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In recent years we have written and spoke on the potential for retail networks such as Google, Amazon, PayPal, Facebook, etc to gradually enter the financial services industry in broader terms than disintermediating payments. Revenue from payments are being cannibalized already which is the life blood for FI's.

If we look at these network giants they have large, loyal customer bases across all ages groups and socio-economic segments. Like you some of us are regular shoppers on Amazon for an extensive array of services and products. Others are on their social networks more than once a day and the lists of followers continue to grow. Consequently these online companies have big data banks which help them target market millions within their subscribers-what great equity base for a  broader range of offerings including financial services!

This week American Banker had a very specific article of interest entitled, "Why are Amazon, PayPal meeting with bank regulators?".  The purpose would not surprise you!

This competitive possibility should be taken seriously. How is your competitive readiness? This question has to be addressed objectively without comfortable blinders and using a clinical analysis process. Every FI has customers dealing with the online networks and, in fact, loyalty could be in their favour.

Hopefully your competitive intelligence radar covers all future and emerging possibilities and not subjective summaries of known players. Also your digital game must be in top form to counter the obvious disintermediation on the horizon.

Pat Palmer | Saturday, September 30, 2017 | Trackbacks (0) | Permalink

Artificial Intelligence (AI) is the hot technology topic in most industries including financial services. So where will this take us and how will it effect institutions, customers and regulators to name a few? Intelligent technology has many beneficial possibilities but we should caution those who would assume that customers will readily adopt AI offerings that the tech firms and financial services management get excited about in isolation from market realities.

Today consumers control channel choices in an omnichannel landscape. They have become comfortable at not  only picking preferred suppliers but also managing their own service selections and experiences. Whether you are 18 or 65 financial and technological literacy has grown and continues to increase autonomy and acceptance. With software/apps today individuals can easily aggregate their multiple dealings and maintain their freedom to engage who they want, where and when. Plus, this independence that technology has facilitated will tend to gain greater acceptance over time. Some FI's are now trying to change this trend by offering personal financial services management AI packages which require customers to consolidate their dealings/transactions under a single umbrella to improve their financial profiles , plans and benefits. Will consumers be enticed to aggregate their dealings under a single FI's control or are they at the comfortable stage that they can do it and also have multiple options at their finger tips? Obviously continuous cross segment preference research is necessitated to ensure that investments mirror where customers want to go today and change as new ground-breaking options appear.

Pat Palmer | Thursday, September 28, 2017 | Trackbacks (0) | Permalink

The American Bankers Association just announced the findings of Americans' channel preferences in a sponsored study by Morning Consult.

The question asked was in regards to channel usage to manage bank accounts.








As you would expect those between 18-26 years of age use mobile banking most (46%) whereas those over 65 (52%) use online. Yes it is a digital world across all segments. When it comes to a branch preference only 11% of those 18-29 lean that way.

We expect that in other countries the preferences are more pronounced. Still there continues an over investment in branches and some credit unions are still not surfing the digital wave. 

Every FI should have its own proprietary research on channel preferences today and five years out as every customer base demonstrates different dynamics. You want to invest in the directions where you customers are going.

Pat Palmer | Wednesday, September 27, 2017 | Trackbacks (0) | Permalink

Over the years most of the major banks tried to support Aboriginal banking on and off reserves to varying degrees of success. Then native leaders initiated many attempts to set-up and run their own financial institutions, mostly via the credit union movement. Peace River Trust was the major outstanding examples of these efforts.

Even though Aboriginal banking models have to compete with an extensive array of traditional and digital FI's they do so with pride and innovations. Me-Dian Credit Union is a shining example with their recent announcement in Winnipeg. This CU caters to Aboriginal communities and organizations in Manitoba and also welcomes non-Aboriginals as Associate Members. A significant challenge was trying to serve current and new members sparsely distributed in northern communities. In partnership with Celero and ASAPP Online Solutions they have introduced a fully integrated digital financial service engagement and experience in an omnichannel model which includes online account opening for individuals and small businesses.

This deserves a WOW! Obviously, this innovation should encourage other small and medium sized credit unions to have similar models for survival and growth.

Pat Palmer | Friday, September 15, 2017 | Trackbacks (0) | Permalink

In following digital banking trends with small FI's, the annual U.S.A. Malauzai research presents some interesting facts from almost 7700 banks and credit unions with assets between $50 millions and $5 billions which offer consumer and business mobile banking, The key finding:

-the market is saturated and new app growth is down to 8%

-interest or growth has failed to meet expectations

-bank-centric P2P growth is low relative to P2P payments growth

-debit cards controls are popular differentiators

-wearables are gaining momentum but most FI's don't have an Apple Watch app

-stand-alone apps are history

-5 primary vendors supply most apps

-vendor churn is high as FI's search for differentiation

Note: most FI's with <$100 millions in assets have no mobile banking app and generally, as you would expect, business mobile growth is slow. 

Still everyone recognizes the importance of mobile banking in this digital era. So where does that leave those which have not yet adopted a solution? Generally, their mobile customers by now have acceptable arrangements with another supplier.

Differentiation is imperative to get engagement and customers are attracted to unique features, design excellence and outstanding experiences. Consequently, those who piggy-back on a generic group solution are not getting the best benefit for their institutions or customers/members.

Pat Palmer | Thursday, September 14, 2017 | Trackbacks (0) | Permalink

Gallup recently released its industries' images research in which banks are still struggling in the USA (and perhaps in others countries as well).

Overall in the American public 43% view the banking industry positively and 30% negatively so 27% are neutral. Gallup says the industry has a net positive score of 13% (43%-30%) which is still below those of a decade ago. In fact, where once the industry was the best overall it is now below the industries' average. Other industries ate improving faster than banking!

Upper income Americans are more negative than middle and lower income segments.

In particular the industry has a problem engaging millennials; has been under political attacks; and has been hit with significant scandals. The industry has to solve the major challenges to counteract/answer its public perception problems. Silence is not a solution!

Firstly, if the majority of your public is negative or neutral about your industry where do individual FI's stand and what are their public relation plans and strategies to differentiate themselves?

Secondly, how much leadership complacency is in their organizations which needs to be shook-up or changed?

Thirdly, how do employees rate their organizations on public relations imaging? (Their negativity or neutrality will affect culture and customer images)

Being proactive is an imperative for brand equity and profitability. Every FI needs to look in the mirror and evaluate their customer-centricity.

Pat Palmer | Friday, September 08, 2017 | Trackbacks (0) | Permalink

Tracking your consumer business was historically based on number of customers and number of products utilized at points in time plus some demographic segmentation information.

Today big data has permitted improved access to the true ebb and flows of customers' experiences, satisfaction and depth of relationships. Technology has enabled individuals with digital tools which assist in acquiring and cutting back on products and services at anytime. It is a fact that the majority of dissatisfied or unsatisfied do not severe dealings completely but redirect usages, volumes and additions among suppliers of preference at points of time. Gauging branch, online, contact centre and mobile visits may in themselves not give you the true pictures needed to identify changes in business loyalty. Your data will show you balance fluctuations and trends plus transaction types and volumes over specific timelines. As well, there will be details on intermediaries being used for transactions of various types and destinations for significant monoline or syndicated services.

The bottom-line is you can find out the trickle or wave of positive and negative engagement flows then proactively determine dynamics to improve relationship experiences. If you have a material number of relatively inactive customers, the problems could be serious affecting current and long term costs and profitability. Simply closing inactive accounts also shows you have cultural care problems which have broader affects on the organization.

Pat Palmer | Thursday, September 07, 2017 | Trackbacks (0) | Permalink

The Canadian economic indicators quickly led to an interest rate increase by the Bank of Canada to 1%- the second increment in a short period.

The FI's, especially the large banks, will automatically get a revenue bonus (RBC CEO estimates that the new 1/4% will translate into $300 millions in additional revenue over 5 years for their retail banking operations) Each institution will benefit in accordance with their interest rate, risk management strategies. Obviously the corporations, which are setting record profits, will show even better results going forward  Their abilities to manage the public relations issues while customers suffer higher, uncontrollable borrowing costs will be the latent challenge.

One key initiative would be proactive, customer-centric outreaches to assist clients in minimizing the negative impacts. Many consumers will have concerns and an FI can start by offering a hotline or priority chat option where individuals can explore costs and solutions. For example, many may have variable rate mortgages and will want to know if it is time to fix a rate. Or, what choices do they have to optimize interest costs such as an aggregation account model or converting high cost borrowings, such as credit card core balances, into mortgage collateralized credit lines or even  doing a blended rate combination under the mortgage umbrella.

Perhaps the most helpful and opportunistic for the FI's and their customers is aggressively promoting borrowing/debt consultations which will analyze their total portfolio picture. Empathetic advice is critical to every one with credit concerns and budget constraints. Consequently bad news can be turned into a personalized cost-benefits immediately and going forward and at the same time institutions uncover sales leads and improved, satisfied relationships- a win-win. 

Pat Palmer | Wednesday, September 06, 2017 | Trackbacks (0) | Permalink

I was one of the odd kids as I waited anxiously for school to begin again each September. There were so many activities, friends and new discoveries. Also many FI's made a special effort to connect with students with unique promotions by offering account opening on site plus making the first, although small, deposit in grade 1 or offering note pads and pencils with the institutions' names embossed. Secondary school didn't receive the same degree of attention until the final year when students were heading off to colleges or universities which was a time to try and attract loans, credit cards, and debit cards. There have also been experiments of student run branches in schools coached by FI agents.

Today there seems to be little if any "back to school" visible promotions to connect with Generation "Z". If you dig you can find smart phones and banking apps being used to entice students to be customers or members. On campuses there is usually a monopoly by an FI which was the successful bidder for on site services. How successful is this strategy now when smart phones are the banking linking except for convenient ATMs when cash is needed and students don't concern themselves with user fees?

The big question is how do you successfully market to students and are they a priority segment? This is not the place to debate the strategic decisions on this question but simply determine if a proper diagnostic was undertaken and what were the cost benefit analyses present and future. Family channel preference research and member influence in financial matters is truly important. These digital dynamos going to school have unbelievable potential and will change our industry products and practices. Perhaps, they also have stronger opinions on FI's and one should really know where your brand equity sits- growth or erosion! 

Pat Palmer | Monday, September 04, 2017 | Trackbacks (0) | Permalink


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