Google's Mobile Payments Announcement Clarifies The Opportunity For Banks And Card Providers

It has been 96 hours (give or take) since the Google's announcement that rocked the mobile payment space. During that time, I read literally dozens of news reports and blog posts to help me understand what this announcement really means. Incidentally, I found a great article that explains how this partnership will work.

Here is my take.

  • The embedded NFC chip in phones is the most exciting part of the announcement. In order to get mobile payments off the ground, NFC chips must be embedded in phones (unless we all want a sticker on our phone - ugh!). We got step closer with the Google announcement and will now wait for Apple's inevitable announcement on the same point.
  • Google got their mobile payment architecture right. The focus on existing providers (i.e. MasterCard, Citi, First Data) is the way to go. Reinventing the payment verification and settlement process is not smart and Google avoided that. 
  • Vendors can now start innovating. The embedded NFC chip and associated standards will do for mobile payments what the embedded camera did for mobile deposit. It gives an innovative vendor the opportunity to take advantage of a technology well integrated in a mobile device. The winner here is not Google (from a mobile payments perspective at least), but instead the next "Mitek Systems" that will take that embedded chip to develop a mobile payments service.
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Mobile Banking ROI Is Small Today But Will Grow With The Addition Of Next Generation Functions

In our new report, "The ROI Of Mobile Banking," Forrester presents a flexible model to help eBusiness and channel strategy executives estimate the ROI of — and outline the business case for — their mobile banking strategies. The resulting return on investment comes to roughly 15%. While positive, the ROI from our model is far from a ringing endorsement of mobile as a money maker for banks today.

For the report, we use our model to estimate the ROI of a multifaceted mobile banking effort by a US-based retail banking provider with 500,000 deposit account customers. Forrester’s model includes eight modifiable inputs: four cost inputs and four benefit inputs. These cover the cost of developing, testing, and implementing mobile services, as well as the potential savings and revenue that a provider might expect from offering such services.

Our findings do not mean mobile banking initiatives should be scrapped. Far from it: Supporting the mobile channel is no longer optional for banking providers in most markets. Their customers and prospects — especially the younger set of Gen Xers, Gen Yers, and teen Millennials — will demand it. Forrester’s Technographics® research shows that 22% of US online adults say it is either “important” or “very important” that the deposit account provider they choose offer access to their accounts through a mobile phone or device. And more than a third of adults younger than 35 feel this way.

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The Role Of Social Gets Clearer For Financial Services

To this point, marketing and specifically interactive marketing have been the focus of social and its applicability to financial services. A colleague of mine – Nate Elliott – has written on the opportunities for the industry on a few occasions, and if you have not seen his work, please check it out.

The role of social outside of pure marketing has been less clear to this point, and it is only now that we can see the areas social can move the needle for financial services. Over the last year, Forrester has written numerous reports and case studies on the subject, and I wanted to highlight a few key areas of social strategy and related reports on the subject. In my view, those areas include:

  • Online sales. For years, marketers have used testimonials to sell products and services, but that concept was foreign to most eBusiness executives in charge of online sales then USAA showed the way. USAA uses customer ratings and reviews to drives sales on their web site. The essence of the strategy is to use the “authentic voice” of the customer to win over would-be shoppers, and represents a great way to tap the good will that USAA has garnered over the years with it customers. During a nine month periord in 2009, the utilization of customer ratings and reviews drove nearly 16,000 incremental product sales.
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Google Gets Deeper Into The Product Comparison Business

Google recently released a savings account comparison tool to go along with a similar tool launched last year for mortgages

In a June 2010 report, eBusiness Leaders: It's Time To Take Financial Service Comparison Web Sites Seriously, we showed that 26% of comparison site users were drawn to comparison tools because of advertisements and 22% came via an Internet search. The launch of Google’s savings account comparison tool will only increase the exposure of comparison tools and sites in the US and other markets (the tool became available in the UK in 2010), mostly because of its strong tie to the buying process and prowess as a search engine. 

Google’s comparison tool covers other retail banking products as well as mortgages, credit cards and checking accounts. The focus on personal finances instead of solely investment products — which for some US companies is a missed opportunity — increases the pressure on smaller firms like or, since it aggregates information for all key retail banking products and will likely benefit from greater exposure by virtue of being associated with Google.

The only major downside of Google’s tool is the lack of major players in the space like big traditional banks. This will be more an issue for less rate driven products like checking, where choice is based on factorsother than just interest rate.

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QuickenLoans and OpinionLab Show How Data Integration Can Solve Real-World Web Site Problems

OpinionLab hosted a Webinar today where QuickenLoans – a leading direct lender in the United States - spoke about their voice of the customer (VOC) program and how they have integrated VOC into their existing processes.

One of the most interesting elements of the presentation in my view was where QuickenLoans discussed how they had integrated OpinionLab with Tealeaf to provide an unprecedented view into Web site visitors and activity.

Before I get into that, let me first explain what each of these vendors do:

OpinionLab: OpinionLab provides functionality to capture customer feedback on Web sites. QuickenLoans uses the service in several locations on their Web site and in several points in key processes.

Here is the QuickenLoans home page with a link to a customer feedback form:

The feedback form is powered by OpinionLab:

Tealeaf: Tealeaf provides a solution that records the activities and movement of Web site visitors in a way that allows clients to “playback” visitor sessions to better understand why a particular problem occurred.

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What Was Old Is New Again: Cross-Selling Is Back In Vogue

Bank of America CEO Brian Moynihan stated in a speech today he plans to step up cross selling as a part of his efforts to revamp the company. The strategy of cross selling is nothing new, but few financial providers have been successful in pulling it off. Why is cross-selling such a challenge? The reasons are two-fold:

From a customer perspective:

  • Nobody Can Be Good At Everything. It is the going in assumption that no single financial provider can have the best product in all situations. Consumers don’t naturally assume that their brokerage provider would also be the best provider for their mortgage.
  • To Each His (or Her) Own. Each product purchase is a discreet transaction. The product being purchased drives what is important. A customer may choose their checking account provider based on the availability of ATM and branches, but when that same customer is shopping for a credit card, they may desire the flexibility to aggregate debit and credit rewards which their existing provider may or may not offer.
  • “What If…”. There is some hesitancy on the customer's part to have all their "eggs in one basket." The current financial crisis has likely only added to the angst of holding too many assets with a single firm. While this concern will subside to a degree over the next few years, it has been and will continue to be in the back of consumer’s minds.
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eBusiness In Financial Services Serves Two Masters

These days one of the top questions we get here at Forrester is around how best to organize for eBusiness. Should the group report to marketing? Should it report to IT? Should it be centralized, or should it be decentralized? Tons of industry brainpower has been spent thinking about these questions.

The answer reminds me of the old SNL skit for Shimmer where the husband and wife argue about whether Shimmer is a floor wax or a dessert topping, and in the end the announcer tells them emphatically, "New Shimmer is both a floor wax and a dessert topping!" The right eBusiness organizational structure is one that reports to both marketing and IT. Why? Because eBusiness has two masters: eBusiness is both a channel and an enterprise function.

Let me explain. Nobody would argue that the ATM is a servicing channel and not an enterprise function like corporate marketing. On the flip side, nobody would consider corporate marketing a channel versus an enterprise function, which it is, but eBusiness fills both roles in most financial service companies. It is a servicing channel for existing customers looking to servicing their accounts, but it also has a marketing and sales enterprise function along the lines of corporate marketing.

I have recently published a document on the Forrester Web site where I explore the implications of this dilemma in organizing for eBusiness. I welcome any feedback on my approach, and look forward to any more blog posts where I can reference SNL.



Bank of America Uses Online To Keep Free Checking Free

Bank of America is launching a new eChecking account that has no minimum balance requirement. The twist is that in order to avoid the $8.95 monthly fee customers must enroll and receive eStatements versus paper and make deposits and withdrawals using ATMs versus a teller.

The development of an eChecking account is not new, but the Bank of America offering differs from forays into this area in the past because:

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The Next Generation Of Marketing And Online Selling In Financial Services

Yesterday I attended the Finovate Conference in San Francisco. Out of the 36, 7-minute demos I sat through (whew!) only a handful stood out as innovative and interesting. During the networking session, I had a chance to meet with one of those companies -- a company called Segmint. While the Segmint Web site does a less-than-stellar job communicating the benefits of their software, I had a chance to speak with David Hadley, CTO of Segmint. When I did, the opportunity was clear to me. But before I get there, let me explain the void a company like Segmint fills.

Most of the on-site, online marketing efforts of financial service firms are still rudimentary in nature. Few have moved beyond basic, non-targeted banner advertisements. But unlike other industries, financial services offers the unique opportunity of going WAY beyond anything retail, travel, or any other industry can provide because in financial services we get a daily, on-going snapshot into customers' financial lives - what they buy, where they buy it, the channels they use, and the fees they pay.  Problem is for the most part nobody uses this incredible information. Exceptions that I am aware of include cross-sell efforts by firms like, Wells Fargo, and Royal Bank of Canada. What I saw from Segmint yesterday takes this a step further.

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Royal Bank Of Canada, Bank Of America, And Citibank Top Forrester Public Bank Rankings In 2010

Without a doubt, the most common question Forrester analysts get are questions around industry best practices. To help answer that question, Forrester annually ranks the top banks in Canada and the US on how well they meet the goal of online acquisition. In 2010, we ranked six banks in the US and six in Canada to answer the best practice question. In 2010, Royal Bank of Canada topped our Canadian ranking and Bank of America and Citibank shared the top spot in the US.

Overall, we are finding that bank Web sites are doing a better job of meeting the needs of financial service shoppers. Online applications are getting better especially at firms like Citibank. On the merchandising side, Royal Bank of Canada has made huge strides via a recent set of redesigns of the content portion of their Web site.

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