What We’re Reading
Below are interesting stories the Banking.com staff has been reading over the past week. What have you been reading? Let us know in the comments section below.
- Paper Gives Small Banks Rewards Tips
Community banks should examine their customers’ card use and use their findings to customize rewards programs, a new white paper says. The paper cites research from the Federal Reserve Bank of Chicago that suggests that often, little is needed to get cardholders to respond to a rewards program. The Chicago Fed’s study found that a 1% cash-back bonus created average monthly spend of $220 among previously inactive cardholders. The CARD Act “and proposed debit interchange regulations may be making the job [of card portfolio management] more difficult, but methods for program optimization still exist,” said Ivy Sprague, product development architect at Members Group and the author of the white paper.
- Ad-Backed Kindle Helps JPMorgan Chase, Visa in Customer Analysis
To get a better read of their customers, JPMorgan Chase and Visa have become the initial sponsors of Amazon.com’s new advertiser-supported Kindle e-book device. E-readers such as the Kindle allow users to set their own pictures to display on the screen after they have stopped reading. The new discounted Kindle, which costs $25 less than the standard $139 Kindle, replaces these screen saver images with advertisements. The device is expected to include a feature called AdMash that allows consumers to choose which version of an ad they prefer to see. “It’s a learning opportunity,” said Chris Conrad, JPMorgan Chase’s marketing director in charge of the Amazon rewards card.
- White House’s Online ID Strategy to Rely on Banks
Banks and other payment providers are expected to take a leading role in the White House’s revised strategy for securing consumer identities online. The guidelines, which the Obama administration announced Friday, would create, under the National Strategy on Trusted Identities in Cyberspace, a so-called identity ecosystem for “interoperable, secure and reliable credentials.” The strategy, which further develops prospective policies included in a draft proposal published last June, gives private industry the leading role, and government a supporting role, in securing online transactions. Consumers would have one identity, managed either through a token or other technology, on a smart card or on a smartphone.
- 5 Things Everyone In Banking Is Talking About
Matt Gunn shared some of the topics currently most pressing to those in the banking industry.Regulation: Dodd-Frank, and particularly the Durbin Amendment’s threat to debit interchange fees, is something all bankers are concerned about. Loyalty/Stickiness: There’s a sense that, with the new regulation, banks will be working harder than ever to attract and maintain customers. While traditional debit rewards and free checking are already starting to disappear from the big banks, it represents an opportunity for smaller community and regional banks to incentivize customer relationships through loyalty rewards, merchant-funded rewards and the thing one thing a small bank can do that a national one can’t: highly personalized customer service.
- Digital and Bricks and Mortar Fill Consumer Needs
Don’t bag the branch yet. A study of U.S. consumers’ digital habits finds that the great majority still go bricks and mortar for at least some of their banking needs. And, according to a new Forrester Research report, only 15% of U.S. consumers have ventured into mobile banking, citing a variety of reasons for their reluctance, from security concerns to just not knowing if it’s there. The March 21 report-“The Changing Landscape of U.S. Consumers’ Digital Banking”-noted that only 4% of U.S. consumers bank exclusively online while almost 40% use the online channel and at least one other. When the survey was taken late last spring, 23% of adults with a mobile phone had a smartphone, a number that has grown since then. Forrester now projects that there will be more than 42 million mobile banking U.S. adults by 2013.
- Are the banks missing a trick?
Consumers are driving technology adoption in the financial services industry like never before. Indeed, as the popularity of smartphones and tablets grows, consumer demand for information and services via the mobile channel is rising somewhat faster than banks can keep pace with. Much of the innovation in mobile transactional services at present is coming from outside the banking industry, ironically. For example, in Kenya Safaricom has taken the initiative with M-Pesa, the mobile money transfer solution, while elsewhere in the world Starbucks has rolled out 2D barcodes enabling customers to pay with their mobile phones.
- Drawing a blank on free checking; No-fee accounts going away, but few in rush to switch their banks
The free checking account, once a big marketing draw for customers of all income levels and a staple for the banking industry, might be an endangered species. Many of the country’s largest banks, such as JPMorgan Chase, Wells Fargo and Bank of America, are abandoning no-fee checking as they look for ways to deal with a revenue squeeze caused, they say, by federal financial rules changes. “Some of the same banks that were the last to jump on the free-checking bandwagon are now among the first to jump off,” said Greg McBride, senior financial analyst for research firm Bankrate Inc. People are clearly fee-weary, though there are no signs that account holders are switching banks in droves in retaliation.