To increase mobile banking adoption and engagement, credit unions and community banks should consider taking a more active role in helping consumers proactively manage their finances in a digital age.
One way to achieve this is through alerts. Beyond simple balance and transaction updates, alerts provide an opportunity for greater interaction with the banking consumer. This, of course, can lead to increased engagement, lowered servicing costs and even potential revenue-generation.
Many of today’s tech-savvy consumers expect their financial institution (FI) to provide real-time information about their financial accounts. In fact, 74 million American consumers currently receive online financial alerts. Many of these consumers are looking for their FI to move beyond simply facilitating their financial activity to becoming a part of their everyday, digital lives. Expanding the number and variety of alerts offered is one way FIs can significantly increase consumer engagement and effectively deepen that relationship.
With such an expansive array of potential alerts, it’s recommended FIs create a comprehensive alerts strategy, phasing in the following five categories:
- Balance alerts — center around account activity and can include such notifications as overdrafts or non-sufficient funds
- Event-based alerts — can be based on bill payment, person-to-person (P2P) payment requests or other occurrences requiring the consumer to follow-up
- Security alerts — include suspected fraudulent activity, such as suspicious transactions, international credit card charges or password changes
- Consumer care alerts — more involved and include notifications requiring consumer and FI interaction (e.g., CD maturing or lease coming up for renewal)
- Actionable insights — use data analytics to offer financial management tips and advise based on the consumer’s spending activity (e.g., changes in spending activity compared to historical data)
Although phasing in alerts will create a smooth transition for the consumer, it’s also important to have a defined enrollment strategy. This includes making it easy and convenient for consumers to sign-up for or opt-in to receiving alerts. Equally important is striking a balance between customization and an overwhelming number of options. At their core, alerts are about excellent communication that truly adds value to consumers’ financial well-being.
Tags: alert, alerts, community bank, credit union, financial security
A recent debit study found a sustained increase in the use of debit cards by both consumers and businesses in 2013. Additionally, debit program performance showed appreciable improvement last year, as consumers increasingly opted to use debit cards for transactions.
Recent data from TMG’s strategic partner CO-OP Financial Services supports this reported growth. The company found total debit card spending at selected back-to-school merchant categories for August 2014 was up more than 9 percent as compared to the same time last year.
To promote continued debit growth, issuers said they are striving to enhance current performance and make their debit offerings even more attractive. Debit rewards programs are making a comeback, often in the form of merchant offers. Specifically, 48 percent of regulated issuers now offer debit rewards programs (up from 32 percent in 2012), many of which center on a merchant-funded model.
The 2014 Debit Issuer Study also took a close look at recent high-profile data breaches’ impact on debit cards. An estimated 14 percent of all debit cards were compromised by data breaches last year. That’s up from just 5 percent in 2012. Target’s breach, which exposed account details of more than 100 million customers late last year, is no doubt responsible for much of the year-over-year increase.
“The Target breach impacted every financial institution (FI) that participated in the study, causing fraud loss rates to increase in 2013 and compelling issuers to re-evaluate their strategies for improving card security in 2014,” the researchers wrote in a press release.
As a result, many FIs are currently seeking enhanced security solutions, including ramping up EMV implementation plans, for both debit and credit cards.
Nearly 70 percent of debit issuers surveyed plan to offer EMV cards in 2015. Seven percent currently issue them, and 12 percent plan to yet this year. That leaves just 14 percent who have no EMV plans. In 2012, half of issuers had no EMV plans. These numbers encouragingly indicate EMV is continuing to take hold in the U.S.
Tags: COOP, debit, debit EMV, EMV, financial institutions
Financial institutions (FIs) that properly leverage Big Data analytics can benefit in a range of ways. Analytics fuel the insights that are increasingly becoming essential to creating the deep relationships consumers have come to expect.
Effectively utilizing Big Data can help FIs roll out real-time, customized offers to their customers and prospects, detect fraud and offer increasingly detailed overviews of credit and liquidity risks.
A recent Bank Systems & Technology article highlights five factors that can play a key role in successfully putting collected data to work for your FI.
- Make it count — The key to properly leveraging data begins with determining the most important business concerns from the start. These can include cross-selling, fraud detection and risk management. Once the main topics have been established, begin deciphering how the data related to these issues can best be utilized.
- Gather pure data — Reduce inaccuracies, repetitions and other mistakes by harvesting the cleanest data possible. Automation is a good place to start, as it can be employed to separate useful data from useless data as it’s garnered, or shortly thereafter.
- Time is of the essence — Data’s worth can erode quickly, making real-time access paramount. Convenient accessibility to the data and user-friendly software can work in tandem to promote constructive procurement of the data.
- Diversify — Consider the value of collecting data from a variety of sources. Look to websites and social media to provide useful “unstructured data,” and to “internal structured sources” for insight into risk data and payment figures.
- Humanize the process — Making the most of an FI’s data requires oversight and information management. In short, aggregating all of this enterprise-wide data for consumption requires a concerted effort and is only possible with a champion — often the chief data officer (CDO). The CDO is mandated and empowered to accomplish this task. Interestingly, the top three industries employing CDOs are banking, government and insurance.
Information can promote the growth of an FI’s brand and performance if properly managed. Elevating data to its deserved status of strategic asset is the key to successfully mining and utilizing Big Data. For more on how credit unions in particular are using Big Data, check out this recent Credit Union Times article, in which our CEO shares her insight on best practices for data analytics.
Tags: big data, data analytics, financial institution, real time
The Members Group (TMG), as part of our parent company, Affiliates Management Company (AMC), is proud to join 100 Iowa organizations as one of the Des Moines Register’s Top 100 Workplaces of 2014.
Each year, the Register, in conjunction with third-party research company WorkplaceDynamics, ranks the 100 best companies to work for in Iowa. Selection and ranking is based on workplace surveys completed by employees. Our employees were asked what is most important to them regarding their workplace. AMC employees were then asked how well the company meets those priorities.
AMC is the holding company of the Iowa Credit Union League (ICUL). Operating companies of ICUL include TMG, Coopera, PolicyWorks and TMG Financial Services.
I know I join many of my colleagues in pride for our company. As part of the AMC family of companies, TMG’s employees are encouraged to be engaged in improving the financial lives of consumers and are respected for their contributions. We strive to be the best at finding solutions for our clients, while making our employees feel valued and making our clients’ lives easier. At TMG, everyone is considered a leader and is encouraged to ask questions, get involved and make a difference. To learn about our current job openings, go to http://www.themembersgroup.com/join_our_team/.
The Register published the complete list of Top Workplaces on September 21. For more information about the Top Workplaces, please visit http://www.topworkplaces.com and http://www.workplacedynamics.com.
Tags: AMC, Des Moines Register, ICUL, Workplace
I recently blogged about the increasing number of EMV payment cards in circulation. With EMVCo reporting there were in excess of 2 billion EMV cards in circulation worldwide at the end of 2013, it’s clear EMV is gaining traction globally.
In a recent PaymentsSource article, Oberthur Executive Martin Ferenczi predicted an EMV card will be in every American household by the end of 2014. Ferenczi said he is basing his estimation on the increased issuance of cards in recent months, as well as growing consumer awareness of EMV.
“Deployment of EMV cards is accelerating, and the largest issuers are either issuing or are close to issuing EMV cards,” says Ferenczi. He added, “There was a lot of publicity of EMV that followed the Target breach and the subsequent breaches.”
While getting cards into the hands of consumers is one thing, ensuring their comfort using them is quite another. There’s no doubt consumer awareness and education are critical to the success of any EMV rollout. Helping cardholders understand the benefits of EMV, as well as the differences between paying with EMV as opposed to mag-stripe cards, are essential components of EMV implementation.
Despite the press EMV received (and continues to receive) following high-profile data breaches, consumer awareness is lacking. “What’s been most glaringly omitted so far is consumer education. EMV is a big change in payment habits,” Javelin Senior Analyst Nick Holland said in a press release. “If consumers aren’t trained to use cards, you will have significant lag times in checkouts.”
Making the transition to EMV easier for consumers is one reason TMG is advising issuers to implement signature EMV cards, as this means less change to established habits. As opposed to PIN-based EMV cards, signature cards are what we consider a “best practice” for community financial institution (FI) credit card issuers. This is due mainly to credit cardholder familiarity with signature authentication. Consumers are not used to entering a PIN when swiping their credit cards.
PIN also adds an additional layer of complexity for the issuer. When it comes to EMV issuance, TMG advises clients to start simple and add complexity in the future, if necessary. The availability of PIN as an authenticator for EMV credit can always be added at a later date.
People learn by doing. When more cardholders have EMV cards in their wallets, education will become easier.
Ferenczi’s forecast is important, because if it’s true, community FIs need to consider the competitive ramifications of an EMV card in every U.S. household by year-end.
Tags: EMV, financial instituion, issuers
Iowa State University (ISU) students recently beat out 98 other universities from 28 countries to win first place during the 15th Annual Data Mining Cup (DMC) competition in Berlin. ISU’s victory marks the first time a U.S. team took home first place in the international competition.
As Big Data continues to get bigger, so will the impact of data analytics across all industries, including retail and financial services.
This year’s DMC task had teams calculating the probability of an online return. On average, online customers return half of all clothing orders, representing a significant cost factor for merchants. Reducing the rate of returns by implementing preventative measures (restricting methods of payment, adjusting shipping costs, providing size charts) on the basis of return probabilities is a key discussion in eCommerce.
Teams were given six weeks to use an online shop’s historical purchase data to develop a model for new orders that would calculate the probability of a purchase leading to a return. Teams were given information, including age and location of buyers, purchase history and quantity of items to determine a pattern of behavior. Participants then apply these patterns to a group of 50,000 purchasers to predict behavior.
ISU’s team leader and statistics Ph.D. candidate Cory Lanker explained the core of ISU’s solution was “to fully characterize customer behavior, which we did using advanced statistical learning concepts on the provided history of purchases. Once we successfully characterized customer behavior, we could then best predict whether a new purchase would be returned.” He added, “We could advance our ideas to create an application that helps online retailers reduce returned shipments and increase profit margins.”
The top 10 teams were invited to Berlin to present their solution methods at the Prudsys User Days conference. The winning ISU team, consisting of students from the statistics department, bioinformatics and computational biology department, and computer science department, was awarded 2000 Euros.
With the explosion of data analytics solutions happening around the world, it was exciting to see one of our great Iowa universities realize such an accomplishment. Financial institutions in the Midwest, you may want to look a little closer at recruiting from within this award-winning group of budding data specialists!
Tags: big data, consumers, ecommerce, retail
As consumer awareness about the prevalence of payment fraud increases, more cardholders are becoming interested in protecting themselves. They are looking for convenient, simple ways to protect their accounts and identities. Consumer attitude about fraud is a crucial component for financial institutions to monitor because it provides an opportunity to help people understand what it really takes to maintain the security of their information.
It’s an opportunity the majority of credit unions and banks are not seizing – at least according to a Q1 2014 ACI Worldwide study of 6,159 consumers in 20 countries. In that study, 44 percent of U.S. consumers said they can’t recall receiving any anti-fraud information from their financial institution.
The report goes on to conclude nearly half of global consumers are demonstrating risky behaviors when it comes to their identities. Examples of this risky behavior includes carrying their PIN with their card, using public computers to shop online, throwing documents that contain personal information in the trash and leaving smartphones with personal information unlocked. Generally, these consumers do not take risks intentionally; they simply lack the proper education on the consequences of these behaviors in today’s world.
Financial institutions must get their cardholders involved in their own financial safety. Keeping individuals updated on fraud trends and scams will prevent misconceptions. Here’s one of those misconception brewing today: Consumers believe shopping online is safer than shopping in-store.
Here’s another: Cardholders also appear to lack confidence in the new cards they are issued after a breach. Based on a recent Aite Group Impact Report, consumers with reissued cards say they used them, on average, 43 percent less as compared to their previous plastic.
Because those of us in the financial industry work around these topics every day, the facts become engrained. It can be easy to make assumptions about the knowledge or know-how of everyday consumers who rightly depend on us to help protect their money, their data and their identities. It’s so important, especially today, to keep the communication flowing and to share new tips on protecting funds as often as we can. After all, your customer can be your strongest ally in the battle against fraud.
Tags: behaviors, consumers, Fraud, security
Prepaid options are playing a key role in the development of mobile wallets. Because prepaid is essentially the model behind a number of mobile payment solutions, it’s no doubt prepaid will continue to play a significant role in the future of mobile wallets.
Evidence of the prepaid model’s popularity among consumers can be seen in its growth, which is accelerating at a rate faster than even credit and debit cards.
Recent announcements suggest mobile wallet providers understand the merit in marrying their high-tech solutions with the convenience of prepaid. Swedish mobile payments company Seamless has teamed up with InComm, a prepaid product and transaction services company, to allow users to store digital reloadable prepaid cards into Seamless’ SEQR wallet. SEQR is a mobile wallet available in 30 countries currently processing 3 billion transactions per year. The U.S. market will be the first launch location for the combined SEQR/InComm offering.
SEQR isn’t the only mobile wallet with a prepaid component. Softcard (formerly Isis) mobile wallets feature a Softcard and Amex co-branded prepaid card, which has made Softcard more appealing to the nearly 70 million U.S. unbanked or underbanked consumers.
As innovative mobile payment developers are demonstrating, prepaid service models and mobile wallet solutions can be mutually supportive. When merged, each will power and encourage innovation in the other. This may establish a strong facilitator in driving both industries forward.
Tags: mobile banking, mobile wallet, Prepaid
Our teams have been preparing for the day payments would be made using near field communication (NFC) and tokenization. With this week’s introduction of Apple Pay, that day appears to have arrived.
What some may see as a disruptor to the payments industry, we see as validation of the path our experts have been traveling.
At this summer’s TMG Executive Summit, our financial institution clients learned of TMG’s vision for a consumer-centric digital wallet – a smart combination of mobile banking and mobile payments into one tool powered by NFC and host card emulation (HCE) technologies. At the same time, we unveiled our initial wearables product, See2Pay, which allows consumers to make payments via Google Glass. At TMG, we are always open to exploring and embracing other emerging payment technologies if they are likely to gain momentum in marketplace. Agility is the key to remaining relevant in a fast-paced changing payments landscape, and we view it as a critical factor in our ability to serve financial institutions and consumers in the future.
Although Apple’s news has created quite a bit of buzz about the new future of payments, EMV, NFC, tokenization and wearable devices used for payments have been part of TMG’s strategic product roadmap for the past 18 months. Our vision for the future of payments remains intact, as we look to develop solutions for both iPhone and Android users.
What Apple this week did was to shine an even brighter spotlight on NFC, tokenization – and to some extent even biometrics – to complete a payment. This is expected to spur more merchants to enable their terminals for NFC and more online retailers to adopt tokenization. Of course, it’s also expected to inspire more consumers to consider making payments from their connected devices.
Why is this so impactful? Because the combination of NFC and tokenization will lead to increased security that will benefit issuers, merchants and consumers. What EMV promises to do for card-present fraud, tokenization promises to do for card-not-present fraud.
Thanks to TMG’s partnership with First Data, we are excited to announce support for Apple Pay, as well as First Data’s Integrated Token Services. Servicing both issuers and merchants, First Data is poised to accelerate mainstream acceptance and use of tokenization. This in turn paves the path for TMG and our clients to offer these new payment technologies.
More than anything, we are proud to be an industry pacesetter alongside our future-focused clients. Whether it’s setting a course for EMV or blazing a trail with NFC and tokenization, it’s such an exciting time to be in the business of payments.
Tags: ApplePay, credit, EMV, GoogleGlass, mobile, payments, Wearables
Global marketing executives expect digital and mobile technology to significantly transform their marketing budgets over the next five years.
Specifically, more than one-third of chief marketing officers (CMOs) believe digital spending will account for 75 percent of their marketing budgets by 2019. Further, according to the recent Accenture study of nearly 600 executives in 11 countries, 41 percent believe their spending on digital marketing will increase by more than five percent next year alone.
The expected digital growth is the result of marketers’ increasing confidence in digital channels, up 10 percent over the past year. That comes as CMOs see an increase in the effectiveness of digital formats, including email, online display and search, compared to two years ago.
Another study found CMOs will spend more than $130 billion on innovative digital marketing efforts this year. The WebDAM study also concluded 55 percent of marketers worldwide increased digital marketing budgets in 2013.
The potential of data analytics is also on the minds of top marketing executives. Seventy-eight percent of those polled believe corporate marketing will undergo a fundamental transformation due to the use of analytics, digital and mobile technologies. Further, 42 percent believe data analytics in particular will become a “core competence” of marketing by 2019. Even so, 79 percent believe their company will not be a fully operationalized digital business by 2019.
With CMOs planning to embrace digital marketing and allocate the funds necessary to amp up their digital marketing efforts, there’s no question: Digital is the wave of the future. As digital grows and becomes increasingly sophisticated, marketers must adapt. Financial institution marketers will need an arsenal of tools and media channels at the ready to stand above the rest.
Tags: consumers, digital, digital marketing, Technology