OBR 131/132see Table 3, p. 3, lines 4 and 10). Current usage estimates were based in part from data provided by Javelin Strategy as shown in Table 2 on the same page. 
  • Wells Fargo My Spending Report CLICK TO ENLARGE In the article, Bank of America's My Portfolio was the first of two existing personal finance tools mentioned. The service, powered by Yodlee, was quietly launched in December and was covered in NetBanker at the time (link here) and received an OBR Best of the Web award in our final report of 2006 (OBR 137) where it was rated the third most important development of 2006.   
  • The second example cited was Wells Fargo's MySpendingReport (see inset and previous coverage here). The service, which is basically just a consolidated view statement data across the bank's transaction accounts, is a great example of positioning online banking features in a way that resonates with users. It was awarded an OBR Best of the Web in 2005, finishing the year as the tenth most important new development of the year (report here).

The story finished with hints of new services planned for later this year at Everbank, Bremer Financial (powered by Corillian), and a Digital Insight tool that allows users to hand enter additional bill payments in order to their entire payments picture in one place.

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Mobile Banking & Payments 2.0 Released: The Latest from Online Banking Report

By Jim Bruene on February 26, 2007 4:07 PM | Comments (2)

OCBC Bank mobile banking serviceWe've finally wrapped up our latest report, Mobile Banking & Payments 2.0, published by Online Banking Report, our by-subscription research division (see note 1).

  • Link to the PDF abstract and table of contents here
  • Link for subscriber access, or to purchase, here

Work on this report started at BAI's Retail Delivery Conference in mid-November where we scheduled a series of briefings with the three mobile players in attendance: ClairMail, Firethorn Mobile, and mFoundry. As reported here previously, we were mightily impressed with the opportunities available in the mobile space.  

After three months of looking at mobile banking, talking to more players, and trying to develop a reasonable forecast, we have slightly tempered our initial enthusiasm. While we remain optimistic that the mobile channel will someday eclipse desktop online banking in terms of pageviews and routine transactions, in North America mobile banking is NOT a new channel, but rather an extension of existing sales and service channels (see note 2). And with few fees expected, the business case must be made on the softer retention benefits and customer service savings.   

The Forecast
U.S. mobile banking adoption compared to online banking adoptionEven with a challenging business case, most top-10 retail banks are headed to market in 2007-2008 with some form of mobile banking. We forecast that 25% of U.S. households will use mobile bank access by the middle of the next decade. The mobile banking adoption curve for the next 10+ years will be virtually identical to that of online banking from 1995 to the present (see inset above and note 3). 

But we are much less certain on which method of mobile banking will cross the chasm. Unlike Web-based banking, there are powerful entities, called wireless carriers, that stand between the bank and its customers in True Mobile Banking. So it seems that text/SMS-based services will lead the initial wave, because they are less dependent on the carrier and most under-40 users are already using them. However, long term, we believe more complete one-button (see note 4) solutions will prevail. And while we do forecast the adoption for all three methods, there are too many variables to be certain. A year from now, things should be quite a bit clearer.   

Subscribers, please post your comments about this report below, or email them directly to jim@netbanker.com.

End Notes:

1. For those of you that may be new readers, this blog is written by the publishers of Online Banking Report, an industry newsletter that began 12 years ago. Many of our blog postings are a by-product of the research we are doing for Online Banking Report, so you'll often see references to our more in-depth research published there, available by subscription only. 

2. This is different in other countries where branch and PC-based banking is less pervasive.

3. U.S. adoption by household, +/- 25%. The underlying data and assumptions for this table are in the full report, OBR 138/139, as referenced in the opening paragraph.

4. One-button mobile banking is our name for banking functions that may be called up on the mobile screen through a link on the main menu. It could be a WAP-based mobile website or a downloadable application. 

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Online Banking Report Releases its Annual Planning Issue

By Jim Bruene on October 19, 2006 9:51 AM | Comments

Our sister publication, Online Banking Report, released its latest report, 2007 Online Banking Planning Guide. The 60-page report is packed with more than 1,000 ideas, tactics, and strategies for use by banks, credit unions, mortgage companies, credit card issuers, brokerages and insurance companies.

The report includes the following sections:

  • Consumer product planner
  • Small business product planner
  • Fee-income planner
  • Messaging planner

Online Banking Report subscribers may download the free report here. Others may purchase the report for US$495 here.

For more information, download the table of contents here.

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Online Banking Benefits: Consumer Needs Pyramid

By Jim Bruene on September 9, 2004 2:21 PM | Comments




 

Before embarking on new product and marketing strategies,
perform a reality check on users’ expectations.




Source: Online Banking Report, 9/04 Notes: 1We call it the illusion of real-time processing, because users don’t so much care whether a transaction is processed in real-time, what they care about is that they can SEE that you have accepted their transaction and have adjusted balances accordingly; the actual debiting/crediting can occur behind the scenes in batch mode. 2It’s extremely difficult to describe what’s “right” in words, but we know it when we see it.

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Categories: Online Banking Report

The Forecast Growth New Small Business Online Banking

By Jim Bruene on June 5, 2004 11:06 AM | Comments

Looking at the entire universe (including self-employed and contractors), for 2004 we project growth of 2 million new small business online banking users, a slight decline from the 2.5 million who came online in 2003. And the rate of growth, due to the higher base, will slow to 17% from 2003’s 28% (see Table 9, below).

Table 9
Forecast of U.S. Small, Microbusiness, and Self-Employed Online Banking Usage

includes broadest definition of small business users, population estimated at 23 million

Source: Online Banking Report projections based on industry data (+/- 30%), 3/04;
% OLB = percent of total population that is actively banking and/or paying bills online (activity within past 6 months)


 

Table 10

OBR Forecast: Small Business Use of Online Banking
businesses with annual revenues from $50,000 to $10 million, not including self-employed/contractors

Sources: 1998 to 2002 estimates, TNS Financial Services Small Business Market Track, April ’03; (1) 1995 to 1997 and 2003 to 2013: Online Banking Report estimates plus or minus 33%

 


 

The opportunity at your financial institution

For a rough approximation of the small business potential in your market, use the national average business-to-consumer penetration. For example, there are approximately 90 million U.S. households with bank accounts. Therefore about 25% (23/90) are business owners. About 8% (7.3/90) own businesses that are relatively easy to find via identifiable business phone lines, D&B reports, compiled lists and so on. The difference, about 16 million, are harder-to-find self-employed and contractors.

Table 11

Estimating the Number of Microbusinesses in Your Market

Number of banking households in your market                                                     (fill in)

Multiply by the percentage of all households that are microbusinesses                 x 8% or 25%*

Approximate number of microbusinesses in your market                          =                        _____

Source: Online Banking Report, 6/04 *Depends on whether you are looking at all businesses including self-employed/contractors, or just the larger small and microbusiness segment

Total market size of balance-driven banking products

Looking at just the 1.2 million larger small businesses with revenues from $1 million to $10 million (not including self-employed/contractors), TNS Financial estimates total business deposits of $240 billion and the total loans and lines of $160 billion for a total of $400 billion. In addition, we estimated the microbusiness segment ($50k to $1 million) has another $240 billion in deposits and loans. In addition, NFO estimates that small- and microbusiness owners have another $1.6 trillion of deposit and loan balances in their personal accounts, for a total of $2.2 trillion. Assuming a 200 basis point (2%) spread on the balances, the sector is generating about $44 billion in net interest revenues, an average of $6,000 per business/owner.

But, this only accounts the money paid out to financial services companies. It ignores the significant internal and often hidden costs associated with financial management: accounting, bookkeeping, payroll, treasury, and so on. With the Web, banks have an opportunity to compete not just for the traditional financial products, but also for the entire financial operations of the business.

Table 12

Deposit and Loan Balances and Net Interest Margin from Small-and Microbusinesses

04-june-c03.jpg

Source: Small business ($1 to $10 million) segment and owner balances from TNS Financial Services Group 2003 Small Business Studies, 4/03; Microbusiness balances and average net interest margin are estimates from Online Banking Report, accuracy estimated at plus 100%, minus 50%

1OBR estimate of $15,000 per microbusiness, n = 6.0 million

2OBR estimate of $25,000 per microbusiness, n = 6.0 million


 

Table 13

Small Business Assets by Type, Numbers and Balances

04-june-c04.jpg

Source: Balances from TNS Financial Services Group (formerly NFO World Group) 2003 Small Business Studies, 4/03

 

Table 14

Small Business Liabilities by Type, Numbers and Balances

04-june-c05.jpg

Source: Balances from TNS Financial Services Group (formerly NFO World Group) 2003 Small Business Studies, 4/03

 

 

 

Table 15

Misc. Product Usage

04-june-c06.jpg

Source: Balances from TNS Financial Services Group (formerly NFO World Group) 2003 Small Business Studies, 4/03

 


 

Table 16

Financial Products Purchased for Personal Use1 by Small Business Owners

Warning: Small sample sizes of respondents with large balances may distort the numbers.

04-june-c07.jpg

Source: Balances from TNS Financial Services (formerly NFO World Group/PSI Global) 2002 SOHO and
Small Business Owner Studies, 4/02; number of small and microbusinesses from NFO’s 2003 Small Business Study, 4/03

Total population (N) = 7.3 million U.S. small and microbusinesses, not including self-employed/contractors, OBR estimate +/- 20%

Does not include the value of the owner’s business, commercial real estate investments, stock options, and other misc. categories

1Products used personally, not for the business

2Total market = (% using) x (average balance) x (7.3 million micro and small business owners)

3Total balances only, does not include auto leases or insurance

4Across all business owners, users and non-users

5Net worth = personal assets less personal liabilities, does not include net value of business or non-residential real estate holdings

6Total personal assets less value of residential real estate, does not include net value of business or non-residential real estate


 

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Online Banking Report #105/106: E-Service 2.0

By Jim Bruene on April 29, 2004 4:04 PM | Comments

The latest report from Online Banking Report was published today, E-Service 2.0: Service with a :)

Subscribers may access the report immediately at Online Banking Report.

Others may download the abstract.

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Lessons from the Card Marketers

By Jim Bruene on February 1, 2004 9:27 AM | Comments

Innovating in online marketing and delivery

Credit cards have always fascinated me. From my first card in 1982, through my stint as a card product manager in the late 80s, I’ve been a student of the industry, watching and learning from the best: American Express, Citibank, First USA, Capital One, and others.

As we entered the Internet era in the mid-to-late 90s, I fully expected the credit card issuers to lead the financial services sector online. For a while, it looked like a good prediction. Many of the early online banking pioneers, NextCard, Providian/GetSmart, Wingspan Bank, C2it, Juniper Financial, had their roots, and business plans, centered on credit cards.

But a funny thing happened as that story was being written. Recession. Whether it was an unseasoned portfolio (NextCard), problems at the parent (Wingspan), or an over reliance on sub-prime (Providian), these pioneers lost their funding and retrenched (Providian, Juniper) or disappeared (NextCard, Wingspan, C2it).

But as card companies recover from the beating they’ve taken during the past three years, we are seeing renewed innovation from the sector. For example, after a decade of struggling to get traction, the card companies have put online bill payment on the map with their convenient card-payment options. As a result, card issuers have some of the largest registered user bases in the financial services arena (Table 1 below):

Table 1

Top 5 Online Cardholder Bases, Year-end 2003
number of online cardholders

Issuer

Online Users

Cardholders (WW)

% Online

American Express

12 mil (e)

60 million

17% to 21%

Citibank

10 mil (e)

140 million

6% to 10%

Discover Card

9 mil (e)

50 million

17% to 20%

Capital One

8 mil (e)

47 million

15% to 18%

MBNA

6 mil (e)

40 million

13% to 16%

         

Source: Companies, (e) Online Banking Report estimates, +/- 25%, 2/04

We still believe that long-term you are better off wrapping your direct banking efforts around plastic rather than paper ( “Will that be Paper or Plastic?”). If NextCard had been more patient in building its portfolio, they could have been a powerhouse today. So who will take their place as The Internet Credit Card? It’s one of the more intriguing opportunities of the decade.

Table 2

Top 5 Online Cardholder Bases, 2000 to 2003
number of online cardholders

Company

2003 Dec

2002 Dec

2001 Dec

2000 April

American Express

12 mil (e)

8.9 mil

5.2 mil

1.8 mil

Citibank

10 mil (e)

7.6 mil

5.5 mil

1 mil (e)

Discover Card

9 mil (e)

8.0 mil

6.0 mil

ina

Capital One

8 mil (e)

6.3 mil (d)

3.5 mil (d)

ina

MBNA

6 mil (e)

4.5 mil

2.7 mil

ina

Total
    % change

45 mil
29%

35 mil
52%

23 mil
475%

4 mil
--

Sources: Companies except, (d) Dove, (e) Online Banking Report estimates, +/-25%, 2/04


 

Online Card Usage

According to a recent Forrester report,1 75% of U.S. credit card customers have online access, and of those 36% (20 million) access their card statements online. More than 60% of those users (12 million) accessed their account regularly. Fisite Research, a company founded by ex-Gomez payments analyst, Paul Jamieson, found even higher usage; with 57% of online cardholders saying they manage some aspect of their card online2 (see Table 3, right). Whether the true number is 20 million or 30 million or somewhere in between, we do know that the use of online credit card management has exploded. Three years ago (year-end 2000), fewer than five million households accessed cards online (see full details, Table 5, opposite). Now, at least five individual card issuers have online user bases of five million or more (see Table 2, above).

There is even a greater disparity in estimates of the number of cardholders paying their card bill online. Forrester found that just 36% of online card statement viewers
(7 million HHs) pay their bill online, while Fisite reported 74% of online card managers paid online.2 Gartner estimated that 22 million adults pay their card bill online, either directly or through third-party bill pay.3 Based on these estimates and usage numbers from individual card issuers, we estimate 16 and 18 million households pay their card bills online directly at the issuer, up nearly 20-fold since less than one million users at the beginning of 2003.

1How To Right-Channel Credit Card Customers, by Catherine Graeber, Forrester Research, Jan. 2004, $675, http://www.forrester.com/ , fielded, Q2, 2003
2The TSYS Summer 2003 Executive Online Credit Card Survey, Finite Research, $2495, http://www.fisiteresearch.com/  fielded May/June 2003; the numbers may be higher because respondents included pay-anyone third-party payments in their answers
3EBPP Future Blends Direct Bank Aggregation Models, Jan 13, 2004, by Avivah LItan, Gartner, http://www.gartner.com/  $95, fielded May ‘03


 

Table 3
U.S. Online Credit Card Usage Estimates

Metric

Forrester
HHs

Fisite
HHs*

Gartner
Adults

Credit card households

75 mil*

75 mil*

--

% of cardholders online

75%
56 mil

--

--

% of online cardholders using online card account management

36%
20 mil

57%
32 mil*

--

% of online card managers using it regularly

60%
12 mil

--

--

% of online card HHs paying their card bill online

36%
7.2 mil

74%
24 mil*

--
22 mil**

Source: Companies, Online Banking Report, 2/04
*OBR estimates, Fisite reported usage as a percent of cardholders responding
to its online survey fielded summer 2003, household extrapolations by OBR
**Includes online payment direct at card issuer or through third-party bill pay

Table 4
Online Card Evolution

Phase

Period

Product Positioning

Primary Market

Beta 1997 to 1999 Easy way to apply for a card Geeks and scam artists
Version 1.0 Novelty 2000 to 2001 Cool  to check your card online Early adopters
Version 2.0 Utilitarian 2002 to 2003 Easier way to pay your card bill Early mainstream
Version 3.0 Value-add 2004+ Save time and money with total credit management 50% of U.S. households

Source: Online Banking Report, 2/04                                                      


 

Forecast

The convenience and reliability of paying card bills online will continue to drive online credit card growth. For 2004, we project overall growth of five million new online credit card households (range: 4 to 7 million), the same number of newcomers as in 2003. However, the rate of growth will slow slightly to 25% compared to 33% last year. Ten years from now, online credit card penetration is projected to grow to 47 million, 40% of U.S. households, compared to 19% today.

Table 5
Online Credit Card Forecast

U.S. households using online credit cards at year-end*

Source: Online Banking Report projections based on industry data (+/- 30%), 2/04


 

 

 


 

Table 6a

Consumer Households Using Online Credit Cards: U.S. vs. Worldwide
millions of households actively using online banking and/or online bill payment

Source: Online Banking Report estimates 2/04, accuracy estimated at plus or minus 30% U.S., 40% worldwide

Table 6b

Annual Growth Rate of U.S. Credit Card Households

millions of U.S. households and percent change from previous year

Source: Online Banking Report estimates, 2/04; accuracy estimated at plus or minus 30%


 

Table 7

OBR Definition: Online Credit Card Household

  •         Someone in the household must have done at least ONE of the following during the past 6 months:

  •        Viewed balance/available credit or transaction data online1 for a general purpose2 credit or charge card

  •        Authorized a card payment at the site of the card issuer (not at a third party such as a bank’s pay-anyone bill-pay service)

Does not include:

  •        Online point-of-sale transactions using a credit card

  •        Debit or prepaid card account management, application, or purchase

(1) Any connection from home, work, school, or other place where data can be viewed through any device (Web phone, browser, proprietary software, Quicken, Money, etc.)

(2) Visa, MasterCard, American Express, Discover

Table 8

Gomez Top Card Companies

Q3 2003 Scorecard

04-feb-04.jpg

Source: Gomez, 1/04

Comments

Forecast: 2004 Through 2013

By Jim Bruene on January 4, 2004 2:25 PM | Comments

Last year, we predicted there would be 32 million U.S. households banking online by year-end 2003. Actual results appear to
be slightly higher, with an estimated 33 million households as of Dec. 31.*

The payments area continued to be a major factor in the household growth, as direct bill-pay at billers’ websites increased 20-fold, from 1 million users at the beginning of 2001 to 20 million at year-end 2003.

Not only is online banking penetration growing, but the level of usage is also increasing. Power Users, households that access bank accounts AND pay bills, have grown five-fold in the past three years; from 3.5 million to 23 million. Less than half use their bank’s pay-anyone bill-pay service, electing instead to go directly to the biller’s site to settle the bill.

For 2004, we project an overall growth of 4 million new online banking/bill-pay households (range: 2 to 5 million), about 20% fewer newcomers compared to the 5 million added in 2003. Also, the rate of growth will slow to 12% from 2003’s 18% (range: 7% to 14%). Online banking penetration is projected to grow to 34% of U.S. households, compared to 31% today.

*More precisely, the year-end total is somewhere in between 29 and 36 million households based on our estimated accuracy of minus 12% and plus 10%.


Table 7
Online Banking Forecast Summary

U.S. households using online banking and/or epayments*

04-jan-c01.jpg

Source: Online Banking Report projections based on industry data (+/- 20%)

 

Table 8
Consumer Online Banking1 and Bill Payment Forecast
millions of U.S. households using online banking and/or bill payment each month

Source: Online Banking Report, 12/03            HHs = households      n/o = not offered
Accuracy estimates: US: 1994 to 2003: +/- 12%; 2004 to 2006: +/- 15%; 2007 to 2009: +/- 20%; 2010 to 2013: +/- 25%; WW: +/- 35%


 

Table 9
Small Business Online Banking13 Forecast
millions of U.S. small businesses using online banking

Source: Online Banking Report, 12/03
Accuracy estimates: 1994 to 2003: +/- 25%; 2004 to 2013:  +/- 35%

 

Table 8 & 9 Footnotes

1)       See account definition, in table posted this month

2)       Has used at least 1 of the 7 listed online banking/payment services during the past 6 months (+/- 15%)

3)       Has accessed at least 1 of the 4 account types during the past 6 months (+/- 20%)

4)       Includes any insured deposit account (does not include brokerage cash accounts or money-market mutual funds) (+/- 20%)

5)       Includes users accessing credit and charge-card accounts online even if they don’t use an online checking account (+/- 30%)

6)       Includes users of account aggregation (e.g., Yodlee, uMonitor) at any site, bank or non-bank (+/- 40%)

7)       Includes email notifications and statements (+/- 30%); excludes marketing- or service-oriented newsletters and messaging

8)       Has used any of the 3 listed epayment services during the past 6 months; does not include online purchases using a credit or debit card (+/- 25%)

9)       Pays bills to multiple billers at a third-party site (not the biller’s site); the third party can be a bank, non-bank, Quicken, or Money (+/- 25%)

10)   Pays bills directly at the biller’s Web site, or directly with the biller in response to an email message (+/- 35%)

11)   Remits/sends money to any person or business using interbank funds transfer, does not include online POS payments using electronic funds transfer (+/- 35%)

12)   We have less information on worldwide usage, so our estimate (+/- 35%) is less precise than for the United States (+/- 15%)

13)   Includes online access for any checking, credit card, or loan account used to process business transactions (can be a personal account if used for business purposes)

14)   We use a broad definition of small businesses, including any individual or entity producing $50,000 or more in annual revenues, includes self-employed contractors and sole proprietors.

 

Table 10
What Others are Saying: Topline U.S. Online Banking Forecasts from Major Research Companies
millions using online banking and/or bill payment each month

Source: Companies, 9/01 through 12/03

Notes: (1) Month/year the most recent data was collected; (2) Estimates from 2001 and earlier were number of individual users, 2002 and beyond are households with at least one member using online banking; the figures are relatively comparable because up until recently very few households had more than one person using online banking;
(3) Year 2000 estimate was made in Dec. 2000, 2001 through 2003 estimates made in July 2003 and cited by eMarketer, 2004 to 2006 estimates made in May 2002; Forrester clients may access current forecasts at its website; (4) As cited by the Wall Street Journal, 9/4/2002; (5) Estimates are not year-end, the data is collected in late first or early second quarter of each year; we assigned its market size estimates to the prior year’s year-end, e.g., we assigned the March 2002 estimate to the year-end 2001 column; (6) Jupiter clients can access new online banking forecasts published Dec. 2003; (8) User base as of Sept. 2001 includes: 30.3 million tracking balances online, 17.6 million transferring funds online, 32.2 million doing at least one of the two; in Feb. 2002, Digital Insight quoted Gartner as estimating that 18.3 million households banked online at year-end 2001

 


Table 11
Comparison of Online Banking Definitions: What’s Tracked

Source: Companies, 12/03           *Often left to the interpretation of the survey respondent; who may or may not consider these activities part of “online banking”


 

Comments
Categories: Online Banking Report

Online Banking: 2003 Results

By Jim Bruene on January 3, 2004 2:18 PM | Comments

2003 Results

During 2003, online banking continued to grow at a rapid clip, adding 5 to 6 million new households, bringing the U.S. total to around 33 million, an 18% increase over 2002. Worldwide totals grew at a faster clip, up an estimated 25% to 30%, or 25 to 30 million households, ending 2003 at more than 130 million.  

Table 3

Consumer Households Using Online Banking: U.S. vs. Worldwide

millions of households actively using online banking and/or online bill payment

Source: Online Banking Report estimates, accuracy estimated at plus or minus 12% U.S., 25% worldwide

Table 4

Annual Growth Rate of U.S. Online Banking Households

millions of U.S. households and percent change from previous year

Source: Online Banking Report estimates, 12/03; accuracy estimated at plus or minus 12%

Definitions

As the market has matured, we’ve noticed much less variance in the estimates from most major researchers. Most of the differences can be explained by variances in the definition of what constitutes and online banking household. For example, Gartner counts all banking products, including checking/deposit accounts, credit cards, bill payment, and email payments, while Jupiter tracks payment accounts separately . Another major difference: Gartner tracks individual online users while Jupiter, Forrester, and most others track household usage.

At OBR, we track at the household level because it’s consistent with how financial providers usually look at the market. And like Gartner, we use the broadest definition of an online banker (Table 4, below) including deposit-account access, electronic bill payment, credit card access, and biller-direct payments. 

Table 5

OBR Definition: Online Banking Household

Someone in the household must have done at least ONE of the following during the past 6 months:

  •        Viewed balance or transaction data online* for a checking account, credit card, or loan/mortgage

  •        Authorized a bill payment online at any bank, non-bank, portal, or biller site

  •        Transferred funds online using third parties such as PayPal, MSN, or Yahoo

Does not include:

  •        Viewing a nonfinancial billing statement online but paying it by paper check, preauthorized debit, or credit/debit card

  •        Point-of-sale transactions whether paid by credit card, debit card, electronic check, PayPal, and so on

*Any connection from home, work, school, or other place where data can be viewed through any device (Web phone, browser, proprietary software, Quicken, Money, etc.)

Table 6
OBR Track Record: Accuracy of Prior Forecasts
millions of U.S. households banking online

Source: Online Banking Report, 1998 – 2003
Fore = Forecast; Act = Actual results; Err = Error (difference between forecast and actual)

Comments
Categories: Online Banking Report

A Look Back : Online Banking Timeline

By Jim Bruene on January 2, 2004 2:12 PM | Comments

Table 1

Online Banking Timeline
number of U.S. households using online banking/bill payment

04-jan-b01.jpg

Source: Online Banking Report estimates based on industry data plus or minus 15%, 12/03


 

Every spreadsheet and business plan needs a prediction of future demand. So every year we gather forecasts made by prominent researchers and analysts, compare and contrast their results, layer on our own insights, and develop a 10-year forecast. Accuracy is estimated at plus or minus 15% for years one through three, plus or minus 20% for years four through seven, and plus or minus 25% for the out-years.

Over the years we’ve demonstrated a respectable track record . Our first comprehensive forecast made six years ago (year-end 1997), predicted that online banking usage would increase nearly 6-fold (560%) from 4.5 million in 1997 to 29 million households by year-end 2003. That prediction was nearly dead-on, perhaps 10% low, with an estimated
29 to 35 million households banking online today.

 


 

Table 2
Online Banking Evolution

Phase

Period

Product Positioning

Primary Market

Beta 1983 to 1996 Beats keying data into Quicken. Outliers
Version 1.0 Novelty 1996 to 1999 Beats calling an 800 number with convoluted menus. Financial geeks and early adopters
Version 2.0 New 2000 to 2002 More efficient record keeping and easier for routine transactions Early adopters and early mainstream
Version 3.0 Early mainstream 2003+ Better management of personal finances with less effort 50% of U.S. households

Source: Online Banking Report, 12/03                                                       



 
Comments
Categories: Online Banking Report

The Forecast Top Management (finally) Gets It

By Jim Bruene on January 1, 2004 2:12 PM | Comments

 

To many long-time bankers, online banking hadn’t proved its worth prior to 2003. However, with usage surpassing 30% of all U.S. households, and with leaders such as Bank of America pushing past 40%, even the skeptics are beginning to recognize the potential. By the end of the decade, total U.S. penetration is expected to approach 50%.

04-jan-a01.jpg

Unlike many new technologies, online banking delivers on three levels: improved customer satisfaction, increased sales, and cost savings. Now that these institutional benefits have actually been documented, the rest of the decade promises to see an extraordinary build-out of online capabilities, much like the explosion of ATMs in the late 1980s as the channel became profitable.

Looking back at the last year, three changes stand out:

  • The onslaught of email spam and scams causing short-term headaches and long-term credibility problems.
  • The change in U.S. press coverage from somewhat negative to very positive (except for the phishing problem).
  • The marked rise in awareness (by financial services execs) of the online channel’s upside potential.

On the innovations front, it may not have been 1997 again, when seven of the 20 all-time top financial innovations debuted, but there were several significant developments including:

  • OBR’s Innovation of the Year, premium fee-based online banking (Money HQ from Online Resources)
  • Real-time credit of online deposits, both electronic (E*TradeBank) and an “honor system” for mailed paper items (PESCU and Pentagon FCU)

The next few years promise a whirlwind of activity as financial institutions implement fixes to email-security concerns, expand the level of email-alert services, dramatically increase online cross-selling and self-service, and see tangible benefits from the investments of the past six or seven years. Online banking initiatives will once again be prominent on the radar screens of top execs. Enjoy the spotlight.

-- Jim Bruene, Editor & Founder

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Categories: Online Banking Report

The Top 10 Banking Events: 1995 to 2001

By Jim Bruene on January 4, 2003 6:30 PM | Comments

The Top 10 Events: 1999 to 2001

 


Source: Online Banking Report, 1995 – 2002             

*Due to high activity levels, two lists were prepared in 2000.

 

 

The Top Ten Events: 1995 to 1998

*The 1995 Top Ten is not directly comparable to other years; it simply lists the top 10 financial Web sites of the year

 

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Online Banking Users Have Impressive Ggrowth

By Jim Bruene on December 7, 2002 3:31 PM | Comments

Prospective Online Banking Users

Despite impressive growth in online banking, the prospect pool has remained relatively unchanged since 1999. We define a prospect as a PC owner that is somewhat or very interested in online banking. In 1999, with only 7 million households banking online, there were 26 million prospects. This year, even though 16 million (60%) of those 1999-era prospects have become users, there are still 24 million prospects. If historical trends continue, we will see 14 to 15 million of today’s prospects become users by mid-2005, resulting in 38 to 39 million total users. This is consistent with our forecast of 40 million online banking households by year-end 2005

Table 1
Interest in Online Banking Among Non-Users
mid-year numbers and estimates

Source: American Banker/Gallup 1999 to 2002 Consumer Survey (n = 1,000), see notes under Table 17

(1) OBR estimate, +/- 10%

Online Banking Platform Vendors

Table 2

Largest Public Net Banking Platform Vendors

dollars in millions

Source: Company reports, 11/02

Bricks & Mortar

Somewhat surprising, given the lackluster economic climate and the overall decline in branch usage1, the number of brick and mortar branches increased in 2001. After a slight decline in 2000, the total number of bank and thrift branches increased for the thirteenth time in 17 years. At year-end 2001, there were 78,866 branches in the United States, 1,121 more than a year earlier. During the past 10 years, the branch banking system has gained an average of 770 new branches per year. With nearly 79,000 banking branches, the U.S. has one branch for every 1,300 households2. The total number of bank/thrift entities declined by 291 to end the year at 9,886. New charters slowed to 144, almost 100 less that the 1998 through 2000 average. 

1 Synergistics  www.synergisticsresearch.com  reports that average weekly visits has declined 35% from 1995 to 2002; average weekly branch visits of households with income of $25,000 or more: 1995 = 4.4, 1997 = 4.1, 1998 = 3.5, 2000 = 3.2, 2001 = 2.9, 2002 = 2.9

2 Not including credit union branches which number

Table 3

Number of Bank and Thrifts Operating at Year-End (U.S.)

Source: FDIC, 11/02                 *129 new banks and 15 new thrifts

 

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Web Traffic at Major Banks Through The Roof

By Jim Bruene on December 5, 2002 2:52 PM | Comments


 

Web traffic at major banks went through the roof during the past year with 57 million visitors in September at the 27 most-visited banking sites1, a 3-fold increase over traffic a year earlier. Much of the 40-million increase2 can be attributed to credit card customers paying their bills and reviewing statements online at Citi, Chase, BofA, Wells, First USA (Bank One), and PayPal. Table 13 below lists Web traffic at 27 financial institutions, including PayPal1, that have more than 200,000 monthly unique visitors according to comScore Media Metrix.

1 57 million is the sum of unique visitors at each banking domain; i.e., the total is NOT a unique visitor total since it double counts, for example, someone who visited Wells Fargo and Citibank during the same month.

2 When reviewing the data, keep in mind we used different sources for the historical figures, so the data is not directly comparable over time.

We consider PayPal a banking alternative since it offers bill payment, funds transfer, money market, debit and credit card products.

 

Table 1

Top 27 Most Visited Banking Sites


unique monthly visitors in thousands (‘000s)


Sources: Web traffic: 2002 - comScore Media Metrix; 2001 -- Plurimus, 8/01; 2000/1999 – PC Data Online; Registered users: Companies and OBR estimates, 11/02

e = OBR estimate, +/- 33%       a = active users

Reg. users = registered users for online access, not necessarily active

1Rollups are straight additions of the Websites shown; overlapping users (i.e., non-unique) are NOT factored out

 


 

Table 2

Financial Sites (U.S.)


02-dec-D4.jpg

unique monthly visitors in thousands (‘000s)


 

Source: 2002 – comScore Media Metrix; 2001 – Plurimus; 2000 – Nielsen/NetRatings
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Registered Users For Online Banking

By Jim Bruene on December 4, 2002 2:37 PM | Comments

We’ve identified 50 North American banks, credit unions, and credit card issuers with registered user bases in excess of 100,000, up from 43 last year. Eighteen of the 50 have passed the 1 million mark . These companies have a total combined registered user base of just under 100 million. We estimate that as many as 35% of these accounts are inactive (no usage in the last 6 months) and that each household is registered with an average of 2 financial providers. That works out to approximately 32 million unique active households served by the 50 largest companies, an 80+% share of the 35 to 40 million North American households banking or paying bills online.

On the credit union side, we have identified 73 with user bases in excess of 25,000 members using Web banking (Table 1, below), up from 51 last year. In total, more than 4.5 million members are banking online at these credit unions, 31% of the total membership base of nearly 15 million. The Web banking base grew 1.0 million (29%) from 3.5 million a year earlier.

Table 1

Credit Union 25,000 Club (North America)


 

estimated registered user base for Web banking1


 

Source: NCUA 11/02; Callahan, 11/02; Online Banking Reports estimates (e) +/- 25%
(1) Web banking users only, does not include any members banking online through older direct-dial systems

(2) As of 6/30/02; 9/30/02 report showed inconsistent decline, which we are investigating

(3) Does not include approximately 10,000 dial-up users

(4) As of 12/31/01; no report for 9/30/01


 

Table 2
Financial Institution 100,000 Club (North America)

estimated online banking registered user base1



p>Source: Companies, American Banker, Online Banking Report, 11/02; Bank Technology News, 8/01          a = active users only e= OBR estimate, +/- 33%

Notes: (1) Definitions of registered users vary by bank, but in general the figure listed is the most generous estimate of all customers signed up for online banking, not necessarily using the service; company reports may reflect totals as far back as Q1 2002, see notes column; (2) Worldwide total; there are no recent figures available on the geographic breakdown of its user base, but on 9/30/01 the company reported that more than 700,000 users residing outside of North America (3) Includes brokerage accounts which numbered 1.7 million in April 2000; (4) Worldwide total, includes an estimated 15% to 20% who reside outside North America (5) Includes brokerage accounts which numbered 230,000 in April 2000; (6) Assumes 65% of registered user base is active (used within last 6 months); (7) Assumes each household is registered with 2 financial companies on this list (1.75 in 2001; 1.5 in 2000)

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The 2003 to 2012 Banking Forecast

By Jim Bruene on December 3, 2002 2:23 PM | Comments

Last year (OBR, Oct. 15, 2001), we projected that by year-end 2002, 27 million (range: 23 to 31 million) U.S. households would be banking online. Actual results appear to be slightly higher, with 28 million online banking households expected on Dec. 31 (range: 25 to 30 million).

Looking at the remarkable growth during the past two years, the payments area revealed the biggest upside surprise with the huge uptick in direct bill-pay at billers’ Web sites. This activity grew from an estimated 1 million users at the beginning of 2001 to 12 million at year-end 2002. Next year, we project another 50% gain to 18 million users. 

Not only is online banking penetration growing, but the level of usage is also increasing. Power Users, households that access bank accounts AND pay bills, have grown
5-fold in the past two years, from 3.5 million to 17 million (see Table 2). Next year, we expect another 5 million new power users, ending the year at 22 million. However, less than half of the power users use their bank’s pay-anyone bill-pay service, electing instead to go directly to the biller’s site to settle the bill there. Pay-anyone services continue to struggle to gain a mass audience.

For 2003, we project an overall growth of 4 million new online banking/bill pay households (range: 3 to 6 million), about one-third fewer newcomers compared to the 6 million added in 2002. Also the rate of growth will slow to 14% from 2002’s 27% (range: 8% to 20%). Online banking penetration is projected to grow to 30% of U.S. households (range: 25% to 34%).


 

Table 1
Online Banking Forecast Summary

U.S. households using online banking and/or epayments*


Source: Online Banking Report projections based on industry data (+/- 20%), 10/01; *see Table 4, for definition


 

Table 2
Online Banking1 and Bill Payment Forecast
millions of U.S. households using online banking and/or bill payment each month

Source: Online Banking Report, 11/02                   HHs = households                   n/o = not offered


 

Table 2 Footnotes

1)       See account definition, in previous post

2)       Household has used at least 1 of 8 online banking/payment services during the past 6 months (+/- 15%)

3)       Household has used at least 1 of 5 statement access services during the past 6 months (+/- 20%)

4)       Includes any insured deposit account (does not include brokerage cash accounts or money market mutual funds) (+/- 20%)

5)       Includes users accessing credit and charge card accounts online even if they don’t use an online checking account (+/- 30%)

6)       Includes users of account aggregation (e.g., Yodlee, uMonitor) at any site, bank or non-bank (+/- 40%)

7)       Subset of account aggregation; a system for monitoring loan payments and balances (+/- 50%)

8)       Includes email notifications and statements (+/- 30%)

9)       Household has used any of 3 epayment services during the past 6 months; does not include online purchase using a credit or debit card (+/- 25%)

10)    Pays bills to multiple billers at a third-party site (not the biller’s site); the third party can be a bank, non-bank, Web site, Quicken, or Money (+/- 25%)

11)    Remits/sends money to any person or business using email payments, e.g., PayPal; does not include online POS payments using PayPal at a cash register (+/- 35%)

12)    Pays bills directly at the biller’s Web site, or directly with the biller in response to an email message (+/- 35%)

13)    We have less information on worldwide usage, so our estimate (+/- 35%) is less precise than for the United States (+/- 15%)

 

Table 3
Online banking market penetration: 2002 vs. 2007 vs. 2012

percent of U.S. households banking and/or paying bills online*

 

Source: Online Banking Report estimates, 11/02, +/- 15%

*Includes active users of any of the following online activities: checking/deposit account access, credit card account access/payment, electronic bill payment, or email payment

 

Table 4
What Others are Saying: Topline U.S. Online Banking Forecasts from Major Research Companies
millions using online banking and/or bill payment each month

Source: Companies, 9/01 through 11/02

Notes:

(1)       Month/year the most recent data was collected

(2)       Estimates from 2001 and earlier were number of individual users, 2002 and beyond are households with at least one member using online banking; the figures are relatively comparable because up until recently very few households had more than one person using online banking

(3)       Year 2000 estimate was made in Dec. 2000, other estimates from May 2002

(4)       As cited by the Wall Street Journal, 9/4/2002

(5)       Estimates are not year-end, the data is collected in late first or early second quarter of each year; we assigned its market size estimates to the prior year’s year-end, e.g., we assigned the March 2002 estimate to the year-end 2001 column

(6)       Published new online banking and lending forecast on Oct. 21, 2002; at press time these forecasts are available to Jupiter Research subscribers only

(7)       Estimates are for mid-year; includes households that had paid at least one bill online at any site (biller, bank, other) during the past month; 2010 forecast is 44 million, 39% of all households

(8)       Data from March 2000

(9)       Data from March 2001

(10)    User base as of Sept. 2001 includes: 30.3 million tracking balances online, 17.6 million transferring funds online, 32.2 million doing at least one of the two; in Feb. 2002, Digital Insight quoted Gartner as estimating that 18.3 million households banked online at year-end 2001

Table 5
Comparison of Online Banking Definitions: What’s Tracked

 

Source: Companies, 11/02
*Often left to the interpretation of the survey respondent; who may or may not consider these activities part of “online banking”

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Reading the Tea Leaves (An Online Banking Forcast)

By Jim Bruene on December 2, 2002 2:11 PM | Comments


Online Banking Timeline
number of U.S. households using online banking/bill payment

02-dec-a1.jpg

Source: Online Banking Report estimates based on industry data plus or minus 15%, 11/02

For the past five years we’ve published annual online banking forecasts. As the market matures it gets easier to predict usage one and two years out, but longer-term forecasts are still a crapshoot. Yet, every spreadsheet and business plan needs a forecast as a starting point, so we do our best to deliver one that is, hopefully, less wrong than others.

We gather and review forecasts made by prominent researchers and analysts, compare and contrast their results, add our own insights, and develop a forecast with accuracy estimated at plus or minus 15%. Over the years we’ve shown a respectable track record (see last table). Our first forecast, at year-end 1997, predicted 26 million households by the end of this year (2002). That now looks a bit on the low side, but still within our current estimate of 25 to 30 million users.


Online Banking Evolution

Phase

Period

Product Positioning

Primary Market

Beta 1983 to 1996 Beats keying data into Quicken. Outliers
Version 1.0 Novelty 1996 to 1999 Beats calling an 800 number with convoluted menus. Financial geeks and early adopters
Version 2.0 New 2000 to 2002 More efficient record keeping and easier for routine transactions Early adopters and early mainstream
Version 3.0 Mainstream 2003+ Better management of personal finances with less effort 50% of U.S. households

Source: Online Banking Report, 11/02                                                       


 

Copyright 2002: Online Banking Report (ISSN 1095-2829) is published monthly by Financial Insite Inc., 4739 University Way NE, Suite 1002, Seattle, WA 98105, USA. Phone: +1(206) 517-5021, Fax: +1(206) 524-0351, Email: info@onlinebankingreport.com, Web: www.onlinebankingreport.com. Subscriptions: US$795 per year worldwide, includes paper and electronic editions. Editor & Founder: Jim Bruene, jim@onlinebankingreport.com; Business Manager: Anita Schultz; anita@onlinebankingreport.com; Circulation: Kate Schultz, kate@onlinebankingreport.com; Sr. Analyst: Margaret Quinn, mq@onlinebankingreport.com;  Webmaster: Kelsey Marshall, kelsey@gagedesign.com; Web Database: Claire Powers; Copy Editor: Jennifer Russell; Editorial Board: Bruce Bruene, The Principal Financial Group; Vera Wildauer, Cascade Bancorp. Federal copyright law prohibits duplication or reproduction in any form, including electronic. To purchase reprints or electronic rights contact the editor.


 


Definitions

When reviewing forecast data, sometimes it seems as though the major analysts are gazing at two entirely different planets. How is it possible for respected researchers at Gartner to claim more than 30 million online banking users at year-end 2001 while the equally savvy bunch at Forrester says only 15.5 million ? When the numbers are dissected, you usually find that much of the variance comes from the definitions used; for example, Gartner tracks individual online users while Jupiter tracks households. Furthermore, Gartner counts all banking products, including checking/deposit accounts, credit cards, bill payment, and email payments, while Jupiter tracks payment accounts separately .

Like Jupiter and Forrester, we track at the household level because it’s consistent with how financial providers usually look at the market. Like Gartner, we use the broadest definition of an online banker (Table, below) including deposit account access, electronic bill payment, credit card access, or email payments through PayPal.

 

OBR Definition: Online Banking Household

Someone in the household must have done at least ONE of the following during the past 6 months:

  •       Registered for online1 access to checking, credit card2, or loan/mortgage account access

  •       Signed up to pay bill(s) online

  •       Accessed balance or transaction data online for a checking account, credit card, or loan/mortgage

  •       Authorized a bill payment online at any bank, non-bank, portal, or biller site3

  •       Transferred funds online using third parties such as PayPal, Yahoo! PayDirect, or C2it

Does not include:

  •       Viewing a nonfinancial billing statement online but paying it by paper check, preauthorized debit, or credit/debit card

  •       Point-of-sale transactions whether paid by credit card, debit card, electronic check, PayPal, etc.

Notes:
(1) Any connection from home, work, school, or other place where data can be viewed through any device (Web phone, browser, proprietary software, Quicken, Money, etc.)
(2) Our estimates include 5+ million households whose only online banking activity is paying or accessing credit card statements online. 


OBR Track Record: Accuracy of Prior Forecasts
millions of online U.S. households banking online

02-dec-a3.jpg

Source: Online Banking Report, 1998 - 2002

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Benefits of Online Banking: Consumer Needs Pyramid

By Jim Bruene on October 5, 2002 6:52 PM | Comments

Before launching into product and marketing strategies, let’s reflect on what users expect from online banking. Use this as a checklist as you review your product design and marketing messages.

Benefit

User Expectations

Example Solutions

Basic Needs (must be satisfied to gain trial)
Secure & private Protect my privacy and help me maintain the confidentiality of all my financial records (not just those at your institution); make sure no one steals from my account, and if they do, take care of me. ·   Allow users to “lock-down” an account or balance amount so no money can be removed without the use of a special password

·   Security center with detailed explanations of security measures

·   Fraud reporting mechanism to encourage reporting of suspicious emails or any other online irregularities

·   User-defined security settings

·   Provisional credit for established customers while investigating potential  fraudulent transactions

·   Email user whenever money is scheduled to be transferred out of an account via bill payment, ACH, or wire

·   Detailed and understandable privacy policies

·   Credit bureau monitoring services

·   Statement aggregation with “account watchdogs” that monitor suspicious activity on all accounts

·   User-defined, triggered alerts so users are notified immediately of suspicious account activity

Free from errors Process transfers, deposits, and payments flawlessly; keep me informed, because I don’t totally trust your systems; give me the benefit of the doubt while any suspected errors are investigated. ·    Session tracking for users to look back and see what they’ve done

·    User-defined limits that trigger an email alert if exceeded

·   Three email confirmations for every bill payment: (1) when initiated,
(2) when sent to merchant; (3) when the payment clears

·   100% guaranteed on-time payment delivery (e.g., FedEx)

·   Ability to track payment status (FedEx again)

·   Error messages if it appears I’m doing something wrong like paying the same bill twice

·    Wired customer service with turnaround times measured in minutes

·    Illusion of real-time transaction processing1


 

Benefit

User Expectations

Example Solutions

Appropriately priced Since it’s electronic and supposedly highly efficient, fees should be very low, if not 100% free ·Free basic services with fees reserved for optional premium services such as expedited payments

·   Bundled with other products to eliminate any explicit fees for online services

Simple to sign up and get started Make it easy for me to sign up for the service and begin using it during my first session. ·Allow users to track the progress of their new account setup

·   Create a “play area” where users can practice online banking and bill payment with a fictional data set

·   Offer quick registration to “read-only” access to their account data with moderate level of authentication: account number, social security number, mother’s maiden, IP address check, etc.; but require more rigorous authentication before allowing funds transfer or bill payment out of the account, such as snail-mailed “funds transfer password”

Common Expectations (must be met to maintain customer satisfaction)
Easy-to-use Intuitive interface with copy written in a friendly manner. ·   Context-sensitive Help buttons

·   Tested for usability with actual users

·   Session tracking so the user can follow where they have been and what they have done (see Amazon.com’s Page You Made and Your Recent History)

Faster than paper (transaction turn-time) Allow me to pay bills at the last possible moment to maximize float and/or save late charges. ·   Post all transactions to the user’s Web view to create the illusion of real-time transaction processing1

·   Encourage usage of fully electronic merchants

·   Guaranteed overnight payment for a fee, e.g., FedEx of a paper check

Saves time Let me get my banking done quickly without burning any brain cells
so I can move on to more rewarding activities.
·   Emphasize automated bill payment options, such as recurring payments

·   Monitor activity and email me when flagged balances/transactions occur

·   Integrate email with bill payments and outbound ACH

·   Preapprove additional credit in advance so I can quickly access it when needed

·   Remember the info I have already provided so I don’t have to reenter everything to get a new product

·   Personalize the Web site so that what’s important to me is just a click away

·   Send as much information as possible by email

Good customer service via Web and email Well-written and thorough FAQs; quick response to routine emails. ·   Thorough cross-referenced FAQs with imbedded Web forms to contact customer service for more help

·   Prompt response to email questions, at least a same-day goal; working towards a response time measured in minutes

·   Email “hot line” to elevate concerns to a supervisor (could be reserved for higher value customers or users who pay a fee for premium service)

·   Embedded feedback options, e.g., Did this answer your question?, Is there anything else we can help you with?

X-factor: the “right”2 look
and feel
Modern look and well-written copy ·   Provide feedback to users that helps them obtain bragging rights about the sophisticated online services they have mastered

·   Ensure that graphics and text are state-of-the-art and reinforce the bank’s core positioning

·   Get rid of any gratuitous “happy family” pictures3


 

Benefit

User Expectations

Example Solutions

Exceeding Customer Expectations (needed for improved customer satisfaction and positive word-of-mouth)
Provides more control Provide tools to control the timing and amount of each transaction. ·   Multiple bill payment due-date reminders via email

·   Make it easy to set up and change automatic payment/transfer options via intuitive Web-based forms

·   Statement aggregation with easy-to-comprehend views

·   Automated “sweep” function across all aggregated accounts

Saves money and/or earns more money Offer a lower price or better rate; or provide more value for a similar price (“supersize that”). ·   Free online banking and bill pay bundled with other accounts such as loans and mortgages

·   Bill-pay fees less than the cost of stamps, either (a) less than $0.37 each (b) monthly fees of less than $3, or (c) somewhere in between

·   Premium package account with a laundry list of online features

Information delivered directly via
email
Instead of requiring customers to log in and slog through their data, send timely email reminders and alerts. ·   Ability to designate more than one email address (e.g., home and work)

·   Alerts when balances fall below a certain level

·   Deposit confirmations and activity summaries

·   Rate-change alerts when CDs or refi rates change significantly

Provides something that can’t be done in off-line world Provide a recognizable service improvement that cannot be duplicated in the traditional banking world. ·   Email alerts

·   Virtual loan manager

·   Web interface to ACH in and out of your account

·   Simplified account aggregation program: for example, a “credit card aggregation” service which pulls all credit cards into a single statement

Improves focus on what matters Help me understand my financial situation, spending patterns, build budgets, etc. ·   Statement analytics, e.g., current vs. historical comparisons

·   Full suite of financial planning tools

·   Integrate with financial applications, such as Quicken, QuickBooks, and Microsoft Money

·   Email alerts based on triggered events, e.g., balance falling below a predetermined level

Provides more peace of mind Reduce the anxiety surrounding bill payment and online banking. (What if I press the wrong button? Didn’t I pay that already? etc.) ·   Alerts when a typical activity has not been done, e.g. the rent has not been scheduled for payment

·   Email activity summaries and alerts

·   Session history logs so I can easily go back and see what I have or have not done

Improves service Ability to quickly and relatively effortlessly resolve problems via email and Web form ·   Unless you happen to be friends with someone at your branch, most customers have no true “relationship” these days; customized online services and eReps, humans servicing a portfolio of online customers, could add a decidedly human face to the online relationship
Eliminates bounced checks Make sure there are enough funds in my account (or available credit) to cover payments; if not, warn me well before I write an NSF/OD item ·   Error message if it appears the payment will bounce

·   Guaranteed no-bounce bill payment (e.g., overdraft protection)

·   Choice of payment options (multiple checking accounts, credit cards, and credit lines)

 

Source: Online Banking Report, 10/02

1We call it the illusion of real-time processing, because users don’t so much care whether a transaction is processed in real-time, what they care about is that they can SEE that you have accepted their transaction and have adjusted balances accordingly; the actual debits and credits can be handled behind the scenes in batch mode.

2It’s extremely difficult to describe what’s “right” in words, but , we know it when we see it.

3While pictures of happy people in branch signage and take-one brochures make your bank seem more user-friendly, it works just the opposite on the Web, where users may become annoyed at the wait to download pictures that have nothing to do with the product.                                                                                       

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2003/2004 Planning Now : Online Banking Gains Respect

By Jim Bruene on October 1, 2002 6:35 PM | Comments

 

Three weeks ago, FleetBoston’s Blaise Heltai told the audience at American Banker’s technology conference that Fleet’s online base is now the size of its New York City market. His observation reinforced a point we’ve been making for years: online banking is not a niche play, but rather a substantial profit opportunity. Indeed, online banking has become the fourth pillar of retail banking success joining people, products, and branches.

Fleet with its 56% online banking penetration, highest among major financial institutions, may be a little further down the curve than most. But it’s amazing what the numbers at the bottom of your spreadsheet look like when 30%, 40%, or 50% of your customer base use the channel. And given the upscale demographics, raw penetration figures understate the total value. Many banks will soon find that online users account for the majority of retail banking profits.

The recent spike in usage has a dramatic impact on planning and budgets. Seemingly trivial Web site changes, things you could never have gotten into the 2001 or 2002 budget, now will significantly impact the bottom line. For example, during a routine technology upgrade, SunTrust found that its limited-use online chat function was generating $1 million per month in revenues.

At American Banker’s conference, speakers no longer debated whether online banking could be profitable; they debated how best to measure the OBVIOUS bottom-line contribution from new revenues, cost savings, and the more intangible retention benefits.* Bank of America recently discovered that online banking and bill payment advertising is driving in more new customers than other general advertising concepts. For example, the bank’s humorous, televised bill-pay spot features two men in a boxing ring competing to see whether the one with the laptop and BofA online can pay bills faster than his counterpart writing paper checks. In concept testing, the bank found that 9 out of 10 viewers said they would take some action based on what they saw, one of the best test results the bank or its agency had ever seen. You know you are on to something when bank advertising outpulls beer ads.

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2001 A Great Year for Online Banking, Overshadowed by World Events

By Jim Bruene on December 1, 2001 10:25 AM | Comments


 

Y2K + 1 was a crummy year as many of the things we worried about in 1999 came to pass: terrorist attacks, bear markets, layoffs, and a recession. However, online banking and lending usage surged during the year. At year-end, more than one out of every five U.S. households does some portion of their banking or bill payments online, almost 50% more than a year ago.

Six years into the online revolution, the usual names are still fighting for market share online: Citibank, TD Bank, Bank of America, Barclays, and so on. Despite billions spent on new infrastructure, little net change has occurred in market share. Wells Fargo may have picked up a half-point share of checking accounts in California; the Net-only banks, led by NetBank and E*TradeBank, grabbed a point or two of deposit share overall; the online mortgage pioneers such as Quicken Loans, E-Loan, and the Lending Tree network have gained a couple points of the refi market, and NextCard, Capital One, Providian, and First USA used online originations to wrest a few smidgens of credit card share.

While no radically new innovations emerged last year, some of the new features launched in the late ‘90s began to gain traction: Yodlee’s account aggregation system used by customers of 57 financial companies hit the 1 million active user mark; PayPal’s online payment system grew to nearly 6 million active users in 37 countries; and FirstUSA, Bank of America, and NextCard made it easy for cardholders to transfer balances online. For a complete run-down, see Top 10 Industry Developments of 2001 .

For 2002 we expect continued impressive growth in the use of the online channel for everything banking related: lending, reviewing and paying bills, exchanging information via email, interbank transfers, and routine customer service inquiries. See 2002 Predictions for more.

Along with our usual coverage of online trends, innovations, and products, we’ll focus on four issues during the first half of the New Year: payments, account aggregation, customer service, and email. Thanks for your support.



 

 

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Categories: Online Banking Report

Online Banking Remains Key to Achieving our Business Objectives

By Jim Bruene on October 2, 2001 10:11 AM | Comments

Memorandum

October 2001

To: Your CEO

From: You

Subject: Why Internet Banking Still Matters

 

With the media focused on the downturn of the economy and the Internet, I know you’ve been questioned about our level of investment in the Internet channel. To help respond, we’ve prepared this brief analysis of the competitive situation and why we need to maintain a superior online presence.

Overview

With the closing of more than 600 Internet companies, including well-financed banking ventures  CompuBank and Wingspan Bank, it may seem like the future of online banking is cloudy. However, looking at actual consumer behavior, it’s clear that online banking is becoming as important to the consumer banking experience as previous electronic innovations, such as ATMs and call centers. Already online banking is used by a third of all online households, and industry analysts expect 50% usage within four to five years. With many of our competitors putting projects on hold, we believe this is an ideal time to expand our services, so that when the business cycle turns, we will be well positioned to increase market share.

Why Online Banking Remains Key to Achieving our Business Objectives

1.       Our customers expect it: Already, more than 20% of our country’s households are active users of online banking and/or bill payment. In recent months, more than twice as many adults banked online than made online purchases.1 Five times more people banked online than traded stocks online.2 When it comes to ecommerce activities, banking is a clear winner.

2.       The competition has it: Most large banks have offered online banking for a number of years. An OCC study in Sept. 1999 found that online banking was already available from 114 of 160, or 71%, of banks with assets greater than $1 billion. In total, online banking was available from financial institutions that controlled 89% of the country’s asset base and 84% of deposit accounts less than $100,000. And that was projected to grow to 95% and 93% respectively by year-end 2001.

3.       We can use it to humanize the banking experience: Only a small percentage of our customers are recognized in the branch by name. For the majority, branch banking is a semi-automated experience. Online, we greet everyone by name, and in the future will provide highly personalized recommendations and service that could never be duplicated by a teller.

4.       It’s more secure and private: Most articles about online banking security focus on problems, real or imagined. In reality, electronic banking can be far more secure, and private, than the paper-based world it replaces. How much privacy do you have when you write a paper check, exposing your name, address, and bank account numbers to everyone who handles it during its long route through the banking and postal system? Authenticated and encrypted electronic data transmissions are far more secure overall.

5.       It’s the best way to get a loan: Applying for a loan is dreaded by most consumers, that’s one of the reasons why people pay 18% for credit card debt when they could cut their rate in half with a bank loan. Although Web lending is not yet a mainstream activity, consumer trepidation can be alleviated with pre-approvals, excellent email service, guarantees, and fast processing.

6.       It’s the ultimate self-service channel: According to Tower Group, 60% of the country’s 19 million affluent households are already “remote-oriented” in the way they do their banking.3 Once customers are successful in finding answers to their account-related questions online, they will be more inclined to go back and use it for future problems.

7.       It’s more efficient: By automating transactions and customer service responses, both the user and the bank can spend less time on routine matters, leaving more time and money for more interesting endeavors. Even though many of our customers still enjoy face-to-face interactions in-branch, their numbers are falling. When it comes to conducting routine transactions, such as balance monitoring and bill payments, Web banking has the potential of reducing the time spent on these chores to just a few minutes each month.

8.       It’s easier: ATMs took off once people understood that it really was a much easier way to get cash. Likewise, online banking will be equally popular as banks institute services that are clearly better than off-line alternatives (e.g., email statement, interbank funds transfer, balance-level alerts, automated bill payment, and so on).

9.       It reinforces and supplements off-line media: The 60% of households now online have an easy way to act on radio, TV, and print advertisements. We no longer have to rely on consumers remembering to look up our telephone number and call for more information.

10.    It will be profitable: The latest Tower Group research found the following4:

 

Household Type

Annual HH Income

Index

Offline

$37,000

100

Online

$67,000

181

Online banking

$75,000

202

 

 

Online households have annual incomes almost twice as high as offline households. This simple fact cannot be ignored. Even though our online initiatives have thus far not paid their way in bottom-line results, we are confident that is about to change. Going forward, a high quality Web presence, managed and operated like a branch, with a line manager and good online sales reps, will turn a profit. Look at NetBank, which has turned a profit almost since inception by keeping focused on the bottom line, even during the high-flying-high-spending 1998/1999 period.

Summary

Internet banking isn’t for everyone. Most customers still desire a physical presence for reassurance and services such as deposits and safe deposit. But for an increasing number of consumers, many of whom are heavy borrowers for shelter and education, the Internet is fast becoming the preferred channel for most transactions. Complacency now puts us at risk of losing our best customers to more aggressive online competitors.

1Gartner Group estimate of online banking users, 9/01, see Table 9,; NRF/Forrester estimate of online buyers, 8/01

2Jupiter Media Metrix, 5/01;

3Affluent households have income greater than $100,000 or assets greater than $500,000; remote oriented customers use ATMs, call centers, point-of-sale debit, and the Internet

4“Internet Banking in North America: Moving to Where the Action Will Be,” by Frank Caruana, Tower Group, Sept. 2001

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Reading the Tea Leaves - Online Banking Revolution

By Jim Bruene on September 2, 2001 9:40 AM | Comments

Every year we publish a revised online banking forecast. The exercise is somewhat futile since we are skeptical of new technology adoption forecasts, knowing that by definition they are wrong. Yet, every spreadsheet and business plan needs a forecast as a starting point, so we do our best to deliver one that is hopefully less wrong than others.

Our process is to gather and review the forecasts from prominent online banking researchers and analysts, compare and contrast their results, add our own professional insights, and publish a forecast with accuracy estimated at plus or minus 20%. Over the years our track record has been respectable. Our first forecast in Jan. 1998 predicted 22 million households by year-end 2001. That prediction looks to be right on the money.


01-sept-02table2.jpg

Definitions

Sometimes it seems as though the analysts are gazing at two entirely different planets. How is it possible for respected researchers at Gartner to claim more than 30 million online banking users while the equally savvy bunch at Jupiter says only 15.5 million? Usually when the numbers are dissected, you find that much of the variance comes from the definitions used; for example, Gartner is tracking individual online users while Jupiter tracks households. Furthermore, Gartner is counting all banking products including deposit accounts, credit cards, bill payment, and email payments while Jupiter is tracking payment accounts separately (see Table 5, below).

Like Gartner, we use the broadest definition of an online banker, (Table 4, below) including deposit account access, electronic bill payment, credit card access, and email payments through PayPal. However, we also track households rather than individual users.


The Latest Forecast


 

In our last major forecast update, (OBR, April 15, 2000) we projected 15 million online households by year-end 2000 and 20 million by year-end 2001. It appears actual results will be slightly higher, an estimated 15.5 million in December 2000 and 22 million by the end of this year. The biggest upside surprise was in the payments area with the huge growth in paying bills directly at billers’ Web sites. This activity grew from an estimated 1 million users in 2000 to 5 million in 2001, and is expected to hit 10 million in 2002.

Another important trend is the sharp increase in Power Users, households that access bank accounts AND pay bills. Beginning the year at just 3.5 million households, this category more than doubled, growing an estimated 4.5 million to end 2001 at 8 million households. We expect another 4 million households to attain power user status in 2002, ending next year at 12 million, more than triple the 2000 number. This shows that not only is online banking penetration growing, but also the level of usage is increasing.

For 2002, we project an overall growth of 5 million new online banking/bill pay households (range: 3 to 6 million), about 25% fewer newcomers compared to the 6.5 million added in 2001. Also the rate of growth will slow significantly from 42% in 2001 to 23% in 2002 (range: 15% to 24%). Online banking penetration in 2002 is projected to be 25% of all U.S. households (range: 22% to 28%) and 41% of online households (range: 36% to 46%).


Source: Online Banking Report, 9/01        n/o = not offered

1)        See account definition, Table 4

2)        Household has used at least one of the following 9 account access and payment services listed below (+/- 20%)

3)        Household has used at least one of the following 5 statement access services (+/- 20%)

4)        Includes any FDIC-insured deposit account (does not include brokerage cash accounts held in money market mutual funds) (+/- 20%)

5)        Includes users accessing credit and charge card accounts online even if they don’t use an online checking account (+/- 30%)

6)        Uses (not just registered) account aggregation services (e.g., Yodlee, uMonitor) at any site, bank or non-bank (+/- 40%)

7)        Subset of statement aggregation that monitors loan payments, balances, and helps user minimize total interest expense (+/- 50%)

8)        Subset of account access; any of hundreds of email notifications triggered by account balances or activity; includes full statement delivery as well (+/- 30%)

9)        Uses any of the following 4 epayment products; does not include online purchase using a credit or debit card (+/- 25%)

10)      Pays bills to multiple billers at a third-party site (not the biller’s site); the third party can be a bank, non-bank, Web site, Quicken, or Money (+/- 25%)

11)      Sends money to any person or business using email payments, e.g.,  PayPal (+/- 35%)

12)      Pays bills directly at the biller’s Web site, or directly to the biller in response to an email message (+/- 35%)

13)      Subset of third-party bill payment, e.g., PayTrust/PayMyBills.com, CyberBills (+/- 50%)

 

U.S. Households Banking Online (millions)

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Categories: Online Banking Report

Benefits of Online Banking: Consumer Expectations

By Jim Bruene on August 2, 2001 8:27 AM | Comments

Before we launch into a few entries this month on product and marketing strategies, let’s reflect for a moment on what users expect from online banking. Use this as a checklist as you review your product design and marketing messages.





Source: Online Banking Report, 8/01
1We call it the illusion of real-time processing, because users don’t so much care whether a transaction is processed in real-time or batch mode, what they care about is that they can SEE that you have accepted their transaction and have adjusted balances accordingly; the actual debits and credits can be handled behind the scenes in batch mode.
2It’s extremely difficult to describe what’s “right” in words, but , we know it when we see it; for example, ING Direct’s Orange Savings account .
3While pictures happy people in branch signage and take-one brochures make your bank seem more user-friendly, it works of the opposite on the Web, where users may become annoyed at the wait to download pictures that have nothing to do with the product

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Categories: Online Banking Report

Sources for Online Banking Research

By Jim Bruene on August 1, 2001 8:20 AM | Comments



Source: Online Banking Report, 8/01
 

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Categories: Online Banking Report

Online Banking & Bill Payment at Mid-Year 2001

By Jim Bruene on July 6, 2001 9:48 PM | Comments

During the last 18 months, online banking has become a common activity among its primary targets, middle- and upper-income households. Here are the primary reasons why usage has continued to grow rapidly despite a poor climate for other ecommerce activities:

Major Milestones: 1999 to 2001

Date

Milestone

1999

Apr-July

CyberBills, PayTrust, and PayMyBills (now part of PayTrust) launched scan-and-pay bill payment programs

Aug

VerticalOne (now part of Yodlee) launched the first financial statement aggregation site

Nov

First Internet P2P payment service launched by PayPal

Dec

The first major online banking/online brokerage merger approved for E*Trade and TeleBank

2000

 

Feb

Compubank, Virtual Bank, and X.com receive large capital infusions from venture firms

Mar

PayPal/X.com hits 1 million users

Mar/Apr

Internet company market caps decline sharply

July

Citibank launches myciti.com, an account aggregation site built by Yodlee

Oct

Juniper Financial launches

2001

 

Jan to now

Mortgage refi boom buoys the bottom line of online lenders

Feb

PrimeStreet.com a well-funded and well-managed small business loan marketplace ceases operation and declares bankruptcy

Feb

Yahoo launches ACH transfer engine powered by CashEdge

Mar to June

Wingspan, SFNB, and CompuBank brands are discontinued and merged into other banks

June

NextCard hits 1 million credit card accounts

July

Virtual Bank attains profitability 15-months after launch

Sep

PayPal hits 10 million users

 

Source: Online Banking Report, 8/01


 

Factors Influencing Usage
  • Continued rapid growth in email payments: Email payments were the first online banking feature to gain “gee whiz, why didn’t I think of that” status; crucial for generating buzz and word-of-mouth. Although plagued by fraud and disgruntled customers, the dark side of the payments business, the leading provider, PayPal, has been able to dramatically raise prices while continuing to grow its business. The privately held company claims to be nearing profitability.

  • Easier-to-use services: During 2000 and continuing this year, bank Web sites become far more user-friendly with easier signup procedures, prominent login buttons, good demos, well-organized FAQs, and better customer service.

  • Strong growth in bill payment at biller sites: Forrester was the first to quantify this new trend in its July 2001 report, Bill Payment Goes Mainstream. In this report, Forrester found that 7% of online consumers pay at least one bill online at a non-financial institution. That total is up from nearly zero just two years ago. And it’s already equal to the 7% of online consumers that pay bills through a bank service, a number that has been growing at only about 20% per year.

  • Word-of-mouth effects: Like the network effect important to high-tech product adoption, online banking has its “neighbor effect,” when your neighbor figures out how to bank online, you decide it’s worth checking out.

  • Negative press: The current wave of ecommerce bashing hasn’t helped bank marketing efforts. But as the down cycle plays itself out, there should be new round of more optimistic stories.

  • Less capital investment: Not only has the VC money dried up, many banks have curtailed their spending on online initiatives.

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A Look Back on Online Banking (1 and 5 years)

By Jim Bruene on July 4, 2001 11:21 AM | Comments

Two Years Ago in Online Banking Report

In , we took a look at the issue of security. Both from the standpoint of making your program less prone to fraud; and how to leverage security concerns in your marketing. Our report, Security Concerns as a Marketing Tool, discussed building a trustworthy brand and detailed eight product features that could alleviate consumer fears of banking online. We also outlined a three-level password system to guard against unwanted account withdrawals.

In light of the recent intrusion into S1’s data center, it might be time to take another look at how you deal with security, both in your authentication procedures and in your Website copy. For ideas, we recommend reading issue 48; most of the ideas are still very appropriate today.

                     OBR, May, 1999


 

Six Years Ago in Online Banking Report

Our June, 1995 report entitled, Web Mania was our first in-depth feature on Web site design. The 12-part template included an optional account access module. While the template would still work today, account access is no longer optional for most financial institutions.

We also looked at the Web sites of two leading banks, Wells Fargo, which was then the only bank in the world with online account access; and Toronto Dominion, which was several years ahead of its time with financial market commentary updated daily.

                     June 1995

 

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Categories: Online Banking Report

Looking Back 1 and 5 Years in Online Banking

By Jim Bruene on May 7, 2001 4:07 PM | Comments

One Year Ago in Online Banking Report

In May 2000, we published our fourth annual “Online Banking by the Numbers” report (which we’ll be updating this summer). At that time, there was still a lot of talk about traffic, brand-building and new business models.

One of the highest flyers, OnMoney, the financial portal owned by AmeriTrade, was drawing nearly 2 million unique visitors per month thanks to a flashy advertising campaign that included among other things, giveaways of Range Rovers stuffed full with cash. But we sounded a warning, noting that “only 220,000 (visitors) had stayed long enough to register.” Today, OnMoney is drawing about 150,000 users per month (see Table 1), but they are an involved user base, using OnMoney’s Web for more than 20 minutes each month on average.

                        OBR May 2000


 

Six Years Ago in Online Banking Report

Six years ago, there was much concern about Microsoft entering the financial services arena. In our inaugural issue, we ran a front-page editorial debunking that notion, “No single entity, be it a bank or non-bank, has the slightest chance of capturing a significant share of the total U.S. (financial services) pie in the next 10 years.” We are now 6 years into that 10-year look, and so far there have been no significant market share shifts in retail banking (online investing is another matter).

                        OBR April 1995

A month later, we ran a list of the only four Web sites in the world with online credit card applications, Capital One, First Union, Naval Air FCU, and Chevy Chase. Two other credit card issuers had Web sites, but no application, Barclaycard and Norwest. Today there are more than 3,000 banks and credit unions in the U.S. alone with online credit applications.

                        OBR May 1995

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Looking Back 1 and 5 Years in Online Banking

By Jim Bruene on April 4, 2001 1:34 PM | Comments

One Year Ago in Online Banking Report

In April 2000, OBR began with the headline, Net Banking Catches Fire: 15% of U.S. Adults to Bank Online by Year-end. We also noted, “We’ve been waiting five years to write that title.”

At that time, we had just endured a six-month period of ominous stories about account attrition and user apathy, much of it stemming from a suspect Cyber Dialogue report that showed virtually no gain in online banking usage in the prior 12-month period. Quite the opposite, we were seeing a surge in demand, as useful online services from financial institutions and credit card companies, plus specialty services from X.com/PayPal, caught on with Net users.

It turns out we called this one right. Online banking usage continued to soar in 2000, easily beating our prediction of 15% penetration by year-end. Today, just one year later, online banking usage is approaching 20% of the population. We’ll look closer at the number in an upcoming report.

                        OBR, April 2000


 

Five Years Ago in Online Banking Report

In the spring of 1996, online banking was just beginning to attract attention in the mainstream press. Unfortunately, it wasn’t always positive. Reporters at The Wall Street Journal, Glitches Short-Circuit Miracle of Paying Bills Online and New York Times I’d Rather Use a Checkbook, both personally experienced the shortcomings of electronic bill payment and wrote scathing articles about the service.

The articles were prompted by a serious of service problems Intuit was experiencing with it’s new bill payment processing company, Intuit Services Corp., later sold to Checkfree.

Intuit’s startup woes motivated us to write a feature entitled, Ten Strategies for a Safe Startup, which extolled the virtues of a slow rollout to iron out the bugs before they made the front page of the New York Times. It’s still good advice for anyone conducting a major system or feature change.

                        OBR Mar. 1996

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Online Banking at Mid-Year 2000

By Jim Bruene on June 2, 2000 8:50 AM | Comments

There has been more truly innovative developments during the past year than in the first four years of Net banking combined. Statement aggregation, email payments, and X.com, to name a few. The following chart summarized the major events since you last went into the annual business planning cycle:

1999 and 2000 Events

 

Date

Milestone

1999

June

PayTrust and PayMyBills launched scan-and-pay bill payment programs

Aug

VerticalOne launches first financial statement aggregation site

Nov

First Internet P2P payment service launched by PayPal

Dec

The first major online banking/online brokerage merger approved for E*Trade and TeleBank

Q4

Credit cards morph into shopping portals led by NextCard and First USA

2000

 

Feb

Compubank, Virtual Bank, and X.com receive large capital infusions from venture firms

Mar

PayPal/X.com hits 1 million users

Mar/Apr

Internet company market caps decline sharply

Q2

Chase, Citicorp, Fleet, and First Union and others announce statement aggregation plans

     
 

Source: Online Banking Report, 6/00


 

Positive Trends in Online Banking Use
  • Rapid growth in person-to-person (P2P) Internet payment usage: P2P payments were the first online banking feature to gain “gee whiz, why didn’t I think of that” status … crucial for generating buzz and word-of-mouth.

  • More capital investment flowing to the sector: X.com, PrimeStreet.com, Lending Tree, NextCard, NetBank, CompuBank, PeopleFirst, and Virtual Bank have attracted more than $1 billion in total capital during the past 12 months.

  • Easier-to-use services: During the past 12 months bank Web sites have become far more user-friendly with simple things such as login buttons on the front page and well-organized FAQs, to more advanced features such as email alerts and statements.

  • Internet billing and payment continues to attract considerable attention and capital: We may finally hit the inflection point in 2001 where usage increases dramatically.

  • Negative Trends in Online Banking Use
  • Bill payment is still a bust: Some 15 years after its introduction, there are still only about 3 to 4 million active bill payments households

  • Bank Web sites are anything but sticky: According to data from PC Data www.pcdataonline.com  across 147 banking URLs that make the top 10,000 Web site list, total traffic was 20 million composite visitors4 in June, up from 18.8 million in May.

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