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Virtual Branch Myth #2, Part 2

Posted by David Peterson on Wed, Jun 12, 2013 @ 13:06 PM

In my previous blog entry, I detailed the myth that integrating online and mobile banking will hold back mobile banking.

As we continue the series in this blog post, I would like to address the issue of mobile being a separate channel.

Mobile is a Channel Myth: Mobile is the next evolution in online banking.

Mobile is cool. Mobile is hot. Mobile devices sales are rising as PC sales are falling. These type of stats are used as “evidence” that mobile is the next evolution of the online experience. When it comes to banking, the fact is that mobile is just another access point for consumers who want to access their financial institutions anytime, anywhere and on any device.

Newsflash: each access device is not a channel; your customer, acting beyond the branch, is the channel.

Think about how many types of mobile devices and operating systems exist today. You have the commercially viable iOS (Apple) and Android OS, plus minor systems in Blackberry (RIM) and Windows 8 (MS). There are multiple Apple devices and literally dozens of Android devices. Now suppose each of these required a separate interface to your core system. Each one would need to have its own user interface. The navigation for similar tasks would not be the same. All of this would generate confusion for your customer. Does that sound like evolution or taking your virtual branch back to the stone ages?

Customers want their financial institution to offer the same unified multi-device access they receive from the non-banking brands they trust with their shopping and browsing. Put another way, if decoupling mobile from online was a great idea, wouldn’t most all of the large online players be doing this?

On the contrary, Amazon and Apple go out of their way to integrate their mobile and online experiences across access devices. Facebook spends millions on ensuring that the user experience from online to handset to tablet is unified, integrated and consistent. Do you think that Facebook thinks that they should shun online and go mobile only? Of course not and neither should you!

Embracing a mobile strategy based on concerns over whether the days of online banking is over is a compromise that leads to dissatisfied customers and a weak Virtual Branch offering. To be successful, FIs need to focus on providing an integrated and unified customer experience that maximizes each access device for its unique qualities while ensuring that data, transactions, security protocol and user interface are consistent. This channel of one strategy is the central to retaining current and attracting new customers.

Stay tuned for more in my next blog post.

 

Tags: Virtual Branch, Online Banking, mobile banking, channel banking

Virtual Branch Myth #2, Part 1

Posted by David Peterson on Wed, May 08, 2013 @ 10:05 AM

There are many in financial services who believe that mobile banking is a channel of its own, distinctly separate from other online banking applications. They theorize that only when mobile is decoupled from all other online capabilities can mobile grow, expand and capitalize on its unique capabilities.

Those who argue for a mobile-only strategy usually believe in the following myths:

1) Online banking will restrict mobile from growing as it normally would.

2) Mobile is the next evolution in online banking and that traditional online access is archaic and antiquated.

3) Mobile and online channels are different and therefore deserve their own distinct applications and systems. 

To me these three myths are all part of one misconception: that the mobile channel can be successfully decoupled from other online services. To gain a better understanding of the issue at hand, these myths must be thoroughly explained and debunked. Due to the amount of information needed to discuss this topic, I will break this topic up into multiple blog entries.

mobile banking, online bankingMobile Is a Channel Myth #2, Part 1: Internet banking will hold mobile banking back.

In order for you to believe that online holds back mobile, you would have to assume that mobile will only take on all of the features that online offers.  Since so many financial institutions have online systems that are so far removed from the expectations of their customers, offering only the most rudimentary functionality, it is easy to see why they would be attracted to the bright shiny object that mobile represents compared to their antiquated online system. 

There is no question that PC sales are down while at the same time the sales of mobile handsets and tablets are off the charts. But without a synchronized mobile and Internet offering, consumers and FI support personnel alike must deal with a separate verification, authorization and issue resolution processes.

Rather than holding mobile back, Internet banking acts as an additional integrated resource for consumers.

Consider this example: suppose a consumer takes a photo of a check with a mobile device to make a deposit. Twenty minutes later, the same consumer is trying to verify if they have enough money to buy that flat screen TV they have found on sale – today only!. The mobile deposit will probably show up in the online system, but will the customer’s mobile available balance match up with the online balance? If the systems are separate, there is a good chance that they have separate interfaces to the core system that holds the balance information.  Separate interfaces often mean mismatched information.

Here’s another example, suppose a consumer creates a bill payment on their non-integrated mobile device. The bill payment goes through fine. When it’s time to pay that bill the next month, they find it on the mobile device and make the payment. The following month, when they need to pay the bill their mobile device is not available. So they use a friend’s computer to access their financial institution via online banking and look for the bill payment vendor. Only it’s not there because the FI has a mobile strategy that is not integrated into all of the access points that the customer can use. This same scenario plays out for issues such as support, security, authorization, dual control, and so forth.

Embracing a mobile strategy based on concerns over outdated online banking technology is a compromise that leads to future obsolescence and a poor consumer experience. Instead, to be successful, FIs need to focus on providing an integrated experience that maximizes each access device for its unique qualities while ensuring that data, transactions, security protocol and user interface are consistent. This channel of one strategy is central to retaining current and attracting new customers.

Check back soon for my next blog post - Mobile Is a Channel Myth #2, Part 2.  

Tags: Virtual Branch, Online Banking, mobile banking, channel banking

Virtual Branch Myth #1

Posted by David Peterson on Thu, Apr 18, 2013 @ 13:04 PM

As a follow up to my recent blog post, here’s the first in a series of Virtual Branch Myths to consider.

“Our FI employs a best of breed approach to technology; we buy individual products that meet specific customer/member needs”. Sounds good, right?

The problem with this siloed approach is that it leads to selecting individual products chasing a particular market segment or specific devices. Mobile is the obvious example; many FIs have selected a specific mobile vendor for a specific part of mobile functionality. This results in the FI having multiple apps for online banking, mobile remote deposit, mobile bill pay, mobile PtoP, and so on.

Moreover, each of these products have a different user interface, the flow of entering information, the navigation in the app, the information that is retrieved and displayed all will be different. It is possible, even likely, that they would see different available balance information displayed in different apps. This is because regardless of the app source, there still has to be an interface back to the core system. Multiple systems means managing multiple interfaces to the core and depending on how the company creates this interface and whether it is online/real-time or batch will affect the balance and other critical information that is retrieved and displayed on the mobile device.

With this in mind, the importance of a consistent user interface cannot be overlooked. When looking at “best of breed”, start by asking these questions:

  1. Do I need to create another host interface? 
  2. Will this present a different user interface for my customers/members? 
  3. Will the data, navigation and experience be simplified and intuitive if I offer this in addition to the other systems that I deploy?
describe the imageIf the answers are Yes, Yes, and No, then even though you may perceive that there is a particular feature/function that is desirable from a particular vendor, the long term negative aspect of non-integrated systems will greatly outweigh any short-term benefit. You should look for a solution that allows for one host interface to run myriad integrated applications that present a unified user experience. Make sure that your view of technology is a strategic one, not the shiny object du jour … stay tuned for more Virtual Branch myths!

Tags: Virtual Branch, Online Banking, Branch Banking, Customer Experience

With everyone talking about adopting virtual branches lately…

Posted by David Peterson on Tue, Apr 09, 2013 @ 14:04 PM

Think you have a true virtual branch?  Maybe not, read on …

If I defined a “branch” as being:

  • A place where customers could perform basic banking transactions

  • Staffed by trained professionals

  • Had all of the equipment and services needed

  • Had its own budget

  • Had a senior manager overseeing its success

Would your current online offering fit this definition of a virtual branch? 

I find that most financial institutions have a limited view of what the virtual branch is and what it can (or should) be.  As I have conversations with bank and credit union professionals about the virtual branch, I am amazed by comments that lead me to believe that there is a great deal of myths and misconceptions about what the virtual branch is and can be.  In this series of blog posts, my goal will be  to examine these myths and dispel them, using verifiable facts and data and adding my own color and opinions to each component of this series.  It is my hope that as you examine all of the evidence that you would not leave the discussion unaffected. 

You may decide to ignore the truths of what the virtual branch has become, but this  will not change the fact that this method of access  has (or soon will be) your largest branch, by both number of primary customers/members and financially.  The question is whether you will strategically address it as your largest branch or continue to view the virtual branch (I’ll refer to it as VB throughout the rest these posts) as just a tactical operational expense.

The types of myths I will address in this series will cover subjects like:

  • Our end users do not desire the VB as their primary channel

  • Devices such as smartphones and tablets are channels (Spoiler note: your customer is the channel!)

  • I can’t charge for any online banking or mobile activity

  • Only young people are interested in online banking

  • Online/Mobile banking is just an operational expense

  • I should abandon online and concentrate on a mobile only strategy

  • End users don’t care about a consistent user experience

  • My customers/members do not expect our institution to offer the same experience as Apple, Google and Facebook

  • My customers/members don’t use smartphones and tablets very much if at all

  • A compelling user experience will not engage the end user to do more with our institution online

  • We do not need to treat our online banking as we do a branch, it’s completely different

  • We have plenty of time to offer more advanced services in our community, we are not competing against larger regional FIs

While not comprehensive, this list will give you an idea of the subjects that this series will cover.  So stay tuned and setup a reminder to check this blog often so you can see the latest post.  And whether you agree or not, send me a reply. I am particularly interested in those that would challenge my assertions, .  Perhaps you will change my mind on an issue or I might wind up changing yours, either way, I welcome the conversation.

David Peterson serves Q2ebanking as Executive Vice President, Strategy & Innovation, and is Chairman of GACHA, a nonprofit payments association located in Atlanta, Georgia.

Tags: Virtual Branch, Online Banking, Branch Banking, Customer Experience

9 Common Pitfalls When Addressing the Virtual Branch

Posted by Mickey Goldwasser on Mon, Aug 06, 2012 @ 09:08 AM

When was the last time you as a consumer were in a branch?

If you’re like me it’s been awhile. In fact the last time I was in a branch was about a month ago. My 21 year old daughter wanted to cash a check that she had received so I suggested we go to our local branch. I really wanted to do this to view the experience through her eyes so off we went. We drove to the branch where she went through the process of standing in the teller line and then having the check cashed. As we were leaving, she commented just how foreign the whole process felt. When I asked why, she said I never go to the branch because I do all my banking online. In other words she uses the bank’s virtual branch as her primary means of contact, as do I.


With this as background, our EVP of Customer Experience and Innovation, David Peterson recently drafted a white paper entitled “Caring For Your Virtual Branch”. The paper covers the common pitfalls, elements needed in a virtual branch, who’s online?, the notion of self service, security, virtual branch requirements, virtual customer service and other elements needed for success of this emerging channel.

A little insight on what this white paper includes: The 9 common pitfalls financial institutions can run into when addressing the Virtual Branch.


1. Management failing to recognize the online channel as its own branch.

2. A lack of direct interaction between customers and FI staff. 

3. Letting concerns about security, risk and fraud delay or prevent the adoption of online banking.

4. A lack of exposure to advertising and other messaging.

5. Forgetting that customers are executing transactions for themselves.

6. Failing to inform customers what equipment they need.

7. Relying on traditional methods to provide training on how to best use the online channel.

8. Staffing for support of physical-branch customers only.

9. Ignoring the virtual branch as a major revenue engine.

I invite everyone to download and read this educational white paper to further explore this important topic in more detail.

Click me

Tags: Virtual Branch, Online Banking, whitepaper