Archive for the ‘Online Banking’ Category
Jim at Netbanker paints a great picture here about the potential for Doxo as a widepsread method of electronic bill presentment and payment (EBPP). Having watched the evolution of EBPP both across North America and specifically in Canada with BMO and ePost since the ‘90’s the base business case has always been biller cost reduction. There still remains the key question of what it will take to get to scale that allows the billers to actually reduce costs.
While billers see cost reduction from paper and postage, they must still maintain some infrastructure for managing the monthly statements. It seems to me the real impetus for EBPP will be something that make it the easiest thing in the world for consumers The integration with online banking was an assumption that it turns out was flawed and not for all. Consumers need a choice, and choices need to, generally speaking, be open – not a lock-in solution. Maybe a Doxo/ ‘facebills’ (sic) solution is the right approach.
Why would billers pay for it?
- It’s a fraction of the cost of paper + postage
- Adoption of estatements has stalled at 10% to 15% of consumers even for billers who’ve worked relentlessly to get rid of paper; and the easy way to get adoption, charging for paper statements, get both consumers and politicians all worked up
- The Doxo platform provides a direct, secure, communications path to end users; including marketing messages
- No advertising from competitors makes Doxo more desirable than other third-party systems where billing info might end up residing (e.g., Google/Gmail, Mint, etc.)
- The network effect; managing multiple bills in one place is the carrot to get consumers to give up the paper
A little known event occurs Wednesday. The 13 root nameservers that run the internet by ensuring those obscure numeric IP addresses resolve as friendly english words for us, are getting a security upgrade.
DNSSEC is designed to solve a flaw in regular DNS used by the root servers to date. When you type in your url, a check is run through DNS servers to obtain the numeric IP address which then locates the site you are seeking. As clunky as it sounds this happens very quickly in milliseconds. It does this by caching the dns information held at the root nameservers closer to your computer, at hosting services, ISP’s etc.
The security issue arises whereby bad guys can intercept the request to the DNS server by pretending to be one themselves. Then your friendly bank URL can be directed to the bad guys server and while it looks like your bank in fact you are handing off your credentials to bad guys.
DNSSEC adds a security layer to the DNS request, which is intended to maintain its validity by keeping a chain from the root servers all the way out to the ISP DNS servers. There is much debate over the workability and even the viability of this exercise. It has been debated for over 15 years. Time will tell – that is not my issue today. The issue this week is that DNSSEC is being rolled out and only a few DNS systems have installed DNSSEC. A related issue is the size of packets used for DNS. DNSSEC uses a 512 bytes limit. There are protocols for how to treat those over that size but from my reading over the last few weeks it seems that treatment is not consistent, and this is the most likely cause of problems when the change is made.
No-one is quite sure what will happen on DNSSEC day +1.
Today it appears that some services are having DNS issues and one can only conclude that there is a problem brewing. Expect choppy waters over the next few days.
This is a significant survey with online banking leading over branches for the first time in consumer preference. (ht netbanker)
ABA SURVEY: CONSUMERS PREFER ONLINE BANKING
Survey shows shift in consumer preference away from visiting bank branches
WASHINGTON – A new survey by the American Bankers Association shows that for the first time, more bank customers (25 percent) prefer to do their banking online compared to any other method.
“This marks a watershed change,” said Nessa Feddis, ABA senior counsel and retail banking expert. “It tells us that for the first time, more consumers prefer the speed and convenience of conducting their banking transactions on the Internet than visiting their local branch. It also tells us that consumers now have confidence in the accuracy and security of online banking,” she added.
Finally we are seeing hints of what we all know is inevitable. It has taken a long time and probably this latest economic crisis, but the long view on branches suggests a damatic shift with less of them.
Yet slowly but surely, the internet is starting to make its mark on the sector as more people move their banking online. Lloyds is to shut up to 400 branches as part of its integration of HBOS. Its rivals are likely to follow suit.
A decade from now, the local branch could well be an endangered species as “cyber-banking” grows ever more popular and more branches close.
Rakuten [wikipedia Site] is a highly popular Japanese shopping destination online, where you can get anything, from laptops to shoes to travel, you name it. Now they are adding their own bank in 2010.
The aggregated model exemplified by Rakuten works well in Japan, and the addition of banking is one more innovation for traditional banks to contend with.
TOKYO, Jun 04, 2009 (Kyodo News International – McClatchy-Tribune Information Services via COMTEX) — Internet mall operator Rakuten Inc. said Thursday it will rename its Internet banking unit eBANK Corp. as Rakuten Bank before late June 2010.
Researched by Nobuyo Henderson
Wesabe have introduced a redesigned site. It appears to be more than a surface change with nice use of interactive ‘hover’ features with personalised information inside the hover. The menu is simplified, yet takes you to everything required, including ‘Connections’ that includes iphone and twitter connections.
Its clean, bright, and worth checking out.
Wesabe Site Redesign
If you haven’t logged in to Wesabe lately, you’re in for quite a surprise. We’ve redesigned every single page of the site and have been getting some rave reviews about our new look!
Deloitte pick up on an interesting characteristic of banks here. Cost cutting occurs during downturns, but its spend spend spend when things are looking good.
Banks rarely get to the point of incremental efficiencies that they note here. Citi are a classic example as noted in the FT this morning.
This fits with the view that this change we are undergoing is not just another blip before we return to business as usual. There is no business as usual coming. The future is smaller, framed in different business models, contains a greater mix of small business, and smaller companies and with retail consumers working harder, longer and for less money.
All this points to realignment of the banks’ models to be more efficient, more effective in customer interaction, and more automated, with much greater reliance on online banking and mobile banking, with less on branch banking.
This time we will not hear about ‘bricks and clicks’ as we did in 2002.
The turmoil in the financial markets, coupled with the economic downturn, is fundamentally altering the financial services environment. In this new world, improving operating efficiency has become a competitive necessity. But while financial firms have typically moved quickly to reduce costs when the business cycle is contracting, far too often these efforts have been quickly forgotten when business picks back up.
In this report, we present research conducted by the Deloitte Center for Banking Solutions demonstrating the critical importance of operating efficiency to the fortunes of financial firms. Among the findings is that building efficient operations is not enough — steady, continuous improvement in operating efficiency are required. In fact, banks that have achieved continuous improvements in efficiency have also generally experienced far greater gains in their share prices.
In general it continually amazes be that banks are not leaping on this opportunity for a low cost, high visibility ad for their online services. Which leads me to todays question de jour for bank executives:
Have you tried an iphone?
If not go to a store immediately and do so. Whether you buy it or not, you will be left with the impression this is a game changing device, and remember the people who use them are vocal. Then go talk to someone who does iphone apps and be prepared to be surprised at the cost of entry.
Anyhow, well done Intuit.
The commentary here from Colin McKay, vice-president of e-business architecture RBC in this video interview, is refreshing to hear from a Bank.
RBC discusses client reporting and customer statements | IT World Canada
Some notes from the interview, then commentary and discussion:
- Old process had product and IT groups generating 18 separate statements in different formats but most ending up in print
- each statement feed was formatted specific to the output, eg, print or web
- each of the 18 had their own processes
- all 18 feeds have been directed to a common store, and stored as raw data
- the 18 raw data feeds from the core systems, are now amalgamated into a “Common Composition Engine” (CCE)
- CCE can output in any format to print, web
- most customers do not read statements, so the current practise of storing all in PDF format is wasteful and inefficient
- CCE will eventually be offerred on demand, and on request, this could be PDF on demand, or web on demand
- the Customer Preference Engine will allow customers to aggregate the data of their choice, including marketing messages,and product messages into a customised statement in the format of their choice
- uses Telephone companies as an example of information display versus statement format. The notion of a statement is being challenged by the web experience, and is redundant for many customers
- He speaks of Electronic Bill Payment and Presentment (EBPP) and social networks. “people go into town and do multiple things, vist grocery store, hardware store, and the bank; there is a desire to conduct multiple business transactions at social networks in the same way; what we are seeing is a convergence”
Relevance to Bankwatch:
Great interview but that last point needs some discussion. But first with regard to the problems of multiple products and statements, the solution to the problems all banks face is clear, and he articulates it well. The notion of on demand and in the format and design by the customer makes sense.
The notion of a social network as being analogous to “going into town to conduct business” requires some thought though. In the real world we have Wal-Mart with photo, bank, restaurant as well as their core service of merchandise. We have malls, with a variety of stores and banks. We have Main St with a variety of stores and banks. Finally we have other cities and countries that we can visit to conduct transactions. The nice thing about the web is that it can be all or any of those. It seems to me if we use this analogy, that the town is the web, and the concept of malls, stores, banks, and big box stores are all sites within the web, exemplified as different types of aggregation or not. An we can get to that web using laptops, PC’s or mobile.
Customers will gravitate to the methodology of their choice, but they will require help to visualise how that future might look. There is scant evidence that Facebook is viewed by users as that place for convergence and aggregation, or the place where they go into town to “conduct business transactions”.
In fact the evidence suggests that people are avoiding those things that get in the way of their social interaction at Facebook. My own observation is that the jury remains out as to a desire for people to aggregate financial information anywahere except with their FI. I know this contradicts the general movements of convergence and aggregation on the web, but so far financial services have not been pulled that way by people, which is probably dirven by privacy, security, and identity theft concerns.
Having said that it is possible if RBC display how that might work in a safe secure and convenient and non-intusive manner, that customers will accept receiving their bills and reminders inside their Social Network environment, alongside their social conversations (but obviously hidden from the view of others). Or is this more of a channel need? Aggregation at the device level, ie PC, mobile? In any event its a great conversation and the rioght conversation that RBC are promoting here.
Thoughts? Do you want to receive your statements, bills and notifications elsewhere than say at the bank site, and in your email? If so where and how?
I am an unabashed avid follower of Online Banking Report, and the latest “Online & Mobile Banking Forecast” continues the classic of Jims annual output.
The focus of online banking and mobile is one key attribute of this years focus. In fact having the iphone on the front page is illustrative of the outside the box thinking.
This year in particular is when all Banks ought be thinking of ways to innovate and get outside the box.
Clearly it is no longer business as usual, and will not be for some time.
Gathering deposits is essential to future success, but that will come one customer at a time – the classic conundrum of acquisition cost remains if banks choose to use old ways to acquire.
A key component of customer acquisition is customer retention, and the thrity six pages here are one way to structure your plans to retain the customers you have. Bank of America and Wells Fargo are doing that – what about your bank? As word gets out, such innovations will drive acquisition too.
The report follows the usual style with first a summary of innovation to date. What makes this intersting is that enough years and innovations have gone by that the history lesson in itself is fascinating, and awe inspiring if one thinks of the things that your bank did not implement. The sheer volume of facts in Jims reports are worth the price – no-where else is this level of detail available in one place.
Then there is a review of 2008 innovations and here it hits close to home for banks. In the top innovations for 2008, there are only four banks mentioned (Wells Fargo, Bank of America, PNC and Zion). Thats four out of eight thousand eligible! For the top ten in 2008 there is one bank makes it.
The breadth and depth of the innovations covered is quite astounding, and to see them laid out in one place is refreshing showing that the possibility to innovate is there for the taking.
Finally there are the honourable mentions of 2008. This is a fact filled detailed view of the current state of online and mobile and this one in particular frankly ought to be required reading for every banker. Well done Jim and the team.