Traditional Banks Are Catching Up To Third-Party Payment Platforms In China

Xiaofeng Wang

This is the second year that Forrester has evaluated the mobile banking services in China, and we’ve just published the results in our 2016 China Mobile Banking Functionality Benchmark report. Compared with last year, we found that incumbent banks are close on the heels of top performer Alipay. Mobile banking teams can use these findings to benchmark their own mobile banking capabilities and identify areas for improvement.

To help mobile banking teams benchmark their mobile banking capabilities, identify critical mobile features, and plan for the future, we used our updated Mobile Banking Functionality Benchmark methodology to evaluate the mobile banking services of six of the largest retail banks in China, including five traditional banks — Agricultural Bank of China (ABC), Bank of China (BOC), China Construction Bank (CCB), China Merchants Bank (CMB), and Industrial and Commercial Bank of China (ICBC) — and one nontraditional bank: Alipay.

The Chinese mobile banking services we reviewed achieved an average score of 59 out of 100, an improvement over last year's 55. Leading traditional banks like CMB and ICBC have made many improvements over the past year and narrowed the gap with leader Alipay. Overall, we found that:

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What Drives Mobile Banking Engagement?

Peter Wannemacher

This blog post is a collaboration between Peter Wannemacher and Nicole Dvorak, who also collaborated on Forrester's brand-new report on this topic.

As former New York Mayor Michael Bloomberg once tweeted, “If you can’t measure it, you can’t manage it and you can’t fix it.” Digital executives at banks must understand and gauge the drivers of mobile banking in order to boost engagement. To help executives and their teams accomplish this, Forrester recently built a driver analysis model to identify which factors increase mobile banking app use (as measured by the number of days used and the average duration of a session). This model included two categories of potential drivers: perceptions and behaviors. The full results of this research are detailed in our new report here.

Here are three key takeaways from our research:

  • Feelings of accomplishment fuel mobile banking use. The degree to which a mobile banking app helps a customer feel positive and accomplished has the largest impact on how often that customer will use mobile banking. This is further evidence that architecting positive emotional experiences is crucial to maintaining an engaged mobile banking audience. At leading providers, digital business execs and their teams will accomplish this, in part, by focusing on bank customers' mobile moments.  
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Digital Labs Can Do More Harm Than Good

Oliwia Berdak

Exposed brick is replacing marble at many banks, insurers, and payment firms. Warehouses are deemed a better location for digital labs, digital centers of excellence, innovation labs, and innovation centers. But why are these spaces proliferating from Silicon Valley to Singapore?

A cynic could say it’s a marketing exercise aimed at making the respectable (if a little slow) financial institutions seem more innovative — and more attractive to both customers and developers. But it’s more than that. Frustration and ambition are pushing business executives out from their traditional locations.

Digital labs promise speed by unshackling product and software development from slow business, technology, and compliance processes. They embrace new approaches, such as design thinking, customer centricity, and Agile development. They can drastically cut the time it takes to develop a proof of concept (POC).

But that’s where the dream ends.While these separate digital units aim to be disruptive, they often deliver just front-end apps or proofs of concept that are impossible to integrate and scale. Why? Because software-driven innovation requires a connection to systems of record, rigorous testing, an understanding of security and compliance threats, an analysis of impact on business units and revenue, and someone with the resources to own, love, and keep developing the product — all the things that made digital innovation so slow in the first place. All that labs achieve is to postpone these reality checks.

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Salesforce Bets Big On Commerce, At The Expense Of Demandware

Adam Silverman

Salesforce announced on June 1st its intent to acquire eCommerce software provider Demandware for $2.8 billion, augmenting its CRM platform with a capable and industry leading commerce solution. This move positions Salesforce as a direct competitor to enterprise software companies like Oracle, SAP, and IBM - all of which have formidable commerce software offerings. This acquisition has serious implications for both companies and the industry as a whole.

Salesforce and its clients get the lion’s share of benefits, but at a high price

With the premium price that Salesforce is paying for Demandware (12x annual revenue - likely due to another company bidding aggressively for the assets), the acquisition will:

  • Fill a major hole in the Salesforce offering. Until now, Salesforce customers had to use third party software tools to manage the buy phase of the customer lifecycle - arguably the most critical phase of the customer journey. With the addition of Demandware, Salesforce clients will be able to manage all customer interactions - including transactional interactions - from a single platform. All customer interaction data will live in one repository, allowing clients easy access to a more complete picture of customer data.
  • Provide greater access to the B2C market. In acquiring a leading B2C commerce suite, Salesforce gains access to nearly 350 clients and over $230 million in incremental revenue.
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Splitwise Is A Fintech Disruptor That Shows The Potential Of Shared Finances

Peter Wannemacher

Note: If you’re a Forrester client, you can jump straight to the full report here.

Two weeks ago, I was lucky enough to spend 10 days in Italy on a vacation with my wife and some friends. As we walked the Path of the Gods, made our own Neapolitan pizze, and enjoyed the gorgeous views of the Amalfi coast, different people in our group would pay for a limoncello here or a glass of aglianico there. As such, our financial activity was a mix of different individuals spending various amounts for a range of stuff. But our group was often too busy having fun to carefully track who paid how much for what and when.

Enter Splitwise* a non-bank mobile app that lets groups of people easily track their spending and settle their short-term debts to each other (see screenshots below). We used it throughout our trip, and it was a breeze.

But why didn’t a bank build this kind of convenient digital offering first? Or why don't more financial providers integrate with Splitwise and other disruptors to build ecosystems of values for their customers? Many bank executives and digital banking teams say their goal is to help customers better manage their finances (and increase retention and engagement by doing so). But too few financial institutions have focused on what Forrester calls the shared finances opportunity. Forrester defines shared finances as:

Any situation in which a person acts as an observer of, partner in, or proxy for another person's finances.

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Google I/O Recap: Google Rises To The Virtual Agent Challenge

Julie Ask

Google took a few big steps forward at Google I/O 2016 to fill in its portfolio to win, serve and retain customers in their mobile moments. Three new product announcements should propel Google forward. They include:

  1. Google Home. Google Home looks like an incredibly promising (and necessary) entry into the home virtual assistant or agent hardware market. Like Amazon, Google led with a story of entertainment and media followed by that of virtual assistance. Google claims the combination of natural language processing, artificial intelligence and years of experience with consumer inquiry patterns via Search will push it beyond the competition. Google’s entry validates the space and its vision to sit between the consumers and their favorite brands. However, Google also failed to offer answers to questions such as a firm date on availability, price or access to the service – how open will access be for brands who want to engage their consumers on Google Home?
  2. Allo. Allo is late to the instant messaging game, but on time for the bot frenzy. Brands are exploring bots that offer customer service or support and help them sell products and services. Google will launch Allo this summer with a host of well-known brands such as OpenTable, Uber and GrubHub. Like Facebook -- and despite a dependence on advertising revenue -- Google did not announce any opportunities specific to marketers for advertising or broad consumer engagement. Google will still facilitate consumers getting reservations or finding concert tickets – sitting between the brand and the consumer. The strategy is both expected and smart.
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Spain, Turkey, And Poland Continue To Lead The Way In The European Mobile Banking Market

Aurelie L'Hostis

For the second year in a row, Spain’s CaixaBank tops our review of European banks’ mobile banking services. Not only CaixaBank delivers the basics superbly when it comes to transactional features, it also excels in offering a wide array of touchpoints including a smartwatch app and a fully-optimized mobile website with product research tools, as well as best-in-class alert services, and outstanding marketing and sales functionality.

Forrester has just published its 2016 European Mobile Banking Functionality Benchmark, revealing important insights about the current state of European mobile banking. We evaluated the mobile banking services of 11 of the largest retail banks in Europe, and found out that CaixaBank in Spain, Garanti in Turkey, and Bank Zachodni WBK in Poland continue to lead in mobile banking. The three banks achieve mobile banking success by offering both strong basic functionality and a wide range of next-generation features. For example, CaixaBank lets customers make mobile contactless payments in store by providing a digital wallet integrated into the main mobile banking app. Garanti offers an interactive, voice-activated virtual assistant that customers can use to search the app for functionality and various task like finding a past transaction. Bank Zachodni WBK helps customers reach human help easily by offering video banking through their mobile banking app.

 

[Image Below: Bank Zachodni WBK Offers Video Banking Through Its Mobile App]

                                                          

 

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How Do Your Organization's Omnichannel Capabilities Measure up?

Michelle Beeson

Omnichannel investments are at the top of digital business executive’s priority lists. UK department store John Lewis, among many others, is substantially increasing its capital investment in updating technology systems and operations to support omnichannel and in-store capabilities. But it is still early days for omnichannel commerce, which will be an ongoing initiative requiring continuous optimization. To help digital business executives understand how they currently measure up against peers and competitors, Forrester has published the new omnichannel commerce benchmark as part of the Omnichannel Commerce Playbook 2016. In this new benchmark, Forrester assess 20 leading retailers across the US and UK against omnichannel best practices across key categories – online experience, channel consistency, in-store pickup, and in-store experience.

Our key findings from the survey are:

  • US Retailers Tend To Score Higher In A Wide Spectrum Of Overall Scores. US retailer scores skew toward the higher end of the wide-ranging scores in this benchmark. US retailers' omnichannel capabilities have leapfrogged those of the UK, reflecting the context of US market competition and greater investment in supporting technology.
  • A Disconnect Between Touchpoints Remains. Even retailers with higher overall omnichannel scores still have a disconnect between touchpoints to address. Consistency of experience across all touchpoints and ensuring functionality is device-agnostic remain challenges.
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Who Would’ve Thought GameStop Has One Of Retail’s Best Innovation Playbooks?

Sucharita  Mulpuru

Because it has over 4,000 physical retail stores but more than 60% of video game sales are projected to move online by 2020, GameStop is in the midst of major disruption.  The steps it has taken to maintain growth and margin are nontraditional and  compelling.  In fact, we featured many of these tactics in last year’s Future of Shopping report.  Among GameStop’s key approaches to driving growth now are:

  • Diversification. GameStop has launched two new store formats in recent years.  The first new format is mobile device stores in partnership with AT&T.  In fact, outside of AT&T’s own company stores, GameStop is the 2nd biggest owner of AT&T stores, selling not only smartphones but tablets, home security systems and internet connectivity. GameStop also acquired the cult brand ThinkGeek last year.  GameStop has plans to open 50 new ThinkGeek stores in the coming year and that gives GameStop an opportunity to take share in entirely new categories like apparel and soft goods.
  • Loyalty marketing. GameStop has developed one of the most innovative and successful loyalty programs in the retail industry.  Currently, it has over 49MM members in its PowerUp Rewards program and 9MM of them even pay for enhanced rewards.  Collectively this group drives 75% of the company’s GameStop store revenue. One of the benefits those paying customers receive is a video game magazine called Game Informer which now, because of its affiliation with GameStop’s rewards program, has one of the biggest circulations of any magazine in America, even greater than magazine industry stalwarts like People and Sports Illustrated.
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Your Customers Have Abandonment Issues

Brendan Witcher

Omnichannel fulfillment services have indubitably piqued the interest of today’s retail leaders; nearly one-third of the retail organizations we surveyed already support “buy online, pick up in store” (BOPIS) functionality or have plans to implement the technology by the end of next month.  However, proponents of omnichannel fulfillment are starting to recognize that simply offering services like BOPIS does not in itself lift the bottom line. eBusiness professionals must actively ensure that these initiatives are driving real profits for their business, leaving no stone unturned in their quest to maximize conversion and minimize costs.

In our new report Abolish Abandon Rates For In-Store Pickup, Forrester explores how BOPIS order abandonment—or situations in which BOPIS users cancel or fail to collect their purchase from the store—threatens the success of these programs due to lost sales, unnecessary layaway of inventory, wasted associate time, and sunk interchange fees. We provide insights into why and how frequently customers abandon their orders, as well as the actions you can take to increase BOPIS profitability. Our research indicates that:

  • "Buy online, pick up in store" no-shows are more common than you think. BOPIS users canceling or failing to collect their online purchases from the store is a shockingly frequent occurrence. Indeed, 29% of US online adults who have used “buy online, pick up in store” services in the past three months have abandoned at least one BOPIS purchase in this time frame. And if your company targets Millenials, the prognosis is even worse: 38% of BOPIS users ages 18-24 and 48% of users ages 25-34 have failed to collect at least one BOPIS purchase within the past three months.  
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