Digital Banking Innovation In Turkey

In our research on eBusiness and channel strategy, we often come across clusters of innovation where innovation by one company in a sector causes its competitors not only to match it, but to try to leapfrog it -- resulting in a rapid cycles of innovation. Among the examples of these clusters are insurance companies in the US (Progressive, Geico and a growing number of others) and banks in Spain (Bankinter, La Caixa, BBVA and Banco Sabadell).

Another of those clusters is the retail banking market in Turkey. Last week I was in Istanbul and was able to see some of the innovations in person and meet a number of heads of eBusiness at Turkey's big banks. Turkey's banks have been quick to adopt digital technologies and achieved some world firsts for the banking industry. Here are a few examples you might like:

  • Ziraat Bank's video teller machineZiraat Bank has deployed a network of unstaffed video kiosks (see picture, right), which it calls video teller machines, that use video-conferencing to connect customers with agents in the bank’s contact centre. Customers can use the kiosks to deposit and withdraw money, buy and sell foreign exchange, pay bills, transfer money and buy bonds. The kiosks let the bank expand its network much more quickly than building conventional branches would do.
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The Business Case For Personal Financial Management

Back in November 2006, a startup called Wesabe first showed the potential of online money management. Packaged personal financial management (PFM) software for PCs like Intuit's Quicken had existed for years, but Wesabe, Mint.com and a handful of other startups showed the value of using customer data, and community, to help people understand their finances better.

Since then, hundreds of banks, credit unions, wealth management firms, and other companies have launched a range of spending categorization, budgeting, peer group comparisons, and other money management features for their customers.* The leaders are increasingly making money management available in mobile and tablet apps, as well as on their websites. Fuelled by the poor state of many of the world's developed economies and growing use of digital channels, customer interest in online money management is substantial, as my colleague Reineke Reitsma wrote on her blog a few months ago.

Yet despite the growing number of firms that already offer money management, and the evident interest of some customers, many financial services eBusiness executives still question whether the business case adds up. Our new report on The Business Case For Personal Financial Management addresses that question. Here's what we found:

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One Fifth Of European Mobile Users Use Mobile Banking

The longer we spend researching mobile banking, the more convinced I become that mobile banking is the most important innovation, or cluster of innovations, in retail banking in years, arguably in a century. Here’s why I think mobile banking is a much bigger deal than cash machines (ATMs), credit cards or home-based online banking:

  • In developing economies that lack a dense infrastructure of branches, ATMs and fixed-line telecoms, mobile banking and payments are bringing millions of people into the formal banking system for the first time.
  • In developed economies mobile banking will become the primary way many, perhaps most, customers interact with their banks. Banks need mobile banking to provide a platform for mobile payments and to protect their retail payments businesses from digital disruption as mobile payments start to replace card payments in shops.
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We're Hiring: Analyst Serving eBusiness & Channel Strategy, Amsterdam Or London

We're looking for a new analyst or senior analyst to join our eBusiness and channel strategy team, based in either Amsterdam or London. We're looking for someone with an analytical mind, good communication skills (listening, not just talking!), strong views on the impact of digital technologies on eBusiness and channel strategy, and experience of the complexities of retail financial services and of different European markets to help our clients make great business decisions and shape their firms' strategies. 

If this sounds like you, or like someone you know, please contact me at bensor@forrester.com or see the full details in the job description.

What Can Bank eBusiness Executives Do About The Euro Crisis?

These are worrying times for people across Europe as the euro lurches towards another crisis, with leaders talking openly about the possibility of Greece leaving the euro and reports of customers starting to withdraw deposits from banks in Greece and Bankia in Spain.

It's easy to feel powerless in the face of such powerful forces, but fundamentally the repeated euro crises are about two things: debt and confidence. Lots of individuals, small companies, banks and governments across Europe have a large amount of debt, and lenders -- depositors, investors and other banks -- aren't completely confident that all of them will be able to pay it back. It's critical to avoid a vicious spiral of declining confidence that will harm Europe's economic prospects and the livelihoods of its peoples.

What can bank eBusiness executives do about it? Remember that you control two of your bank's critical communication channels:  the website and email. Use them to reassure customers. How?

  • Help customers understand what the crisis is about. Banks aren't just about products. Your purpose is to help customers manage their money. Help your customers understand the causes of the crisis and the reality of the hard choices facing Europe. Nobody likes realizing that they are poorer than they thought they were. Without getting political, help customers understand the situation and what it means to them.
  • Spell out why your firm is safe. My bank emailed me on Thursday to remind me that it's covered by the British government's Financial Services Compenstation Scheme, covering up to £85,000. Put a similar message on your home page and onto the secure site, where online banking customers are most likely to see it.
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Our View On What Matters In European Retail Banking eBusiness & Channel Strategy

The past five years have been awful for most European retail banks. The financial crisis, and the resulting recessions in most of Europe's economies, nearly destroyed some banks and crushed the profitability of many of the remainder. Worse than that, it was a problem that was partly or largely of (some) banks' own making. Banks are being forced to shrink their balance sheets, sell off non-core businesses and cut costs (i.e. fire employees) just to survive. And Europe's ongoing financial crises are far from over as banks' fortunes are closely entwined with those of their indebted governments.

There's one small silver lining among these dark clouds. Over the past 15 years, eBusiness has evolved from providing an electronic brochure to become a fundamental strategic function within retail banks. One of the effects of the financial crisis has been to force most European banks to focus on how to generate profits in their core retail banking operations by serving customers efficiently. Digital banking is a big part of the answer. So, despite the bleak economic outlook, most retail banking boards know that they must continue investing in digital channels. Digital strategy is an increasingly important component in overall strategy.

I'm still surprised when I find heads of eBusiness who remain marginalized within their firms, reporting into IT or marketing rather than a centralized distribution channels function alongside branches. The leading banks no longer make that mistake. That has greatly increased the power and influence of digital banking executives, but also their responsibility for the overall success of their businesses.

Here's our view of the top five priorities for eBusiness and channel strategy executives at European retail banks:

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Learning From Digital Innovation At Commonwealth Bank Of Australia

There are a number of firms that we watch closely at Forrester because they stand out for sustained innovation. Behind the technology giants like Google and Apple, there are a number of established firms that are using technology to adapt rapidly and successfully to changing customer behaviour and needs. One of them is Commonwealth Bank of Australia. Over the past four to five years CommBank has introduced a series of digital innovations to serve its customers better including:

  • Finest Online. In the course of its "Finest Online" project from 2007 to 2009, Commonwealth Bank of Australia redesigned its NetBank Internet banking service with the objectives of building an excellent customer experience and driving online sales. The bank implemented new content and functionality to support the customer journey and integrated new secure site sales processes with in-person channels and the bank's multichannel customer relationship management (CRM) system. The two-year, cross-organizational project boosted online sales, increased customer satisfaction, and improved the bank's image. (Forrester clients can read our case study.)
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Barclays Bank Raises Its Game In Digital Financial Innovation

At our Marketing & Strategy Forum last November, Sean Gilchrist, head of digital banking at Barclays Bank, talked passionately about the importance of customer experience to the work being done by his team at Barclays. It's good to see some of the results of that focus on customers in two innovations introduced by Barclays in the past few weeks:

  • Firstly, Barclays has started rolling out a new online banking interface. While I'm sure that not every customer will like the change, the point is that Barclays is taking a modular (or widget-like) approach to displaying content and functionality in anticipation of having to serve customers on a rapidly growing range of digital devices. We think that approach is going to become increasingly common as eBusiness teams adjust to the fragmentation brought by the Splinternet.
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Finovate Europe 2012: Innovation In Digital Financial Services

A number of people asked me to repeat my blog post from last year with my impressions from Finovate, so I thought I would.

For those of you who aren’t familiar with Finovate, it’s a fast-paced format with seven-minute live demos and pitches from 35 financial technology vendors. It’s produced by Online Financial Innovations, the people behind the excellent NetBanker blog.

I was lucky enough to go along to the show in London today. Unlike last year, when four or five themes dominated the day, this year’s exhibitors were more diverse. Among them were:

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Will 2012 Be The Year Financial eBusiness Teams Fully Embrace Video?

I love video as a communication media. The combination of sound and moving pictures so much more engaging and more memorable than text.

We wrote in our research last year about how we're starting to see video being used more and more by eBusiness teams as an efficient and effective way to educate customers about products, encourage sales and deliver customer service.

With the Academy Awards coming up, we thought it would be both fun and helpful to highlight some of the best examples we've seen of online video in retail financial services in the past year.  With the help of the rest of team, I've drawn up a list of our favourites in five categories:

Product marketing video
DNB's S for Savings Plan video (Norway).
PayPal’s future of shopping video.

Service marketing video
Commonwealth Bank of Australia's Welcome to NetBank video.
E*Trade's Take Control In 3 Easy Steps video (US).
Mint.com's 90-second overview (US).
Lloyds TSB's money manager video (UK).

Educational (‘how to’) video

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