The Bankwatch

Tracking the consumer evolution of financial services

Bankwatch predictions – Banking 2007

Christmas and New Year are always a good time to take stock, and reflect on the year past, and what we might expect next year, so here are my thoughts in the Banking space, based on what I have seen, and expect. This is largely a North American view.

  1. statement and cheque presentment will be table stakes. If you don’t have that capability it will be noticed by your customers, and you will lose customers.
  2. Banks will start to worry about internet evolution, and some tangential attempts will be made by baby boomer executives who genuinely want to make a change. Bank blogs will be big, and disastrous. Reason: Banks have not integrated their internet ‘people’ into their ‘corporate’ people, so 2007 is still too early. Thought for 2007 – “Blogs have to reflect the business model”. First look at your structure. Sticking with the positive examples, I believe Bank of America have the structure right.
  3. Credit Unions will lead the way in use of blogs and community spirited internet activities. They will continue to lead the way in customer loyalty. They have a natural advantage being local, and community minded from the outset, but they have something deeper that perhaps results from the non profit motive, that means customers believe CU’s care. Internet and Credit Unions match. On a similar note, I see an opportunity for the smaller small/mid size Banks in the US. They have some of the same attributes as Credit Unions, and can lever that, instead of worrying about the large Bank of Wells Chase’s. Bank exception: Wells Fargo – they get it.
  4. online banking generally will undergo a state of crisis. First we will have the next “phishing”, possibly “man in the middle attacks”. But at a deeper level, Senior Executives will ask why all customers have not been “migrated” (internal bank jargon for the uninitiated). This will result in dysfunctional Bank behaviour. [Note those customers have not “migrated” because Banks (largely) haven’t moved beyond transaction automation]. Bank exceptions: more this time – Wells Fargo, Bank of America, ScotiaBank, and TD Canada Trust.
  5. Quietly, web 2.0 offerrings will start to chip away at the traditional banking business model by levering social internet to eliminate costly bank processes. Social lending, brokerage models, account acquisition models.
  6. Tied to 5. Open Finance will resurge and expect some big Bank(s) to sell other Banks products and services on a commission basis. This is an opportunity for 3. above. No prediction here – I would just be guessing who might do this.
  7. Online account opening will be table stakes, and generally associated with high interest rates to prime acquisition. 2007 will see a plethora of new brands out in front of the mother Bank brands. (2008 will see entrenchment though)
  8. Certain Banks will stand out from the competition amongst customers by
    1. offerring online product comparisons with other Banks
    2. online planning tools as Wells have already done.
    3. online financial planning
    4. cross channel integration: branch employees connected directly to online banking customers
    5. call centres for some, will encompass the entire Bank; some employees just happen to be centralised.

That’s enough for now. Each of these could be a post by themselves, and likely will be.

Your thoughts for 2007? – comments encouraged!

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Written by Colin Henderson

December 21, 2006 at 22:46

16 Responses

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  1. For executives in the world of high finance to find full value in your expressions, there is an expectation that proper grammar be employed. Singular verb tenses used with plural nouns does not make for quality content. Have at least one person on your staff who skims your labors before going to press.

    Justice

    December 22, 2006 at 09:31

  2. For executives who care about the trends that will impact their business in 2007 (and beyond) your blog is essential reading. Keep up the good work.

    Jason Knight

    December 22, 2006 at 09:45

  3. Spot on, Colin – especially #3. I doubt that you’re surprised I’m on board with that one.

    When I first read Justice’s comment, I thought it was comment spam.

    “Singular verb tenses used with plural nouns DOES not make for quality content”? I hope that was an English-prof joke. If Justice would’ve given us a 😉 we may have gotten it. But that wouldn’t have been proper for those “executives in the world of high finance” who take offense to imperfection/personality.

    Puh-lease.

    Colin, you are brilliant, and I’m not saying that because I’m full of Christmas cheer. Bankwatch was my favorite feed in 2006; don’t change a thing.

    Trey Reeme

    December 22, 2006 at 13:04

  4. Trey & Jason … Thanks for the kind comments.
    Onwards and upwards to 07. No changes to the blog expected, but some other surprises coming!

    Merry Xmas

    Colin

    December 22, 2006 at 13:35

  5. Justice … first of all thank you for commenting, and reading my blog. I would encourage comments not to be anonymous, since I am keen to know from whom I am learning. Incidentally, once my ‘staff’ locates the error I will be sure to address the matter.
    Merry Christmas!

    Colin

    December 22, 2006 at 14:57

  6. Frequent reader, first time commenter. Excellent 2007 list and agree with the criticality of many of the initiatives you have listed. In our finance world of hyper-competition – the ones that can execute on a list like this will be the winners.

    Doug True

    December 23, 2006 at 16:33

  7. Thanks for the comment Doug! I like how you sign each post on your blog ~ innovative.

    Colin

    December 23, 2006 at 18:52

  8. […] Top Ten 2007 Predictions For Banking […]

  9. Colin,

    Nice list. I think your list of predictions covers a larger geographic area than your North America examples.

    Your second point is an interesting and realistic one. Although I am not sure what you mean with a blog reflecting a business model, company blogs in the hands of traditional corporate communication people could indeed lead to disasters.

    I further agree with your views on points 5 and 6. I would however add that 2007 would be the year for traditional banks to work on a counter strategy. Starting in 2008 with that might be too late for many banks.

    Happy New Year.

    David

    david garceran nieuwenburg

    January 1, 2007 at 05:20

  10. […] A nice “forward reflection” on banks in 2007 is put forward on Bankwatch. Some comments relate to online activities. […]

  11. David, thanks for the comment, and Happy New year to you. To expand on my rather unclear #2 – I was thinking about corporations put out a blog because they should. Blogs by definition are open and transparent views of the writer and will shed light on their organisation. Closed old style corps will resist that openness, and try to edit blogs, insist on Corporate Communications doing a review of posts first etc etc.

    Colin

    January 1, 2007 at 09:45

  12. hi Colin:
    excellent read. which are the banks which are blogging and blogging well? is there any bank which has a model which handles and kind of customer issues via its blogs…or are/will blogs always be the view of a/multiple writers from the bank? do banks have multiple threads of conversations – product or service wise? appreciate if you could throw some light here. thanks.

    ranjana

    January 14, 2007 at 22:54

  13. Ranjana ….
    Check here for some examples:
    https://bankwatch.wordpress.com/2006/11/30/online-only-banks-branchless-banks/
    Let me know your site, and we can talk more.

    Colin

    January 14, 2007 at 23:45

  14. Colin,
    Spectacular list to which I would add the following:
    a) Prepaid card and NFC offering vendors will gradually chip away at the traditional definition of a deposit account leading more Gen Y consumers viewing Paypal, Obopay, and MVNOs as their primary banking sources.
    b) Data from the social experiments in interchange regulation in Australia and those countries covered by SEPA will go largely unread and US legislators/regulators will cave into the merchant community and tinker with payment rates and discounts.
    c) Major US processors, convinced that US growth will come in single digits, will conduct a global M&A program in countries moving from cash to electronics for payments.

    Just an old guy’s point of view.

    John

    John MacAllister

    January 17, 2007 at 17:51

  15. Great list John and thanks for taking the time.

    I find a) in particular very interesting. Someone from Japan was just showing me such a card that seemed to be shareable across merchants.

    PS … you should consider blogging 🙂

    Colin

    January 17, 2007 at 19:53

  16. […] banking war we are about to witness. (P.S. how the ‘H’ did I miss this in my 2007 predictions!) El Banco de Nuestra Comunidad, which targets check-cashers by undercutting them. Imagine […]


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