Category Archives: Strategy
Fees, fees, fees. That seems to be a big topic these days in the financial services industry. Bank of America announces a fee for debit card usage. Public outcry ensues so they reverse their stance, causing other big banks to follow suit.
Now Bank of America, along with others, plans to roll out monthly account fees unless customers agree to using online banking, maintain minimum balances or purchase more products.
Of course this has the free checking advocates licking their chops. I’ve seen a steady increase in free checking marketing since last fall’s debit card fee announcement. While I understand the stance for free checking, I’m not totally convinced it will be profitable in the long run.
Depending on who you ask, checking accounts cost a financial institution any where from $150-350 annually. Usually, these costs are associated with interest-bearing checking accounts. In the past, only checking accounts that required a high balance received interest.
Recently, the market trend was to offer checking with interest for behaviors such as debit card usage, online banking and e-statements. Now these accounts pay out about as much interest as the bank in a Monopoly game.
I have always questioned why banks and credit unions no longer charge for accounts. They have no problem charging for such things as:
- foreign ATM usage
- overdraft protection
- early account closures
- inactive accounts
- check copies
- statement copies
Side note – NOTHING ticks me off more than an overdraft fee when money from MY account is used to cover the shortage. One FI I have accounts at charges $10, as a courtesy, to draft my savings account to cover my checking account. However, if I have a line of credit on the checking account, the LOC is drafted for no charge. Say it with me…THAT AIN’T RIGHT.
Look, I’m all for financial institutions making money, but fees leave a bad taste in everyone’s mouth. When all these fees can occur to each of my accounts, there’s a problem.
I am definitely in the camp that says banks and credit unions should charge for accounts. However, how they charge needs to change.
I think that the financial services industry needs to go to a subscription based model. Think about it, most people pay a monthly subscription fee for things like cable, electricity, water, mobile phones, gym membership, newspapers, magazines and others.
Most of these are services that we happily pay for. Well financial services is a “service”, why can’t we have a monthly plan and treat it as such?
Let’s say for instance, $5 a month gets you a basic checking account with online banking, mobile banking, e-statements, bill pay, direct deposit and no overdraft.
$10 a month gets you the previous products plus a savings account linked for overdraft protection that is limited only by the amount available in each account. PFM could also be added to this tier, along with an additional account (checking or savings).
$25 a month gets you up to ten different accounts, plus everything previously mentioned. Unlimited foreign ATM usage, free mobile P2P, free bank-to-bank transfer, 12 free wire transfers a year and merchant rewards would be included.
Would customers be open to something like this? Maybe, maybe not. But until someone gives them the option, we’ll never know. All I know is the number of people in the unbanked and de-banked categories seems to be rising.
It’s obvious that the current model is seriously cracked, if not broken. Adapting to the market is the only way to survive. Because no one wants to be Circuit City.
In case you haven’t heard, mobile banking is now the bee’s knees. In fact, using the Quantipulation Method, we can see that offering mobile banking will increase your customer retention rate by 75%. But in case that statistic didn’t work for you, it is a fact that mobile usage is growing.
Here are some statistics from comScore’s quarterly report:
- 97.9 million people in the U.S. owned a smartphone (40% of all mobile subscribers)
- 74.3% used text messaging
- 47.6% downloaded apps
- 47.5% used the mobile browser
So how does this help you with picking your mobile strategy? This should give you a starting point. Instead of having heated arguments about whether you should have an iPhone app, Android app, or use HTML 5, find out how YOUR customers use their mobile phones.
Years ago when I led a mobile banking project, the first thing I did was create and send a survey to our customers. Once I had the results, I then formed a list of vendors that lined up well with how our customers were using their phones.
How do you know which mobile banking strategy to pick if you don’t even know anything about your customers’ mobile usage? It’s pretty pointless to develop an iPhone app with RDC capabilities when the majority of your customers only use text messaging and don’t have smart phones.
So to help you get started, here is a list of some questions you should ask:
Do you own a smart phone?
If so, which kind operating system does it use?
a. iOS (iPhone)
b. Android (Google)
d. Windows Mobile
How often do you use text messaging?
b. 1-5 times a month
c. 1-5 times a week
d. every day
Do you browse the internet on your phone?
Do you listen to music on your phone?
Have you downloaded an app for your phone?
Do you play games on your phone?
Do you use social networking on your phone? (Twitter, Facebook, Google+, Pinterest, Foursquare, Gowalla)
Have you ever used your phone to find directions?
Have you ever purchased an item through your phone? (movie ticket, book, music, etc.)
Have you accessed our website on your phone?
Have you accessed online banking on your phone?
If we offered mobile banking, which features would you be interested in?
a. SMS/text alerts (daily balance, deposits, withdrawals)
b. Web mobile banking
c. Mobile banking app
d. Remote Deposit Capture
e. ATM locations
f. mobile payments
g. Person-to-person transfers
Once you’ve compiled the responses from this survey, you’ll be well on your way to setting a successful mobile strategy. So go on and get started.
Looking for a mobile banking vendor? Well check out FS Vendors to start your search.
Apple recently released their third quarter earnings and the iPhone and iPad combined for 68% of all of Apple’s revenue. The iPhone actually makes up 46.6% of the total revenue, which breaks down to over 20 million units and $13 billion.
In case you’ve been sitting on the fence about implementing that mobile strategy, it’s time to go all in. Android device sales have been keeping pace with Apple devices. In the near future, more people will access the web from their mobile device than their computer. You can bet they’ll be looking for that cool mobile banking app also.