Every now and then, GonzoBankers read something that makes them scratch their
heads and say, "Hmmphh. You don't say." Here are a few examples of just such
occurrences...
Are U.S. consumers short on money management skills... or just money?
In a survey of 1,200 adults conducted by the American Association of Retired Persons, only 42% said they budget expenses, only 37% have ordered their credit report within the past 12 months, and just 36% have ever received professional financial guidance.
36% of 1,000 adults polled by the National Foundation for Credit Counseling said they have no savings, excluding what might be in retirement plans. Of those with savings, most don't have enough to meet three months of expenses in a pinch. Source: Arizona Republic,
5-11-08
Consumers confident?
Not. The New York-based Conference Board said in May that its Consumer Confidence Index dropped to 57.2, the lowest level since October 1992, from a revised 62.8 in April.
Economists had expected the index to decline to 61, according to a consensus. Source: CNN Money.com, 5/27/08
Which came first?
80% of executives believe their company loses sales because of failure to engage customers. 47% said that the difficulty of measuring customer engagement is the biggest barrier to achieving greater levels of engagement.
Source: The Wise Marketer & survey conducted by Economist Intelligence Unit (EIU)
In-house vs. outsourced core processing
"Although the vendor community continues to report to Cornerstone that more banks are moving to an outsourcing arrangement for core services, Cornerstone’s metrics do not indicate such a trend. In our 2005 study, 56% of respondent banks reported operating in-house core systems, while 44% reported outsourced core processing. This year’s numbers show a gain for in-house deployments to 62%, with outsourcing dropping to 38%. While these deployment numbers are affected by the growing median size in our participant banks, we see this year’s change as a normal sampling irregularity as opposed to a grass roots trend toward in-house deployment."
From The Cornerstone Report 2007: Benchmarks and Best Practices for Mid-Size Banks
Seniors need translator for bank-speak
Out of 1,200 Americans recently polled by the American Association of Retired Persons (AARP), 73% said money professionals use more jargon than mechanics and 52% said they use more jargon than doctors. Two-thirds couldn't explain terms like "basis point" or "index fund" and 44% don't understand how IRAs work.
Of those surveyed, half said they suspect financial firms and advisors use jargon to distract investors away from fees or make them feel less confident handling their affairs.
Source: Russ Wiles, Arizona Republic, 5/11/08
Gonzo Quick Stat
The number of banking brands impersonated by phishing e-mails hit an all-time high of 225 in March. Source: American Banker-RSA Security Inc., 4-21/08
Deposit Insurance Apps Down 50% Over Last Year
The Federal Deposit Insurance Corp. says that as of April 30 it had received just 42 applications for deposit insurance this year, compared with 83 in the first four months of last year.
Source: American Banker, May 5, 2008
100 Million to Pay by Mobile Phone by 2011
The number of people making payments using their mobile phones globally is predicted to soar from 32.9 million in 2008 to 103.9 million in 2011, according to analyst house Gartner.
Gartner reports that SMS text messages will continue to be the dominant channel for mobile payments, although take up of wireless application protocol (WAP), unstructured supplementary service data (USSD) and near field communications (NFC) contactless services will also grow. Source: finextra.com, 4-24-08
Branch Deficiency?
According to The Cornerstone Report 2007: Benchmarks and Best Practices for Mid-Size Banks:
* The median bank opened, on average, 64 new deposit accounts per branch per month.
* 21 of those new accounts were personal or checking business accounts.
* The median ratio of accounts opened to accounts closed was 1.17 -- at the 75th percentile performer, it was 1.4.
Couldn't we be doing better? Learn more about The Cornerstone Report 2007: Benchmarks and Best Practices for Mid-Size Banks.
True or False?
1. Among the nation’s largest financial institutions, WAMU is the only FI with limits on overseas transactions.
FALSE: Among the nation’s largest financial institutions, Navy Federal Credit Union is the only FI with limits on overseas transactions.
2. Consumers are 3 times more likely to use a debit card over a credit card for bill payment.
TRUE: Consumers are in fact 3 times more likely to use a debit card over a credit card for bill payment.
3. 30 percent of the nation's largest FIs currently use multifactor online authentication.
FALSE: Surprisingly, only 4 percent of the nation’s largest FIs currently use multifactor online authentication.
Source: The Point, Javelin Strategy & Research, 10-4-06
Checks popular fraud tool
71% of businesses surveyed by the Association for Financial Professionals said they experienced fraud last year, and of those, 94% said they were victims of check fraud. 26% reported misuse of automated clearing house debits and 13 percent reported fraud on corporate credit cards.
The Cost of Compliance (Ouch - that hurts!)
According to a recent report by the Deloitte Center for Banking Solutions, large bank spending on regulatory and compliance costs is up an average of 87% over the last five years. The average cost in 2002 was $44.78 million and in 2006 it was $83.54 million. Source: Bank Technology News, 1-4-08
Still Plenty of Potential Bill Pay Converts Out There
Online bill payment at bank Web sites grew from 11.7 million in 2004 to 19.4 million in 2007, according to a recent Forrester Research report. While the 65% of online consumers who aren't using their bank's bill pay functionality is a nice improvement over 2004 when 80% reported not using online bill pay, it still means banks are missing out on a lot of customers.
33% of Surveyed Credit Unions Plan to Change to Bank Charters
According to a recent report by Aite Group LLC, 33 percent of 201 surveyed credit unions said they plan to convert to a mutual bank charter. "This is a clear call to credit union leaders to get their heads out of the sand on this issue," said Jim Blaine, CEO of $15 billion State Employees Credit Union, Raleigh, NC, and co-founder of the National Center for Member Trust. "It has taken a well-respected, nationally known financial research firm to come out with something that we should have confronted already."
Source: Credit Union Times, Jan 30, 2008
2008 Hot Tech Topics
Bank Technology News recently listed the following technologies as the ones to watch in 2008:
1. Virtualization - pooling server capacity
2. Infiniband - high speed/low-latency I/O for computing over a single fabric
3. Social networks - social computing strategy
Satisfied Bill Pay Customers Buy More Services
Online banking bill-pay customers have greater satisfaction levels and are significantly more likely to purchase additional services from the bank. Source: Bank Technology News, 4/1/07
Bank Web Sites Not Satisfying Customers’ Needs
According to a recent Transversal survey, 30 percent of bank static Web pages struggle to answer more than two of 10 product or service questions.
The survey found that almost one third of banks don't allow submission of questions via email. Banks that did offer customer support via email had a 30-hour average response time, and after 30 hours only 30% answered the inquiry successfully.
The study did report, however, that call center response times have improved 'dramatically,' with 60% of calls being answered within 3 minutes, and the shortest wait times being just a few seconds. Source: Bankwide.com, January 2008
GONZO QUICK STAT
New home sales in 2007 dropped 34.4 percent on a year-over-year basis. Source: Bank Technology News, 1-2-08
Business Alignment a Major Concern for CIOs
53% of polled CIOs ranked business alignment a top priority; 42% said it was managing project deadlines, and 40% cited security as their key focus. Source: Bank Technology News, 3-28-07
Meet Your Next Financial Consumer
More than four out of 10 consumers between ages 18 and 21 who surf the Web now own a credit card, and 65% of this "Gen Z" online group used the Web to apply for a credit card. Source: Forrester Research, 4/3/07
Banks Need to Meet Gen Y Expectations, Study Finds
A recent study on the attitudes of Gen Y consumers toward banking concludes that financial services providers should be prepared to offer this market segment with traditional as well as new banking channels.
The study, conducted by Javelin Strategy & Research, finds that compared to other age groups, Gen Y consumers rank ATMs and branch access as more important than online services.
"Not planning for the long-term with respect to Generation Y will leave banks and credit unions in the same position they find themselves in today, fighting for short-term profits," the study cautions.
MediaPost, 8-17-07
Training Budgets for Mid-Size Banks Down 50% from 2005
Among 67 recently surveyed mid-size banks, the median external training budget per employees was $132. This figure is down from $260 reported by a similar sampling in 2005. Source: The Cornerstone Report 2007: Benchmarks and Best Practices for Mid-Size Banks
The De-evolution of the Call Center?
The United States had more than 50,600 call centers employing 2.86 million agents in 2004. These numbers are predicted to decline by 2008 to 47,500 call centers with 2.7 million agents because of self-service technologies, greater use of speech recognition and offshore outsourcing. Source: North American Call Centre Report, 4-7-06
The Price of Loyalty
U.S. financial institutions' spending on rewards program redemption and management (including technology) will grow to $18.4 billion by 2010, up from $10.3 billion in 2006, according to Aite Group.
Good News for Geeks
According to a study conducted by the Association of Executive Search Consultants, financial services and banking IT professionals were named as the number one most sought after talent in 2006, with 56% of respondents naming that sector as one of the biggest growth markets for talent. Source: Bank Systems & Technology, 2-2-06
Online Banking Habits of Gen Y (18-29 yr olds) vs All Consumers
Applied for a credit card in last 12 mos:
Gen Y - 42%
All consumers - 24%
Opened bank or CU account:
Gen Y - 31%
All consumers - 14%
Applied for loan:
Gen Y - 24%
All consumers - 14%
The biggest factor for both Gen Y and all consumers in choosing a bank is rates and fees.
Source: Javelin Strategy and Research as reported by American Banker, 9-30-07
Service Beats Products in Bank Preference Survey
In a study of 4,327 U.S. households with banking relationships, 48% of respondents cited good service as the most important attribute when shopping for or doing business with a bank. Below service in rankings were nearby locations, 42%, and good reputation, 33%. Interestingly, quality products and product variety trailed significantly, at 8% and 4% respectively. Source: Forrester's NACTAS Q4 2006 Survey
Consumers Mixed on Checking Rewards Value
According to a survey by Synergistics Research, 41% of consumers think checking rewards programs are very valuable. Among those surveyed, 36% responded with “somewhat valuable,” and 19% find no value. Four percent didn’t know. Source: American Banker, 7-9-07
Green Teens
A Jupiter Research study found that 15% of teenagers ages 13 to 17 report being very concerned about the environment - a subgroup the study labeled Green Teens. Of these, 29% reported making a purchase in a traditional store during the past 12 months and 19% made a purchase online, compared to 22% and 13% of online teenagers overall, respectively. Source: Customer Relationship Management, October 2007
Product, Channel and Service Innovation Top Strategies for Lenders
In a survey and interviews TowerGroup conducted with executives at 40 top U.S., Canadian, British and Irish lending institutions, 57 percent of respondents cited product, channel and service innovation as a top strategy for this year and half (50%) named business process automation. Other areas of concern cited by the survey respondents included growing market volatility (71% of respondents), an aggressive regulatory environment (43%) and increased competition (36%). Source: BAI Banking Strategies, Vol. 3 No. 1, 9-26-07
Fixing Problems Does Not Build Loyalty, Study Reveals
Bancography’s 2007 Service, Satisfaction and Loyalty survey of 10,000 clients indicates that perception of the brand is affected much more severely than the perception of the branch when customers experience a problem. “In other words, respondents more often blamed the institution – not the teller,” according to Bancology, bancography’s quarterly journal.
The data shows customer/member perception of service quality at the branch plummeted from an index of 81% to 68% for customers who experienced a problem. The level of customer satisfaction and loyalty to the brand also suffered when a problem occurred, dropping from 69% to 47%.
Even when problems were resolved, brand and branch perceptions did not fully recover. The branch index, while up from 68%, reached just 72% of the initial 81%, and the brand index, up from 47%, rose to just 54% of the original 69%.
Check Image Volume Sets Records Across the Board
The number of check images sent through the SVPCO Image Payments Network in July rose 306.9% from a year ago, to an all-time record of 245 million, with a total dollar value up 159% to $436.7 billion.
The daily average number of items rose 12.25% from June 2007 to 11.6 million.
Checking Accounts with Free Credit Reporting?
According to a survey by Synergistics Research, 69% of consumers said they did not get a free credit report with their checking account. Twenty-one percent said they did, and 10 percent didn' t know.
Consumers Look Longer at Paper Statements
A survey of 1,000 consumers in the United States and Europe conducted last May and June by Pitney Bowes’ Group 1 Software found that Americans spend twice as much time reviewing printed bank and credit card statements compared to the 3.5 minutes they spend looking at online equivalents. Source: BAI Banking Strategies Vol. 2 No. 23
Branches Get High Marks Among ‘Millennials’
In a recent survey conducted by Boston-based Celent LLC, 591 students at 34 universities gave both branch location and ATM location an average score of 4.35 on a five-point scale; rates and pricing received 4.41. Good online service, reputation and the availability of other mobile services were ranked lower.
Interestingly, while 72% of respondents said they use a mobile phone very often, only 6% frequently download applications or browse the Web with their phone. These figures suggest that Millennials will use their mobile phones for social interaction but not for serious matters like banking, said Alenka Grealish, a managing director at Celent.
Source: BAI Banking Strategies, Aug 15, 2007
Broadband Growth Rate Slowing
Seven of 10 home Internet users have a high speed connection, while 23% use dial-up. High speed Internet access grew 12% from 2006 to 2007, down from the 40% increase from 2005 to 2006.
eMarketer projections put Internet penetration at 75% of U.S. households by 2011, with 94.1% connected via broadband.
Source: Pew Internet & American Life Project survey, February 2007
IT Execs Big On Social Media for Purchasing Decisions
According to a report by ITtoolbox and PJA Advertising + Marketing, IT professionals cite social media as the most trustworthy online source of information when making purchasing decisions. In fact, the study found that executive-level decision-makers spend nearly 3.5 hours per week consuming or participating in social media. Of the 2,100 IT professionals surveyed, 75 percent claim social media tools and user-generated tools have helped them make more educated and efficient purchases. Source: ITtoolbox/PJA IT Social Media Index, June 7, 2007
The Cost of Web Services
Celent estimates the growth rate in Web expenditures for financial services is about 11 percent a year, with total spending for Web services and XML implementations forecast to be $1.4 billion next year. That compares to the estimated $400 billion spent annually on all technology in financial services, according to TowerGroup. Source: Bank Technology News, 4-1-06
Gonzo Quick Quote
"In the future, I can see people bidding on your economic activity, similar to the way in which credit card companies bid for your business now. I think the smart banks are going to collaborate with customers and say, 'Hey, how much is your business worth to us so that we give you the best deal?'"
-Geek Squad "founder and chief inspector" Robert Stephens (Source: BAI Banking Strategies, Mar/Apr 2007)
Bank Call Centers Rank High, but Sour Some Clients
A recent survey of 900 consumers by CFI Group ranked banks’ call centers second only to catalog retailers for customer satisfaction, largely because bank employees were able to resolve customers’ questions 80% of the time. However, even if bank call centers outperform those in other industries, some experts say consumers in general still tend to consider call centers a source of frustration rather than satisfaction. Source: American Banker, 6-12-07
Report Finds High Debit Card Overdraft Fees
A new report, "Debit Card Danger," analyzed the checking accounts of more than 5,000 customers of the nation's 15 largest banks and found that debit card purchases and ATM withdrawals trigger 46 percent of high-cost overdraft loans.
A related survey of 2,400 account holders showed that some 61 percent preferred that their debit card purchase be denied at the checkout if it would overdraw their account and incur a fee. Nearly all responded that they would cancel their ATM withdrawal to avoid a fee. Source: consumer affairs.com, 1/29/07
In-house vs. Outsourced
According to a recent benchmarking survey conducted by Cornerstone Advisors, 92% of surveyed credit unions operate in-house core systems, with only 8 percent being outsourced or facilities managed. This deployment is drastically different than the historically consistent 50-50 split for banks. In Cornerstone's 2005 mid-size bank study, 56% of respondent banks reported operating in-house core systems.
The Cost of Courtship
U.S. financial institutions' spending on rewards program redemption and management (including technology) will grow to $18.4 billion by 2010, up from $10.3 billion in 2006. Source: Aite Group, as reported in CU Tech-Talk Weekly, 4/24/07